“Yes, Virginia, you can save more than a million dollars in your 401K!”  So says Jeremy Olshan in his article about 401k millionaires at Smart Money.

A Million Bucks-In Your 401k?Confirms this article at Smart Money. The author, Jeremy Olsham, interviewed several brokers who managed money for clients that had amassed more than 7 figures in their 401K.

Most experts feel 401k savings are a failure-that many in our country will be hurtin’ for certain at retirement….

Though the savings plan could use a few tweeks, the failure is OUR FAULT, yes us, the public rather than the plan’s.

Why do they fail?

Cause we don’t use ‘em.  I’ll leave it up to you to decide why, though I have strong opinions….

401K Success Stories

In this article, what were the consistent findings for those who saved the most in their 401k?

As usual, it’s not shocking,  no not surprising, and certainly not scintillating.

These retirement plan millionaires didn’t have inside information, they didn’t cheat the 99%ers, they didn’t walk all over the middle class.

Nope, they did what every self-respecting financial planner recommends you do to maximize your retirement account.

They participated.

• They put in as much as they could afford.
• They put money in every pay period, every month, every year for long periods of time.

Boring….but effective.  You can laugh at ‘em, but they are the ones having a comfortable retirement, while you spent your money on that new truck you couldn’t afford….

What didn’t they do?

• They didn’t use their 401k as an ATM….borrowing money for golf clubs, or braces.
• They didn’t try to time the market, stopping their contribution during down markets  (fear) and increasing at market tops (irrational exuberance).

Not rocket surgery as Yogi was known to say….

Included in the article cited above, is a discussion about how employees with modest incomes could be 401k millionaires, with the math and everything.  Where have you heard that before???? (hint: see the name of this blog….)

Breaking 401k rules

Some of those interviewed had broken a few standard rules.  The most common was having their 401k invested  100% in company stock.  {This precaution only applies to those of you working at a publicly traded company who allow company stock purchases in your account.}  My employees can’t buy company stock and most of my  nurse readers work at facilities with 403b plans.  They can’t buy company stock in their plan.

Experts advise that you not keep all your money in one stock-whether in a retirement plan or any account.  Failed companies such as Enron, Lehman, Worldcom and Bear Stearns come to mind.  If their employees only invested their 401k holdings  in company stock, their accounts went to zero overnight.  Damn depressing to think about-sorry you guys…

If you worked at Apple or Google and 20 years  ago you put all your retirement savings in those company stocks,  you are sitting on easy street right now.  20 years from now though, who knows whether even those tech titans will still be here.

In summary, the tried and true is confirmed once again.

If you want to have a large bucket of money in your retirement account at the end of your career, put money into it.  Every pay period, every month, every year, for years and years.

And you should learn what and where you are investing, but that’s for another post.  I’m sure you’re on the edge of your seat!

Reader Questions:

Do you think you will be a 401k millionaire?  Check out this post and survey at Retire by 40 on net worth at retirement  goals, and read the comments, very enlightening.

{photo credit: surburbandollar c.c.}

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Paul tells this story:

While sitting around the dinner table eating and catching up with his elderly parents, Paul’s jaw dropped.  It wasn’t just that Mom’s usually delicious roast was terrible, though that should’ve been a tip.

Family Time!

What got Paul’s attention was his Dad talking about his latest purchase. He was so excited about his  new software program to help him with his Forex options investments.

Of course, Paul didn’t know what Forex was and when his Dad explained, he still wasn’t sure.

What Paul was sure about was his Dad, who lived on his pension from working a lifetime on the Ford assembly-line, hadn’t enough money saved to be risking any of it on speculative investments. And Forex sounded more like gambling than investing.

Aging and Your Money

That tale highlights this post on money sense and it’s age related decline, by Robert White over at Market Watch.

And there’s even a personal finance quiz you can take to see where you stand now in your knowledge.

