Teachers Stacking 10's

Author: The Professor

  • Investing – Make Money Like the Big Boys!

    So we’ve covered benefits, budgeting, and savings. Now we are on to the fun part. Putting that hard-earned money to work for you.

    IMPORTANT NOTE! Investing involves risk. Usually, the higher the risk, the higher the return. You COULD lose money. Keep that in mind before taking part in any investments.

    Sure, we’d all love to get an 8% return in a cozy, no-risk savings account like they did in the 80’s. That’s just not the case anymore. (Of course, they also had to pay 18% interest on mortgages for their house!)

    If you want your money to grow, you have to invest in something other than savings accounts.

    Most people go through life working to make money. What you need to do is to get that money working for you. QUIT TRADING YOUR HOURS FOR DOLLARS! The way you do that is by investing in things that will make you money. These are assets. Most people like to spend their extra money on trucks, cars, snowmobiles, ATVs, etc. Our students just LOVE spending their money on these things. These are NOT assets. Unless you can use one of these to make more money than they cost, they are liabilities.

    These liabilities are the things that WILL cost you your financial stability, security, and freedom!

    There are a variety of assets that you could purchase.

    • A business
    • Real Estate
    • Stocks
    • Bonds

    All of these assets have their pros and cons.

    Business

    As teachers, most of us probably don’t have the time to start our own full-time business, but what we can do is start a side business, or as the T.A. likes to call it, a side-hustle. There are a variety of side-hustles that you can invest in. Things like Etsy, a website, Amazon fulfillment, etc… The key with these side-hustles is that you want them to make you money with some up-front work, and then earn income on their own. Sure, you could start a landscaping or lawn mowing business in the summer, but there again, you are working for your money! That defeats the purpose of what we are trying to do.

    You could also invest in a start-up business or one that is already established. Maybe your friend needs some start-up capital for their new clothing boutique. You could be an angel investor in their company. Just be sure to do your due diligence on their business plan. Businesses like these can cost you your entire investment.

    Even though a business can grow and create great wealth, the T.A. and I are kind of “meh” on businesses as an investment because they do require a lot of work and time to start.

    Real Estate

    Since the beginning of time, real estate has been a symbol of wealth and power. All the way back to early man, they would fight for the right to hunting grounds and natural resources that the land provided. Today, people use real estate to grow their wealth through rental or commercial properties. This type of investment can be doubly powerful. On one hand, you are collecting monthly income through rent from your tenants. On the other hand, the value of your property is increasing through appreciation. This can grow wealth rapidly. You also have the ability to use leverage to grow your wealth. You can take your down payment of $25,000 and collect rent payments on a property that is worth $100,000. This ability to leverage is how you can grow your real estate portfolio very quickly.

    As with a business, real estate can be very a lot of work and very time consuming. There are options such as “turnkey” investing, where you buy a property from a “turnkey” company who will have the property move-in ready and even manage it for you. This “passive” real estate investing works as well, but definitely not as quickly as “active” real estate investing.

    We will have a separate post on this in the future as the T.A. and I are discussing getting into this area. Hopefully we will be able to make a case study post on this someday.

    Stocks

    Stocks, or equities, are shares of ownership in a publicly traded company. If you have a retirement account (which you should!), you will already own some stock. Stocks are traded on the exchange and come in a variety of forms. You make money on stock when the value of that stock increases over time. You can also make money on that stock if they pay out dividends. A dividend is a share of that businesses profit that they pay out per share. Some companies pay them out once a year. Most of them pay on a quarterly basis. Just like real estate, you can make money different ways with stocks.

    Now when it comes to purchasing stocks, you can purchase stocks of individual companies, or you can purchase them bundled together. These bundles come in different forms and have their own advantages and disadvantages. ETF’s, mutual funds, and index funds are the most common. We won’t go too deep down the rabbit hole on stocks in this post. More will come in this area. JL Collins has a tremendous site for knowledge on this subject.

    Bonds

    Bonds are a loan made by a corporation or government entity that is bought by an investor (you). Bonds will pay an agreed upon rate when they are purchased and held for a stated amount of time. Bonds are considered fixed because the rates don’t change after you purchase them. They are usually very safe investments compared with stocks. (unless you are buying bonds from shady companies). Bonds will usually have a rating associated with them. Since these are usually “safe” investments, they won’t give you as good of returns over time as stocks will.

    Our next post will focus on Investing Accounts. (Link)

    Keep stacking!

  • What Kinds of Benefits Do Teachers Have?

    What Kinds of Benefits Do Teachers Have?

    So far we’ve looked at what you need to do when you meet with the business office. One area that we did not discuss were the benefits. This post will just give the big concepts of these benefits and we will follow up in the future with a more detailed analysis of each one.

