Episode #35- 6 Financial Pains and How to Fix Them

Wealth Decisions Podcast Transcript for Episode #35: 6 Financial Pains and How to Fix Them

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Welcome to The Wealth Decisions Podcast, where each week I take 15 minutes or less to discuss crucial wealth decisions and mindset hacks to help you live a richer life.

I'm your host, Brian Muller, and I've been in the financial services industry for over 25 years, and I'm also a certified life and health coach.

And I have a passion for helping people make better decisions around their money and their life.

So for the sake of time, let's dive right into it.

In today's episode, we're going to be talking about six financial pains and how to fix them.

Now, every one of us at some point in our lives have had some type of financial pain.

And most of the time, we didn't have the tools to fix them.

We didn't learn a lot of these things in school.

So today, we'll explore some of these top financial issues that many of us have faced or are facing right now, and provide just some kind of practical solutions to improve your financial health.

So let's get started and let's talk about financial pain number one.

And that's living paycheck to paycheck.

I often would hear in self-development books someone say, if your goal is to make just enough to pay the bills, that's exactly what you'll get.

But it is one of the most common financial pains that most individuals have is feeling like they're living paycheck to paycheck.

And this can cause a lot of stress and kind of leave you vulnerable to any unexpected expenses.

I hear this a lot that Americans, especially today with inflation higher, that people feel like they're living paycheck to paycheck and they can't save for the future.

But how we can fix this is, first of all, really looking at our budget, create a detailed budget to understand your income and expenses and look at what expenses you can cut and then find areas where you can save money.

We can all look at our budget and find some things to cut out.

Increase your income maybe through side hustles or approaching your boss for a raise.

Build an emergency fund once you've figured out your budget to make sure that you cover unexpected expenses.

I heard a statistic one time that the average American could not come up with $1,000 if they had an emergency.

You have to find a way to pay yourself first so that you can save for the future.

Finding room in your budget to establish that emergency account, but also save for the future with balancing living for today.

The only way to do this is by looking at your budget and creating a better budget that works for your current situation so that you're not feeling like you're living paycheck to paycheck.

Financial Paying Number Two, High Credit Card Debt.

We all know that credit card debt can get out of control.

With high interest rates on credit card debt, it can be really hard to get out of debt unless you create some type of plan.

With interest rates where they are in credit card, I think the average credit card out there today is about 28 percent.

Using the rule of 72, divide that 28 by 72 and that will tell you how many years it's going to take that balance to double.

It equates to about two and a half years.

Every two and a half years that if you have a balance of 10,000, for instance, and you're only paying the minimum payment, that balance is going to double in two and a half years to 20,000, and then two and a half years after that to 40,000.

10,000 of debt is something you can get out of, but 40,000 makes it very, very difficult.

So how do you fix this situation of having high credit card debt?

The first thing you need to do is stop using credit cards for new purchases.

Number two, create some type of debt repayment plan.

Focus on high-interest cards first, and then go from there if you have more than one card.

Consider maybe a balanced transfer option to lower interest rates or some credit cards will have interest free for 12 to 18 months.

Number four, negotiate with creditors for lower rates or payment plans.

Not very many people think of doing that.

Look into some type of debt consolidation loans if appropriate for your situation.

Financial paying number three, lack of retirement savings.

Many Americans worry about not having enough save for retirement, and this can lead to some anxiety about the future.

I talked about this in financial paying number one, you have to find a way to pay yourself first.

To fix this lack of retirement savings, don't focus on where you're at compared to other people.

Just start saving for retirement as soon as possible.

Figure out a way to start small.

Start with 3% of your income, then bump it up to 5%.

The goal is to try to get the percentage you put away for retirement to be anywhere north of 10%, depending on what your actual financial goals are.

Ideally, 15% to 20% if you want to achieve financial independence.

Take full advantage of your employer matches at your retirement plans, but don't stop there.

Just because you've maxed out that part to get your match doesn't mean you're maxing out your 401k or tax advantage plan.

And increase your contributions gradually over time.

Once you've gotten close to maxing out your 401k, consider opening up some type of IRA or Roth IRA.

And then just always continue to educate yourself on investment options and asset allocation.

Make sure you have the right mix of investments in your 401k to take full advantage of that tax-deferred growth.

Financial pain number four is student loan debt.

You know, the weight of student loans can be overwhelming, especially for some of the recent graduates.

So how do we fix student loan debt or the burden of student loan debt?

Is first, you need to understand your repayment options, you know, including some of the income-driven plans.

Also look into loan forgiveness programs if you qualify.

Consider refinancing for better interest rates.

And make extra payments if you can, when possible, to reduce the principal faster.

And also explore some of the employer student loan assistance programs that are out there today.

Financial pain number five is just the inability to save for major life goals.

You know, whether that's buying a home, starting a family, or traveling the world, you know, financial constraints can hinder your ability to achieve for major life goals.

If you're living paycheck to paycheck, and you're not putting away money, it can be very, very difficult to save for other goals.

How do you fix this?

Obviously, going back to financial pain number one, is you need to understand your budget, and figure out ways to make room to be able to save, not just for the future, but for some of these major life goals.

But you also want to set some clear and specific financial goals with some type of timelines, and automate your savings to consistently work towards those goals.

If you are saving for a home, you should have a separate savings account that you funnel money into each month.

If you are saving for travel or experiences, you should have another savings account that money funnels into.

You can even put a little nickname of those accounts to keep you focused on what those accounts are for.

You can also look for ways to increase your income by having a side hustle or getting a raise.

You may want to even consider downsizing or reducing expenses.

Maybe you shouldn't be driving a car with a $1000 car payment if you are not able to save for major life goals.

Financial pain number six is a poor credit score.

A low credit score can limit your financial options and lead to higher interest rates on loans and different credit cards.

The way to fix this is check your credit report for errors, possibly, and dispute any inaccuracies or what you believe to be inaccuracies.

Obviously, pay all your bills on time, every time going forward.

Reduce your credit utilization ratio.

That's a big determinant of your credit score.

A general rule of thumb for this credit utilization score is you shouldn't use more than 30% of your available credit.

Anytime you do that, it affects your credit score.

So, try to keep that, the amount that you use of your credit limit below 30%.

And remember this, keep old credit accounts open to maintain a longer credit history.

A lot of people try to close out those old credit accounts.

Keep them open, but don't use them for your basic needs.

And then, the last thing to be able to fix a poor credit score is to consider a secured credit card to rebuild credit responsibly.

Just always remember that improving your financial situation takes time, it takes effort, but the peace of mind and security it brings are gonna be well worth it.

You know, start by identifying your biggest financial pain and start to take some small, consistent steps towards addressing them.

Take one small action today to improve your financial health.

And that's it for today's episode, Six Financial Pains and How to Fix Them.

And if you like this episode, please rate the episode, make some comments, and hit the notification bell to get updated on future Wealth Decision Podcasts.

And please, if you could, share it with a family member or a friend.

My goal with the Wealth Decisions Podcast is to reach over 100,000 people by the end of the year in the Twin Cities and beyond, so that people can make better wealth decisions to live a richer life.

If you'd like to schedule a discovery call with me, you can go to my website at momentouswealthadvisors.com and I'll spend some time to get to know you a little bit and find out if I might be able to steer you in the right direction or help you with your financial future.

Once again, thanks for listening.

Have a great weekend.

Listen to this episode on Apple Podcasts or Spotify


-Brian D. Muller, AAMS® Founder, Wealth Advisor

Momentous Wealth Advisors in a fee-only fiduciary advisory firm

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