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
The Savvy Guide to Coupons
by Stacy Francis, CFP®, CDFA
Think coupons spell cheap and cheesy? So did I, until a couple of weeks ago the woman in front of me in line at the grocery store used a whopping sixteen of them, saving over thirty dollars. This, with hardly any effort! I just had to ask for her best coupon shopping advice.
If you have yet to try this way of saving, or if you’d like to get more out of your clippings, read on!
- The Internet is not just for shopping and email – it’s for saving as well. Check out sites such as hotcoupons.com, valupage.com, and coolsavings.com.
- Your Sunday paper, too, can be a wonderful resource. Allocate a compartment in your purse or wallet to this purpose, clip, and save!
- Many stores have fliers with coupons at the entrance. If this is true for yours, don’t miss out on this golden opportunity. You can combine these savings with the ones already in your purse. I now check the flyer at Whole Foods every time we shop. We save a minimum of $10 on every grocery visit.
- If you can’t find coupons for the brand you like, try giving the company a call. Many companies are happy to send valued customer coupons – you just have to ask.
I am taking the first, staggering steps toward becoming a coupon customer, using them mainly for restaurants and travel. What about you?
5 Quick Fixes for Your FICO Score
by Stacy Francis, CFP®, CDFA
An old friend – a real estate agent in the Midwest sent me an email this morning with a topic she suggested I post in my blog. With real estate prices at record lows, many aspiring homeowners are looking her up. Many fulfill both the down payment and income requirements for a mortgage. Unfortunately, they tend to underestimate the extent to which the credit markets have changed over the past couple of years. These days, there’s no way around it: your credit score must be sky high. Wanting nothing more than for her clients to have their dream homes, she has put together a list of quick lifts for that FICO score.
1. Pay down balances. A main ingredient in the credit score formula, the size of your balances really does matter. Pay them down – or even better, off.
2. Protest unfair information. If you have an entry on your credit report that shouldn’t be there (honestly, now), know that you can dispute it. If you submit complaints to the company that posted it as well as the credit-reporting agency, they will investigate and take it off, leaving your record a whole lot cleaner.
3. Ask for help. If you’ve been a loyal customer for years and normally make your payments on time, chances are, if you talk to customer service, they will disregard that one time you forgot to pay your bill because you were on your honeymoon. Ask politely – and thou shall receive.
4. Don’t neglect the oldies. Another important factor in the credit score formula is how long your accounts have been open. So even if the Victoria’s Secret card you applied for when you were in college doesn’t have the most useful perks, use it once in a while for a credit score boost.
5. Make your payments on time. It seems simple, yet so many people fail on this count. If you have a hard time remembering your payments, set up a reminder.
How the Recession Can Help Your Finances
by Stacy Francis, CFP®, CDFA
A newsflash from travelzoo.com just plopped down in my inbox. Apparently, this weekend, flight fares between New York and the West Coast run as little as $99, round trip. Now, with two little kids, spontaneous travel is not as easy for me as it once was. Still, I love that the possibility is there! Slashed airfares all over the country (and all over the world) is just one way the recession can help your finances. Below are a few others.
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Mortgage payments. With interest rates at record lows, this is an excellent time to refinance. Furthermore, with landlords growing increasingly desperate, renters with outstanding payment records may be able to negotiate a discount. Or take advantage of the rare low home prices-low interest rates combo and buy!
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Going out of business sales. Enjoy major discounts on the items you were planning to buy anyway (a car, new carpet for your bedroom, a flat screen TV) by sweeping up all the bargains out there.
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New business opportunities. Old, established companies going out of business means there will be plenty of room for up-and-comers once the economy comes back around. Start out slowly, be patient, and before you know it you’ll be in a perfect position to prosper.
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New wisdom. Yes, the past year or two have been painful for most. That we have learned the hard way may be the understatement of the year. Still, there’s no way around it: our attitude toward money has changed for the better.
Opportunity Cost and Holidays: Should You Stretch Your Budget for a Longer Vacation?
by Stacy Francis, CFP®, CDFA
During the latest Savvy Ladies teleconference, the topic of conversation was much rosier than the typical ones these days (unemployment, recession, and ways to cut spending). One member had just quit her job to realize a long-lost dream: to spend a year backpacking through Asia and Oceania. By staying in hostels and eating out of grocery stores, she wouldn’t use more money per month than a family visiting Disneyworld burns in a weekend. She was very proud of her calculation, and it does make a lot of sense …except she forgot to consider opportunity cost.
Since she won’t be making any money while traveling, she will also miss out on a year’s worth of salary. Whereas the family spending the big bucks during the weekend or while on paid time off wouldn’t face any loss of income.
Now, whether a weekend at Disneyworld is as much of an experience as a month trekking the Himalayas, I am going to leave up to you to decide. But considering how often people forget about opportunity cost, I always feel obliged to point it out.
Selecting Your Beneficiaries
by Stacy Francis, CFP®, CDFA
One of my best friends is going through a divorce. Over the phone last night, she provided an endearing account of her efforts to make a clean break and start over. Apparently, she even remembered to take her ex out of her will. This reminded me of something few people know, even though it affects most of us in one way or another.
Your will has no jurisdiction over accounts with beneficiaries, such as your IRA. Translation: no one will care about the changes you made to your will five years ago, designating your entire fortune to your sister. If your ex is listed as the beneficiary on your retirement account, he may very well walk away with all your money.
