Episode Transcript
Speaker 1 00:00:05 This is the kaso Podcast network where your trusted advisors are at your fingertips, are in your earbuds At Kassouf, we are an accounting and advisory firm with a team of specialists in a variety of industries. Everything from cybersecurity to healthcare consulting, to everything in between. I'm Tara Arrington and I'm your host. As an ex-journalist, turn marketing professional, I'm the non-expert who will be chatting with our experts, giving you all the tips and tricks you need to help your business succeed. Today we are joined by Michelle Pike. Michelle is principal and financial planner at Kath. She is a certified financial planner and an accredited estate planner, and she specializes in personal financial planning, which includes education, planning, insurance planning, investments, retirement planning, and estate planning, just to name a few of her specialties. But thank you so much for joining us, Michelle.
Speaker 2 00:01:02 Thank you for having me.
Speaker 1 00:01:04 So today, um, Michelle, Michelle was chatting with me a little bit about, um, adulting, right? It's a, it's a fun word we like to say, but it's actually pretty, pretty serious. Like, um, and, and she was gonna, um, enlighten me and all of us on just some like adult, like what we were saying, adulting 1 0 1. What are, you know, some basic things you need to do as a proper adult to make sure
Speaker 2 00:01:28 Your finances
Speaker 1 00:01:29 Are in in chat. Yes, yes.
Speaker 2 00:01:31 <laugh>, sometimes we all like to pretend like we're proper adults and this is some, some ways to do it. Uh, I was talking, the first thing I think about when we adulting and, and we think about it a lot, is our credit scores and we talk about getting credit cards. Mm-hmm. <affirmative>. And when we look for houses or auto loans and everybody's always worried about what their credit score is. Mm-hmm. <affirmative> and if it's high enough or is it low enough. Mm-hmm. <affirmative>, a lot of people don't really know a lot about it until you're right there in front of the loan officer, which is not the time to try to be figuring out, um, what your credit is. Mm-hmm. <affirmative>, so I, the government many years ago, probably 10 years ago, came up um, with a program where you can get your credit report for free mm-hmm. <affirmative> and it's www.annualcreditreport.com and they allow you to get all three of the credit, the three of the credit bureaus reports on there. Mm-hmm. <affirmative> and you can do that once a year. So I always suggest people go and pull it up and it doesn't count against you. Right.
Speaker 1 00:02:33 Cuz that's what everyone's always
Speaker 2 00:02:34 Worried about. Yes. This does not count against you cuz this is the government program and since you can do each one once a year, I always suggest doing one every four months. Mm-hmm. <affirmative> that makes you adult the whole year long is not just a one thing <laugh> mm-hmm. <affirmative>. So for example, you would, you go on and you would pick in January, you'd pick the TransUnion report mm-hmm. <affirmative> and then four months later you go pick the Equifax and then four months later the Experian and then start the whole cycle again. Mm-hmm. <affirmative>, but that covers you then for the whole year and you're always able to see, you know, what your credit is doing if a new account's been opened, um, or if somebody has, has breached into your accounts that that's a good way to see it. Mm-hmm. <affirmative>. And one thing I always recommend people if you're adulting with kids is that kids' identities have been stolen more and more often.
Speaker 2 00:03:27 Oh wow. So that is something I would decco definitely recommend you go ahead and go on that website. They'll make you, um, it's not gonna pull up online, they're gonna mail it to you for a child. Mm-hmm. <affirmative>, but more and more kids are going to college and applying for that first credit card to get that free t-shirt. I don't know if they still do that, but they sure did that when I was in school and finding out they already have five or six credit card that somebody has opened for them and ruined their credit before they even get an opportunity to ruin it themselves. Ruin it themselves. Right. But Right. Um,
Speaker 1 00:03:56 I did not know that.
Speaker 2 00:03:58 Yes. Well cuz you would, you know, if you think about it, you, they, you wouldn't catch it until it's too late. Right. And usually the, the thiefs have already left the building, you know. Right. 10 years earlier. So I recommend checking yours, checking your spouses, um, and checking um, your children's, you know, kind of getting that every four month cycle mm-hmm <affirmative> to, to make sure
Speaker 1 00:04:22 Mm-hmm <affirmative>, I love y'all. Also you saying to number one, um, you know, so many of us don't think about it until we need it for something really important. Right. So just making it a habit. That's such a great, great point. Yeah.
