The Best Financial Books of 2021

09.16.2021 by Harry //

There are thousands of books out there about how to become better with finances, how to invest, and how to be okay with talking about money.

Listed below are books that will teach you how to go from living tightly with money to retiring debt and being worry-free. There are many books out there for those wanting to learn about finances!

Retire Before Mom and Dad: The Simple Numbers Behind a Lifetime of Financial Freedom by Rob Berger

Retire Before Mom and Dad is a book that teaches you how to improve your financial future by using psychology, finance, and self-help concepts. This is a great book for those that are just beginning to get into the world of personal finance or those that want to learn more!

Rob Berger is a litigation attorney and the founder of popular personal finance and investing website.

Rob’s goal is to help people achieve financial freedom by helping them live a life free of financial stress and worry by teaching them about wealth and living financially free.

In Retire Before Mom and Dad, Rob writes about the difference between a Roth 401K and a Traditional 401K, the ins and outs of investing, how to retire debt-free, and how to successfully and carefully analyze long-term decisions.

His simple approach and clear writing will teach you how to become financially wise and efficient, as well as how to invest and self-help. This is a great book for those just getting started in the financial world, or those wanting to learn more!

When She Makes More by Farnoosh Torabi

In When She Makes More, Farnoosh Torabi teaches the reader how to deal with income imbalances in relationships, and how to help women manage these circumstances that can have negative impacts.

Today, there are more women than ever working as the household’s top earners. However, they face higher risks of burning out, depressions, infidelity, and even divorce. Farnoosh uses her real-life experiences to connect the reader on a personal level.

Sold as a physical book or an audiobook, Farnoosh Torabi outlines rules to help her readers learn how to address financial imbalances that can affect relationships negatively and how to become okay with talking about these problems.

In When She Makes More, readers will learn how to deal with changes in dating and marriage in society, how to know when to let your significant other lead, and how to allow your significant other to become a stay-at-home parent without making their life too easy.

Broke Millennial: Stop Scraping By and Get Your Financial Life Together by Erin Lowry

Written for Millennials, Broke Millennial gives great insights on how to save money, handle student loan debt, negotiate a pay raise, and how to ‘adult’.

Erin gives humor and empathy a fun twist in Broke Millennials!

No one likes to think about money, especially when money is tight. In Broke Millennial, the reader will learn how to be okay with talking out loud about money and how to deal with it.

Described as refreshing and conversational, Erin relates to her audience in a way that will guide them to a path of financial wellness!

Written for Millennials, Erin doesn’t use boring language to talk about investing and credit card debt, but rather uses analogies to relate those topics to Tinder, dating, and marriage.

Erin even talks about how to manage student loans and what to do when your dining out with friends and can’t afford to split the bill.

Written by a millennial for a millennial, this is a must-read!

How I Invest My Money by Joshua Brown and Brian Portnoy

In How I Invest My Money, you will learn about 25 experts and how they invest, spend, save, and give their own money.

Joshua Brown and Brian Portnoy will teach you there is no right or wrong way to use your money!

Joshua and Brian talked to 25 different financial experts, including financial advisors, portfolio managers, and venture capitalists, and have turned their stories into essays about their lives, families, struggles, and aspirations.

https://www.harriman-house.com/Howinvestmoney

How I Invest My Money describes how there is no right or wrong way to handle your money, but rather use these stories to teach the reader how to figure out what works best for them.

You will read about different perspectives on bonds, stocks, funds, charity, and other means of achieving the life you have always dreamed of. How I Invest My Money will also teach your how to create and keep a healthy relationship with money and your values.

Spend Well, Live Rich by Michelle Singletary

In Spend Well, Live Rich, Michelle Singletary teaches the reader how to support a family while living on a budget.

Michelle also teaches the reader that it’s okay to not feel bad about not spending.

Michelle Singletary was raised by Big Mama, her grandmother who made $13,000 a year. Big Mama was the one who taught Michelle the “7 Money Mantras for a Richer Life.”

These mantras include “If it’s on your a$$, it’s not an asset,” “Sweat the small stuff,” Keep it simple,” and “Priorities lead to prosperity.”

How to Analyze Your Financial Upbringing

Check out our article on analyzing your own financial upbringing.

In Spend Will, Live Rich, Michelle teaches the reader how to teach children the value of money, how to become comfortable talking about money in relationships, how to save money as a household, and how to look for and get the best loans for your situation.

Summary

There are many resources to help you become comfortable with finances.

By becoming comfortable with your finances, you can have conversations about money in your relationships, learn how to save money as a household, and become okay with saying no. Start your journey to financial freedom today!

