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Ask the Expert: Bob Gavlak on managing personal finances

Between saving, investing, paying off debt, and covering daily expenses, keeping track and optimizing our personal finances can be overwhelming. This week, LifeSpeak expert and certified financial planner Bob Gavlak joined our Ask the Expert session to help our users make sense of it all. Bob employs a holistic approach when working with his clients, ensuring that all aspects of an individual’s financial needs are taken care of. He specializes in working with young professionals and pre-retirees through personal interaction, helping to build the ideal plan for navigating a broad range of financial situations.

Here are the highlights from our webchat with Bob Gavlak. Please keep in mind all user participation is anonymous.

Cancelling credit cards

QUESTION — “What impact does cancelling my credit card have on my credit score?”

Bob Gavlak — “In a weird way, cancelling your credit card can potentially have a negative impact on your credit. The reason is that one of the big factors in your credit score is something called “credit card utilization rate”. Basically, if you have $10,000 in total credit card limits and you’re only using $1,000, you have a 10% utilization rate. That’s not bad from the credit rating perspective. However, if you cancel a card that has a $7,000 limit, your available limit is $3,000 and all of a sudden you’re now at a 33% utilization rate of your credit! This high of a utilization rate is not seen as good from the reporting perspective. If you’re being charged an annual fee just to have the card, cancel it. Just be careful on how it could impact your credit!”

Understanding robo-advisors

QUESTION — “What are your thoughts on robo-advisors/investors apps and services?”

Bob Gavlak — “With the changes in technology, these are moving over into financial services through different robo-advisors. In general, I look at this as a good thing because it encourages more people to get more proactive with their investing. However, it is important to understand the service they provide and weigh that against what you’re looking for. The upside of a robo-advisor is they can build low-cost investment strategies that adjust to the market. This can be a great way to gain exposure without having to have too much knowledge of the financial markets. However, they often make decisions without the input from a human, which is important. If you’re investing in a long-term, tax-deferred investment vehicle, you may not want a robo-advisor selling during rough times. This could lead to poor timing or poor returns. Additionally, they aren’t going to be as proactive or thoughtful in decisions regarding cash flow concerns, debt issues, retirement projections, taxes, etc. Utilizing robo-advisors can be a great tool; just be sure it fits in with your goals and what you expect from an advisor.”

Saving for retirement after post-secondary

QUESTION — “I just graduated from university and started my career. Could you advise on the percentage I should put in my retirement accounts?”

Bob Gavlak — “Congratulations! My short quick answer: as much as you can afford! 🙂 In all seriousness, starting out saving as soon as you’re out of school is of the utmost importance. Once your lifestyle can fit into the fact that you’re saving, you won’t have to feel like you’re “taking a step back” when you put into your retirement. Being in the habit early on is going to make it much easier to continue as your career and life progresses. So stuff as much money as you can into your retirement!”

Don’t miss our next Ask the Expert session!

If you weren’t able to catch our webchat with Bob Gavlak, you can always sign into your LifeSpeak account to read the transcript. And be sure to log in April 30 at 12PM EST to chat with Dr. Adi Jaffe, who will be answering your questions about mental health and addiction. If you don’t have a LifeSpeak account, please have your HR team reach out to us about your company subscribing.

What is Ask the Expert?

Our Ask the Expert sessions allow our users to have regular access to our experts in real time, which allows them to have their pressing questions answered. This opportunity provides our users with practical and easily implemented tips to help them make real changes in their lives. To learn more, don’t hesitate to book a walk-through.