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Personal finance advice relies on shame; what if we tried empathy?

Personal finance advice relies on shame; what if we tried empathy?

When June applied to be on the Suze Orman show in 2012, she was a young doctor making $58,000 a year with $240,000 in student loans from medical school and $40,000 in credit card debt. As a divorced mother with three children, who was also caring for a terminally ill parent, June’s income barely covered her living expenses. When a friend suggested that she apply to be on the Suze Orman show, June agreed; she wasn’t familiar with the show but figured it couldn’t hurt to get some professional advice. 



a woman holding a cell phone: @outlandvideography via Twenty20


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@outlandvideography via Twenty20

Initially, her experience with the show producer was positive. The producer told June that she was working so hard and she was exactly the kind of person Suze wanted to help. 

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That’s why she was so surprised when Orman, one of the most well-known faces in the personal finance industry, started off by telling June that she shouldn’t have gone to medical school. Orman then advised her to declare bankruptcy, questioned if she should buy her children Christmas presents, implied that June was spending money on her children to make up for her guilt over the divorce, and said that June’s 16-year old child needed to start working to help take on the responsibility of June’s debt. 

“Tell them the situation you have gotten yourself into.” Suze yelled. “Let them see the reality of when you are irresponsible with facing the truth — what it can cause.” 

This advice may seem shocking, but most traditional money advice is built on shame, often packaged as tough love and personal responsibility. In a shame-based framework, financial stability is accessible to everyone. Certain financial decisions are positioned as entirely positive, such as homeownership and 529 education savings plans, while other financial decisions are considered

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Fast Company’s Advice for the Next 25 Years

Fast Company’s Advice for the Next 25 Years

Something is happening, and it affects us all. A global revolution is changing business and business is changing the world.” That was how cofounders Bill Taylor and Alan Webber introduced Fast Company to readers in November 1995. “A new generation is rewriting the rules of business,” they added, and they emblazoned these new tenets on the cover: Work Is Personal. Computing Is Social. Knowledge Is Power. Break the Rules.

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Taylor and Webber’s manifesto proved prescient. But 25 years later, as society confronts a global pandemic, the worst economic downturn since the Great Depression, and demands to end systemic racism (on top of climate change and growing income inequality), it’s time to rewrite the rules yet again. Some changes had begun before the existential crises of 2020—hourly wage hikes, pledges to lower carbon footprints—but they were largely reactive, and not adopted broadly enough to meet this moment. Taylor, who has gone on to write three books about leadership, recently said, “It’s hard to sustain a great company in a deeply troubled society, to build a healthy corporate culture in a world where so many people struggle with discrimination, lack of access to healthcare, and a planet that keeps getting sicker.”

We editors asked the Fast Company Impact Council—an invitation-only group of forward-­thinking corporate and nonprofit leaders, CEOs, innovators, and founders—to help draft the new new rules of business. During a series of conversations this past summer, they aided us in developing a prescription for the next 25 years, and beyond. (Excerpts of these roundtables may be found on fastcompany.com.)

Bring democracy to work

When the spread of COVID-19 forced many employees to work from home, all illusions about the value of hierarchical leadership “blew up,” says Aaron Levie, cofounder and CEO of enterprise tech company Box. “In fact, it’s

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5 pieces of advice for anyone who wants to buy a second home

5 pieces of advice for anyone who wants to buy a second home

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective.

Buying a second home isn’t a quick process — it takes time, and a lot of planning.

Financial planner and co-founder of Facet Wealth Brent Weiss has seen several clients buy second homes, and says there’s one important thing to have before you start.

“The No. 1 thing that people need to do is have a plan around it,” he says. “If you do it right, it becomes a really amazing part of your financial plan, and it’s a successful moment for you.”

In order to build a solid plan, there’s a lot that needs to happen before you even start thinking about the home itself.  

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Set a realistic budget before you start searching

Weiss says his clients often skip one of the most important steps in the process of buying a home: setting a realistic budget for how much second home they can actually afford. 

“The biggest mistake that I see among second home buyers is that people start looking before they set realistic goals or have a plan for it,” he says. 

“People start Zillowing, and they go online and look for houses. And guess what happens? They call me and go, ‘I’ve found my dream home,’ and it is inevitably more than we probably should fit into the budget,” Weiss says.  

Instead, he recommends anyone thinking about a second home purchase start by setting up the financial side first.

Make sure you have enough cash on hand, both coming in

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Insurance Consumer Advice for Buyers of High-Risk Homes: Liz Weston

Insurance Consumer Advice for Buyers of High-Risk Homes: Liz Weston

When house hunting, the price of homeowners insurance probably isn’t top of mind. But homes with hidden risks can make getting coverage difficult, expensive or both. Learning how to identify them could save a homeowner a bundle.

This could be a particularly important concern for first-time homebuyers and those moving from cities to suburban or rural areas who may not be aware of common hazards, says Jennifer Naughton, risk consulting officer for North America for Chubb, an insurance company.

Three out of 10 city dwellers told a Chubb survey in early August that they were considering moving out of the city because of the novel coronavirus outbreak. Meanwhile, the number of first-time homebuyers in the first half of 2020 rose 4% compared to a year earlier as lower interest rates made mortgages more affordable, according to Genworth Mortgage Insurance.

A homeowners insurance premium can depend in part on distance to the nearest fire hydrant and fire station, Naughton says. Homes that are on narrow roads or otherwise difficult for fire trucks to access also could be more expensive to insure.

Three out of 10 city dwellers told a Chubb survey that they were considering moving out of the city because of the coronavirus outbreak.

“If they have to cross over a bridge, it’s not only a consideration of can a car go over that bridge, but also can a fire engine,” she says.

Some homes are at such high risk of wildfires and severe weather — hurricanes, tornadoes, windstorms and hail —that private companies won’t insure them. Without insurance, buyers can’t get a mortgage, so they need to turn to state-run risk pools such as Beach and Windstorm Plans or Fair Access to Insurance Requirements Plans, better known as FAIR. These policies typically cost more and cover less than regular

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Consumer Reports: Financial advice during COVID-19 | 3 On Your Side

Consumer Reports: Financial advice during COVID-19 | 3 On Your Side

3 ON YOUR SIDE (3TV) – Andrea Bloome has devised a whole system, so she can zero out her credit card bills and plan for her future at the same time.

“My best plan is to take the money before I ever even see it, so I don’t even know it exists,” Bloome says.



saving money

Consumer Reports says it’s important to find the right balance for spending and saving.




Money experts at Consumer Reports agree with her strategy, and say it’s important to find the right balance. Penny Wang is a money expert at Consumer Reports.

“It’s difficult to tackle two financial goals at once, but if you take a two-pronged approach, you can save for retirement and pay down your debt at the same time,” said Wang.

Start by taking a good, hard look at where your money is going. Several online tools can help you track your spending, including Mint.com, which is free, and YNAB, short for You Need A Budget, which costs $84 a year.



money advice mint ynab

Several online tools can help you track your spending, including Mint.com and YNAB.




Then, look for ways to free up cash. You’ll have the biggest impact with big-ticket items such as housing or transportation. But small fixes, like making coffee yourself or cooking at home, can also add up over time.

Next, prioritize your debt. High-interest credit cards should go first and then lower interest debt, like student loans. Setting up automatic payments, like Bloome has can help make it mindless.

“It makes it much easier because that way, you don’t have to remember each month to send in the money and you know that your debt is being paid down regularly,” Wang says.



coffee

Small fixes, like making coffee yourself or cooking at home, can also add up

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