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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Know that Savvy Ladies® is here for you! Should you like to seek advice on a personal financial question, please visit our Free Financial Helpline and get matched with a pro bono financial professional, click here.


Stop Flirting With Disaster

by Stacy Francis, CFP®, CDFA

Nobody likes (or needs) to spend much time thinking about a possible future disaster. But sometimes an ounce of prevention is worth a lot more than a pound of cure. Losing precious documents to disasters such as theft, fire, earthquake or flood can cost you countless hours and thousands of dollars as you try to restore them. Buying a fireproof safe will set you back about $100. You decide.

Savvy Ladies’ Tip: Buy a fireproof safe online (Google “fireproof safe”) and have it delivered right to your doorstep. Then store these documents inside:

• Birth certificates, marriage certificate, divorce papers • Passports • Social Security cards • Title to your home (the deed) • Title to your car (the pink slip) • Will, trust, and power of attorney • Advance directives (living will, health care) • Insurance policies (car, home, long-term care) • Stocks and bond certificates • Photographs of your possessions (for insurance purposes)

Will Millions Make You Happier?

by Stacy Francis, CFP®, CDFA

You’ve heard it ad infinitum, “Money can’t buy happiness.” Now there’s scientific data to give the old saw new teeth.

University of Southern California economist Richard Easterlin surveyed 1,500 people over nearly three decades to see what gets high marks on their “Happy-O-Meter.” His results revealed that time with family and good health are the stuff of happiness.

Money? Did this play a role in happiness? The study found that wealth doesn’t necessarily lead to joy and contentment. In fact, the magic number that equals satisfaction is far lower than you would expect. It’s $40,000 a year. Once enough is earned to meet basic needs, money in relation to happiness is a very personal equation.

Oprah’s magazine says so. And so does Harvard psychologist Daniel Gilbert, who studies such things. In fact, the rule is well established in research: The first $40,000 makes a big difference in one’s level of happiness. After that, the impact is much smaller. The difference between someone making $40,000 and someone making $15,000 is far greater than the difference between $100,000 and $1 million.

Your Happy-O-Meter

So technically, most of you should be happy. And if you’re working for the next big raise, forget it. You’re better off working on teaching yourself how to look at your money with a different eye.

The sad truth is that we’re twice as rich as we were in 1957, but only half as happy. As Dr. David G. Myers, an authority on the psychology of happiness, wrote in Does Economic Growth Improve Human Morale?, “Never has a culture experienced such physical comfort combined with such psychological misery. Never have we felt so free, or had our prisons so overstuffed. Never have we been so sophisticated about pleasure, or so likely to suffer broken relationships.”

Despite air conditioning, TiVo, carb-free wine and high-speed Internet access, we’re not as happy as our parents and grandparents.

Super Rich ≠ Super Happy

But what about the Donald Trumps of the world? Surveys reveal that even lottery winners and the superrich soon adapt to their affluence and are little if any happier than the average Joe. Moreover, those who strive most for wealth tend, ironically, to live with a lower overall well-being than those focused on intimacy and relationships.

“By far the greatest predictor of happiness in the literature is intimate relationships,” Sonja Lyubomirsky, a researcher at the University of California-Riverside, told a Chicago Tribune reporter. “It’s definitely not money.”

In the end, happiness is about wanting and managing what you already have, spending time with friends and family, as well as taking care of yourself. So the next time you get green with envy when you see your favorite Fendi handbag go parading by, take comfort in knowing you would not be happier even if it was on your own arm!

Buying a Home When You’re Female and Single

Buying a Home When You’re Female and Single

by Stacy Francis, CFP®, CDFA

Are you thinking about buying a home? Here’s some expert advice

A lovely little house with a white picket fence and a husband to buy it for her used to be the average little girl’s fantasy, or so goes the stereotype. But these days, the average woman is more than likely dreaming about buying her own home. And according to statistics, she and her savvy single friends are setting records doing just that!

