Archive for March, 2010

Payoff Your Credit Cards – But Set the Stage FIRST

It’s easier when you take care of a few things first

By Kevin M

It’s been said that the best way to accomplish a big project is to break it into a series of smaller ones. Paying off credit cards can be as big a project as we can imagine, based on the size of the debt that needs to be paid off.

Often it’s the size of the debt itself that presents the biggest obstacle to even getting started. While it may not be too difficult to payoff $10,000 in credit card debt going from a standing start, a balance of $50,000 will require marshalling all of our efforts and resources.

It’s important to realize that paying off credit cards isn’t just about discipline. A huge part of the project is emotional and you’ll have to do it in such a way that you’re rewarding your efforts by reaching crucial milestones along the way. Take it in stages, stack the deck in your favor, and the whole process will be less painful.

7 Reasons Everyone Needs to Have a Blog

By Kevin M

“Everyone” is one of those absolute words we should generally stay clear of, but I’m violating conventional wisdom, sticking my neck out and saying everyone needs to have a blog!

You can beat me up for violating protocol, but before you do, consider the seven reasons why I’m making such a bold declaration…

1. To CONNECT with the rest of the world, 21st Century style

There are nearly seven billion people in the world and most of us connect with a handful who we’ll connect with in any meaningful way. With a blog we can add hundreds or thousands more—do you think there might be some value in that?

A blog is the cornerstone of finding like minded people in a world that seems to be pulling apart socially even as it gets more crowded. Though it often seems that people are the nexus of our troubles, we can’t overlook that they’re usually the source of our solutions as well. After all, who couldn’t use a few more friends, a few more intelligent opinions or a few more business contacts?

Most of the people we’ll meet through blogs will live in another part of the country, or another part of the world, but that’s pretty stinking exciting, wouldn’t you say?

Over 50 – No Pension, No 401K – What Now?

By Kevin M

Let’s be honest, most retirement posts in the personal finance blogging world are aimed squarely at people in their 20s and 30s. Those over 50 are presumed to not exist. It’s almost ironic, isn’t it, talking about retirement to people who are so far away from retirement that it’s very nearly irrelevant while ignoring those for whom it’s right around the corner?

Maybe it’s that the vast majority of people on the web are under 35, or maybe it’s just easier making multi-decade projections to a group of people so far from retirement that they’ll never remember any bad advice they’d gotten early in life. And in a different direction, all things are possible when your time horizon is 30, 40 or 50 years. Those magical retirement projections that’ll turn us all into millionaires just wouldn’t work without all those decades!

But what if you don’t have decades to accumulate a retirement fortune? What if you’re over 50 and retirement is just a few years away? If you don’t have at least a healthy six figure portfolio, how do you prepare for retirement now that the luxury of time is no longer available to work in your favor?

Majoring on the Majors by Learning to Say NO

Controlling our tendency toward Creative Avoidance

By Kevin M

How is it that that some people seem enormously successful, yet astoundingly they have more free time than the rest of us? Have you ever noticed as well that some people who are incredibly busy are at best only moderately successful? Perhaps you’re one of them, always busy, but not having as much to show for your efforts as you think you should.

The typical human reaction to this apparent contradiction in the natural order of things is to assume that the successful person with all the time on his hands is a) lucky, b) has an “in” with important people, and even c) must be doing something unethical, immoral or illegal.

While each of those considerations isn’t beyond the realm of possibility, there’s a far greater chance that the successful person with all of the free time on his hands has found a way to
maximize his results while minimizing his efforts. He manages to do this by saying “NO” to unproductive tasks, either by making it clear to others up front that he won’t engage himself in them, or by simply refusing to participate.

Logically, isn’t that what we should all be doing?

Making Money-Goes-to-Money Work For You

By Kevin M

How do we define rich and poor? The dividing line is more subjective than real in that we tend to think of rich as anyone with substantially more than we have, and poor as anyone with substantially less. Since we always see ourselves as more or less in the middle, how do we determine at what point we might transition into “having money”?

Trying to fix a dollar amount that moves us into that status is probably a waste of time.
A more useful metric might be the point at which:

we earn more money than we need to live,
we have savings in excess of predictable contingencies, and
we’re debt free.

For example, a middle income person living beneath his means, and having above average savings with zero debt probably has more economic options, more day to day freedom, less stress, and probably even more unencumbered cash flow than a high income person living above his means with below average savings and an excessive level of debt.

