Should You “Ditch Your Retirement Plan?”

July 19, 2012

I’ve written before about the Early Retirement Extreme concept, in which people save as much as 75% of their after-tax income in order to become financially independent in as little as 5 years. I recently came across a post in Forbes called Why You Need to Ditch Your Retirement Plan that was surprisingly written by another financial planner who argues essentially the opposite: that people should stop worrying about saving for retirement and enjoy life now. That could mean taking a lower paying job that you like more or working fewer hours, even if it means saving less and retiring later. He points out that working longer wouldn’t be so bad if you love what you’re doing. Continue reading “Should You “Ditch Your Retirement Plan?””

5 Financial Planning Moves for Women in Their 20’s

July 16, 2012

Whoever said, “Life is short” did a disservice to thousands of people.  Life is not short.  Life is long.  Research on longevity shows that in married couples that live to age 65, life expectancy for at least one of them is age 94.  When you think about it, 94 years is a very very long time. Someone who is 94 years old this year would have been born in 1918 – does anyone know what was going on in 1918? We were in the middle of World War I, Mississippi was the first state in the Union to ratify prohibition, and Woodrow Wilson was the President of the United States.   In the 1910s, only 14% of homes had a bathtub, only 8% had a telephone and the speed limit in most cities was 10 miles per hour. Continue reading “5 Financial Planning Moves for Women in Their 20’s”

Top 4 Ways to Begin Investing for Retirement Today

July 04, 2012

If you haven’t been saving for retirement, putting even a little away on a monthly basis can have a huge impact on your future quality of life – especially if you invest in a tax-advantaged retirement account like your employer’s 401k plan or an IRA. This is because of compound interest: If you don’t have to pay taxes on the interest your account earns, that interest stays invested and earns yet even more interest – and the longer you’re invested, the more money you can make. For example, a mere $50 invested every month for 30 years will turn into almost $75,000 if it earns 8% annually – even though your total investment was only $18,000. Continue reading “Top 4 Ways to Begin Investing for Retirement Today”

7 Steps to Your Financial Independence Day

July 04, 2012

This week America celebrates its 236th birthday.  To honor the occasion, why not declare your own personal “Financial” Independence Day.  To me, financial independence equates to not having to worry about money, so if you are worried about your finances, take these seven steps to economic freedom: Continue reading “7 Steps to Your Financial Independence Day”

Want to Make Better Financial Choices? Know Thy Future Self

June 07, 2012

In his last two blog posts, my colleague Michael Smith wrote about two young guys in their early 20’s who are earning about the same amount of money but making very different choices about what to do with it. One is living frugally so he can save for emergencies and a down payment on a home and contribute 15% of his income to his 401(k). He is on track to have a home with no mortgage and $1 million in his 401(k) by age 50. Continue reading “Want to Make Better Financial Choices? Know Thy Future Self”

Why Spending Less Can Mean Living More

June 06, 2012

This morning on the radio, I heard an ad for refinancing your home mortgage, targeting us listeners by explaining that the savings that come from a lower interest rate could be used to buy a new car or take a luxury vacation.  But there was nothing about using the savings to actually, well, save!  Ads like this remind me that we live in a society where other people often judge your quality of life based on the amount you spend, while the amount you save is seen as painful deprivation, belittled as “cutting back.”  But if spending less in order to save more is seen as something that limits your life rather than enhances it, something to be suffered rather than celebrated, it’s no wonder that it becomes so difficult for so many people to do. Continue reading “Why Spending Less Can Mean Living More”

A Tale of Two Choices Part 2: Which is Right?

June 01, 2012

Last week I wrote about 2 young men who are living very different lifestyles.  One is frugal now and is saving substantial sums of money and the other is living for the day with the assumption that when he gets married and settles down, there will be plenty of time for saving later.  As I was writing it, I was reminded of the epic tortoise v. hare race.  In the blog post, I raised some questions about the lifestyles and choices that these men are making.  Some of those questions are at the very heart of the field of behavioral finance and some of the questions could lead some of us to “judge” the choices that they are making.  This is where understanding each guy and how they are “hardwired” regarding financial decisions can be helpful.  Continue reading “A Tale of Two Choices Part 2: Which is Right?”

Inspiring Savings with a 5k Challenge

May 29, 2012

I managed to cross the finish line last weekend at the Kennett Run, a local 5k race I’ve run the past few years.  I don’t like to exercise, but this event provides enough incentives that even I am inspired to lace up my sneakers and hit the pavement.  Here are some of the tactics that got me motivated: Continue reading “Inspiring Savings with a 5k Challenge”

A Tale of Two Choices

May 25, 2012

Over the last few weeks, I have met a couple of young men who are in the early stages of their career.  Both are in their mid-20’s and both make approximately the same amount of money, yet each had very different financial issues to discuss.  The contrast with these two gentlemen is something that I am absolutely going to point out to my kids and hope that they can take a valuable life lesson from it. Continue reading “A Tale of Two Choices”

What’s Scarier Than Monsters??? Numbers…!

May 18, 2012

When I was growing up, I was surrounded by numbers and I actually liked that.  (Yes, I’m admitting that I’m a geek from way back.)  My friends and I could tell you the batting average of almost any member of baseball’s Hall Of Fame and the stats of major NFL players, compute a pitcher’s ERA in our heads or talk about the winning percentage of various great teams throughout history.  Numbers were fun!  Numbers were cool!  (To us, at least…)  Numbers were all that was right with the world back then…Last week, I read an article about the cost of healthcare during retirement and those numbers scared me! Continue reading “What’s Scarier Than Monsters??? Numbers…!”

Learning to Become an Extreme Saver – Part 1

April 12, 2012

We’ve all heard about the many benefits of saving money.  With money in the bank, you can pay for things you need or want without going into debt.  You have an emergency fund to help tide you over in case you lose your job and you have the foundation for a nest egg that can be invested conservatively and grow over time into a substantial amount saved for retirement.  There’s no question that being a saver has several advantages.  But have you ever thought about the advantages of becoming an ‘extreme saver’? Continue reading “Learning to Become an Extreme Saver – Part 1”

Married With Debt? How to Manage Your Money When the Honeymoon is Over

March 09, 2012

We just received the following question on our website:

“I’ve recently gotten married and both of us have entered into this marriage with our own debts. We are having a hard time, even with combined incomes, making ends meet. I would like to learn more about money management and what needs to be done to pay bills and still have enough money left for savings and cash reserves.” Continue reading “Married With Debt? How to Manage Your Money When the Honeymoon is Over”

Don’t Simply File Your W2 – Analyze It!

February 06, 2012

When you look in your mailbox these days, there is some kind of a tax form waiting for you just about every day.  Most people simply glance at them to verify there are no mistakes but then they go into the current year’s tax file.  After filing taxes, who pulls out their W2 and goes over it with a fine toothed comb?  Not too many people I would assume.  Most of us are so glad to get our taxes filed and over with that we are done and ready to move on to other things. Continue reading “Don’t Simply File Your W2 – Analyze It!”