    There are a few big areas that you need to focus on:

    • Health Insurance
    • 403(b)
    • Life Insurance

    Health Insurance

    Whether or not you use health insurance benefits from your school will depend on your relationship status and the amount your school pays toward your health insurance premiums. Some schools will pay only a fixed cost for employee health insurance. This has actually become more common with the quickly rising costs of health insurance. Larger districts may cover the full cost. Our district will pay $400/month to the cost of insurance. If we decide to take coverage through a spouse, like I do, we are just out that $400/month. It’s a benefit that I decline because it would cost me more than it’s worth. See my example below.

    For example, my wife works as a nurse. The company she works for requires us to pay $450/month in health insurance premiums. Sounds like a lot of money, BUT if I were to get a family plan through our school, we would have to pay over $1,200/month for premiums since our district will only cover $400 worth of costs. Now if we didn’t have our kids on our health insurance, I might take the school insurance since the cost for a single premium would be $100/month, and my wife would be able to get a single premium at her work for $150/month. This COULD be more cost effective depending on our health condition. We will deep dive into health insurance in a later post.

    Your health insurance premiums could vary wildly depending on the plans available to you. Details of these different plans will come in a later post.

    Life Insurance

    Some schools will also have a small life insurance policy, usually under $50,000, for their employees. These policies are usually covered completely by your district, or requires a very small payment from the employee. If you join the union, your state association or the national association may also have a small policy paid as part of your dues. The T.A. and I do not have life insurance policies at our school, but we do have $25,000 policies through the national union.

    403(b)

    This will be a brief overview of the 403(b). The 403(b) benefit is one where the school district will match a portion of your contributions to this retirement investment. An important part of this idea is that the district will deposit this money into your account ONLY if you put money in yourself. Our district will match up to $700 for any teacher. So the minimum you would want to designate would be $700 or you would be giving up that 100% return on your investment. One of our colleagues didn’t contribute anything to his 403(b) his first year. Needless to say, the T.A. and I assigned him many detention sessions for his misbehavior!

    Now contributing to this 403(b) account involves a little more than just filling out the form and putting the money in. You will have to meet with an advisor from a 403(b) company and figure out where this money is going to go. We will cover this important area in its own post in the future.

    In Review

    These benefits may not seem very important when you get your first job. Everyone focuses on the salary, but the sooner you learn about them and use them to your advantage, the earlier you will be on the path to financial freedom.

    KEEP STACKIN!

  • How Can a Teacher Save Money

    Extra money? Give it a job!

    Now that you have gotten your budget laid out, it’s time to determine what you are going to do with the money beyond your expenses. The first step is to establish an emergency fund (EF). When life happens, you need to be prepared. The size of the emergency fund will be different for everyone. Some people feel that you have to have 3-6 months expenses in an EF. Others feel that $1,000 is enough. It all depends on your comfort level. The TA and I both feel comfortable with $1,000 in our EFs. We typically can access money from other accounts or investments within a week. You just don’t want to back to living on credit! Once you have this EF set up, move on to the next step.

    This step will require you to think about what your goals are. Sit down with your significant other and determine what you want your future to look like. Some questions that you should be asking each other:

    • How many pots will you fill?
      • This could be like setting money aside for a replacement vehicle, updating an appliance, a date night….
    • How will you handle big expenses?
      • Things always come up in life. If your vehicle springs a leak from your head gasket, how will you cover that cost?

    It is SUPER important that you are both on the same page. If you aren’t, it will feel like you are swimming upstream. It could also create feelings of resentment. My wife and I went through a rough patch that lasted several years of not being on the same page. Fortunately, we came to an agreement on our financial future and path.

    All of this savings involves money that you plan on using within the next 6-12 months. Once you have these savings goals funded, it’s time to look at the next step. Investing….

    Keep Stackin!

  • So You Just Landed Your First Teaching Gig.

    Congrats! The ink is still wet on your first contract. You are nervous and excited at the same time. You’re about to be in charge of a room full of kids who will want to push your limits on a daily basis, but that’s not why we are here. We are here to talk about the things they don’t teach you in teacher prep classes. What decisions do you have to make outside the classroom?

    Human Resources (because that’s what you are now)

    The first person you will meet after you are hired will be the district human resources person. They will be the ones to “guide” you through all of the paperwork that we will be talking about.

    Some questions that will be very important to ask:

    • What will you enter in your W-4?
    • What is the frequency of pay? Monthly? Bi-Monthly? Every 2 weeks?
    • Can you split your paycheck into multiple accounts?
    • How is summer pay handled?
    • How much are union dues?
    • How often are they deducted?

    Let’s tackle each of these questions one at a time…..

    W-4

    The W-4 is the first step in that joyous process of paying taxes. The best thing to do is to go to the IRS Withholding calculator. This site will give you the “best” idea for setting up your withholdings. I say best because with the recent changes in the tax laws, it was a point of angst this past year that the withholding calculator might not be completely accurate.