How to Analyze Your Financial Upbringing

07.29.2021 by Harry //

Studies have shown that most of our financial habits and money decisions that affect our financial health are largely influenced by our upbringing. Your parents largely influence the way you save, spend, or view money.

A quick look at your finances can help reveal your financial health. Your financial health considers your net worth, debt, retirement plans, emergency funds, and several other financial implications.

https://thinksaveretire.com/parents-money-habits/

Why You Need to Evaluate Your Financial Health

It is not out of place to see a doctor for a physical check-up. In the same way, a routine fiscal check is good for your financial health. It will help you make the necessary economic adjustments.

Here are Three of the Most Popular Ways to Assess your Financial Health

#1. Figuring Out Your Net Worth

Determining your net worth is the first step in assessing where you stand financially. You can do this by adding all your assets and subtracting your liabilities.

Don’t beat yourself up. It’s completely okay to have a negative balance now. The goal is to write it down and work towards increasing your assets.

Action plan

Your net worth serves as a personal measuring tool that should spur you to take action. Focus on increasing your net worth by 5% to 10% every year. Your net worth is personal so remember never to compare yourself with someone else.

#2. Take a Closer Look at Your Income to Debt Ratio

After figuring out your net worth, the next step is to calculate your income-to-debt ratio. Calculating your debt-to-income ratio helps you keep your debt under control.

You can get this by dividing your income by the total amount of debt you have. For example, if your monthly gross income is $6,000 and you have a total debt payment of $2,000, your debt-to-income ratio is 30%.

Action plan

A high debt to income ratio means you need to exercise caution. Experts advise you keep the ratio to 20% or lower. You could pick on a side hustle or take on another job to help you pay up your debts. But most importantly, work on reducing your expenditure.

Identifying how you were raised could help you put things in perspective and set you on track for the future.

#3. Take Budgeting Seriously

If you aren’t tracking where your money is going, you need to start now. It is not enough to save. Make sure you know where every single penny comes from and goes to.

What to Do After My Emergency Fund Is Fully Funded?

Action plan

Create a budget and stick to it. This might seem time-consuming, but there are lots of platforms offering automated solutions.

3 Common Financial Upbringings | How They Affect Your Money Habits as an Adult

After evaluating your financial health, it is important to consider your financial upbringing. Growing up, it is natural to look up to your parents and immediate family and want to be like them.

So, it is not unusual for you to pick up the money habits of your parents or guardians. It is also possible to be negatively affected by their money habits.

#1. Little Financial Education

Some parents never saw the need to educate their children about financial literacy and good money behavior. This could be because their parents also never taught them.

Effects

Adults who grew up with zero financial education end up not knowing how to strike the right balance. They could develop unhealthy financial habits like overspending and undersaving. Others hoard money and live miserly.

Solution

Seek to acquire financial knowledge. You could enroll in finance courses, read investment books, or enlist the help of a portfolio manager to help you best manage your finances.

32. Frugal Upbringing

A lot of families fall within the low to middle-income bracket. This means prioritizing the family’s needs over luxuries. It’s not uncommon for kids from such homes to have their requests for expensive gadgets denied or replaced with a cheaper alternative.

Effects

If you are from a frugal family, you might splurge on wants rather than needs to compensate for childhood luxuries you never had. You might end up accumulating debts to fund this lifestyle. On the other hand, you could also choose to emulate your parents’ financial discipline.

Solution

Analyze your money habits. Are you embracing unhealthy money habits just to make up for your childhood? If you are, you could draw up a savings and investment goal.

You could also get an accountability coach to keep you in check or join groups of like-minded individuals.

#3. Luxurious Childhood

If you grew up in rich homes, it is easy to emulate your parents’ lavish lifestyle. You even grow up with a sense of entitlement, expecting things to be easily handed to you.

Effects

If you are from a well-to-do upbringing, there is a temptation to live above your means. You might want to match the luxury you enjoyed while living with your parents. If you are not careful, this could you lead you into debt, especially if your financial situation changes.

Solution

Keep a distance from friends and environments that cause you to overspend. Reduce the urge to splurge; rather, Indulge yourself occasionally.

Final Thoughts

Tracing your financial upbringing may help you improve your future. Take a holistic look at how you were raised, identify harmful money habits you have picked up, and work on replacing them with healthy financial habits.

Image Credit: [Thiago Matos]

When to Refinance Student Loans

06.29.2021 by Harry //

Refinancing student loans can be a great idea, but it is not the best option for everyone. Refinancing student loans allows you to pay a lower interest rate while merging your payments into one.

You should not refinance your loans if you need to take advantage of federal student loan protections.

It may be a good idea to refinance student loans if you are a private student loan borrower, but it is generally not a good idea if you are a federal borrower.

