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
Top Financial Fears
by Stacy Francis, CFP®, CDFA
This weekend, my family and I decided to go for a picnic in the park. So we filled a basket with Dean & Deluca foods and headed outside our door to Battery Park. There, the smell of grass, the sun, and the majestic beauty of the skyline behind us should have been a wonderful experience . . . except everywhere around us, people were voicing their concerns about the crumbling economy and its impact on their financial well-being. Do I have exceptional hearing or something? I am not sure why those around us were so loud about their financial woes. A construction worker reported that it’s been months since his employer last paid him on time. A new mother was packing up the baby room in preparation for the foreclosure looming at the horizon. An investor said his doctor refused to prescribe him any more sleeping pills, but instead advised him to take his money out of the markets.
Unable to drop the topic, when I got home, I went online to research financial fears in the US today. These turned out to be the most common:
- The rising cost of living. Nearly two thirds of Americans worry about their salaries not keeping up with rising costs of living, such as food, gasoline and medical expenses.
- Job security/recession. More than a third are anxious about losing their jobs. Almost nine out of ten are concerned about the recession, and two thirds worry about the future of their investments in the shaky stock markets.
- Debt. Credit card debt seems to keep the most people up at night, followed by student loans, medical bills, and home equity lines of credit.
- The housing crisis. Some worry they’ll be forced into foreclosures, others suspect that high mortgage payments will force them to trade their homes for less nice ones. Still others fret over repairs and maintenance they cannot afford, and almost everyone seems to worry about falling house prices.
- Savings. More than two thirds of people between 31 and 50 are worried because they either have nothing set aside for retirement, or can’t afford to save.
For whatever it is worth, if you are concerned about these things, you are clearly not alone. If you’ve been reading this blog regularly, you also know that there are steps (many of them small) you can take to reduce these worries and regain control over your finances.
Selecting Your Stocks: Technical Analysis
by Stacy Francis, CFP®, CDFA
In the last entry, an email I received inspired a discussion about fundamental stock analysis. This entry covers its counterpart, technical analysis.
According to technical analysis, value is truly in the eyes of the beholder. Rather than paying attention to the book value of a company, technical investors define a company’s worth as whatever people are willing to pay for it. Technical investors therefore spend as much time analyzing charts as fundamental investors do perusing balance sheets and income statements. According to technical analysis, stock prices tend to follow certain patters — some long term and others shorter term. The price for a certain stock can be in a short-term upward trend even while in a downward trend overall. So if the charts look right, a stock trading for ten times its market cap may very well be a good buy.
It is impossible to say which out of the two works the best. There are investors who make billions using either, and investors who lose everything they own and then some. What I can say, though, is that the problem with either type of analysis is that they assume investors think and act rationally. If a company’s assets are worth a certain amount, fundamental investors trust that’s where the price is eventually going to settle. Similarly, if the price of a stock breaks through a certain resistance point, technical investors almost take for granted that it is going to climb for a while. The problem here is that — as you know — most people are not rational especially in the stock market. It is therefore extremely difficult to predict their behavior; what makes them buy or sell a stock and when. So while both techniques bring valuable information to the table, it is important not to take them too literally.
Selecting Your Stocks: Fundamental Analysis
I got an email from a client this morning, raving about this exceptional new stock everyone was talking about. It had already tripled since going public, and all the charts looked amazing.
Curious, of course, I went online to do some research. The company was in the mining industry, and had one early stage project, which, if everything worked out according to plan, would bring home a cash flow worth around $3,500,000. The market capitalization (the current price per share times the number of shares outstanding) was $40,000,000. Basically, the company was trading for more than ten times its worth, and yet this woman considered it an exceptional investment.
This is an excellent example of an instance where the two main schools in stock evaluation — fundamental and technical analysis — contradict each other. For someone who selects stocks using fundamental analysis, which deals with the book value of a company (its assets, in whatever form they come), buying this stock would be absurd. To the fundamental investor, companies trading below the value of its assets are good buys, whereas companies trading above this number are no-gos. And a company trading for ten times the highest possible value of its assets . . . well, you get the picture.
For a person using technical analysis, however, it could make perfect sense. In my next blog entry, I will explain how.
Note that selecting your stocks should follow this blog on the next day.
Laid Off? How to Get Back on Track
by Stacy Francis, CFP®, CDFA
I think most of us know someone who has lost his or her job recently. To me, this recession became a reality when a client called mid-afternoon (and mid-latte) yesterday to let me know her company had let her go. Now, being a long term Savvy Ladies devotee and subject to my continuous reminders, she has enough money stashed away to survive six months without income. But of course, she was still devastated. What did I think she should do?
“The most important thing to keep in mind,” I told her, “is that when you are unemployed, the job hunt becomes your job.” So stick to your pre-lay off routine, the only difference being that rather than hopping into your car (or the subway) in the morning, you sink down in front of your computer and get to work on those applications. If you keep at it, you will have a new job long before your emergency funding (or unemployment) runs out.
Of course, browsing job sites is not the only thing you should be doing. If you’ve been doing your networking duty, you should have a number of contacts you can get in touch with, just to let them know that if they hear of an opening, you are interested. Former colleagues, relatives, friends and college buddies can all come in handy when it comes to getting you back on your feet.
Money Management for Couples: What to Do When Your Opinions Differ
by Stacy Francis, CFP®, CDFA
Something interesting happened in my latest Savvy Ladies telephone conference. When one woman told the group that her husband’s sloppy attitude toward money was so frustrating to her, she wanted to divorce him for this reason alone, every woman in the group expressed their support. Several of the married ones even told her they could relate because they were having similar issues in their marriages.
