New Site in the Works

Hi Readers,
As you may have seen, it's been awhile since I have done any new posting. I am currently working on reinventing the site, and hope to have better content, a bigger following, and more helpful to my readers. My intent will be to have as much communication with the readers as possible, as well as collaboration as a whole. We will help each other become more financially savvy.

I sincerely appreciate you reading up to this point, I have thoroughly enjoyed posting. When I have the new site ready to launch, I will provide an update here on the new web address. Until then, please feel free to let me know if you have any questions or comments, as I will still be receiving updates from the current site.
Regards,
Jeremy

Do you have an emergency fund?

Many people don't expect any emergencies to happen in their life, and if they do, they expect to deal with it when it happens. If you are one of those, I encourage you to change your mentality on this subject, because at some point, you WILL have an emergency. You need to have this money where it is barely accessible, where you actually have to work to be able to use it. And by work, I mean, pull the money out of the bank, or something that will inconvenience you to use it. The hope is that this money always stays put, and that you never need to dig into it.

With that said, I encourage you to take a portion of your tax return (if you are getting one), and put it back for a rainy day. You'll feel much better knowing that you've accomplished this, and if that emergency ever arises and you need it, you'll feel even better.

401K Advice

Many people are not familiar with how a 401K works at their employer. I haven't been in a job that long which provided me one, but I have learned alot about them. There are a few main features of a 401K, so we'll start with one of them today.

The money that you contribute from your 401K is pre-tax money. For instance, if you contribute $100 to your 401K, and you are in the 25% tax bracket, you save $25 in taxes. This means that the $100 contribution you made, really only costs you $75. You do not pay the taxes until you begin withdrawing the money from your 401K. This is a big feature, that allows you to contribute more, and reduce your tax bill at the same time.

I hope that you will take this year to contribute to your 401K when you can. It is very important for us to prepare for our own retirement. Anything else (Social Security, etc) will just be an unexpected bonus when it comes time to retire!

Tax Deductions vs. Tax Credits

How many of you know the difference between a tax deduction, and a tax credit? When I was younger, I didn't even know the term, much less the difference. My mom took the taxes down to the nearest large tax return preparing company, and had them do the work for us. With that said, let me explain the difference between the tax deduction, and the tax credit.

A tax deduction reduces your taxable income in most cases. For example, if you are in the 25% tax bracket, and have a $1,000 tax deduction, you would pay $250 less in taxes (in most cases).

A tax credit reduces your taxes owed dollar for dollar. For example, if you are in the 25% tax bracket, and have a $1,000 tax credit, you would pay $1,000 less in taxes (in most cases).

I hope this helps you a little in understanding a part of the tax process. Obviously, tax credits are better than tax deductions, but a deduction is better than nothing as well. I encourage you to get your return completed early this year, and if you are getting a return, put it to work!

Suggestions for Tax Refund

Most of you have probably began working on your taxes if you don't have someone do them for you by now. It's something I actually look forward to doing each year. If you are getting a refund, I encourage you to take that money and begin your savings journey. If you don't have much saved, put the refund back so you CANNOT spend it. If you already have an emergency fund in place, make sure you have built up your savings to a level you are comfortable with. Your goal this year should be to NOT LIVE ON ANY KIND OF CREDIT. Do not buy what you cannot afford, plain and simple. I know that I want to retire some day, don't you?

Tax Time!

By now, you're probably getting amped up to do your 2011 taxes, and either get that refund or pay to the government. Most companies are supposed to have 1099 forms sent out by January 31st. I enjoy doing taxes, particularly when I see a savings.

Some people enjoy seeing a refund at the end of the year, so they stick with the number of exemptions which allows them to typically receive a refund. Others prefer not to give the government an interest-free loan, and adjust exemptions accordingly. I am one who likes to see the refund each year, so I can decide what to do with it accordingly. We always have a pre-planned idea on what we're going to do with the money when it comes in. We always talk about it and agree before making a final decision. Then when the money comes in, we're already a step ahead of the game. Therefore, there are no "impulse" purchases either.

I hope you'll also decide to do the same, and know what you're going to do with the money ahead of time. I strongly encourage you to use it to pay down credit card debt, invest it, or save it. It may be hard to do at first, but you'll be glad you did it when you reap the rewards of no debt, bigger investments, etc.

Great Quote I Heard

I heard a great quote while watching a highly regarded financial person (okay, Suze Orman) talk on a show. Her quote was "Live beneath your means and within your needs." What does this mean to you?

Save Money By Contributing to Your Retirement

Did you know that by contributing to a deferred retirement program (such as a 401K) is saving you money in taxes now? The money comes out of your check pre-tax, and you pay taxes when you begin to make withdrawals during retirement. This reduces your taxable income (consult your tax advisor for confirmation in your situation), meaning if you contribute $100 and are in the 25% tax bracket, you actually only miss $75 on your check. This takes minimal sacrifice to accomplish, so I suggest finding a way to get it done!

Are You Scared of the Stock Market?

