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Written by: Gilles Hudelot, Director of Education

If you carry debt on multiple accounts or loans, then you have likely considered debt consolidation. Not only can debt consolidation simplify your bills into one monthly payment, but it can also help you save on high interest rates. However, this does not mean that a debt consolidation loan or similar refinancing strategy is the best option for you. There are various factors to consider and you should always do your research before making changes to your debt management strategy.

What Is Debt Consolidation?

Debt consolidation is a form of refinancing that allows you to move or replace your debt with new terms and conditions. The most common option is a debt consolidation loan. This allows you to take out a loan that can be used to pay down existing debts. Ideally, this loan will have a much lower interest rate than your existing accounts. 

For example, if you have multiple credit cards with an average APR of 23% and a total balance of $20,000, you could get a debt consolidation loan for the same amount (or more) with a lower interest rate, like 10% to 15%. This way, you can pay off the entirety of your credit card debt and have a single monthly payment that could potentially save you thousands of dollars over the long term.

Is Debt Consolidation Right For You?

While the scenario above may sound great, it does not mean that debt consolidation is the best option for everyone. Before considering a debt consolidation loan or any form of refinancing, you need to do a cost-benefit analysis. Run the numbers and see how much you could realistically save. If the benefits outweigh the costs (fees, interest payments, etc), then debt consolidation will likely be a good option for you.

However, consolidating your debt is not a cure-all for financial burdens. Many people struggle under the weight of debt because of a lack of financial wellness. It is possible that you will need to focus on changing your spending habits and behaviors first. If you continue to spend beyond your means, debt consolidation will not help you manage your debt. In fact, it might just add to your financial troubles.

This is why behavioral changes are so vital when it comes to debt management. One thing to consider before attempting debt consolidation is the debt snowball strategy. With this strategy, you line up all of your debt to understand what you owe and then prioritize the accounts that you want to pay down first. You may want to focus on the smallest balance or the one with the highest interest. Either way, you can use the minimum payment on your other balances while you pay off the highest priority debts quickly.

Factors to Consider Before Debt Consolidation

Debt consolidation or refinancing makes sense if you are in a situation where your current interest rate or payment plan is onerous. A debt consolidation loan can help you ease the burden of debt, with the potential to give you access to even more cash to improve your budget and finances. The same is true of refinancing a mortgage or loan; just be sure to factor in the costs of refinancing and find the break-even point (the point when the savings overtake the initial costs). For example, let’s say you have a mortgage with a 6% APR and you plan to refinance the loan at 4%. However, the cost of refinancing is $2,000. How many months will it take to make up that difference? And will it be worth it to you?

Also, consider how a debt consolidation loan or refinancing will affect your credit score. When you are using debt consolidation to pay off high-interest credit cards, it usually has a positive impact on your credit, as you are transferring debt to a separate loan and lowering the amount of available credit you use. However, this assumes that you will not start building up new balances on your credit cards once you have paid them off. On the other hand, if you do not use all of the loan to pay down debts, you will be adding to your total debt, potentially overextending yourself. This could lead to missed payments, which will definitely hurt your credit score.

If you are weighed down by student debt, you might have four or five federal student loans, which you could consolidate into one private loan. Sometimes the new interest rate will be better, but there might be a difference in the flexibility of repayment options, as a government-backed student loan comes with repayment safety nets, while a private loan does not. 

No matter what you choose to do, it is best to be proactive. You should look for the information ahead of time and evaluate your needs, behaviors, and potential benefits beforehand. Don’t wait for credit card loan offers to arrive in the mail; they are often most beneficial to the lender — not you. Instead, do your research and figure out the best solution to meet your needs.