This article describes refinancing student loans, when it is a good idea, and the pros and cons of refinancing student loans.

What Does It Mean to Refinance Student Loans?

To refinance student loans is to take out a new loan that replaces an old loan (or more than one loan).

By taking out a new loan, your old loans will be paid off, but you still have to make payments towards your new loans.

The new loan will give you new terms, a new lender (sometimes), and most importantly, a new interest rate.

Should I Refinance My Student Loans?

When deciding whether or not to refinance student loans, take into account the following factors:

Your current loan interest rate. High-interest private student loans can be a challenge to pay off. If you want to lower your interest rates, and thus lower your monthly payments and your total loan amount, you should consider refinancing.
How much money you would save. You should only refinance if it allows you to save money on your interest rate, monthly payments, and overall loan payment.
Your credit score. A solid credit score will make you more eligible for student loan refinancing. It should at least be above 670. The higher your credit score, the more likely lenders will work with you and offer you lower rates. You also need a solid credit score because new credit applications will trigger a hard credit inquiry, which will limit your ability to apply for other types of credit such as credit cards, auto loans, and mortgages.
If you need a co-signer. Some lenders will allow you to have a co-signer. Having a co-signer can help you qualify for student loan refinancing. It is a good idea to opt for a loan that will release the co-signer after a certain number of on-time payments.
Your payment history. Lenders will look at your payment history. This is the determining factor in your credit score. Lenders may not allow you to take out a new loan if you are having trouble affording your current student loans.

Who Qualifies to Refinance Student Loans?

To qualify to refinance your student loans, you must have a good credit score. A credit score is the determining factor to get approved for student loan refinancing.

Lenders need to know how likely you are to repay your loans, and they get this information from your credit score.

You also need a steady income to refinance student loans. When you take out a loan, you must prove you earn enough money to repay it. If you have a reliable income, you are showing that you will eventually repay your loan and that you won’t fall behind on payments, even if financial emergencies happen.

To qualify for student loan refinancing, you must also have a low debt-to-income ratio.

A debt-to-income ratio represents how much debt you have compared to how much money you earn. You want this ratio to be low, so lenders trust that you can comfortably pay off the loan.

Private Student Loans vs. Federal Student Loans

The majority of borrowers are federal student loan borrowers – about 92% of borrowers. Private student loan borrowers make up the rest.

When it comes to refinancing your student loans, which type of borrower you are will determine whether or not it is a good idea.

https://yourfinancialpharmacist.com/my-experience-with-first-republic-student-loan-refinance-after-6-months/

Student Loan Refinancing Guide

Both federal and private student loan borrowers can refinance their loans, but federal loan borrowers have payments on freeze right now because of the pandemic. Federal loan borrowers would lose this benefit if they refinanced.

Until September 2021, federal student loan borrowers are not charged monthly payments and their interest rate is set to zero. Since the only reason to refinance is to get lower interest rates, it is not a good idea for federal borrowers to refinance at this time.

Federal loans also come with other benefits such as income-driven repayment plans that can lower monthly payments and Public Service Loan Forgiveness for working at non-profits, government agencies, etc.

If you refinance federal loans, you lose these benefits. Even when payments resume for federal loans, you should only refinance federal loans if you don’t think you will ever use the other benefits offered.

If you believe your income will be stable throughout your loan payments and you won’t qualify to be forgiven, then you can refinance your federal student loans.

Another aspect to consider when refinancing federal loans is President Biden’s plan to cancel student loan debt.

While no plan has been passed yet, federal student loans could be forgiven at least in part. If you refinance your loans, you will no longer be eligible for forgiveness.

On the other side, it is a good idea for private loan borrowers to refinance right now to take advantage of low interest rates. If you have taken out private student loans and are paying too high of an interest rate, it may be a good time to take advantage of low interest rates from private lenders.

Private student loan borrowers who want to refinance should choose a lender that offers fixed APRs. This will lock in your low interest rate.

Refinancing student loans may help you get a lower interest rate and reduce your monthly payments. However, it may not be the best way to get out of debt. Refinancing is not the best idea for every borrower.

WHEN TO REFINANCE YOUR STUDENT LOANS:

You should refinance if you want to pay off your loan sooner. You can pay off your loans quicker by lowering your interest rates.

You should consider refinancing if you are not making progress in paying off your loans. If you are struggling to keep up with monthly payments and interest, refinancing can help you start to make more progress each month.

You should only refinance your student loans if your income and credit are good. These factors are necessary to qualify for student loan refinancing and will help you qualify for lower interest rates.

Another great reason to refinance is that market interest rates are at a historic low. Private student loan borrowers can take advantage of low market interest rates by refinancing

Image credit:[KAROLINA GRABOWSKA]