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The Biggest Dos and Don’ts of A 401(k)

golden egg with moneyFor most people who are trying to save for their retirements an employer-sponsored 401(k) can be an incredibly great deal. The premise of a 401(k) is reasonably easy to understand. You take pretax dollars out of your paycheck, invest them over a number of years and ultimately wind up with a really nice nest egg come retirement. On the downside, 401(k)s have some rules that can be difficult to understand. So the important thing is to know the dos and don’ts of a 401(k) so you’ll know how to get the most out of yours.

Do begin saving early even if you don’t earn much

One of the most powerful forces in the known universe is compound interest. If you save just a little cash and give it a lot of time to grow this will be better than saving a lot of cash but for a short period of time.

Don’t be afraid of growth

If you start early you have a fair amount of time to offset any losses. Stop worrying about things and keep that 401(k) in growth mode. This means investing in US and international stocks. These will carry more risk in the short term but over many years they will be a much better wealth creation tool. You should even consider investing in stocks if you’re in your 40s or 50s because you could easily live to 80 or 90.

Do take advantage of your employer’s match

If your employer matches your contribution to some percentage take full advantage of it. This is basically free money. Your employer puts it in your 401(k) account as a reward for saving, which is something you should be doing anyway.

Don’t treat your 401(k) as if it were a checking account

You can borrow from your 401(k) but you need to be careful because it can be very costly. You’ll not only pay a penalty for any withdrawals you make before age 59 ½ you’ll also be short of that cash when it comes time to retire or in an emergency. The bottom line is that you should exhaust every other option for borrowing money before you dip into your retirement funds.

Do contribute from your bonuses

When you get a bonus it can be very tempting to use it for a beach vacation and there is nothing wrong with using part of it for that or for a pair of special shoes. But put the rest into your 401(k) account to help feed your long-term savings.

man balancing a checkbookDon’t forget catch-up contributions

If you’re getting close to retirement, are behind on your saving and are 50 or older remember that you’re allowed by the IRS if to contribute an additional $6000 for the tax year 2015 and that’s above the normal $18,000 limit. That makes a total of $24,000 you could invest in your 401(k). This can be a powerful catch-up tool.

Do increase your contributions when you get raises

There are a huge number of studies showing that when you make your saving automatic you don’t notice that missing money as much. Make arrangements with your HR department to adjust your 401(k) contributions each year when your salary increases. You’ll never miss the money and you’ll be glad you did this come retirement time.

Don’t ignore those taxes

The sad fact is that you don’t really have as much money in your 401(k) as you think. The reason for this is that it’s a tax-deferred account meaning that when you begin withdrawing funds the money will be taxed as ordinary income. If you don’t think this can hurt think about this. If you have $1 million in your 401(k) and withdraw the full amount you would pay the top tax rate, which as of this writing is 39.6% meaning it would cost you $396,000. Ouch!

Do learn if there’s a vesting schedule

While you may be getting a nice matching contribution from your employer do understand that it may have put strings on it through what’s called a vesting schedule. What this translates into is whatever money you contribute into your 401(k) will always be yours. However, some employers can and do reserve the right to get back its matching funds if you quit before you become vested. While federal law limits vesting schedules the terms can still be nasty. As an example of this, your employer might require you to work a minimum of three years or lose every single penny of what it matched. Check out your vesting schedule and make sure you understand its terms. This could actually help you decided when to – or not to – get a new job.

Don’t forget about your RMDs

RMDs are those required minimum distributions the government makes you take out of your 401(k) when you reach age 70 1/2 if you’re no longer working. How much you’ll be required to take out of your 401(k) involves a lot of math based on your account balances, age and marital status. This means that once you reach that 70 ½ and are required to start taking money out of your 401(k) you should consult with a tax professional or check out the RMD worksheets available on This is important because if you don’t take out the required amount you can expect the government to penalize you so it will get its share regardless.

Do think long-term and diversify

The retirement giant Fidelity Investments made the astounding discovery that it’s best-performing accounts were those of people that didn’t even realize they had accounts. This is proof positive of the power of sticking with investments and not being influenced by day-to-day changes. What you need to do is diversify across asset classes including bonds and stocks and think both domestically and internationally.

Don’t be afraid to ask for assistance

When you reach that golden age where you’ve paid off your mortgage and paid for your kids’ college educations you need to think about the kind of retirement you want and the type of legacy you want to leave your heirs. And most importantly you need to think about when and how do you start moving money around to get there. These are critical questions and there’s nothing wrong with looking for help. An accredited financial advisor could help you navigate the various tax laws and figure out a long-term plan that would help keep those golden years golden. You don’t want to make an expensive mistake late in life and paying a smart person to help you could be an excellent investment.

If you’d like to know more about 401K)s, here’s a video courtesy of National Debt Relief with details.


5 Frugal Tips To Enjoy This Summer

happy familySummer is here and if you want to enjoy it without breaking your budget, then you need to pay attention to the frugal tips that will be discussed in this article.

Following a successful frugal lifestyle does not mean you will be depriving yourself of a fun-filled activity this summer season. Frugality should never feel restrictive. If that is how you feel as you practice frugal habits, then you are probably doing something wrong.

A lot of people who are practicing frugality actually feel quite liberated. Being frugal allows people to be free from materialism. They know that being happy goes beyond your possessions and how much you spend each month. It does not matter how much you can afford to spend as long as your priority expenses are met. When you are freed from this way of thinking, the pressure to work long hours in order to earn more will no longer be there.

If you haven’t thought about becoming frugal, then you may want to start practicing it this summer. According to a report from the American Express Spending and Saving Tracker, Americans are known to live for summer travel. They think of it as a reward that they deserve to enjoy after all their hard work and the cold winter months they had to endure.

This is probably one of the reasons why the summer season is one of the most expensive when it comes to entertainment costs. On top of the summer travel, parents have to deal with the additional expense of having all the children at home. They need to spend more to keep the house cool – which means higher energy costs. They have to spend on summer activities that will keep their kids entertained for the next two month. These are only some of the added expenses that they have to think about when the summer season comes in.

The report published on revealed that 91% of their respondents have implemented saving strategies that will allow them to reduce costs this summer. Whether you have done the same or you lacked any plans for this season, you need to find some frugal tips that will allow you to keep your costs low.

