Subscribe to our newsletter!

Posts Tagged ‘Financial planning’

« Older Entries
Newer Entries »

Reality check for the amount you’re saving…

Friday, February 5th, 2010

Do you think you”re saving enough?  If so, are you sure?

Today’s article, titled, How much should I save?by Donna Rosato, is an in depth look at an entrepreneur and her retirement portfolio.  The entrepreneur is hoping that a financial planner who looked at her portfolio will “bless it” and tell her good job.  Unfortunately, like most people, she isn’t saving as much as she thinks she is!  Most people think that by saving anything, or by getting their “company match” in a 401k program that they are set for retirement…they’re not.  Yes, it is good to get that company match, but if that is ALL you’re saving, you won’t be able to retire with the same lifestyle you have now, and that is where the misconception comes in for a lot of people.  They think, “oh, well, as long as I get my company match, I can retire living at the same level I live at right now”.  WRONG!  If it were that easy, we’d all retire with no debt and a vacation condo!!  As the financial planner in the article figures out, the entrepreneur is saving less than half of what she needs to retire at her current lifestyle level. 

What is going on here?  As adults, we underestimate things…it’s what we do.  For example, we underestimate the amount of calories we take in in a day (to the tune of 20%-40% from what I have read) and we underestimate how much we should be saving.  So, how do you keep from underestimating things?  Get some help!  You can pay for it, or get the free kind.  Either will be better than nothing, but if you’re paying for it, be sure that the expert isn’t just trying to sell you products…if they are, then they DO NOT have your best interests in mind!  Need some basic (and free) ideas on how much you should be saving?  Check out this link at CNN Money, to get a rough idea of where you are and what you need.  Some extra tips are to be diversified, preferably in growth stock mutual funds, and, the article and I agree, that small cap, mid cap, large cap and international funds are all good places to invest your cash.   Whatever you do, figure out what you need to retire.  Don’t just think that a 6%-8% contribution to your 401k is enough.  Max it out!!  Start contributing to a Roth IRA!  HAPPEN to your life…don’t let your life HAPPEN to you!!!

Tags: , ,
Posted in Friday's Financial News! | Comments Off

Taking on too much & treating yourself…

Monday, February 1st, 2010

Okay, so what happens when you decide that you want to lock down your finances, follow a budget and get out of debt.  We know that getting out of debt can be a boring and tiring experience, but you can take some precautions to guard against that. 

First of all, stick to your budget, but allow yourself a little indulgence on rare occasion.  Why?  Well, it’s my opinion that everyone only has so much willpower to give to something, and eventually they will break and indulge anyway, so little indulgences keep away the big ones.  So, what types of indulgences are little?  Well, when you’ve got your finances locked down, and you’re buying basic needs only when it comes to groceries, TV and movies/shows etc., on occasion it wouldn’t hurt to buy a nice meal from the grocery.  Make that a special family night with a nice meal and some board games or something.  Or, you could save a couple of bucks every week out of your grocery budget to take the family to the movies or some other inexpensive activity.  Your choice!  The point is to indulge occasionally to keep you focused and on task, without blowing through your budget.  If you never treat yourself, you might fall off the wagon.  Notice to those of you who are “used to” treating yourselves…this does not mean you can do your normal “treating”…no mani/pedi’s, or blowouts, or daily cupcake from the specialty $10 a cupcake store, or expensive clothes/shoes/tools.  This is a small indulgence.  A $20 pick me up a couple of times a month.  If you can’t stick to that, you’ll never get out of debt.  And no, you don’t “deserve” those mani/pedi’s, because they are what got you into debt in the first place! 

Trying to do 2 or more hard things, like getting out of debt and quitting smoking (for example) at the same time, means even more added stress to your willpower.  You have to give a little slack and indulge yourself  while getting out of debt, because the alternative,in this example, is indulging in smoking.  Not cool.  And indulging a little there would save you money anyway, since once you quit smoking, you would have a ton of cash to put toward paying down your debt!

What’s the take away?  Get on a budget.  Pay off your debt.  Learn to live like an adult who doesn’t get everything they want every time they want it.  But stay on this path for the long haul by making the occasional small ticket splurge!

