3rd Quarter 401k Back in the Positive November 30, 2006
For the 2nd quarter 2006, I wrote that my 401k performance was negative. In the 3rd quarter 2006, I did better but not by much. At least it’s in the positive range. My personal rate of return for the period ending September 30, 2006 was: 3.54%.
Hope you’re doing better than that.
Lately I’ve been thinking of reducing my contributions to 401k to the minimum contribution dollar amount an employee needs to contribute to get the maximum employer match in order to pay off some home equity line of credit, which is at approx 8% or so interest rate. I’ve already maxed out the 401k in the past few years so I’m thinking that I can take a break until my higher interest line of credit is paid off. Is this a smart idea?
Hip Hopper Ice Cube a Smart Saver August 20, 2006
I was browsing Men’s Health Magazine and saw an interview with rapper Ice Cube. One question asked was about his earnings:
Keep what you earn
“People love you today, but it’s off with your head tomorrow. I just keep it in perspective and never, ever buy into the lifestyle. I didn’t buy a house until I started selling records. Now I put my money into my business. Get what you need and a couple of things that you like. Everything else after that is just stuff.”
With that answer, he gained my respect. It’s refreshing to hear a celebrity in the hip hop world, where the more flashiness the better, saves up money before buying a home. With that thinking, I’m sure Ice Cube is financially free and can do what he wants rather than relying on his next hit song or movie.
When to Purchase Airline Tickets August 8, 2006
Great tip from SeekingAlpha on the best time to purchase airline tickets:
What’s the absolute best time to purchase a ticket directly from the airlines? Turns out it’s Wednesday from midnight to 1a.m. in the time zone of the airline’s “home base.” (For instance, Delta is headquartered in Utah and United currently calls Chicago home.)
Why? That’s when the computer systems of most airlines get rid of the reserved but unbooked lower fare reservations. Most of us at one time or another have booked a reservation, then let it go without purchase. Snap-up these discounted fares right after this happens and you’re likely to get a significant discount.
I like using Kayak.com to search for airfare since they consolidate airline searches from one website. Thanks SeekingAlpha!
Related:
Saving on Airfare
More Airfare Saving Tools
The Frozen Drink Non-Latte Factor July 12, 2006
If you’ve been to Starbucks, Dunkin Donuts, Jamba Juice, Amazon Juice, Cold Stone Creamery, and many other eateries lately, you’ll notice that there’s a barrage of new drinks (usually frozen, since summer has arrived) to get the consumer to have more trendy drink options. It’s the Latte Factor of the frozen summer drinks. I love frozen things; ice cream, slurpees, slushes, smoothies. I even chill my water in the freezer and will create a ‘water slush’. And these coffee shops, cafes, and smoothie places make it hard on a frozen drink lover who’s trying to save money. So far I have not tried any of these because looking at the prices is a deterrent. Some examples:
- Starbucks Frappuccino blends ($3 to $3.75)
- Amazon Juice smoothie (starts at $3.75)
- Dunkin’ Donuts smoothies ($3.39 to $4.99)
If you buy one frozen drink a week at $5 (with tax), it adds up to $20 per month. I know, the 7/11 Slurpees are cheaper at $1.65 but you’re essentially drinking frozen sugar water. As an alternative, blend your own smoothie at home. There are tons of recipes online. They’re easy to make, cheap, and you can make them with any fruit, and it’s healthier than the store bought ones because it has less sugar. Buy frozen bags of fruit at your grocery store and mix and match.
Source:
Fruity summer drinks are a tropical paradise of profit, By Bruce Horovitz, USA TODAY
What’s Your Nest Egg Ranking? July 7, 2006
That’s my score up there according to a new online calculator from A.G. Edwards that lets you figure out how well you are building wealth vs. the rest of the U.S. public (nesteggscore.com). According to the site, the national average is 631, a ‘fair’ ranking:
The 14 question survey told me that I have a score of 748, which gives me a Nest Egg Score ranking of “Good”:
You’ve done a respectable job of saving up to this point in your life. To improve your Nest Egg Score, you should focus on saving more — especially for retirement — and reducing debt, such as paying down credit cards or building more equity in your home (if you own one).
The scoring factors in age, housing, investments, and location (cost-of-living). With my ‘Good’ ranking, their suggestions are:
- Continue to manage debt.
- Maximize your retirement contributions.
- Consider your other financial goals.
- Review your investment mix.
- Create or review your estate plan.
While the suggestions sound like standard retirement planning advice, the scoring is an interesting indicator of how you’re doing. If I took this survey 3 years ago, my score would probably have been much lower. Since then, I’ve contriuted the maximum allowed in my retirement accounts, spent less than I make, and saved up to purchase real estate. How are you scoring?
Apple.com refurbished deals July 5, 2006
Here’s an idea for those of you who are looking to buy iPods and Mac computers. You can buy refurbished products for great prices. I never thought of looking for this, and would consider it if I ever need a computer. Some sample prices:
- Refurbished iPod nano 2GB, Original price: $199.00, refurbished price: $169.00, 15% off
- Refurbished iPod 30GB, Original price: $299.00, refurbished price: $259.00, 13% off
- Refurbished MacBook Pro - 2.16GHz Intel Core Duo, Original price: $2799.00, refurbished price: $2149.00, 23% off
These are current Apple models, includes free shipping and Apple’s one year warranty. Dell also has their outlet section for reduced PC and accessories prices. So if you’re looking for a way to save on your computer purchases, buying refurbished or outlet prices might be worth looking into.