5 ways you can have some frugal fun this summer

There are many ways you can have fun with a frugal lifestyle. All it takes is a clear understanding of what you believe will make your family happy. Add to that your creativity and you should be able to have a lot of fun this summer without spending a lot of money.

Here are 5 frugal tips that you can use to help get things started this summer.

Use your kitchen.

There are so many things you can do in the kitchen. Let your children have fun with you in this room. Create cold drinks that will help keep everyone cool when it gets too hot. You can also teach your kids how to cook or bake goodies. Make it as fun as possible by coming up with some food art. If your kids are not interested in cooking or baking, you can have them watch you as you work in the kitchen. Bake your own bread, mix your own drinks and cook meals from scratch. Whatever comes out of the kitchen can be consumed and that can help you save on take out or deliveries. You can even earn from the things that you can cook or bake. Sell cupcakes, cookies and other treats. The kids can help with the packaging. It can be a fun summer project for the family.

Staycation is the key. reports that 37.2 million Americans jumpstart their summer vacation with a holiday weekend – this year, it is Memorial Day. But travelling far will cost you money and that is what we are trying to avoid this summer. You deserve a change in scenery and some relaxation – that is true. However, you do not have to travel far to get that reward. What you need is some staycation options. Staycation is simply enjoying what you have in your neighborhood – or at least what is near your home. Instead of booking a hotel in a far place, why not book a hotel nearby with the amenities that will make you feel like you are in another state? Explore what you have in the community because there may be hidden gems that you have yet to explore. Go to the museum or enjoy a bike ride in the park, etc.

Explore the park.

One of the places that you can go to is the local park. Have a picnic there with your kids. Make it a spontaneous excursion. Instead of having snacks in the kitchen, put it in a picnic basket and drive to the nearest park with your kids. Bring with you a blanket, some books and outdoor game materials like some a ball, frisbee, etc. Your kids have a wide imagination. They will come up with something to do while out in the park. You will all benefit from the bonding and the exposure to nature.

Look for free activities.

Talking about frugal tips will always include something that is free. For sure, your local community has events and activities that you can enjoy without paying anything. From festivals, concerts in the park, open theatre to trade fairs, these are all possible activities that you can go to with your family. Look at the community board to see what you can do with your free time. If it is sponsored by the community, it is most likely offered for free or at a very low cost. You can also look at the amenities in your area. You may be able to have your kids join the summer sports league or something similar.

Spring cleaning – in the summer.

If you failed to do some spring cleaning, you may want to do that this summer. Go through all your stuff, and see what you can sell off. Have a yard sale so you can profit from the things that you no longer use around the house. Sometimes, what you consider as trash is something valuable to others. You can remove the clutter from your home and at the same time, earn some cash that may be able to fund some of your summer activities.

Follow these frugal tips to allow you to enjoy the summer without breaking the bank.

How to save on air conditioner costs this summer

One of the expenses that will also increase during the summer time is your air conditioner cost. Since the season is quite hot, you need to spend more to keep your home cooler. Your kids will be spending more of their time at home. You want to make sure they will be comfortable. That means you need to keep the air conditioner running more than the usual. You need to prepare for this increase in your household budget.

Fortunately, there are ways to keep your energy costs low despite the need to keep the house cooler. According to the tips found on, you can save energy for up to 3% per degree that is more than 72 degrees.

Of course, the challenge here is how to accomplish that higher degree so you can save on energy costs. Here are some frugal tips aimed at your energy consumption this summer.

  • Open the doors and windows. Make sure the house is well ventilated by opening the doors and windows. Let the air go through the house to keep it cooler.
  • Use a ceiling fan. A ceiling fan is a great way to get the air circulating in every room. Even if it is not enough to keep the whole house cool, it will help lower the need to make you’re A/C unit working too hard.
  • Go to cooler places. The best way to lower your use of the air conditioner is to just leave your house and go somewhere cooler. You can go to the park as long as the sun is not too striking. Or, you can go to the mall where the air conditioner is free. Other places you can go to include the library, museum, etc.
  • Make sure your A/C unit is in good condition. A broken A/C will consume more energy than the usual. Ensure that the necessary repairs and maintenance checks are done before the summer season comes in.
  • Keep yourself hydrated. Another way that you can stay cool without putting too much strain on your air conditioner is by drinking a lot of liquids. Use your kitchen to concoct drinks that can be enjoyed by your family.

To get more energy saving tips for the summer, watch this video.

Financial Lessons For Kids That They Can Use As An Adult

group of kids around saving conceptDid you know that teaching financial lessons to your kids will help set them up to a financially successful life in the future? You need to consider how important it is to learn financial management at an early age. There are many benefits to knowing how to manage your money properly. For one, you can use financial management as a debt solution. It can also keep you from debt in the first place. This is one lesson that you want your child to have as they enter into adulthood. One bad financial decision, like student loans, may result in decades of suffering.

According to an article published on, it is revealed that the percentage of students who display responsible financial behaviour declined – at least when you look at the statistics from 2012 to 2014. These behaviours include tasks like reviewing bills, paying bills on time, following budgets, paying off credit cards and controlling their spending. The survey involved 42,000 first year college students from both four-year and two-year colleges and universities. The topics in the survey covered savings, banking, school loans and credit cards. The report is titled “Money Matters on Campus” – an initiative from Higher One and EverFi, a financial company and education technology company respectively.

The report indicated that college students are stressed financially – regardless of where they come from in life. According to the report, the thing that gives them the stress the most is their level of student loans.

It is very important that you equip your kids with the right lessons that they can use even as they get older. Truth is, this is not very hard to do. A lot of financial lessons that we got as kids can easily be applied even as we get older.

Money lessons we got as kids that can be applied when we’re older

According to, there are a lot of parents who fail at teaching their kids the right financial lessons. In an article about teaching kids money lessons, it is revealed that 20% of parents have never talked to their kids about basic money concepts. This data came from a survey done by True Credit of TransUnion.

You need to do better than these parents so you can prepare your kids for a future filled with the right financial decisions. Here are 4 simple financial lessons that you can start with.

Money does not grow on trees.

Some parents think that this is a difficult concept for kids to grasp. But when you think about it, they need to learn it because it teaches them the value of money. They have to realize that you are working hard to earn the money that you are spending at home. You can discuss with them the concept of an income and how you need to spend hours in the office or your business to earn money. To illustrate this lesson, you can ask them to do extra difficult chores at home – something that they will be paid for. Choose these chores wisely. Try not to reward them for simple chores because that might make them refuse to help around the house if they will not be paid for it. If they are older, you can encourage them to find part time jobs – especially during the summer when school is over.

