GUIDE REAL TALK: FINANCIAL HEALTH

Here at Redside, we understand that financial health, mental health, and physical health are all connected. The Redside Financial Health Helpline launched in Spring 2018, allows guides to talk with a licensed Financial Advisor about topics ranging from credit card debt to savings plans.

For this quarter’s Guide Real Talk, we interviewed former Idaho guide and current Financial Advisor Mickey Smith to dive into the financial struggles and advantages that Idaho guides face.

 This interview includes the topics of Roth IRAs, student loan payments, emergency funds, credit card debt, and savings plans. Find your topic of interest, or scan the whole piece for a great overview of beginning financial literacy for guides.

Emerald LaFortune: Hi, Mickey, thanks for hopping on a call. Let’s start with you telling us about your career path.

Mickey Smith: I went to college in Denver, Colorado, where I started guiding during the summer. I worked on the Arkansas River for three seasons doing day trips. After my undergrad degree, I moved to Missoula, Montana to get a Master's in math and stats. While I was in Missoula, I found another guiding company locally and worked on the Lochsa, Clark Fork, Missouri, and the Main Salmon River. After I finished grad school I worked a few odd jobs, including going to Chile and working as a river guide there. I eventually became a teacher at Missoula College and then a little later at the University of Montana. At the University I was thrown into teaching large statistics lectures which was a lot of fun. I continued to guide during the summers in Idaho and Montana. In my final year guiding, I ended up on the Middle Fork of the Salmon River. The month before moving to Salmon Idaho and the Frank Church for the Middle Fork, I was hired to start working at Merrill Lynch for the upcoming fall. I’ve been a Financial Advisor there since 2016.

Emerald: You've had experience in two pretty contrasting careers - guiding and then mathematics and statistics. I think the differences between the two are obvious, but do you see any similarities between the skills you built while you were guiding and what you do now as a financial advisor?

Mickey: Absolutely. When I first started my job at Merrill Lynch, I thought my business partners hired me because of my analytical skills. I as well thought that my math skills would lend well to my new job. That is certainly true, but one thing I did not realize was that being a river guide taught me how to converse with people and how to serve people in a very special way. The skills I learned while guiding, especially on multi-day river trips, is immensely helpful in my job today. Things like being able to listen to guests and understand when people are in an uncomfortable situation. I use people skills at my job all the time now.

Emerald: Well said. Having been in the guiding industry, what do you think is one or a few of the larger financial challenges that guides face?

Mickey: For me, I usually had a winter gig, but for a couple of summers, or after a couple of winters, I did not. Seasonally, it was always hard to decide what to do with the large chunk of change I had at the end of the summer. I was definitely living mostly paycheck to paycheck and not saving a whole lot of money until I got a job at the university and had a more consistent winter job. It's hard to plan money-wise. You're only making money four months out of the year and then working odd jobs throughout the winter, so that was always a little bit frustrating. I think I kind of just winged it and it usually worked out for me, but winging it sometimes doesn't work out. If you’re one of those people where winging it doesn’t work, having an intentional savings plan is very important. This is of course easier said than done.

Emerald: Do you think on the flip side of that, do you think that there are advantages to that sort of seasonal guiding work and setup?

Mickey: I got to experience a lot of different things guiding. I worked mostly as a guide during my twenties, and I'm super grateful for that time because I was mostly free from obligations. I certainly was not the person to find a routine-based career right after college. Guiding allowed me to learn a lot about myself, develop more soft-skills, and allowed me to meet all sorts of people. Guiding shaped me as a person, and of course, I still boat and use my suite of guiding skills often. I was close to making river guiding a career since guiding and teaching was something I could envision doing long-term. I certainly don't regret being a guide and working seasonally, and the skills I developed are very useful.

Emerald: Can you talk to us a little bit about planning for retirement and some of those real long-term financial goals if you had decided to make guiding a lifetime career?

Mickey: So to put my financial planner hat on, if you do make guiding a career, know that many outfitters don't offer any type of retirement plan. This means you have to be very intentional about how you save for retirement and how you save in general. Utilizing retirement accounts like an IRA, a Roth IRA, or even a SEP IRA could be of help for particular guides. Saving money outside retirement accounts is important too. Things like buying a home could be a great savings avenue. Consider having automatic money transfers to a savings or investment account.

There are limits to IRA contributions so to go above and beyond that you have to be a little bit creative. Whatever you decide, be intentional. Talk to as many people as you can to help formulate a plan, and make sure you execute it.

Emerald: With retirement that there's an advantage to the length of time that an account has to age, correct? So can you give us an example where if you potentially were going to start saving for something like retirement and you started at age 25, how an average account would grow by the time you were 65, given ... Say, I decide I'm going to put $100 into a Roth IRA every month from now, from 25 to 65. What does that start to look like?

Mickey: Without quoting exact numbers, you will be extremely surprised of what it does grow to- even investing less than $100 a month would grow quickly. Especially if it's invested in stocks and or bonds. Retirement account money can’t be accessed until your 60s. Think about these accounts as a “set it and forget” strategy. Naivety is a great planning tool. Spend some time on the front end to get things set up, like establishing a Roth IRA and make auto deposits into it. There are lots of investment and savings apps and websites that make this very simple.  You’ll be amazed; that account can grow to six, sometimes even seven figures, just by saving 10, 15, or 20% of your income each year.

Emerald: I think there's sometimes a personality type in guiding that leans towards the bury your gold in the backyard type of approach to money management. Can you talk a little bit about the risk of investing and how that is managed?