Speaker 2 00:04:36 And as you look at it, you're looking for um, you know, anything you didn't know about but then look for old accounts and make sure there aren't things that are Dragon that you still, um, have opened that aren't really necessary to have open. Mm-hmm <affirmative> one part of your credit history and credit score is about that credit history. And so how long you have an account open for, so you wanna keep, I still have my one account that I opened in college that uh, I keep and I use every so often just so I have a good length of time. Mm-hmm. <affirmative>. But everything else that I've opened between college and now that I'm not using, I have closed. Uh, you try to keep one or two open so you have a good long history mm-hmm. <affirmative>, but the, all those different store cards that they talk to you into, you know, getting and you get your 20% off and then you don't use it again. Just close those down. Mm-hmm <affirmative> close 'em down.
Speaker 1 00:05:25 Yeah. That makes sense. So you've given us, you know, great tip, we need to check our credit score. Yes. What, what else do we need to do to be an adult?
Speaker 2 00:05:34 So let's look forward a little bit to retirement. So, um, we all would love for social security to be there at retirement or if we're already, you know, close there. But, um, one thing you need to do is check your social security statement. Even if you're in your twenties or thirties or forties, social Security Administration used to mail out a statement for you every year and they really don't do that anymore. You've got to go on to the website, which is www.ssa.gov and request your benefit statement. You can go ahead and look at it online. And what everybody does when they pull that up is they see how much am I gonna get in social security? You know, cuz that's exciting to think about how much income you're gonna get. But what I would like you to look at after you look at that is the second page that gives the earnings history for yourself.
Speaker 2 00:06:27 So what happens is when you work each year, it's reported to the Social Security Administration and then they take every year of income that you've earned and then that's how they calculate your benefit. Well I have seen it happen where your income does not get reported correctly. Oh, okay. You know, whether it's gotten completely missed mm-hmm. <affirmative> or a decimals in the wrong place. Mm-hmm <affirmative>. Um, that is critical because when you get to the retirement age and you look back and you say they missed a couple years of your income mm-hmm. <affirmative>, that is really hard to fix. Mm-hmm. <affirmative> 20 or 30 years from now or even 10 years from now, if you can catch it in the years that it happened as much easier process. Yeah.
Speaker 1 00:07:11 So you think like check that once a year, a few times a year?
Speaker 2 00:07:15 No, you really just need to check it every couple years.
Speaker 1 00:07:18 Every couple
Speaker 2 00:07:18 Years because they only report your income once a year. Right. So I would just kind of check that and even if you're not thinking about retirement, if you're young and that seems far off, what that income also calculates is any kind of disability mm-hmm. <affirmative>. Um, so heaven forbid you need to claim disability or if something happens to you and one of your dependents needs your social security mm-hmm. <affirmative> amount cuz you, you receive that if you pass away and still have young children, those young children receive that, that's also based off that income mm-hmm. <affirmative>. So even if you're young and think I'll handle it at one point, you just never know when that social security is gonna be needed. Right. And it's based on that income, which is reported by another government agency. So I suge suggest every couple years I would just put my eyes on it and make sure the right income's on there.
Speaker 1 00:08:04 Yeah. Um, and I know we, you know, we're kind of touching on retirement a little bit, but, um, is it ever too early to start thinking about retirement?
Speaker 2 00:08:13 It's never too early to start thinking about retirement. It's definitely not too early to start saving for retirement. I think we all probably think about retirement all the time, but starting to save a retirement and especially if you're at a place, a corporation or a business that offers a retirement plan benefit mm-hmm. <affirmative> to you where they're matching, putting funds in for you, um, absolutely need to start thinking about that. A lot of times those matches that your company's giving you is free money, money on the table. Mm-hmm. <affirmative> that you're gonna leave if you don't take it. Mm-hmm. <affirmative>. So if they're gonna give you a 3% match, for example, that's on, that's a 3% raise that you're getting mm-hmm. <affirmative>. So there's, there's no reason, um, to not take that. Even if you're not thinking about retirement, it seems so far away it, you think I don't need to worry about it. Mm-hmm. <affirmative> at least put yourself into the present and know you're, you're giving up a raise essentially. Mm-hmm. <affirmative> if you're not taking advantage of those match programs.
Speaker 1 00:09:09 Yeah. I, I remember, um, hearing you say that before and I, I know it sounds silly but I never thought about it that way. And I was like, yeah, that makes perfect, that makes perfect sense. You're not taking advantage of this great benefit that you have and that's just silly not to.
Speaker 2 00:09:26 Right. And I, and I don't know anybody that would say, no I don't. Please don't gimme a raise. You know, which is essentially what you're saying by giving up a match. Please don't give me a raise.
Speaker 1 00:09:35 Please don't <laugh>, I'm just kidding. Please do.