In fact, over 52% of women-headed households in the U.S. own their own homes and single women constituted the fastest growing demographic of first-time home buyers recently.

Nonetheless, the prospect of buying a home on your own can be daunting. In order to purchase the home of our dreams you need to get real about your finances. Here are some questions you need to ask yourself before you purchase a home.

Can you afford to buy a home?

Consider these two guidelines:

1) Your monthly mortgage payment, including principal, interest, real estate taxes, and homeowner insurance, should not exceed 28% of your monthly income before taxes.

2) Your total amount of debt (mortgage, credit cards, car payments, student loans, etc.) should not be more than 36% of your gross income–this is referred to as your debt-to-income ratio.

Sadly, due to low interest rates many individuals are buying more home than they can afford. They strap themselves with mortgage payments that stretch them to the limit and forget to budget for maintenance. When the first thing goes wrong with the home, they’re in over their heads. Ladies, if you can’t afford the sort of place you want to buy — with a loan that does more than just pay your interest — you may want to wait until you can pay a more substantial down payment.

Should you buy?

Are you planning to stay put for three years or more?

If you’re not planning on living in the same place for at least three years, buying is not a good idea. You need to consider the cost of moving and the cost of buying and selling makes renting a smarter move if you plan on living there only for a short time.

Are you willing to maintain it?

Owning a home is more work than renting. No more calling the landlord when the plumbing breaks, the refrigerator stops working and the air conditioner dies.

Is your credit in decent shape?

Be sure to check your credit score at before you decide to buy. Unless you have a credit score of 700 or above, you could pay above average rates to finance your purchase. That can be costly!

You are ready to buy!

By and large, whether you’re single or divorced, the toughest part of buying a house is coming up with the down payment. However, the following resources are a good place to look for mortgages requiring low down payments.

Fannie Mae: This type of mortgage features a loan-to-value ratio of 97%, meaning you need only come up with 3%. Only people with modest incomes will qualify for this type of loan, and a pre-purchase homebuyer education class is required for approval.

Federal Housing Administration (FHA): This government agency doesn’t offer mortgages, but it does insure residential loans provided by private lenders. This means that once you qualify for FHA insurance, you may buy a home with only 3%-5% down. FHA-backed mortgages have a maximum loan limit depending on the average housing cost in each region.

USDA Mortgage: 100% Financing No Money Down options exist for non-military borrowers, too. The U.S. Department of Agriculture offers a 100% mortgage, too. The program is formally known as a Section 502 mortgage, but, more commonly, it’s called a Rural Housing Loan.

The New Ozzy and Harriet – Financial Tips for Unmarried Couples

by Stacy Francis, CFP®, CDFA

A sharp rise in the number of opposite-sex, unmarried couples moving in together this year may be less about romance and more about surviving in a struggling economy, according to a new report by the U.S. Census Bureau.

The share of couples who are not married has risen in many places but is highest in areas that offer many people grim prospects for a better financial future: old industrial cities and the Mississippi Delta.

Unmarried couples made up 12% of U.S. couples in 2010, a 25% increase in 10 years, according to 2013 Census data.

Two-thirds of the cities with the largest shares of unmarried couples were in the Northeast and Midwest, up from about half a decade earlier.

The couples in the study range from young couples living together before marriage to elderly couples living together for convenience, and about 10 percent are gay couples. These single couples face unique money issues, and are less likely to plan for their financial future than married couples.

In the beginning of a relationship it’s best to keep your assets separate, to avoid property disputes later. Be sure to have separate checking accounts and own as little joint property as possible. Beware, if you both contribute money to the purchase of a major asset, such as a house or a car, this will be considered joint property.

As the relationship grows and your income and assets begin to increase, you may want to hire a family lawyer to draw up an agreement that addresses what will happen to your assets if your relationship ends. You don’t need financial troubles in addition to the emotional turmoil of a failed relationship.