Just because you want it, doesn’t mean you should get it.

The next lesson that you can teach your kids is about smart spending. As a parent, it is quite difficult to say no to our children. But you know that it is never a good idea to give them everything they ask for. You need to help them get used to the idea that wanting something does not necessarily mean they should have it – especially if it is not a necessity. This lesson can serve as the foundation for smart spending habits. They can learn that even if they can afford to buy something in cash, it does not mean they should buy it.

Wait to save before you buy.

In connection with the precious lesson, you need to stress the importance of saving to your kids. Saving can help them purchase a lot of things in the future. If you have to say no to one of their requests, you can encourage them to save for it instead. If there is a toy that they want to buy, you can tell them that they can save up for it using their allowance. For younger kids, you can encourage them to help beyond their usual chores so they can earn extra money from you. They can use that to save up for the purchase that they want to make.

Spending money is fun.

While you need to encourage them to save, it is also important for you to teach your kids to enjoy spending the money that they have. This is especially true if they worked hard for that money. Have them commit to save a portion of it and then let them enjoy spending that money. They deserve whatever it is that they will spend it on. Try not to teach them to feel guilty if they do not save everything they earned. That is a mistake because they deserve to know that they can spend their money anyway they wish – as long as it is done in a smart way that will not jeopardize their financial standing.

Teaching kids smart money management skills is easy if you practice what you preach. Living by example is a lot better than hours of talking to your children about money management. Even if you spend hours teaching your kids, if they see that you are practicing something else, they are more inclined to follow what you are doing.

Money quotes from famous cartoons

If you feel like teaching your kids financial lessons seems daunting, you should know that there are a lot of tools that you can use to help you get the message across. For instance, Time for Kids and the financial editor of the “Today” show came up with a magazine that is intended to teach children money lessons. An article published on explained that this magazine will target fourth, fifth and sixth graders. The publication will be distributed to schools nationwide.

There are also story books that you can use to teach your children about money. There are even cartoon shows that can teach financial lessons – if you know how to use them properly.

You should know that some famous cartoon characters have some pretty impressive quotes that you can use while teaching your kids money lessons. Here are some of them.

The past can hurt. But you can either run from it or learn from it. – Rafiki, The Lion King. This simply means it is okay to make mistakes when it comes to your money. As long as you know the lesson that you need to learn from it and you will avoid committing the same mistakes again.

Venture outside your comfort zone. The rewards are worth it. – Rapunzel, Tangled. This is a great quote that you can relate to investing. The simple rule in investing is this: the higher the risk, the higher potential there is to earn more.

The future is worth it. All the pain. All the tears. The future is worth the fight. – Martian Manhunter, DC Universe. The lesson you can connect here is about saving – specifically retirement savings. Although your kids will have to sacrifice and let go of some expenses, it will all be worth it if they end up saving a lot for their retirement.

You control your destiny – you don’t need magic to do it. And there are no magical shortcuts to solving your problems. – Merida, Brave. Merida here is telling us that when it comes to your financial problems, the shortcut is not the best way to solve them. For instance, when it comes to debt, bankruptcy may be the fastest way to solve it, but it is not always the best way for you to get out of debt. If a solution seems too easy and too good to be true, then it probably is.

Fairy tales can come true. You gotta make them happen, it all depends on you. – Tiana, Princess and the Frog. This means if you want to be rich, you need to work hard for it. Those get-rich-quick schemes are rarely true. You need to work hard to become rich. It all depends on how much you want to improve your finances – if you want it bad enough, you will do your best to reach your goal.

Do not be fooled by its commonplace appearance. Like so many things, it is not what’s outside, but what is inside that counts. – Aladdin, Aladdin. This young thief can be quoted when you are trying to teach your child about financial decisions. Just because a lot of people are doing something, buying a product or something similar, it does not mean they should follow suit. Teach your child to trust their judgement and stay true to what they want out of their finances.

There are other quotes that you can use to help teach your kids important financial lessons. You know your child best so you are in the best position to figure out the best way to teach them these important concepts.

Consolidate Debt, Pay For A Wedding Or Buy An RV — Without Ever Seeing A Banker

College student catching money in the airSo you need a loan. You might need the money to consolidate debts, buy a boat or an RV, pay for a wedding or pay taxes. You could go to your bank but, well, you just hate the idea of facing that personal banker and groveling for money. The problem with getting a loan from a bank or even a credit union is that you need to have pretty good credit. If you don’t, you might be facing the embarrassment of being turned down. And who wants to be turned down by that young snip of a personal banker who stares at you as if you were a dead fish.


If you have less than stellar credit or just don’t want to have to go to a bank for a loan there’s a new way to get one called marketplace lending. Until a few months ago it was called peer-to-peer lending but then some of the big guys of finance like hedge funds got involved so if you are able to get one of these loans it probably won’t come from one of your peers.

Why a marketplace loan can be better

The prime reason why a marketplace loan can be better is because it’s likely to cost you less than if you were to go to a bank or even a credit union. There are currently marketplace lenders offering loans for as little as 4% interest. And these are fixed and not variable-rate loans. Their terms are generally three or five years depending on the amount you want to borrow and your credit worthiness.

A second reason why a market place loan can be better is that you may be able to get one even if you have poor credit. Bankers hate risk. If you have poor credit that’s a red flag – that you represent a risk. In comparison, marketplace lenders are often willing to take more of a risk on you. Of course, your loan will come with a higher interest rate – to offset that risk. Finally, marketplace loans are unsecured so that if you are able to get one you won’t be required to provide any collateral.

How marketplace loans work

There are now numerous marketplace lenders but the way things work is generally the same. You fill out a short application where you provide information such as your name, address, social security number, the amount of money you need and how you will use it. If your application is approved your loan request will be posted on the website’s platform for potential investors to review. In most cases it will stay there for 14 days. If your loan is totally funded before the 14 days, the money will be direct deposited to your checking account. If it is only partially funded before the end of the 14 days you may have the option of taking the lesser amount. If it’s not funded at all or for less than some required minimum such as 70%, then you’ll be out of luck. In this case, you may allowed to repost your request.

