Why You NEED an Encouraging Financial Community

When it comes to managing money, going it alone can be tough. Whether you’re trying to get out of debt, save for a big purchase, or invest for the future, the journey can feel overwhelming at times. That’s why having an encouraging financial community is not just beneficial—it’s essential. Here’s why you need one…

1. Support and Motivation

Achieving financial goals often requires persistence and discipline, and there will inevitably be moments when you feel discouraged or tempted to give up. An encouraging financial community provides the support and motivation you need to keep going. Surrounding yourself with people who share similar goals and values can make all the difference when times get tough.

Whether it’s a group of friends, a church community, or an online forum like the Fully Funded Life Membership, having a network that cheers you on and celebrates your successes can be the boost you need to stay on track. They’ll remind you why you started and help you push through challenges.

2. Accountability

A strong financial community doesn’t just offer encouragement—it also holds you accountable. When you share your financial goals with others, you’re more likely to follow through because you don’t want to let them (or yourself) down. This sense of accountability can be incredibly powerful.

For instance, if you’ve committed to sticking to a budget or paying off a certain amount of debt, knowing that others are keeping track of your progress can help you stay disciplined. Tools like the Fully Funded Life Ladder can be used within your community to track progress together, making accountability both practical and supportive.

3. Shared Knowledge and Resources

No one has all the answers when it comes to personal finance, but within a community, you can tap into a wealth of knowledge and resources. By sharing experiences, tips, and advice, you can learn from others’ successes and mistakes, making your financial journey smoother and more informed. Whether it’s learning about new budgeting tools or discovering investment opportunities, being part of a community ensures you’re not navigating the financial landscape alone.

Together, you can achieve more than you ever could alone.

What To Do When You Are In A HUGE Financial Mess

I have met a ton of people who are experiencing the harshness of the following two key items:

• No Plan, No Savings, Piles of Debt

• Loss/Reduction of Income

Here is what you can do when faced with this situation.

Allow Yourself to Feel, Then Act

It's natural to feel overwhelmed and regretful when facing a significant financial challenge. Take a moment to acknowledge your emotions and give yourself permission to process them. It's okay to feel this way—it's the first step in moving forward.

Prioritize Your Payments

When finances are tight, prioritize who needs to be paid first. Essentials like housing, utilities, and food should take precedence over non-essential expenses. Create a list of creditors and bills, and decide which ones must be paid immediately and which can wait.

Set SMART Goals

To regain financial stability, set Specific, Measurable, Achievable, Relevant, and Time-bound (SMART) goals. Whether it's paying off debt, saving for emergencies, or increasing income, clear goals provide direction and motivation.

Create a Written Spending Plan

Even if your income and expenses don't balance perfectly right away, a written spending plan is crucial. This plan helps you understand your financial situation better and identifies areas where adjustments can be made. Knowing your "Go Get This!" number—the amount needed to cover essentials—empowers you to take control.

Take Action!

The most crucial step is to take action. Start implementing your plan immediately, whether it's cutting unnecessary expenses, seeking additional income sources, or negotiating with creditors. Small steps taken consistently can lead to significant improvements in your financial situation.

There can be a tendency to just focus on #1 and hope for everything to just work itself out.  Usually, this is not the case.  Recovering from this type of issue is emotional and gut-wrenching, but it requires one to take action.

You CAN recover from the mess.

Investing Myths That You Believe

Investing can be a powerful tool for building wealth and securing your financial future. However, several common myths can prevent you from taking advantage of its benefits. Let's debunk these myths and explore why investing is accessible and beneficial for everyone!

Myth: Investing is Only for the Wealthy

One of the most pervasive myths is that investing is only for the wealthy. In reality, anyone can start investing with even a small amount of money. Options like index funds, ETFs, and stock slices allow you to invest with minimal initial capital. Starting early and consistently investing can lead to substantial growth over time, regardless of your income level.

Myth: Investing is Like Gambling

Another myth equates investing in the stock market to gambling. While both involve risk, investing is based on informed decision-making and research. Unlike gambling, which relies heavily on chance, investing focuses on long-term strategies, diversification, and understanding your risk tolerance. With careful planning, education, and credible guidance, investing can significantly grow your wealth over time.

Myth: Investing is Too Complicated for Me

Some people shy away from investing because they find it as overly complex. In reality, investing can be straightforward, especially with the wealth of educational resources available today. Websites, books, and financial advisors provide valuable guidance for beginners. Starting with basic principles and gradually expanding your knowledge will empower you to make informed investment decisions.

Take Your Next Steps in Investing

Now that you've debunked these common investing myths, it's time to take action toward securing your financial future. Visit our Investing Next Steps page to learn more about starting your investment journey, choosing the right investment vehicles, and developing a personalized investment strategy. 

Investing doesn't have to be intimidating or exclusive. By challenging these myths and educating yourself, you can take control of your financial future and build long-term wealth.

What You Didn't Know About Online Banks

If you have ever heard me speak or teach about saving money, then you have undoubtedly been introduced to online banks. I’m not talking about banks that have websites but about banks that have little to zero physical “bricks & mortar” locations.