The facts tell the story. Your ability to make complex decisions related to money decline significantly from age 60 to age age 90. (and looking at the test scores, it ain’t too good even at our peak, when we are in our forties.)

Age and Your Personal Finance Knowledge

My take:

• Staying in good health helps your brain.
• Staying in good health means adequate sleep, good nutrition, and exercising regularly.
• Keeping mentally active helps you think. (TV is a brain-drain)
• To stay on top of your personal finances, you have to continue to learn (life long learning is one of my favorite alliterative phrases…).
• The older you are, the more your finances should be on auto-pilot, with index funds and age based investments that are annually  rebalanced.
• You need a trusted adviser-and not that old geezer you’ve always used-he may be worse off cognitively than you are.

Send a copy  of this test and article to your parents, before they begin to lose their way.  Once they’re at a certain point, any “help” you try to provide will likely be viewed with suspicion and scorn.

Begin your own personal finance education.  The higher your knowledge base before you start losing your cookies (and we will all lose ‘em), the less likely your deterioration will affect your finances significantly.

In other words, if you are at the 95 percentile now, and you lose 30% over the next few decades, you will still be ahead of the average guy in financial knowledge.

Go Take The Personal Finance Quiz:

Go to the link, take the test, and report back here your score  in the comments, unless you’re chicken….

I would tell you mine, but it would seem like braggin’, and bein’ a southern gentleman, I don’t brag….

What about you, are your parents making poor money decisions? What have you done to help?

{photo credit: GrandCanyonNPS c.c.}

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Many readers wonder, “Does Dr Dean practice what he preaches?”

I will let you in on a few details about how we manage our finances. Transparency seems to be the new buzz word….

As I’ve written here before, my wife handles day to day bill paying, and I handle our investments.

Money Management Mayhem

Checking:

We use online banking wherever possible, though my wife is not a big believer in automating bill pay. She would rather do it herself.

We use a locally owned bank for our checking. I like doing business with “hometown folks” when I can.  We keep the minimum balance over the required amount to avoid fees.

We manage that account with Quicken, having upgraded to 2010 version last year.  I tried to use Mint last year as a trial but it didn’t interact electronically with our small town bank.  I’ll try again in the future as it gets great reviews from those who use it.

Savings:

We have an automatic savings draw from our checking to ING Orange Online.  That’s an out of sight out of mind account.

We move money to our emergency savings account every month and keep 4-6 months of expenses in an interest bearing money market account.  Any additional income goes to pay off my real estate investments.  More about them below.

Investments:

Retirement Accounts:

I have the company match invested in my 401k automatically withdrawn and invested in a fairly aggressive mix of growth and  value mutual funds, emerging market funds, and international funds.

I have a separate older retirement fund I’m no longer funding that is invested in a fairly conservative mix of bonds and cash 40%, and a mixture of growth and value mutual funds, international funds,~45%  and commodity funds 5%.  I review that account with my personal investment adviser once a year. We re-balance those investments to keep the percentage approximately the same every year.

I have been trying to get him to increase the commodity portion a little more aggressively, but have met resistance to those ideas.  Not enough for me to fire him but enough to keep him paying attention.

My wife and I  have two traditional IRA’s I’m no longer funding.  I use those accounts for my  speculative stock investments. They represent less than 5% of my net worth.

I have  a taxable brokerage account. As I have said here before’ I don’t like to have all my retirement savings tied up in traditional retirement accounts (IRA’s, 401k’s, 403b’s) as the rules of those can be changed on a whim by Congress.

Dr Dean’s Debt:

I am paying down debt (my only debt besides my house and office) aggressively on beach property I have owned (with the bank) for  the last 5-6 years.  I hope to have my home, office and beach property paid off completely within the next 5-8 years-well before my expected retirement.

I have written a guest post at Consumerism Commentary with the details of my beach property investment fiasco.

My Costa Rica property was purchased with cash more than 10 years ago.

