Blog - Page 2 of 94 - KNS Financial

Ignorance of Financial Realities Is a Major Concern

They say there are two certainties in life; death and taxes. Whether the word certainty applies is a moot point but there are some realities in the USA today that appear to be unavoidable, and miserable retirement for many is on the list.

A recent study of 1,000 people over the age of 18 identified almost 60% happy at their ability to enjoy a comfortable retirement because of their ability to save sufficiently. With life expectancy rising, many can expect to live twenty years or more after retirement, so it is a challenge to have a large enough fund to do that. A common way to calculate how big a fund you will need is to take 4% per year of your fund’s total as your potential annual spending.

These 60% are arguably far too optimist when average savings in society today are analysed further. Only half actually knew how much they would have in their fund when they retired. While Social Security benefits help support retirement they are far from sufficient for a comfortable retirement; no, very far!!

Statistics reveal that the average annual spending of a couple who has retired is around $45,000 with benefits paying up to half of that depending on the couple’s working history. It means that a couple need around $500,000 in their fund if the 4% rule is applied.

Too few Americans have anything like this and many of them are of an age where it would be impossible to accumulate that amount, simply because of time. With the chances of hitting the jackpot one in many millions the reality in the USA is extremely disturbing. It is not helped by other facts that have been revealed by further questioning in TIAA’s Lifetime Income Survey:

Of the 1,000 people surveyed around 400 stated that they were saving only 10%, often less, of what they earned each year towards retirement. That 10% is only the starting point on widely-acknowledged advice that recommends rising up to 15 and then 20% in later years.
Almost 30% admitted they were not saving anything at all. Surprisingly half of them said they had no worries about retirement so there is a clear issue here.
500 or so said that their first financial goal was to create a monthly income for the years of retirement yet almost as many did not appear to have any idea or plan about how this could be achieved.
There was a feeling that spending would drop by a quarter once they retired. There are some obvious savings on commuting as an example but what about increased medical bills that many face as they get older? There is a counter argument to spending. When people have more time on their hands it is likely they actually will spend more as they do on holiday during their working lives.

Those Americans that understand the conflicting evidence within this survey can act to improve their futures but time is a constraint. The number of Americans keeping a proper budget is just in excess of 30% if a Gallup poll of 2013 is to be believed. It is an essential part of good financial management.

Debts need to be reduced, especially expensive debt such as that on credit card balances. Personal loans are a cheaper way to organize your finances and can be used to pay off card balances by regular instalments which can be entered within the budget.

Living to a budget takes self-discipline though not necessarily sacrifice. You have to be realistic or you will be discouraged when preparing your budget. There is the chance of savings on utilities, insurance and telephone with comparative websites doing much of the research for you.

The aim behind living to a budget is saving each month towards the future. You will know how you stand at any one time and that clearly helps you make good decisions about every aspect of your life. There is nothing wrong in getting expert advice as well.

The good news if there is any is that the younger generation appear to understand the limitations of the Social Security System and are prepared to do something about it. The bad news is that older people don’t and time is not on their side.

The Recovering Spender

By Sherrian Crumbley

After hearing about her and seeing Lauren Greutman‘s name often over the past couple years, I was excited to learn more about her through her new book, the Recovering Spender.

This book is not just for someone who needs a little direction in making a budget. It’s not just for someone who needs help picking a stock. As Lauren puts it:

I wrote the book for the not-so-saavy spenders. The forgotten people when it comes to money management. We are the black sheep in the finance class, sitting in the back of the room slouched down with our heads hung low.

She wrote the Recovering Spender for the person who spends as a compulsion – an addiction – and she frames the book through that lens, starting with herself.

The first half of the book is Lauren’s story of getting her family into $40,000 worth of debt and the trials and errors of getting out of it. She is very open with her flaws and missteps, and this genuineness allows the reader to easily find where they can relate to her story.

I really liked the way Lauren weaved stories about her childhood and upbringing into the narrative, and explained that a lot of our behaviors and attitudes toward money have been ingrained from youth. She gives a really good example of how two people with different value systems about money, based on social class, can have serious conflicts in a marriage as a result.

We don’t often realize how our views about money start from a young age. Whether it is directly from lessons taught to us by our parents, or by our reactions to experiences in our childhood (e.g. I am going to give my child everything I couldn’t have as a child). Lauren stresses the importance of acknowledging all these thought patterns in making steps toward a successful recovery.

The 12 Recovering Spender Steps

In the second half of the book, Lauren takes the reader through 12 steps of recovery… similar to the 12 steps of Alcoholics Anonymous. From her experience working with people with addictions, Lauren was able to diagnose her own issues with spending and create this plan which she is still utilizing in her own life.

12 recovering spender steps

Each of the 12 steps contains practical information, application, and a real-life example of someone’s recovery experience. Having real people with real experiences is always a helpful tool, and having Lauren share tips that she uses everyday makes the information seem more realistic.