How much you could borrow

Again, all the marketplace lenders tend to provide loans ranging from $1000 to $32,000 – depending on the individual lender. The terms of these loans are almost always three years or five years. Your interest rate will depend on your credit worthiness. In most cases after you fill out an application you will be assigned a letter grade and your term and interest rate will depend on it. If you have good credit you’ll likely get an A, which means you’ll get the best interest rate offered by that lender and probably a three-year term. On the other hand, if your letter grade is a C or D your interest rate could be as high as 20% or even 30%.

How you repay marketplace loans

Every marketplace lender we’ve analyzed all require their loans to be repaid through automatic withdrawals. Some will allow payments to be made by check but generally charge an extra $15 per payment for this. There are also almost always late payment fees and in some cases origination fees that can vary from 1% to 5% of the amount of the loan. These origination fees are usually added onto the loan amount so that if you were to borrow $5000 with a 1% origination fee, your loan would actually be for $5050.

Man counting moneyThere are lots of options

Marketplace lending sort of exploded over the course of the past year Initially there were essentially three options –Lending Club, Prosper and Funding Circle. However, new marketplace lenders have been cropping up recently like crabgrass. In addition to the three noted above, there are Peerform, Upstart Lending, SoFi, CircleBack Lending, Pave, Borrowers First and probably others we simply don’t know about.

Lending Club, Prosper and some of the other marketplace lenders operate kind of like banks in that they will loan money to almost anyone for practically any purpose. Some of the other lenders tend to be more specialized. For example, SoFi provides loans only to graduates of Title IV universities that have reasonably good credit ratings. All of the loans made by Borrowers First come not from individual lenders but from just one bank so it says that it’s able to qualify people and grant loans much quicker than some of the comparable marketplace lenders. And Funding Circle provides only business loans up to $500,000.

The downside

While there are many advantages to marketplace lending versus traditional lending it’s important to understand that it’s relatively new and totally unregulated. Banks provide safety in the fact that most belong to the FDIC and provide the same consumer protection regulations as Truth in Lending. In comparison, marketplace lenders offer no consumer protection. None have failed to date but this doesn’t mean there couldn’t be a failure. And if one does occur nobody knows what will happen to either its lenders or borrowers.

5 Things You Need To Know About Medicare Before You Need Medicare

Happy old couple looking at a cameraMedicare has been a Godsend for many Americans. There are now roughly 52.3 million Americans on Medicare; 43.5 million due to age and another 8.8 million because of disability. Medicare beneficiaries averaged $11,901 in total benefits this past year of which $5045 was Part A, $5092 Part B and $1773 Part D (more about Parts A, B and D later).

If you don’t think Medicare can be incredibly helpful, consider this. Both my parents died after long hospital stays and it cost them (or us) practically nothing. I have a friend who had emergency surgery last year. The total bill for his surgery and hospital stay was north of $120,000. What did it cost him? A little over $1200.

If you haven’t noticed, the cost of medical care has skyrocketed over the past 10 years. Consumer Reports recently reported, “Person for person, health care in the U.S. costs about twice as much as it does in the rest of the developed world. In fact, if our $3 trillion health care sector were its own country, it would be the world’s fifth-largest economy. “

If you haven’t yet reached the age where you’re eligible for Medicare we don’t have to tell you how expensive health insurance can be. But even if you’re a number of years away from 65 there are some things you need to know about Medicare before you need it.

There are four parts

There are four parts to Medicare. Part A includes hospital insurance. Part B includes medical insurance. Part C is known as Medicare Advantage. It includes all the benefits and services of Parts A and B along with some additional benefits and is operated by Medicare-approved private insurance companies. Part D, which was introduced under President George W. Bush, added prescription drug coverage.

The eligibility requirements

To be eligible for the original Medicare (Parts A and B) you must be either a U.S. citizen or legal resident and age 65. You would also qualify if you have been entitled to Social Security disability for at least two years, have end-state renal disease, require transplant or dialysis and are currently insured.

When to enroll

If you receive Social Security, U.S. Civil Service or Railroad Retirement benefits you will be automatically enrolled in Medicare Part A. If not there is an important seven-month enrollment period that overlaps your 65th birthday. The way it works is that if you want immediate coverage you must apply three months before you turn 65. If you wait and apply during the four months following your 65th birthday, you won’t have coverage for one to three months after you enroll.

If you fail to enroll during the seven-month period you will be penalized unless you or your spouse has health insurance where you work. The way this penalty works is for every year you fail to sign up, your Part B premium will go up 10% … and that’s forever.

There is a special enrollment period if you or your spouse is over 65 and covered by health insurance at your workplace. If this is the case you could delay signing up. If you do enroll then Medicare becomes the second payer. And if you enroll in Part B you will receive practically no benefits. You may also lose your Medicap enrollment guarantee.

What it costs

Generally speaking there is no cost for Medicare Part A. If there is some reason why you don’t qualify you can buy Part A coverage for a premium.

If you are eligible for Part A you’re also eligible for Part B. However, it ‘s optional. Premiums for Part B coverage start at $104.90 and are based on your adjusted gross income. If you sign up for Part B it will be automatically deducted from your Social Security monthly payments. Part B covers physician and outpatient care, home health, medical supplies and preventive services. It requires a co-pay of 20% of the covered benefit.Medicare doesn’t pay for everything

As great as Medicare can be, Parts A and B won’t pay all your medical expenses because of their deductibles and co-pays. In the case of Part A (hospital) coverage, there is a cost or deductible of $1216 for the first 60 days. It then jumps to an additional $321.50 a day for days 61 through 90 and then $630 a day for hospital stays beyond that.

These deductibles and co-pays are reasons for the afore mentioned Medigap or Medicare Supplement Insurance, which is designed to fill the “gap” between what Medicare covers and its deductibles and co-pays. There are 10 standardized Medigap policies to choose from. As you might guess, the more these plans cover the more they cost. As an example of this, Medicare Supplement Insurance Plan “A” includes 100% of Parts A and B but not the Part B deductibles. Plan C covers 100% of Parts A and B and includes 100% of Part B deductibles. Plan G is sort of the Cadillac of these plans as it provides 100% coverage of all deductibles, co-pays, excess charges; hospice care and skilled nursing facility care coinsurance.

