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Uncategorized Mar 20, 2019


EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. 

Why It's Important

This is one measure you can use to determine a firm's financial performance.  What does this have to do with personal finance?  Well, if you are evaluating investments you would want to invest in companies with strong financial performance.  You would look at a variety of factors including the EBITDA.  

The equation for calculating it looks like this:

EBITDA = Net Income + Interest + Taxes + Depreciation

You are adding back in some values that the net income already took out.  Unfortunately, not all measures are perfect.  If they were, I would be extremely rich by now!  EBITDA does not account for the cost of capital (land, machines, equipment) so it can be a little misleading especially if the business relies on credit a lot to make those purchases.

When you are conducting research, always make sure you are evaluating the target company...

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Uncategorized Mar 13, 2019


A tax deduction lowers a taxpayer's tax liability by reducing the amount of taxable income.

Why It's Important

You have probably heard a lot about tax deductions and tax credits during tax season, so I wanted to debunk what they are.  I covered tax credits so now it's all about deductions.  Deductions are usually expenses that you pay throughout the year that can be subtracted from your gross income.

All taxpayers can either take the standard deduction or itemize their deductions.  You can't do both!  If itemizing your deductions gives you a bigger tax break, that's the route you would want to go! 

Some examples of deductions would be charitable donations and business expenses.  Let's look at a simplified example:

Income: $30,000
Donations: $300
Business Expenses: $2,000

Taxable income (from subtracting all deductions): $27,700
Uncle Sam will only tax $27,700 of the $30,000 I made. 

I highly recommend talking to a tax...

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Uncategorized Mar 06, 2019


A tax credit is an amount of money that taxpayers can subtract from what they owe the government

Why It's Important

You have probably heard a lot about tax deductions and tax credits during tax season, so I wanted to debunk what they are.  I will cover deductions next week.  Tax credits are available for anything from going to school to making energy efficient upgrades to your home and many things in between.  

As I mentioned, tax credits lower the amount of tax you owe so, what if you don't have a tax liability (owe)?  Well, there are two different types of tax credits.  

Non-refundable tax credits, like mortgage interest and adoption, do not apply if your tax liability is 0.  

Refundable tax credits, like the earned income tax credit, still apply even if it lowers your tax liability to below 0.  Refundable tax credits are the most beneficial because you get the full dollar amount regardless of your tax liability or income, therefore, raising...

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Uncategorized Feb 27, 2019


Debt consolidation is when you take several debts and get a loan to pay them off, therefore, providing you with one monthly payment instead of multiple payments

Why It's Important

I will probably do an article soon on debt consolidation and credit card balance transfers since they kind of fall under the same boat.  

The premise is that you are just restructuring your debt (moving it around) instead of paying it off.  If you have a bigger balance outstanding, then more than likely your interest payments will be, therefore, keeping you in debt longer than if you just paid them off individually.  

Additionally, they may restructure your debt to a longer term, thus, reducing your payments, so you think you are getting a deal.  In reality, you are just signing up to be in debt longer.  

Don't play around with debt, just get rid of it!  

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Uncategorized Feb 20, 2019


Bankruptcy is a legal preceding that involves a person (or business) that is unable to repay their outstanding debts

Why It's Important

Declaring bankruptcy gives the filer a chance at regaining financial traction after a hard fall.  Depending on the type filed, some or all of the debts could be discharged.  All bankruptcies have a negative effect on your credit score for up to 7 years!  So, this should be a last resort!  I hope that none of my followers get to this point but if you do, it is good to know your options.  There are three popular types of bankruptcies:

Chapter 7 - This is the most common type of bankruptcy.  It allows the filer to have all of their debts forgiven after their "non-exempt" assets are sold and the proceeds are used to pay off as much as possible.

Chapter 11 - This is only for businesses.  I won't go into detail but it allows businesses to restructure their assets and debts.  The business also stays...

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Uncategorized Feb 08, 2019


OK, so I felt like this was a timely post in light of the government shutdown and the possibility of families not receiving food assistance in the coming months.  If you aren't aware of all the changes, you can read about it here.  I want to keep this post focused on how families can save money whether they receive government assistance or not.  It is essential to squeeze every penny at the grocery store because eating is a necessity and is usually one of our most significant monthly expenses. Let's begin...

Plan Your Meals
Grocery shopping starts before you even walk into the store.  Thinking ahead of time about what you plan to cook for the week is extremely important.  I usually have my meals laid out for the week, OR I will opt to cook whatever is available in the house.  Either way, I have a plan!  Disaster strikes when you go to the store without a list and start picking up random items.  Then, you get home and realize nothing goes...

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Uncategorized Feb 06, 2019


Income tax is a tax that the government imposes on both individuals and businesses.  These funds go to support our government infrastructure. 

Why It's Important

Because it's tax season, I thought it would be appropriate to discuss income taxes.  You probably get them taken out of your check every payday but do you really know how it works?  When you start a job, you fill out a W4 and a state tax form (i.e. NC-4).  On this form you are declaring how many exemptions you would like to take to therefore lower the amount of income tax taken out of each check.  If you put 0 exemptions, you will have the maximum amount taken out every pay check.  This money is then forwarded to the government by your employer.  Every year, employees and businesses file tax returns to see what their tax obligation to the government is.  If they paid too much throughout the year, they get a refund.  If they didn't pay enough, they end up owing. ...

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Net worth is calculated by subtracting your liabilities from your assets.  If your liabilities are more than your assets, you have a negative net worth.  If your assets are more than your liabilities, you have a positive net worth.

Why It's Important

We have finally reached the last piece to the formula, net worth!  Everyone wants to work towards a positive net worth.  Keep in mind that a net worth calculation is just a snapshot in time.  Your net worth changes very frequently, sometimes even daily or hourly.  It doesn't provide information about cash flow or your monthly income and expenses.  There are other financial statements for that!  

I calculate my net worth officially once a year.  In between time I may take a peek on RightCapital or Personal Capital (both free apps) to see if I am on track. 

You can see my full net worth calculation for this year here.

The formula is Assets - Liabilities = Net...

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Liabilities are anything that you owe (debt). They can be divided into Current and Non Current Liabilities, depending on how soon you have to return that debt.

Why It's Important

It is important to know what liabilities are on your personal balance sheet because it allows you to make sure you are current with your bills and obligations.  Yes, this includes items that are on your credit report!  If you don't know what you owe, how could you possibly get rid of it?!

Businesses break liabilities down to two categories, current and long-term.  Current liabilities are any debts that are payable within one year while long-term liabilities are payable over longer periods.  To translate this to personal finance, short term liabilities would be your credit card balances (hopefully) and small loans.  Long-term liabilities would be your car and your mortgage.  

Knowing what liabilities you hold also allows you to calculate your net worth as I did...

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Uncategorized Jan 16, 2019


I am always trying to find ways to pay off my debt faster!  One of my favorite ways is to participate in the gig economy, particularly ride sharing (driving for Uber & Lyft).  Now, I try to drive every other weekend when I don't have my kids.  Last year, I made about $2,500 just from this gig and I didn't even drive that much!  Here are some things I do to maximize my time and earnings:


Use Both Platforms
There is no rule or law saying that you can only work for one.  As a matter of fact to be considered a contractor, which you are if you work for either company, they can not restrict you from doing similar work or they will have to classify you as an employee.  I usually sign in to both apps at once and if I get a ride on one, I turn off the other until the trip is complete and then I continue that cycle until I log off for good.  This way I am able to make more money than if I was depending on one source.  In my local market,...

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