Credit Cards:

• A Delta American Express card I use for travel.
• A Pen Fed 5% gas card  I use for gas purchases.
• A rewards Visa I have for use in Costa Rica as they prefer Visa in Central America.

All my credit card purchases are paid in full monthly. I monitor my reward miles and cash them out frequently-usually with air travel.  I don’t trust rewards cards to not change the rules so I don’t let miles build up excessively.

Vehicles:

Both our vehicles are paid for.  We will need to buy a new vehicle for my wife in the next year or so, but will be paying cash for a 1-2 year old vehicle of her choice.

I have small investments in many side entrepreneurial efforts that may or may not pay off in the future, including this blog.

I have a Will, term life insurance (enough to pay off all my  real estate debts and allow my wife to live in reasonable comfort.)  I also have long-term disability insurance.

I need to make funeral arrangements (at this point I have no burial plot or coffin/urn picked out) and will be leaving my body to a medical school for study, followed by cremation and sprinkling of ashes in the Gulf of Mexico.  Though if my wife dumps me in the backyard, I won’t really care….

I also have researched long-term (nursing home) care insurance but have decided to not make that purchase till my late fifties as that seems to be what experts advise.

I  have an inexpensive identity theft insurance policy that covers the expense of dealing with any issues there. That’s a choice that may not be necessary if you have the time to deal with those problems if they occur.

Giving:

We give annually to our church, our local college’s nursing scholarship, and our local library and hospital and Y.  We also  give to local charities (Cancer, heart, Salvation Army)  and have given to disaster relief as those occur.

Future details:

I will write a post in the future that will detail my investment choices with more specifics for the curious. (yes, I will name names….)

Reader Questions:

What do you think?  I would love your feedback on my choices or any specific questions you have on why I do what I do. If you do something different and have suggestions I would love to hear it.

All of us have made dumb money decisions and mine are too numerous to count.   I’ve made significant money management improvement in the 2 years I’ve been writing about personal finance,  thanks to you!

{photo credit: Images_of_Money c.c.}

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The mailbag is opened again:

Reader question:  My 401K sucks.  What should I do?

Why does it suck? 

• Because your account value has gone down this year?  If so get over it.  The whole market is down.  Even the best funds have trouble making money when nearly every stock in the universe is dropping like that satellite from space.
• Because you can’t buy ETF’s?  Exchange traded funds are a great cheap way to buy certain market sectors. But they are risky because they can be so focused. I predict more ETF’s to be on the list of 401K choices over time.  Out-the ETF investing in Chinese gold mines. In-the ETF that mimics the S&P 500 or Russell 2000, but does it with less expenses than a mutual fund.
• You can’t buy gold or silver?-Your company has a legal requirement to protect you from yourself.  A paternalistic notion known as “Fiduciary Requirements.”  A two edged sword for them. They have a legal responsibility to make you act like a grown-up.  But if they limit your investment choices too much they can be sued for being like a “Tiger Mom”-my way or the highway….
• You can’t purchase unregistered stock?  …. in your uncle’s can’t miss idea, or buy that duplex down the road that has a sweet foreclosure price.  Most plans prohibit your money being invested in anything outside the plan’s offerings. (see “fiduciary responsibility” above)

401K Investment Choices

Choices?

401K and 403B plans are gradually maturing and over time will certainly broaden their options. Just like businesses are gradually opening up their arms to employees using iPhones instead of insisting on Blackberries.

It may be because of outside influence-threats from regulating bodies.

Or inside influence- threats of lawsuits from the plan’s members.  They are gradually making those changes.

If you are “bound and determined” as my late Mom used to say, to invest your retirement money in something not offered in your 401K, here’s what ya do:

• Decrease your 401k or 403B participation, and increase your Roth or traditional IRA investments.  They too don’t have unlimited choices, but they have a lot more investment options available.
• Invest part of your money in your own brokerage account, or put it into your choice of investments such as real estate, or your cousins new invention. (no tax deferral or deduction, though)

I am a firm believer in having control of some of your money outside accounts that the government regulates…..What Congress gives, they can take away.  Plus they require you to spend a certain amount of your money each year when you reach a certain age.  You may disagree but they can fine you and let you spend your last years in a federal pen if you don’t follow the rules.  (The Big Stick Rule!)

