Tag: credit score

How to Live Your Values

Published in: Resources |

At The Humphreys Group, we talk a lot about values, and encourage our clients and community members to live their values each and every day. But what does that really mean? What exactly are core values, and how does one “live them”?

At their most basic, core values can be defined as principles, qualities or energies that make you feel fulfilled. There is no one specific set of values that each individual should have; your guiding values are as unique to you as your favorite band or your favorite smoothie recipe.

Although we may not all share the same set of values, one thing we do have in common is that when we live our values, we are much more likely to feel aligned, fulfilled and at peace with ourselves. That’s why it’s extremely important to understand what your core values are, and orient your daily life around them.

Discovering your values means you’ll need to get introspective and do a little bit of soul-searching. Start by grabbing a pen and paper and taking the time to contemplate a few questions.

  1. Have you ever experienced a moment so fulfilling that you felt more like you than you ever had before? What have been some of those moments? Maybe one was when you found out you were pregnant. Perhaps one was the day you graduated from law school. Or maybe, one was a random Tuesday afternoon when you went out to lunch with a friend and had an amazing conversation. Try not to choose moments based on society’s narrative, but rather consider any occasions where you felt like the most authentic version of yourself.
  2. Now that you have a few of these ultra-fulfilling moments jotted down, reflect on why these experiences were so fulfilling, rich and meaningful for you. Look at these moment through a value based lens. If one of your peak moments was taking a vacation with your significant other, maybe that signifies that a core value for you is adventure, or maybe partnership. If you cherish the memory of a conversation with a loved one, maybe you value communication and connectivity.
  3. Once you have begun to think deeply about what you value, try to compile a list of at least 3 core values that you’d like to incorporate more into your day-to-day life, and brainstorm ways you can express these values through your daily actions. For example, if your values are service, leadership, and creativity, maybe you volunteer for a leadership position at your local community center. Perhaps you organize a team wine and paint night at work. Or maybe you organize a compost program in your apartment building.
  4. After you’ve come up with a list of values and brainstormed ways to incorporate them into your daily life, be sure to continue to check in with yourself. Keep a journal and assess your progress. Track how these subtle but actionable shifts are making you feel.

At The Humphreys Group, we know that living your values feels fulfilling because we practice living our values each day. We value our community, our clients, and the environment, and by becoming a B Corp, we have shown our public that we’re not just talking the talk — we’re walking the walk.

If you’re interested in learning more about the B Corp certification and how it impacts The Humphreys Group, get in touch today!

 

Money Tips for New Parents

Published in: Resources |

Becoming a parent is an undeniably exciting time. It’s also an undeniably expensive one. From car seats and diapers, to baby food and childcare, the list of expenses seems never-ending. However, just like any large financial commitment, a little planning can go a long way. Here are some key considerations and planning tips for new or expecting parents.

Budget, budget, budget 

We don’t mean to sound like a broken record, but we can’t stress the importance of budgeting enough, especially when the financial commitment is as expensive and longterm as a child. First, come up with a list of all the new expenses you will be responsible for between now and the time your child is an adult. While you don’t need to have college tuition saved up by the time your little one is walking, it certainly helps to consider longterm costs early on. Try breaking expenses down annually. The first year, you might factor in medical bills, a crib, a diaper stash, a breast pump, and baby clothes, among other things. The second year, your budget might cut down on the medical bills, but tack on childcare. By year 10, maybe you’re thinking about back-to-school clothes, after-school soccer, and art classes. Again, you don’t need to panic if you don’t have the extra money lying around to pay for year 10 expenses at the time of birth, but thinking about them early on and planning accordingly can make a massive impact on your preparedness when the time eventually does come.

Once you’ve thought through the costs associated with your child, start comparing the annual budget to your existing budget. Chances are you’re going to be spending significantly more money now that you have an additional human in your care, and it’s likely that you’ll need to make adjustments elsewhere in your budget to compensate for the new spending. Maybe it’s time to stop coloring your hair each month, or maybe it means packing a lunch instead of eating out every day. Whatever your new budget looks like, it’s important to be prepared to face your evolving financial reality.

Build up your rainy day fund

If the pandemic taught us anything, it’s that a rainy day fund is a necessity. Emergencies can and do happen, and it’s always better to be overprepared than underprepared. While the thought of losing your job or getting sick and not being able to support yourself is always nerve-wracking, it’s especially daunting when you have children who rely on you. Aim to put 6-12 months of living expenses into an emergency fund as a comfortable cushion to fall back on in a time of need.

Add your child to your insurance policy

For most health insurance plans, you will have between 30 and 60 days from the date of birth or finalized adoption to add your new child to your health insurance policy. It’s worth doing a little research into various policies and premiums as you consider your new situation. In some cases, it might be worth jumping up to the next level of coverage and paying a higher premium, as you’ll likely be visiting the doctor more frequently with a little one on your hands. In two-parent dual-income households, it might be more cost-effective to keep one parent on a solo coverage plan, while adding children to the other parent’s “employee with children” plan. In any case, doing your due diligence and taking the time to compare your options can end up saving you money.

