Phil's Personal Finance Tip of the Day:
How to Tell if You Have a Lousy 401(k) Plan
By Emily Brandon | U.S.News & World Report LP
Investing in a 401(k) plan allows you to defer paying income tax on the money you save for retirement, helps automate your decision to save for retirement by having the money withheld from your paycheck and often allows workers to get valuable employer contributions. However, investing in a 401(k) plan isn't always worth it, especially if your plan has high fees, poor investment choices and no employer contributions. Here's how to tell if your employer is providing a subpar 401(k) plan:
No immediate eligibility. Ideally, you should start saving in a 401(k) plan with your first paycheck, but many employers won't let you. Only 54 percent of 401(k) plans offer immediate eligibility, according to a recent Vanguard analysis of 2,000 401(k) plans with 3 million participants. And 16 percent of 401(k) plans require workers to be with the company for an entire year before they are able to put their money in the plan. "It's sort of a legacy of when record keeping was more manual," says Jean Young, a senior research analyst for the Vanguard Center for Retirement Research. "You want to make sure that somebody is going to be with your organization before you enroll them."
[Read: 10 Trendy 401(k) Plan Perks.]
No employer contributions. Most Vanguard 401(k) plans (91 percent) offer an employer contribution. The best 401(k) plans immediately provide employer contributions to workers, but the majority of 401(k) plans impose a waiting period before new employees are eligible for a match or other company contributions. Many 401(k) plans require between one and six months (27 percent) or even an entire year of service (28 percent) before employees become eligible for a 401(k) match.
A very small match. The maximum possible match employees can get is a median of 3 percent of pay among all Vanguard 401(k) plans. The bottom quarter (24 percent) of 401(k) plans offer a maximum possible employer match of less than 3 percent. The top 15 percent of plans provide employer matches worth 6 percent or more of pay.
A match that is difficult to take advantage of. Employer contributions vary considerably by employer, with Vanguard alone administering 401(k)s with more than 200 different match formulas. Almost half (48 percent) of 401(k) plans require employees to contribute 6 percent of their pay to the 401(k) plan to capture the maximum possible 401(k) match. Other employers require workers to save between 3 and 5 percent of pay (37 percent) or at least 7 percent (11 percent) to get the entire match offered.
To read the entire article from Emily Brandon | U.S.News & World Report LP: http://finance.yahoo.com/news/tell-lousy-401-k-plan-152009584.html
To know what you know and to know what you don't know, that is real wisdom. - Confucius
Monday, July 8, 2013
Saturday, July 6, 2013
Personal Finance News Saturday 7/6
Phil's Personal Finance Tip of the Day:
Why Planning for Christmas in July Makes Sense
From Work Save Live.com
Even though hot temperatures of July are as far removed from winter in December, starting your holiday shopping plans in the middle of summer can do wonders for your budget and satisfy your love for gift-giving. There are many Christmas in July-type celebrations people enjoy but it should be a reminder to all consumers that the holiday spending spree is just 6 short months away and it is a perfect time to start planning and saving for the holiday rush.
To read the entire article from Work Save Live.com:
http://www.worksavelive.com/why-planning-for-christmas-in-july-makes-sense/
Why Planning for Christmas in July Makes Sense
From Work Save Live.com
Even though hot temperatures of July are as far removed from winter in December, starting your holiday shopping plans in the middle of summer can do wonders for your budget and satisfy your love for gift-giving. There are many Christmas in July-type celebrations people enjoy but it should be a reminder to all consumers that the holiday spending spree is just 6 short months away and it is a perfect time to start planning and saving for the holiday rush.
Save Money on Christmas Shopping
Here are 5 tips that can help get you into the holiday spirit – if only financially speaking:Calculate Your Money
From the first day of July, there are approximately 19 full weeks to work on saving before the big holiday. If you multiply 19 weeks by $50 a week set aside, you’ll have saved $950 by the week before Christmas day. If that amount is not enough or you plan to head out to the Black Friday sales, you’ll have to rearrange your math a little to get you to your goal. Make sure to mark it on your yearly calendar that as of the first of July you need to get your plan in place.To read the entire article from Work Save Live.com:
http://www.worksavelive.com/why-planning-for-christmas-in-july-makes-sense/
Friday, July 5, 2013
Personal Finance News Friday 7/5
Phil's Personal Finance Tip of the Day:
13 Productive Things to Do While Watching TV
Cross a few simple tasks off your to-do list while watching your favorite TV shows.
From Real Simple.comMultitask
This article originally appeared on LearnVest.com.