Just don’t be stupid.  If there is a match, make sure you take advantage of free money, even if your 401k has limited choices.  Use that matching money for your most conservative investments.

You can  go play Texas Hold ‘em with the rest of your retirement money.  (you may even get to play Howard Lederer and Chris Ferguson in that federal institution mentioned above….)

Mailbag:

If you have a question, please feel free to go to the contact page and do what it says.  I’ll try to answer it if I can…or make fun of you if I can’t (just kiddin’ sheesh….)

{photo credit: YellowCat c.c.}

Speakin’ of Google + I’m there as  Dean Burke….they wouldn’t let me use Dr Dean…  Put me in one of your circles, I’ll feel so special….

Make sure you follow me on Twitter @DrDeanBurke- quick links on the side of the blog!  And let’s not miss a post-sign up for email special delivery or the RSS feed!

Friends, I love friends-check out my Facebook page, and I’m definitely Linked-In-use the shortcuts on the side-that’s why I paid my Web Master of the Universe-Ben-the big bucks to put ‘em there-saves you time!

Mailbag dump:

One reader asked an intriguing question this week.  She is getting a raise, and wanted suggestions on what to do with the extra money.  That tells us two things:

1. Doom and gloom is not the true picture everywhere-It’s easy to lose sight that many businesses are making a profit.  Some-record profits.  Businesses have used our financial turmoil to make difficult personnel decisions and are now lean mean money making machines.
2. You and I are more thoughtful about our money after the last few years.  Doesn’t mean we will make better decisions, but we are at least thinking about getting rid of debt, bumping up  retirement savings, whether to rent or buy a home, and reading blogs like this.

Just like a smoker can quit the day the shadow of cancer shows up on his chest x-ray-A kick in the financial ass can change behavior like nothing else.  And if you haven’t had a financial shock  or stress  in the last 3 years, you were already living under a bridge or in a tent in the Sarengeti.

Back to the extra money question.

This person is:

• paying extra on her mortgage-should be paid off in 8 years or so.
• Is putting about 18% of her current income into retirement accounts.  Putting in up to the company match on her 403b, and the rest into Roth IRA’s.
• Has college for her last child at home figured out.
• Driving paid-for cars.

How did she get there?  She must’ve inherited money right?  No, by working 3 jobs plus a couple of side gigs at home.

I of course can’t give specific financial advice, but I can thoughtfully, or kneejerkily (is that a word?) give the ole “what I would do if I were in your shoes” answer.

• Emergency fund-she has only pennies in a savings account as she is so focused on paying off her home.  I suggested I would sleep better with 4-6 months expenses in an easily accessable savings vehicle.  Even if she slows down on paying off the home for now, she will easily have it paid off before retirement age.
• Retirement funds-the government has so many rules on retirement accounts, I think non-retirement vehicles such as brokerage accounts that you are free to invest how you want, can take the money out when you want-are under utilized by many.  I would start by piling money away in a brokerage money market fund. Then when I had an adequate emergency nest egg, begin diversifying into a blend of stock and bond mutual funds that have 10 year track records of success.
• Real Estate: Another option, if you would rather not learn what it takes to invest in stocks and bonds, would be piling money up to buy real estate.  I think inflation is coming, and real estate investing will come back with a boom.  It already is in many markets.  It’s just a cash game now.  Banks aren’t fighting over no-doc loans, and 5% down.  You’ve got to pay cash or have a great credit score to borrow money on investment real estate these days.
• Diversify: I also think it will be worth divirsifying a small portion of  my savings-5-10% into precious metals, energy, stable currencies.  To do this requires a knowledgeable broker who can keep your expenses down.  ETF’s have helped us average investors be able to divirsify like a hedge fund but again this requires knowledge most aren’t willing to obtain.
• Cool it.  Burnout is around the corner with 3 jobs.  Slow down and enjoy life just a little.  Remember what Elton said about candles burning out, or was it Grandma  talking about both ends of the candle…something like that.

