Let's Talk Money
In the last month or so I’ve had so many conversations about money management and the importance of saving money. I’m fortunate in that I’ve always been comfortable talking with and getting advice from my parents when it comes to my personal finances. I’ve learned a good deal from them throughout my life about the importance of saving money, having good credit, and living within my means. Now despite all this good advice, I’ve also made my fair share of mistakes. Just recently, I got very overwhelmed with the costs associated with maintaining this blog and creating content (Yes, it costs money!) and so I had to take a step back and make some serious adjustments.
I haven’t written much about finances or money management in this space but I think it’s worth touching on because well, it’s important. I really wanted to get a professional’s advice so I reached out to Rue Gumunyu, CEO of Ladies Building Wealth, Inc. and asked her some questions regarding financial literacy. I hope these questions will be helpful for you. I encourage you to follow Rue on her social media platforms to soak in more information about how to manage your money well.
A lot of people think they are alone in having bad financial habits. Can you shed some light on what the financial climate looks like for the US?
US economic system relies mostly on debt, student loans being the largest debt for households. According to irs.gov 41.2% of all households carry some sort of credit card debt. Households with the lowest net worth (zero or negative) hold an average of $10,308 in credit card debt.
What’s the best way to eliminate multiple credit card debts? (Interest rate versus highest balance).
There is no one best way to eliminate credit card debt. In my opinion, both ways work. First list all your credit cards and their monthly interest rates. If your APR’s are very high (which means you’re paying more in interest every month) pay off the card with the highest APR first. Put more above the minimum for this card, while you still pay a minimum on the other cards. This method avoids being charged a high interest charge every month.
On the other hand, paying off the highest balance is beneficial if your APRs are lower on the credit cards. While you pay off your highest credit card debt, remember to keep on paying minimums on the other cards.
What are practical skills for saving money when you already have a tight budget?
The first thing is to create a monthly budget and figure out why your budget is tight. Simply list your income and expenses and the difference between the two will tell you how much extra you have per month. Are you having a tight budget because your expenses are high? Find ways to cut extra spending from each expense item you listed above. Do you need a mani/pedi every two weeks? Maybe move that to once a month. Eating out every day? Cook your meals and treat yourself/family to a restaurant once a week.
You might also need extra income, so find a side hustle to boost your income.
Open an online savings account dedicated only to your savings. Start slowly and build up as you go. You can save $1200 per year, with only $100 per month.
Many people struggle with paying off student loans. What advice do you have for eliminating this debt?
Like any other debt, student loans should be paid off monthly or as per your agreed terms. Otherwise if you default you might risk messing up your credit score. Paying more towards the principal lowers down your interest charges and allows you to pay off your loans faster. Look into government programs such as student loan forgiveness programs to see if you qualify.
How important is investing? Can anyone do it?
Savings is for short term and investing is for long term. They are both important! My advice is if you have any sort of debt, especially credit card debt, eliminate that first before you start investing. If you have a job, see if your job have a 401k program that matches your contribution (this is another great way to invest for your future).
Is it better to save and reduce debt concurrently or should people prioritize one over the other?
Having a savings account is always crucial to have in case of an emergency. However, the rule of thumb is to have at least 6 months of your expenses saved up and this can be hard if you have debt. So, my advice is having at least $500-1000 saved up in your emergency fund while you tackle your credit card debt. Having a cushion saved up avoids you reaching into your credit cards in case of emergencies.
For influencers or individuals wanting to start a business, what financial advice would you give before individuals take that leap?
You need to build a good foundation with these few basics before getting started in your own business. Set up your business legally. Find out from your State Government Office website what forms are needed for your business. Separate your personal and business banking accounts by opening a separate bank account. Track and monitor all your spending and create a budget for your business. Also, making monthly, weekly or even daily revenue goals allow you to stay on track and make the adjustments necessary for constant growth.
What's one piece of advice you could give someone regarding their finances?
What’s the best way to eliminate multiple credit card debts? (Interest rate versus highest balance).
There is no one best way to eliminate credit card debt. In my opinion, both ways work. First list all your credit cards and their monthly interest rates. If your APR’s are very high (which means you’re paying more in interest every month) pay off the card with the highest APR first. Put more above the minimum for this card, while you still pay a minimum on the other cards. This method avoids being charged a high interest charge every month.
On the other hand, paying off the highest balance is beneficial if your APRs are lower on the credit cards. While you pay off your highest credit card debt, remember to keep on paying minimums on the other cards.
What are practical skills for saving money when you already have a tight budget?
The first thing is to create a monthly budget and figure out why your budget is tight. Simply list your income and expenses and the difference between the two will tell you how much extra you have per month. Are you having a tight budget because your expenses are high? Find ways to cut extra spending from each expense item you listed above. Do you need a mani/pedi every two weeks? Maybe move that to once a month. Eating out every day? Cook your meals and treat yourself/family to a restaurant once a week.
You might also need extra income, so find a side hustle to boost your income.
Open an online savings account dedicated only to your savings. Start slowly and build up as you go. You can save $1200 per year, with only $100 per month.
Many people struggle with paying off student loans. What advice do you have for eliminating this debt?
Like any other debt, student loans should be paid off monthly or as per your agreed terms. Otherwise if you default you might risk messing up your credit score. Paying more towards the principal lowers down your interest charges and allows you to pay off your loans faster. Look into government programs such as student loan forgiveness programs to see if you qualify.
How important is investing? Can anyone do it?
Savings is for short term and investing is for long term. They are both important! My advice is if you have any sort of debt, especially credit card debt, eliminate that first before you start investing. If you have a job, see if your job have a 401k program that matches your contribution (this is another great way to invest for your future).
Is it better to save and reduce debt concurrently or should people prioritize one over the other?
Having a savings account is always crucial to have in case of an emergency. However, the rule of thumb is to have at least 6 months of your expenses saved up and this can be hard if you have debt. So, my advice is having at least $500-1000 saved up in your emergency fund while you tackle your credit card debt. Having a cushion saved up avoids you reaching into your credit cards in case of emergencies.
For influencers or individuals wanting to start a business, what financial advice would you give before individuals take that leap?
You need to build a good foundation with these few basics before getting started in your own business. Set up your business legally. Find out from your State Government Office website what forms are needed for your business. Separate your personal and business banking accounts by opening a separate bank account. Track and monitor all your spending and create a budget for your business. Also, making monthly, weekly or even daily revenue goals allow you to stay on track and make the adjustments necessary for constant growth.
What's one piece of advice you could give someone regarding their finances?
When it comes to personal finances there is no cookie cutter method. Find what works for you, your income and your goals. I have seen that having goals allows you to stay on track. Find an accountability partner or group to share your goals as well as your wins. If all fails, seek help from finance professional to help you with setting goals and staying on track.
Rue is the CEO of Ladies Building Wealth, Inc and is dedicated to empowering women with financial tools that help them achieve financial wellness and build generational wealth. Her high-impact “30 Day Money Savings Challenge” has inspired and empowered hundreds of women to jumpstart their savings and provide a financial “backstop” for life’s uncertainties and increase feelings of security and peace of mind.
With a background in Accounting, Finance and Real Estate, Rue is also a Certified Financial Educator who is passionate about spreading financial literacy among the community. For more detailed information on 1 on 1 consultations or to book her for your next event, please contact Rue at:
Phone: 209-496-1982 | Email: info@ladiesbuildingwealth.com
IG: @ladiesbuildingwealth | FB: Ladies Building Faith