I’m talking about banks like Capital One 360 (formerly ING Direct) and Ally Bank (built on the base of GMAC).

Here’s why I use online banks (over a local bank) for my savings accounts:

1. Better interest rate Online banks pay interest that is generally 5 to 8 times more than a local bank savings account (somewhere near that of a 2 to 3 year CD) – but it doesn’t affect the liquidity of my money

2. Sub-Accounts If you have a regular savings account, all you can see is the total amount of the money the account currently contains. With online banks, you can create something called “buckets” or “sub-accounts” to give every dollar a designated name! This means you can create sub-accounts like “Christmas”, “Emergency Savings”, “Vacation”, “Life Insurance”, etc. 

3. Automatic Savings You can establish automatic transfers from another existing bank account. I have set up automatic transfers for my emergency fund, YMCA annual membership, House taxes and insurance, Christmas, and life insurance premiums. It is a “set it and forget it” approach to savings that is awesome!

4. Customer Service  Because these banks only have an online presence, they have to be INCREDIBLE at customer service, or people would not even know about them. Every interaction I have had with my online banks has been an incredibly positive experience.

5. FDIC-insured  These banks are insured by the FDIC – just like any other bank. That means your deposits are protected. I like that!

6. No fees  There are no fees unless you exceed the monthly allowable transactions (or something extraordinary like that)

7. No MINIMUM balance  This makes it perfect for any and every saver.

I encourage you to check them out: Capital One 360  and Ally Bank.

Set a savings goal. Then establish an automatic savings plan to help you accomplish it!

5 Signs That You are Financially Healthy

Achieving financial health is more than just having money—it's about stability, planning for the future, and making wise financial decisions. Whether you're just starting on your financial journey or looking to assess your current situation, here are five signs that indicate you are financially healthy.

1. Consistent Savings Habits

One of the hallmarks of financial health is the ability to save consistently. Financially healthy individuals prioritize saving by setting aside a portion of their income regularly. This could be through automatic transfers to savings accounts, contributions to retirement plans like IRAs or 401(k)s, or investments in other financial instruments. By consistently saving, you build a financial cushion for emergencies and future goals, demonstrating proactive financial planning.

2. Manageable Debt Levels

Managing debt responsibly is another key indicator of financial health. While some debt, like a mortgage or student loans, can be considered manageable and even beneficial, financially healthy individuals avoid high-interest debt and work towards paying off existing debts with purpose. They prioritize paying down debts with the highest interest rates first and maintain a healthy relationship with debt.

3. Emergency Fund Adequacy

Financial emergencies can happen unexpectedly, making an emergency fund crucial for financial health. Strive to set aside roughly three to six months' worth of living expenses. This fund acts as a buffer against unforeseen circumstances such as job loss, medical emergencies, or major home repairs. It provides peace of mind knowing that you can cover essential expenses without relying on credit cards or loans during challenging times.

4. Regular Budgeting and Financial Planning

Budgeting is a cornerstone of financial health. Financially healthy individuals create and stick to a budget, tracking income and expenses meticulously. Budgeting allows you to understand your financial situation, identify spending patterns, and make informed decisions about saving, investing, and spending. It helps prioritize financial goals and ensures that money is allocated efficiently towards achieving those goals, whether it's saving for a vacation, paying off debt, or investing for retirement.

5. Investing for the Future

Investing is essential for building wealth and securing your financial future. Financially healthy individuals understand the importance of investing early and regularly. They prioritize long-term investments such as retirement accounts (e.g., IRAs, 401(k)s), stocks, bonds, or real estate. By investing wisely, you harness the power of compounding returns and build wealth over time, ensuring financial security and achieving long-term financial goals.

Assessing your financial health is a crucial step towards achieving financial stability and security. By evaluating these five signs—consistent savings habits, manageable debt levels, an adequate emergency fund, regular budgeting and financial planning, and investing for the future—you can gauge your financial well-being and identify areas for improvement. Whether you're starting on your financial journey or looking to strengthen your financial health, taking proactive steps such as saving more, reducing debt, and investing wisely can lead to a brighter financial future.

To get a clearer picture of your financial health, use our free Financial Health Assessment today. Start living your fully funded life today!

Why You Should Reset Your Financial Habits This Summer

Before the busy schedules pick back up in the fall and you’re juggling everything little thing, take a moment this summer to reset your financial habits. Find time to take a closer look at your current financial habits and make necessary adjustments.

1. Reflect and Reassess Your Financial Goals

Mid-year is a great time to assess how well you're meeting your current financial goals. Take a moment to review your progress and identify areas where you might be falling short. This reflection can provide valuable insights into what’s working and what needs to change.

Based on your evaluation, you may find that it’s time to set new financial goals. Align these goals with your values and long-term plans to stay motivated and on track. Whether it’s saving for a dream vacation, paying off debt, or investing in your future, clear and aligned goals are essential.