    Pay Frequency

    This question is pretty straightforward. Some school districts will pay once per month. Others will pay twice a month. Others might pay every other week. This isn’t a major concern once you get going but at the start chances are you’ll be a paycheck to paycheck person. Which is what this blog will work to correct….. The timing of your first check will surprise you. Typically, every month you get paid for the previous months work. So, say you start teaching mid August, that very first check isn’t coming until mid-September so brace yourself. Those first couple months will be financially stressful. You will also need to ask if you are paid over 10 months or over 12 months. If you are paid over 12 months, no worries. If they pay over 10 months, make sure to carefully read the next paragraph…

    Paycheck Split

    This is an important question to ask yourself. Most people will opt to have their whole paycheck deposited right into their checking account. I’ll ask that you press pause and think for a second. Automating your savings makes it much easier and more effective for you. After figuring your budget, determine how much you can afford to put into savings. Have that amount sent directly to a separate savings account you have set up. Personally, I currently send $200/month sent to a separate savings account with our teacher credit union. This account isn’t one that I can go online and transfer money. I have to physically call them and order a check withdrawal that is mailed to me. Sounds time consuming right? Well that’s the point! I want it to be a little painful to get that money out. If it is too easy, then I’ll be tempted to use that money on an impulse purchase. Something to think about…

    A live look at the T.A. working hard to collect his summer paychecks

    Summer Pay

    After my first year of teaching, I had accepted a position with another district. The district I was at thanked me for my year of service and handed me three paychecks on my last day of workshop. June. July. August. That district was one that paid us monthly. On that last day, I was given all three months of paychecks. Imagine handing an impulsive 23-year-old 25% of their yearly salary all at once! Luckily, I showed some restraint and waited to deposit each check until the first of each month.

    Union Dues

    Since the Supreme Court’s Janus Decision in 2017, union membership has become highly political. The T.A. and I are members of our union, but that is a decision that you must make for yourself. We will discuss our view of union membership in a later post. If you do decide to join, you will need to find out the total dues and how they are deducted. Each district does it differently. In our district, union dues are only deducted from our paychecks during the school year, so our checks in the summer are a little bit bigger.

    In Summary

    The last thing on your mind when you get that first job is the stuff outside the classroom, but that’s exactly where your focus needs to be. At least until all of these points are covered.

    This gives you a good start on your path to financial stability. Our next post will deal with an the first step to financial freedom… BENEFITS!

    Keep Stackin!

  • Money, Friends and Family

    Money, Friends and Family

    How to begin the money conversation

    “The Professor, T.A., and their cronies”

    “How much do you make a year?”

    “How much do you save each month?”

    “How much credit card debt do you have?”

    “How much are the payments on that car?”

    “What is your net worth?”

    What makes questions like these make people feel so uncomfortable? According to a study by Ally, 7 in 10 Americans find it “rude or inappropriate to discuss personal money in a social setting.” As a Gen X’er, I was raised to never discuss your personal finances with other people, including family members. My parents never talked about money with us growing up. Even today as a 45-year-old adult, my parents in their mid-60’s refuse to talk with me about money. If I ask my mom today how much her car payment is, I guarantee you the response will be, “Enough.”

    Maybe this is why we have a whole generation of middle-age adults that are stuck in a paycheck to paycheck cycle and living off of their credit cards, struggling to pay their bills with a bleak financial retirement ahead of them.

    There is hope though. According to that same Ally study, 60% of Millennials have talked with others about their finances so they seem willing to learn, but two-thirds still believe it is rude to discuss in public.

    Money and Relationships

    Finances are also the leading cause of stress in relationships. My wife and I have definitely lived through this. Early on in our marriage, we found ourselves in major credit card debt. I would be considered the “saver” in our relationship, and she was the “spender”. Where we ran into the biggest trouble though was when she would open a credit card without my knowledge and proceed to “max” it out. This happened two different times and almost destroyed our marriage. Fortunately, we were able to work our way through these obstacles and are in a much better place today.

    The Solution

    Start with small conversations with friends and family about easy financial topics to discuss. Things like the best interest rates in savings accounts you have found, good credit card bonuses (only with someone financially responsible!), experiences with investment companies, loan rates, etc.. Starting with these “easier”, small conversations will allow you to slowly build up to bigger topics. You can’t just jump right into the deep end of the pool.

    As for discussing with your partner, I cannot stress enough, you MUST be open with your finances. These conversations may be difficult, especially if you are the “saver” and they are the “spender” or vice versa. If you aren’t on the same page, it can completely destroy any relationship. As you talk, decide on what your goals are, determine a budget, and come to an agreement on what you both can do to help make them reality.

    There’s also never going to be an “easier time” to talk about finances, you are much better off having those conversations early than waiting and compounding the problem. The earlier you start, the sooner this can be you and your partner.

    Keep Stackin!