Ever feel overwhelmed by the financial realities of adulthood? Student loan debt, unemployment, and credit card woes can all seem like insurmountable challenges. But what if I told you there's a way to navigate these financial hurdles? In this episode we dissect these financial challenges and give you a roadmap to overcome them.
We'll talk about the real truths about student debt and explore repayment options. Show you how to not just survive, but thrive, even when faced with unemployment. We’ll also expose the realities of health coverage, helping you manage medical expenses, and unravel the intricacies of credit card debt. Plus, we'll delve into making informed decisions on renting versus buying a home, tackling financial windfalls, and guarding your personal information.
It's not just about overcoming these financial hurdles; it's about taking control and building a strong foundation for your financial future. So, are you ready to conquer your financial challenges? Tune in, and let's journey towards financial freedom together.
Ever feel overwhelmed by the financial realities of adulthood? Student loan debt, unemployment, and credit card woes can all seem like insurmountable challenges. But what if I told you there's a way to navigate these financial hurdles? In this episode we dissect these financial challenges and give you a roadmap to overcome them.
We'll talk about the real truths about student debt and explore repayment options. Show you how to not just survive, but thrive, even when faced with unemployment. We’ll also expose the realities of health coverage, helping you manage medical expenses, and unravel the intricacies of credit card debt. Plus, we'll delve into making informed decisions on renting versus buying a home, tackling financial windfalls, and guarding your personal information.
It's not just about overcoming these financial hurdles; it's about taking control and building a strong foundation for your financial future. So, are you ready to conquer your financial challenges? Tune in, and let's journey towards financial freedom together.
Hello everyone. My name is Carolyn. Welcome to the Saving for your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives.
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For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this.
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Hello, welcome back to the Saving for your First Home podcast. I'm Carolyn, your Money Coach. Now, today, I'd like to talk about the things that cause us to go off track, the bumps in the road, otherwise known as financial challenges, because if we can deal with some of these challenges before they arise, then we are going to be ready to face them head-on. Okay, so, as I go through this, I am sure that each one of you have faced one of these things at some point in your lives, and I want you to think back and how you felt going through this particular financial challenge, and then also think about how you would have handled it differently now that you have a little bit more financial literacy. And I'm actually going to go through and discuss some strategies and how you can actually navigate and overcome them.
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So first up and it's probably the first real experience that a young person has with finances and that is student loan debt. You're all excited, you're ready to go into school and you either are paying your way yourself or perhaps your parents are giving you a little bit of a cushion. But in the end of the day, once you graduate, you have a little bit of student loan debt, and this is hard for recent graduates because, you have to remember, they're coming from a high school environment, they're going into college, university and really just the beginnings of trying to manage their own money or money that the government has given them to pay for their education, and so probably not many people have financial literacy going in, and so they may have developed some bad habits and unfortunately, racked up some debt. Now, as a new graduate, you're dealt with a lot of other problems, like you know trying to find a job, trying to get some experience behind your belt, maybe even starting a business, becoming an entrepreneur. You know there's so many things that are in the beginning stages when you graduate that having this additional loan payment is just really a heavy burden.
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So what are the first steps Now? The first thing is not to ignore it. I know for a lot of students that are out there that have just graduated, when that first bill comes they're like what is this and why do I need to even worry myself about it? That is not the correct answer. Do not ignore the student loan letters. Open the letters and find out exactly how much it is that you owe. That is really the first step, just acknowledging that you do have to come to terms, that you have some money that you need to repay. The second thing I would say is find out what the repayment options are, because if they're not asking for a lot of money in the beginning, most times the payments are very small and reasonable, because they understand that you are not currently employed, or some of the loans actually wait in six months after you graduate. So you know, maybe by then you will have some employment and you can actually negotiate the rate that you're going to be paying on a monthly basis. So, even if it's a small amount, just start.
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It really is important to create a good foundation as you are building your credit score, to ensure that you are paying at least the minimum that they require back to your loan. And if you do find yourself in a little bit of hardship, there is repayment assistance. So you can apply for that and they will even lower your payments further, or you may even qualify for zero payments for a certain period of time. If you have a disability, there is also assistance for you as well. So really become informed, go out and find that information and once you have the document and it's not feasible to your current situation, reach out to them and talk to them about what your options are. And finally, there is loan forgiveness. So it varies from time to time. Right now, I think that people that are family doctors or nurses going into that type of field they are giving some forgiveness, but doesn't the saying go? It doesn't hurt to ask Always. Find out what your options are and see if you qualify Now next up.
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One of the other financial challenges that comes along with, I guess, going into adulthood is unemployment and job loss. This is a real thing In an economy that is kind of fluctuating right now. It is very possible that you could find yourself in this situation. So if you do have financial responsibilities, unemployment can be a real hit to your bottom line. Now I know for a lot of people sometimes it's a blessing, right, it's the opportunity to rethink about what it is you want to do. It's an opportunity to say, well, no, do I want to start a business? Do I want to go into another field? Do I want to go back to school? Sometimes these bumps in the roads really give us a chance to rethink and reexamine what our true goals are.