Help Your Workforce Manage Debt With Mentoro

Struggling with debt can hurt an employee’s focus and motivation. Helping them have resources and tools to understand their debt can greatly improve their well-being and work performance. Financial wellness programs are ideal, but you should also consider what kind of educational resources you can offer to your employees. Some 401k providers, financial tax advisors, and corporate-banking institutions provide their own educational resources. You can also explore preferred banking or credit unions for your employees. All of these can be useful in addition to financial wellness programs. Just make sure to communicate these benefits to employees so that they know what they have at their disposal. In doing so, you can help educate your staff and see the benefits of establishing a culture of financial wellness across your organization.

If you want to learn more about managing debt and a debt consolidation loan, or if you are interested in acquiring a financial wellness program for your organization, be sure to contact the experts at Mentoro today!

Save More

Saving money might be the key ingredient for financial success.  It provides security and gives you options.  Saving money is important for many reasons including:

• Emergencies

• Purchases

• Vacations

• Opportunities

• Expenses

For an even greater incentive to save, compare the results of spending $100 more than you earn each month for ten years to spending $100 less than you earn each month for ten years.  By spending $100 more each month, you will be $12,000 in debt before interest is even calculated; spend $100 less and you will possess $12,000 before you total the interest earned: a staggering difference of $24,000 at the end of ten years.  The difference between sinking into debt and walking on the firm ground of savings can be a matter of a few dollars a day.

Spend Less

Spending less than you earn is one of the most important financial habits to develop.  If you don’t, you will never get ahead.  In fact, it does not matter how much you make – if you spend more than you earn you will be in financial trouble.  Once you start spending less, you will no longer be living a paycheck-to-paycheck existence.  This will take away stress that cannot be measured solely by your bank account.

Manage Debt

Debt can be the major factor preventing you from having financial security.  Many times we find ourselves paying lenders first which leaves us little or nothing to pay ourselves.  The money you spend on debt could instead be used to build an emergency fund, invest for retirement, or even take a fully paid for vacation.  Once you manage and eliminate your debt, you will have the freedom to use your money in ways that will help you become more financially secure.

Retirement Readiness

Saving for retirement can be looked at as creating a freedom fund.  It is about building the future you want.  It means setting money aside right now to make your Golden Years all you want them to be.  One day most of us will stop working.  This might be because we no longer want to or are physically unable to.  Start preparing now for these days.

Protect What Matters

You can make all the proper financial decisions and one slip off a ladder can derail this hard work.  While we don’t like to think of bad stuff happening, it does.  This is why it is important to have the proper insurance policies in place to protect you and your family from the dangers of life.  Policies to consider include homeowner’s/renter’s insurance, disability insurance and life insurance.

Plan Your Legacy

A legacy can be defined as something transmitted by or received from an ancestor or predecessor or from the past.  It is an impact that you make even though you are no longer living.  While many times a legacy includes some sort of inheritance, there is more to it than just material things.  Leaving a legacy is like tossing a rock into a pond. There’s an initial splash followed by ripple effects that continue once the rock has disappeared. You might have a small rock to throw or a big boulder, but each one of us will leave something behind us.  It’s up to us to decide how far those ripples will travel!

Build Wealth

Most of us will earn most of our income through our place of employment.  However, there has never been a better time to look at ways to supplement our salaries and build wealth.  From becoming an Uber driver to delivering groceries, the options are unlimited.  The following are some actions you may want to consider to help boost your wealth:

• Become A YouTuber 

• Start A Blog 

• Freelance 

• Write An Ebook

• Turn Your Hobbies Into A Business 

• Rent Out Unused Space 

• Tutor 

The above list was just a small sampling of side gigs that could help you build wealth.  Be open-minded and see what you can come up with. 

Written by: John Shaouni, Regional Sales Manager

Wellness is often treated as a broad or ill-defined concept that is difficult to implement in a business environment. However, the benefits of financial wellness for employees have been a topic of increasing focus among business leaders across a wide range of industries. In fact, studies have shown that more than 80% of large businesses provide wellness programs as part of their employee offerings. [1] But what constitutes a wellness program? And what are some concrete examples of businesses that have used wellness programs and thrived?

What Is a Wellness Program?

