Stacy’s Savvy Financial Advice

Stay Savvy with our founder Stacy Francis’ latest articles on financial planning, budgeting, debt management, investing, divorce, retirement planning, and more.

Stacy Francis founded Savvy Ladies® in 2003 with the mission to educate women about their finances and empower them to make proactive choices. Inspired by her grandmother who stayed in an abusive relationship due to financial reasons, Stacy has been determined to never let another woman become powerless by financial instability.

Get the resources, knowledge, and tools you need to make smart and informed decisions about your money and your life.

In addition to being the Founder and Board Chair of Savvy Ladies®, Stacy is the President, CEO of Francis Financial, Inc., a boutique wealth management and financial planning firm. A nationally recognized financial expert, she holds a CFP® from the New York University Center for Finance, Law, and Taxation, and is a Certified Divorce Financial Analyst® (CDFA®), a Divorce Financial Strategist™ as well as a Certified Estate & Trust Specialist (CES™).

Stacy has appeared on CNBC, NBC, PBS, CNN, Good Morning America, and many other TV & Financial News outlets. Stacy too is ofter sought out for her advice and can be found quoted in over 100 publications such as Investment News, The New York Times, The Wall Street Journal, USA Today.  She shares her wisdom and expert financial advice here for you to learn and get savvy about your finances.

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STACY’S $AVVY ADVICE

Reality Check: A Family Budget That Will Last

by Stacy Francis, CFP®, CDFA

The cashier checking me out at the grocery store last night told me this time of the year is always the busiest for them. Every January and February, he explained, thousands of people swear that this is the year they will start cooking at home instead of hitting up restaurants and drive-thrus. All these people stuff their carts during January and February. As the year proceeds, sales dwindle as gradually, they revert to TGI Friday’s and Panda Express.

January is often the busiest month for me as well. It is prime time for new clients to look me up, after making the resolution to get their finances under control, once and for all. But as opposed to the grocery store’s customers, most of my clients are able to stick to the goals and budgets they set for themselves. Why? Because we talk about the importance of being realistic.  

Rather than setting huge, abstract goals like “I’m never going to eat out again” or “I’m going to retire a millionaire” or “my children will not have to take on any student debt,” we break the aspirations down into small, manageable pieces. If, for instance, your goal is that your children won’t have to take out any student loans, open savings accounts for them and start to contribute $20 per week. If you want to save on dinners, instead of opting never to eat out again, let your children cook twice per week and add the money you save to the family vacation budget.

I usually recommend 4-5 small changes per year, as long as everyone in the family is onboard. Next year, when these changes have become habits, you can implement another 4-5 – and just like that, you are on your way to healthier family finances.

Real Estate: Should You Refinance?

by Stacy Francis, CFP®, CDFA

I was stunned to read in the newspaper this morning that it is now possible to secure a 30-year fixed mortgage at 4.5% (restrictions apply). This, of course, is wonderful news for anyone shopping for a home: we now have a real estate market with falling prices in many areas and interest rates at record lows. But those already in possession of a home, too, can benefit. How? Through refinancing.

When you refinance your home, you take out a new mortgage to pay for all or a portion of your old mortgage. If you have built a lot of equity in your home (the value of your home minus the size of your mortgage), you may even be able to increase the size of the mortgage and free up more cash. The latter could save you a lot of money if you are carrying high-interest debt, but always remember that you are putting your house on the line. Because of this, many people prefer to handle a short-term cash crunch with a HELOC (home equity line of credit). However, with the current credit environments the terms for getting a HELOC can be quite difficult. Some banks require credit scores over 750 even.

So apart from pulling cash out of your house, what are the reasons people refinance? The main one is that by refinancing, you may be able to secure a lower interest mortgage and shrink your monthly payments – sometimes significantly. This, of course, saves you money. Other people refinance to change the terms and conditions of their mortgage.

Whatever your reason is, beware that fees associated with refinancing can be quite substantial, so be sure to work with someone you trust or call me as I know several excellent real estate brokers. We can help you determine whether the savings versus cost of the loan are worth the refinancing. If you’ve been making your payments on time, chances are, the same provider that gave you the first loan may offer you a new, better deal.

3 Money Lessons for Pre-Schoolers

by Stacy Francis, CFP®, CDFA

In the park this weekend, one of the moms shocked me by telling me that her 5-year-old son recently asked her about car financing. Why, he wanted to know, can’t we have a Ferrari? It won’t cost anything – we’ll even get cash back!  