Tags: , , , , ,
Posted in Mucho Moolah, Monday's Money Saving Tips! | 1 Comment »

What would you do for a Klondike Bar??

Wednesday, January 27th, 2010

What is your ultimate goal?  Your “Klondike Bar”, so to speak.  What would you do to accomplish that goal? 

No matter what your ultimate goal is, more than likely you need to plan for it!  Are you planning for this goal that you want to achieve?  Are you working toward it as I’m typing this?  If not, then how do you ever expect to achieve it? 

Planning out your life usually gets you just as excited as doing your taxes, but is just as necessary (don’t want the government coming after you, do you?) because it not only maps out what you need to do, but gives you a sense of purpose to work toward for your future.  Basically, you can’t reach your destination if you don’t have a map to go by.  So, what are some ways to plan for the future?

First, you need to brainstorm.  What is your goal?  What credentials or money do you need to achieve your goal (college, or capital to get started?)?  Is the place you live in a good place to work toward that goal, or is there another place better suited to the goal (i.e., marine biologists shouldn’t live in the desert).  What type of friend and family network do you need to make this goal a reality?  If your goal is for a certain career, are you sure that the career is suited to your personality (i.e. if you don’t like paying attention to details, accounting is probably not a good career path for you).  If your goal is to retire wealthy, have you written out a budget and figured out what percentage of your income you need to save in order to do so (the money isn’t just going to appear, and social security, if it’s still around, definitely won’t let you live “comfortably”). 

Once you have brainstormed and figured out all the things necessary to achieve the goal, then you put them in chronological order or order of necessity, whichever seems to make more sense for your particular needs.  Now, you have a map.  Start at the top of the list and work at it, one item at a time.  For example, if the first thing you need is an education, then that is where you start.  Use the same process of identifying how to achieve each item on your list, as you did to make the list, and you not only have a plan/map to achieve your ultimate goal, but it should be easier to achieve it, because you aren’t scrambling to figure things out on the fly.

Don’t know what you want to do, or what your ultimate goal is in your life?  That’s ok.  Take time to figure it out.  If you bounce around for a few years longer than your friends, it’s OK.  It doesn’t make you inferior, it just means that your interests are too varied to settle on one thing at that point in your life.  However, once you do figure out your passion, take these steps to get a plan in action!

Tags: , ,
Posted in Wild Card Wednesday | Comments Off

Why the mall contradicts the experts…

Wednesday, January 13th, 2010

I drive by our local mall often, and for the past several months, I’ve been watching it for signs of the recession, unemployment, and how bad the economy is suffering.  Now, as much as I believe that there are places all throughout the country that are truly suffering, with debt, falling home prices and unemployment, I have to say, it’s not happening with the same fury everywhere, the way the media would have you think.

I hate to see people suffer, and those people that have lost their jobs are in my prayers.  However, the falling home prices are only an immediate concern if you are trying to sell your house and/or have lost your job.  If you have a stable income and are contented in your home, staying there for a few years (decade, maybe?) isn’t a big deal, so neither is the drop in value.  Debt, is, as always, a major concern for us.  If you are employed, you should be making a budget, sticking to it, funding your emergency fund and getting out of debt.  If you are unemployed, then you are in an income crisis, and that should be your main concern…along with food, shelter (that doesn’t mean a “McMansion”) and basic utilities (i.e. lights, water and heat).  You can’t focus on paying people back what you owe until you get stability back in your life, so put them on hold, even if it takes a few months. 

I would like to make a point for our readers though: with roughly 10% unemployment, that means that 10 people out of 100 are out of work, which is the same as saying 90 people of 100 are employed…it’s terrible for those 10 people, but overall, it’s not a catastrophe.  And those 90 out of 100?  They are shopping!  Maybe less often than before, and they might be spending less than before, but they are shopping…at least, that’s the way it looks EVERY time I drive past/go to the mall.  The place is packed!  As usual, I can’t find parking there, and the Christmas season was just as bad as usual.  Now, like I said, I know this isn’t the case everywhere, but the media’s version that everyone everywhere is suffering terribly, in houses they can’t afford, without jobs and piling up debt.  This isn’t true either.  The truth, as usual, is probably somewhere in the middle.  Some are suffering, some aren’t.  If you are suffering, I wish you luck and speed in your job searches and in getting out of debt, and if your job and home life are stable and “secure”, work hard to keep it that way, and help those who need it, either with prayer, food donations or job contacts (etc.).

