Who is the CFO of You, Inc.?

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February 17  |  budgeting, college, goals, retirement, saving money  |   Lisa R. Hatcher

cfo pic for blogYou are the CFO of your life, the Chief Financial Officer of You, Inc.  What does that mean?  What are the duties of a CFO?  A CFO has many responsibilities, but the essential ones boil down to managing cash flow, budgeting, and planning for the future financial needs of the company.  Sound familiar?

If a business wants to become successful and stay that way, information needs to be gathered about sales or revenues, cost of goods sold, and overhead expenses.  The owners need to know when money is coming in and when it needs to go out, when do the bills need to be paid.  They make cash flow projections to make sure they will have enough money to pay the bills.  By having a good understanding of their expenses, they know where they can trim if needed and they know what is essential.

It is no different with our personal finances.  In order to be successful in reaching our financial goals, we need know what is coming in ~ our income, and what is going out ~ our expenses.  If we don’t have a clear understanding of this, it makes it difficult to know if we are making progress or not.  We need to understand what our weekly, monthly, and annual expenses are and when those bills come due.

By planning for our expenses, i.e. having a budget, we know that we are paying our bills and we know how much is going to saving and paying down debt, if any.  (See this blog on how to divide up your spending using the 50/20/30 budget.)

Planning for the future means taking stock of your goals.  When do you want to retire, how much do you want to spend?  Do you want to start a business, travel?  Do you have college tuition to think about for your children or grandchildren?  All of these goals come with a price tag.  Work backwards to see how much you need to save for the future and this will help you prioritize how you spend and save your money now.

One of my favorite quotes comes from the tagline on Positively Positive:

Your attitude + your choices = your life.

Take charge of your finances like a CFO – after all, it is your life!

How many marshmallows for you?

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January 22  |  budgeting, goals, home page news, retirement, saving money  |   Lisa R. Hatcher

How are you feeling about your New Year’s Resolutions?  Is it going well or are you already beating yourself up that you lack willpower and discipline?   Are your finances, your house, and your diet under control?marshmallows

The marshmallow study, as it has come to be known as, looked at kids and their choices.  The kids were put in a room and told they can have one treat now or a bigger treat later, if they wait.  The kids’ responses were noted and the study continued over time.  The researchers concluded that the kids who could wait for the bigger treat, i.e. delay gratification, were more successful later in life.  The study made it seem like it was a character trait that led to this success and that if you didn’t have that ability to wait, well, you would not be as successful.

But there’s more to the story than that, and it gives hope to all us who struggle with waiting, whether it is eating another potato chip now rather being slimmer later or buying those shoes today rather than funding your IRA for your retirement later.

Three points need to be clarified, according to the author of an article* that seeks to dispel the myth of delayed gratification.

The first point is it wasn’t really about self-control:

“It turned out that kids waited longer when they were distracted by a toy. What worked best wasn’t …”self-denial and grim determination,” but doing something enjoyable while waiting so that self-control wasn’t needed at all.”

The second point is ‘sometimes it’s okay not to wait:’

“‘In a given situation…postponing gratification may or may not be a wise or adaptive choice.’ Sometimes a marshmallow in the hand is better than two in the bush.”

The third point is it depends on your past:

“The inclination to wait depends on one’s past experiences. “

So, how can you make Delayed Gratification work for you with regards to your finances?

Make it fun. Make it a game.  If you are trying to save more money, be creative.  Make a poster, fill a jar as you make progress, add a link to a chain that drapes across your windows, distract yourself from what you are giving up with positive reinforcement of what you are gaining.  Give yourself some mini rewards along the way for long term goals.

Put as much of your savings on autopilot as possible. Then you are not distracted into spending money that you really meant to save.

It’s not all or nothing. Plan for setbacks. Most of has have competing goals of saving for our future (an emergency fund, the next car, retirement) and enjoying our life today. Strive to find a balance between all these goals.  Sometimes it really is okay to spend today.  Just understand the tradeoffs you are making.  Having a financial plan in place can help you figure out the tradeoffs. And, if you have a setback, don’t berate yourself, find compassion and regroup.  Try again.

