What Comes First: Saving, Investing, or Paying off Debt?

June 06, 2013

One of the most common questions we get is whether to prioritize paying down debt, building up savings, or investing for retirement. Ideally, of course, we would do all three but most of us have limited dollars with which to work with. So what should take priority? It’s a topic that has generated some disagreement among some well-known financial gurus. Here are some guidelines to follow: Continue reading “What Comes First: Saving, Investing, or Paying off Debt?”

You Are Not Your College Major

May 30, 2013

In this blog post, my colleague Michael Smith writes about his daughter going to college next year and the big decision she’ll have to make about what to major in. But I’m not sure that I agree that it’s as big a decision as he thinks it is. As you’re probably aware, some of the most financially successful people like Bill Gates and Mark Zuckerberg didn’t even graduate from college at all. Continue reading “You Are Not Your College Major”

Is the Stock Market Too High to Invest?

May 23, 2013

Usually when I talk about investment mistakes, I refer to what is known as the “greed, hope, and fear” cycle. This is the well-known tendency of investors to invest more aggressively when the stock market is doing well, hope it will come back when the market begins its inevitable downturn, and then eventually sell near the bottom out of sell fear. Investors are then typically reluctant to get back in until things “settle down,” which means when the market has gone up for an extended period of time and is possibly nearing another high point. This causes investors to buy high and sell low, the opposite of what you want to do.   Continue reading “Is the Stock Market Too High to Invest?”

10 Financial Lessons From the Celebrity Apprentice

May 16, 2013

While I don’t generally watch tv or even own one, I have to admit that I’m a huge fan of one particular show: The Apprentice, which is currently on the verge of the finale of its All-Star Celebrity Season. While the show has its share of mindless reality tv entertainment, there are lessons that can be derived from it, not just for the business world that the show is based on (albeit loosely) but for our own personal financial lives as well. Here are some financial lessons from this season’s celebrity firings: Continue reading “10 Financial Lessons From the Celebrity Apprentice”

Does the 401(k) “Suck?”

May 09, 2013

A friend of mine recently sent me an article titled “It’s a 401(k) World and It Sucks.” I realize that the 401(k) is not perfect (but what is?) and the author does make some good points. But that being said, “sucks” is a pretty strong word about the vehicle that has encouraged more retirement saving than anything else, especially considering how much we need to increase those retirement savings. Let’s take a look at each of the author’s main arguments: Continue reading “Does the 401(k) “Suck?””

Timing is Everything: Why You Should Wait for the “Right Moment”

May 02, 2013

Yesterday, my colleague Greg Ward published a blog post about a friend who was awarded a $1k vacation that he has yet to use in 2 years because he’s waiting for the “right moment.” Greg then points out how many gift cards and reward points go unspent each year by people who may be doing the same thing. Well, I am that friend so let me explain why it actually can make sense to wait for the “right moment.” Continue reading “Timing is Everything: Why You Should Wait for the “Right Moment””

When to Retire? How About 40?

April 25, 2013

I recently saw this clip of the Today Show that discussed one man’s goal of retiring before 40, a topic I’ve written about before. He’s 30 years old, earns $50k a year, and has accumulated $100k of savings over the last 3 years. His goal is to save 60-70% of his net income to retire at age 35 with a $400k nest egg to cover his $15k of annual expenses. To do that, he’s moved to Florida to avoid state income taxes and be able to live without a car (he points out that waiting for the bus is much easier in warmer weather) and has decided not to have children. Is his plan feasible? Continue reading “When to Retire? How About 40?”

Should You Jump on the Bitcoin Bandwagon?

April 18, 2013

Last week, I was asked what I thought about investing in the new digital currency  “bitcoin.” This got me thinking about what successful investors do in general when deciding what to invest in and how to make a rational decision as opposed to being caught up in a herd mentality. Here’s a great process to go through before investing your hard earned dollars in the latest investment trend (or fad): Continue reading “Should You Jump on the Bitcoin Bandwagon?”

Can Your 401(k) Be Part of Your Emergency Fund?

April 11, 2013

One of the results from our recent research report that has gotten a lot of attention is that we saw an increase in the number of employees’ accessing their 401(k) balances through loans and hardship withdrawals from about a quarter in 2011 to about a third in 2012. The conventional wisdom is that this means employees need to do a better job with money management and in particular, building an emergency fund of at least 3-6 months of necessary expenses and maybe even more. For someone just starting out, I think this is absolutely true.  Continue reading “Can Your 401(k) Be Part of Your Emergency Fund?”

