With the current global health crisis, COVID-19, Worthy understand that financial stability is something many of us are starting to think about. This article explains how, especially in times of financial unknown, a diamond ring can be a financial asset. Stay safe out there.
-The Worthy Staff
In its “Building a Financial Fresh Start” Study, Worthy found that 64% of divorced or divorcing women surveyed, did not think of their diamond engagement ring as a financial asset. Yet as I described below, a financial asset you no longer wear can be sold and the proceeds used to pay off credit card debt or invested for your future (or your child’s future).
Let’s play a little game. Ask yourself what you would do in each of these four scenarios:
Your pet needs medical care. She needs tests and a costly procedure.
If you had $2,000 sitting in your drawer, would you use it to pay the veterinarian instead of adding debt to your credit card?
You have $2,000 in credit card debt. The interest rate is 18% a year. You can’t afford to pay more than the monthly minimum payment, which is $70 each month. Even if you never put another purchase on that card, it will take you more than three years to pay it off and you will have paid the credit card company a whopping $631 in interest.
If you had $2,000 sitting in your drawer, would you pay off the credit card?
You want to ensure that when your 8-year-old daughter eventually attends college, she won’t have to spend her own money on books. Over a four-year period, a college student can expect to pay more than $4,000 for books and supplies.
If you had $2,000 sitting in your drawer, would you open up a 529 college savings account for your daughter if there was a strong possibility that in 10 years the $2,000 could grow to $4,000?
You have less than $10,000 saved for retirement.
If you had $2,000 sitting in your drawer, would you invest in a retirement account if there was a strong possibility that in 30 years the $2,000 could grow to $16,000?
I have news for you. If you are divorced, you may have $2,000 (or possibly even more) sitting in your drawer or jewelry box. It’s the most sparkling financial asset you own and it’s not being used to benefit you or your children.
I often explain to my female clients that it is important they start investing and slowly build up a retirement account so they don’t outlive their savings. Generally, after reaching a certain age, a woman can withdraw money each month from a retirement account to pay for living expenses when other income isn’t available.
For example, if you were to generate a lump sum of $2,000 by selling your diamond ring with Worthy, that could become seed money for an individual retirement account (IRA). If you were able to earn extra income of $400 per month through a side gig and transfer the money each month into an IRA, after 25 years your retirement savings would be worth close to $300,000 assuming a 6% annual rate of return.
Like the idea of investing but not sure how to get started? Check out:
Investing 101 blog post.
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