Tags: , , , , , ,
Posted in Wild Card Wednesday | 1 Comment »

Our State of the Union…

Wednesday, January 6th, 2010

Last night, your favorite southern couple had our bi-annual “State of the Union” or “budget committee meeting”.  Basically, a time when we sit down and review our budget and re-vamp any budgeted items that are receiving too much money or not enough money.  Now, we talk about our budget line items that affect us on a weekly basis, on a weekly basis.  These are the things we do every week, like buy groceries and gas.  The bi-annual committee meeting is for the things we don’t look at all the time, like web hosting fees and legal fees etc. 

As I said above, we also go over our budget reports to understand what is being under-funded and what is being over-funded.  We look at EVERY budget item.  Last night, we had to increase the money funding our medical budget and our grocery budget (I swear the grocery stores just keep raising the prices!).  Now, you might be asking “how do you increase a line item?”, and the answer is simple; Something else has to be cut back.  We took the money from our monthly savings (grudgingly) to fund the additional money needed for the medical and grocery budget items.  What if you have no savings?  Then you have to cut back on another line item, like cable, telephone or Internet.  Is your budget so slim that you don’t have ANYextras?  Then you need to try cost cutting to bring your spending in line with your budgeted amount, or increase your income to cover the overages.  It’s simple math…your budget must be balanced!  If there aren’t enough funds, you must cut back, or make more!

Now I challenge you to have your own budget committee meeting (if you’re single, you still need to have the meeting with just yourself, or a friend/family member you trust to share this info with)!  Sit down and figure out how much you spent on all your expenses this last year!  How much did you go over? Under?  Do you even have a budget?  First things first, you need a budget.  Get out a pen and paper, and write down all of your expenses, in order of importance (1. housing, 2. food, 3. electricity etc.), then write down your income.  Assign amounts to each category.  If you run out of income before you reach the bottom, then you either need to cut back your expenses, or increase your income.  Did you reach the bottom with money to spare?  Great!  If you have debt, use the money to pay it off, if not, start saving an emergency fund for 3-6 months worth of expenses, and after that, for retirement! 

It’s our opinion that money works for you and not against you if you watch it like a hawk.  Don’t give yourself the opportunity to mess up!  Start this year off right, and take your budget committee meeting to the kitchen table tonight!

Tags: , , , , ,
Posted in Wild Card Wednesday | Comments Off

Gen Y-ers grow up!

Friday, December 18th, 2009

Today’s article is from Foxbusiness.com, and is titled Growing Up Financially Is Hard to Do by: Gail Buckner.  It’s some interesting commentary on how the Gen Y-ers are responding to the recent economic turmoil!

Generation Y is a term applied to those people currently 22 to 33 years old, of which, I am a member.  These people are typically the offspring of Baby Boomers, and according to many in the work force, are nothing like their parents, especially in how they view their jobs.  In the past, this (my) generation has been characterized as a bunch of job-hoppers.   But now that they and their friends are experiencing layoffs and financial problems, the number of those surveyed that had changed jobs in the last 2 years dropped from 40% to almost half of that, and almost a quarter of them plan to stay with their employer until they retire…now there’s some surprising information!

Another interesting thing of note, however, is that the economy and higher rates of unemployment have changed the optimism and confidence typically displayed by this group of people, and they are becoming more financially conservative…all I have to say is that it’s about time! 

