00:00 Brad
This week on Wealth, we’re spring cleaning your finances, taking a look at ways that you can set up yourself with good financial habits for the rest of the year. Today’s focus is sprucing up your financial goals. A US News and World Report found 82% of Americans have a financial goal for 2025. And some of the most common ones are saving more money, paying off debt, buying a car or home, investing and saving for retirement. Here to dive in, we’ve got Derrick Hodges who is the CFP and financial planner at Anchor Point Wealth Management. Great to have you here with us. So how can people do an audit essentially on their savings goals and figuring out if they’re on track or not?
01:14 Derrick Hodges
Hey Brad, thanks for having me. I think, uh, financial goals are so crucial. They’re your milestone that you can kind of evaluate your progress. Uh, if I was traveling from New York to LA, I would pick a route and there would be cities that I would expect to encounter along the way, and if I got off track, I would know it pretty quickly. Same way with your finances. If you have a goal that’s written, measurable, has an amount, has a date certain, you then have something that you can start to evaluate your progress and then make course corrections along the way.
02:18 Brad
How do you adjust your financial plans based on changes that that could pop in your life and some of those analogous cities that you were talking about hitting on the way to those goals?
02:41 Derrick Hodges
Yeah, I think, uh, being flexible with your financial plan is crucial. So, first of all, your financial plan serves you, not the other way around. And so your financial plan needs to be adjusted when there’s life events. So, if you have a baby along the way, uh, that’s a big change. You’re going to have to evaluate some of your goals, you’re going to have some other financial, uh, challenges that you’ll have to consider. Marriages are certainly some of those events that will take some adjusting in your financial plan.
03:28 Brad
How do you develop habits that can keep your finances clean year round to achieve your goals?
03:44 Derrick Hodges
Well, habits, I think, are the key, and I think just consistency in all of your planning is what’s going to give you greater advantages. So simple things like retirement planning. I mean, going into your 401k, if you have one of those and setting up automatic increases in your contributions. Typically those work where every January 1% is increased to your contribution rate. Those have massive effect on your overall plan, and yet, you’re probably not going to miss that money. And so I think that’s a great one right away. And I think having greater discipline and consistency with your debt is so important. Right now, we’re in these high interest rate environment environments. We still have kind of tough inflation. So pocketbooks are really being strained right now. So credit card debt, as one example, is just a killer right now. So growing that discipline to pay as you go is so important. Stock piling credit card debt is going to get in your way, it’s going to hold you back from many of your other financial goals.
05:28 Brad
How much debt should you be keeping on those credit cards? Because a lot of us were taught just pay the thing off in full. Some of us were taught to keep a balance. What is kind of the good rule of thumb that you use?
05:48 Derrick Hodges
Thanks, Brad. It’s Friday and I’m going to be the buzzkill here, but I’m going to say no balance. I, uh, listen, right now credit cards, generally speaking, are going to be well north of 20% on interest. I can’t find a way that that’s going to be positive for anybody’s pocketbook. So I think paying as you go is a great idea, and certainly, you know, I get all the points and miles, uh, reward programs that are out there, but something I know I’ve practiced a lot in the last few years is I still use my credit card, but I literally go in multiple times a month and just pay it off, much as if I was using a debit card or just a checkbook. I’m getting the benefits of the credit card, but I’m never getting out of control and accumulating any debt. Not everybody can do that. I understand that, but whittling away at that debt with these high interest rates is I think is vital.
07:14 Brad
All right, if I lined up a bunch of specialists here around the table, I’m sure that would be one of the hottest button debates. So, thank you at least for entertaining the question here. You know, just lastly, while we have you here, as you’re thinking about how you make decisions around funding your goals and how you achieve those, what are some of the steps that you can set up and make into routines as well?
07:43 Derrick Hodges
Yeah, I think, um, really linking your goal and then how you’re going to accumulate money for that goal is such a big deal. Um, you know, oftentimes there’s a lot of debate about what’s the right investment that I ought to be in. And I think that’s sometimes out of syntax or out of sequence, and I really like to have my goal in mind before I even begin to think about how I’m going to invest for that. So I think at the top of the interview you mentioned, you know, accumulating money for car purchases are usually a big goal. Well, oftentimes if that’s going to be within 12 months, we probably then don’t need to be thinking about the stock market or crypto or real estate. Those, I think, are investments that are better aligned and geared for longer-term investments like my retirement or accumulating education funds for a child who’s going to go to school 15 years from now. So I think really beginning with the end in mind is a great place to start is what am I trying to attack or accomplish and then aligning my decisions, like investing, with those timelines.
09:22 Brad
Derrick, thanks so much for taking the time here with us. Good to see you.
09:29 Derrick Hodges
Thanks, Brad.