Readers like this are what keeps me coming back to the keyboard.  It’s gratifying to know that there are people in the world thinking, and more importantly taking action, about their financial  future.

Not just what Snooky was wearing (or wasn’t wearing) last night, or how well Chaz flowed around the dance floor.

Keep those questions coming!

And what’s your opinions?  What would you do with a 5% raise with that back-story?

(Photo credit: Images_of_money c.c.)

Speakin’ of Google + I’m there as  Dean Burke….they wouldn’t let me use Dr Dean…  Put me in one of your circles, I’ll feel so special….

Make sure you follow me on Twitter @DrDeanBurke- quick links on the side of the blog!  And let’s not miss a post-sign up for email special delivery or the RSS feed!

Friends, I love friends-check out my Facebook page, and I’m definitely Linked-In-use the shortcuts on the side-that’s why I paid my Web Master of the Universe-Ben-the big bucks to put ‘em there-saves you time!

Kim over at Emergiblog wrote me the nicest note recently.

At my suggestion, she began adding the employee Federal Tax forgiveness of 2% into her 403b.  She coulda’ spent that money on a needless trinket or an extra cup of coffee, or a poster of her favorite Nascar driver, Kasey Kahne!

She said in her email that the money  had grown into a little nest egg she was proud of.  Part of her additional money was even matched by her employer-THAT’S FREE MONEY!

The great thing about this technique is it doesn’t require any change in lifestyle.

No suffering involved. No giving up your daily Latte,  lemonade,  or lunch out.

It looks as if the feds are going to repeat that experiment by continuing to wave the 2% this year.  If you aren’t currently putting away the maximum on your 403b/401k then take advantage of this painless way to improve your retirement savings.

(For a sexy review of retirement savings-see this post.)

No 403b? IRA it!

And if you don’t have a 401k or other work related retirement account, set up an IRA and have a direct deposit of the money.  Outta sight, outta mind!

An article in the WSJ this week highlighted the number of US elders continuing to work due to the level of debt they were carrying and their lack of adequate retirement savings.

• Almost 40% of those between 60-64 were still carrying a mortgage, with up to 20% carrying a second mortgage or line of credit.
• The average American approaching retirement has less than 25% of the savings needed to maintain current lifestyle in retirement.

Why is the continual siren call to living the so-called “high-life” prevent us from realizing the need to live a little under our means in order to put away cash for our future?

We would rather have short-term pleasure over long-term gain.

• We want a new car smell over a paid off home.
• We want a vacation today, rather than a 20 year comfortable retirement.
• We want an iPad now over being able to give freely to our causes, our children,  and grand-children after our working years are over.
• We want the latest smart-phone over a cruise around the world after the kids are grown with our mutually sacrificing life partner.

Take these opportunities of found money- whether it’s the governments gracious giving back of your own money, or your next raise- to increase your retirement savings.

When you are in your sixties or seventies and your peers are struggling, you’ll be able to say I told you so “how can I help you?”

Reader comments:

What say you?  Are you making the necessary sacrifices to be able to retire without a change in your lifestyle?  Or will you be hobbling to the mailbox paying your mortgage on your 100th birthday?

Shout out:

Thanks to Len from LenPenzo.com for his guest post Friday Follies last week, if you missed his attempt at gynecology, better check it out.

And thanks to the Nerdy Nurse for stepping up with a guest post on nursing salarys, and hosting the “Best In Nurse Blogs” series.

Friends, even cyber-friends, make life beautiful!

You guys are the best!

