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The Retirement Answer

Although I will admit that the title of this post is a bit glamorous, I wanted to share the simplicity of the message. Typically, every morning we will sit down to eat breakfast. Meals at our house are generally jovial, with discussions ranging from which animal would win in a fight to how my kids will spend their day. A few mornings ago, however, my oldest asked me a rather interesting question. Knowing what I do for a living she asked, “Daddy, what do you have to do to retire?” My immediate response was, “That’s a great question!” At age 7, my heart swelled that she was already thinking about retirement. Before I could give an answer she quickly quipped, “Wait. I know. You have to save enough money so that one day you can retire.” I was speechless. Pretty profound for a 7-year-old. Finally, I replied, “That’s exactly what […]

How to Save Even More

In the past, we’ve written about how to save more money by paying yourself first, saving 15-25% of your gross income, or saving just 1% more in order to have enough to retire comfortably, send a child to college, or other goals requiring capital needs. Saving money via payroll deductions, automatic contributions to IRAs and 401ks, and directly into piggy banks (for kids and adults alike) can be considered ways to save money directly. However, there are some ways to save money indirectly – and convert that money into direct savings towards retirement, college, or other financial goals. Turn the lights off (shut the door, close the refrigerator)! This phrase still echoes in my head from when I was younger. My parents could frequently be heard telling me to turn lights off in my bedroom or in the house if I wasn’t going to be using them or needing them. […]

Save Money with an Energy Audit

When we hear the word audit it’s often associated with a negative connotation. However, an audit does not necessarily have to be a bad thing – especially when it can save you some money. I’m talking about having an energy audit done at your home or business. What an energy audit can do is let you know how much energy and utilities your home is using as well as let you know how much energy and utilities your home may be wasting. Of course, wasted utilities means wasted money. Let me give you an example from my perspective. About 5 years ago my wife and I decided to have an energy audit done. We called our local utility provider and inquired about the specific programs that were available. Our utility company was more than willing to point us in the right direction and they recommended a third-party contractor that was […]

How to Make Your Saving Automatic

Sometimes it can be difficult to save for emergencies or for retirement. While physically not demanding, the mental strain can be a hump that is hard to get over. In other words, we experience a little bit of “pain” or mental anguish if we have to physically hand over money or write a check. So how can we overcome this anguish? Automate. First, determine how much you need for an emergency. This can either be to start the fund or to replenish amounts that have been used. Generally, it’s a good idea to have 3 to 6 months of non-discretionary expenses (expenses that don’t go away if you lose your job or become disabled) set aside in an FDIC insured bank account. Some individuals may find it more comforting to have 6 to 9 months or 9 to 12 months. It’s up to you. For retirement, I recommend saving 15 […]

Multiple Income Streams

This post is primarily geared toward younger individuals just starting out after college or from graduate school. However, the information can be used by anyone looking to boost income in order to increase retirement savings, pay off debt earlier or simply to put them in a better position financially. In financial planning we often talk about risk management as one of the bricks to the foundation of any solid financial plan. Generally, when we say risk management we think of auto, home, life, disability and other insurance coverage in addition to an emergency fund. Another area of “insurance” would be creating additional or multiple income streams as a hedge against losing an income source due to downsizing, termination, etc. If none of the aforementioned negative events occurs, then the extra income can be used to bolster retirement savings, reduce debt, or save extra for college. The point is that if […]

The Third Most Important Factor to Investing Success

Previously I wrote about the Most Important Factor and the Second Most Important Factor to Investing Success. Continuing this streak I’ll give you the third most important factor to investing success: Leave it alone. To recap: The most important factor is to continuously save and add to your nest egg over your career; the second factor is allocation – make sure you’re investing in a diversified allocation that will grow over time. The third most important factor to investing success: Once you’ve started investing, leave it alone. Resist the temptation to sell off the component of your allocation plan that’s lagging; the reason you have a diversified allocation is so that some pieces will lag while others flourish, and vice-versa. Reallocate your funds from time to time (once a year at most) to match your allocation plan, but that’s all the fussing you should do with your investments. Leave it […]

The Spare Change Challenge

Many individuals who know me know that I’ll run in front of oncoming traffic to pick up a penny (or anything shiny for that matter). While some may think that this is a waste of time and that “it’s only a penny”, the fact is that the small change adds up. Whenever I get weird looks or folks laugh at the mention of a penny to be grasped, I always ask, “Would you walk past a $100 bill?” The point being, it all adds up. The tiniest snowflakes create earth-moving avalanches. The small amounts I pick up are usually deposited into my kids’ piggy banks. When we’re together and we find money they call the change “lucky coins”. The interesting thing is that these lucky coins have gotten pretty heavy in their banks. Both of my kids can barely lift their piggy banks due to all of the luck we’ve […]

Maintaining Confidence in an Uncertain World

All around us, every day, we see signs of an unstable financial world. The stock market has been all over the place, instability continues in the Middle East (like it will ever change?); at home we’re confronted by a presidential election that offers little choice other than to hold your nose and vote for the one that you believe is likely to do the least damage. Add to this the rising cost of “getting by” and there’s little wonder many folks are very concerned  and have little confidence about the future. What Can You Do? I don’t suggest hiding under your bed – this has never worked for me, and sometimes you find things there that you would rather not! On the other hand, there are few things that you can do to help get through this uncertainty, and maybe you’ll decide that it’s not so scary after all. For […]