2. Review and Optimize Your Budget

Conduct a thorough review of your budget to see where your money has been going over the first half of the year. Identify any areas of overspending and analyze whether these expenses were necessary or if they can be reduced or eliminated.

Based on your findings, make adjustments to your budget. This might involve reallocating funds to different categories, cutting back on non-essential spending, or increasing your savings contributions. Ensuring that your budget reflects your current needs and priorities is crucial for financial stability.

3. Enhance Savings and Debt Management

Use the summer to focus on increasing your emergency fund. An emergency fund is a financial safety net that can cover unexpected expenses and prevent you from going into debt. Set up automatic transfers to your savings account to make saving easier and more consistent.

Evaluate your current debt situation and create a realistic repayment plan. Prioritize high-interest debts to reduce the overall amount of interest you’ll pay over time. A structured plan can make managing and paying off debt more manageable and less stressful.

4. Streamline Expenses and Improve Financial Literacy

Take a close look at your subscriptions and memberships. List all the services you’re subscribed to and determine which ones you actually use and which can be canceled. Eliminating unused or unnecessary services can free up significant funds in your budget.

Improving your financial literacy is one of the best investments you can make. Use the summer to read books, take courses, or get into a routine of listening to podcasts about personal finance. Being well-informed about managing money and understanding investment options can help you make better financial decisions.

Resetting your financial habits this summer can lead to better financial health and stability. Take advantage of the summer months to make these important changes and enjoy the benefits of a more secure and well-managed financial future.

5 Things You Don’t Need To Buy For School Every Year

As the back-to-school season approaches, it's easy to get caught up in the excitement of shopping for new supplies. However, not everything on your list needs to be replaced annually. Being strategic about what you buy can save you money.

Five items you can skip purchasing every year:

1. Backpacks

A durable backpack can last several years if it’s of good quality and well-maintained. Look for backpacks made with sturdy materials and reinforced stitching. Unless the old one is worn out or damaged, there's no need to buy a new one each school year. Encourage your child to take care of their backpack to extend its lifespan.

2. Lunch Boxes

Sturdy lunch boxes can also be reused year after year. Invest in a good-quality lunch box that can withstand daily use. Regular cleaning is essential to maintain hygiene, but a well-made lunch box can serve your child for multiple school years. If the exterior or interior lining is in good shape, there’s no need for a replacement.

3. Calculators

Calculators, specifically scientific ones, are often a significant investment, but they are built to last. These calculators are required for multiple years of math and science courses, so once you’ve purchased a good one, it should see your child through high school. Unless it’s lost or broken, you don’t need to buy a new calculator every year.

4. Binders and Folders

High-quality binders and folders can be reused if they’re still in good condition. Instead of replacing them each year, try reusing them. Choose binders and folders made from durable materials that can withstand the daily wear and tear of school life. 

5. Water Bottles

Durable water bottles made of stainless steel or hard plastic are designed to last for many years. Regular cleaning and occasional checks for wear and tear are all that’s needed to keep them in good condition. A reusable water bottle is an eco-friendly choice that can accompany your child through multiple school years, making it unnecessary to buy a new one annually.

Back-to-school shopping doesn’t have to mean buying everything new every year. By reusing durable items you can save money. Focus on purchasing quality items that can withstand the test of time, and teach your children the value of taking care of their belongings.

Saving Tips: Back To School Clothes

It’s never too early to start saving for back-to-school expenses. Clothes can be a significant part of your spending each year, but with a little planning and strategy, you can save a substantial amount. Here are four practical tips to help you navigate back-to-school clothes shopping without breaking the bank.

1. Create a Budget and List

Before diving into the shopping frenzy, take a step back and plan. Setting a budget is crucial to avoid overspending. Here’s how you can start:

• Set a Budget: Determine how much you can afford to spend on back-to-school clothes. This budget should be realistic yet restrictive enough to encourage smart shopping choices.

• Make a List: Go through your child’s current wardrobe to see what fits, what can be reused, and what needs to be replaced. This can help you focus on essentials and avoid buying unnecessary items. A well-thought-out list will keep you on track and ensure that you purchase only what’s needed.

2. Shop Sales and Use Coupons

Timing is everything when it comes to shopping for clothes. Taking advantage of sales and using coupons can lead to significant savings:

• Look for Sales: Retailers often have end-of-summer or back-to-school sales with substantial discounts. Keep an eye on social media, websites, and local stores for these promotions.

• Use Coupons and Promo Codes: Before you hit the stores or online shops, search for coupons and promo codes. Many websites, apps, and mailers offer additional discounts. Signing up for store newsletters or loyalty programs can also provide access to exclusive deals.

3. Buy Secondhand

Why pay full price when you can get great quality for less? Consider these alternatives to traditional retail shopping:

• Thrift Stores and Consignment Shops: These stores often carry gently used, fashionable clothes at a fraction of the cost. With a little patience, you can find great deals on high-quality items.

• Garage or Mom2Mom Sales: Shop local garage sales, or look out for locally organized sales with other parents in your community. This is a simple way to get clothes for often the cheapest price from families whose kids have outgrown them. 