A wellness program is any incentive or solution that an organization offers to its employees to improve their health, finances, education, or overall sense of well-being. These programs can vary from 401(k) plans to free health screenings. Many wellness programs take a holistic approach to employee wellness, focusing on key pain points for each individual. For example, one employee may need financial education while another may need support finding affordable daycare for their children. However, in most cases, wellness programs put particular emphasis on reducing financial stress for employees.

3 Companies That Use Wellness Programs and Thrive

At Mentoro, we specifically focus on financial wellness, but this does not mean that we only help organizations educate their employees about money. We believe that financial wellness is about health, not wealth. Therefore, implementing a strategy that is unique to each company and its employees can ultimately yield far-reaching benefits. Here are just three examples of organizations that have used our wellness programs and thrived:

Harris County School District

One of the most important concerns among many employees is saving for retirement. When employers can provide ample retirement benefits and programs, they can enhance employee retention, productivity, and overall wellness. In the case of the Harris County School District in Hamilton, Georgia, their ongoing retirement plan is so popular that it garnered the Plan Sponsor of the Year Award. [1] The annual Plan Sponsor of the Year awards program recognizes retirement plan sponsors that show a commitment to their participants’ financial health and retirement success. 

PCI (Publishing Concepts) 

PCI is a company that provides various services to educational partners, including assistance with fundraising campaigns and alumni connection programs. To help PCI’s employee wellness, Mentoro created a customized incentive program that increased engagement with benefit offerings. More specifically, the program gave the employees a financial wellness portal, classes, and one-on-one consultations. Completing the steps in the portal awarded each employee with $250, helping employee finances directly while also educating workers on good financial habits. 

EZLynx 

EZLynx is an insurance agency software provider. Over time, the company found that they were having low engagement rates with benefits programs. Moreover, EZLynx wanted to raise awareness among its staff of all of the offerings available to them. To do this, Mentoro has worked with EZLynx to customize webinars that highlight company benefits offerings and bring light to all the resources available to employees. 

Implement Wellness Programs With Mentoro

It is easy to look at the percentage of companies that use wellness programs and see that there is value in the practice. Even some of the most enhanced business strategies cannot replace a workforce that feels financially empowered and engaged with their work. Fortunately, if you want to implement a financial wellness program for your employees, Mentoro can make the process simple. 

If you are currently in the market for a financial wellness company or you want to learn more about companies that use wellness programs, be sure to contact the experts at Mentoro today!

Sources:

1. KFF

Written by: Casey Stegman, SVP of Strategic Planning & Business Development

Financial literacy is a position of health, not wealth. There are tens of thousands of people who are wealthy but are not living financially responsible lives. Alternatively, there are just as many people living paycheck-to-paycheck who may be able to get to financial wellness sooner than they realize. One of the biggest issues among people of all socioeconomic backgrounds is a lack of financial literacy. Fortunately, businesses can now implement financial literacy programs to improve the financial health of their employees. 

Financial Literacy 101

Financial literacy is a bit different for everyone, but the basics of financial health are largely the same across the board. It is all about the knowledge to know how you can and do use your money. This can include basic household budgeting and ensuring that you are earning more than you are spending. It can also relate to more long-term tactics like investments and retirement savings. However, more than anything else, financial literacy programs for adults focus on teaching people that having a plan is critical.

For a more concrete examination of financial literacy, here are a few examples of what a financially literate person will likely know:

• Balancing income versus expenses
• The power of your credit score
• The positive and negative effects of compounding interest
• Basic concepts and principles of investing (i.e. the difference between stocks and bonds, a Roth IRA versus traditional IRA, the benefits of diversification, etc.)

While this is not a comprehensive list, it does offer a blueprint for what financial literacy looks like and what you can expect from enhanced financial education services.