Check your bias. Look at your own experiences.  Be self-aware as you make financial decisions.  I see this in many of my clients.  The ones whose parents died young (before retirement age) are much more likely to want to enjoy life now, while they can.  The ones who have parents that have lived a long time or had a long term care situation are much more likely to purchase long term care insurance.  Be sensitive to leaning one way or the other too much, as in being so careful with your money you don’t enjoy spending it or spending it too freely to the detriment of your future.

*From “Dispelling the Myth of Deferred Gratification: What waiting for a marshmallow doesn’t prove”


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Planning for Departure

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December 10  |  estate planning, home page news  |   Lisa R. Hatcher

“I intend to live forever, or die trying.” ~ Groucho Marx


It’s not easy to talk about death, but I hope that brought on at least a chuckle. In the world of financial planning, death is a topic that can’t be avoided. Life insurance, wills, trusts, savings: we review these as part of a comprehensive plan. But what about your end of life wishes? What about those of your loved ones, especially one’s parents?

“More than 90% of the people think it’s important to talk about their loved ones’ and their own
wishes for end-of-life care.

Less than 30% of people have discussed what they or their family wants when it comes to
end-of-life care. “

Source: National Survey by The Conversation Project 2013.

This survey shows there is a huge discrepancy between what we think is important and what we are actually doing. So how can one go about approaching this delicate topic?

There is help available. There is an organization called The Conversation Project. Their website offers advice and tools to start the discussion of end of life wishes with others, whether it is you telling your family your wishes or asking for feedback from others about their wishes.

Since the holidays are often a time when families get together, especially ones with family members living far away, this season offers an opportunity to have these important conversations.

Having one’s financial affairs in order and letting our end of life wishes be known is a loving gift we can give to others.

The man on the right in the photo is my grandfather, Brannon Lewis Riffle.  He instilled strong family values of education and money management in his children and grandchildren.

Is your budget ready for the holidays?

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November 19  |  budgeting, saving money  |   Lisa R. Hatcher

If the answer is no, fear not, there is still time to plan ahead! Continue Reading

Your future self will thank you if you save today

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October 27  |  retirement  |   Lisa R. Hatcher

10471026_10152175918032391_1277064562242882543_nPlanning for retirement has changed a lot in the last 20 years.  There used to be the analogy of a three legged stool.  There was a company pension, Social Security benefits, and your personal savings.  As an employee, you weren’t responsible for choosing the investments in the pension.  As long as you stayed in the job long enough, you were eligible for the monthly check. Continue Reading

What’s the right investment mix?

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September 22  |  bonds, home page news, investing, stocks  |   Lisa R. Hatcher

Your investment mix is your personal blend of cash, stocks, and bonds – how big a slice is investment pie charteach in your investment pie?  The right mix for you depends on several things – your goals, your time horizon, and the amount of risk you are willing and able to take. Continue Reading

Serving up a credit score – what’s in the secret sauce?

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August 26  |  budgeting, Credit, home page news  |   Lisa R. Hatcher

Your credit score is used by more than just a potential lender.  Your car insurance carrier, home insurance carrier, a prospective landlord, cell phone company, or utility company may all be looking at your credit worthiness.  All the more reason to understand your score and maximize it!ce_scorebreakdown

A FICO score is the most common score, (named after the Fair Isaac Corporation which first developed a credit risk formula) but each credit bureau, Equifax, Experian, and Transunion, use information from your file with them to create a FICO score, and they have collaborated to create the VantageScore.

There are five major components to your score.  Remember, scores can vary because of different information in your file and different weights given to the components. Here is an example of a typical FICO score.

The most important part of your score is your payment history – do you pay your bills on time?  Late payments have a very negative effect on your score.  If you bank online, we recommend that you set up your credit card payment so that a minimum payment is always made.  This way, if you forget to make your payment (which we hope is a paying the full balance each month!) at least the minimum payment is made and you avoid a late fee and a late payment mark on your file.