4. Shop Off-Season

Another effective way to save money is to shop off-season. This requires some planning but can result in big savings:

• Buy Off-Season: Retailers often discount items heavily at the end of the season to make room for new inventory. Buy winter clothes at the end of winter and summer clothes at the end of summer. Store these items for the next school year.

• Plan Ahead: Estimate your child’s growth and buy sizes accordingly. Buying a size up can ensure that the clothes will fit when the season rolls around again.

By creating a budget and list, shopping sales and using coupons, buying secondhand, and shopping off-season, you can outfit your child for each season without overspending. These strategies not only help you save money but also teach your children the value of smart shopping and financial planning. 

Ways To Eliminate Your Mortgage

You’ve seen your mortgage payment. How much of each payment is applied to the principal balance reduction…It can sometimes feel discouraging to watch your payment go primarily towards interest and see the principal balance slowly decrease over time. 

There is a way to eliminate (what is usually) the single largest expense in the household budget and free that money up to much greater things than making a bank rich!

#1 - Lower The Interest Rate

Lowering the interest rate by 1% on a $100,000 mortgage will nearly $1,000/year! That, my friends, will spend just like money and I would much rather apply that money toward principal reduction or funding a dream than sending it as a gift to my mortgage lender!

#2 - Pay 10% extra each month

Whatever your monthly payment is, add 10% and you will eliminate 7 years or more from a 30-year fixed rate mortgage! For instance, if your mortgage payment (including escrowed taxes and insurance) is $1,000, you would send in an extra $100 per month – $1,100/month.

Example: If you have a $150,000 5.50% fixed-rate mortgage with a monthly payment (including escrow) of $1,000 with $852 being applied to principal and interest each month (the other $148 being applied to taxes and insurance). If you send in $1,100 each month, there is now $952/month being applied to principal and interest. This will reduce a 30-year note to a 23-year 4-month note!

#3 - Make 1 Extra Payment Each Year

One of the most common ways that people reduce their mortgage payback period is by sending in one extra payment each year. This will eliminate 5 to 7 years from a 30-year fixed-rate mortgage. You can send one extra payment each year using a variety of methods.

• Send in one extra payment when you receive a tax refund or profitability bonus

• Since this money is not part of the normal budget, it can be easier to send this money immediately toward the mortgage.

• Set up 1/2-payments to be made every two weeks

• Since there are 26 two-week periods in a year, this means that 13 full payments will be made each year.

• Send in 1/12 (8.3%) extra on each monthly payment.

• 1/12th payment/month X 12 months = 1 full payment per year

#4 - Eliminate one “nice-nice” monthly expense and send it to the mortgage company

How much do you send to the cable/satellite company each month? Let’s say that it is $70/month. That is $840/year. Cancel the cable and re-route that monthly bill to the mortgage payment.

Other items that could be reduced/eliminated include:

• Dining out

• Clothing

• Spending money

• Magazine subscription

• Insurance premiums

Do You Have Insurance?

I do not like talking about death. I don't know many people who do. But I am not deaf to the fact that we are all going to die. Every single one of us. At this point, we all know that life insurance is important, and hopefully, you have taken the appropriate steps to protect your family. But, is it enough? Is your policy enough to cover your debts and provide a comfortable life for those you leave behind?

Assessing Your Life Insurance Needs

I carry an insurance policy equal to ten times my annual income. With an income of $50,000 per year, this would mean a person should obtain a $500,000 policy. If I pass away while my children are still in the household, I want my wife to be able to focus on raising them without having to worry about replacing my income.

But determining the right amount of coverage isn't as simple as multiplying your income by a certain number. You need to consider various factors, including:

• Existing Debts: Ensure your policy is sufficient to cover any outstanding debts, such as a mortgage, car loans, credit card debt, and personal loans.

• Living Expenses: Estimate the amount needed to maintain your family's standard of living. This includes everyday expenses like groceries, utilities, and healthcare.

• Future Financial Goals: Factor in the cost of future expenses, such as your children's education and your spouse's retirement.

• Inflation: Consider the impact of inflation over the years. What seems like a large sum now may not be as significant in the future.

My Personal Strategy

With that being said, I also carry no debts. My home, vehicles, and school loans are paid off. I do not need life insurance to repay these debts. If you do have debts, you should consider these when deciding how much insurance you need.

Cost of Life Insurance

The total amount of insurance that you require to secure your family should not break the bank. For a healthy 30-year-old male who does not use tobacco products, a $500,000 policy would cost about $25 a month in term life insurance. For a healthy 30-year-old female, the same coverage would cost about $20 a month. That is really cheap for such great coverage.

The Goal of Becoming Self-Insured

My personal goal is to become self-insured. If you are able to become debt-free and invest wisely, you will eventually have enough money that your need for life insurance will diminish greatly. Think about it. Suppose you die, leaving behind no debts and more than $1,000,000. You have probably become self-insured.