The paperwork

The one downside of Medicare coverage is the bills and it’s important to review them carefully. We know that when you see your charges there will be a lot of medical mumbo-jumbo thrown at you so you may have to get out your dictionary or call your healthcare provider for some explanations. As an example of this the term “transdermal Clonidine procedure” means you had a Clonidine patch for some period of time. If you don’t remember having a patch or if you don’t have hypertension (which is what Clonidine is meant to treat) you need to call and dispute this.

medical debtBe sure to pay you bills

As painful as it might be you need to pay your medical bills as quickly as you can. If you don’t, your healthcare provider(s) could turn them over to a bill collector and this is something you definitely don’t want to happen. If you can’t pay your bills you should contact your healthcare provider and ask about arranging a payment plan. Depending on your circumstances you might also be able to negotiate a reduction in you bills. Barring that you could put the charges on a credit card or cards or get a debt consolidation loan. While these alternatives might not seem very appealing they are definitely better than letting your medical bills go to a collection agency as this would not only have a bad effect on your life but would also severely damage your credit score.

7 Things Your Employer Won’t Tell You About Your 401(k) Plan

You have a job, you’re getting a steady paycheck and your company just gave you a form to sign up for something called a 401(k) plan. You give it a casual glance, see that you’d have to fund the account with money out of your paycheck, turn the form over and go on with your work.Video thumbnail for youtube video 6 Tips For Simplifying Your Financial Life

Bad mistake.

1. Sign up regardless

Some companies will match the money you put into your 401(k) account up to a certain percentage. Others won’t. If you work for a company that doesn’t provide matching dollars you should still sign up for a 401(k) account because it’s an almost painless way to get started on your retirement saving. And yes, the money will be taken out of your paycheck every pay period but you’re less likely to miss the money because you never actually see it. Even if you start out by saving just $15 or $25 out of every paycheck this will eventually add up to a fairly serious amount.

If your employer does match your contribution you absolutely must sign up for a 401(k)account or you’re basically throwing away free money. As an example of this let’s suppose you contribute $142 a month. If your employer matches to the maximum it will have added another $1704 by the end of a year.

2. Establish automatic increases

Experts at this sort of thing say that your 401(k) contribution plus whatever your company matches should add up to at least 15% of your annual income. If you don’t feel comfortable starting out at that level set up annual automatic increases. For example, you might increase your contribution by 1% a year. If you change your mind for some reason, you can always remove that automatic increase and there won’t be any penalty.

3. Take time to understand the alternatives

Most 401(k) plans limit your alternatives or how you can invest your money. For example, you might be limited to certain mutual funds, stocks and bonds. You may also be allowed to invest only a certain percentage of your contributions in stocks. Take some time to review your alternatives and to do some research. Make sure you understand the differences between stocks, mutual funds and bonds. Mutual funds can be a good choice because they spread the risk as you’re essentially investing in a number of companies. As a general these funds neither increase nor decrease in value as rapidly as do stocks. Bonds pay guaranteed annual dividends. This makes them a very stable investment. If you’ve ever heard the financial expression “coupon clippers” this refers to bonds because in some cases you literally clip a coupon each year and exchange it for cash.

4. Don’t be scared of stocks

You should put some of your money into stocks and some into mutual funds or bonds. If you’re in your 20s or early 30s you might want to heavy up on stocks. Yes, they will go up and down but you probably have close to 40 years before you retire and blue ribbon stocks always increase in value over the long term. Since you have a long-term before you retire don’t be afraid to take a risk at this time. But again do your homework. Choose stocks that are not likely to be terribly volatile. It might be okay to buy stock in some of the high-flying tech companies such as Google or Apple but you might want to balance that off by investing in companies like UPS, Honda and General Mills. These companies might not have the flashy track record of an Apple or a Facebook but they are good value stocks that are almost sure to steadily increase in value over the years to come.

5. Learn what it’s costing you

We don’t know of a single 401(k) plan where there is not an annual administrative fee charged. You should be able to see this on your account statement. However, there may also be fees based on the funds in which you invest. You probably won’t see this on your statement because it’s subtracted from your investment. You may have to call your plan administrator to learn what this fee or fees are. For example, you might find you’re being charged $3.17 for every $1000 you invest in a particular fund. That would be okay because it’s below the average 401(k) fund, which is $5.80 for every $1000 invested. If you find you’re paying more than the $5.80 you might want to take a hard look at the funds in which you’re investing.

6. Think before you leave

Most companies have what’s called a “vesting” date”. If you leave before this date you may lose your employer’s matching contribution. If you consider your current job to be just a steppingstone on your career path make sure to learn if there is a vesting date and when it is before you decide to leave. While this might not keep you cemented to your job it’s something valuable to know. After all, you might learn that if you were to stay just another month you’d get the full amount of your employer’s matching contribution.

7. You can take it with youstack of cash

There’s the old saying about money that “you can’t take it with you” when you die. However, in the case of a 401(k) you can take the money with you. However, don’t use it for a great island vacation or a new car. If you spend it before age 59 1/2 you will pay a tax penalty of 10%, plus you’ll have to pay regular income tax on the full amount. If your new employer offers a 401(k) plan your best option would be to roll over the money into it. If not, put it in an IRA. Alternately, you could leave the money where it is with your current employer where it will continue to grow although you can’t, of course, add any more money to it. Just make sure you keep some kind of a reminder so that 10 years from now you won’t have completely forgotten about that money. And yes, many people actually do this.

If you’d like to know more about 401(k) plans here’s a video courtesy of National Debt Relief with details about them and how employer matching works …

Tips For Everyone That Wants To Get Their Personal Finances Under Control

couple discussing finances

Couple calculating their budget

Are you tired of struggling to make ends meet? Do you constantly worry about running out of money before your next paycheck? Do you find yourself juggling bills to make sure that you at least get the important ones paid?

You don’t have to live like this.

There are simple things you could do to get your personal finances under control. Where it begins is understanding how much you spend versus how much you earn. If you’re having problems financially the root cause is because you’re spending more than you earn. So, the first thing you need to do is change your spending habits so that you are earning more than you spend. This may seem obvious but it’s the foundation of smart money management.

Make a budget

Step two on your road to getting your personal finances under control is to create a budget so that you can build your savings. A study by recently revealed that more than 60% of us don’t even have a couple of hundred bucks in an emergency fund. If this is true of you, you need to do better. The way you do it is by creating a monthly budget where you build up savings. Ideally you should have the equivalent of six months of your living expenses in savings. If this doesn’t feel realistic at least try for three months’ worth.

