Farnoosh Torabi's Blog, page 5
August 22, 2017
The BEST Money Advice for Kids
A question I enjoy asking guests on So Money is, “What is one thing you wish you had learned about money growing up?”
Some admit they learned nothing about investing. Others wish their parents had promoted entrepreneurship and becoming your own boss.
The fact is most kids will NOT learn about money in the classroom, so it’s up to mom, dad and loved ones to take the reins.
To help, there are many fine books and resources for kids of all ages. Here’s a round-up of some of my favorite money tools, with back-to-school season approaching:
The Startup Club. My good friend and MSNBC host JJ Ramberg has recently published this ingenious book for kids (aged 1st through 5th grade). Kids will learn money lessons and how to start a business.
The Money Savvy Pig. So Money guest Susan Beacham invented the award-winning multi-slotted piggy bank to teach children the many uses for money: save, spend, donate and invest.
FamZoo. Need an online system to let the family track allowances and view your kid’s budget? Enter: FamZoo. Founder Bill Dwight stopped by So Money to talk about the inspiration for starting the site (hint: he has four children). A cool FamZoo feature: When interest accrues on savings, your child receives an alert!
Make Your Kid A Money Genius. The New York Times bestselling author of Geta Financial Life is out with a money manual for parents. Is bribing our kids todo household chores ok? You’ll have to read the book to find out! Beth also tells all in a candid So Money interview.
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Ask Farnoosh Roundup: 401k Matching, House Renovation and 529 Plans
I’ve returned from vacation to an overflowing Ask Farnoosh mailbag. Thank you!
It goes without saying that your questions are really, really smart. I couldn’t pick just one to answer so this week, so we’re featuring three very interesting queries. From retirement to financing a home renovation to college savings, we’re about to cover a lot of ground:
Leland asks, “What if my employer-sponsored 401k does not have a match? Should I still invest in the 401k or would an IRA be a better route?”
That’s a bummer that your employer doesn’t offer a match. But that doesn’t mean your 401(k) is totally useless. The 401(k) comes with a number of advantages. First, contributions can lower your taxable income today. The same is true, of course, with a traditional IRA, but the contribution limit with a 401(k) is more than three times greater. You can invest up to $18,000 in a 401(k) this year, versus $5,500 in an IRA. The 401(k), therefor, can offer you a bigger tax savings if you contribute up to the limit.
That said, be sure to compare costs for both saving vehicles. Fees associated with a 401(k) vary and are typically higher than the fees you may find associated with an individual retirement account. The investment options may also be narrower in a 401(k) plan. I recently came across a website called BrightScope that helps you quickly evaluate your particular 401(k) plan components including costs and the overall plan rating compared to its peers.
Sara says, “My boyfriend and I have a baby now under a year old and are looking to do a house addition. We have $55,000 in cash for the addition and estimate it will cost $200,000. We are struggling with how to finance it. The mortgage is currently our only debt, which we anticipate will be at around $90,000 by the time we begin renovations. Our liquid day-to-day savings is low, about $4,000 combined. Any advice?”
For my response to Sara’s question and a few others check out the full Ask Farnoosh round-up post over on the Mint blog.
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August 18, 2017
Alternative Ways to Pay for College
Imagine a day when a college degree takes just one year to complete. Tuition is free and, upon graduation, companies like Spotify and Lyft want to hire you.
Adam Braun, founder of MissionU, wants that day to be now.
Earlier this summer I spoke with Braun to learn more about his latest venture MissionU, a program that’s trying to change the way we approach and afford higher education.
(You may recognize Braun as also the founder of Pencils of Promise, an organization that builds schools, trains teachers and fund scholarships around the world.)
While college students typically attend school for four or more years and borrow money to afford tuition, MissionU is a one-year program that has an income-share agreement with students.
Students get charged tuition only once they become gainfully employed upon graduation.
The program’s current (and only) major is data analytics and business intelligence, which Braun says is the top skill set many competing companies are increasingly seeking in new hires.
The average 2016 graduate is carrying about $37,000 in student loan debt, up six percent from the previous year. It’s not uncommon for some to owe double or triple that amount, which makes for a challenging financial life once stepping into the “real world.”
For more alternative ways to pay for college check out the rest of the article on the Mint blog.
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August 10, 2017
6 Ways to Save on Your Family Vacation
To offset the steep entry to Disney, my family ditched the plane ride to the Most Magical Place on Earth, in favor of cruise-controlling it from Worcester, Massachusetts, to Orlando, Florida. Total miles driven: approximately 1,200. Total homemade Persian Kotlet sandwiches consumed: far too many.
This was the summer of 1983 when gas prices were a little more than $1 per gallon. By piling into our white Toyota Camry we saved thousands with cash left over for Mickey and Minnie tchotchkes.
Fast-forward to 2017 and family road trips are still going strong. This year, in fact, AAA finds eight out of 10 traveling families will be packing their cars and coolers for long-distance adventures—a 10 percent increase from last year.
Driving, even with the summer’s steeper gas prices, many times beats the cost of flying (not to mention the agony of getting through airport security.) If you’re planning to venture out on the road any time soon, head over to O, The Oprah Magazine‘s website where I’m sharing some tricks to help you save (and maybe score freebies) on everything from gas to meals to museum passes.
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August 8, 2017
Mint Money Audit 6-Month Check-In: How Did Michelle Allocate Her Windfall?
In March I offered some financial advice to Michelle, a Mint user who was struggling with debt, a lack of retirement savings and a bit of family financial drama amongst her siblings.
Michelle was anticipating a cash bonus from her company and wasn’t sure if she should save the money or use it to relieve her debt.