By the end of the week, the last thing we want to do is to tackle our to-dos. As important as it is to give full attention to big financial decisions and anything that requires real math, we’ll confess that we often try to knock off our more menial tasks in front of the television. Nothing like killing lots of birds with one televised stone.
Here are 13 to-dos to do while you pay a visit to TV Land.
To read the entire article from Real Simple:
Losers quit when they're tired. Winners quit when they've won. -Unknown
Thursday, July 4, 2013
Personal Finance News Thursday 7/4
HAPPY JULY 4TH!!!
Today we take a break from Personal Finance and enjoy the festivities of the holiday.
John Adams was a prophet back on July 2nd, 1776 in describing how we would celebrate the signing of The Declaration of Independence. However he was two days off at the time:
“The Second Day of July 1776 will be the most memorable Epocha in the History of America. I am apt to believe that it will be celebrated by succeeding Generations as the great anniversary Festival. It ought to be commemorated as the Day of Deliverance by solemn Acts of Devotion to God Almighty. It ought to be solemnized with Pomp and Parade with Shews Games Sports Guns Bells Bonfires and Illuminations from one End of this Continent to the other from this Time forward forever more. You will think me transported with Enthusiasm but I am not. I am well aware of the Toil and Blood and Treasure that it will cost Us to maintain this Declaration and support and defend these States. Yet through all the Gloom I can see the Rays of ravishing Light and Glory. I can see that the End is more than worth all the Means. And that Posterity will tryumph in that Days Transaction even altho We should rue it which I trust in God We shall not. The Book of Abigail and John: Selected Letters of the Adams Family 17621784 Harvard University Press 1975 142 .”
― John Adams
Today we take a break from Personal Finance and enjoy the festivities of the holiday.
John Adams was a prophet back on July 2nd, 1776 in describing how we would celebrate the signing of The Declaration of Independence. However he was two days off at the time:
“The Second Day of July 1776 will be the most memorable Epocha in the History of America. I am apt to believe that it will be celebrated by succeeding Generations as the great anniversary Festival. It ought to be commemorated as the Day of Deliverance by solemn Acts of Devotion to God Almighty. It ought to be solemnized with Pomp and Parade with Shews Games Sports Guns Bells Bonfires and Illuminations from one End of this Continent to the other from this Time forward forever more. You will think me transported with Enthusiasm but I am not. I am well aware of the Toil and Blood and Treasure that it will cost Us to maintain this Declaration and support and defend these States. Yet through all the Gloom I can see the Rays of ravishing Light and Glory. I can see that the End is more than worth all the Means. And that Posterity will tryumph in that Days Transaction even altho We should rue it which I trust in God We shall not. The Book of Abigail and John: Selected Letters of the Adams Family 17621784 Harvard University Press 1975 142 .”
― John Adams
Wednesday, July 3, 2013
Personal Finance News Wednesday 7/3
Phil's Personal Finance Tip of the Day:
Achieve the Optimal — Not Highest — Credit Score
By Dave Johnson | CBS MoneyWatch
If you're a smart consumer, you probably keep an eye on your credit score. At least one annual peek can tell you if your score is healthy enough to support a new mortgage or car loan, for example.
You might also know that the scale tops out at 850. That begs the question: What do you need to do to achieve the highest score? And what number is actually good enough? After all, getting all the way to 850 is probably impossible, so is there an optimal number, beyond which you don't need to work to improve your score?
That's the question recently answered at personal finance blog LearnVest. Bottom line: 760 is the tipping point; beyond that number, there are diminishing returns. According to Anthony Sprauve, director of PR at FICO, "It's important to understand that if you have a FICO score above 760, you're going to be getting the best rates and opportunities."
How can you reach 760 and beyond? For that, technology blog Lifehacker comes to the rescue, with a breakdown of the factors that go into calculating your score:
Payment history: 35 percent of your total score is calculated based on your diligence in making payments on bills and loans. To maximize your performance in this area, pay your bills on time. It's that simple.
Credit utilization: Another 30 percent of your rating is based not quite on what you owe, but more precisely on the ratio of what you owe to your available credit limit. If all of your credit cards are maxed out all the time, that's a very poor credit utilization score. But if you only use a little of your available credit, that's good. The lesson here is that it can pay to leave credit cards open even if you don't use them; if you cancel all your lines of credit, you'll damage your credit utilization score.