Financial Literacy Programs Increase Employee Wellness

Financial literacy plays a key role in increasing employee wellness. As a result, thousands of businesses have invested in financial literacy programs for their staff, offering various services and educational resources, from workplace finance seminars to retirement benefit trackers. In any case, studies have shown that employers who provide financial literacy programs often see significant improvements in employee engagement, productivity, and overall well-being. At the same time, these programs can help reduce financial stress, which often makes employees more content with their employers, thereby reducing turnover rates.  

Helping Your Employees Learn & Grow With Mentoro

If your business wants to benefit from financial literacy programs, Mentoro can help. We partner with companies who understand the advantages of financial literacy for their employees. That said, we are a company focused on individual coaching. So, in addition to many of the standard services associated with improving financial wellness for employees, we also offer all of the following:

• Basic financial literacy coaching and training
• Proprietary software that gives each employee access to resources like podcasts, e-books, and virtual meetings with financial mentors. 
• One financial mentor for each business to help answer questions, run group seminars, and provide one-on-one coaching. 
• A customizable approach based on the needs of the business and its workforce

If you are currently in the market for a financial wellness company or you want to learn more about financial literacy programs in general, be sure to contact the experts at Mentoro today!

Written by: Whitney Queen, President

Some may tell you that there is only one financial wellness definition. The truth is that the definition varies from one person to another. At Mentoro, our financial mentors generally refer to financial wellness as “the meaningful approach to the handling and understanding of your money.” As you can imagine, that means something a little different to each organization or individual. Rather than just leaving you with a vague definition of financial wellness, let’s get into some of the most important aspects of financial wellness to uncover its deeper meaning.

What Does Financial Wellness Mean?

When asked, you’ll find every financial professional, business owner, or employee will tell you that financial wellness means something uniquely different to each of them. Thus, financial wellness is inherently subjective. In some cases, a person can quite literally say “I am not in good financial health,” which reflects a crisis that needs financial triage. In other words, people experiencing dire financial health need help to change their behavior.

For most people, however, it can be likened to going on a diet. Attaining financial wellness often requires a lifestyle change, as it’s all about getting to a healthier state. Much like you take care of your physical and mental health, you will have to continually take care of your finances. Regardless of your current status, you should prepare for the future by prioritizing your wellness.

Financial wellness is truly holistic. It’s not just about getting out of debt, investing, or preparing for retirement. There is a myriad of different factors that will matter more to certain people at various stages of their lives, but there are two important concepts that our mentors like to use to help people better understand financial wellness.

Health Not Wealth

Financial wellness does not equate to being rich. Plenty of wealthy celebrities have gone bankrupt because they didn’t lead financially stable lifestyles. So often we find individuals are simply living beyond their means, no matter their income, resulting in the inability to practice other positive habits. 

Additionally, financial wellness and health wellness are quite symbiotic in that focusing on one positively impacts the other. Financial stress takes a toll on your mind and body. It is one of the primary causes of health issues like heart disease and high blood process. Therefore, putting healthy financial plans in place can literally improve your well-being. It is typically the first and most important shift in mindset. 

It’s a Process, Not an Event

Everybody would love to say that they are financially fit at the drop of a hat, but that is never the case. Returning to the example of dieting and losing weight, you must start the process and then work hard to maintain it. The same applies to your finances. People usually stop at the thought of making money, assuming will be financially well. But the event of earning money will not correct “bad” behaviors or better your financial knowledge. You should expect the same grind with your finances as you would with your health.  

Using Financial Wellness to Improve Your Business

Most 9-to-5 employees assume that they cannot improve their financial wellness because they cannot afford a personal financial advisor or do not have access to the right educational resources. Fortunately, the number of companies with financial wellness programs is increasing every year. It is not just about improving the lives of individuals, either. Financial wellness for employees has many proven benefits for businesses, too, including reduced turnover, greater employee satisfaction, and even enhanced productivity.

Every program varies based on the approach of the financial wellness providers and how they define the concept. But ultimately, people simply need to strike a balance, make a plan, and feel confident enough in their plan to sustain it. That is going to look differently for everybody. It all comes down to feeling empowered to control your money and having a solid foundation of financial acumen.

