FAQ : Full Moon Financial

I bank my money, why is it important to have a financial advisor?

Banking an emergency fund (3-6 months of expenses for most) is a good practice. But for long term savings, retirement, college funding, even a major purchase that is far into the future, utilizing an advisor can be very beneficial. There is a whole world of investment offerings and they can help you sort through what might be a good choice for you. Trying to go it alone can be overwhelming, and well, it’s worth asking an expert. I often get new clients after they have done it for a while on their own and they are dissatisfied with the whole process. I love investing, but it’s not everyone’s idea of a great hobby.

Is my money at risk when investing?

Yes. If you are invested in the stock market there is risk involved. There are ways to spread the risk out by using a mutual fund that has several companies represented as opposed to investing in one company’s stock.

There are also fixed rate investments that are much lower risk, CDs in a bank for example. Those will offer a lower return generally than the potential return in the stock market.

How bad is it if I don’t pay off my credit card every month?

It’s bad if you aren’t able to over a reasonable amount of time. A few months for example. You don’t want to pay interest on everyday expenses and budget items, but many use their credit cards regularly and pay them off every month to reap the rewards. I think this is a good example of using credit well, and it’s important to pay it off monthly in that situation.

If you only use credit cards occasionally, an unexpected car maintenance bill for example. That’s generally something you would want to pay off in a few months, and it highlights that you may need to reevaluate if you have enough in your regular budget for maintenance items.

Is all debt bad? What is good and bad debt?

No, you must establish credit to qualify for a mortgage for example, that is good debt. Educational debt isn’t considered bad either, although sometimes the payments can eat up a large portion of income. I caution against having too much depreciating debt; vehicles, travel trailers, and credit card debt. It can easily become overwhelming and get out of hand.

ARTICLES

Don’t Get Retirement Wrong!

I don’t expect people to work a 40+ hour week forever. You don’t want to work forever. At some point you will probably want to retire. I think where we missing the mark is we see retirement as a finish line. Focusing on the vacation image, like golf or lunching with friends; but can you do that every day? Probably not. A few times a week sure, but not every day.

With medical advances, you may live another third of your life in retirement. That could be 25 years. What will you fill your days with for the next 25 years? What do you like to do? What gives your day purpose? What gets you out of bed in the morning? If you have a great day, what makes it great?

“Retirement is not what I thought it would be.”

I can’t tell you how many times I have heard this from clients generally 6 months to a year into retirement. It’s heart breaking. If it’s hard to hear this, try living it.

Personally, I can be out my routine around 5 days before I start to miss work. I like my routine. Feeling I accomplished something, helping my clients, seeing their success. I am not alone. My husband is a high school teacher. The first couple weeks of summer he is catching up on rest, doing things around the property that he hasn’t had time to do. He loves to take a nap in the afternoon. But after a couple weeks, he is ready to go back to teaching. We are fortunate that we both have a profession we really enjoy. I know that isn’t the case for everyone.

So again I pose the question…..what makes you feel accomplished? Ok, so start doing it. I know you might have a day job, but add in the thing you think will be your “retirement thing”. Try it on. What if you only like it in theory? Or for a short period of time? I know from all the years of chatting with incredibly talented and diverse clients, we are all unique. We have different talents, and Ideas of a “best life”.

Debunking the common answers

Travel

I often hear “in retirement I will finally be able to travel”. What kind of travel? Luxury resorts, or camping? RV excursions? There are several ways to travel and they can fit a variety of budgets. I would recommend trying them while you are working. I have many couples that liked the RV for a couple trips and then they were done. It wasn’t what they thought. There are always exceptions, but it isn’t a long-term lifestyle for very many people.

Hobby or Passion

Maybe it’s a hobby…. again, try it. If you do it every day, will you still enjoy it as much? Can you incorporate it more into your life now? Can you make your living doing that? Will you try to in retirement? I am always surprised when I find out after a client retires, that they have this incredible talent they were just sitting on until they could afford retirement. I always think they might have more satisfaction if they earned their living that way. It’s not always possible to follow your passion in your career, maybe making a living and supporting your family rightfully took priority. Is retirement the time when you will have the financial freedom to try it?

Home Improvement Projects

Another common response when I question people about this is, “I have so many home improvement projects, I will be busy doing those”. I encourage you to really question for how long you wish to do those projects. Do you really enjoy them? If so fantastic, incorporate them now. If it’s just a project or two, what about when those are finished?

Retiring Happy

Out of all my clients the happiest retirees I know are those who have created a new purpose for themselves. I have a client that works at Target because she likes the employee discount. Another client writes baseball articles for different news sources. I have a handy man who is often paid in “trade” or baked goods. One lady makes beautiful jewelry and learned to sell pieces online. A few clients found a charity they really love, and quickly became involved with fundraising and leadership.

Maybe they aren’t even getting paid other than in satisfaction but that provides them with a purpose. It’s the feeling essential, vital, and important in some way. Making an impact.

Financial planning allows us to plan for most life events that can really impact a retiree’s finances. I think the most overlooked piece is this; the planning each individual must do to really know what will fill the hours they were commuting, working, commuting again and worrying about work. Some may be able to incorporate more of their “best life” lifestyle before retirement. I can only imagine that would be more beneficial in long run mentally, maybe even physically.