At the end of the book, Lauren provides worksheets to help you sort out your financial state of mind, budget, and more.

Overall Thoughts

If your spending is out of control, if you have tried and failed to budget or save, or if your relationship is in trouble because of monetary issues, please read this book. I love that it is not just a book on how to get out of credit card debt (let’s say), but it looks deeper at the source of the issue.

It is equally important that she does give good, applicable advice to change your situation once you realize what is going. Do I think spending is an addiction for many? Yes. Do, I think everyone who shares some of these issues has an addiction? I am not quite as convinced as the author is, but I DO believe that we should all do the same work she prescribes to figure out the problem from the root.

I also believe that for many, the changes do need to be life-long. For varying reasons, we need the ‘fences’ she talks about to protect us from old thinking and habits.

This book is a really good one.

No-Credit Loans Are Helping Millions of Small Businesses

By Khaleef Crumbley

Owning a small business is not supposed to be easy. If it was then everyone would do it. But trying to run a small business with no credit or poor credit can be nearly impossible. The pressure of trying to pay bills and grow a business without credit has undone a number of entrepreneurs.

Part of the problem is the fear that having no credit or bad credit induces. Many business owners in this situation simply put on blinders. Convincing themselves that if they can make enough money they can work their way out of this situation.

While making money is important, it also takes money to make money. So not having the flexibility to get extra cash fast can force a small business owner to be too conservative in their approach. Eventually missing opportunities when they come knocking.

However, it does not need to be like this. A number of lenders who specialize in no credit loans have come on the scene in recent years. Lenders such as the San Diego-based Mulligan Funding, provide loans based on cash flow, not credit scores.

These loans can be used for working capital, inventory or even equipment purchases. Repayment is often flexible and can be made based on a percent of the day’s receipts. This allows a small business to borrow with confidence as they don’t have the stress of struggling to make a monthly payment.

Other advantages to a small business owner with no credit or poor credit include faster application and approval. In the case of businesses with no credit, the loan amounts tend to be smaller and are often used for emergency purchases or ramping up for a growth opportunity. As such, business owners need financing options which can be approved in a matter of hours, not weeks.

While these sorts of programs are not new, ‘alternative lending’ has only made it onto the mainstream in recent years. This was brought on by the financial crisis which saw banks and other financial institutions reduce their leveraged lending and small business activities.

In many ways, this was a blessing in disguise as mega banks are not well equipped to deal with small businesses, even when the owners have perfect credit. The void created by the withdrawal of banks has created opportunities for more flexible lenders to take their place.

Some of these financing options have been caught up in one of the hottest investment trends the world has seen since the dot.com boom of the 1990’s. That is Fintech. Don’t take my word for it. This New York Times article profiled how these lenders helped a small business owner when banks wouldn’t.

For small business owners with no credit or bad credit, these lenders have been manna from heaven. All they need is a business banking account, cash flow, and in some cases a merchant account – used for processing credit card payments. With these, a small business owner can get as little as $1,000 or more than $250,000. Granted the amount will depend on a number of variables, but this means that business owners with no credit now have place to turn to.

Another plus for small business owners is the sheer number of funding options out there. The commercial credit agency, Dunn & Bradstreet, has an excellent website called Access to Capital. This site provides in-depth information about a number of programs on the market today and even has checklists on what you will need to prepare for a potential lender.

This sort of information is extremely beneficial for a small business owner with no credit or bad credit as they can educate themselves about the options on the market today and how to apply for them. As such, the fear that comes with having bad credit or no credit fades away and the business owner can make decisions based on what is best for their business.

In the end, millions of small businesses with no credit or bad credit are finally able to get the funding they need to grow their businesses. This helps to strengthen our economy and our communities as these businesses will be able to grow, hire more people, and maybe even change the world.

Budgeting is Hard, But Here Are 8 Tips to Make It Easy!

By Ruddigar Simpson

[The following post has been brought to you in conjunction with Credit Sesame.]

Sticking to a specific budget is not always easy. From holiday spending to emergencies to everyday purchases, the household budget can easily fall to the wayside. If this sounds familiar, you’re not alone. Simply relying on willpower and discipline for your budgeting is hard.

What really works is automating what you can and getting smart about where you spend your money. Here are 8 tips you can try to help yourself stay on track.

8 Easy Budgeting Tips You Can Use TODAY

Use an App to Track Spending

If you already have your phone in hand, why not download an app to track all of your spending? Many banks offer free budgeting tools, based on debit card transactions. Log in to your account and take a look.

Free apps like Mint can also show you exactly where your money goes, separating transactions by category in easy to understand tables and graphs. You can visually see where you spend too much and make adjustments.

