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

Should You Do Your Own Taxes?

by Stacy Francis, CFP®, CDFA

My college friend was red-faced and bursting with anger when we met for after-work cocktails the other day. She arrived straight out of a meeting with her tax accountant, who had failed yet again to get her the tax refund so many people received last spring, and for which she was eligible. “Next time,” she muttered between her teeth, “I am going to do the taxes myself. What am I paying him for anyway?”

I tried to explain to her that whether or not you get a tax refund should not reflect on the quality of your accountant. In the safety of my home, away from her rage, I realized that her real question is “Should you do your own taxes, or hire someone to do them for you?”

To answer that question, here are a few things indicating that you could be better off on your own:

  • You know your filing situation (you are up to date with legislation, know your status, etc) and have a very simple financial situation.

  • You are organized and have your paperwork ready to go.

  • You prefer not to disclose your financials to anyone.

On the other hand, these things may be signs you need help:

  • Your financial situation is complex.

  • You don’t want to waste time and energy preparing your return.

  • Your life has changed drastically, and your filing this year will be very different from last year.

  • You want the confidence of working with a trusted advisor.

Or, alternatively, if you are so furious at your accountant that you run the risk of expiring from a heart attack, you may also be better off on your own.

Credit Card Overwhelmed: Notes on Debt Consolidation

by Stacy Francis, CFP®, CDFA

“My credit cards are driving me insane,” a friend complained to me over mochas (bought with cash) yesterday morning. “It’s like I can’t stop thinking about how much debt I’m in, because the minute I’ve sent off one minimum payment, I get a bill from a different company.”

I asked her if she had considered debt consolidation, and she replied that she had heard about consolidation loans, but don’t you need to own your home to get them?

The truth is, there are numerous options for those looking to save time, hassle and frustration by combining all their monthly payments into one. Below are a few:

  1. Credit card transfers. This can be an excellent way to go, if – and only if – you are certain that you’ll be able to pay off your balance before the low introductory interest period is over. BEWARE: Watch out as rolling your debt from one card to another can hurt your credit scores.
  2. Home equity. This is the loan type to which my client thought I was referring. For those lucky (or unlucky, depending on how you view things) enough to own a house, this can be a great way to lower your interest and get better payback – and overall – terms for the money you owe. BEWARE: I know too many people who have innocently moved their credit card debt onto their home equity line of credit, only to rack up new credit card debt only months later.
  3. Loans against retirement funds or life insurance policies. Most employers allow this for 401(k) plans, and most insurance companies don’t even require that you pay back the loan – you can deduct the balance from the benefits paid to your beneficiaries. While the latter may not be too happy, this is an option and worthy of a mentioning. BEWARE: Taking money from a 401 K can impact your retirement security. Not to mention many loans are due in full 60-90 days after you leave or are fired from the company.
  4. Nonprofit credit counseling agencies. The employees of these agencies do debt consolidation for a living. They negotiate with credit card companies daily, and will be able to score you the smallest possible fees and most favorable interest rates. BEWARE: Not all credit counseling agencies are the same. Do your homework and make sure that you are working with a reputable company.

These are just a few examples of ways to get control over your debt situation – simple ways to commit to a plan that both eliminates your debt and takes your mind off it. Always remember that many people have had this problem before you – and many have gotten out of it.

 

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

 

How to Manage Student Loans

by Stacy Francis, CFP®, CDFA

A young woman at a recent Savvy Ladies seminar had just received her first student loan bill, and subsequently, her first panic attack. What was she supposed to do? There was no way she could spare that much money per month. Could she make smaller-than-minimum payments?

The answer is yes, she could. But for most people, it may not be the best idea. Here’s why.

Around graduation time, most students’ mailboxes are stuffed with offers from banks to refinance their debt and shrink their payments. So it is certainly possible. But the problem is, the longer you stay in debt, the more interest you are going to pay. And paying interest is basically throwing away money. While there are certainly worse kinds of debt than student debt, if you can stay on your regular payment schedule, it is generally wise to do so.

Another thing to note is that even if all your debt is with the same company, it is most likely split between a few different loans with different interest rates. If you do not stay on top of the company, they will apply your payments toward the lowest interest loans first – the exact opposite of what you want them to do. By making sure your money goes where you want it to go, you can save a ton of cash.

Of course, as I told the young woman in the seminar, there’s no reason you can’t pay off your loan earlier just because you have refinanced it. For her, refinancing now but striving to pay it off as soon as possible is probably the best option. What will work in your case will depend on your unique set of circumstances.

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.

  1. 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.
  2. 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.
  3. 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

  1. Put everything, including amount and conditions for the loan, on paper,
  2. Have a clear payback plan, and
  3. Don’t lend them another dime before they have paid back the original loan.
  4. 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.

 

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