Now, before you break into a cold sweat, hear the good news! Most investment firms make changing your beneficiaries easier than changing a light bulb. Many provide a printable version of the form on their website. If this is not the case with your firm, the form is probably just a phone call away. Meaning: it is definitely worth the effort to review your beneficiaries periodically – especially when you are going through a lot of changes – and make sure everything is still as you wish.
Two other things to note: first of all, it is generally unwise (and an express ticket to probate) to select a minor as your beneficiary. If you want to ensure that a minor gets a portion of or all of your money, set up a trust. Secondly, it is usually smart to have a backup beneficiary, to keep things simple in case anything were to happen to your first choice.
Cash Crunch in Your Forties: Your Children’s Future or Your Own?
by Stacy Francis, CFP®, CDFA
This dreadful dilemma was the main topic of discussion at a recent Savvy Ladies event. And the economy being what it is, alas, it is one to which far too many of us can relate. We all want what’s best for our children, so what could possibly be more important than securing them a top-notch education? On the other hand, past big 4-0, retirement is no longer a hazy, distant concept but something very real, approaching at rocket speed. So when faced with job loss and financial hardship, how do we prioritize?
The answer is quite simple: stick to your retirement savings plan, and direct whatever’s left toward the college savings account. It may sound selfish, but the truth is, no one’s going to give you a scholarship or a favorable retirement loan. And not only do your children have time on their side, greatly enhancing their chances to pay back whatever balances they may accrue, but the less savings you have set aside for them, the more financial aid becomes available to them. Once your financial situation starts to improve, you can certainly lend them a hand.
Ask any child what he or she would prefer – a bit of student loans or an aging parent crashing on the couch for, say, fifteen years. I’d say chances are high he or she will opt for the student debt.
So stick to your retirement savings plan. Then help your children.
Use the Wallet-Half-Full Approach and Make Your Financial Dreams Come True
by Stacy Francis, CFP®, CDFA
The book “Unwinding the Clock. Ten Thoughts on Our Relationship to Time” sat on my bedside table for months after a friend gave it to me. This past weekend, I finally got around to reading it – and I liked it much more than I thought I would! My favorite chapter dealt with a feeling most people will recognize: not having enough time. Author Bodil Jonsson turns this around and points out that in a way, time is all we have. Time is a wonderful gift, enabling us to start families, build careers, have hobbies, learn new things, and travel the world. Instead of panicking about running out of time, why not tell ourselves that we have all the time in the world? After all, it is no less true.
The same approach can revolutionize your relationship to money. If you stress about the money in your account not being enough to fulfill all your financial obligations and desires, try turning this negative thought process around, instead viewing each dollar as an opportunity to get closer to your personal and financial goals. Rather than worrying about the financial milestones you will fail to meet, imagine how the twenty-dollar bill in your wallet could buy you a better lifestyle in your golden years, part of a college education for your child or a lavish dinner. This simple change of perspective won’t cost you a dime, and you’ll have a lot more fun securing your financial goals.
Spousal IRA 101
by Stacy Francis, CFP®, CDFA
A woman approached me after maternity yoga last night. My husband is stoked about this child, she told me, and when my maternity leave is up, he would like to be a stay-at-home dad for a couple of years. I already know this means he won’t be able to keep contributing toward his 401(k), but is there another way for him to keep up his retirement savings?
A smart question, and she should really give herself a pat on the shoulder for planning ahead. And yes, provided that she makes enough money and that they file a joint tax return, he can contribute toward a traditional or Roth IRA (income limits apply for Roth IRAs). Even if her employer does provide a retirement plan, she may also be able to contribute toward a traditional IRA (or a Roth, as long as her income is below certain limits).
Putting her and her husband’s case into numbers, they are each eligible to contribute $5,000 toward a traditional IRA in 2009 ($6,000 if they are over 50), as long as she makes enough money to cover the contributions. If they prefer Roth IRAs, their joint adjusted gross income must be less than $176,000 (phase-out between $166,000 and $176,000).
Clear as mud, isn’t it?
Term or Whole Life Insurance – Which Is Right for You?
by Stacy Francis, CFP®, CDFA
I had breakfast with a new client this morning, at a cozy new bakery around the corner from my office. While the fruit and croissants couldn’t have been better, our conversation was anything but. My new client was- like so many people these days – in a bit of a tough spot financially, so last week he attempted to cash out on the whole life insurance policy he purchased three years ago. He had put almost $9,000 into it, surely, he would be able to withdraw something?
Before sharing his account of this transaction, allow me to explain the difference between term and whole life insurance. Put simply, a term insurance policy is acquired for a certain period of time, often with an option to renew. If the insured person dies before the end of the term, the beneficiary is paid the face value of the policy. A whole life insurance policy is usually for life, and it has both insurance and cash value components.
Now, back to my new client’s case.
The woman who sold him the policy informed him that if he wished to make a cash withdrawal, he would have to wait several years. Even then, he wouldn’t get much.
This type of scenario is far from uncommon. Most whole life insurance policies you need to hold for at least twelve to fifteen years if they are to generate decent returns – some of them never do. Other drawbacks with these types of insurance policies include hidden fees, high commissions (100% of the first year’s premium is not unusual), and that overall, they tend to be lousy investments. There are so many better ways to save for retirement!
So unless you have a very high net worth and intend to use the whole life insurance policy for estate planning purposes or a disabled child or parent, opt for term insurance. It is simpler, less expensive, and you are much better off investing your money elsewhere.
