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
Taxes: Should You File Jointly or Separately?
by Stacy Francis, CFP®, CDFA
Even after tax season has come and gone, one of the main topics of discussion at a recent seminar was: what are the benefits versus drawbacks associated with married couples filing separately? An excellent question. However, just like with so many other excellent questions, the answer will depend on the circumstances. Below are a few examples of cases where it may be a good idea to keep this one aspect of your life together separate.
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You or your hubby has made little money and had lots of medical expenses. By filing separately, the proportions of the two may work out so that you or your hubby can itemize the medical expenses and save well-needed dollars.
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Your partner uses questionable techniques for keeping his tax dollars to himself. While tempting, such actions are illegal, and if you sign the same tax return, you, too, are responsible. If you file separately, your chances of arguing in front of a jury that you didn’t know are much better.
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Your marriage is crumbling. If you are fairly certain that your twosome isn’t going to last, you may want to file separately in order to minimize the paperwork you need to do together later. It is also important to file separately if you are concerned that he is not being 100% honest on his tax reporting.
Last but not least, it is imperative that you stay up to date with the newest rules and limits for the different tax brackets. Taxation is a complicated matter – but you do have options. When you add knowledge to the pot, you can make an informed decision.
The 10% Rule
by Stacy Francis, CFP®, CDFA
Yesterday, I went shopping with a colleague of mine. (Yes, I know I advise against hobby shopping, but if kept under control it can be a great way to bond with your peers.) Everything was lovely, until she found a suit she liked, determined that it fit, and promptly started to bargain with the shop assistant. Wasn’t this button a little loose? The stripes a little off on this arm? The stitching starting to come loose in this particular spot?
I was dumbfounded at first. When the shop assistant went to fetch a manager, I asked my colleague what she was doing. Did she like the suit or not?
She replied that her parents had taught her that just about every shop assistant is authorized to knock 10% off purchase prices in order to make a sale. If you make sure to save this 10% on every purchase you make, by the time you retire, you will have saved more than $200,000.
While I am not sure how pleasant of a money saving trick this would be – to you or to the staff in the stores where you shop – I thought it was creative and worthy of a mentioning. And for major purchases like computers, TVs and cars, it could – depending on the circumstances – most certainly be worth a shot. Hey, if you don’t ask you will never get it.
When Your Account Is in the Red
by Stacy Francis, CFP®, CDFA
A lady I met last night while I was waiting for my husband to arrive at a restaurant was intrigued that I am a financial planner. As usual I typically get questions about their personal investment and/or finances. This case was no different. She confided in me that the red in her investment account is keeping her up at night. “What,” she asked, “am I supposed to do? I can’t sell because my investments are all down, but they just keep falling. It’s a total nightmare.”
“What you’ve got to ask yourself,” I told her, “is how you feel about your stocks and funds. Do you think they’re going to do well in the long run, or have their fundamentals changed so that you no longer believe in them?”
Because when it comes down to it, holding equals buying. With any investment, historical prices are irrelevant. It doesn’t (or shouldn’t, anyway) matter whether the stock you own that is trading at $5 per share was $1 last week, or $30. If you would buy it at today’s price, you should hold it. If you wouldn’t buy it at today’s price, you should sell it. If the reason for your lost shuteye is that you no longer believe in the company, sell it, and chances are good you’ll find that lost peace of mind. If, on the other hand, you still like the company, and the reasons you trusted it with your money are still there, try to look at it from a wider perspective. Both the economy and the markets go through cycles of ups and downs. If the company of your choice is truly great, sooner or later your investment will pay off.
Finding and Understanding Your Credit Score
by Stacy Francis, CFP®, CDFA
“Now that real estate prices are falling,” a woman told me over the phone today, “I would like to buy a town house or a condo. But I hear you need really good credit these days, and I have a feeling mine may be pretty bad.”
I asked her what her score was, and she replied that she had no idea. She had never seen her own credit report, and she was not aware that this information is available to her. After some research, it turned out her credit wasn’t bad at all, and she decided to find herself a real estate agent. For the rest of you, here’s some basic information on the very much dreaded credit score.
There are three major credit-reporting agencies: Experian, Equifax, and TransUnion. The information on their reports tends to vary slightly. You can get your credit report for free from www.annualcreditreport.com
Once you have your reports, you should check them for accuracy. If you see anything that shouldn’t be there, make sure you contact the reporting agency/agencies to dispute it.
Looking at your reports for the first time can be something of a cold shower, as they will list every single late payment you have ever made in your life, as well as how late it was.
The actual score is a snapshot of your creditworthiness at any given time. It is calculated by a machine, and influenced by many factors such as available credit, outstanding debt, length of credit history, and late payments. As these variables vary, so does your score. So the good news is that when you clean up your report, make your payments on time, and reduce your outstanding debt, over time your credit score will be better and better.
Four Rules for Paying Off Credit Cards
by Stacy Francis, CFP®, CDFA
Numerous people have told me that Mary Hunt’s book Debt-Free Living is well worth a look. This weekend, I finally got a chance to read it. Sure enough, it had some excellent points. My favorite was her four rules for getting out of debt. I will share below.
