The Do’s And Don’ts Of Reducing Debt

The Do’s And Don’ts Of Reducing Debt

According to one study, the average American has $90,460 in debt, which includes all types of consumer debt, such as credit cards, personal loans, and car loans.

Whether you owe a few thousand or hundreds of thousands of dollars, paying off debt can lead to less stress and more opportunities. Use these do’s and don’ts to help reduce your debt burden and enjoy a higher quality of life:

Do Get Organized

First and foremost, take inventory of your debts, so you have a clear picture of how much you owe. Jot down all of your debt accounts, their total balances, and monthly payment requirements. Don’t forget to include small bills, such as overdue utility or cell phone bills, as these can also hinder your finances if you leave them unpaid. Knowing your debts is a great tool for reducing debt.

Don’t Take On More Debt

While this may seem obvious, avoiding any new debt is essential. You might have to forgo or delay certain purchases, like a new car or furniture. The more debt you take on, the more difficult and time-consuming it will be to become debt free.

Do Create A Debt Repayment Plan

Fortunately, there are several ways you can pay off debt. With the debt snowball method, you begin with your reducing your smallest debts and move on to more significant debts to build momentum and stay motivated. The debt avalanche is when you focus on debts with the highest interest rates first to save the most on interest. You may also want to explore other options like debt consolidation and credit counseling.

Don’t Forget About An Emergency Fund

While throwing all your extra money toward debt may be tempting, an emergency fund is essential. Before you pay off any debt, ensure you have three to six months’ worth of expenses. One emergency expense can force you to take on more debt and derail your repayment progress. An emergency fund may also give you some peace of mind.

Do Put Money Windfalls Toward Debt

A money windfall is a sudden, unexpected influx of money. If you get one from a bonus, inheritance, or gift, use it to pay down debt. You can save a portion of it for fun, like a dinner or a weekend getaway.

A Financial Professional Can Help

A financial professional can help you develop a solid game plan for reducing debt so you can improve your finances and increase your financial security. Contact us today to get started.

SWG2306340-0722d The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

The Impact Of Inflation On A 401(K)

In simple terms, inflation is the rate at which the cost of goods and services rises. Due to inflation, it costs more money to buy groceries, gas, or anything else than it did in the past. Inflation can also affect your retirement savings as stocks, and other investments don’t automatically adjust for it. Rising inflation means your investments will have to work harder to keep pace. The extent to which inflation will impact your 401(k) will depend on several factors, like your investing strategy and how close you are to retirement.

What Is The Impact Of Inflation On A 401(K)?

Unfortunately, you can’t stop inflation as it’s out of our control. But you can be mindful of it and implement certain strategies to help lessen the burden of inflation on your 401(k). Here are some ways to help lessen the impact of inflation on your 401(k):

1. Maintain Your Contributions.

When your paycheck doesn’t go as far as it used to, it can be tempting to reduce your 401(k) contributions. If possible, maintain them to ensure you get the full match if your company offers it. You might even want to increase your contributions so that more money goes into your account. In 2022, you can contribute up to $20,500 or $27,000 if you’re 50 or older.

2. Diversify. Diversification Means Spreading Your Money Across Different Types Of Investments To Reduce Risk.

During periods of inflation, it’s a good idea to diversify your portfolio with a mix of strategies that can help weather volatility and inflation.

3. Pay Attention To Fees.

While minimizing investment fees is important, it’s essential when inflation has the potential to erode your 401(k) returns. The less you pay in fees, the more of your returns you’ll get to keep in the long run. Speak to your financial professional about your fees and what you can do to lower them. Also, consider less expensive strategies that are appropriate for your situation.

4. Be Flexible.

If you’re already retired, you might have to make some lifestyle changes to cope with the effect of inflation on your 401(k). Maybe you can move to an area with lower real estate taxes. Or perhaps you can postpone some of your trips or drive less to save on gas. Another option is to pick a side hustle or part-time job to add a cushion to your retirement savings.

Consult Your Financial Professional

A financial professional understands how inflation impacts 401(k) accounts. If you’re unsure what to do with your retirement savings, don’t hesitate to reach out for advice. Contact us today to get started.

SWG2306340-0722e The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

5 Ways To Keep Emotions Under Control During A Volatile Market

The stock market can be volatile and will always go up and down. If your emotions run high during a volatile market, you’re not alone. The good news is you can take steps to help keep your feelings of fear and anxiety in check and avoid poor investment decisions based on emotions. Here’s a closer look at five ways to keep your emotions under control during periods of stock market volatility:

1. Focus On Your Goals

The foundation of your investment strategy should be based on your unique situation and portfolio’s goals. While some are short-term, others are long-term. Take a step back, think about your goals, and then determine if the current volatile market conditions require you to change your portfolio to meet them. You may find that staying the course and riding out the storm is suitable for now.

2. Don’t Obsess Over Your Portfolio’s Performance

While it may be tempting to log in to your account every hour, on the hour, to check your portfolio’s performance, doing so can do more harm than good. If you check it too often, you may make decisions during downturns that you later regret. Do your best to limit the frequency you check your portfolio since it benefits your emotional and financial wellbeing.