Create a plan

If you’re typical your most troublesome debts are probably unsecured ones such as credit card debts. If so, you need to make a plan to get them under control. One of the most popular ways to do this is by “snowballing” those debts. This is a strategy developed by Dave Ramsey and it’s worked for thousands of people. Just make a list of your debts ranging from the one with the lowest balance down the one with the largest. Then focus all of your efforts on paying off the debt with the lowest balance – while continuing to make at least the minimum payments on your other debts. You should be able to get that first debt paid off fairly quickly, which will free up money you can use to pay off the debt with the second smallest balance and so on.

hand with cashUse cash

You don’t need to close your credit card accounts but you should stick your credit cards away in a drawer somewhere and use cash for your everyday expenses. Now that you have a budget you should have a handle on your everyday spending. Calculate the amount you spend each month, divide it in half and then take that amount in cash when you are next paid. The odds are overwhelming that you’ll end up spending less because psychologically it’s just a lot harder to take out the cash to pay for something than to swipe a credit card. If there is some reason why you can’t use cash for your everyday expenses then at least use a debit card rather than a credit card. While it’s easier to swipe a debit card then to pay cash for something it will at least keep your spending in check because when you zero out your checking account that’s it. You just can’t spend anymore without going into overdraft, which is also a bad thing.

Work on your credit score

Having a low credit score will cost you money in the form of increased interest rates and higher insurance premiums. If you don’t know your credit score you need to learn what it is. You can get it free from any of the three credit reporting bureaus – Experian, TransUnion or Equifax – or from a site such as CreditKarma. You’ll probably find you have a low credit score of 600 or less. If this is the case you need to get to work improving it. Your credit score is made up of five components. The biggest, which accounts for 35% of your score, is your credit history and you can’t do anything about it. However, the second largest factor – credit utilization –, which accounts for 30% of your score – is something you could work on. The way it’s calculated is by dividing the amount of credit you’ve used by the total amount of credit you have available. For example, if you have total credit limits of $10,000 and have used up $5000 of it your credit utilization would be 50%, which is way too high. Do the math to see what’s your credit utilization ratio. If it’s higher than 30% this is something you could affect by paying down some of your debts or by getting an increase in your credit limits although this is much easier said than done.

Review your credit reports for errors

You can get your credit reports free once a year from the three credit bureaus or on the site Review your reports very carefully as they could contain errors that are dragging down your credit score. A study done last year by the Consumer Financial Protection Bureau found that at least 5% of us have errors in our credit reports that are dragging down our credit scores. And who knows? You might be one of that 5%. If you do find errors it’s important to dispute them by writing a letter to the appropriate credit bureau. If you have documentation supporting your claim the credit bureau must by law contact the institution that provided the information and ask that it be verified. If it can’t verify the information or if it fails to respond within 30 days the credit bureau is required to remove the item from your credit report – which could cause it to take a healthy bump up.

Find the negative items

The other thing to look for on your credit reports are negative items such as late payments, charge-offs and accounts that have gone to collection. Then do what you can about them. If you have late payments try to catch them up. Charged off accounts may have been charged off but you still owe the balances. If you pay them off it will improve your credit score. The same is true of accounts that have gone to collection. You will need to contact the debt collection agency to see what you can do to get the balance paid off or to negotiate a settlement.

Get some counseling

If all of this seems a bit overwhelming you might try consumer credit counseling. You should be able to find a credit counseling agency where you live or, failing that, on the Internet. In either case you’ll have a counselor who will review your finances and help you create a budget and a Debt Management Plan (DMP). Your counselor will present this plan to your creditors. If they accept the plan you won’t be required to pay them. Instead, you will send a check each month to the credit-counseling agency. You will have to give up any credit cards that are in your DMP and not take on any new debt until you complete your plan, which typically takes five years. However, at the end of those five years you would be debt-free and should have learned to be a very smart money manager.

If you’re unfamiliar with consumer credit counseling here’s a short video, courtesy of National Debt Relief, that explains what it is and how it works.

Different Ways Your Preteen Can Earn Money This Summer

smiling preteen with a garden rake

If you want your children to be financially literate after summer, you may want to encourage them to earn money during their free time. There are a lot of fun activities that can help them earn extra cash and if they choose the right one, it could prove to be quite educational too. Pointing out the things that they can buy with their own money might motivate your kids to go along with your idea.

Of course, you will encourage your children to earn an income – not just for the sake of having money to spend, but also to help them learn a thing or two about personal finances. The road to financial literacy is long and they will benefit a lot if they start their lessons at a young age.

When children are taught the right financial habits and concepts, they are more inclined to succeed in life. Developing the habits early on will help them make the right decisions at an early age. We all know that among the first financial decisions that your child will make involves student loans. If the right financial concepts and habits are instilled in them early on, they are bound to choose the right path when it comes to their student loans and other college expenses.

According to an article published on, teens are expected to be financially competent before they enter into college. The article cited a study done by the Organization for Economic Cooperation and Development that revealed how the US only ranked 9 out of 18 countries when it comes to teen financial literacy. Obviously, there is a lot of room for improvement – considering the fact that the student loan problem already reached its trillion mark.

Although efforts are being made to improve the curriculum to include personal finance lessons, we all know that a financially literate individual is shaped at home. That being said, you need to realize that motivating your children to earn money this summer can be a great step towards a successful financial future.

Encourage your kids to make money this summer

According to, financial decision making can be influenced by proper information, giving incentives for good decisions and allowing them to apply the information in real-life situations. When you are in your preteens, the best way to learn about money management is to start earning money.

The best age to encourage children to earn money is during their preteens or tweens. This is the age wherein they shift from being shy to becoming more independent. The idea of earning their own cash would appeal to them so convincing them to get a part time job would not be too hard to do. Of course, you want to make sure that the job they will choose will not suck the fun out of their summer break.

Here are a couple of options for your preteens to earn money this summer.