{photo credit: DigitalRedEye c.c.}

Speakin’ of Google + I’m there as  Dean Burke….they wouldn’t let me use Dr Dean…  Put me in one of your circles, I’ll feel so special….

Make sure you follow me on Twitter @DrDeanBurke- quick links on the side of the blog!  And let’s not miss a post-sign up for email special delivery or the RSS feed!

Friends, I love friends-check out my Facebook page, and I’m definitely Linked-In-use the shortcuts on the side-that’s why I paid my Web Master of the Universe-Ben-the big bucks to put ‘em there-saves you time!

Explain this: Everything you read reports without equivocation the US as a whole is not saving near enough for retirement.  We see commercials on retirement savings every day-but it seems those folks are wasting their dollars.

Even after the recent economic catastrophe, when we thought the world was going to end, it seems it didn’t get your attention.

This article in the Wall Street Journal confirms we are not putting near  enough money to live the kind of life we desire after our working years?

What is the disconnect?  Why do we worry more about Lady Gaga’s sex life then our future?

Retirement Conversation

How bout this conversation, does it ring a bell?

What is a comfortable retirement-what does that mean?

Most experts use the have enough money to “maintain your current lifestyle” as the basis for discussion.

If your cost of living for a year is $40,000 per year, then you need to have enough savings to be able to spend $40,000/year without running out of money before you die.

The problem with this simple equation is-WE DON’T KNOW WHEN WE WILL DIE!

The guru’s solve that problem with the recommendation that your money should be invested in some vehicle that will allow it to increase in value while it sits.

What happens when it doesn’t?

Over the last 100 years or so, the stock market has returned ~10%/year, but if your retirement was 10 years ago, the stock market hasn’t increased any, and of course at it’s bottom it was down 30 % depending on which index you compare.

When you retire, and what the market has done to your account recently matter, A LOT!

The stock market shouldn’t be the only place you hold retirement money for these reasons.

Well what about bonds-they confuse me?

Bonds historically have risen on a 5% per annum basis.  But lately that number is way down.  You can read more about bonds here, and how a company sells bonds here!

How about I just put cash in the bank?

Cash in the bank-either averages no growth or the  equivalent of the treasury bill yield-which is ~1%.  Cash investments lose money when  inflation is factored in.  Inflation’s historical average is 3 %.

I need $40,000/year to live comfortably during my retirement, what do I do?

Let’s look at three scenarios:

1. You retire with nothing in savings and you earn $40,000/year now-you will receive only Social Security which will be about $12-15,000/year-in today’s dollars.  How does that sound?  Not anywhere close to 40 grand a year huh?
2. You retire with  $55,000 in retirement savings (well above the national average)-you will get Social Security as above ~12+ grand and whatever amount you draw from that $55,000 every year.  Obviously you will not be able to stay at $40,000 per year very long before your money runs out.  You got a lotta lifestyle cuttin to do baby!
3. You retire with $250,000 in retirement savings-your savings will run out by age 85 if you pay yourself ~$25,000-30,000 + your Social Security-if your money is earning 3-5%.  With luck, you can make your $40k lifestyle with this number-though I didn’t throw in taxes….

Retirement growth variables

Because there are so many variables, the most common reaction is-”Just forget about it, I will live for today and worry about

Retirement?

tomorrow, tomorrow.”

And if you don’t feel that way, what can you do?

Baby Steps To Starting Retirement Savings

Take these several  sexy steps this week:

• Open a retirement account if you don’t have one available at work.
• Begin participating in your work retirement account 401k or 403b if you aren’t now.
• Begin making every purchase decision based on whether it will allow you to meet your retirement savings goal.
• Have your retirement savings be automatic-set it up at work or through your bank.
• Start slow and build up as your confidence grows.

Take these steps today.  And review your accounts every year with a professional to be sure you are hitting your targets.

Questions:

What is keeping you from saving for retirement?  What can I do to help?