According to Mary, shrinking your debt is not all that different from shrinking your waist, so just like your diet, your action plan needs to be simple and specific. It is also crucial that you can measure your progress, and that you have a specific completion date. All payment plans work in theory – but they will only make a difference for you if you can stick to them. So be realistic when crafting it, and your chances for success are much bigger. Then make sure you work these four rules into the formula.
- There can be no more debt. You are never going to be debt free if you keep borrowing. It’s a bit like binge eating while on a diet – except you can’t make yourself sick afterwards.
- Pay the same amount every month. Over time, as your balances and minimum payments start to look smaller, you will be tempted to slow down and make smaller payments. Don’t. The faster you pay it off, the less finance charges you have to pay, and the smaller number of dollars will stand between you and financial freedom!
- List your balances according to size and payback time.
- Whenever you’ve paid off one balance, add the size of the payment you used to make toward it to the next one, and really get the ball rolling.
Paying off debt is no more fun than being on a diet, but if you keep envisioning your goal and implementing these four steps, you will be out of your crunch before you know it.
Talking to Kids about Money
by Stacy Francis, CFP®, CDFA
During a dinner party last weekend, a woman told me her son had taken her by surprise by asking “are we rich?” She said she was dumbfounded, and as she had no idea how to respond, she mumbled, “no.” Her son got extremely anxious, and she spent the rest of the evening trying to comfort him. Below is some advice, so that the rest of you can be prepared in case your son or daughter . . . pops the question.
If you do have a good amount of money, tell your child that you have enough to be comfortable. If possible, avoid going into sums and too much detail – most children won’t grasp them anyway. They just want to know that you are OK.
If, however, your child insists and starts asking for numbers, tell him or her that you are doing better than most. This should still his or her curiosity.
If, on the other hand, you are not doing so well, the situation gets a little trickier. You don’t want to worry your child, but at the same time you don’t want to lie. Tell him or her that you are doing alright, and hopefully will do even better in the future.
As a general rule, stay as close to the truth as possible and avoid details.
Shopping Triggers and How to Curb Them: Sense of Entitlement
by Stacy Francis, CFP®, CDFA
Watching TV last night got me thinking about how our entire society is built around this shopping trigger. TV and radio ads, magazines and catalogues all scream to us: you deserve this, you’re worth it, treat yourself! This is because savvy advertisers know that creating a sense of entitlement is one of the most potent ways to get consumers to cough up the dough.
It is so easy, when exposed to those ads, to start thinking that “hey, that’s right, I did pass that exam/meet that deadline/suffer through that nasty flu/put up with the in-laws staying at my house for a full week, I do deserve a little something.” The problem is, none of those things did anything to change your budget, so when you treat yourself, you have to either find another place to cut, or get (further) into debt.
The best way to curb this is to tell yourself, whenever overcome with this sense of entitlement, that if there is anything you deserve, it is to have your finances in order. If you need to repeat it over and over again, fine – let it be your personal affirmation. After all, what outfit/cosmetic product/trip/new high tech gizmo could possibly make you feel better than true financial security?
Check out the other articles in our series on Shopping Triggers.
The Prenup
by Stacy Francis, CFP®, CDFA
Over lattes today, my best friend reported that her friend was finally leaving the husband we all tried to tell her she never should have married in the first place. I am sure that you have a few girlfriends who you love in spite of their husband. Why do nice girls sometimes choose jerk husbands? Ok, I am digressing. This is a topic for another blog…
The friend was devastated by the divorce, my best friend told me, and her only consolidation was that she had made him sign a prenup.
We have all heard this story in one version or another. From A-list celebs to politicians and neighbors, divorces are far more common than we’d like to think they are. Conclusion: while drafting one isn’t exactly like a honeymoon trip to Maui, doing so may save you years and years of agony down the road. But what should be included in a prenup?
Put simple, the prenup should be a summary of how your assets (savings accounts, securities, houses, cars, investment properties along with anything else of monetary value) are to be allocated in case of a divorce. In the absence of a prenup, state laws will make these decisions for you. Though you may consider these laws favorable at the time of the engagement, they are ever changing, and therefore most people are better off settling things on their own. Not because lawmakers aren’t doing a good job – it’s just extremely difficult to generalize when each case is so truly unique.
Living Together=Spending Together?
by Stacy Francis, CFP®, CDFA
My always-single girlfriend surprised me the other day at lunch, by informing me that she is moving in with her boyfriend. As this is a first for her, she had a million questions. Should she keep her apartment in case things don’t work out? Who decides whose stuff goes where? And then, an unbelievably important yet rarely asked one: what about money?
She was unsure if she should even bring the topic of money up. Money is still certainly a taboo topic but one of the most important to address if you want your relationship to be successful in the long run.
True, moving in with your partner is less of a financial commitment than walking down the aisle. But there are still tons of things that can make the relationship turn sour if left unattended. Here are my key pieces of advice.
- Communicate. Set an evening aside especially to talk about money, and take lots of notes. True, it’s about as much of a turn-on as cleaning the bathroom, but believe me, it will make all the difference in keeping the romance intact later.
- Share a bed, not a credit card. Work out who pays for what, in writing, then keep the rest separate. Have your own bank accounts, credit cards, investments, etc.
- Track major purchases. The fact that your partner lives with you does not make him your spouse, so there is no merger and protection of assets. Keep notes — and receipts — whenever you buy something expensive.