In this example, the middle class person has reached the all important tipping point where money is now working in his favor, rather than against him, often described by the term “money goes to money”.

OutOfYourRut Friday (but almost Saturday) Personal Finance Round Up

IMG_1646 by whatleydude.

By Kevin M

It’s been one of those long, involved weeks in my corner of the universe, and though I’ve been planning all week to post only the second Friday Round Up ever on this site, it’s taken me nearly the whole day to pull it off.

And I’m really glad I did because there’s some really incredible stuff out there that’s well worth the read. Below are some of the material I thought to be top notch this week.

Save for Retirement Now or Payoff Your Mortgage First?

By Kevin M

Two of the most important components of retirement planning are a generous retirement savings plan and a mortgage free home. But if limited resources force you to make a choice, which goal should get the lion’s share of your extra income?

There are three basic choices:

1) Emphasize retirement and let the mortgage slowly amortize itself into extinction
2) Throw all extra funds at the mortgage, and once it’s paid you’ll have even more money to put into retirement
3) A hybrid plan where you try to do both at the same time

This isn’t a good solution-bad solution debate. There are plusses and minuses no matter which way you go, and fortunately all three can get us where we need to go. Which one we choose will depend largely on individual circumstances and preferences.

Should You Use Retirement Savings to Pay Off Debt?

By Kevin M

Despite the near sacrosanct status of tax sheltered retirement accounts, there are situations in which liquidation makes abundant sense. From the outset, let me say that I don’t advocate raiding retirement accounts except under extreme circumstances.

When to consider tapping retirement savings

My personal opinion is that if survival is at stake tapping retirement savings MUST be on the table. Under certain circumstances it becomes beyond absurd to allow your financial situation to collapse while protecting retirement savings. Retirement savings are, after all, a financial tool and not some sort of gold-plated legacy to be shielded at all costs.

Under what circumstances should we seriously consider withdrawal?

Since when are you the quitting type?

By Dave “Gonzo” Kelly

That is what Fortune (Charles S. Dutton) asks of Daniel “Rudy” Ruettiger near the end of the movie “Rudy”. This is after Rudy has been denied the opportunity to dress (be on the sideline in uniform) for the final game of his senior season at Notre Dame. Rudy was never good enough to be a member of the team, but he spent two years working harder than anyone as a member of the practice squad. At the end of his junior year, Notre Dame head coach Ara Parseghian promised to let Rudy dress for a game during his senior season due to his hard work and dedication.

But after Rudy’s junior season, Parseghian decided to retire.

The new coach, Dan Devine, did not know about this promise, nor did he intend to let Rudy dress for a game. Rudy went through the entire season checking the weekly dress schedule and never saw his name on it. After the schedule for the final game was posted and his name was not on it, Rudy decided to quit. He walked out of the locker room determined to miss his final practice.

Then he ran into Fortune, who had been a mentor to Rudy. And Fortune reminded him of who he was.

Rudy returned to practice. The seniors rallied to his side and convinced the coach to let him dress. He even got into the game for the final couple of plays. The movie ends with Rudy being carried off the field by his teammates. But it almost never happened!

Why It Might Be Better to OWE on Your State Income Tax Return

By Kevin M

A disturbing report came out last week in an article on Yahoo Finance in regard to state income tax refunds being delayed. In Cash-Strapped States Delay Paying Income-Tax Refunds it was reported that several states will be delaying the issuance of refunds this year in response to budget issues.

The article said that the delays represent “…essentially an involuntary no interest loan from the taxpayer.”

Projections indicate that this is a trend will continue into the foreseeable future. The Christian Science Monitor reported in December that (What recovery? Budget deficits get worse for states) 48 states face budget deficits for fiscal 2010, and at least 41 are projected for 2011.

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Archive for March, 2010

Payoff Your Credit Cards – But Set the Stage FIRST

7 Reasons Everyone Needs to Have a Blog

Over 50 – No Pension, No 401K – What Now?

Majoring on the Majors by Learning to Say NO

Making Money-Goes-to-Money Work For You

OutOfYourRut Friday (but almost Saturday) Personal Finance Round Up

Save for Retirement Now or Payoff Your Mortgage First?

Should You Use Retirement Savings to Pay Off Debt?

Since when are you the quitting type?

Why It Might Be Better to OWE on Your State Income Tax Return

Financial Management