You may also want to put into place a durable power of attorney that allows your partner to make financial decisions for you if you’re unable to make them yourself.

In addition, a healthcare proxy (or durable power of attorney for healthcare) can be useful. This allows a non-relative to make medical decisions for you if you’re incapacitated.

If you want to leave assets to your partner at the time of your death you will also need to draw up a will.

These are only a few of the issues you will need to discuss with your partner. It’s difficult to have to think about these things whether you’re married or not, but it’s important!

Do You Know Where Your Investments Are?

by Stacy Francis, CFP®, CDFA

A survey of those who own mutual funds found about 40 per cent didn’t know the names of the funds they bought. Even if you are a pro when it comes to rattling off the latest mutual fund you purchased, you still may not have a clue about the mix of stocks, bonds and other investments. Sadly, mutual fund names don’t always tell the entire story. You have to dig deeper in the prospectus to figure out where fund assets are invested.

Your goal should be to create a balanced asset allocation with the mutual funds you won. Asset allocation is an investment portfolio technique that aims to balance risk and create diversification by dividing assets among major categories such as cash, bonds, stocks, real estate and derivatives. Each asset class has different levels of return and risk, so each will behave differently over time. For instance, while one asset category increases in value, another may be decreasing or not increasing as much. For most investors it’s the best protection against major loss should things ever go amiss in one investment class or sub-class.

There is no simple formula that can find the right asset allocation for every individual. You will need to assess your goals and risk tolerance to find out which asset allocation is best for you.

Savvy Ladies Celebrates Labor Day

by Stacy Francis, CFP®, CDFA

Now that Labor Day is right around the corner you might be planning to spend that weekend relaxing at some oh-so-swanky resort in the Hamptons or that cute mountain hideaway in the Poconos. But have you ever really thought about why we celebrate Labor Day? That is, besides the fact we are in dire need of more three-day weekends. I didn’t think so!

So you know, Labor Day is dedicated to the social and economic achievements of American workers. It celebrates the contributions workers have made to the strength, prosperity, and well-being of our country. That means Labor Day is about celebrating you! And this is a perfect time to make sure your company and country are paying their dues to you.

Check your Social Security benefit estimate I am sure you think the government is never at fault. But let me tell you, the Social Security Administration does make mistakes. Make sure they have recorded your correct salary as well as the amount of time you have been working. Otherwise, you could have a nasty surprise when you need to collect disability or retirement from the government.

You can get a copy of your Social Security benefits estimate at

Check your work benefits You know you put in too many long hours to be short-changed. Sadly, many American workers are. Due to tough economic times, many employers are slashing health, disability, life and health insurance provided through their company. Make sure you know your coverage. When a catastrophe strikes the worker is left unprotected and the employer does not have to do anything. You can call your HR department for the latest employee benefits handbook. Have a CFP™ look it over to make sure you are adequately covered.

Make sure you are investing in your company’s retirement plan You company’s retirement plan might be one of the hottest investments around. Many companies give generous matches to every dollar you put into your 401(k) or 403(b) up to a certain limit. It is better than winning the lottery!

Just think about it: If you make $100,000 per year and your company contributes up to 5% of your salary, that means an extra $5,000 in your retirement fund. There are two catches though. 1) You also have to contribute to the fund to get your companies corresponding match. 2) If you leave for greener pastures you could lose some or all of that money. However, your contributions are yours forever!



An Emergency Fund: Your First Line Of Defense

by Stacy Francis, CFP®, CDFA

If you don’t have an emergency fund, it’s time to get serious about building one.

The purpose of the fund is to sock away a minimum of three to six months’ living expenses. But this money could also be used when you’re staring at major, unplanned expenses such as a car breakdown or a leaky roof.

What’s important is that you put the money away consistently, and then tap it only for true emergencies. And let’s be clear! A new dress for your best friend’s wedding does not qualify as an emergency!