Dude, Where’s My Card?

April 04, 2013

It was April 1st so I hoped that it was just an April Fool’s joke. I was at the grocery store checkout and reached for the credit card that I generally use for groceries but it was nowhere to be found. After paying with a different card, I called the credit card company to see when the last transaction was. Fortunately, it was at the restaurant where I had lunch that day so no one else had used it. After putting a temporary hold on my credit card, calling the restaurant and everywhere I had been afterwards and searching my home and car, I had to accept that it was gone and cancel the card. Continue reading “Dude, Where’s My Card?”

How Much Do You Really Need to Retire?

March 28, 2013

I recently answered a question from a blog reader and received the following message:

“Thanks VERY much! In the past few years, I have paid $500 to two separate financial planners to get this kind of advice, to no avail.  In a few minutes you provided me more useful information than they provided.  They have been helpful telling me how much I CAN invest with them, where, and how much that investment will grow to – but they haven’t, can’t or won’t tell me how much I SHOULD be saving now to get to a recommended savings target – so that I have enough to retire, but also am not unnecessarily saving too much now rather than enjoying it while my family is young, all together (before kids get big and move out) and all healthy (and capable of enjoying it).” Continue reading “How Much Do You Really Need to Retire?”

Why a Home is Still a Good Investment

March 21, 2013

Today is the first day of spring and among other things, that means many people will begin the process of buying a home. Despite the crash in the real estate market a few years ago, real estate remains a great investment. In fact, it can often make the difference of whether someone is able to retire. Here are some reasons why: Continue reading “Why a Home is Still a Good Investment”

The College Fund You Don’t Know You Have

March 14, 2013

I talk to many parents of students approaching college age who fret about having little or nothing saved for college. They know how important a college education is and want their children to be able to go to the school of their choice while graduating with as little debt as possible but at best, they only have a few thousand dollars set aside for college expenses, barely enough for one semester’s worth of meals. The rest of their money is tied up in emergency savings, retirement accounts, and a home with little or no equity. Yet, there is one potential bright spot… Continue reading “The College Fund You Don’t Know You Have”

The Worst Savings Account in America

March 07, 2013

Imagine I told you about a special savings account that you could contribute to with money automatically deducted from your paycheck every pay period. Sounds like a great way to save, right? Now imagine that this account earns no interest and has no possibility of any growth or future earnings. Continue reading “The Worst Savings Account in America”

What’s Probably Missing From Your Financial Plan

February 21, 2013

When people call our financial helpline or schedule a one-on-one consultation, they usually have a particular problem or goal in mind. It might be getting out of debt, knowing whether they’re on track for retirement, or dealing with a thorny tax issue. But sometimes we have people that seem to be doing all the right things. They have no high-interest debt. They have more than adequate savings for emergencies. They’re saving enough for retirement. They just want to know what they might be missing. Here are the most common holes in people’s  financial plans: Continue reading “What’s Probably Missing From Your Financial Plan”

Financial Advice for an 18-Year Old

February 14, 2013

There’s a lot of financial information out there for people at various stages in life. But what about for those just starting out in adulthood? How can they get off on the right financial foot? Continue reading “Financial Advice for an 18-Year Old”

5 Potential Changes That Could Affect Your Retirement

February 07, 2013

The more I think about the funding shortfalls with Social Security and Medicare, the disappearance of traditional defined benefit pension plans, and the lack of Americans’ saving for retirement, the more I realize that there will likely be some major changes in the future of retirement and retirement planning. Everyone talks about entitlement reforms like raising the Social Security retirement age and reducing Medicare benefits. But here are 5 other possible changes affecting retirement that you may not have heard as much about and some things you can to prepare: Continue reading “5 Potential Changes That Could Affect Your Retirement”

5 Reasons NOT to Pay Down Debt

January 31, 2013

One of the most common things we help people with is paying off debt. This makes sense because in the case of high-interest debt like payday loans and most credit cards, you can save considerably more in interest by making extra payments towards that debt than you’re likely to earn by investing that same money instead. Paying off debt can also improve your credit score and cash flow. But are there times when it may make sense NOT to pay off debt? Here are a few: Continue reading “5 Reasons NOT to Pay Down Debt”