The second most important part is how much you owe.  How much of your credit available are you using?  Ideally, you are using no more than 30% of your available credit at any one time.  So, let’s say you have two cards, each with $5,000 credit available, $10,000 in total.  If you have a balance of $3,000 on one card and $1,000 on the other, you are using 40% of your credit.  This affects you even if you pay off your balance in full each month, which may come as a surprise!  This means that if you regularly charged $5,000 per month, paid it off completely, and charged another $5,000 next month (to get those travel rewards) it appears as if you are using 50% (in this example) of your available credit.   You may want to ask for an increase in your credit limit if you find yourself in this situation.  If you carry a balance, by paying down your credit card debt, thus decreasing your amount owed, you will increase your credit score.

You can’t do much about the length of your credit history, other than keeping open old accounts.  While it can be tempting to close an old account you no longer use, it’s better for your score to keep it.  We suggest that you use the card for some purchases to reduce the chance that the card company will cancel it.  Perhaps take one small bill that can be paid automatically through that card (like Netflix).

Opening up new credit lines in a short amount of time can have a negative effect on your score, so only open cards that you really need.  We recommend saying no to offers of a one-time discount if you open a card today.  Better to stick with two or three cards that truly meet your needs.  (Having more than one card that you use regularly means you are not dependent on one card company.  It’s okay to use one as your main card, but use one or two back up cards as well).

The last components of your score are the types of credit used.  This looks at the types of credit accounts you have and how many of each.  For instance, you may have an auto loan, mortgage, and an installment loan.  You don’t have to have every type to have a good score, but a mix can be beneficial.

You can check your VantageScore for free by registering with www.creditkarma.com which we recommend.  There is a wealth of information about credit on that website.  We also recommend that you get your annual copy of your credit report from each credit bureau at www.annualcreditreport.com.  Stagger your request every four months, for instance: Sept – Equifax, January – Experian, and May – Transunion.

A FICO score has a range of 300 to 850.  The VantageScore range is 501 to 990.  Each lender is going to have their own guidelines as to what comprises a “good” score.  Here is an infographic that looks at a FICO score.  It really shows the financial benefit of having a good score!

credit scores

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Teaching Kids to Save

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July 28  |  goals, saving money  |   Lisa R. Hatcher

MoneyMonkey-PNG“Monkey see, monkey do”.  An old cliché, but an apt one in this case.  One of the best ways to teach children how to save is by example.  The age of the child needs to be taken into consideration to figure out what to do.  For instance, a younger child will respond to a piggy bank, something very tangible, whereas an older child can understand the idea of putting money into a savings account at the bank.  In fact, a field trip to the bank for the purpose of opening an account and explaining how a bank works can be a fun activity!

Getting into the habit of talking about money and sharing how you are managing money goes a long way to teach your children.  They don’t have to know the exact numbers, but getting a sense that one sets aside money now in small amounts so that it can grow into a bigger amount in the future is a good lesson to learn.  This strategy of sharing can be an incentive and motivator for you as well to stay on track.  The idea of delayed gratification is challenging but is an oh so important lesson to learn when young.

Setting goals is a critical part of handling money.  For your next family vacation, let the kids help plan it.  Teach them about creating a budget, help them work through tradeoffs of not being able to do everything they want.  Once you have the total budget, work backwards to figure out how much to save weekly and monthly in order to be ready for the trip.

Lots of parents have questions about allowances.  There are different schools of thought, and I encourage you to read up on the various options.  The main sticking point is whether or not the allowance is tied to chores.  Each family needs to decide what works best for them.  Research does show that getting an allowance in some form results in better money management later in kids than just doling it out as needed.

Here is a great website that talks about money and kids at every age level.  Check it out!  http://moneyasyougrow.org

Have a recent college grad at home?  We love to talk college students and recent graduates about getting off to a good start financially. Call for an appointment.


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Getting Divorced? First steps financially

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June 13  |  divorce, home page news  |   Lisa R. Hatcher

UntitledGetting divorced sucks.  I don’t actually like using that word… sucks… I think it is vulgar, but having gone through a divorce myself, I can attest to its validity.  Divorce is one of the most emotionally draining experiences one can go through that doesn’t involve the death of someone.  There is a death, though.  There is a death of a relationship that once held great promise.  It is difficult to think about the financial aspects of divorce when your emotions are raw and you are mourning the loss of the marriage.  I think both parties may feel this, even the spouse who initiates the divorce.

So while it is a challenge to think about, the financial issues are a huge part of the process and you can best protect yourself with information and knowledge.