  • Babysitter. In truth, babysitting jobs for preteens have changed over the years. Parents will rarely leave their young ones with preteens and would opt for older babysitters. However, tweens can be hired to babysit just so the parents can do chores around the house. They simply have to keep the kids occupied to give the parents some peace and quiet for a few hours.
  • Senior helper. Another option for preteens is helping out the elderly. Some of these seniors simply need someone to be with them for a couple of hours so they will not feel alone.  Your child can help out around the house too like sweeping or putting some things around the house in order.
  • Dog walker. Some busy neighbors may be in need of someone to walk their dogs. This is a job that preteens can also opt for. It will only take a couple of hours to do this and can help tweens earn money easily.
  • Pet sitter. Speaking of animals, you can also encourage your kids to look after the pets of vacationing neighbors. Summer is a time to travel for some families and your kids can help look after any pets that will be left behind.
  • Gardener. This job involves simple tasks like mowing the lawn, trimming the bushes or keeping the garden clean. Cleaning the garden can be time consuming – something that some neighbors may not have time to do.
  • Car washer. Another job that your kids can opt for is washing cars. Have them go around the neighborhood to offer this service. It can be a once a week thing – depending on the needs on the person who owns the car.

Once your children starts earning money, it is your chance to teach them smart money management skills. They will be tempted to spend everything at once. You need to stop them from doing this by teaching them the right money habits.

Financial lessons children can learn while earning an income

In a report published on, it is revealed that a lot of kids do not know enough about money management. At least, it is not enough to make them responsible money managers when they grow up.

Since you have started by encouraging them to earn money during summer, you may want to continue by teaching them a couple of things about personal finances.

Here are a couple of lessons that you may want to discuss with them.

  • Value of money. By earning money on their own, you are teaching your children the value of money. They now understand that money do not grow on trees. You need to work hard to earn them. That should keep them from being too insensitive when asking money from you.
  • Budgeting. You may want to give them a lesson or two about budgeting. In case they want to stop working for the summer, you can teach them how to stretch their money so it will last until before school starts.
  • Saving. Instead of spending their hard earned money, you can encourage your kids to save. This is a great lesson for those who have recurring jobs. When they get their first paycheck, encourage your kids to save it so they can buy something more expensive at the end of summer. Or you can encourage them to save the whole paycheck for next year so they can go on a vacation or something.
  • Investing. As you are teaching them about saving, you may want to explain a bit about investing. For instance, you can discuss with them the value of saving up for their college fund. To maximize the growth of the money, discuss with them how investing can help increase their money in ways that a savings account cannot.
  • Smart spending. In case your child wants to spend their money, teach them how to do so in a smart way. While saving is a great idea, your kids deserve to enjoy the money they earned. Let them decide but encourage them to spend their money on things that will enrich their lives even further.

Take note that there are several options to make financial lessons appealing to kids. It does not have to be boring. In fact, there are ways to teach financial lessons through cartoon shows. If your child is interested in sports, you can relate financial concepts to that too. Or you can point out prominent individuals who have made good decisions with their money. You can also discuss individuals who have made mistakes. It really depends on what you think your kid can relate to.

Here is a video that will give you tips on how to teach kids about personal finances.

FTC Wants To Help You Battle Identity Theft

identity theft sign

identity theft sign illustration design over white

Identity theft continues to be a problem in our society today. This crime happens when someone uses your identity without authorization so they can buy something in credit under your name. That is how they rob from you.

When you become a victim of identity fraud, that is a clear sign that you need to implement financial management. If you are a good manager of your personal finances, it would be very hard to rob you. Thieves will find it hard to get your personal information so they can rob from you.

Some people are in deep financial trouble not because they were irresponsible with their money. Some of them had the misfortune of becoming victims of identity theft. Although they were careful with their purchases, they were unaware that someone already got their information and were opening new credit accounts under their name. When the time came for these victims to borrow money, they are surprised to find out that they are disapproved because someone loaned an amount under their name and did not pay it back. If the victim cannot prove they are innocent, they will end up paying for the money and all the penalties and interest charges associated with it.

According to a press release published on, identity theft was the top consumer complaint in 2014 – at least those filed with the Federal Trade Commission. This was revealed in  the 2014 Consumer Sentinel Network Data Book. It was 13% of the overall complaints filed for the whole year.

Given this information and the seemingly growing threat of this crime prompted the FTC to create a tool that will educate consumers in case they face this in their life.

FTC released a tool to help victims of fraud

The tool that was launched recently is at This website shows the step by step instructions for those who are already victims of identity theft. Although you can protect yourself from this type of crime, there are thieves who are just too smart and good at what they do. In the event that you do end up becoming a victim of this crime, your next steps will determine the extent of the damage that will be done to your finances.

This is what the website wishes to solve. Based on the site, these are the things that you need to do.

What To Do Right Away

As soon as you find out that someone took your identity and is using it to steal from you, it is important to inform the company involved. For instance, if your credit card was stolen, you need to get in touch with the credit card company immediately. Let them know that any transaction done after the time the crime was committed should be taken with caution. You can ask them to freeze the accounts and ask for more identification before any transaction is to be completed. You also have to change any passwords, PIN or other security questions associated with your account.

The credit bureaus should also be alerted after. You need to raise a fraud alert on the stolen account. You only have to get in touch with one of the three credit bureaus (Equifax, TransUnion and Experian). The one you will call will tell the other two on your behalf. This fraud alert will be raised so that everytime someone uses your account, they will be asked for extra identification. That means only you can use it.

The identity theft incident should also be reported to the FTC so you can get an FTC Identity Theft Affidavit. This is one of the documents that you need to submit to the local authorities when you report the crime.

What To Do Next.

Once you have accomplished the reports needed, you need to start repairing the damage – if there is any. Check if there are any new accounts opened under your name. You need to close these. Just call the companies involved and tell them that you were a victim of identity theft and that you want to close the new accounts. The company should send you a letter confirming that the fraudulent account was closed. Make sure you keep this document in case a transaction appears in your credit report in the future.

You should also check your existing accounts in case there are charges that you did not make. You need to dispute these transactions so they will be removed from your credit report. Again, make sure the companies will send you a letter proving that the charges have been removed.

The actions that you will do is to help you correct any information in your credit report.

This website is a great way for you to know what to do about identity theft should you become a victim. Again, this crime is only destructive if you fail to act on it immediately. If you can raise the fraud alert or freeze your accounts immediately, the perpetrator will be unable to do harm to your finances or credit report.

This site also has information that you can follow in case you are a victim of specific identity theft like your tax identification, Social Security, etc. For child or medical identity theft, there are certain things that you need to do so it pays to take a look at this site. Regardless if you are a victim or not, check out this site and try to memorize what has to be done so you will know what to do in case you become a victim of identity theft.