Apparently, a new survey shows that 41% of Gen Y-ers have become more fiscally conservative in the last year, and nearly 2/3 say they’re “trying to save more now than a year ago”.  I think that is incredible!  To know that a lot of people from my generation are waking up and saving is great.  And as far as retirement, in the last year the number of Gen Y-ers that are saving for retirement rose from 18% to 53%, but the majority of them are only focused on an emergency fund (which is a good start!).  Considering that more than 30% of Gen Y-ers owe more than $5,000 in credit card debt, saving for an emergency and/or retirement is a nice change of pace. 

No matter what their motives, the Generation Y group has started to notice the benefits of saving money and job security.  I have feared that my fellow Gen Y-ers would never learn this lesson, but I am happily wrong.  Maybe it was the economy, maybe it was the fact that it became cool to be a “recessionista”…or maybe it was that we got tired of hearing the word “recessionista”, and started watching our money to get people to quit using that word…either way, it happened, and hopefully it’s here to stay!

Tags: , , , , ,
Posted in Friday's Financial News! | Comments Off

A new twist on “Find a need and fill it!”

Friday, December 11th, 2009

Today’s post is based on a post by one of our favorite bloggers here at Southern Couple’s Guide, Dan Miller, author of 48 Days To The Work You Love.  The post is titled Find a Need and Fill it?, an old business motto that has been helping people find ways to become entrepreneurs and make money for years.  Some examples of filling a need would be inventing a wheel, inventing a steam engine or growing a crop that feeds many people, like potatoes or wheat. 

Dan Miller has pointed out other products in this post, however, that might not necessarily be able to be pigeon-holed in the need category.  He talks of the fancy tennis shoes that have come about in the near past, that help with stabilization and have a broader base, and their new counterparts that are narrower and simulate running barefoot at $245 a pop (I spent a lot of time deciding which way to go on this very topic when I decided to start running)!

Another product, Bling H2O, that has been on MTV is encrusted with Swarovski crystals that spell out “bling” on the bottle.  The funny part is that the water comes from Tennessee, and probably isn’t very “blinged-out” on some guys farm.  That doesn’t stop them from sealing the bottles with a cork and calling it “Limited Edition”.  The funny part is the price!  This water can be bought for $441 dollars a case (12 bottles) or $36.75 a bottle.  Can we say ridiculous?  Funny thing is, people are buying it! 

And this is Dan Miller’s point:  If you fill a “need” you can make a living.  If you fill a “want”you can get rich.  I agree with him wholeheartedly, I am simply dismayed at the reason for such a statement to be true.  In our instant gratification, want the best, have to be famous society, wants and desires trump needs.  We all have desires, and I think that’s OK.  But when we start to go into debt to obtain them, something is wrong.  When we start to think we “deserve” them, we are out of touch with reality, because the truth is that you don’t “deserve” anything just for being you…you have to earn it!  As sad as it is, however, it’s how things work today, so if you can find a want and fill it, go make yourself rich!

Tags: , , ,
Posted in Friday's Financial News! | 1 Comment »

Debit card fees may be the wave of the future…bummer.

Friday, December 4th, 2009

Today’s article is Banks’ newest game: Debit card fees, by David Ellis. It centers on the new trend in the banking area to institute loyalty program fees or other debit card fees. Basically, the banks are hesitant to lend money, thanks to all the problems that have resulted from over lending to high risk borrowers (and others), and now with the new credit card legislation that will go into affect soon, this is the avenue that will anger the least amount of people.

These loyalty programs are similar to those of the credit cards, where you earn points toward cash back or other “prizes”. As usual, however, it takes a TON of points to earn anything worthwhile. Luckily, a debit card doesn’t put the consumer further in debt, and these cards give the banks 1%-3% fee per transaction (However, lobbyists for retailers are trying to get that fee capped). UN-luckily, to use these new programs, many banks are charging yearly (or monthly) fees. This means that you have to use your debit card all the time and HOPE to earn the rewards while paying a fee for the PRIVELEGE to be in the program! How fun, right?

Our advice? If you can’t control your spending, and are detached from your debit card, the way you were from your credit card, and it’s not like spending money because it’s plastic…stick to cash. If you can handle using a debit card, use it. We don’t have a problem with them, since the money comes directly out of your checking account…but be aware, overdrawing on your checking account with you debit card is NOT responsible, and if that is you, GO BACK TO CASH! On the subject of loyalty/reward programs? We think you should just skip them. It takes crazy amount of effort to get anything, and costs a yearly fee on top of it!  What a waste.