Below are some initial things to do once you realize divorce is on the horizon.

Gather copies of your financial data.  Get copies of last three years of tax returns, get latest statements of all individual and joint accounts (checking, savings, brokerage, retirement accounts such as IRAs, Roth IRAs, and employer plans like 401(k) and 403(b), HUD statements for any home purchases, titles to cars, life insurance policies, and any other information about a substantial asset.  Also gather the latest pay stubs for each person.

Get copies of credit report from all three bureaus.  Note which accounts are joint and individual and where there may be an authorized user.  Joint accounts will eventually need to be closed and authorized users removed.  If you do not have a credit card in your own name, now is the time to apply while you can still include household income if you are not employed or your income is low.

Determine your spending.  This can be the hardest work if you are not used to tracking your expenses.  Review your bank and credit card statements to get a sense of your spending.  You may want to try an online tool called Mint.com which will get about three months of spending history on average when you set up your account.  You can use this tool moving forward to track your spending.  Get a sense of what your “squeak by’ number is, that is, the basic amount of spending to keep you and your family housed, fed, clothed, and transported (in a low frills manner).  Then see which expenses are more flexible and can be reduced if needed.

Make a list of your assets.  Note how they are titled, joint or individual, and if joint, what type of survivorship.

Make a list of your debts. Note the original balance, the current balance, interest rate, and minimum payment, and the term of the debt if not revolving.

All of this information will eventually be needed as the divorce proceeds.  While it can be overwhelming, make a checklist from the items above and start chipping away at it, one item at a time.  The more you understand about your financial picture, the better equipped you will be to make property and support decisions.

At Hatcher Byles Financial Planning, we can help you organize and analyze your information so the settlement process is more efficient and less costly.  We work with clients (with one or both parties) on their own and in conjunction with mediators and attorneys.


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May 28  |  home page news  |   Lisa R. Hatcher

marriage_love_wedding_265659_lGetting married is such an exciting time! But through all the excitement and hectic planning, don’t forget to spend some time with your soon-to-be spouse to talk about the #1 topic couples argue about –finances.

Handling your finances does not have to be painful, it’s just something that needs to be discussed, planned for, and agreed upon and the best time to do it is before you tie the knot. Think of it as part of the planning for your amazing future together and setting some goals for all the wonderful things you will do together!

Here is something to consider: how are you going to handle your finances once you are married; separate bank accounts, joint accounts, or a combination of both?

1) Separate Accounts (i.e.: you each have your own accounts in your own name)

If you have separate accounts how will you separate the bills?
One option if you are a two family earner, you may choose to split the bills in the same % as your earnings (i.e.: if hubby earns 60% of the household income and the wife earns 40% then split the bills 60/40).

2) Joint Accounts (i.e.: you put your money together into one account that you share)

If you have joint accounts, how will you handle if one person wants to make a large purchase (shoes, gifts, etc)? Perhaps you make a rule that if one person spends over a certain amount (like $100 for example) that it needs to be discussed first.

3) Combination of Separate and Joint Accounts

You use joint accounts for household expenses and joint savings goals, and , if applicable later on, for child related expenses.  Keep separate accounts for personal expenses for things like personal care, clothing, and gifts.

There’s no one way that is right for everyone and it may take some trial and error to find the best match for you and your beloved. It’s important to talk about this and be prepared to tweak as needed.

We recommend that you each have at least one credit card in your own name. The other person can certainly be an authorized user and have a card for that account but you each need to continue to establish and maintain your own credit.

The most important thing to do is to set your goals; how much do you want to save each month, how much do you want to invest, how much do you want to spend? You may want to have a look at our blog: http://hatcherbyles.com/needs-wants-and-savings-the-50-30-20-rule) for some great suggestions.

Do you want to save money to buy a home? Do you want to travel? Are you planning to have children? Will one of you stay home and work part time or not at all? When do you want to retire (it’s never too early to plan for that!)?

Once you agree on your goals, it’s much easier (and more exciting) to save your money knowing you are working towards something wonderful.

Start your new life out right and talk about your finances. Not sure how to get the conversation going? Just print out this article and share it with your spouse. You’ll be so glad you did!

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