Steps to Becoming Self-Insured

1. Pay Off Debts: Focus on paying off all your debts as quickly as possible. This reduces the amount of coverage you need.

2. Save and Invest: Regularly save and invest a portion of your income. Over time, your investments will grow, providing a financial cushion for your family.

3. Live Below Your Means: Adopt a lifestyle that allows you to save more and spend less. This will help you build wealth faster.

4. Review Your Insurance Regularly: As your financial situation changes, review and adjust your life insurance coverage. You may find that you need less coverage as your assets grow.

Talking about death is never easy, but planning for it is a crucial part of protecting your family's future. Ensure that your life insurance policy is sufficient to cover your debts and provide for your loved ones. While life insurance is essential, the ultimate goal is to become self-insured by eliminating debt and building significant financial assets. This way, you can ensure that your family is financially secure no matter what happens.

Taking these steps not only provides peace of mind but also sets a strong foundation for your family's financial well-being.

Is This Mutual Fund a Good Investment?

Many people are hesitant to begin investing because they think that it is an incredibly complicated venture that is only for the uber-wealthy. I am here to tell you that it is not that difficult and you can (and should!) get started today at some level.

Most people feel this apprehension towards investing because they do not know how to tell if they are making a sound investment. There is some research that you can do to make this decision. I have a process that I go through when deciding if a mutual fund, specifically, is a good investment. Here are the questions I ask when I get ready to make an investment:

1. Do I like the product or service they are delivering? Do my children like it? I want to like a product that I am going to invest in first and foremost. If I like a product there is a good chance other people will like it as well. The same holds true for if I dislike a product or service.  

2. Is the company profitable? Does the company share those profits with shareholders in the form of dividends? I do not typically invest in companies that are not profitable although there are a lot of people that have made a lot of money off of their stock. When I invest in a company I want to see that they can move an idea towards profitability.

3. What is the P/E? Once I know if a company is profitable, I next look at the P/E or the price to earnings ratio. This is calculated by finding the earnings per share (the total profits of the company divided by the total number of shares) and the current price of the stock. The P/E is calculated by dividing the price by the current earnings per share. I want to see a P/E that is less than 20 and ideally less than 10. Now, do not freak out about having to calculate this number every time you want to invest. You can simply google the company name followed by P/E ratio and easily find out.

4. What is the vision of the company? Do I like the leadership and the direction they are headed?

To find this information, I typically utilize several different websites including finance.yahoo.com, money.cnn.com, and schwab.com.

As you can see, investing does not have to be super complicated or involve a lot of intense research. When picking mutual funds it can be as simple as checking out their products, leadership, and vision and then doing a quick check to make sure they are profitable. If you can put a checkmark next to those four boxes, you can probably say that you are making a good investment.

Do you want to learn more about how you can acquire and maintain oxen? You can get my book Oxen from our store today! 

3 Ways To Teach Stewardship To Your Kids

Money. We all might have different feelings when the topic is brought up. Some of us grew up in households where finances were spoken about freely. Others of us might have had a different experience, with money being a taboo subject. But collectively, the way our parents spoke about finances had a direct impact on our knowledge, viewpoint, and understanding of money in our adult lives. 

Think about your children… You want them to be confident in their financial decisions. You want them to be knowledgeable in good financial habits. You desire them to understand the importance of stewardship. But how can you start to teach these concepts to your kids?

• Dinner Devotionals on Money & Stewardship

Pick one dinner out of the week to sit down, eat, and focus on intentionally speaking to your kids about finances. This a great way to educate on money but also speak toward the importance of stewardship. 

To make these conversations easy for you, our team has put together 10 Dinner Devotionals on Money & Stewardship, for your family! These devotions are designed to be simple, and thought-provoking for kids of all ages, helping your family grow in the understanding and practice of biblical stewardship and financial wisdom. 

• Speak Openly About Financial Habits

You and your spouse practice financial habits every month, week, and maybe even every day! Bring your kids into these conversations as you see fit. Each month you might budget, save, invest, tithe, and pay off a debt.

When it’s time to set aside your monthly tithe, share with your kids why you give. If you have a family vacation coming up, share with your kids why it’s important to save in advance for trips and what sacrifices you might have to make now to put more money towards an experience. 

Bring them into the conversation. 

• Have Your Kids Budget

Are your kids old enough that you pay them an allowance or they are now receiving money for birthdays or Christmas gifts? Walk them through how to fill out a budget. This could be in Excel or on paper. Create line items for spending money, saving money, tithing money, and even investing their money. Having your children practically apply the financial habits you model to their own money will quickly highlight the importance of financial planning in their lives. 

Talking about money and stewardship with your kids doesn’t have to be a struggle. It can be a fun way to equip them early on with the tools and wisdom to be good stewards of their finances. Get started today with the 10 Dinner Devotionals for your family! 

How Do Interest Rates Work?

I'm sure you have seen interest rates on a variety of different credit cards, car loans, student loans, or other lines of credit. But what do these numbers mean? Understanding interest rates is crucial for making informed borrowing decisions. Let's dive into the basics of interest rates on loans and how they impact your finances.

