November 24, 2022
Financially speaking, this year has been….a lot.
I know it hasn’t been easy for many of you.
|Even with the recent rebound in the stock market, your portfolio values are likely still showing a loss for the past year. And bonds haven’t done their usual lifesaver job during rough stock markets. The sharp rise in interest rates this year has created losses for bond funds and ETFs.
Those rising interest rates have slammed the brakes on the homebuying (and selling) markets, as the average 7% interest rate for a 30-year fixed-rate mortgage is more than double the financing cost from a year ago. And you don’t need me to explain how the sharp rise in the rate of inflation has been a big financial challenge.
I both acknowledge the hardship of all of that and ask you to see past it, through it, and around it.
When it comes to the money challenges this year may have brought you, I am going to remind you of a Suze rule: Focus on what you have, not what you had.
We can’t do anything about what has happened. But we can stand very tall in our truth and focus on what we can do today and tomorrow to make our life better.
Take a look at your portfolio and decide what to keep and what to sell. Any changes you make inside of a retirement account, such as a 401k or IRA won’t trigger any tax bill.
And if you have a regular taxable account, you may be eligible for a tax break. When you sell an investment for less than you paid for it, it will reduce your tax bill, as it can be claimed as a tax loss, and used to offset any realized gains you may have.
Next, let’s focus on spending. I know how very hard it can be right now to pay for your basic needs given the price of just about everything has increased a lot over the past year.
I hope you will stand in your spending truth this holiday season. You are not loved for the gifts you give, but for the love you give. Instead of spending money on gifts, I hope you will consider exchanging gratitude notes with your friends and loved ones. What comes from the heart will likely be treasured and remembered more than what comes from a store.
If you feel the need to purchase gifts, all I ask is that you first take the time to set a budget for each gift, before you start shopping. And that budget should reflect not what you want to spend, but only what you can spend without putting your financial security at risk. It is never okay to run up an unpaid credit card bill, but this year is especially dangerous. The interest rate on credit card balances is rising, and we still are on a recession watch. Please, only spend what you can honestly afford.
Most important is to remember the major law of money this holiday season:
|People first, then money, then things.
|When I say “people first” I mean you. You have to take care of your personal and financial needs before anyone else’s. That is not selfish. That is the sincerest form of love: when you have built financial security you relieve your loved ones of needing to worry about your future, or needing to step in with financial support.
And I am going to repeat myself: I personally think showing gratitude toward those in your life—with a note, or in a conversation—is the greatest gift you can share.
In that spirit, I want to make sure you know that I am so very grateful for each and every one of you. I thank you for your trust in my advice. I thank those of you who communicate in the Women & Money app for your support. And for all who join KT and me on my podcast. I love the community we have built together. I am thankful for all of you.