Fortunately, Mentoro is ready and willing to provide comprehensive financial wellness programs to businesses and their employees. Through seminars, one-on-one coaching, and an online portal of extensive resources, Mentoro provides each and every employee with the tools to attain financial wellness. In order for employees to really adopt the financial wellness behaviors, though, we have to empower them through education. After all, knowledge truly is power. 

If you are currently in the market for a financial wellness company or you want to learn more about the financial wellness definition and its many variations, be sure to contact the experts at Mentoro today!

Written by: Danny Kofke, Motivational Mentor

Financial incompatibility and poor communication are two of the leading causes of divorce. Fortunately, these issues can often be overcome through honest conversations, compromise, and a desire to understand the wants and needs of your significant other. However, it all starts with communication. If you and your spouse are not talking about money, you could be leaving yourselves exposed to financial risks and emotional struggles down the road.

Mentoro is dedicated to helping people learn more about their finances and take better control of their money. In honor of Valentine’s Day, we would like to focus today’s post on helping couples talk about money. Since talking about money can be difficult and even divisive, here are 7 questions that you and your partner can ask each other to help open the line of communication:

1. What does money mean to you? 

Many people simply think of money as something that helps them feel secure and allows them to purchase things they want and need. However, when you dig a little deeper, individuals can have very different goals and feelings toward money. For example, you may be a natural-born spender, while your spouse prefers to save a significant portion of every paycheck. Talking about what money really means to you and your spouse can help you find commonalities and areas where you don’t (and may never) see eye to eye.

2. Did your family talk about money when you were growing up? 

In many families and cultures, money is a taboo subject. This is especially true during some people’s formative years. Parents often don’t reveal the details of their finances to their children, which is a habit that can continue once the child grows to adulthood. Socioeconomic background can also impact the answer to this question. If you grew up in a poor environment, but your spouse grew up in an upper-middle-class environment, you will likely have different feelings about money and how to talk about it.

3. If I spent $100 on something and didn’t consult you, would you be upset? What about $1,000?

This question is a bit more direct and one of the best ways to gauge how you and your spouse feel about expenditures of varied amounts. For some couples, $100 on a non-essential purchase could be a major issue. For others, it might not matter at all. However, there’s always a limit on the amount that your spouse would be willing to brush off. So, understanding your partner’s boundaries can help you learn when and how to discuss purchases with them beforehand, rather than telling them after the purchase has already been made.

4. What does it mean to be good with money?

While this question may sound like a no-brainer, everybody will likely have a unique answer. For some people, being good with money simply means earning more than you spend. Others think that it’s related to the percentage of income you’re putting into savings. Still others might focus on investment vehicles and how good you are at making your funds grow. Thus, being “good” with money is quite relative, and you should learn how you and your spouse define it.

5. On a scale of 1-10, how would you rate how we manage our money?

This question will give you a quantitative indicator of how your spouse views your collective money management abilities. It may also be a good idea to ask each other this question at the same time and write down your answers before you reveal them. In doing so, you can avoid being swayed by each other’s answers and actually provide your honest opinion. Then, you can discuss why you each wrote down your number.

6. What would we do if one of us was laid off?

Asking about important hypotheticals is a good way to actually devise practical emergency plans for the future. Many couples do not have a Plan B if something goes wrong, which can lead to potentially disastrous consequences. So, discuss what you both would do if your household income was suddenly cut in half or reduced to nothing overnight. 

7. What is one of my money habits that you admire?

Finally, it is always important to keep financial conversations between loved ones civil. You never want to feel antagonistic or accusatory when talking about money with your partner. Instead, you should try to approach everything as a collaborative team. One way to help keep things positive is to ask what good money habits your partner sees in you, and vice versa. This will show both of you that you are appreciated for something and that you know that the other is working to improve your shared financial life.

If you are currently in the market for a financial education company or you want to learn more about the benefits of financial wellness education, be sure to contact the experts at Mentoro today!