Speaker 2 00:09:37 Right. <laugh> speaking of raise is, you know that retirement Amma, so let's say you're doing the right thing, you're contributing, you're getting the most of the match that shouldn't be where you stop. That's where a lot of people stop. Mm-hmm. <affirmative>, they find out I have to put in 5% to get the most match. That's what I'm gonna do. Mm-hmm <affirmative>, well that's a starting place that should never be your ending place. Right. Because if you think about if you're doing 5% of your income and that that's really not gonna give you enough to retire that you want. So I, something I have done is something I always recommend to people is started that 5% or started at the amount that they match. Let's get to that point, step one. Mm-hmm. <affirmative>. But then every year, and this is what I've every year, if you get a raise, go ahead and if you get a two or 3% raise, go ahead and put that.
Speaker 2 00:10:28 It'd be great if you put the whole or two, two or 3% in there, but at least do 1%. Mm-hmm <affirmative> increase it every single year and especially around that raise time so you don't miss it. Mm-hmm. <affirmative>, you're not used to living on that money anyway, so go ahead and put it in. So I know that's what I definitely have done for myself is started at the minimum level to get that match and then every year just increase 1%. Mm-hmm. <affirmative> and then by the time you've worked many years, you're putting in significant dollars mm-hmm. <affirmative> and really don't miss it cuz you're not used to to having it.
Speaker 1 00:11:00 Yeah. That, that makes perfect sense.
Speaker 2 00:11:03 So I'm gonna check in with you later and make sure <laugh>, make sure you're increasing it. I
Speaker 1 00:11:06 Know. You know, I know. I feel like I need to go fill out a form
Speaker 2 00:11:09 Right now. This is part of adulting so you know, go increase it every so often. Yeah. And the other thing about the retirement plan is a lot of these retirement plans that you have access to have portfolios they put together mm-hmm. <affirmative>, they're diversified, they're based on your age. Mm-hmm. <affirmative>. But if you don't pick that portfolio, I think those are great, but if you don't pick it, you might still be sitting in cash. I've seen or or their default investment. Mm-hmm. <affirmative>. So I've seen a lot of people do the right thing. They're putting their funds in, they're getting a match, they're increasing it. But then if I look kind of under the hood mm-hmm. <affirmative>, I see that they're not really invested. So that, that's also a choice you usually have to make is what do I want to invest my funds in? Right. And of course, course pick something that's diversified and has your age in mind and your retirement date, but don't let that just go to chance cuz if you have it sitting in cash, that doesn't make any any sense. You've done everything up until the last step. Right. So, so do make sure you check at least once a year, make sure you're invested in, in the correct allocation for your risk type and your
Speaker 1 00:12:15 Age. Mm-hmm. <affirmative>, I feel like a lot of people, especially when they're starting a new job and they get all that paperwork about that kind of stuff, they're, they kind of push it to the side and they're like, yes, I'll figure that this seems hard. Yes. I'll figure this out later. Yes. And
Speaker 2 00:12:28 You never do.
Speaker 1 00:12:29 You never do.
Speaker 2 00:12:29 Right. You never go back. You never do. Mm-hmm. <affirmative> and one of those other, another adulting thing, um, one of the papers that you get when you sign up for retirement plan is who your beneficiary is. And that's something I see more and more frequently that people put someone down as soon as they started working and now they have gotten married or they have children or something else that's happened in their life and they forget to go back and, and check mm-hmm. <affirmative> to see who that beneficiary is to make sure it really makes sense, you know, for their family. So that's something every couple years I'd put on your list to mm-hmm. <affirmative> to check those retirement plans and check life insurance. Sometimes you get that as an employee benefit. Sometimes you have that separate but Right. But checking those beneficiaries to make sure, especially if you have a change,
Speaker 1 00:13:16 A lack of
Speaker 2 00:13:17 Change Yeah. In your, in your family or in your life mm-hmm. <affirmative>, but, but every so often just check it and make sure you have a copy of it. Mm-hmm. <affirmative>, I've seen that too, where it just gets stuck in your employee file and nobody can find it and mm-hmm. <affirmative> someone passes away and so they just kind of have to, to guess or go with what the law is, so. Right. Make sure you keep a copy in your important adulting 1 0 1 file that she, that she can make. Yes.
Speaker 1 00:13:43 Yes. Um, yes. The, the file very important for the adulting, right? Yes. Because if you do all this stuff and then like you said, no one can find all these important documents really doesn't help, does it? No. No,
Speaker 2 00:13:53 It doesn't <laugh>. No, it sure doesn't. <laugh>
Speaker 1 00:13:57 Well. Any, anything else you think for to help us adult?
