Who Is Erin Gobler and What Does She Offer in Finance?

Erin Gobler is a personal finance writer and coach who helps individuals take control of their money. She simplifies complex financial topics, making them accessible to those looking to improve their financial well-being. Her work covers budgeting, investing, debt management, and financial planning.

Understanding how to manage income, allocate expenses, and plan for the future are key to financial stability and long-term success.

Distinguishing Income Sources

Knowing where money comes from is essential to managing it effectively. Income falls into two main categories: active and passive. Active income is earned through work, such as salaries, wages, or freelance payments. It is subject to payroll taxes, including Social Security and Medicare, which in 2024 are 6.2% and 1.45% respectively for employees. Employers match these amounts, while self-employed individuals cover both portions, totaling 15.3%.

Passive income requires minimal ongoing effort and includes rental income, dividends, interest, and royalties. Tax treatment varies by source. Qualified dividends are taxed at long-term capital gains rates, ranging from 0% to 20% in 2024, while ordinary dividends are taxed as regular income. Rental income is taxable but allows deductions for mortgage interest, property depreciation, and maintenance costs, reducing tax liability.

Portfolio income comes from investments like stocks, bonds, and mutual funds. Capital gains taxes apply when assets are sold for a profit. Short-term gains (on assets held for less than a year) are taxed as ordinary income, while long-term gains benefit from lower rates. Investors can use tax-loss harvesting—selling underperforming assets—to offset gains and reduce taxes.

Budget Allocation Methods

Managing expenses effectively requires a structured approach. The 50/30/20 rule divides after-tax income into 50% for necessities, 30% for discretionary spending, and 20% for savings and debt repayment. Necessities include housing, utilities, groceries, and insurance, while discretionary expenses cover entertainment, dining out, and non-essential purchases. The savings portion funds retirement accounts, emergency funds, and extra debt payments.

For those with irregular income, such as freelancers, zero-based budgeting provides better control. This method assigns every dollar a purpose, ensuring all income is allocated across expenses, savings, and investments. Fixed costs are prioritized first, followed by variable expenses, allowing adjustments based on fluctuating earnings.

High-income earners or those with complex finances may prefer values-based budgeting. Instead of rigid percentage allocations, this method prioritizes spending based on personal goals, such as early retirement, real estate investments, or funding a child’s education. Aligning spending with long-term objectives helps optimize financial decisions.

Addressing Borrowing Concerns

Debt can be a useful financial tool when managed properly, but it carries risks. Interest rates, loan terms, and repayment structures determine the true cost of borrowing. Credit cards often have variable interest rates, with the average APR in 2024 exceeding 20%. If balances are not paid in full each month, this can become one of the most expensive forms of debt. Fixed-rate loans, such as mortgages or auto loans, offer predictable payments, making long-term planning easier.

Credit scores influence borrowing costs, affecting interest rates and loan approval odds. FICO scores range from 300 to 850, with higher scores securing better terms. Payment history (35% of the score), credit utilization (30%), and length of credit history (15%) are major factors. Keeping credit utilization below 30% and making on-time payments help maintain or improve scores. Lenders also evaluate debt-to-income (DTI) ratios, with most mortgage providers preferring a DTI below 43%.

Loan refinancing can reduce interest costs or adjust repayment terms. Homeowners may refinance mortgages to take advantage of lower rates, while student loan borrowers might consolidate federal and private loans for a more manageable payment plan. However, refinancing federal student loans into private loans eliminates access to government benefits, such as income-driven repayment plans and potential loan forgiveness, which should be carefully considered.

Planning for Tax Efficiency

Reducing tax liability requires strategic planning. Tax-advantaged accounts, such as 401(k) plans and IRAs, allow individuals to defer taxes on contributions and investment growth. In 2024, traditional 401(k) contributions can reduce taxable income by up to $23,000, while IRAs offer a maximum deduction of $7,000, or $8,000 for those aged 50 and older. Roth accounts do not provide an upfront deduction but allow for tax-free withdrawals in retirement, making them beneficial for those expecting higher future tax rates.

Optimizing deductions can lower tax exposure. Itemizing expenses may be beneficial for taxpayers whose deductions exceed the 2024 standard deduction of $14,600 for single filers and $29,200 for married couples filing jointly. Deductible expenses include mortgage interest, state and local taxes (capped at $10,000), and qualified medical expenses exceeding 7.5% of adjusted gross income. Business owners and self-employed individuals can deduct home office expenses, Section 179 depreciation for equipment purchases, and the qualified business income (QBI) deduction, which allows eligible pass-through entities to deduct up to 20% of their income.

Approaches to Asset Growth

Building wealth requires strategic investment decisions and risk management. Diversification reduces exposure to market volatility while maximizing potential returns. A well-balanced portfolio typically includes a mix of equities, fixed-income securities, and alternative investments. Stocks offer growth potential but come with higher risk, while bonds provide stability and predictable income. Exchange-traded funds (ETFs) and mutual funds offer exposure to various asset classes without the need for active management.

Real estate provides both rental income and long-term appreciation. Investors can purchase residential or commercial properties, participate in real estate investment trusts (REITs), or explore short-term rental opportunities. Tax benefits, such as depreciation deductions and 1031 exchanges, can enhance profitability. Business ownership is another wealth-building tool, as successful enterprises generate income and equity value. Entrepreneurs can reinvest profits, expand operations, or eventually sell their businesses for a substantial return.

Evaluating Charitable Contributions

Charitable giving can provide financial benefits while supporting meaningful causes. Donations can be structured to maximize tax advantages through donor-advised funds (DAFs), charitable remainder trusts (CRTs), and qualified charitable distributions (QCDs). DAFs allow donors to contribute assets, receive an immediate tax deduction, and distribute funds to charities over time. CRTs provide income to the donor or beneficiaries for a set period before transferring remaining assets to a nonprofit, offering tax deductions and estate planning benefits.

For retirees, QCDs enable tax-efficient giving by allowing individuals aged 70½ or older to donate up to $100,000 directly from an IRA to a qualified charity without incurring taxable income. This strategy can help satisfy required minimum distributions (RMDs) while reducing adjusted gross income. Businesses can also benefit from charitable giving through corporate philanthropy programs, which may include matching employee donations, sponsoring community initiatives, or establishing charitable foundations. Structuring contributions effectively ensures both donors and recipients maximize the impact of financial gifts.