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Budgeting shouldn’t be a limiting exercise designed to tell you how to spend your money. At its best budgeting is a tool for organizing your financial resources toward your great life, both now and in the future.

Also Covered:

• A Better Version of Budgeting

• Opportunity Cost

• Changing Costs

• Changing Priorities

Severance packages are considered compensation by the IRS and are taxed the same as other income from a job, but this means not all of your severance is subject to taxation. Reviewing the terms of the agreement with your CPA or financial advisor can help you know exactly how it is taxed. If you are still negotiating your severance, you have an opportunity to lower your taxes by changing the terms of the package.

ALSO COVERED:

• The Severance Agreement

• Estimating Tax Withholdings

• Avoiding Taxation — healthcare & fringe benefits

The last couple weeks saw a stock market drop which has many spooked. Here are the 6 things you should do to keep the market downturn from ruining your financial plan.

Before worrying about strategies for saving and investing start by having a discussion about the goals you and your fiancé have for your life together; such as buying a home, having children, or even taking vacations. Then focus on how you can align your finances toward those goals. This discussion on your goals is the most important financial discussion you can have as it is the only one which directly connects to the life you want to build.

Also Covered:

• INVEST MORE AGGRESSIVELY

• OPEN A HEALTH SAVINGS ACCOUNT (HSA)

• SAVE UP FOR A DUPLEX/TRIPLEX

• SAVE UP TO START A BUSINESS

• BUY A HOUSE

Peer-to-peer lending (P2P lending) is a relatively new investment class and tends to carry with it high risk. As a result, I would not recommend P2P lending as a significant part of a person’s portfolio - definitely not more than 5% to 10% of their invested assets. This means you should build up a significant portfolio of more traditional investments before considering investing here.

Full Article Also Covers:

• Adding P2P Lending Isn’t Necessary to Diversify From Mutual Funds

• P2P Lending Actually Increases Risk to a Portfolio

• P2P Lending Scandals

You can invest in any type of investment account, including retirement accounts, through a brokerage company, a mutual fund company, or through Purposeful SP. At your age, and with over 30 years until you retire, you should consider investing heavily in a broadly diversified stock portfolio which includes both U.S. and international stocks. With three plus decades to go, you only need bonds in your portfolio to help you sleep at night and for rebalancing opportunities. In other words, after doing your research, choose a bond percentage which makes YOU feel comfortable that you have enough "safety" in your portfolio.

Article Also Covers:

• Beware Portfolio Advice From Books, Magazine, or the Internet

• Build an Emergency Fund Before Investing

• Three easy ways to get started with an investing account

Generally speaking, putting the money toward paying off high-interest credit card debt is going to help you the most, then keeping an emergency fund, and finally contributing to retirement plans. There are also traps to be wary of with 0% credit cards. It would help to build a complete financial plan considering your entire financial picture including. . . .

Congratulations on giving yourself the foundation for financial freedom. If you were a client, I would respond to your "what's next?" question with asking you the same thing. What is next on your personal life agenda? Think about your major life goals you want to accomplish in your future. Retirement is obviously one of the major ones, but also think about whether you want to . . . .

Yes, getting a paper divorce can help you financially but it can also be a financial negative depending on your personal situation. As with most things with Personal Finance, the answer is it will depend on a large number of factors related to your family's finances. Below are a few of the consideration that immediately spring to mind, which you will want to explore.

While the concerns over the slower bootstrap method are legitimate and should be considered, I still believe bootstrapping for as long as possible is the way to go for the vast majority of enterprises because of the significant potential downsides of VC and Angel funding. Ultimately the question you want to ask is if it is possible to build your business through bootstrapping considering the concerns you identified. If it is, then I recommend going with bootstrapping as long as you can. Here are potential challenges with getting funding:

The good news is you are choosing between two good options, so you really can't go wrong with either decision. If your student loans are subsidized loans, then the U.S. Government is paying the interest for you, so there is no reason to pay anything on the loans until you graduate. If they are not subsidized loans, then you may want to consider paying just the interest on the loans and then contributing to (or even maxing out) your IRA. This will give you the best of both worlds: being able to invest in your IRA and . . . .

My answer: neither is the optimal strategy – but that the home loan is a less-bad strategy. Your financial planner is correct about it being worse to use your IRA money to pay the loans. When you take money out of the IRA you will have to pay the 10% penalty plus income taxes, which should be 22% based on your income. This means to pay off the $50,000 debt you would need to take out . . . .

As with many things in the financial world, the best answer is "a little of everything." You should get in the habit of investing in your retirement from day 1, even if it is a small amount. Those who put off contributing to their retirement for 'a little while' often find themselves 10 or even 20 years into their career with no retirement savings. To catch up they need to contribute huge portions of their income to retirement accounts. Here is my recommendation for what to focus on:

Your analysis is actually correct, in that cash flow and growth rates are constantly changing, and generally they are changing for the better. As a result, future cash flow increases at a faster rate than previously expected and the stock price is adjusted up due to these increasing cash flows. Because no one can predict the future, as new facts become apparent they changes the expectations of future cash flows. This, of course, assumes . . . .

Finding the right adviser is difficult but not impossible. You will want to research advisers and then set up appointments with at least three or four of them. An adviser should be a fiduciary, should not be a commissioned. . . .

I encourage the two of you not to consider this as an either/or situation, but instead use the money to provide for multiple goals. Focus on multiple goals to help you achieve both financial stability and a happier life . . . .

Before we discuss the investment opportunities for paying back the loans, start by talking with a financial planning specialist to identify additional financial aid opportunities to offset the schooling costs. Although it's great you . . .

As a professor of entrepreneurship, I'm in favor of you starting the business, especially since you have the desire to be able to work from home as a mother. Your financial plan should be developed to support your life goals . . . .

Other than the credit card debt, your other debt and your housing costs actually look quite good. If you can get the credit card debt paid off, you'll be doing very well financially. Your best bet is to make minimum payments on your student loans and your car loan and put everything you can . . . .

From your question, it seems like you truly think working for the bank is the right choice, and I agree. You are not the only person who is going through a situation like this, although it might feel that way. I am also a professor of entrepreneurship and at least once a year I have a student . . . .

In order to stay within your "safest" criteria, you would want to stick with an FDIC or NCUA insured account. You can get slightly higher interest rates by shopping around for high-interest savings accounts from online banks and credit unions. Currently (November 2018), rates on savings accounts are….

When credit cards carry a (any) balance they charge interest on the entire amount, even purchases, on a daily basis. So there is a difference, because the client in scenario B would accrue interest daily on the purchases they made that month, while in scenario A they are only accruing interest . . . .

The end of last week saw a stock market drop which has many spooked and supposed experts have been using words like ‘market crash’, ‘historic drop’, and ‘recession’. Here are the 5 things you should do to keep the market downturn from ruining your financial plan.