Walking Disaster

Since the year started, there hasn’t been one day that didn’t inspire an invasive feeling of hopelessness. With so much uncertainty politically and socially, I feel like financial instability is the only stressor I could address. My company offered a few free consultations in different fields, one of which was a financial planner, so I decided to take full advantage. 

I mainly went into it wanting to know about 401Ks, credit, and what to expect from the economy moving forward. Unfortunately, he was unable to help much with the latter considering the Dipshit in Chief and his Nazi lover are plunging us headfirst into another Great Depression, trade war, and actual war as soon as Putin allows. But he had plenty of advice for the first two, so there’s that! He has been in the field for about 15 years, working with multiple different commercial banks, and now working as a financial planner, so I feel comfortable sharing his advice. 

Apparently, when it comes to your 401K, it’s best to max out your contributions in your 20s and early 30s. A good mix of Roth IRA and 401K contributions is a better option than choosing one over the other. Personally, I find it harder and harder to stomach planning for retirement every time my state develops fire tornadoes in the winter, but according to my new best friend, the long-term trendlines are steadily increasing, even with recessions in between. 

When it comes to your 401K, try and pay attention to the following: 

• Your vested balance: this is technically your available balance and should equal the total amount. If not, it could be due to stock falls. 
• Your tax bracket: find out which you are in and try to skew aggressively when you’re early in your career 
• You are not locked into your plan: do the math to figure out how much your company matches dollar for dollar versus staggered amounts. You can always add more or less depending on how your paycheck looks (commissions, bonuses, etc.)

There’s also the fact that maxing your contributions also allows you a bigger pool to pull from if you need to withdraw from your retirement fund early… like a hypothetical third world war, or a state secession, or a full dissolution of all federal programs… or even in case of all three at once! 

When it comes to credit, the discussion was a lot more in-depth. I was initially reluctant to open a credit card at all last year, preferring to stick to debit due to my principle of disliking Wall Street traders bundling credit payments. However, the financial planner (whose name I forgot almost immediately but I’m sure it was something like Ben or Jeff) pointed out that if I bought a house, I would still get a mortgage, which is the same principle. So, as long as I care for my debt, it’s time to get off my moral high horse. 

The key term he taught me about was the utilization ratio. The idea is basically to keep your usage-to-limit ratio around or less than 30%. This means that if your credit limit on one card is $10,000, don’t put more than $3,000 on that card per month. But if you have two cards with the same limit, suddenly you have 30% of $20,000 to pay off each month. I am absolutely not advocating for you to spend that much, but you’ll have a bigger purse for it if needed.

When it comes to deciding between credit cards, don’t worry too much about interest rates because you shouldn’t plan on leaving a balance at the end of each month as it is. Always keep your cash flow under control when it comes to spending on your card. It helps limit your liabilities and increase your credit score.

I was happy he admitted that it’s bullshit that my economics degree gave me the opposite of useful information, but if it had, he wouldn’t have a job. All this to say, the advice is definitely not one size fits all and if you can, I’d recommend talking to a professional. I realize that makes it sound like I’m suggesting a psychiatrist or something, but maybe I just think of it more like credit therapy. I understand all the points logically, but it helps to have the tools for truly conceptualizing and handling your budget. 

I hope this was a little helpful, even if it just helped narrow down your questions for someone in finance and get an idea of where to start. If it wasn’t helpful, that’s fair too; I rarely have good advice. 

Tune in next week for more shenanigans!