Mickey: There is, of course, risk in investing. Stocks and bonds do and will fluctuate in value. But there is also a risk in doing nothing. Cash can slowly lose purchasing power due to inflation. For example, if you have 100 dollars today, in 1 year your 100 dollars won’t buy the same amount of goods as it would today. Inflation is an invisible risk that can eat away at your cash savings. Historically stocks keep up and or beat inflation. This means you take on different risks but this can be minimized by staying invested over long periods of time. For example, a retirement account you have when you are in your 30s will be invested for over 30 years. That plenty of time to reap the benefits of investing in stocks and minimize the inherent risk.   

Emerald: To shift gears, let's say I'm a guide and have just earned my undergraduate degree and I have let's say $40,000 of student loans that I need to pay back. As a younger person, what's the best place to start with addressing those if the plan is to be a career guide and sort of having that fluctuating income?

Mickey: That's a good question. As a guide with student debt, you have to be very intentional about budgeting. Consider student loans as a basic expense along with other bills. Make sure you are paying back an amount where some of the principal is being chipped away. I wouldn't worry about having student debt as long as you’re disciplined about paying it back. Now, if you're only paying interest, or making payments that don’t fully cover the interest so the loan is actually growing, as the balance is getting larger even though you're paying it back, that's where you have an issue. Paying the highest interest rate loan back first typically the best strategy. Having debt can be mentally taxing and stressful, but you can reduce that stress by making a repayment plan that works for you and sticking to it.

At the same time if you are happy with what you are putting toward student debt don’t avoid other financial goals. Things like buying a home or having some type of emergency fund can be important as well. Don't let student loans be a barrier to your financial plan or other smart money decisions.

Emerald: You mentioned an emergency fund. Can you talk a little bit about why an emergency fund might be important for a career like guiding and what you recommend, not necessarily as a hard amount, but maybe as a percentage of living expenses or as what you recommend when folks are interested in setting something like that up?

Mickey: Emergency funds are something that is totally dependent on your obligations. When you're say, living in your vehicle and working seasonal jobs, you might not have a whole lot of financial obligations. But be aware of those surprise costs like a vehicle repair or lack of work in between jobs.

Your situation of course changes a lot if you owe a home for instance. An emergency fund becomes a lot more important. My emergency fund was nonexistent for most of my 20s but I now have more obligations financially. When thinking about how much you should have saved, ask yourself, “What are my obligations?” In addition, emergency funds can help avoid going down the slippery slope of credit card debt.

Another important reason to have an emergency fund is for insurance deductibles. Look at your deductible on your car and medical insurance. What were to happen if you were to hit a deer somewhere on Highway 12 late at night? Can I afford my deductible? Would I be able to get to work? Would I be able to afford medical bills if I were to break my leg?

Emerald: Will you speak to the advantages and disadvantages of using a credit card? I know a lot of guides who use that credit card as that crutch to get them through the last month or two before their season begins.

Mickey: Credit cards can really spiral out of control. I've been there. I know a lot of people that have been there. It's surprising when you hear about it, but it’s more common than you'd think. Be really careful with credit cards. Be careful with all the promotional points or the cashback. At first, I would use them sparsely. When I first got mine, I just used it for only gas to begin building credit. I talked a lot about how important saving money is, but if you have credit card debt, that is the most important thing to handle. The incredibly high-interest rates make credit card debt the number one thing to get under control. Come up with some way to pay off credit card debt as quickly as possible. This is where your emergency fund comes into play, avoid using a credit card if you know you can’t pay it off by the end of the month.

If you are able to consistently pay your balance on time, credit cards can be helpful to build your credit score. Your local credit union or bank should be able to issue a card without any credit. There will be a really low minimum, but use it for something simple like groceries. If you are worried about credit card debt and you are scared about having access to a credit card, don’t get one. There are other ways to gain credit. There's something called a secured loan, which means you take out a cash loan where you have the same amount of cash already in your bank account. It shows the bank you can make monthly payments on time and manage debt appropriately. It's a great way to earn credit without having a credit card.

Emerald: And credit then becomes very important when you do move forward into larger purchases, such as a home or property.

Mickey: Exactly.

Emerald: It's awkward to talk about money. It's definitely something that's taboo for a lot of us, and that idea gets passed down not only from families but from employers and our coworkers and everything else. Particularly from a guiding perspective, why is it important to ask questions, to take your finances seriously, to understand where your finances are at, and be prepared and have a plan?

Mickey: It's going to make you less stressed and make you happier. The more knowledge you have about money, the more comfortable you will feel dealing with tough money decisions. Also, you will be able to enjoy what you earn more and reduce so much stress surrounding money. Spending money will be a more comfortable decision. When you get off your guiding season and have a savings plan and budget, you can enjoy spending for a month-long road trip. If you have things under control, you can make those decisions and not worry about what's to come.

Emerald: Any last thoughts or pieces of advice for guides who are ready to take their financial planning and systems to the next level?

Mickey: I've had a bunch of my friends ask me a very simple question which I don't think a lot of people have an absolute answer for, which is, "How much money should I save?" I like to spit out the number 20% of your gross income. That doesn't mean that you should put 20% just into your savings account. You can include things like your 401k, your other retirement accounts like your Roth or IRA. Also things like a home, gaining equity in your home is essentially saving money. I know not everyone owns a home, but that's one case that I would certainly include as savings.

Maybe you can't afford 20% right now, start with 10% and try to work up. Increase it by a percent every year. A lot of these things are with the caveat “if you can afford it”. So, if you can't start at 20% then that's okay. Don't let that be a barrier to start somewhere.

Emerald: That's good advice. Start where you can. Thank you for your time, Mickey, and for volunteering your services to Redside through the Financial Health Helpline.

Mickey: Of course. 

Through the Redside Financial Health Helpline, Idaho Guides can set up a no-cost, no-obligation 30-45 minute advice call with Mickey to discuss anything from savings plans to credit card debt to, “Where should I start?”. Learn more here.