Mar 5, 2013 ~ Interviews    1 Comment
Posted by Dan Mastromonaco

Hank Coleman on The Debt Epidemic & His advice to Avoid the Pitfalls

hank-colemanPersonal finance planner and financial blogger Hank Coleman, tells us the real reason why young adults are easily susceptible to fall debt. Through education, experience and practical application, Coleman offers a unique perspective on what made him become financially aware from an early age. Gain knowledge from his insights and start on your own journey towards financial freedom by budgeting money and tracking your spending. Here’s Hank Coleman

1. Tell us a little bit about yourself, what you do and why you’re passionate about sharing personal finance tips.

My name is Hank Coleman, and I’m originally from Charleston, SC. My day job is currently working in the federal government, but I am a part-time financial planner and a finance writer on the side. I’ve had my writing featured in many national publications and popular websites such as Seeking Alpha, The Motley Fool, and many others. In addition to writing for several sites, I have my own personal finance blog, Money Q&A (moneyqanda.com). I started Money Q&A a little over two years ago after owning several successful personal finance blogs. I like to tell people that I’ve lived the blogger’s dream of creating successful blogs and then selling them. But, then I realized that I love writing and helping people with their financial issues and started Money Q&A.

Unlike most personal finance bloggers in the space who only really talk about their own stories and struggles with credit card debt and student loans, I have the formal education to back up what I write about. I have a Masters in Finance, a Graduate Certificate in personal financial planning, and am currently studying to take the Certified Financial Planner exam.

2. In your opinion, why is debt such an epidemic in our society today?

I think that debt is an epidemic today in our society because we have transitioned to a “got to have it now” society. We need that instant gratification. We don’t want to wait and save for something. Instead it is so much easier to put things on a credit card or take out a loan to make a purchase. We’ve forgotten what it was like to save for a specific financial goal whether that is a new car, a family vacation, or even something as simple as a new television or computer. The instant need for gratification and our love of things has driven us into a debtor’s society.

3. How can we begin to make more positive decisions in our everyday lives about the way we manage our finances in order to reduce debt and save for the future? What are some tips that you seem to repeatedly remind your readers of?

I’m a big fan of naming your savings accounts. I know that it sounds very simple, but there is something to be said about the reinforcing factor of a savings account that you give a name to. With online banking, it is so easy to set up multiple accounts with a very small initial deposit and a monthly automatic deposit. And, now banks let you change the name of the account or add a nickname to the account. It is much harder to raid an account that is labeled “Disney World Vacation” instead of one that simply says “Four Star Savings”. My wife and I have multiple savings accounts used to help us visualize our savings plans and keep from adding to our debt. We have accounts for vacations, new computers, a television, etc. You name it and we have an account that we systematically add money to every month until we reach our goal. As soon as we make our purchase, then we go on to the next savings goal. This winter we are going to have Christmas in the Bahamas.

4. In your experience, what would you say are some of the biggest challenges for people when trying to develop a personal budget and stick to a spending plan? What resources could be beneficial for them?

I think one of the biggest challenges with budgeting, other than actually starting, is capturing how you spend your cash. Cash in its very nature is hard to account for. So if throughout the week or month you get cash out of the ATM, there is a very good chance of you not knowing where you are spending it. It simply is gone and far too many of us do not keep receipts for those purchases or reconcile them. So I think one of the best couple of ways to combat this is to not pay with cash throughout the week or the month.

My wife and I actually use a charge card from American Express for what you would typically think of as cash purchases. The charge card, instead of a credit card, forces us to pay off the balance at the end of every month and subsequently it forces us to monitor our spending throughout the month very closely. Another way to combat the loss of tracking your cash expenditures is to carry around a pencil and paper with you and manually record those transactions.

You could also use several smart phone apps to do the same thing, but you have to be very diligent in recording those purchases. The Budget School has a free mobile app for android users that allows you to track your spending on the go. You can get it with your purchase of the Ultimate Budgeting Tool.

5. Do you have any examples or stories of anyone who has struggled in the area of personal finance and overcame their obstacles to reach their financial goals? Please share.

I will tell you of one person’s spending that made a true impact in my life and that was the spending habits of my mother. When I was growing up, it was just my mom and I. She and my dad divorced when I was about 11 years old. So my mom and I are very close and have been forever. I saw first hand the dangers of not managing your money very well, living paycheck to paycheck, and drowning in debt. My mom and I are very blessed that she managed to claw her way out of debt through hard work and the help of my wonderful stepdad. But her lack of money wisdom when I was growing up made a profound impact on me and help mold me into the financial person I am today. It also gave me a passion to want to help others who are struggling with their finances.

6. What are 1 or 2 things that we can learn from your personal experience in regards to money management? Any light-bulb moments or times when you’ve turned a corner?

As weird as it seems, one of my light-bulb moments was deciding on my college major. I have seen far too many friends and family members drowning in student loan debts. Many of their problems stem from choosing their college majors poorly and then changing majors too many times. Far too many college students today are not thinking far enough in the future. They do not know what type of job that they want and are changing majors trying to find their way while adding years to their college experience.

I graduated with my Bachelor’s Degree in Business Administration in four years. I knew what I wanted to do with my life. I wanted to run companies. I thought that I might want to go work on Wall Street. I fell in love with the business world after watching “The Secret Of My Success” with Michael J. Fox when I was twelve if you can believe that. I was driven since that time to get a degree in business and be in the business world and community. My degree also had a high success rate of earning a salary commensurate to the cost of my education. Far too many college students today are choosing their majors with little to no idea as to how they will apply them or what type of salary they will earn when they do.

Earning a prestigious degree from a great school in art history is awesome, but there is little to no practical application for that outside of museums. Also there is no way that they will earn a return on their investment in the short-term and cover their student loans. That’s the hard decisions that need to be made early in a person’s life unfortunately. We tend to shy away from that and let our children flounder to the detriment of their future earnings and ability to pay off their subsequently enormous student loan debt.

7. What role does budgeting play in your success story and how can one go about starting a budget?

The biggest thing that I can point to with my own finances that has been a success is that I spend less than I earn. I know that it sounds trite but it is true. Because of this one little fact, I am able to do so many more things and enjoy more financial freedom than many of my peers. I am able to save a lot of money for an early retirement, travel, take vacations with my family, save for my children’s college educations, and the like. So if there is one thing that budgeting helps me do, is that it helps me to spend less than I earn every month. With a surplus, so many more things are possible. With breathing room comes such a wonderful life. I’m truly blessed.

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1 Comment

  • Great interview and insight! I agree that too many young men and women are taking on huge amounts of student loans for degrees that do not pay anywhere close to the amount of debt they will owe.

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