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But money does play a factor in all of this. And if you really want to take that time to figure out what it is you want to do, you need to have an emergency fund. So when I say an emergency fund, it really means that you want to be able to cover your essential expenses during the times when it's a period of unemployment or job loss. Now how would you create an emergency fund? Well, technically, it's really just savings. You're going to pull some money off of your income and put it aside for times like these, but you should have kind of an idea or a range of how much it is that you truly need to support yourself during a time like this. So the average is three to five months of covered expenses that is saved that you can rely on to use during this period.
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Now, I know that can be a lot of money for some, so you just need to start somewhere, even if it's half that amount, having an actual fund and continuously putting money towards that. Every pay is going to give you a sense of security and it's going to give you the ability to have freedom if something sudden or unexpected were to happen. Now, I did touch on this before, but if you do face some unemployment or job loss, don't forget about applying for unemployment benefits. Make sure that you fit the eligibility requirements and ask them about upgrading your skills. You know a lot of these programs offer the ability to be able to upgrade and enhance your skills so that you can go into a different line of work, and it will increase the chances of you finding a new job or even starting your own business. So having that emergency fund is going to take the pressure off and allow you to rethink and refocus in on what it is you truly want for your future goals.
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Now another unexpected financial challenge can come with medical expenses. Now, I know in Canada we do have a globalized healthcare system where everybody has access to healthcare. However, there are expenses that can arise when you go to a hospital or clinic. Now, I worked in healthcare for many, many years, so this is very close to my heart. You need to, number one, understand what your health coverage is. A lot of employers will provide some healthcare insurance and that can cover perhaps premium rooms, different things that are not covered by the global plan, but it may have also deductibles and maximums and copayments, and so you really want to understand what your health insurance coverage is. A lot of people when you go into a job, you sign up on the benefits, and that's the last time you even look at the insurance until you need it. So understand what your insurance covers so that when the time comes that you need it, you are going to be prepared and you know exactly what is going to be required out of pocket.
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Alright, and this particular challenge I think a lot of us are faced with, and that is credit card debt. Now, I talk about this in the podcast a lot because it is something that has such a big impact on number one, our credit score, our ability to purchase a home. It has such an impact on so many things and it is 100% under our control. So the number one thing that I think a lot of people don't even know is how much they owe. A lot of people are just continuously using the card as long as they're staying within its limits. You know, hey, what? Why does it matter? Well, if you are carrying a balance, you are paying interest and you're giving money, your part earned money away to the bank, and so it's really important to understand how much is that you owe and the ability that you have to actually pay that off before you go and put anything further on that card.
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Nextly, you want to understand how your interest is being calculated. I did an episode a while back I think it's number 24 about interest, and if you haven't listened to that episode, I highly recommend that you go back and listen to it, because the way interest is calculated depends on the type of vehicle of your debt. So now, credit card interest is based on your average daily balance. So if you do not pay your credit card off in its entirety at the end of the statement period, then you are going to be charged for that daily balance that you carried for the entire month. So I'm going to link an article in the show notes that goes into great detail and it actually has a credit card interest calculator that you can use to see how much interest you're really paying and making sure that you have a full understanding of why it's so important to pay off that balance at the end of every month. Now, if you're in a position where you find the debt to be overwhelming and you really don't know where to start, now I can help you. That is the role of a money coach, and if you aren't on my email list, I highly recommend that you jump on, and you can do that by downloading the budgeting guide it's in the show notes as well because I am hosting a series of webinars and in-person talks at various libraries around the GTA. In fact, on August the 10th, I had a great webinar with the Markham Library about reducing stress that comes with having debt. So if you're on my email list, you'll get the notifications and you can sign up for these free talk, and I provide a lot of great tips and interesting information for you to boost your financial literacy. So Make sure to jump onto that list Now.
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A lot of their challenge that a lot of us are facing in this economic time is housing and renting challenges. You know a lot of the people in their 20s right now are having a very difficult time to be able to move out from their parents' homes and rent or own other own place because the cost of living is just so high right now. So what to do in this situation? This is where I'd love for you to do a little bit of research. You need to understand the financial implications of renting versus buying a home. Now I know you're on this podcast because you do want to buy your own home and have your own asset. However, buying is not for everyone and I did have a Q and A on this a while ago. I think it's episode number 11. If you haven't listened to that one, then go back and check that out, because really you need to understand if renting or buying is for you, which one is the better option, based on your personal needs and the method you have to cover certain expenses. So once you've determined that and perhaps you've decided that, yes, you do want to buy your own property, then saving up for that down payment you are in the right place, because this podcast I go through every possible angle on how to save, how to manage your money, how to navigate through this process. So I hope you guys enjoyed the interview that we had in the last two episodes with Talia. She really broke down all the tips on how to purchase your first home.