What is an Interest Rate?

An interest rate on a loan is the cost of borrowing money. It is typically expressed as a percentage of the principal (the amount you borrow). This percentage determines how much extra you'll pay on top of the principal amount over the life of the loan.

How Interest Rates Affect Your Loan Costs

For example, if you take out a $25,000 car loan at 5% interest, you will not only owe the original $25,000, but you will also owe an additional $1,250 in interest over the life of the loan. This means the total cost of your car loan would be $26,250. The interest is usually calculated annually and added to your monthly payments, spreading the cost over the term of the loan.

Types of Loans and Their Interest Rates

1. Credit Cards: Credit cards often have higher interest rates compared to other types of loans because they are considered unsecured debt, meaning there's no collateral backing the loan. Interest rates on credit cards can vary widely but typically range from 15% to 25% or more.

2. Car Loans: Car loans generally have lower interest rates than credit cards because the vehicle serves as collateral, reducing the lender's risk. Interest rates for car loans can range from 3% to 7%, depending on factors such as your credit score, the loan term, and the age of the vehicle.

3. Mortgages: Mortgage rates are usually lower than both car loans and credit cards, partly because the loan is secured by the property itself. Current mortgage rates typically range from 2.5% to 5%, but these can vary based on the type of mortgage, the term length, and the borrower's creditworthiness.

4. Student Loans: Student loans often have lower interest rates and more flexible repayment options to support education financing. Federal student loans have fixed interest rates set by the government, which currently range from about 2.75% to 5.30%, depending on the loan type. Private student loan rates can vary more widely.

Factors That Influence Interest Rates

• Credit Score: Your credit score is one of the most critical factors. Higher credit scores generally qualify for lower interest rates because they indicate a lower risk to the lender.

• Loan Term: The length of the loan can affect the interest rate. Typically, shorter-term loans have lower interest rates but higher monthly payments.

• Market Conditions: Economic conditions, including inflation and the Federal Reserve's policies, can influence overall interest rate levels.

• Loan Amount and Collateral: The amount of the loan and whether it is secured (backed by collateral) or unsecured can also impact the interest rate.

How to Get the Best Interest Rates

1. Improve Your Credit Score: Pay bills on time, reduce debt, and avoid opening too many new credit accounts to boost your credit score.

2. Shop Around: Compare offers from multiple lenders to find the best rates and terms. Don’t settle for the first offer you receive.

3. Consider Loan Terms: Choose loan terms that balance affordable monthly payments with the lowest possible interest rates.

4. Negotiate: Don’t be afraid to negotiate the interest rate with lenders, especially if you have a good credit score and a stable financial history.

Understanding and managing interest rates is key to keeping your borrowing costs down. By making informed decisions and proactively managing your credit, you can secure better loan terms and save money over the life of your loans.

Should I Get A Home Equity Loan To Pay Off Debt?

One of the most common questions I am asked is:

"Should I get a home equity loan to pay off all of my non-house debt?"

Here is my response.

I am not a big fan of consolidating one's non-house debt into a home equity loan.  This is for several reasons, and I have outlined those reasons below.

• This is addressing a symptom, not the root cause.  This question is usually motivated by our need for immediate action.  It is the same motivation that causes us to purchase a car and finance it for five years.

• Borrowing from home equity makes it more difficult to sell the house.   This is especially true in today's house market.  There are a ton of people who now owe more on their house than it can be sold for.  Consequently, they become trapped in the house.

• Changing spending behavior is a process.  If one runs out and consolidates their debts, it might remove the urgency from the need to change spending behavior.  Changing one's spending behavior takes time.  I am convinced that if I had obtained a home equity debt consolidation loan in December 2002, I would not have changed my spending behavior.  However, because it took fourteen months to address our debt, our spending behavior was completely changed.  We have never looked back!

Having spoken with thousands of people and working one-on-one with thousands of individuals, I am convinced that obtaining a home equity loan is not the best way to eliminate debt.  The most common result from obtaining a home equity loan is less equity in the house and the consumer debt shows back up because the spending behavior was not changed.

This is, in fact, my own story.  I obtained a debt consolidation loan to move a pile of credit card and consumer debt to one payment.  After paying $315.60 a month for an eternity, I wanted to celebrate, but I could not.  Why?  Because while I had finally paid off the debt consolidation loan, I had not changed my spending behavior and my credit card debt had grown back to more than I had consolidated in the first place!

Bad Retirement Advice To Avoid

As you plan for your retirement, you're likely to receive advice from various sources. While some advice can be helpful, there are also common misconceptions and bad advice that could derail your retirement planning. Here are three pieces of bad retirement advice you should avoid:

1. You Can Start Saving for Retirement Later

How many times have you said, ‘I’ll get to that tomorrow.’ One of the most detrimental pieces of advice is to postpone saving for retirement. The earlier you start saving, the more time your money has to grow through compound interest. Waiting too long can significantly reduce the amount you'll have available for retirement. Even small contributions early on can make a big difference in the long run. You’ll never regret investing early. 