To read the entire article from Dave Johnson | CBS MoneyWatch :
http://finance.yahoo.com/news/achieve-the-optimal-%E2%80%94-not-highest-%E2%80%94-credit-score-171836679.html
If you aren't fired with enthusiasm, you will be fired with enthusiasm. -Vince Lombardi
Achieve the Optimal — Not Highest — Credit Score
By Dave Johnson | CBS MoneyWatch
If you're a smart consumer, you probably keep an eye on your credit score. At least one annual peek can tell you if your score is healthy enough to support a new mortgage or car loan, for example.
You might also know that the scale tops out at 850. That begs the question: What do you need to do to achieve the highest score? And what number is actually good enough? After all, getting all the way to 850 is probably impossible, so is there an optimal number, beyond which you don't need to work to improve your score?
That's the question recently answered at personal finance blog LearnVest. Bottom line: 760 is the tipping point; beyond that number, there are diminishing returns. According to Anthony Sprauve, director of PR at FICO, "It's important to understand that if you have a FICO score above 760, you're going to be getting the best rates and opportunities."
How can you reach 760 and beyond? For that, technology blog Lifehacker comes to the rescue, with a breakdown of the factors that go into calculating your score:
Payment history: 35 percent of your total score is calculated based on your diligence in making payments on bills and loans. To maximize your performance in this area, pay your bills on time. It's that simple.
Credit utilization: Another 30 percent of your rating is based not quite on what you owe, but more precisely on the ratio of what you owe to your available credit limit. If all of your credit cards are maxed out all the time, that's a very poor credit utilization score. But if you only use a little of your available credit, that's good. The lesson here is that it can pay to leave credit cards open even if you don't use them; if you cancel all your lines of credit, you'll damage your credit utilization score.
To read the entire article from Dave Johnson | CBS MoneyWatch :
http://finance.yahoo.com/news/achieve-the-optimal-%E2%80%94-not-highest-%E2%80%94-credit-score-171836679.html
If you aren't fired with enthusiasm, you will be fired with enthusiasm. -Vince Lombardi
Tuesday, July 2, 2013
Personal Finance News Tuesday 7/2
Phil's Personal Finance Tip of the Day:
6 Personal Finance Rules to Live By
By Maitland Greer | Manilla.com
[More from Manilla.com: How to Cut Back on Spending]
1. Build an emergency fund.
Think of an emergency fund as a security blanket for your finances. You should save up three to six months of your total expenses in an emergency fund to be able to deal with an unforeseen circumstance like job loss, illness, natural disaster or home issue.
2. Protect your family with life insurance.
Life insurance is one of the most important gifts you can give to your loved ones. If you are the breadwinner of your family, your insurance coverage should be five to six times your salary to leave them secure and protected if something happens to you.
[More from Manilla.com: Basic Tips for Financial Tracking & Budgeting]
3. Negotiate.
Whenever it is an option, you should always negotiate. No matter if your buying a new car, landing a new job, purchasing a house or even setting up a new cable account you should always negotiate to ensure that you get the lowest price possible. Don’t feel embarrassed or shy about asking for a deal, perk or discount — your bank account will thank you in the long run. Remember, it never hurts to ask.
To read the entire article from Maitland Greer | Manilla.com
http://finance.yahoo.com/news/6-personal-finance-rules-live-120045930.html
You can't live a perfect day without doing something for someone who will never be able to repay you. -John Wooden
6 Personal Finance Rules to Live By
By Maitland Greer | Manilla.com
Being fiscally responsible means you live by sound money principles that allow you to build a stable future for yourself and your family. An understanding of these basic financial tenants is the first step in achieving financial success.
[More from Manilla.com: How to Cut Back on Spending]
1. Build an emergency fund.
Think of an emergency fund as a security blanket for your finances. You should save up three to six months of your total expenses in an emergency fund to be able to deal with an unforeseen circumstance like job loss, illness, natural disaster or home issue.
2. Protect your family with life insurance.
Life insurance is one of the most important gifts you can give to your loved ones. If you are the breadwinner of your family, your insurance coverage should be five to six times your salary to leave them secure and protected if something happens to you.
[More from Manilla.com: Basic Tips for Financial Tracking & Budgeting]
3. Negotiate.
Whenever it is an option, you should always negotiate. No matter if your buying a new car, landing a new job, purchasing a house or even setting up a new cable account you should always negotiate to ensure that you get the lowest price possible. Don’t feel embarrassed or shy about asking for a deal, perk or discount — your bank account will thank you in the long run. Remember, it never hurts to ask.