Housekeeping: Remember the RSS feed in the upper right!  You can have our posts delivered however you like…

And follow/friend/linked-in on your favorite social network-or choose them all!

(photo credit by martin c.c.)

Did you make a New Year’s resolution, but are now admitting to yourself, in a tiny voice- “I am a failure?”

Now is the time of year most realize they suck at keeping resolutions.

Just like dieting

You’ve heard it before-Jan 1, “I started my diet today-size 6 here I come!”-Gyms are full all over the country!

A month later, don’t get in the way of the size 6 wannabe- pushing her way into Dunkin Doughnut with a scary “gotta have it now!” look.  You may have seen it in the mirror… (no one’s waiting for the elliptical any more!)

What’s the secret?

What’s the secret between making your money last till the last day of the month, or losing weight successfully?

What’s the secret of splendid success vs the emotional devastation of knowing you blew it again?

Choices

It all comes down to choices.  The ones you get right, and more importantly minimizing the ones you get wrong.

Notice I didn’t say eliminate your wrong choices.   I truly believe none of us are perfect, but I know you can be successful with your money.  Without perfection.

And actually, trying to be perfect, will end up working against you, rather than for you!

Let me explain:

If you listen to us gurus, and wake up tomorrow and decide to save 15% of your income for retirement, but are currently saving nothing-  YOU WILL FAIL!

Why?  Because you aren’t prepared.  Your spending hasn’t changed, you have no savings cushion for the unexpected expense, you haven’t met with your partner about your spending priorities….

So a coupla weeks after you change your 403b withdrawal with such bravado, you will be slinking back to your personnel folks, and say-”Sorry, can you eliminate that 15% 403b draft, my car broke down.”  “And while I’m here, can I borrow money from my account?”

From The Beginning

To hit a baseball successfully, you must have the proper stance, weight shift, wrist cock along with a good eye for where the baseball is coming. You learn this by proper coaching and practice.

Sure there are exceptions, someone comes along with an unorthodox swing, and knocks the cover off, but they are noteworthy because they are unusual.

• The best hitters are successful only 1 in 3 times at bat.
• The best docs and nurses lose patients
• The best 3 point shooters are also around 30%
• The best investors make millions buying only one winning stock out of three!

To successfully care for an ill patient, you must know the signs of a well one, and what to look for when things are going downhill.  You must study and understand the difference between illness and health.

To save money consistently you must learn the basics, then start making the right choices-as often as possible.  But don’t let the absence of perfection be an excuse to get started…

So what do you do?

• Make a plan with the proper foundation.
• Do your net worth and financial statement
• Decide on your financial goals
• Begin to prioritize your spending, saving, and debt reduction goals.
• Follow your spending plan, and find your errors
• Make realistic course corrections and give yourself little  rewards along the way.

But if you deprive yourself of all the pleasures in life that you and your hippocampus have come to label as “Good” then you won’t last long.

Summary!

• Don’t be afraid to start, but start at the beginning, with the basics.
• Don’t think you will be perfect at money management, no one is!
• Reward yourself for hitting your milestones!

Get Started

If  you want to get started, sign up for my free e-book and newsletter.  I will also send you (free of course!) my mini-course to help you get started on the basics of your money.

Keep an ear out for my personal finance course, the 5A’s to Financial Health-that will be released again later this year.

I look forward to hearing your next success story!

Reader Questions: What works for you?  If you have turned your money management around, what are tips for others?

Let us hear about them!

Part of the recent tax compromise was a 2% decrease in your Social Security tax withholding.

The Obama administration is counting on you running to Wal-Mart and spending this money, as part of the Stealth-Stimulus Plan of 2010 (my moniker).

Please, Please, Please stop what you are doing right now, and call your benefits administrator, or your personnel office at work.

Tell them to put that 2% towards your 401k, or 403b.  Don’t put it off, and don’t delay.

Found Money

This is found money, and you have no excuse for not putting this money away for retirement.  You won’t miss it, and it will get you into the habit of saving something in that plan.

