Savings

What Is myRA?

myRA

Can myRA help?

We know about traditional IRAs and Roth-IRAs, but what is a myRA?  myRA is a new government-backed retirement account.  Last year, President Obama asked the United States Department of Treasury to create a new form of retirement account that could be used as a “starter” account for low and middle-income Americans who don’t have access to employer-sponsored retirement plans.

The program is not really designed to be your only form of retirement account, but a stepping stone towards start saving for retirement.

How Does myRA Work?

myRA works in a similar fashion as a Roth-IRA in which all contributions are made after taxes, and withdrawals are tax free. Contributions are invested in a United States Treasury security, which means you never lose your contributions.  The U.S. Treasury security earns interest at the same variable rate as the Thrift Savings Plan‘s (TSP) Government Securities Investment Fund.

This is a safe way to save for retirement, but it also means that the rewards are low. The average annual rate of return for this fund over the ten year period of December 2003 and December 2013 was 3.39%.

These returns are better than having your money in a savings account, but not better than investing in index mutual funds.  However, you can lose your money investing in index mutual funds, which is not the case when investing in TSPs.

Why You Should Get Long-Term Care Insurance

long-term care

Ice cream makes everyone happy

Many of us think we’re invincible and that we are going to live forever.  And even though we’re living longer – around 80 years, which is about 30 years longer than people living 100 years ago – that doesn’t necessarily mean we’re going to be healthy all our lives.

We all know having health insurance is a must, but many of us don’t know that health insurance doesn’t cover long-term care.

Long-term care is not medical care, but rather a variety of services which help meet both medical and non-medical needs of people who cannot care for themselves over a long period of time due to a chronic illness or disability. Most long-term care is not medical care, but rather assistance with basic personal needs of everyday life, such as bathing, dressing, etc.

How to Avoid Debt for Christmas

avoid debt for christmas

All I want for Christmas is You

Ahh Christmas is almost here.  Christmas season is the best time of the year for many, but it could also be one of the most stressful times for people who are in debt and can’t afford to buy gifts.

There is just so much pressure put on us to buy everybody and their mother a little something something for Christmas.  If you don’t, then you are just like Ebenezer Scrooge.

The pressure comes from everywhere.  There are countless Christmas commercials telling you what you should buy, there’s Christmas music everywhere (doesn’t tell you to buy stuff, but it reminds you two months in advance that it is Christmas season and that you should start getting ready), and there are also those who keep asking, “What are you getting [INSERT NAME] for Christmas?”  It is not even November yet!

Don’t get me wrong.  I love Christmas.  It is a time to get together with your family and loved ones.  Everybody seems to be happy – maybe tired of the Christmas songs, but happy – some of us gets a little break from work, and we get gifts.

Yes, I like gifts too.  The problem I have is when people get into debt just to buy somebody else a gift.

How To Avoid Credit Card Annual Fees

avoid credit card annual fees

No more annual fees!

Being an avid reader of personal finance blogs/websites for the last year or two, I’v noticed that there are two schools of thought when it comes to credit cards. Those who say credit cards are pure evil and avoid them at all cost, and those who embrace credit cards and use them to play the rewards game.

I’m in neither of these camps.

I definitely don’t avoid using credit cards.  Not because I don’t think they are dangerous – they certainly could be in the wrong hands – but because they are very convenient.  I use credit cards more that I use cash.  However, I only use credit cards when I know I have the cash to pay for whatever I buy.

For example.  I budget $150 for groceries per month, but instead of paying cash when I go food shopping, I pay with my credit card.  I know I can’t spend more than $150 because then I’ll go over budget.  At the end of the month, I take the $150 that are in my bank and pay off the credit card.

This allows me to not have to carry cash all the time and also earn some rewards.

Now, I like earning rewards, but I don’t play the rewards game.  The game where you sign up for 10 or 20 credit cards and spend X amount of dollars a month to get X number of points.  I’m impressed by the people who are able to do this, but I’m just not one of these people.

I spend what’s in my budget and if I get rewards then cool, and if I don’t get rewards then also cool.  I don’t try to manufacture spending to claim rewards… or maybe not yet.

The Best Way to Pay Off Debt

best way to pay off debt

Photo Credit: StockMonkeys.com

Getting into debt is very easy.  Just start buying stuff with your credit card and don’t pay it off each month.  But getting out of debt is very difficult.

The average American family with at least one credit card has around $16,000 in credit card debt (2012 data).  Many of these families are trying to erase that debt but are having a hard time accomplishing that.  There might be many different reasons why this is so, but one of those reasons might be that they’re not approaching it the right way.