To read the entire article from Maitland Greer | Manilla.com
http://finance.yahoo.com/news/6-personal-finance-rules-live-120045930.html
You can't live a perfect day without doing something for someone who will never be able to repay you. -John Wooden
Monday, July 1, 2013
Personal Finance News Monday 7/1
Phil's Personal Finance Tip of the Day:
How Much Should You Have In Your 401(k) To Retire?
By Ryan C. Fuhrmann | Investopedia
The discussion on how much and individual needs by the time they retire used to be pretty straightforward. With $1 million in savings, at a 5% interest rate, one could be reasonably assured of having $50,000 in annual income by investing in long-term bonds and simply living off the income. With $2 million, an individual could assume a six-figure annual income without having to dip into principal. (For more on how you can achieve these targets, read How To Save More For Your Retirement.)
TUTORIAL: Retirement Plans
Unfortunately, interest rates have been on a steady decline for roughly three decades now. Back in 1980, nominal Treasury Bill rates were roughly 15%, but these days a 30-year Treasury is yielding just over 3%. Lower yields on bonds has made the investing equation in retirement more difficult and was only exacerbated by the credit crisis, which has also served to complicate the manner in which individuals save to have enough to live off in retirement.
Primary Retirement Income
The primary savings vehicle for most Americans these days is through a 401(k) retirement plan. Individuals have traditionally been able to also count on Social Security benefits, but the long-term picture for this savings vehicle is murky at best, so ideally shouldn't be part of the savings equation. Deciding how much to save first requires having a retirement goal in mind, such as an overall savings level or annual income target listed above.
Given these retirement goals, an individual can make an attempt to reverse engineer, or back into a current level of savings. Other important considerations include one's current age, current savings levels and estimated retirement age. Other major inputs consist of estimating market return levels, such as the growth rates of stocks, bond interest rates and inflation rates over the long term. (For more on inflation, check out Combating Retirement's Silent Killer: Inflation.)
As you can see, there are a wide array of inputs that are far from certain. Many websites, including Investopedia, bankrate.com and the non-profit organization AARP, provide retirement calculators to help individuals enter and tweak the key variables to come up with annual savings goals. AARP asks individuals to estimate retirement age, current savings levels and percentages of income saved, and desired spending levels in retirement.
To read the entire article from Ryan C. Fuhrmann | Investopedia :
http://finance.yahoo.com/news/much-401-k-retire-120000945.html
Yesterday is but today's memory, tomorrow is today's dream. - Khalil Gibran
How Much Should You Have In Your 401(k) To Retire?
By Ryan C. Fuhrmann | Investopedia
The discussion on how much and individual needs by the time they retire used to be pretty straightforward. With $1 million in savings, at a 5% interest rate, one could be reasonably assured of having $50,000 in annual income by investing in long-term bonds and simply living off the income. With $2 million, an individual could assume a six-figure annual income without having to dip into principal. (For more on how you can achieve these targets, read How To Save More For Your Retirement.)
TUTORIAL: Retirement Plans
Unfortunately, interest rates have been on a steady decline for roughly three decades now. Back in 1980, nominal Treasury Bill rates were roughly 15%, but these days a 30-year Treasury is yielding just over 3%. Lower yields on bonds has made the investing equation in retirement more difficult and was only exacerbated by the credit crisis, which has also served to complicate the manner in which individuals save to have enough to live off in retirement.
Primary Retirement Income
The primary savings vehicle for most Americans these days is through a 401(k) retirement plan. Individuals have traditionally been able to also count on Social Security benefits, but the long-term picture for this savings vehicle is murky at best, so ideally shouldn't be part of the savings equation. Deciding how much to save first requires having a retirement goal in mind, such as an overall savings level or annual income target listed above.
Given these retirement goals, an individual can make an attempt to reverse engineer, or back into a current level of savings. Other important considerations include one's current age, current savings levels and estimated retirement age. Other major inputs consist of estimating market return levels, such as the growth rates of stocks, bond interest rates and inflation rates over the long term. (For more on inflation, check out Combating Retirement's Silent Killer: Inflation.)
As you can see, there are a wide array of inputs that are far from certain. Many websites, including Investopedia, bankrate.com and the non-profit organization AARP, provide retirement calculators to help individuals enter and tweak the key variables to come up with annual savings goals. AARP asks individuals to estimate retirement age, current savings levels and percentages of income saved, and desired spending levels in retirement.
To read the entire article from Ryan C. Fuhrmann | Investopedia :
http://finance.yahoo.com/news/much-401-k-retire-120000945.html
Yesterday is but today's memory, tomorrow is today's dream. - Khalil Gibran
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