2. You'll Spend Less in Retirement

While it's true that some expenses, like commuting and work-related costs, may decrease in retirement, others, such as healthcare and leisure activities, may increase. What will your retirement look like? Create a plan with your spouse and identify what your wants and needs are for that season of life. Failing to account for potential increased costs can lead to underestimating your retirement needs. It's important to plan for a comfortable lifestyle in retirement, which may require maintaining or even increasing your current level of savings.

3. You Can Rely Solely on Social Security

Social Security is designed to supplement, not replace, your retirement income. Depending solely on Social Security may not provide enough to support your desired lifestyle in retirement. It's important to have additional sources of income, we recommend at minimum three streams of passive income, such as a 401(k), IRA, or other investments, to ensure a financially secure retirement and future! 

As you plan for your retirement, it's important to seek advice from trusted financial advisors and sources. Avoiding these common misconceptions and bad advice can help you make informed decisions and secure a comfortable retirement. Start saving early, plan for realistic expenses, and diversify your sources of retirement income for a more fully funded financial future! 

3 Ways To Teach Your Kids Financial Principles

Are your kids at that age where they're curious about money and how it works? Teaching children financial principles early in life can set them up for a lifetime of success. Here are three creative ways to help your kids understand the value of money and develop good financial habits.

Try These Ideas:

• Assign Chores with an allowance: link chores to a weekly allowance. This teaches kids the value of work and earning money, Encourage them to give, save, and spend appropriately. 

• Plan A Family Budget Meeting: Sit down as a family and create a mock budget for a summer activity or vacation. Involve your kids in the decision-making and prioritizing expenses. This will give them a practical understanding of budgeting, plus let them in on planning fun for the family. 

• Cooking Together: Cooking meals together provides an opportunity to discuss the cost of groceries and the value of homemade meals compared to eating out. You can also introduce concepts like meal planning, shopping within a budget, and avoiding food waste. 

Incorporating these activities into your summer plans can help your kids develop important financial skills while still enjoying quality time together. For more creative ways to teach your kids about money, download this month’s key resource by becoming a free Fully Funded Life member. Access this month’s resource and future ones on your free membership dashboard.

By making financial education fun and interactive, you can set your kids on the path to financial responsibility and independence.

Inexpensive Summer Fun

Ah, summer—the season of scorching sun, endless days, and the unrelenting desire to cool off without breaking the bank. Is it possible? There’s a variety of activities that seem to continually make you swipe the card: waterparks, baseball games, amusement parks, and more. 

There are ways to stop overspending in the summer months. Use these inexpensive summer fun ideas: 

• Water Gun Battle: Cool off and have a blast with a family water gun fight. Set up obstacles, devise strategic plans, and prepare to get drenched in the name of victory.

• Visit a Pick-Your-Own Farm: Spend a day at a farm picking your own fruits or vegetables. It’s a great way to teach kids about where their food comes from, and you get to enjoy fresh produce. 

• Homemade Ice Pops: Create your own ice pops with fruit juice, yogurt, or pureed fruits. Get creative with flavors, experiment with funky molds, and be proud of your homemade delicacy! It’s a delicious way to beat the heat.

• Community Pool Day: Spend a day swimming and playing in your neighborhood or community pool. 

• Sidewalk Chalk Art Festival: Turn your driveway or a section of the sidewalk into an art gallery. You can even have family members vote on their favorite pieces. 

But what if you're still struggling to stick to a budget? In addition to these inexpensive ideas, consider using our FREE budget tools to help you stay on track. The best way to make financial progress is with a plan. Access our budget tools here. 

How To Prepare A Budget That Actually Works

There are a lot of people who struggle with budgeting. They know they should have a budget, but there never seems to be enough time, energy, or money to prepare one.

I know the feeling. However, I also know the feeling of not having control of my money and always running into financial disasters toward the middle to end of each month. It was in December of 2002 that I experienced my IHHE Moment (I Have Had Enough Moment) and resolved to figure out a way to gain full control of my money. By July of 2003, I figured out a way to make budgeting work for my family. Below are the steps I put into place. If you put them into place, I’m confident this budgeting process will work for your household too!

1. At least 3 days before the month begins, make a list of all your expected income and expenses for the upcoming month.

2. Pull up the FREE BUDGET TOOL. Enter the income and expenses into the worksheet.

3. Modify your income/expenses to ensure that the following formula is true: INCOME – OUTGO = EXACTLY ZERO

It really is that simple.

However, before you dive into preparing your best budget ever, I urge you to consider a few tips I’ve learned along the way:

1. Prepare the budget BEFORE the month begins (before you get paid and start spending money). It is very difficult to prepare an effective plan in the midst of already spending it!

2. Be realistic. I found that my previous attempts to budget failed because I was lying to myself and not being realistic.

3. Put some fun in the plan. It really is okay to spend some money on FUN – as long as you aren’t mortgaging future plans, hopes, and dreams in the process.