Start a college fund

The longer you save, the more money you’re likely to have when it’s time for your kid(s) to pursue higher education. State-sponsored 529 plans are ideal, as they allow students to make tax-free withdrawals for tuition and other relevant expenses, as well as offer financial aid advantages. Most 529 plans offer automatic investment options, where money is transferred from your bank account to the 529 plan, and some even offer contributions through payroll deduction. Additionally, some states offer parents tax breaks on their contributions to 529 accounts.

The Humphreys Group can help

There is a lot to consider when you’re a new or soon-to-be-new parent, and we understand that while it’s exciting, it’s likely a little stressful, too. If you’d like a second set of eyes on your financial plan as you begin to factor in your new family, consider scheduling a free consultation with a member of our team.

 

How to Establish Good Credit

Published in: Resources |

Let’s discuss the mythical credit score… There are countless rumors floating around in the ether about credit scores, from ‘don’t check your score, it will negatively impact your credit,’ to ‘married couples have a joint credit score,’ to ‘the better your job, the better your score!’ While a sizable chunk of the information we read online or hear from our colleagues regarding credit scores can (and should) be disregarded, there is no denying that your credit score is an important number with serious implications.

To start with, let’s break down how credit scores are calculated. According to FICO, there are five key factors that are considered to determine a credit score.

  1. Payment history (35%): Have you paid off your credit card balances, and were the payments made on time?
  2. Amounts owed (30%):  Your credit utilization rate — what percentage of your credit limit are you using?
  3. Length of credit history (15%): How long have you had credit? This includes any and all lines of credit you have had over the course of your life.
  4. Credit mix (10%): Do you have a variety of credit products? This could include credit cards, mortgage loans, installment loans, finance company accounts, etc.
  5. New credit (10%): How often do you apply for new lines of credit or open new accounts?

Now that you’re familiar with the key factors that determine a credit score, we’ll walk through three steps you can take immediately to get your credit score on the right track — and bust some credit myths while we’re at it.

  1. Pay down your balance

Pay your credit card bill on time, and pay it in full. This may seem like a no-brainer, but seeing as 35% of your overall score is based on your payment history, we can’t stress enough how important it is. Did you know that not only do creditors look at how much you owe, but they also look at how much you owe in comparison to how much credit you have available? Try to keep this rate, known as your credit utilization rate, under 30%. That is to say, if your credit limit is $10,000, you should never have more than $3,000 charged at a time.

  1. Increase your credit limit

Piggy backing off of tip #1, the larger your credit limit, the easier it should be to keep your credit utilization rate below 30%. If you’re frequently charging over 30% of your limit to your credit card, consider asking for a credit increase. It’s critical to remember, though, just because you have a higher limit does not mean you should start spending more.

  1. Open a new account

Contrary to the belief of some, having multiple lines of credit can be a positive thing. For instance, if you wish to increase your credit limit, but your credit card issuer declines to grant additional credit, applying for a new card through a different issuer will still get you to that higher overall credit limit. As your utilization rate is based on all your open lines of credit and balances rather than on each individual credit card, you could still succeed in lowering your overall utilization rate. Do keep in mind though that if you plan to open additional lines of credit, they should be spaced out. Opening too many new accounts at once can negatively impact your score.

Remember, credit is a tool, and it’s meant to be used. Don’t be afraid of credit, be smart about it! If you’re displeased with your credit score, remember that there are ways to boost it, it just takes a little time, patience, strategy, and willpower. If you have questions about your credit rating, reach out to our team!

 

Credit Card Habits During the Pandemic

Published in: Resources |

In our six-month reflection, we talked about how the pandemic has changed our spending behavior. For instance, we’ve noticed anecdotally that we’re spending less on travel and entertainment, understandably; instead, our discretionary income is increasingly going toward improving the creature comforts of our homes. Now, Money and Morning Consult’s new survey gives us insight into our credit card behavior with data.

Americans’ Credit Card Habits During the Pandemic

The good news is that over half of those surveyed said that they’ve put money toward a debt as a direct result of the pandemic, or plan to in the future.

But even though Americans are decreasing their balances, there’s a lot of anxiety around it; 25% of Americans said credit card debt is a source of daily stress. The high interest rates that credit cards carry is likely one of the main stressors.

With money worries on everyone’s minds, we wanted to answer common questions about credit cards: 

FAQ about Credit Cards

What is a common credit mistake?

A common mistake is relying too much on credit cards. It’s tempting to bridge any gaps between your income and expenses with a credit card. But because most cards have interest rates over 20%, if you aren’t able to pay off your balance in full every month, your debt can snowball out of control quickly.

How can people avoid relying on credit cards too much? 

If you’re on a tight budget, use them only for fixed, recurring expenses, and pay off the balance every month.

Doing this has a positive impact on the two most significant factors of your credit score: payment history and how much of your credit limit you utilize. This will get your credit into good shape should you eventually decide to buy a car or home, and won’t put you in danger of incurring a mountain of debt.

How can people recover from using their credit card too much? 