Advertisers are well aware that small children pick up on basic money concepts. Yet many parents wait until their children reach adolescence – if not forever – to teach them proper money management. To ensure that you and not the advertisers will shape your children’s relationship to money, below are a few money lessons you can teach them while they are still in preschool.  

  1. Money can be saved or spent – but not both. The best way to teach your children saving is to start setting money aside for a certain toy that they really want. Your children will learn the value of saving when they hold that precious toy in their hands.
  2. Once money is spent, it is gone. Many children seem to believe that money grows in their parents’ pockets – and just as many parents support this belief by acting as though it does. You can get your message across by giving them a dollar, allowing them to spend it in the store, and then not giving them another one next time they want to buy something.
  3. People have to make money choices. Most adults don’t do this well, so it would hardly be fair to expect great choices from preschoolers. But if you give your children an allowance, and when it is spent make them wait until next week before you give them any more, eventually the message will start to sink in that when they choose to buy something, they automatically un-choose to buy something else.

Should You Buy a Vacation Home?

by Stacy Francis, CFP®, CDFA

I just returned from a lovely weekend of skiing in Vermont. Being pregnant meant that I got to enjoy lovely hot chocolate in the lodge. One of my hubby’s friends just bought a gorgeous cabin there, and invited us to come check it out. Between the stunning mountain views, the fireplace, the perfect slopes and newly renovated kitchen they couldn’t have made a better choice, and it was only hours before my husband pulled me aside to ask when we were going to look into a vacation home of our own. After all, he argued, we would get a tax break on the mortgage interest!

For those of you thinking the same thing, below are a few things to consider before you start shopping.

  1. Are the weekend pages of your calendar usually blank or filled with scribbles? If you, your husband or your children have commitments during the weekends, chances are you’ll rarely be able to use your vacation home.
  2. Are you an explorer or do you prefer vacationing in the same spot every year? You may want to ask the rest of your family the same thing to avoid future conflicts!
  3. How do you feel about guests? If your vacation home is a nice one, people will want to visit. I know I will visit Vermontagain – the sooner the better!
  4. Does your definition of relaxing involve butler service? Chances are, you may be better off at the Four Seasons than scrubbing dishes in your rustic country kitchen.
  5. Can you afford it? Do you have the money for a down payment or would you need to rely on a second mortgage or HELOC, putting your primary residence at risk? If the latter is the case, I’d say it’s not worth it. But if you are still craving that cabin even after this little quiz, chances are a vacation home is in your future.

5 Tips When Buying a Home

by Stacy Francis, CFP®, CDFA

Remember my friend who is moving to Miami? She called again last night, to report that she is flying down there this weekend to start looking at condos. She asked me to put together a list of things to keep in mind as she browses the market for a sub-tropical paradise of her own. Since she assured me she doesn’t mind if I post it in the blog, here you go!

  1. Think about what you need, not just what you want. It is, of course, of the utmost importance that you love the place – but the love is not going to last if you have to squeeze two of your children into the same bedroom or try to do your office work in the living room, to the tunes of American Idol.
  2. Set a realistic budget, keeping in mind that your expenses may change in the future. We have all seen during the past year what happens when we take on mortgages we cannot afford. By now, we should know better.
  3. Research the neighborhood – thoroughly! I am sure you have heard the saying that you should never buy the most expensive home on the block. It is true.
  4. Visit the house or condo more than once before signing anything – and if possible, have a professional look it over. This can protect you from unpleasant surprises down the road.
  5. Be proactive at closing. Check in with everyone involved frequently to make sure the process is running as quickly and smoothly as possible.

5 Tips When Selling a Home

by Stacy Francis, CFP®, CDFA

February has never been the most pleasant month in the Northeast, but I was still shocked when a friend called me up last night to inform me that she is leaving town – for good! When she learned that she could get her hands on a condo in Miami for less than a fifth of what she put into her Upper East Side apartment, there was just no stopping her. So, she asked me, what do I need to know before I put my home on the market?

Below are just a few helpful tips:

  1. Do your research before you set your price. If it is too low, you miss out on potential earnings, not to mention that your pricing may have a negative influence on other homes in the neighborhood. If, on the other hand, you pick an unrealistically high price, your listing will turn into a buyer-scarecrow.  
  2. Pick the right agent. This can really make or break the deal. Approach friends, family and colleagues whose judgment you trust, and find out who they use. If this is not an option, the Internet is a fantastic resource.
  3. Decorate and make small changes. A leaking sink will most certainly turn potential buyers off, and may make them think twice about making an offer. It would have been an easy fix.
  4. Conversely, it is generally a good idea to skip any major changes and renovations. Many buyers like to customize anyway, so you can save both time and money by leaving such tasks to them.
  5. Be proactive at closing. Check in with everyone daily to see if there is anything you can do to speed the process up. Find out what the next steps are and stay ahead of the game.

