According to this issue of the Employee Benefits Research Institute, 69% of eligible workers participate in their 401k plans in 2010. That means almost a third of eligible employees aren’t contributing anything at all. Even if we take into account that some of these plans do not match contributions, millions of people are passing up free money! This post is not to tell you the normal rules (don’t take out loans on your 401k, don’t cash your 401k out when you switch jobs, contribute as much of the $16,500 a year as possible, etc). This post is to yell at everyone who is ignoring free money. For the sake of all that is sacred to you, contribute the maximum that will be matched by your company. That is free money that is part of your benefit package. Not taking advantage of that is like handing back a paycheck and saying “no thanks”. Don’t whine that you’ll miss that percentage of your paycheck…you won’t. I never notice the 6% that’s missing from mine. Unless you are truly starving, this is necessary. I know that my readers probably already do this. I know I’m probably preaching to the choir. BUT, if you … Read more
I hit on the main ways of diagnosing your financial health in this past post. I’m going to use Wednesdays to go further in depth on each point since I truly believe that financial health leads to less stress and happier lives. I covered the first point, Spend Less Than You Earn, last week. The second point was to have a solid emergency fund. This means that you need liquid reserves in order to cover unexpected circumstances. Job loss is the most frequently mentioned reason for emergency funds that I have read so far. Start a Separate Account I’d suggest starting a separate account for your emergency fund so you’ll be less likely to use the money if it’s away from your normal accounts. We recently chose to keep our emergency money at Smarty Pig since they currently have a 2.01% interest rate while ING is only at 1.1%. I sometimes forget about our emergency fund account for weeks at a time. It usually only pops into my head to check on it when I’m updating our monthly net worth. If you don’t like the idea of a separate account, I’ve also seen recommendations for starting a CD ladder, investing in a money market account, or … Read more
Yahoo had this article about the 12 Hidden Costs of Homeownership that reminded me of the many times I had to take a deep breath when we were buying our home. Here’s a quick summary of their list: 1. Home inspection – $300 or more 2. Pest Inspection – $50-$200 3. Appraisal Fees – $350-$400 4. Closing Costs – 2%-3% of the mortgage loan amount 5. Moving Expenses – Variable 6. Furniture – Variable 7. Property Taxes and Homeowners Insurance – $3000 or more and 0.5%-1% of the loan respectively 8. Supplemental Insurance – $240 a year 9. Homeowners Association/Condo Fees – Variable but could be more than $1200 a year 10. Utilities – Variable 11. Ongoing Maintenance – Variable 12. Repairs – Variable Here’s how we have fared so far: 1. Home inspection – $200 2. Pest Inspection – $50 3. Appraisal Fees – $250 4. Closing Costs – 2.2% mortgage loan amount or about $2000 total since we had a $91,200 mortgage. 5. Moving Expenses – $400 since we packed our stuff and hired a company to simply bring the boxes and furniture to our new house. 6. Furniture – So far we still use family hand-me-downs for … Read more
I know, you might think you are like me…not craftsy at all. But you can make your own art anyway and it will be awesome! Our favorite artwork is a three piece set that we created ourselves for less than $25. We bought five yards of burlap in three pieces, multiple colors of spray paint, and three cheap wooden frames used to stretch fabric. Then we went outside, scrunched up the burlap, and spray painted like crazy with one color. After that, we unscrunched, rescrunched, and sprayed like madmen with a different color. We just repeated that process for 45 minutes until we were really happy with the outcome. Once they dried, it was easy to staple them onto their soft wood frames. Even though we have spent a couple of thousand of dollars on other cool art by artists much better than us, those colored burlap pieces are still our favorite. Here’s what we enjoy…says a lot about my insane mind, huh? Can you imagine what you’d come up with if you make your own art?
Today we have a guest post from the Car Negotiation Coach offering advice on car financing. The Coach’s blog provides people with practical negotiation strategies and financial advice on car purchases. Whenever one of my friends buys a new car, I always ask them what interest rate they got on their car financing. And it always surprises me how little effort they put into finding a competitive rate. It’s often a percent or two above the best rates available at the time. They devote time and effort to researching car prices, driving around to several dealerships, and trying to drive a hard bargain with salesmen. But once they get what they believe is a good price, they put down their guard and consider the deal done. When they walk into the Finance office, they just take whatever rate the Finance Manager offers them. What most people don’t realize is that shaving off a couple of percentage points of interest can make a huge difference and car financing is negotiable. For example, a $15,000 loan with a rate of 7.5% paid over 5 years results in a monthly payment of $300. That same loan with a rate of 9.5% would have … Read more
Free From Broke was kind enough to let me guest post today with Recurring Expenses Will Kill Your Budget-Choose Wisely. It’s my personal take on prioritizing recurring monthly expenses. What’s on the top of your list?
I hit on the main ways of diagnosing your financial health in this past post. I’m going to use Wednesdays to go further in depth on each point since I truly believe that financial health leads to less stress and happier lives. The first point was to spend less than you earn. This means that the money you have going out needs to be less (hopefully a lot less) than the money you have coming in. Constant, overwhelming debt is not healthy for you or your future. List Your Income and Expenses In order to spend less than you earn, you need to know how much you earn and how much you spend. I’d suggest writing down your known monthly income and expenses first. Then spend a whole month adding anything you missed to that list. Not only will this be a definitive picture of your spending and salary, but it will give you a great start on beginning a budget as well. Ways to Widen the Gap If you are not where you want to be once you’ve seen this list, you do have options: 1) Decrease your spending. 2) Get a better paying job. 3) Find other income sources. Decrease Spending … Read more