3. Maintain An Emergency Fund

When in a volatile market, an emergency fund can help provide peace of mind. Be sure to have at least six months’ worth of living expenses in an account you can access at any time. If you don’t have easy access to cash, you may be more likely to make decisions based on emotions and fear instead of facts.

4. Keep The (Stock Market) Faith

Financial advisory professional Nick Murray once said, “Investing is the age-old, never-ending emotional battle between fear of the future and faith in the future.” History has shown that the markets bounce back after dips, wars, recessions, and depressions. Therefore, calm down and remember that a market correction is temporary.

5. Talk To A Financial Professional During A Volatile Market

A financial professional understands how to manage the lows and highs of a volatile market. If you’re unsure what to do during a volatile market, reach out to a financial professional for advice to help you control your emotions and avoid rash decisions.

SWG2241771-0622b The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

The Importance Of A Diversified Portfolio In A Bear Market

The old saying, “Don’t put all your eggs in one basket,” applies to many areas of life, including investing. If you put all your money into a single investment, you may take on more risk than you would if you had a diversified portfolio.

A diversified portfolio is a collection of different strategies from various industries, countries, or risk ratings. The reason for having a diversified portfolio is that if specific strategies decline, others offset the decline and accumulate in value. Diversification is essential in a bear market when stock prices are falling by 20% or more since maintaining a diverse portfolio can make a bear market much more tolerable to some investors. Here are some strategies that may help diversify a portfolio during a bear market:

Bonds

Ideally, you may want to consider a wide range of Bonds such as corporate, municipals, Treasuries, and even foreign issues since bonds may move reverse to stocks. Also, be aware of short-term to mid-term maturity dates at specific times aligned with your financial plan to provide you with income or money to reinvest.

Stocks

When it comes to long-term investing, it’s wise to have a diversified portfolio among various domestic stocks. Including large and small and rapidly growing and dividend-paying stocks.

REITs

Don’t forget to add real estate investment trusts (REITs) to your diversified portfolio. They consist of real estate assets that typically produce income at different times.

Annuities

An annuity is a contract with an insurance company to provide an income stream during retirement. It is for a specified period or the remainder of the annuitant’s life, regardless of market performance. Annuities help address the risk of outliving retirement savings and are purchased with monthly premiums or a lump-sum payment.

How Can You Weather A Bear Market?

In addition to diversifying your portfolio, consider these ideas when the stock market drops and leaves you feeling anxious:

Keep Your Goals In Check

You should design your portfolio in a way that will allow you to meet your short and long-term goals. Whether you’re saving for a home renovation, retirement, or college tuition years down the road, your portfolio strategies should reflect your goals. In a bear market, consider your goals and don’t make any changes if you’re still on track to achieve them. Sometimes, your best course of action is to stay the course and ride out the storm.

Realize Downturns Don’t Last

Time after time, history shows us that a bear market is an inevitable part of investing, as is market recovery. While past results don’t guarantee future results, remembering that downturns are only temporary may be just what you need. This can help avoid making rash decisions based on panic and fear.

SWG2241771-0622e The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax-qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.

In Conclusion

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

Should You Rebalance Your Portfolio?

Is it time to rebalance your portfolio? Your portfolio should align with your risk tolerance, retirement timeline, and long-term goals. These factors may help you decide on the appropriate asset allocation for your unique situation.

When you rebalance your portfolio, you sell off higher-performing strategies, reinvest the returns, or invest the return into other strategies. Rebalancing your portfolio may help you manage portfolio risk and help improve returns. You may want to rebalance it to help ensure your portfolio’s strategies continue to support your goals. In general, there are three approaches to how often you should rebalance your portfolio, including:

  • Time approach: You may rebalance your portfolio every quarter, six months, or year. A time approach prevents you from changing your portfolio based on emotions
  • Tolerance threshold approach: The tolerance threshold approach is when you rebalance your portfolio when its allocation deviates by 20% or more. This method helps to remove emotions from your investment decisions based on actual performance rather than an arbitrary period.
  • Hybrid approach: The hybrid approach combines the time approach and the tolerance threshold approach. This approach occurs when you rebalance at a regular time interval but only if your portfolio exceeds certain thresholds.

Rebalance Your Portfolio

Once you determine which asset classes have deviated from the planned allocation or your financial plan, you may want to rebalance if appropriate. Here are the steps to rebalancing:

First, Consider The Tax Implications That Come With Rebalancing.

While you don’t have to worry about taxes with tax-advantaged accounts like 401(k)s, you will be responsible for capital gains tax on taxable accounts. Consult your tax and financial professionals to help you determine how rebalancing will impact your taxes.

Second, Sell The Strategies

In the asset classes that have exceeded the planned allocation.

Third, Determine If You Want To Invest

The asset classes that have fallen below your desired allocation, invest in new strategies aligned with your risk tolerance and goals or stay in cash to invest later.

Rebalancing an investment portfolio can be challenging. A financial professional can help you determine if rebalancing is appropriate for your situation, help with the process, and determine the ideal strategies for your portfolio’s new allocation.

SWG2241771-0622c The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.

In addition, M3 Wealth specializes in providing strategies and guidance for those who are seeking a better lifestyle in retirement. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!

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