Tags: , ,
Posted in Friday's Financial News! | Comments Off

Lay-a-way…It’s back!

Wednesday, November 11th, 2009

For a very long time, I didn’t hear anything about lay-a-way.  The stores I visited didn’t seem to offer it, and the commercials on T.V. didn’t suggest it as a shopping method.  That has changed recently, and I am quite happy about it!

You see, it’s become part of our culture to shop-shop-shop.  Retail therapy, they call it.  Think about that statement.  They want you to come and spend money to make yourself feel better.  Is that the way we should be relieving stress/improving our mood?  I don’t think so.  It’s an instant gratification thing.  We are like children with a shiny new toy…retail therapy!  How ridiculous!  Sounds like we’re simply encouraging ourselves to act like children.  I think we should act like adults.  Adults save up for things.  They have delayed gratification.  They don’t get retail therapy, they relieve stress by being with friends and family (or getting a REAL therapist, not one that doubles as a satchel purse and is called Louis Vuitton).  This, is why I like lay-a-way.  It allows people who don’t have the cash to pay for something all at once an option that doesn’t charge high interest and isn’t a credit card.  As a bonus, you don’t get the merchandise until you pay for it in it’s entirety, so it teaches delayed gratification!

I should note that we don’t really use lay-a-way ourselves, because, as most of you know, we save up throughout the year to pay for the things we want.  We have a Christmas category in our budget, that receives money each and every week.  This ensures we will have the money that we have determined we want to spend on the holiday, in time for said holiday (and in case you’re wondering, we determine the amounts in all budget categories at our “new year new budget” committee meeting, held in January).  If however, you haven’t been keeping up with your budget (and I really hope you have), then lay-a-way is the way to go for you.  Just remember this phrase…I WILL NOT use credit cards on presents!

Tags: , , , ,
Posted in Wild Card Wednesday | Comments Off

The dangerous reverse mortgage.

Friday, October 23rd, 2009

There’s a lot of talk these days about reverse mortgages, and whether or not they are a good idea.  While I think they are dangerous, I think the real danger is in people not knowing what they are and getting involved with these mortgages anyway.  It’s my opinion that you should never sign your name to anything that you do not completely understand (that is how people got into trouble with the sub prime mortgages), and therefore, you shouldn’t take out a mortgage (or other financial product) you don’t understand.

So, what is a reverse mortgage?  Well, you can read the full description here, but a simple explanation is that it is a loan for senior citizens, used to release (give back to the owner) the equity of the property as one lump sum or multiple payments over time. The home owner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves (usually going to a long term care facility). 

Today’s article (CNN Money Blog post) is titled Reverse mortgages: Sub prime mess déjà vu?, by Carla Fried.  It looks at how a lot of retirees are taking out reverse mortgages, since they have insufficient nest eggs to carry them through retirement, and how a lot of people, Comptrollor of the Currency John Dugan included, think these financial products have some of the same characteristics as sub prime mortgages.  Considering the mess to which the sub prime mortgages contributed, that should definitely make us be wary of these products.

Some resources to check into, if you want to learn even more about reverse mortgages and their pitfalls, are as follows:

  • AARP.org – A section on this website is dedicated educating seniors on reverse mortgage basics, their alternatives and ways that the financial product might be abused.  Check out the web page here.
  • U.S. Department of Housing and Urban Development – An informative website put on by the government.  It’s not as suspicious of the reverse mortgage product as the AARP website, but it still speaks of the dangers of scam artists peddling information that they give away on their website for free!

I know that there are some people who think these products have their place, but I have to disagree.  As I have said, I’m fine with 15 yeaar fixed rate mortgages, but products like these, just seem to part people with their money.  Make your own choice, but don’t say I didn’t warn you.

Tags: , , , ,
Posted in Friday's Financial News! | Comments Off

« Older Entries
Newer Entries »