Go Get Your New Car!

Your neighbor just bought the brand spanking latest car of his “dreams”.  How long did he dream of it, the thing just came out?   He will probably trade it in within three years for his upgraded “dream” ride.

You don’t need to do him one better. Forget about keeping up with the Joneses. They don’t pay your mortgage, car note or any other bill for that matter. Forget about impressing them because that is the real reason for keeping up.

Not saying you should trade-in your car for a bike, or drive your car until it becomes a rust bucket, but a new car every two or three years is a terrible financial move.

Buy certified pre-owned with factory backed warranty. This is like buying new, with the added benefit of saving thousands of dollars and ride it until you can ride it no more.  No plug here, just a little smarts!  .

Go ahead and buy that car.   Every summer while you are stuck in rush-hour traffic in your new car, dreaming about lounging in paradise; St Lucia, Cancun or Tenerife. I am there toes in the sand, refreshing beverage in hand, while you wish you could. It’s OK you are sitting in your NEW car.


Essays From A Moron – Saving For Retirement

Over the last few days I spoke to many friends and co-workers about saving for retirement. What many shared stuck a nerve.  Pretty scary that many had almost nothing saved.  Even worse they had no idea where to start.

All works of life. A high school drop-out, many college graduates, there was even a doctor in the group. From minimum wage earners to one with a six-figure salary. The commonality was that they had no clue whatsoever

Many feel that between social security and whatever pension they may have will be more than enough. Most of us have seen what is going on many pension plans are being mismanaged into oblivion and most fear that whatever we receive from social security will be no more than what would be considered a supplement.

Some had invested in the market, but after the most recent collapse circa 2009, they cashed out when the market was low and took a substantial loss. Lack of knowledge, fear and misinformation has led many to never again invest in the stock market. That fear is real.

There are other options for those that may be afraid of the stock market.  Keeping your money in a savings account is like keeping it under the mattress; your savings can’t even keep up with inflation so look elsewhere.

The tools and information are freely available. I typed “investment information” into my scroll bar and I received about 706,000,000 results and all it took was 0.53 seconds. A few minutes reading some of the links and conducting some research is time well spent. Due diligence will get you very far.

There is no need to spend our “golden” years living in poverty. Getting started is much easier than many think. It is never to late to start.

Is Using Credit Cards a Sound Financial Strategy?

Credit card usage has become such a controversial topic that to recommend using one seems like bad financial advice. Many will tell you to not use them, to get rid of them altogether.

Using a credit card to buy things you can’t afford or don’t even need is certainly not smart. The interest charges will pile up over time-Why do you think minimum payments exist?

Stay within your budget and pay your bill in full, when due. Never run up or carry a balance, so if you can’t afford to pay the bill, you probably should not be buying it.

I have a rewards card that I use to make almost all of my purchases. If am going to make the purchase anyway, might as well get all the benefits possible. I do suggest taking advantage of the many perks credit cards offer.

I use my points to get things I would otherwise pay for. Cash might be king, but credit cards offer advantages otherwise unavailable. Some offer travel insurance, extended warranties, fraud protection and allow you to dispute billing errors and defective merchandise.

Some credit cards even offer travel and emergency assistance or other travel related features. Credit cards are one of tools used to build credit. Somewhat frequent purchases and a solid payment history help achieve a respectable credit score.

A higher credit score will help you qualify for lower interest rate on loans. The difference between a mortgage at 7% versus 3% is staggering. They also provide financial backup in case of an emergency, such as an unexpected healthcare cost, job loss or major auto repair.

A few things to keep in mind: Do not, under any circumstances miss a payment, you will be accessed with late fees and interest, increasing your debt load. These can add up and have a negative effect on your credit score.

 Review your monthly statements and keep track of your purchases. Report lost/stolen cards immediately.

The card issuers will make money from every single purchase you make. Merchant fees. The multiple charges to cardholders – annual, cash advance, balance transfer, late fees and interest payment .

Some even sell customer data to other businesses. Completely legal as data is anonymous and aggregated, meaning you out can not be singled out.

Some items to consider when choosing a credit card:

-Don’t get a card with annual fees. The benefits hardly ever offset the expense.

-Look for a low-interest rate. The plan is to pay in full, but life happens.

-Look for the rewards program. Some of the most common rewards include Cash back on purchases and airline miles that can be redeemed for trips.

Credit card issuers are betting that by offering perks you will buy more and end up carrying a balance therefore paying interest. Prove them wrong take advantage rewards programs.

 I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommend my children do when the time comes.

My Aha Moment, I Finally Saw The Retirement Light

The conversation that set me on the right path to retirement savings

One day I was talking with a co-worker about our upcoming family vacation plans. He boasted that his tax-refund would pay for his.  I wondered how, and cornered him into telling me how he managed to do it.

He went on to tell me about the “new” saving for retirement tool he found, the 401K.  Not new, but I wanted to know more, so I kept the insult to myself and allowed him to continue.

His tax burden the previous years had been huge so he adjusted his withholding tax to more closely mirror his total payment.

The key to his large refund was the fact that he maximized his contribution to his 401K thus lowering his taxable income.  I also contributed to mine but until that day, I contributed just enough to get the company match.

I instantly saw my mistake.  All that money went in the trash. Nothing to show for it, not experiences…nothing.  Made the necessary corrections.

Many people do not see the advantages a 401K presents both now and in the future. Hopefully you just did.  Know someone who can be helped. Get this to them.

I am not a financial advisor.  I hold no fancy degree and as such this is not financial advice.  This is simply what I have done and recommended my children do when the time comes.