November 11, 2019

Seven Days to a Better Retirement

The 7 days to retirement challenge is brought to you by The New York Times! Writer Ann Carrns explains the process and why you need to start now.

"In the shuffle of immediate priorities, don't push off planning for what could be the best chapter of your life. Get a week’s worth of simple steps you can take to help plan for and secure a stable and successful retirement."  Get started here:

Seven Days to a Better Retirement

Day 1: What is my retirement?
Day 2: Your financial starting point
Day 3: Set your goal
Day 4: Start saving (a little) more
Day 5: Consider health costs
Day 6: Protect your wishes
Day 7: Consider a financial planner

Mounting car debt traps more drivers

Look at all those huge shiny new pick up trucks and SUVs on the roads these days! Are Americans really that affluent? Not really.

How could it make sense to buy a $27,000 vehicle with a $45,000 loan? No I did not mix up the numbers as reported by AnnaMaria Andriotis & Ben Eisen on the front page of the November 11 Wall Street Journal. "Consumers, salespeople and lenders are treating cars a lot like houses during the latest financial crisis: by piling on debt to such a degree that it often exceeds a car's value"

Forget about envying your neighbors driving expensive new vehicles; it may be all debt and more! One-third of new vehicle buyers who traded in a car during first 9 months of 2019 had negative equity. On average these borrowers owed about $5,000 on their trade-in before taking on new debt.

"Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can lst seven years or longer." Don't get sucked in! 

Did no one learn any lessons from the Great Recession? 

November 7, 2019

2020: Increased limits for employee contributions to retirement plans

The IRS limit on annual employee contributions to 401(k)s, 403(b)s, most 457 plans and the federal government's Thrift Savings Plan will rise to $19,500 next year, up from $19,000 in 2019 .

The limit for IRAs remains $6,000 or $7,000 for ages 50 +.

4 Steps to choosing a health plan for the coming year

Get guidance for this important decision from the Humble Dollar, courtesy of Richard Conner.

4-step process:
1. Calculate the total annual premium
2. To the results from step No. 1, add the deductible for each plan. 
3. Subtract the deductible from the out of pocket (OOP) maximum.
4. Add the premium amount from step No. 1 to the OOP maximum.

An example will help. Get the full details and example at:

Best Credit Cards for 2019

"Credit cards are a useful financial tool if used responsibly. With a credit card, you can charge items and services that you need and then pay them off at a later date. If chosen wisely, a credit card can even be used to earn rewards or to build credit."

Writing for Consumer Affairs, Beverly Harzog provides an excellent, easy to use guide to choosing a credit card and evaluating the ones you hold. Data current as of 3/29/19.

Looking for best "balance transfer" card? airline miles? cash back? hotel, business or travel cards?
Check out:

What will Medicare cost me in retirement?

Tips for College Graduates Making Their First Loan Payments

Your Money adviser (The New York Times)
Make sure you know how much you owe and to whom. Then, look at your payment options.
"Student borrowers typically get a six-month grace period after graduating from college. For students who earned their diplomas in the spring, that means monthly loan payments start in November or December."
"The loan servicer — the company that collects payments and otherwise manages student loans — usually sends a notice a month or so ahead of the first due date."
"Go online and check your borrowing history at the National Student Loan Data System. There, you will find a list of your federal student loans and the amounts as well as their servicers, so you can contact them to make sure you are receiving necessary information. (Loans made by private banks and lenders, rather than the federal government, are not included.)"
"Unless you choose an alternative, you will automatically be placed in a standard 10-year loan repayment plan. That’s usually the cheapest option in the long run, and the one that will get you out of debt the quickest." 
Set it and forget it

Colleges mislead high school student into applying

Numerous reports are coming out with reports that many colleges and universities are recruiting applicants who have no chance of being accepted to their institution. The goal of the colleges is to reduce their acceptance rate, making them appear to be more selective. This process hurts students who may pay substantial application fees to institutions where they have no change of acceptance, bruising their confidence and steering them away from realistic college choices.

So beware of enticements to apply to institutions where your SAT/ACT scores and grades indicate you are unlikely to be accepted.


For Sale: SAT-Takers’ Names. Colleges Buy Student Data and Boost Exclusivity

By Douglas Belkin (11/5/19)
For 47 cents, the College Board will sell an individual’s information, feeding admissions frenzy

November 5, 2019

How much do you need to retire?

The “Rule of 25” says you should multiply your total annual expenses by 25 to determine how much you’ll need to have saved by the time you retire. So if you plan to spend $50,000 per year in retirement, you’ll need to save $1.25 million. To have $100,000 per year to spend, you’ll need $2.5 million.
The Rule of 25 is a good starting point, but it is not an ironclad, one-size-fits-all solution for everyone. Among the uncertainties are health care and long-term care costs and inflation.
There are numerous other posts on this blog to provide guidance on how much to save.
For those who gasp and shake their heads at million dollar goals, a book that provides a contrary perspective is “Get a Life: You don’t need a million to retire well” by Ralph Warner.

October 31, 2019

Get money smart. 25 tips to improve your financial well-being from CFPB

This is just a summary of a great website from the Consumer Financial Protection Bureau; it's almost like a complete personal finance course in one place. Click here:

Understand where your money goes 

         1. Take our quiz to see how healthy your finances are. 

         2. Learn where your money is coming from. 

         3. Learn where your money is going. 

         4. Write your bill due dates on a calendar. 

Small changes can make a big difference 

         5. Create a working budget that matches your cash flow. 

        6. Request due dates for your bills that help you stay on track. 

        7. Compare your spending month-to-month. 

Save for emergencies

8. Give yourself financial security with an emergency savings fund.

9. Set rules for your emergency savingsbut don’t be afraid to use it.

10. Make saving easy by making it automatic.

11. Put extra money into savings at times when you have it.

12. Use your tax refund to help you reach financial goals.

Reduce your debt

13. Before making a plan to pay down your debts, know what you owe.

14. Choose a debt reduction strategy that works best for you. 

15. Learn about federal and private student loans repayment options. 

16. In the market for a car? Negotiating can save you hundreds or thousands of dollars over the life of your loan. 

Create better money habits 

17. Apply only for credit you need.

18. Set an annual reminder to check your credit reports. 

19. Set up alerts to stay on top of your checking account balance.

20. If you can’t make a bill payment, act fast and call your creditors.

21. When shopping for a loan, get quotes from at least three lenders. 

Plan for success 

22. When planning for the future, set SMART financial goals.

23. Set up a 529 savings plan for your children.

24. Make your savings consistent.

25. Prepare for life events and large purchases by planning ahead.

Financial Planning for Women does not sell, rent, loan, lease or otherwise provide any personal information collected at our site to any third parties.