Tips to keep yourself from being a victim of identity fraud

According to a study published on, there is a new victim of identity theft every two seconds. This study was done by Javelin Strategy and Research. According to the published report, victims of this crime does not only bear the financial damages. There are also emotional effects after becoming a victim of identity fraud. There is an emotional roller coaster to be dealt with while you are trying to solve the crime. And of course, the paranoia will never really leave you – even years after the incident.

This should give you more motivation to make sure that this will not happen to you. There are critical things that you need to know about identity theft so you can avoid it. Here are some tips that you need to implement in your life.

  • Always check your credit report. You are entitled to three free reports each year – one from the three major credit bureaus. All you have to do is to download a copy from the Free Annual Credit Report website. You can get one copy every four months so you do not have to spend to look at your credit report.
  • Be cautious when entering your personal and financial details online. Make sure that the website you are accessing is secure. There are logos to look at to make sure it is a trustworthy site.
  • Avoid accessing your financial records or entering your PIN or password using a public wifi. It is very easy to intercept your information if you access it through a public wifi.
  • Keep the antivirus program of your computer, laptop and other devices updated. Malwares can steal your information. Make sure your electronic devices are protected at all times. If you have to invest in a software, then do just that.
  • Stay informed. Lastly, you need to always keep yourself informed. Try to find out the new scams and techniques of criminals to get your information. Also, be aware of what you need to do in case you become a victim of identity theft.

In the end, vigilance is the best way to be protect yourself from the threat of identity theft. Although you need to trust others, it is important to know whom you should put your trust to.

What’s Better A Bigger Paycheck Or A Big Tax Refund?

Now that we have April 15 a few weeks behind us is a good time to think about the coming tax year and whether you want a bigger paycheck or a big refund. While the answer to this question may seem easy it’s actually more critical than you could guess. While the majority of us elect to get a nice check from the government in April the fact is that a huge tax refund might not really be so terrific. In fact, some experts say it’s better to give up that big refund in return for getting additional money in each paycheck as this would give you more control in maximizing your income. Of course, there are other financial gurus who say that this is an idealistic approach to saving. The harsh reality is that some of us, including you, may not be trusted to put the extra money in a savings or investment account instead of spending it.Prepare money to pay tax for the income tax returns

Why you should have more money in your paychecks

There are literally dozens of books about personal finance, including the number one best-selling “Rich Dad, Poor Dad,” that leave no question about it. You should take more money in your paychecks and not a bigger tax refund. The author of “Rich Dad, Poor Dad”, Robert Kiyosaki, explains that for every dollar we get we can either spend it or invest it. He says, “I’m not one to advocate living below your means, but suggest, instead, that we ask ourselves ‘how can I expect to expand my means?’ One way to do this is to focus on investing. And even small amounts on a regular basis will put you on the road to having your money work for you.” In addition, if you get more money throughout the year in your paychecks this offers the opportunity to create an emergency fund if you don’t already have one. That way you have cash available to handle unanticipated expenses instead of having to put it on a credit card, which probably means adding to your debt.

Another way to look at this is that if you get a large refund check it means that you’ve paid to much in taxes to the IRS. This means you’ve basically been giving it a loan for a year interest-free. Since our government won’t ever loan you money for free why should you lend it money for free?

The case for getting a big refund

We suppose that financial experts just tend to disagree on some things. This is because in many cases there is just no clear-cut answer and this is one of them. For example, there is also a school of financial experts that believe it’s better to get a nice refund in April. The reason for this according to one expert is that it’s best to get a big chunk of money at the end of the year. However, if this were an ideal world you would bank the money you received during the year in your paychecks. Unfortunately, nine out of 10 times what people do is end up spending the money. These experts say that if you get a big tax refund you might be prompted to do something immediately and save or invest the money or use it to pay off a debt. If you have your finances in pretty good order there is just no good reason to give the government an interest-free loan by letting it keep a part of your income throughout the year. Of course, if you’re short on financial discipline and were to have more taxes taken out of each paycheck then necessary you would be required to live on less money but would then have a windfall in April that you could ideally deposit into savings or investments. On the other hand, if you don’t have much in the way of financial discipline you could end up spending that tax refund on a new HDTV instead of investing it in savings.

Either one can work

It’s not bad if you want to get a big refund in April so long as you understand you’re giving the IRS a loan interest-free and that you are a responsible person and will make a good decision with the way you use that big tax refund. It’s also not bad to take the money during the year and end up with a large tax bill so long you’ve planned for it and have been earning interest on the money. On the other hand, it can be a type of forced savings account when you have the government take out more money than necessary so that you can get a big tax refund. This can be a good plan for people who need an extra push to save or invest.

Today’s interest rates

There was a time not long ago when it was best to get more money in your paycheck and put it in a savings account where you could collect up to 5% interest. However, these days when experts tell you it’s best to get the extra money in your paycheck so you could save it they neglect to say that you’ll get basically nothing in most savings accounts that pay interest. So, a case could be made that unless you have an investment account that’s returning 5% or more you might just as well get all that money together in the form of a big refund where you could then invest it in something that would get you a decent return.

Building a nest eggEgg labeled 401k in nest as next egg

There’s no doubt about the fact that the logical thing to do is give up that large tax refund and get control of your money. But then you may not always be logical. Given that there are few options today to maximize your savings, plus the fact that you may not be saving hardly anything at all, then a nice large check from the IRS might be your only chance to build a nest egg. And no, the government isn’t going to pay you anything on that “loan” but it’s also not going to pay you anything on your savings. Until interest rates change don’t feel bad about getting a big refund this year. Just make sure you save some of it.

The case for using your refund to pay off credit card debt

One of the best ways to use that big refund check is to pay down or pay off your credit card debts, especially if you’re carrying a large balance. Most credit card interest rates these days are at 15% or higher. For the sake of an example let’s suppose you owed $5000 at 15% and your minimum monthly payment was $112.50. If this were the case, it would take you 266 months to pay off the $5000 and would cost you $5729 in interest – or more than the actual balance. Use your tax refund to pay off this debt and you would not only save $112.50 a month, you would save $5729 in interest – which is a lot more than you could ever earn by saving or investing the money.

If  credit card debt is a big problem for you and you can’t pay if off with a tax refund there are some other good ways to take control of it. Here’s a short video, courtesy of National Debt Relief, that explains three of them.

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