Auto-Pay Your Bills

It can be tempting to pay a bill late in order to buy something else. However, putting bills first by auto paying them can eliminate that temptation and keep you on track. Even if you normally pay your bills on time, it is easy for one to slip through the cracks. Then you might think you have more money than you do, and you could get hit with late fees and service interruptions.

Schedule an auto-payment date that works for you and sign up for electronic receipts (a notification or an email that the transaction occurred).

Automate Savings

Set up your direct deposit so that a portion of each paycheck goes straight to savings before you even see it. You can do this through your employer’s payroll service, or through your bank. If you manually deposit your pay, it’s up to you to put the allotted amount into savings each time.

Save on Entertainment

Do you have expensive cable service but you rarely have time to sit and watch anything? I used to spend around $100 per month on cable but switched to Netflix for $10 per month. You can also pick up movies, magazines and books at the local library for free rather than buying or renting them.

Also, check your local newspaper, the coupons that arrive in your mailbox and online deal sites for free or low-cost concerts, movies, and other events. A little bit of effort can lead to huge savings and an easier time budgeting.

Plan Meals

Food is often one of the most frequent, necessary, and expensive items in the budget. The temptation to swing through the drive-through can be strong. If you’ve already got a delicious dinner planned at home, the temptation is easier to resist. You can, of course, eat out sometimes. But it should be the exception, not the rule.

Google recipes. Start on your favorite recipe site or by typing in the ingredients you’ve got on hand, followed by the word “recipe.” (If you’re on a tight budget or new to cooking, we love this free cookbook.) Buy staples in bulk (olive oil, butter) to save money. Shop according to a list, not whim. Another word of advice: don’t shop when you are hungry or stressed. The key is to experiment so that you find recipes you and your family like.

Save on Gas

Gas is another expense you can cut down on by planning ahead. First, get the cheapest gas in town by downloading an app like GasBuddy that lets you search the city you live in for the best prices. Then think out all the errands you need to run and how you can do them most efficiently during the week.

When you know where you need to go, use Waze to find out about any problems on the road so you don’t find yourself stuck in traffic or taking a detour. Don’t forget about carpooling with friends when it makes sense. There’s even an app for managing your carpool schedule!

Negotiate Services

Are you paying monthly fees for your phone, car insurance, credit card interest, and bank accounts? In our competitive market, companies frequently change their offers and run promotions. They want to keep existing customers, which gives you leverage.

When paying my monthly phone bill, I asked about getting a discount on my services and learned they offered 15% off for AAA members. Just by asking I cut over $20 from my monthly bill.

Also, check your credit report to find out if you have improved, as better credit can help you get better rates, especially for products like insurance and credit cards. Credit Sesame is a great resource for getting free credit report cards.

Create Goal-Oriented Savings Accounts

Lastly, if you have a specific goal you want to save for like a vacation, the down payment on a house or an emergency fund, you can make that goal more tangible with a goal-oriented savings account. Put a name on the account and separate it from your other savings. Goal accounts can be strong motivators.

Sticking to a budget, repaying debt, and saving money can be hard, especially if you have never done it successfully before. Don’t get down on yourself about it. Instead, take action using tips like these to support your efforts and relieve some responsibility from your willpower.

The Teenpreneur Conference

By Sherrian Crumbley

A few years ago we had the opportunity to meet Eva Baker from Teen Got Cents and we are glad to call her a friend, as well as being card-carrying members of her fan club! She is an exceptional young adult who, through her blog and community activity, educates teens (and adults) on personal finance topics. Most recently, she has been working really hard on the first Teenpreneur Conference.

TEENPRENEUR Conference? Really?

ABSOLUTELY! Two things we are passionate about here at KNS Financial are (1) That younger people be educated about handling money, which includes building wealth (2) The importance of encouraging entrepreneurship as a viable option for anyone!

If you have a teenager who is currently running their own business, or needs to be inspired to do so, this conference is for them! I can not stress how necessary it is for them to be surrounded by like-minded peers to motivate them about their ideas and aspirations.

I Think You Need A Little More Convincing

Check out these statistics shared on the Teenpreneur Conference website:

Since 2012, there has been a general decline in the number of students learning about business and money at school, especially in grades 5-8. – Gallup-HOPE Index

…a tough economy, increasingly competitive college market, expanding networks and shifts in technology – is creating a culture of innovators. Some people call post-millennials Generation Z, but I think a more appropriate moniker would be Generation (I)nnovation. – Harvard Business Review

In 2014, 4 in 10 students (42.1%) in grades 5-12 planned to start their own business. – Gallup-HOPE Index

If your teen is interested in taking their business to the next level, or considering starting their business, this is a wonderful opportunity to see what other teens are doing, thinking, and building.

Check out the website. All the conference information is detailed there! Parents, there are sessions for you too. You and your teen won’t want to miss it!