4. Use cash envelopes or a pre-paid gift card for categories where you have a tendency to overspend. This has worked wonders for my budget! The categories I use cash envelopes for are groceries, restaurants, clothing, spending money, and entertainment.

5. Recognize that you will forget some expenses – especially in your first few budgets! I’ve seen many people address this by putting a “I forgot!” line item in their budget to cover these forgotten expenses.

Now go put that budget together, and start winning like never before!

What You Should Know About Credit Scores

Credit scores are a measure of one’s ability to manage debt. The dominant credit scoring system which is used by most lenders was created by Fair Isaac. This system provides a measure of an individual’s creditworthiness and is commonly known as a FICO Score.

A credit score impacts many things. It determines whether or not you can obtain a loan. If you qualify for a loan, the credit score dictates the interest rate charged.

Credit scores also impact insurability. When you obtain auto, renters or homeowners insurance, the credit score directly impacts the insurance cost. The lower your credit score, the higher the insurance premium will cost. I have seen insurance premiums double because of poor credit.

Credit scores also impact the ability to obtain a cell phone contract or an apartment lease. It can affect utility connections. Utility providers usually require much larger deposits from people who have low credit scores. If you have an excellent credit score, a deposit might be waived entirely.   Credit scores can even impact your ability to obtain a job. Your credit score will have an impact on your life.

Many people know their exact credit score. If it is great, they wear it as a badge of honor of their financial prowess. “My credit score is 814,” they will say quite proudly.

Others who have a more colorful experience with credit will wear it as a badge of dishonor. “My credit score is in the toilet,” they say with a glum look.

The fact is that credit scores are only a measure of how well a person can manage debt and contractual financial agreements.

Credit scores are calculated using these data points:

1. Type of credit issued [Revolving debt (credit card) or Installment debt (anything with payments and a pay-off – car loan, boat loan, student loan, etc.]

2. Age of the credit relationship

3. Amount of credit one can obtain (total of all credit limits)

4. Amount of credit one has consumed (percentage of total credit limit)

5. Payment timeliness

6. Requests for credit (“hard pulls” of credit)

7. Outstanding judgments

Look at the list again. Does it include any relationship to how much money one might have in a savings account? Or any connection to a person’s net worth?

Here’s the fact: You could be a millionaire and have a terrible credit score.

How? By having zero credit relationships. While a great credit score is more desirable than a terrible credit score, it is not the best indicator of financial success. Choose instead to make financial decisions about what best increases financial margin and net worth.

Are You Teaching Your Kids About Budgeting?

Are you teaching your kids about budgeting? 

Money is a foreign concept to most children until they are about 4 or 5 years old. It is at around this age they become aware that money has the ability to purchase things. However, most of their financial knowledge is focused on spending because that is what they SEE happening with money.

• Mom gives money to the grocery store clerk and carries groceries out of the store.

• Dad swipes his credit card at the gas pump, and it allows him to put gasoline in the vehicle.

• Grandma gives money to her beautiful grandchildren (your children, of course) and you take the child down the toy aisle to buy something with it.

Since “spending” is what we see happening with money from our earliest days, it is what most children grow up knowing about money. For them, money equals spending.

The important financial principles of giving, saving, investing, and budgeting are not learned. Consequently, grown children leave the house knowing only that money equals spending. This is a recipe for financial disaster!

Here’s a simple thing you can do immediately to change that for your children (grandchildren):

Ask the child to prepare a budget for any money they receive – BEFORE they are allowed to spend any of it.

For example, when my wife and I started teaching our daughter about budgeting, we would give her birthday money. She and I count the money so we know exactly how much she has received, and then I confiscate it. Upon receipt of a well-planned budget, I release the money to her for use. Later on, I do a “check in” to ensure the money has been used according to the plan.

One time my daughter was planning the use of $20. Her first budget had $2 for giving, and $18 for spending. I rejected it because there was no saving or investing. Her revised plan showed $2 for giving, $0.25 for saving, and $17.75 for spending. She gave the budget to me with a smile – knowing there was little chance of it being accepted.

I rejected it.

Her third try included giving, saving, investing, and spending. I released the funds to her.

Here are the reasons I love this process:

1. Teachable Moments This process creates space for “teachable moments” about money. It forces a conversation about the importance of giving, saving, and investing. It allows us to talk about the “spender” mentality that we both share.

2. Learned At Home Before my daughter enters the real world, she is receiving real financial knowledge that will set her apart. She knows what a mutual fund is and how it operates.

3. The Pain of Wasting $20 is Less Than The Pain of Wasting $20,000 I want her to recognize the pain of poor financial decisions NOW when she is making $20 decisions so she doesn’t have to learn the lesson with a $20,000 purchase later.

4. My daughter actually enjoys the process It has helped her save a substantial amount of money toward her first car. She has financial margin. She knows her parents care about her.

I have my daughter use our FREE BUDGETING TOOLS.

My book, What Everyone Should Know About Money BEFORE They Enter The Real World, is a perfect resource for helping your child start out life with the financial tools and principles essential to life.