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So another challenge that a lot of people face is financial windfalls. Can you believe that that is really a challenge? People think, hey, you win the lottery, everything's all good. Well, actually, a lot of lottery winners end up spending all their money in the first little bit and end up in a worse position they were before they won the lottery. So understanding how to manage and deal with a windfall is really important, and it all goes back to assessing your financial goals and determining how you're going to allocate these funds that have landed in your lap. And a windfall can be big or small. So let's think not so much like the lottery, but perhaps a tax return, perhaps a bonus that comes in from work, perhaps extra pay in a calendar month All of these things are windfalls, and the way you allocate your money during these times is to really stick to your goals and not deviate.
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Don't think that this is a great shopping spree, a time to go out and party. Really stick to your financial goals and put the money towards the things that are super important to you. Now we've already talked about putting towards an emergency savings fund, putting towards a down payment from your home, clearing credit card debt. These are all things that you can do to allocate those windfalls in the proper way. And don't forget to invest. You want your money to work for you, not against you, and always be paying up and catching up. You want to invest your money so that it grows without you having to work for more of it.
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The next challenge that a lot of people face and that can do real damage to their credit score is identity theft and fraud. I know we hear about this all the time. Protect your information and it's super annoying when you have to change your password all the time I hear you on that one but really it is so important because it is so prevalent for people to be able to lose their identity due to fraud. So, protecting your information online using strong passwords, two-factor authentication, shredding documents these are all ways that you can actually protect your personal information. And then, like I said, don't ignore the bills that come in the mail, right? Don't just leave them around. Make sure you are shredding those documents. You're looking at them first and then shredding them.
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Monitor your credit reports that's another thing, because you know things could be happening and you don't even are aware of it. If you're not one that goes into your bank account and kind of looks at the transactions on a regular basis, something might have just slipped you by and you never even noticed it. So really take the time to monitor your credit reports. The banks have like built-in alerts that they have implemented where they will send you maybe a text message saying did you make that transaction and you enter yes or no. You know those are their self-safe guards, so create some safeguards of your own. Every Saturday morning, you're just going to go into your bank account, you're going to review everything, you're going to check your credit score and then you're on with your day, right? Just kind of build it into your personal daily routines and it's something that you're going to keep on top of.
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Now the next financial challenge is something that we really don't predict and that can be divorce, something that happens because you're not able to continue in a marriage and you have to split your assets and start divorce proceedings. Now, this is a very stressful time emotionally, but it can also be a very stressful time financially, especially if you're not aware of your current financial situation. So now, once you've gone through the process and reached a fair settlement, then it's time to think about rebuilding your own personal financial independence right, and boosting that financial literacy is super important. Rebuilding your credit, really talking about how to budget on your own now with one income, discussing what your financial goals are in this new single lifestyle. So it's a really time. It's a time to rethink everything and reset those goals and come up with a new plan.
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Now the next one is going to face us all at some point, but we may be in a situation where you are caring for our aging parents and this may have an impact on your own personal finances, depending on how your parents have planned for themselves. So long-term care planning is important to understand what the plan is as you age, how you want to live, how you want to be taken care of, have those conversations with your parents and with your children about your own personal plan, you know, making sure that you have power of attorneys in place and people that are going to be able to act on your behalf financially and medically, of course, because as you get older, you know decisions may need to be made and those documents are very important during that time. Okay, I've gone through a wide spectrum of different financial challenges and I'm going to end with this one because I think it's kind of interesting how our relationships really can be a financial challenge. So dealing with a spouse that has impulse spending or different spending habits than you do.
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When you're in a partnership, you may have your money split separately, you may have it together, depending on how you came up with your system, but if one person has a tendency to spend more than the other, it really can impact your financial goals. So you want to kind of be on the same page. It doesn't mean you have to change that person, but you want to come up with common goals and some parameters that you can both live in so that you can reach those goals that you want to, like purchasing a home, right, cause that has an impact, a direct impact, on the ability to be able to buy a home, to get loans from the bank, et cetera. So you really want to be on the same page. I've talked out before having money dates with your partner and this is where you have those set calendar dates where you talk about money, you talk about your goals, you talk about what your current situation is and how you can improve it. And it can be fun, right?
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I always say that budgeting can be fun. It doesn't have to feel like it's restrictive. You can incorporate things that travel and spending and ways to how fun that maybe involve a different type of spending than your average consumer spending, like on clothes and things like that. And finally, think about lifestyle inflation. So, as your income goes up, it doesn't mean that you need to expand your lifestyle right. If you have goals and you haven't reached them yet and your income goes up, just continue to live at the same rate that you're currently living at, because anything extra can go towards those goals.
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That was a lot Different challenges that can come our way during our lifetime, and I'm sure there are many more. So you're definitely in the right place. We are going to hit all of these things and give you the tools to be able to reach your financial goals. So I thank you for listening to this episode. I hope that you gain something from it, and if you want more information on any one of these things or you're dealing with one of these challenges, then don't hesitate to reach out to me. I'm just an email or a DM away. All right, have a great week and we will see you next Thursday. Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.