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Money and Moms: Matt Sapaula Talks Personal Finance for ReVamp Project

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Last week, I hosted at our office Chicago’s top bloggers for the ReVamp Project, organized my MJ Tam of Chicagonista.com.  It was a delight listening to the concerns of these forward-thinking, thought leaders for mothers in a changing economy.

Some of their concerns dealing with money were:

  • Getting comfortable, or confident, in dealing with money
  • Dealing with the household’s personal finances
  • How to effectively plan for college and their own retirement when going from job-to-job, career-to-career or building their women-owned businesses
  • And of course, as every mother would, protect their children from financial stresses that both mom and dad may be experiencing

Of course, there was not enough time to discuss all the strategies to address their concerns.  I shared how traditional financial strategies that may have worked in the past, may need an “upgrade” in critical thinking and retool how to put money on their side – now.

For example:

Are IRAs/401(k)s the only and best way to plan for retirement? Before I addressed this, I introduced to them the word, “work-tirement”.  My core belief is that retirement is truly achieving financial independence and not sitting around the house with a remote control in your hand for the rest of your life.  I encouraged discovering work later in life not because of necessity but following a lifelong passion and dream unfulfilled.  Working while financially independent keeps one active in their community, allows them to give back to the next generation and maintains a sense of duty, dignity and pride.

What other than IRAs/401(k)s then?  We discovered financial strategies that maintain financial liquidity and keep the governments hands, as much as possible, from their savings and investments.  With federal income taxes at one of the lowest levels in the history of our country AND Bush-era tax cuts expiring at the end of 2010, the Roth IRA and/or maximum-funded life insurance policies would be worth a second look.  I talked about Roth IRA’s during an episode of the personal finance reality show, The Invested Life, that I co-host on MSN Money.

Is paying off your home the wisest thing to do? I shared with them a listener from our radio show who met with me last week.  She was a middle-aged, divorced nurse who had two homes – a personal residence and second home on the East Coast.  Her current plan, the one she had in her head, would have her personal residence paid off in 13.5 years.  She considered sending a few hundred dollars as extra payments to accelerate paying off her home.  Good thought, however, shows financial discipline which is important.  But is it the best thing to do?

A few mental light-bulbs popped off amongst these mothers during our financial workshop when I revealed how a mortgage should be considered more than just debt but, a wealth-creation and wealth-building tool. Against all common, traditional financial thinking, a mortgage can work for a homeowner’s advantage.

With that being said, I asked if any of the mothers of the ReVamp Project were homeowners.  All of them raised their hands.  I shared with them just one Money Smart financial strategy that I called SCORE (Strategic Cash Out Repositioning Equity).  This one strategy, properly done, would instantly increase financial liquidity, reduce risk from further real estate depreciation meanwhile keeping a homeowner (or real estate investor) in a position of financial choice and control.

Holding financial discussion w/mothers who blog! Big thanks to MJ Tam & ReVamp Project!!

I shared how this listener, who came in for a free financial review, was able use the SCORE strategy to:

  • Pay off her home in 7 years vs. her plan, which would take 13.5 years
  • Have over $180,000 of financial liquidity from day ONE
  • Increase her itemized deductions, minimize what she pays yearly in federal/state income tax which then allows her to keep more of her gross salary from her current job
  • Put an extra $1.1M, over 30 years, towards her “work-tirement” plan allowing her to solidify a dream of becoming financially independent
  • …not increase one dime to her existing monthly budget, cause her to dig deeper into her pocket or reduce her current lifestyle

When these mothers left my financial workshop, we had quite a lot to rethink about and accomplish!

Big thanks to all the Mother’s who attended the ReVamp Project!

MJ Tam of ChicagoNista.com

Melanie Myatt of Tales from the Crib

Carrie Kirby of Chicago Now’s Frugalista

Dwana De La Cerna of Healthier Happier You Reviews

Sevila Schiml of Chinatown Family Dental

Lisa Hanneman of Hannemaniacs

Christine Chan

See you at the next financial workshop!  If you’d like to be notified of our next event, please, join our email list by subscribing below!

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