Why You Need It

Emergency funds are an absolute necessity for financial security because they give you funds to fall back on if you become ill or disabled and can’t work, or if you or your spouse lose your job, incur large medical bills, or have an unexpected large bill such as a major car or home repair.

Without an emergency fund, you may be forced to use credit cards that could take you many years to pay off. The steep interest rates of credit card debt will end up costing you much more in the long run. Pretty depressing.

How Much You Need

The minimum amount in your emergency fund should be three to six months’ worth of basic living expenses. Singles who don’t have dependents who rely on them may be able to get by with three months’ worth, but couples or anyone with dependents should definitely shoot for six months’ worth. The more people you support, the more likely you are to have unexpected or unplanned costs.

If you don’t have short- and long-term disability insurance at work or a private policy of your own, it’s a good idea to have even more cash stashed in your emergency fund. When estimating how much money should be in your emergency fund also consider the degree of difficulty you’d have in finding a new job if you lost yours. For example, if you’re a teacher and teachers are in demand, you probably wouldn’t be unemployed for as long as a person with skills that are not in demand.

Where To Keep It

While you wouldn’t want to keep your retirements funds in these types of accounts, saving accounts, money market accounts, certificates of deposit, money market funds, and short-term bonds are all good places to stash the cash you may need on short notice. These are the most liquid investments. Liquidity refers to how quickly an asset can be converted into cash. Your house is not a liquid asset because it could take months to sell it. Stocks are somewhat more liquid than real estate, but you can lose money on stocks if you’re forced to sell at a time when the market for your stock is less than favorable. Even though interest on liquid investments may barely keep up with inflation, the lower risk is worth the lower return when you may need the money quickly.

Savings Accounts

Savings accounts usually pay somewhat higher interest and segregate your savings from the money that covers your living expenses. They’re less likely to have monthly fees. One of the highest interest rates in town are offered by Capital One and Ally Bank.

Make sure that the account is FDIC insured so you know your account is always secure.

Money Market Funds

You can think of money market funds as low risk mutual funds. They’re not 100 percent risk free, but they’re safe enough. The Securities and Exchange Commission regulates these funds and limits the kinds of investments fund managers can make – primarily U.S. Treasury issues, and other securities carrying the highest credit ratings.

What should you look for when shopping for a money market fund?

Make sure the fund has low management fees. You want to pay less than 0.50% percent. Make sure to watch out for fees for check-writing privileges or electronic transfers from the fund to your checking account. Also be sure to ask what is the minimum check size. You should expect it to be between $100 and $500. You’ve got to shop around. Large, reputable financial institutions are your best bet. They are a good place to start.

Like any other mutual fund, you want to read the prospectus before you part with your money. Many investment companies will let you download prospectuses right from their Web sites. If you use an investment firm, talk to someone there or visit the company’s Web site to see what it has to offer.

Be sure to see a professional for guidance if you have questions about selecting a proper fund. Then set up an auto-withdrawal from your regular checking account or direct deposit amount from your paycheck right into this new account. Adjust your budget to accommodate having less money each month and forget about it.

You can also give your emergency fund a boost now and then by putting “windfall” money into to it. You know “free-money”: birthday gifts, inheritances, insurance settlements, escrow overages, rebates, tax refunds, etc.

Your emergency fund becomes your own financial insurance policy. And if you never use it you will have that much more money to play with when you retire. Or even retire early with the extra money you have saved!

How Smart Investors Blow It

by Stacy Francis, CFP®, CDFA

Going back to the early 2000s, our friends at Dalbar have been conducting a study to determine whether investors’ investment decisions impacts their investment performance. Unfortunately, it does. In a BIG way. As with every year’s study so far, the results illustrate a big difference in what the S&P 500 gained versus the average equity mutual fund investor. The results of the twenty year numbers ending 12/31/10:

S&P 500 – 9.14%

Average Equity Mutual Fund Investor – 3.27%

Greed and fear often lead investors to bad decisions. In the tech bubble of the late 1990s, investors poured their money into technology stocks for easily gotten gains and took risks they should have avoided. We all know what happened soon after. The tech bubble burst and fear clouded the judgment of tech investors as they dumped these stocks like hot potatoes and a few even avoided owning stocks at all. Many individuals are still trying to recoup the losses they sustained and have the majority of their money in savings accounts and the like.