When they ask you what to put the money in, find a generic choice that is a mixture of US Stocks, Bonds, and International.  Don’t put this off till you can ask your buddy what to invest in.  Make a quick choice and get it done.

I am all for studying the details and making wise investment choices.  But I want you to get this done, no muss, no fuss.

There’ll be time enuff for countin, when the dealin’s done-as Kenny Rogers famously sang!

No 403b?

If you don’t have a 403b or 401k option, then start an IRA right now. Again, it won’t take but a minute to do.

Then have the 2% direct deposited to that account.  Many IRA’s can be started with low minimums if you choose a direct monthly deposit option.

Make a conscious choice to increase your amount each quarter/6month intervals or at a minimum annually till you hit your maximum.

Doing this in small steps again will allow you to adjust your spending, making this retirement savings much less painful.

Additional Retirement Savings:

If you and your spouse are making $40 grand apiece, and you both added this 2% to your savings this year and continued it for the next 20 years, @ 6% return, that is an extra $65,000 towards retirement.  If you are 30 or even 40 years  away from retirement that money is in 6 figures….

Not too shabby for “found” money!

Call them now!

Julie RN-Staff Writer

Like 99% of other consumers, I hit my favorite stores in a blaze of glory after Christmas eager to grab up some great deals.  After all…buying at 50% off is smart shopping, isn’t it?

The items I wanted earlier in the season but wouldn’t buy would surely be marked down to prices too good to pass up.

247moms.blogspot.com

I have a weakness  for Ann Taylor and Lucky Brand, which are  on the pricey side.  So the after-Christmas 50%-off sale is the perfect bait to reel me in.

The retailers’ scheme is successful…SUCKER!

Lead us not into temptation…

I was enjoying my quest to pick up some great bargains when this little voice kept nagging me, “You don’t need that!”

Well no,  I didn’t “need” it, but I really liked it and it’s a great price!  “What are you doing?  You just finished spending for Christmas and  still paying off a wedding!”

That little voice drives me nuts! THAT’S when it really hit me…

This is insane! We are such suckers for “deals”.  I started questioning “what is my goal here? Why am I so eager to spend money for something I don’t need?”  My goal is to be completely debt-free and save for a comfortable retirement.

I don’t remember increasing spending on the after-Christmas sales as being  part of that plan.  So, I reluctantly restrained myself and listened  voice whispering “don’t do iiittt!!!”

Mounting up credit card debt after Christmas

Consumers consider after-Christmas sales “Merry Christmas to me!”. Most after-Christmas spending is on self and not for gifts to others.  If you are utilizing those fabulous gift cards for after Christmas spending,  then shop on!!

After-Christmas sales are excellent opportunities to pick up some great bargains.  But don’t fall for the temptation on “great deals” by increasing credit card debt or even paying cash for self-indulgence.

If it’s not a necessary expense,  buying even at 90% savings is no savings.

Discipline, discipline, discipline!

Don’t lose sight of your long-term goal…debt-free and happily retired !

I felt emotionally beaten to a pulp after the ongoing battle of  ”I really do want this! 50% off is too good to pass up!” and “That money needs to go towards debt. You don’t NEED that!”

Fortunately, the more sensible side won out.  And I have to say after the initial let-down that I was very proud of myself and happy to go home empty-handed.

Waiting for the after-Christmas sales to purchase needed items is a great way to save money.  But staying on track towards a comfortable retirement means finding the willpower to resists those great deals that are actually no-deals on our finances if we are buying just for the sake of buying .

Rather than  losing 50% on “great sales”, why not increase those retirement accounts and MAKE SOME MOOLAH!

Reader Questions:

Have you succumbed to any “great deals” you didn’t need this  post-Christmas?

What secrets do use to help keep you on target with your goals, and not falling off the wagon????

Share with others-we are all on the same team!

Have a great New Year’s Eve, but be careful!

Julie RN