I can tell you from personal experience that the stock market can at times be a nerve-racking ride. I started investing when I was 18, and got taken down on the roller coaster ride that ensued in 2001. I was fortunate that my mom did not kick me out of the house, and I was able to save money. However, lots of that money disappeared. It was a sick feeling to see lots of what I had invested gone. I didn't have alot of experience with the markets, so I didn't understand it would eventually recover, and I should leave it alone, as well as invest more.

The ride over the last few years has been a rough one for many investors as well, however I am a firm believer that the stock market is a place to make money. Not all people do it, but would you rather have a chance to make 10%, or a guarantee at 1% in the bank? It will take a long time to retire on that kind of return.

Now, I know that investing is not for everyone. Many people are not comfortable with the risk involved, and that's okay. Others don't worry about retirement, however they should be at least making a plan. I started my retirement plan when I turned 21, in hopes of retiring when I am 55. Now, I've never had an overwhelmingly high paying job, so I've had to find creative ways to put money back, while my wife stays home with our child. Despite the loss of income, it has been well worth it. We will continue to put what we can back for retirement, and save what we can as well.

My overall advice is to invest when you can. Save when you can. Also, live your life to an extent. Don't overly spend, but occasionally do something nice for yourself, and save at the same time. You'll get a great feeling on both ends.

Are You Contributing to Your 401K?

With the uncertainty lying within the economy today, many people have decided to forego contributions to retirement as a means in which to save money. I highly encourage this to be one of your last options, and continue making contributions if at all possible, especially if your employer matches your contribution. For example, if you put $50 into your 401K and your employer matches that, you've earned an instant 100% return on your money. Your $50 contribution becomes $100, just like that!

With that said, I encourage you to revisit your budget and see if you can either up your contributions, or begin making them. When it's time to retire, you'll be glad you did!

Quick Money Facts

DID YOU KNOW? If you begin putting back $50 per month when you are 30 years old, by the time you reach 65 you would have over $100,000?!

*This fact assumes an 8% annual return.

Shocking Number About Debt

I just read a survey, and felt like I had to share this.  The average consumer owes $15k on auto loans, $173k on a mortgage, $26k for student loans, $48k in home equity loans, and $6k on credit cards.  This is a total of almost $270k!  The survey did not account for any savings that people might have on average, but this number is very high!  I understand we all have different circumstances, but I am here to tell you that if you put your mind to it, you CAN and WILL eliminate your debt!  You just have to want to do it, day after day! 

To my fellow readers, I encourage you to pass along this website to any one you think might enjoy reading about finance.  I am hoping to reach more people out there, in hopes that something they read might in fact help them change their financial future as well.  Thank you everyone for your continued support!

Yearly Expenses: Be Prepared!

The last few days have been very busy trying to look over my 2011 budget, and analyzing how things went.  It's also been spent trying to forecast what our bills are giong to be in 2012.  I know that health insurance and health insurance are going up for this year, so we've created our 2012 budget to take that into consideration.  I'm hoping that items such as food and gas stay down a little this year, but that is unfortunately not a cost I can control, so we'll do our best to handle them as the fluctuations occur.  We're going to take the first three months of the year to see how everything pans out with our budget, then we'll revisit it and determine if any adjustments need to be made at that point.  I encourage you to stay up with your budget, as many things change during the course of the year.  Your goal is to be prepared for these costs when they arrive.  As we discussed before, you should take what you expect your expenses to be, and divide them by 12.  Put that amount into your budget on a monthly basis, and you should for the most part be prepared when the bill arrives. 

I hope you  have found this information useful, as it is a practice I have found to really work for our family.  It helps us to forecast our yearly bills, and not be surprised when they come in!

Your 2012 Financial Goals

Hopefully by now you have already been motivated enough to decide what you would like to accomplish financially for 2012. If you haven't, now is the time!  I urge you to think long and hard and commit to it.  Whether it be to pay off your credit card debt, to save $1,000 this year, to limit yourself to spending $50/month eating out, make the decision and STICK WITH IT.  I believe short-term goals can turn into long term achievements.  For example, if you have $1,000 in credit card debt, tell yourself you're going to pay $500/month (or the most you can afford) until it is paid off.  Stretch yourself, and you will be surprised at what you can achieve. Trust me, I have been there! 

Happy New Year! This is YOUR year!

I hope everyone had a great New Years! This year, you are going to get or stay on the right track, and learn some interesting new ways to save a little bit of money! My family and I have established some new goals for 2012 financially, and are going to do our best to get there. I hope you're motivated to do the same! You should have already made your 2012 resolutions, and be ready to stick with it.  You should've set a lofty goal, and be dedicated to get there. Whether it be to pay down debt, save money, start a retirement plan, make better financial decisions, or more, the possibilities are endless! You should have already made a budget as well, as we discussed in the past. If you have any questions about this, please feel free to drop me a line.

I had a money saving encounter today as a matter of fact! Each year, a specific department store has a large sale on New Year's day.  We were able to pick up a new pair of Nike's for our two-year old for only $7.50! This cannot be beat! So, it pays to pay attention to big sales, and look for the things that you actually need, rather than the things you might want. There is a big difference in the two!