• Nate Baim, MBA, CFP®

Emotion and Intention In Saving Money


Enjoy this week's edition of the Planner's Beta


Beta (n) - climber's jargon that designates information about a climb This digest's purpose is to share observations, ideas, and treasures found this week which you may also find insightful. Sharing does not mean it's an endorsement. I am endorsing the pursuit of knowledge and exploration.




Emotion and Intention In Saving Money


Our emotional state determines many of our spending and savings choices. This article on mindset outlines two competing states we may find ourselves in when making financial decisions: intentional or reactional. In an intentional state, we are often calm, clear-headed, and thoughtful about how our choice might impact our long-term goals. In a reactional state, we are operating in a chaotic, emotion-filled state and may be more inclined to make erratic, short-term decisions to feel like we have some control. While the choice during an emotional state might alleviate some stress, the decision itself might be negatively related to long-term goals. Reaction states lead to focusing on the here and now instead of what the choice might lead to down the road. Instead of making decisions in a reaction state, consider your long-term life goals and long-term wellness. Focusing on these areas necessarily means you are in more of an intentional state. An intentional mindset helps us frame our choices around what is best for us in the long-term instead of the short term. For more information, check out this insight on the psychology of saving.


Our intentional or reactional state can impact financial choices. To make sure your decisions are aligned with long-term goals, try to recognize the type of state you are in before making the decision. If you think you are in a “reaction state,” consider delaying the decision until you are in more of an intentional state.

How to Save for a Big Goal


With the New Year, many of us are committing to new goals. Some goals include making it through January without having any alcohol or losing some weight. But others are wanting to reach financial goals. Whatever your goals may be, it is essential to take a series of steps to increase your likelihood of successfully attaining your goals. Here are the steps I walk my clients through to help them achieve their pursuits.


First, we work together to help you need to understand yourself. I encourage and work with clients to understand their values, those things which make them tick. Then we begin to understand what their big aspirational ideas are for them living their best life. Once we know the kind of life they want to live, we start writing down a series of objectives. We understand that these objectives are more or less the rough draft to their goals. The objectives help us know what may or may not be realistic goals.


Next, we collect all their financial information, and we work to get them organized. Getting organized is an essential step because it helps you understand what you owe and own. Organizing your financial life enables you to see how much cash you have, where all your investments are (and an idea of how they are doing), and what kind of debts you have. Getting organized provides the basis from which you can work off to create realistic and attainable goals.


Third, we setup a budget and work to provide a clear understanding of what cash is coming in and what money is going out. Knowing your cashflow is a vital exercise whether you are in debt or have $1 million of savings. Knowing and understanding your budget enables you to see where there are recurring payments that may be trimmed. A budget helps you see if there is a behavior you need to change. And finally, a budget helps determine how much you can realistically save toward a goal.


Fourth, we analyze different savings strategies that may work for your situation. We are looking to find a plan that provides the highest level of confidence you will achieve your objective. Here we look to see how much your budget allows. We reflect on how this objective aligns with your values and the ideal life you want to live. We then begin crunching the numbers. We determine if you should save in cash, bonds, stocks, or other alternatives. Generally speaking, if it is a short-term objective (within two years or desired attainment), we will look to cash as the savings vehicle. If you wish to attain your goal between two and five years, we will look to cash and bonds as tools to help you get there. Anything that may take longer than five years, we begin to think about investing in bonds, stocks, and other investment options. Once we find a realistic path for attaining your objective, we make that objective into a goal. We do this by writing down the specific actions you need to take to achieve that goal.


And last, we work on implementing those specific tasks needed to achieve your goal. We then monitor your progress and adapt to any changes life may throw your way.


This Month's Financial Planning Item - Review Your Debts


It is a start to a new year, which often means folks begin the year seeking to improve themselves and their lives. Financial planning is a process that systematically helps individuals create, analyze, implement, and monitor their financial and life goals.


A goal many Americans focus on is improving their financial life. One of the critical economic elements many households have to manage is debt. For this month's financial planning item, I encourage you to look through your current debts and ask yourself, "Am I deploying the best strategy to pay off my debts?"


Many American's have student loan debt and/or a mortgage. Use these two resources below to help organize your thoughts on how to improve your debt management strategies.


If you need independent advice on how to manage your debt, so it aligns with your overall financial aspirations, please review the services I offer and place an introductory appointment on my calendar.


If you are a current Pursuit Planning and Investments client, securely upload any statements needing review to PreciseFP. We can discuss this in our next check-in meeting, or feel free to place an appointment on my calendar for any urgent issues.

Managing Your Home Loan - Should You Refinance Your Mortgage?

When interest rates decline, mortgage refinancing becomes a trendy topic. However, there are several good reasons to consider refinancing. Each person's situation is unique, and you should consider many factors before deciding to refinance.

This flowchart helps guide your thoughts when considering to refinance your mortgage. This flowchart considers:

  • Interest rate trends

  • Current loan rates and terms

  • Available alternatives

  • Motivations for refinancing

  • Cautions against refinancing



Strategies for Student Loan Debt - What Issues to Consider

More than 44 million borrowers in the U.S. hold more than $1.6 trillion in student loan debt. There are many factors to consider when choosing a repayment plan or deciding to refinance or consolidate. Each person's unique circumstances will determine what strategies are available and favorable to them.


This checklist helps when planning around student loans and covers:

  • Relief available to borrowers

  • Repayment considerations

  • Costs and benefits of refinancing

  • Eligibility for loan forgiveness



Quote of the Week

"History is not merely what happened. It is what happened in the context of what might have happened." - Hugh Trevor-Roper

 

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