It is no secret that “financial differences” is one of the most common reasons couples split. While sad indeed, there are things you can do to get past these issues. Below are just a few.
- Draft a budget. Sit down together and put your expenses and financial goals on paper. Be realistic, and make sure that sticking to the budget won’t require too much effort. Remember that budgets are like diets – they never work if they’re unrealistic.
- Communicate. It is common knowledge that lack of communication rarely solves any problems, yet so many couples fail to talk openly about their financial differences. Approach them in a calm, non-threatening way, and focus on finding constructive solutions that you work for both of you.
- Be considerate. Whether you intend it or not, the way you manage your money will affect your spouse as well. Make sure he or she is comfortable with your spending and investment habits.
If this doesn’t work, consider seeing a marriage counselor, a financial planner, or both. They can apply an outsider’s perspective to your specific situation, and hopefully find solutions that will get you past your problems. Remember, you are far from alone.
Lending Money to Family and Friends
by Stacy Francis, CFP®, CDFA
I received an interesting email this morning. It was from a mother-of-two in her early thirties, who was broke because over the past five years, her parents had continuously borrowed money from her, supposedly to get into some miraculous investments bound to triple within six months. Of course, none of these had worked out, so they didn’t have any money to pay her back. Her children needed new clothes, she needed a new car, her husband needed a vacation . . . and her parents were giving her guilt trips for refusing to lend them more money. When she told me this story I had to keep myself from asking her parents phone number and calling them to give them a piece of my mind!
This situation may sound terrible, but I have heard similar stories before. Which is why I generally advise against lending money to family members and friends. Many friendships have ended this way, and within families things can – and do — get really ugly. Your own children can be exceptions, but even there, make sure you
- Put everything, including amount and conditions for the loan, on paper,
- Have a clear payback plan, and
- Don’t lend them another dime before they have paid back the original loan.
- Use a lender like Virgin Money to legitimize the loan so that you protect your assets.
Like I said, in 99% if the cases, don’t do it. But if you are going to anyway, at least make sure you cover the steps above.
Securing Your Job in Shaky Times
by Stacy Francis, CFP®, CDFA
At the bar in my favorite Asian fusion restaurant the other day, waiting for a table, my hubby and I overheard an interesting conversation between two twenty-something women. Apparently, one of them had lost her job earlier that day, and her friend was helping her drown her sorrows in martinis.
“You didn’t see it coming at all?” the friend asked.
“Of course I did,” sobbed the newly unemployed woman. “But what was I supposed to do?”
This conversation actually took me back several years to when a dear friend of mine was laid off. We had this exact same conversation.
Actually, there’s plenty you can do to keep the same think from happening to you. One thing I continuously remind people worried about their jobs to do, is to keep learning new things. The world is constantly changing, and you need to adapt and keep up. Take an evening class or finally master that program your boss wants to implement. Ask if you can take on a new type of project. Offer to cover a colleague when she goes out of town. This does not only show your boss that you care about the company and are interested in your job – you also come across as useful and versatile; the kind of person she would separate out and hang on to in case of a mass-layoff.
Of course, there are no guarantees. But don’t forget that the happier you make your boss, the nicer the letter of recommendation she will write for you if she does have to let you go.
Writing Your Will
by Stacy Francis, CFP®, CDFA
I facilitated a workshop at a conference last week, on the topic of wills 200 men and women attended my session. Considering how many attendees the conference had, which was over 5,000, I was shocked to see how few took an interest in estate planning. Shocked and concerned, actually. Why? Because everyone needs a will – if not for their own peace of mind, then to make things easier for their heirs during a time that is tough enough as it is.
Put simply, just like a prenup details what should be done with a couple’s assets in case of a divorce, a will outlines how your assets should be distributed after you die. And just like state laws take over when divorced couples do not have a prenup, you get stuck with a universal will if you do not bother to write your own. This means the state will decide who in your family gets what, often putting your spouse in a less-than-pretty situation.
So what should your will cover? Basically, it needs to state what should be done with your property when you die. It also needs a statement at the end containing your explanation that it is indeed your will, your signature, date and place of the signing, along with witnesses’ signatures and statements from them that they really did sign your will, in your presence, and watched each other sign.
We highly recommend that you work with a estate lawyer to write a will. But you do need to be at least eighteen years old, and in a sane state of mind.
Shopping for a Home
by Stacy Francis, CFP®, CDFA
My husband and I just purchased our home and are so excited and smiley these days, when you see us you think we have slept with a hanger in our mouth. A home is something almost everyone wants, but acquiring one can take a lot of work – and money. While it would be impossible to cover everything you need to know in one little entry in my blog, here are a few things to keep in mind if you are – or are considering – buying a home.
- The higher your credit score, the lower the interest rate you are going to score, meaning the more house you will get for your money. While many people with less-than-excellent credit scores can get mortgages even today, it is probably going to cost you.
- Down payments can come from unusual places. It is generally a good idea to make some sort of down payment when you buy a home, but if you don’t have the cash saved up, there are other ways to get your hands on one. Try asking your employer for a loan against your 401(k), or consulting a private bank.
- Houses are illiquid investments, and especially these days. Before you purchase your first home, it is a good idea to think about the future – whether you’ll need more room for children or may need to relocate to a new area. You never want to be in a hurry selling a house because that tends to get expensive.