 

My 401(k) Is Getting Rid of the Match – Should I Still Contribute?

by Stacy Francis, CFP®, CDFA

A client called me up with this excellent question yesterday. Of course, as long as your company matches your contributions, you should contribute as much as you can toward your 401(k). It is unwise to turn down free money, and especially free money that will grow and grow and grow – tax deferred – and make up a good portion of your nest egg. But what happens when your company ceases to match your contributions?

You always want to contribute toward some sort of retirement account – preferably by maxing out your 401(k) and a type of IRA if you can (certain income limits apply for Roth IRAs). The main difference between an IRA and a 401(k) – apart from the fact that 401(k)s generally have the added benefit of free company matches – is that with a 401(k), many times, you have limited investment options. Though many employers will add, say, a certain mutual fund upon request, some won’t. If the latter is true for your company, you are stuck. You cannot rollover a 401(k) unless you leave the previous employer and are no longer employed.

However, you may want to consider rolling the money in your previous employer’s 401(k) into a Rollover IRA and contribute toward that account instead. As long as this rollover takes less than 60 days, you will not face any tax consequences.

Of course, if you are already invested in the funds you like the best, there may be no reason to shake things up. You may be better off keeping the money where it is.

When Your Parents Need Help

by Stacy Francis, CFP®, CDFA

A new Starbucks just opened a block from my office – what a treat! It was an even bigger treat to run into an old friend there yesterday. Catching up over lattes (hot chocolate for me since I am pregnant), I learned that she has a fabulous new job, a gorgeous husband, and the best son in the world. Unfortunately, she is unable to enjoy any of it because she is so worried about her parents. Picking up their mail the other day, she found numerous overdue bills. Even worse, when she asked them about it, they acted very strange. In case you are one of the many people whose aging parents may need some financial assistance, here are a few tips: 

  1. Be courteous. True, they may have made mistakes or be desperate for money, but nothing will get easier if you start bossing them around. Chances are, it is not easy for them to ask for your help – even less easy to accept it. Don’t make things any harder than they need to be. 
  2. Gather all the facts. If you are going to straighten out their money problems, you need to see everything – every bank account, IRA, 401(k), insurance policy and credit card account that they may have. Only when you have a 360-degree view can you make sound decisions.
  3. Think long-term – in this case all the way to the end (for them, that is). Don’t start pouring money over them, but rather work out a long-term plan for how you can restructure their finances to make their dollars last longer. Then fill in the holes where needed.

Saving for College in Tough Times

by Stacy Francis, CFP®, CDFA

“My daughter is off to college in 2010,” a woman told me during the Q&A session at a recent conference. “Now the savings account we opened for her has been cut in half, and my husband has lost his job. Will a local community college be her only option?”

While there are many good community colleges these days, she was delighted to learn that the answer is no. There are many things she and her daughter (and of course the father) can do to secure that college education. Below are just a few:

  1. Now that stock prices are low and yields on income-generating securities are lower, they can maximize portfolio returns by keeping at least a portion of the money in mutual funds invested in stocks. The good news is that their portfolio has 2-6 years to recover.
  2. If at all possible, they should continue to contribute toward the college savings account. They now need the money more than ever.
  3. The lower their household income, the wider the range of financial instruments that becomes available to them. I suggest they take advantage of financial aid and grant opportunities!
  4. If the daughter happens to be a brainiac, or an athlete, or a minority, chances are greater that she’ll be able to obtain a scholarship to pay for part of the expenses.
  5. There’s always the option of the daughter taking on an extra job during her studies. Many colleges offer work-study programs where wages can be applied directly toward tuition expenses – and students can gain valuable work experience. I worked for four years in my college cafeteria. It gave me extra cash and the revelation of why going to college was so important. I did not want to be in that cafeteria for the rest of my life.
  6. Finally, let’s not forget about student loans. Despite the fact that many parents strive for their children to remain debt-free, this is not always possible. Student loans are there to bridge the gap between the education that will secure a child’s future, and the parents’ means to pay for it.

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