Seek credit counseling. Through close examination of your cash flow, credit card balances and interest rates, a counselor can help you identify the best strategy to handle your debt. Most credit counseling agencies are nonprofit organizations that offer free phone appointments. Find an agency near you by visiting www.nfcc.org/locator.

Can closing a credit card affect your credit score?

There are two reasons why closing your credit card can affect your credit standing.

First and foremost, one of the biggest factors on your credit score (second only to payment history) is your amount of available credit — in other words, how much you could spend until you hit your credit limit. And it’s good for your credit score to have a lot of available credit.

For example, if your credit limit is $10,000, and you typically keep your balance around $3,000, your available credit is around $7,000. If you were to pay off that balance, your available credit would increase to $10,000, and you might see your score slightly improve. However, if you close your card, you’d then be decreasing your available credit to $0 — and that will negatively impact your score.

Of course, the impact of closing one account also depends on the other open credit accounts you have. If you were to close a card that has a much lower limit compared to your other accounts, the impact on your score might be negligible. But there is another factor to consider: length of credit history. 

The age of your accounts is the next biggest factor on your credit score, and typically the longer the account history, the better it is for your score.

Let’s say you’re 50 years old, and you decide to close that old credit card that you opened back when you were 18. Unfortunately, your credit score is probably going to suffer as a result — even if you hadn’t used that card in several years — because it was one of your oldest accounts.

Keeping your credit cards open doesn’t mean you have to use them, of course. If your credit score is important to you, you can simply keep your unused credit cards somewhere safe and (more or less) forget about them. Some credit card companies may close the account if it’s been awhile since you’ve used it, so you may want to get in the habit of charging a small purchase to that card once or twice a year. But otherwise, you can stop using those cards and still benefit from the available credit they’re providing you with.

That said, your credit score isn’t everything. If the card comes with high annual fees, or if having lots of available credit makes you feel tempted to overspend, that open credit card probably does more harm than good. Closing the card might hurt your score temporarily, but in some situations, it could be better for your overall financial picture.

Financial Planning with The Humphreys Group

Want to learn more about credit card best practices? Check out Part 1 and Part 2 of our series from last year, “Mid-Year Wellness: The Credit Vs. Debit Debate.”

Savings Self-Care: What It Means to Your Personal and Financial Health

Published in: Resources |

We talk a lot about resilience and how our clients can apply their unique skills, talents, and knowledge to achieve their personal and professional goals. We know this can be tiring work, which is why we highlight the important role “Savings Self-Care” plays when it comes to forming healthy habits that can support an individual’s long-term economic health and success.

But what is Savings Self-Care, and how do we go about practicing it?

First, let’s take a step back and understand what financial resilience looks like to us. At The Humphreys Group, we believe the following strengths contribute to an individual’s ability to take charge of their financial circumstances:

  • Living within your means
  • Building savings for an emergency
  • Knowing your credit score
  • Diversifying your income and investments
  • Attaining job security
  • Getting insurance
  • Having conversations and exchanging wisdom about money with others

It’s a substantial list, and many of us lead busy lives that can distract us from doing our best in each of these areas. To bulk up any weak financial resilience muscles, we suggest engaging in a variety of Savings Self-Care exercises that will fit your life and schedule.

Start by examining the financial resilience categories listed above, and determine which ones you want to prioritize. Then focus on self-care steps that target that resilience. For instance:

  • Resolve to budget and save. Money is a stressful and loaded subject for a lot of people, but this is a great first, self-care step to take. Review how much you make, how much you spend and where you spend it. Next, determine how you might alter your habits to live within your means, save more and put money toward an emergency fund. Doing so can lead you toward another self-care step: developing short- and long-term budgets and financial goals (i.e., travel, starting a business, saving for retirement, buying a home, paying for college) that are honest reflections of your life. Ones that you can resolve to stick to.
  • Manage your debt and income. Begin by learning your credit score and, if necessary, resolving to improve it by paying off debts, paying down bills and paying back loans. Once you know what you are spending, what you owe and where your credit rating stands, you can take yet another Savings Self-Care step: begin to work with a financial advisor to develop a plan to build your money through long-term investments and strategies.
  • Assess your goals. As part of the savings self-care process, review what you expect of your life and work goals. When it comes to work and employment security, what else could you be doing to ensure your future (additional training, education, etc.)? As you assess your personal and professional life, make sure you remain mindful of insurance that will sustain you during a job shift or change in health.
  • Remain engaged. Find a supportive community, whether online, in person or both, where you can continue to check in with others who make Savings Self-Care a priority. For instance, The Humphreys Group offers clients the opportunity to participate in Conversation Circles where we tackle issues that may be challenging us on the road to financial success and work together to discuss possible solutions.

We agree with industry subject matter experts, like the one in this U.S. News & World Report article, in the idea that balance, sustainability and empowerment lie at the heart of financial self-care and resilience. But remember that self-care isn’t something you have to do alone. In fact, we believe we are made stronger in our efforts to improve our lives when we work together and support each other. Reach out today for more information from us, or to learn about joining an upcoming Conversation Circle. We look forward to discussing ways you can continue to practice Savings Self-Care, and exploring other strategies that will strengthen your financial resilience.