Read more at ComLuv.com

4 Ways to Replace Cable and Save Money

replace cable

Cut the cord, man.

Okay let’s admit it.  We’re TV addicts.

The average American watches 5 hours of TV per day, according to a report from Nielsen.  Five hours a day!  That’s a lot of TV watching.  But that’s understandable, I mean how else are you going to keep up with the entire Kardashian family?

But just because we are addicted to TV doesn’t mean we have to pay over $100 a month to watch our favorite shows.  And $100 is a low number.  It is estimated that the average price of cable TV will hit $123 a month next year.  That’s $1,476 a year!

I’m not suggesting you stop watching TV – I watch more TV than I’d like to admit – all I’m saying is that you should consider paying less for your services.

I haven’t had cable for over a year and I don’t miss it at all.  True, I have to wait a day to watch my favorite shows, but as long as nobody ruins it by telling me what happens, one day is not that long of a wait.  I’ve noticed that people nowadays are pretty good at not telling me what happened.  They usually ask, “Oh man, did you see it last night?”  No, and don’t say anything or I’ll karate chop you in your throat.

Anyways, below are a few ways you can replace cable and save money in the long run.

Living On Campus Costs More than Off Campus (Infographic)

living on campus

NJCU in ‘da house!

With the cost of higher education in the U.S. rising tremendously each year – over 500% since 1985 – it is no wonder students and parents get into so much student loan debt.  I mentioned that there are proposals being written to try and change that, but until those proposals are put in place, we have to deal with this price gouging if we want to get a college degree.

There are a few things we can do to avoid student loans, like 529 plans and working through college, but the fact remains that we still have to pay for tuition – unless we get a scholarship.

A college education is becoming more and more of a necessity.  Study after study has shown that people with a bachelor’s degree earn on average 66% more than people with only a high school diploma.

That being said, there are definitely ways to lower the cost of a college education. You could go to a in-state public school for example.  But even if you go to an out-of-state school, you could potentially save a lot of money by living off campus.

How To Track Your Spending

track your spending

Write it down!

The number one rule of wealth management is “Know where your money is going.”  Don’t look it up, it’s an unwritten rule.

Everybody knows how much money is coming in every month.  They just have to look at their paychecks.  But not everybody knows where all of that money is going.  Sure, they know about the big bills: rent/mortgage, student loan, car payment, utilities, phone, etc., but many don’t remember at the end of the month what they spent at the beginning of the month.

This causes them to always ask, “Where the hell did my money go?”

I certainly was one of these people.  Every month I used to ask myself the same two questions.  The question above and “What did I buy this month?”

I was really fed up with that routine so I decided to write down every single expense I made… I mean EVERYTHING.  After a month I looked back at my spending and was able to figure out where my money was really going.

Fun Weekend, Only $6.50 Spent!

fun weekend

Not our actual class.

Happy Monday everyone… or not.  If you’re anything like me, Mondays is by far the worst day of the week because it is when we have to go back to work. Yoohoo! (There should be a sarcastic font).  But I’m not here to tell you how crappy Mondays are – you already know that – I’m here to tell you about what I consider to be a very busy, fun weekend in which I only spent $6.50 total.

Okay I admit that I was probably lucky by knowing the right people and being at the right place at the right time, but that’s not the point.  The point is that the following situations/activities presented themselves and I took full advantage of them.

All work and no play is never a good thing and that’s why we should always try to find fun activities to help us stay sane.  But just because we should have fun, doesn’t mean we need to spend a lot of money to achieve it.

Kate doesn’t want to be inside the house all weekend so we always have to find free or inexpensive activities to do – or risk going broke.  Disclaimer:  I don’t mind staying inside watching TV all day, but I have to put my wants aside if I want to keep this good woman by my side.

How Much Money Do I Need To Retire?

Need To Retire

When Will I Retire?

We all dream of that day when we don’t have to go back to work and we can enjoy our free time in retirement… at least, I do.  We all know we need to retire, but how do we know if we have enough money saved to have a comfortable retirement?

That is a difficult question to answer because it depends on many different factors, such as your age when you retire, lifestyle, health, and how long you plan on living on retirement money.

There are dozens of retirement calculators that will tell us how much money we will need to retire, but most of them only makes my heart skip a few beats.  The numbers those calculators tell us are a little too high, at least for me.  My plan is to be able to retire early, but according to those calculators I’ll never be able to retire.