4 Simple Ways to Scare Your Finances Into Shape

4 Simple Ways to Scare Your Finances Into Shape

What better time than Halloween to finally face down some of your fears?

And we’re not talking about ghosts or spiders, but the stuff that can really send chills down a grown-up's spine—like finally slaying that credit card debt.


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It’s natural to feel intimidated by certain areas of your financial life—and that fear can be certifiably paralyzing for some.

“Most people hide their head in the sand and ignore unpleasant financial realities, preventing them from making proper plans for the future,” says Kimberly Foss, CFP®, founder and president of Empyrion Wealth Management.

But there are simple ways to whip your finances into shape—like these four easy things you can do to make dealing with hair-raising money matters more of a treat.

If You’re Scared by … Estate Planning

It can be frightening to contemplate your own demise—and awkward to bring up any money implications with loved ones.

So it's no wonder that while 69% of people have considered creating a will, only 34% have actually done so, according to a study from Everplans.

The study's more surprising finding?

The biggest hold-up when it comes to drafting a will is sheer lack of knowledge. And that common concern brings us to ...

A Simple Way to Face Down the Fear: In just 15 minutes, you can fill out a $69 end-of-life plan at LegalZoom.com. Their wills are tailored to meet the requirements of each state, and cover everything from beneficiaries to property distribution.

Specialists will review your documents for completeness and consistency, and then provide a downloadable copy. For an extra $10, you can also schedule a phone consultation with an attorney.

In order for the will to be legally binding, it must be signed and witnessed in accordance with your state’s laws.

The possible catch? If your estate is complicated, Foss recommends having your documents reviewed by your own lawyer.

“It’s worth a couple hundred dollars to make sure all the t’s are crossed and the i’s are dotted,” she says. “You can ask your financial adviser for a recommendation.”

RELATED: Ready to Start an Estate Plan? 6 Key Documents to Have

If You’re Scared by … Saving for Retirement

When you got your job, you probably dutifully signed up for a 401(k), set your investment allocations and monthly contribution—and haven't taken a glance since.

“People tend to have a ‘set it and forget it’ attitude,” Foss says, adding that life gets busy, and managing your retirement account can fall to the bottom of the list.

You may even feel intimidated or worried about how exactly to move ahead.

If so, you're in significant company: A survey from Charles Schwab found that only 58% of Americans know how much they should save for retirement—and three in 10 have not made any changes in two years.

RELATED: Not Sure How to Start Saving for Retirement? Try These 5 Pain-Free Strategies

A Simple Way to Face Down the Fear: Here's an easy rule to consider following: Up your 401(k) contribution by 1% every six months.

It’s small enough that your wallet probably won’t feel the pinch, and yet it can really add up over time.

For instance, if you’re a 30-year-old earning $80,000, each extra 1% could yield upwards of $100,000 by retirement, assuming a 7% annual return.

Another nest egg move that Foss suggests keeping in mind: If your employer matches 401(k) contributions, aim to meet that match. After all, the company is essentially giving you free money.

If You’re Scared by … Your Credit Card Debt

Threatening calls. Ominous letters. It’s not Freddy Krueger out to get you—but debt collectors.

A poll by the National Foundation for Credit Counseling revealed that credit card debt is a top source of embarrassment for people. And perhaps out of shame, many of us simply pretend the problem doesn’t exist.

Proof of this blind-eye mentality: A paper by the Federal Reserve Bank of New York found that people underestimate how much they owe in credit card debt by a whopping 37% to 40%.

According to a poll by Bankrate, 62% of Americans lack enough emergency savings to handle an unexpected expense, like a $1,000 ER visit.

A Simple Way to Face Down the Fear: Whether you’ve got a mountain or a molehill of debt, make a list of your credit cards, from highest to lowest interest rate, noting how much you owe on each of them.

Then prioritize paying off the card with the highest rate—since it’s costing you the most in added fees—while paying the monthly minimums on the other cards, plus $5.

“It helps to show good faith to the company, and they may even be more willing to negotiate with you [in the future if you can't pay back the full amount],” Foss says.

Once you've paid down the highest interest rate card, focus on paying off the one with the second highest rate, and so on until you eliminate all of that scary debt.

If You’re Scared by … Your Nonexistent Emergency Funds

The data is, admittedly, pretty scary. According to a poll by Bankrate, 62% of Americans lack enough emergency savings to handle an unexpected expense, like a $1,000 ER visit or $500 car repair.

And if faced with an emergency, the majority of those polled would try to reduce their spending, borrow from friends and family, or rely on credit cards to cover the cost.

“Because urgent situations happen infrequently, people put saving for them on the backburner,” Foss says. “But they’re betting against the house, and if disaster strikes, it can wipe them out.”

A Simple Way to Face Down the Fear: Your ultimate goal should be to create a rainy-day cushion that's equivalent to six months of your take-home pay.

To get there more easily, set up an automated payment for a small amount (say, 5%) to be deposited from your paycheck into a dedicated emergency savings account.

“Treat this the same way as you would a bill," says Foss. Like your mortgage or car payment, it should be non-negotiable. “And don’t link it to any of your other accounts, or you’ll be tempted to tap into it.”

RELATED: It’s a (Financial) Emergency! 3 Ways to Tap a Rainy Day Fund

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Unless specifically identified as such, the individuals interviewed or otherwise listed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services and the views expressed are their own. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.


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