I recommended a two-prong approach where she uses the cash to play savings catch-up in her retirement account and knock down some of her debt, which, at the time, included a $3,000 credit card balance and $52,000 in student loans.
Six months later, I’ve checked in with the 38-year-old real estate developer, to see if any of my advice was helpful and if she’s experienced any shifts in her financial life.
We spoke via email:
Farnoosh: Have your finances have improved over the last 6 months since we last spoke? If so, what has been the biggest improvement?
Michelle: Yes. I’ve aggressively been contributing to my 401(k) – about 50% of my pay – and had hoped to reach the annual maximum of $18,000 by June, but looks like it will be more like October. I also received a $40,000 distribution from a project that I closed.
For more from our follow-up conversation, check out the full post over on the Mint blog.
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August 1, 2017
How One Mint User is Crushing $11k in Debt in Just One Year
Aaron Hahn vividly remembers the moment he decided to crush his debt.
It happened in March, while visiting his retired aunt and uncle in Arizona.
Their home, with a lush, sprawling golf course as its backdrop, symbolized to him the power of hard work and consistent savings. Not to mention, this was their vacation home, a place where his “snowbird” aunt and uncle enjoyed visiting during the winter months.
“It was my ‘aha’ moment,” says Hahn, who, at the time, had about $42,000 in debt spread across student loans, a car loan and credit cards. “I was like, ‘O.M.G. I want this life.’ I want to do what they’re doing. I want to be financially independent.”
Hahn had also just celebrated his 34th birthday, which served as another wake-up call. “It was a confluence of events…I realized that I just wasn’t taking care of money like I should be, like a grown-ass man,” says Hahn. “I feel like there’s an awakening when you’re in your 30’s.”
His first plan of attack: Obliterate his $11,000 in credit card debt. For Hahn, credit was just a tool to for buying stuff when you didn’t have the cash. “The credit card debt was just something I was misusing,” he admits. “It became another part of my spending arsenal. I used credit for more spending power.”
Since March Hahn, who works in the Navy, has embarked on a diligent plan to reach debt zero across his four credit cards. He’s given himself 12 months to eliminate all balances and has, for the first time ever, begun budgeting. He’s using Mint to stay on track.
Will Hahn cross the finish line in time? I thought it would be interesting (and fun?) to check in from time to time to report on his progress and setbacks. He says he likes having me as an accountability partner.
Head on over to the Mint blog to see how Hahn’s staying focused and handling some setbacks in the first few months. We’ll check back with him in the fall.
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July 26, 2017
Why Renting is Better
You’ve heard the expression countless times: Paying rent is like flushing money down the toilet.
I get it. There are strong reasons for purchasing a home. I’m a homeowner and can attest to the fact that it provides my family with more stability, knowing a landlord can’t kick us out. Purchased at the right time and in the right place, a home can also prove to be a solid long-term investment.
But lately, the case for renting has been strengthening. If you prefer a transient lifestyle with no intentions of staying put for many years, don’t like mowing your own lawn, have bad credit or all of the above, home ownership is probably not right for you…at least, not right now.
But you already knew this.
If you need more convincing, here are some additional talking points over on the Mint blog. Feel free to fire them back at home-owning friends who throw you shade.
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July 19, 2017
Donny Wahlberg and Deepak Chopra: My month in review
If you’ve been keeping up with me on the podcast and Instagram, you may have heard/seen some of the craziness that is my life.
In case not, here is a sampling of my work and play in the last month. I must say, while the entrepreneur life comes with its own set of doubts and risks, I wholly enjoy the many, many extraordinary opportunities I get to experience. And being able to spend more time with my family is everything. I know I’m very fortunate.
June 13: Tim and I manage to sneak away one night to see the award-winning Broadway show, Hamilton, for a belated Valentine’s Day/Birthday/5th Wedding Anniversary celebration. As I’d predicted, the experience was totally worth the splurge!
June 14: My Mint family hosts a panel in NYC with #Girlboss founder Sophia Amoruso for an impolite conversation about money with a room full of awesome women. I recapped the night here on the Mint blog and shared the five money lessons we covered.
June 21: My first born Evan celebrates his third birthday with a fireman-themed celebration complete with pizza and cupcakes. #success
June 27: I fulfill my childhood dream as a 37-year old to be in the same room with Joey McIntyre and the rest of New Kids on the Block. My Iranian parents never understood my infatuation with the band, thus was never allowed to attend concerts as a kid. Now was my time.
June 29: My teammates at Chase arrange a backstage meet and greet for me and the singular Deepak Chopra, as he gives a special keynote held at the financial firm’s summer wellness speaker series. #goals
July 3: My beautiful daughter Colette Soraya turns 4 months! (Seriously, where does the time go?)
July 14: My semi-annual Book to Brand workshop officially sells out! Stay tuned for more updates on future workshops and what’s to come this fall in the coming months.
Hope you’ve had a terrific start to your summer, as well!
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July 18, 2017
How to Rank Your Investments: Your Financial Pyramid
When it comes to investing for future goals, we can’t always do it all, at least not at the same time. We need to make some hard choices. But the best approach may not be super clear.
For example, if you have a child headed to college soon with nothing saved for his or her education, is it wise to pump the brakes on your 401(k) and, instead, allocate money towards a 529 college savings account? College is sooner on the horizon, after all.
And if you have a workplace retirement plan, should you invest in it over a Roth IRA? Which takes precedence?
And where might a diversified brokerage account stack on your financial pyramid?
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July 15, 2017
CBS This Morning: Why are consumers hoarding their cash?
With rising employment, more Americans are earning a steady paycheck, but much of that money is going both unspent and not invested — leaving banks brimming with cash. I stopped by “CBS This Morning: Saturday” to discuss the trend and some ways people can invest that extra money.
Catch the full segment:
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