Speaker 2 00:14:02 Well, I mean we, I kind of mentioned life insurance a minute ago. Um, one kind of insurance people don't think a lot about is their property and casualty insurance. Mm-hmm. <affirmative>. So that would be something we all buy when we buy a home or if we have an apartment, we have renter's insurance or when you buy your car, that's something we all get once. So for example, we buy a house and we get insurance and we're great mm-hmm. <affirmative> and then we honestly never look at it again. The premium comes mm-hmm. <affirmative> once a year, sometimes you pay it through your escrow, so you don't even have anything to do with it. You don't think about it again. And I have noticed as home prices have gone up mm-hmm. <affirmative> as timber prices have gone up, the ca the cost of building has gone up. Mm-hmm. <affirmative>, I have noticed everybody's, um, homeowner's insurance policies that, that I'm reviewing on there should be the first line it says what your home is covered for mm-hmm. <affirmative>,
Speaker 2 00:14:56 So that started at the price that you paid for the home mm-hmm. <affirmative> and then it automatically increases a little bit every year according to your insurance mm-hmm. <affirmative> company, how much they're gonna increase it. The problem I've seen is that home prices and rebuilding prices have gone up so high. Mm-hmm. <affirmative>, the amount that's on your coverage that you're paying for is not adequate. Right. So if you don't have adequate coverage and one of these tornadoes comes through that we have mm-hmm. <affirmative> or a fire mm-hmm. <affirmative>, the insurance company's only gonna pay you for the amount that you have on that policy.
Speaker 1 00:15:31 Right. And I, because I I know you guys shared this tip in our internal newsletter recently. Yes we did. And um, you know, something like, I know y'all mentioned in that like if you make like a big renovation on your home mm-hmm. <affirmative> and makes it worth more, and then if that coverage doesn't reflect that, you're kind of outta luck Right. If something happens. Right.
Speaker 2 00:15:50 Right. One little caveat, you do need to think about when you're looking at the value that that policy has on there mm-hmm. <affirmative>, remember that part of the value in your home is the land uhhuh
Speaker 1 00:16:02 <affirmative>.
Speaker 2 00:16:02 So if your, your home is worth $300,000 and you're only covered for two 50, that's probably okay because your land is probably worth 50,000. Right. You know, so if there was a tornado or a fire, your land would still be there. You don't need to replace your land. Right. So the value hopefully hopeful we have other issues <laugh>. Yes. So what you're really looking for is the price to rebuild the home. Don't forget part of the value of your, when you look at the value of your home, if you were to sell it, it includes that land. Yeah. That's, it's also a good time when you're pulling that policy out to check that deductible mm-hmm. <affirmative> amount that you have mm-hmm. <affirmative>, um, a lot of times it's either a percentage of your value of the home or it's a thousand dollars or $1,500. Make sure that makes sense for what you would actually claim.
Speaker 2 00:16:57 Mm-hmm. <affirmative>, I've seen some people that have a $500 deductible mm-hmm. <affirmative>. And if you think about it, if you really had a $500 loss, you probably wouldn't a make a claim because you know it's gonna go against you. Mm-hmm. <affirmative>. So have it, if you increase that deductible, that lowers your premium. Mm-hmm. <affirmative>. So have it make sense, you know what amount, same thing with your car, people have $250 deductibles on their car. Really? If you had a $250 or $300 loss, you really wouldn't claim that. Right. So make sure that makes sense. And there's a significant indifference in the premium if you can increase to $500 or a thousand on your auto. And the same thing for your homeowners, homeowners, don't forget that. Include there's a very small limit for any jewelry or electronics that you have artwork. So if you have significant value in any of those things, you really need a special rider. Mm-hmm. <affirmative>. So as you're doing that kind of annual check of your insurance, make sure if there's special things in your house and those electronics add up, um mm-hmm. <affirmative> pretty quick. Or if you've acquired an artwork or some jewelry, make sure your insurance company knows about that mm-hmm. <affirmative> and has it covered separately.
Speaker 1 00:18:10 Yeah. That, that, that makes sense. That's, that's really good advice. Yeah. I think that we are on our way to adulting Michelle. All right. Let's And by me good. I mean me.
Speaker 2 00:18:20 All right, <laugh>.
Speaker 1 00:18:22 Well, thank you so much for stopping by the podcast and sharing your expertise with us.
Speaker 2 00:18:27 Thank you. I appreciate it.
Speaker 1 00:18:31 Thank you for tuning in to the kassouf podcast network. Resources for today's episode are linked in the episode notes. Thank you to our producer Russ Dorsey and for Kassouf for powering this podcast. Be sure to stay up to date on new episodes and more information about today's episode by following at Kaco. Until next time, thanks for tuning in.