Fear and greed are natural human emotions. However, when it comes to investments these emotions often cause us to make decisions that are not in our best interests over the long-term. Investment decisions should be made with clarity and conviction. The best way to do this is to create an investment plan. You need to decide upfront what percentage of your money should be in stocks versus bonds, and within stocks, how much in large companies versus small companies and how much in growth stocks versus value stocks. You should also be sure to invest in international and domestic stocks.

Once you decide on how to divvy up your money, you should never change your plan unless your objectives change and you are going to need the money in the next three years. Examples of a shift in objective could be a home purchase or you are nearing retirement.

Many investors are burned because they make an investment and forget about it. Be sure to rebalance your portfolio every year. Why do you need to do this? If you are hoping to have a break up of 40% bonds and 60% stocks in your portfolio you need to check that you have the same percentages. It is natural that stocks will grow faster than bonds over the long-term. Most likely you will be over weighted in stocks in several years if you do nothing.

We all should be disturbed and moved to action by Dalbar’s findings! Start an investment plan and stick with it. Monitor your investments on an ongoing basis and don’t be scared to get help if you need it.

Top IRA Trouble Spots

by Stacy Francis, CFP®, CDFA

Individual Retirement Accounts (IRAs) now hold more assets than any other retirement savings vehicles, but many people do not understand how they work and many IRA owners make critical mistakes that can cost them money. Here are some ways you can ensure that your IRA works for you.

1. Begin your required minimum distributions on time. Regardless of whether you are still working, you must begin taking an annual minimum required distribution from your traditional IRA no later than April 1 following the year you turn 70 1/2. You have much more flexibility with a Roth IRA and are not required to take distributions. However, for a Traditional IRA you will have still penalties if you don’t withdraw enough or you don’t withdraw it on time. You will owe up to 50 percent of the difference between the amount you took out and the amount you should have taken out. Why is the IRS so strict about taking distributions from a Traditional IRA and not a Roth IRA? The IRS wants your tax dollars. You must pay taxes on your distributions from a Traditional IRA while distributions from Roth IRAs are generally tax-free.

2. Don’t wait until the last moment. Don’t wait until the April 1 deadline to take out your initial minimum withdrawal. Don’t forget that you’ll have to make another withdrawal by December 31 of the same year. Watch out because these withdrawals in the same year could bump you into a higher tax bracket and increase your tax liability. Don’t let this happen.

3. Name a “real” beneficiary. One of the biggest mistakes is not naming a real (human) beneficiary. If you do not name a person, your assets will most likely go to your estate and this will cost you more money. That’s because if you hadn’t already started taking distributions yourself by the time of your death, the IRA assets must be distributed to your estate’s heirs within five years of death. Or if you had started, distributions must be paid out to the heirs over what would have been your remaining life expectancy. Either way, leaving your IRA to your estate deprives your heirs from “stretching out” the tax-deferred assets over their own lives and creates a bigger tax bill.

4. Name a contingent beneficiary. This allows the primary beneficiary to “disclaim” (reject) the IRA inheritance if he or she doesn’t need the money so that it automatically passes to the contingent, who typically is younger and can stretch out the inheritance longer.

5. Name the right beneficiary. Your spouse or parent isn’t always the best choice to name as the primary IRA beneficiary. An adult child might be a better choice. If you choose a young child you will want to consult a professional to find out if you need to set up a trust in their name to control the assets and distributions.

6. Changing your beneficiary. Don’t forget to change, in writing, your beneficiary in the event of a marriage, divorce, birth of a child, death of a beneficiary or similar circumstances.

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