Analyze your assets to avoid missing the mark

When we talk about financial fitness, one of the measures that is most important to the conversation is the value of our assets. There are really five different kinds of assets that we should consider: Personal Assets. Clothing, furnishings, and jewelry fit into this category. Most of this “stuff” decreases in value to less than half what we paid for it before we even get it home. Household Assets. This includes real estate, cars, and appliances. Most of these items either appreciate in value over time or provide a fair value over their life (in relation to renting the service). The total value of these assets must be reduced by any loans that we have against them – such as mortgages and auto loans. This will produce a net value of Household Assets. Employment Assets. Some employers still provide for a pension for their employees’ retirement. This pension has a […]

ABLE Accounts

For 2015 there is a new type of tax-deferred savings account, called the ABLE account. The acronym ABLE comes from the name of the act: Achieving a Better Life Experience Act of 2014. As such, these accounts are dedicated to provide for tax-deferred savings (non-deductible contributions) of up to $14,000 per year for folks who became blind or disabled before age 26. Tax-free distributions from the ABLE account can be used to pay for housing, transportation, education, job training, and the like.  The assets in an ABLE account are not counted toward an individual’s eligibility to qualify for Medicaid, Supplemental Security Income and other federal mean-tested benefits (up to a $100,000 balance in the ABLE account). This is the great benefit of the ABLE account, because the means-testing applied to so many benefits for folks with disabilities actually discourages savings of this nature. With the ABLE account, people with disabilities […]

It’s Never Too Early to Teach Your Kids About Money

I have two daughters and it has given me the pleasure of seeing them grow up and get excited about even the little things like chasing butterflies or finding a lucky penny. My kids find lucky pennies all the time. In fact, they find lucky coins all over the place. Some are by chance as we’re walking down the sidewalk and other times it’s a lucky coin that I may place in an inconspicuous place so they stumble upon it and find it (sometimes it’s fun creating luck for my kids). Whether they find the coin by luck or otherwise, it gives me a great opportunity to teach them. After the excitement of the find goes away, they get even more excited when I ask, “Where should we put that lucky coin?” With glee they almost always reply, “In the piggy bank!” I feel parents can teach their kids about […]

Save 1% More This year – Your Future Self Will Thank You!

    Like so many other things, practicing financial awareness has few payoffs in the early stages.  Think about exercising, eating right, putting in the extra effort at work, or taking a class to improve your skills.  All of these things have a future payoff for the extra effort that you put into it today.  Small steps matter in all of these areas, and before you know it you’ll look back and thank your earlier self for putting in the work to get where you are today. Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – and watch for more articles in the weeks to come! How Much is 1% by Sterling Raskie, @SterlingRaskie Retire Rich With Only […]

Add 1% More to Your Savings

Savings rates in America are really not what they should be.  Studies have shown that, in order to achieve the goal of replacing 80% of your average pre-retirement income you should be saving at a rate around 17.5%.  This doesn’t necessarily mean that 17.5% is the right number for everyone, because pensions and Social Security can help out in replacing some of your income in retirement.  But the average savings rate for all Americans is something just south of 5% – so we can definitely do a better job.  So make the effort to apply at least 1% more to your savings rate this November.  It certainly can’t hurt! Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – […]

Call All Bloggers! 2nd Annual 1% More Blogging Project

I’m sure that I’m not alone in the financial planning world with my concern about the rate of saving toward retirement across this great land.  Recent figures have shown that we Americans are not doing as this year as last, at a 4.6% rate versus 5% last year when we started this project. This is a dismal figure when you consider how most folks are coming up way short when they want to retire.  Just like last year in November, I thought maybe something could be done to encourage an increase in savings – if only by 1%, this can be a significant step for lots of folks.  November is the perfect time to do this, as most corporations are going through the annual benefit election cycle, so the 401(k) (or 403(b), 457, or other savings plan) is right at the forefront for many folks. I’m proposing that all financially-oriented […]

Receive a Tax Credit For Saving

Starting (or staying with) a savings plan can be difficult to do.  After all, it’s often difficult enough to just get by on your earnings day-to-day, week-to-week, before reducing the take-home pay that you’ve worked so hard for by putting it into a savings plan.  The thing is though, once you start a savings plan, you’ll be surprised at how little it “hurts” to start putting small amounts aside.  After a while, you won’t even miss it. In addition, the IRS has a way to help you get started – it’s called the Saver’s Credit.  This is a credit that you receive on your tax return, simply for putting money aside in a savings plan.  Pretty sweet deal, if you asked me! The IRS recently released their Newswire IR-2012-101, which details how the plan works and how you can take advantage of it.  The full text of IR-2012-101 is below: […]

C’mon America! Add 1% More to Your Retirement Savings This Year!

My fellow financial bloggers and I have come together to encourage an increase in retirement savings this year.  Since many employees are going through annual benefit elections right about now, it’s also a very good time to consider increasing your annual contributions to your retirement savings plans.  Small steps are the easiest to take, and the least painful – so why not set aside an additional 1% in your retirement plan in the coming year? The list below includes a boatload of ideas that you can use to help you with this increase to savings.  I’ve heard from several more bloggers who are going to put their posts up soon. If you’re a blogger, see the original post for details on how to join the action: Calling All Bloggers! Listed below are the articles in our movement so far (newest are at the top): From Dana Anspach: Can You Spare […]

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