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Posted
Jul 09 2008, 04:33 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller. Let's get right to the point: Saving for retirement in a Roth 401(k) likely will leave you with less money in retirement than if you had invested in a traditional 401(k). There are some exceptions to this rule. For example, a Roth 401(k) may be the right choice if you make more than $1 million a year or if you make so little that you pay no income tax or very little income tax. But for the majority of us, the Roth 401(k) is better left alone. Here's why.
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Posted
May 08 2009, 05:40 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from partner blog The Dough Roller.
Dave Ramsey's "Baby Steps" to financial peace have become a popular way to get control of finances. In case you're not familiar with the Dave Ramsey approach to money, here are the seven Baby Steps:
- $1,000 to start an emergency fund.
- Pay off all debt using the "debt snowball."
- Three to six months of expenses in savings.
- Invest 15% of household income in Roth IRAs and pre-tax retirement.
- College funding for children.
- Pay off home early.
- Build wealth and give.
While there are those who quibble with some aspects of these steps, by and large it's a sound approach to money management. If my children, when they leave home, decide to follow the Dave Ramsey way of handling money, I'll take great comfort that they are headed in the right direction.
But what about those of us who aren't just starting out or recovering from a financial meltdown. When many of us look at Dave's Baby Steps, we realize that we have been taking many of those steps all at the same time. For example, we have a lot more than $1,000 in our emergency fund, yet we also have nonmortgage debt, we save for our children's education (my son starts college in three years), we save for retirement, and we give money to charity.
All of this raises the question we are going to address: Should we "Dave Ramsey our finances," and if we did, would we be better off?
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Posted
Mar 30 2009, 04:46 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This post comes from J.D. Roth at partner blog Get Rich Slowly.
In general, the frugal person who saves and invests will slowly build wealth, and will find herself far ahead of her peers. But sometimes the progress is slow -- or even nonexistent. When this happens, good financial habits can seem frustrating. Recently, a reader named Sara wrote to ask what to do when frugality seems to be getting you nowhere.
Although I practice extreme frugality, I feel that I cannot get ahead financially. Every month I seem to be back in exactly the same place as I started the month before. Here are the details:
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Posted
Nov 20 2008, 05:21 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
It's bad enough that your retirement funds are shrinking at a disturbing rate. Now some employers have stopped matching employee contributions to 401(k)s, and Nickel at Five Cent Nickel suspects more companies in struggling industries will follow their lead.
General Motors, Ford, Frontier Airlines and several other large companies have suspended 401(k) matches, and The Wall Street Journal reports that a growing number of small business are also put matching on hold.
Nickel writes: "Imagine how you'd respond if you received a memo saying that you've been targeted for a salary reduction. A cut in retirement benefits should be interpreted in exactly the same way."
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Posted
Dec 20 2008, 12:13 PM
by
Karen Datko
Rating:
Filed under: debt, spending, savings, Karen Datko, tips, credit cards, retirement savings, shopping, bills, save money, frugal
Money Blog: Smart Spending Blog - MSN Money
If you're considering a purchase that you feel uneasy about -- or any purchase, for that matter -- read The Strump's "10 ways to tell if you can afford it." In fact, if you struggle with spending, print it out. If you're about to rationalize a purchase, remove the list from your wallet or purse. In it, you'll find the discipline you need to keep focused on your personal-finance priorities. Here are a few examples from this concise and wise post.
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Posted
Mar 25 2009, 08:17 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This guest post comes from Mr. ToughMoneyLove at Tough Money Love.
What goes around, comes around. How many times have you heard that phrase used as a subtle threat or reminder of another's misbehavior?
Boomeranger. That's a word that baby boomers invented to label -- in a semi-demeaning sort of way -- adult children who return to their parents' home to escape the realities of their own financial problems. (I actually don't think that all boomerangers should be demeaned, but that's another topic for another day.)
I have a new phrase to talk about: the boomer boomeranger.
Now that the retirement nest eggs of many baby boomers have been crushed by falling markets, some of those boomers are a future threat to boomerang on their adult children. Retirement Plan A (or for some boomers, Plan Zero) has failed. Retirement Plan B may become "mooch off my kids."
Mr. ToughMoneyLove has some thoughts about how to dodge a boomeranger parent. First, a little background.
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Posted
Aug 19 2009, 11:40 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
If there's anything the housing bubble should have taught us, it's that a home is a nice place to hang your hat. Investment? Not so much.
Still, 92% of Americans consider a home a good investment for the future, a new Bankrate survey says. That's incredibly optimistic in light of the fact that 48% of those surveyed worry about whether they can afford their homes, now or down the road.
The survey does show we're a practical bunch when it comes to love and money. Six out of 10 would reconsider their marriage plans if they found out their sweetie had lots of debt. (After the knot is tied, limited finances would not stop a similar number from divorcing a lousy spouse.)
Among the many head-scratchers in the survey results:
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Posted
Mar 02 2009, 02:08 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
This guest post comes from Frank Curmudgeon at Bad Money Advice.
Poke around the blogosphere and personal-finance punditocracy and you will find lots of positive references to Roth IRAs and virtually no nice things said about its dull older brother, the traditional IRA. If you didn't know any better (and why would you?) you might assume that the younger and hipper Roth IRA was the way to go. After all, it is the cool new thing and the latest in retirement savings technology.
Here's a rundown of the differences and why you are likely to want to go with the unhip kind after all.
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Posted
Dec 10 2008, 03:28 PM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Are you asking yourself this question? When did we devolve from people and companies that accept responsibility to a bunch of whiners (or opportunists) looking for a bailout? If you're getting fed up with all of these federal handouts -- and all of the people and companies with their hands out -- you'll find lots of company online.
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Posted
Mar 24 2008, 11:29 AM
by
Karen Datko
Rating:
Money Blog: Smart Spending Blog - MSN Money
Grace's post at GRACEful Retirement will sound familiar to many aging boomers watching the effect of Wall Street gyrations on their retirement accounts. Grace is 58 and playing catch-up after getting a late start on socking away money for her hopefully golden years. "I started this blog last July with $176,000 in retirement savings. Now I'm down to $146,000, notwithstanding the money I keep putting in," writes Grace, who plans to retire in 10 years. That drop, "when I allow myself to think about it, scares me to death." Yet she continues to invest $1,025 a month in index and growth funds. She tells herself she's right to keep buying when the market is down because it inevitably will come back up. She asks, "When do I find out if I passed the test?"
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