My Story on Getting to $0 Credit Card Debt and Staying There June 30, 2006
On my continued quest to the next income bracket, I am grateful for not having any more credit card balance. Since college I had a credit card balance in the thousands and got pretty good at managing the servicing of my debt by taking advantage of 0% balance transfers, limited time low balance offers, and credit card issued checks. I had up to 7 credit cards and at one time had $4,000 of credit card debt in college and $13,000 debt post-college. The interest rates on those cards were between 15% and 23%. I wasn’t financially saavy and didn’t consider negotiating rates, calling to ask to cancel that occassional late fee, or taking it seriously. It wasn’t easy, but it took some dedication, education, and a commitment to myself that I will change my lifestyle to erase that debt. Now, I only have 2 credit cards and $0 balance on both. It’s been more than a year that I’ve had a $0 balance, so like a successful diet, I’ve removed my debt and kept it off. Once you pay off debt, the race isn’t over. You still have to work hard at keeping it at $0. I’ve used the money I would have used to pay off the credit card and saved up for a home and put in $15,000 per year in my 401k retirement fund. There’s so much freedom in having the choice to direct your earned money to YOU.
For those of you who have credit card debt, you can achieve financial freedom. Read up on all those great PF blogs out there and take the debt and shove it out of your life. There’s so much collective wisdom that everyone has to offer from sites such as PFblogs.org (a great collective personal finance site, by the way), and I wish I had that back in college. Anything is possible if you decide that you don’t want to be a slave to money and work hard at keeping the debt out of your life. Once you get there, imagine your life with that extra money and the relieved feeling you’ll have. This is the best step you can take to improve your life and get to the next income bracket to give you choices.
PS: ING Direct Savings Account just increased their savings rate to 4.35% today. I’ve parked my money there since I don’t need to put all my extra money into Visa or Mastercard.
More Airfare Saving Tools May 4, 2006
People who love to travel, like myself, like to look out for travel bargains. I like to keep an eye out for last minute bargains, but I don’t have time to search on travel sites everyday to see how prices move. I just discovered tripstalker.com. Tripstalker.com constantly scours for inexpensive trips and alerting you by email or text message once a flight, hotel, or rental car matching your search criteria shows up. I hope I can find a good bargain to Europe or Asia.
You can also check out my favorite travel site, Kayak.com, which I previously wrote about. The site searches almost all airlines and you can adjust you searches with without having to reload the page. I’ve found great round trip deals from NYC to LA for $250 (normally over $350), and NYC to Chicago for $130 (normally over $250).
US Addictions: Gasoline and Spending May 2, 2006
The USA is addicted. Addicted to gas and addicted to spending (i.e. not saving), and we are not making any sacrifices to fix these addictions. Last week’s story from the NY times on gas prices going up raised an eyebrow for me for one reason. So far, the $3 per gallon price has not persuaded many commuters to change their behavior. According to the article, there has been no increase in registration for a program that arranges carpools and vanpools for the county that includes Seattle and Bellevue. What are people are waiting for? At what price does gas have to be in order for people to start changing their habits? For all the anger and talk about “rediculous” gas prices and the fall of consumer oriented businesses, Americans aren’t sacrificing their bad habits.
This reminds me of Americans not sacrificing to save money for emergency funds thinking that there are other ways to get money, either by taking out more loans or tapping home equity to pay for emergencies. There’s no need to wait for hybrid cars to be more mainstream, for fuel cells or a new government fuel economy mandate when we can drive less, trade down to a more fuel efficient car, or carpool. We have the means to reduce our gasoline consumption NOW without expensive technology. We also have the means to adjust our standard of living without much sacrifice. When we realize that the World’s oil is tapped or our home equity is tapped, we won’t have the luxury of making more. Can we kick our bad habits??
Source:
As Gas Prices Go Up, Impact Trickles Down
By THE NEW YORK TIMES
Published: April 30, 2006
My Definition of the 10% Rule April 20, 2006
Books, financial advisers, personal finance blogs often suggests that earners save 10% of what they earn. Since the US national savings rate is in the negative territory now, in the consumerism society of the USA, how is it that everyone expects America to save 10%? I’ve always wondered about that 10% number. None of the publications I’ve read were that clear on whether that 10% is pre-tax or after-tax or is it 10% of your disposable income. I know it doesn’t really matter, because either way, saving something is better than spending more than you earn. But it can make a difference. For example, the difference between my pre-tax savings of 10% and after-tax savings of 10% is approximately $5000.
Does saving on your 401k retirement count towards your savings? I’ve always trained my mind that anything put into my 401k is just money never seen. I don’t count it towards savings, net worth, etc. So when I do get to see it someday, it’ll be found money. So in my book, when people say we should save at least 10% of our salary, I see it as 10% of my after-tax, discretionary money. I’ve been able to do that without any major lifestyle changes by changing small habits, and reducing my fixed costs. From a MSN Money article, the savings picture in the US is pretty bleak:
In 1981, families saved an average of 11% and owed 4% of their income on credit cards. By 2000, the average savings rate had already fallen below zero, and credit-card debt had gone up to 12% of income. Today, she says, “boomers have a bigger problem with debt than anyone else. Half of them do not have a retirement account.”
In the same article, I agree with the quote by Jeff Seely, CEO of ShareBuilder.com, “Do not let people borrow against their 401(k). This is your retirement money. Don’t touch it.” That’s partly why I don’t even count that as my savings, because I don’t intend to touch it until I retire.
Do you count your 10% savings after-tax? Does retirement count? Inquiring minds want to know.
Source:
Why can’t Americans save a dime?
MSN Money