Moneycashfinance

A 401k VS. an IRA

If you are faced with a situation where you are choosing between a 401K and a IRA program it is best to compare the pros and cons of each plan and then see which will help you achieve your goals and objectives. 

 Looking first at the 401K program we see that this plan allows you to make higher contributions not to mention some employers will have matching percentages up to a certain amount, which reduces your taxable income.  If for example you are contributing 6% of your gross income to the plan then some employers may match your funds up to 3%.  Normally your investment options are limited to those provided by the plan.

If you decide upon the IRA you are going to find that your investment possibilities are virtually unlimited.  The downside is that you are limited to an annual contribution of $2,000; this small amount may not reduce your taxes depending on your own circumstance and various situations. Unlike the 401k retirement plan any contributions made to the IRA do not have any type of match whatsoever.  Some of the professionals say you should try to implement both plans but it all depends on what you are trying to accomplish.

KEOGH Plans

Keogh plans are for those individuals that have the entrepreneurial spirit and work for themselves.  This type of plan allows you to make tax-deductible contributions as much as 25% depending on the situation, of your net income not to exceed $30,000 per year.  Any earnings realized from this plan are tax deferred.  Various Keogh plans will decide exactly how much you can contribute. With some plans you have to contribute each year with others it is completely optional.  Also if you have employees working for you as a business owner then you must make or contribute the same percentage for them that you make for yourself.

The average Keogh plan is really difficult to set up and arrange.   It would probably be a good idea to get some professional help just to make sure you don't run into any problems later on down the line.  When it comes to your money and your financial security it is always best to make sure everything is handled exactly as it should be.  No matter what plan you have in place it a good idea to do the things necessary to secure your financial future and make sure your money continuously and consistently grows.

Sincerely,

Mel Richardson

P.O. Box 538

Jessup, Maryland 20794

Melvin21@msn.com

Take a look at these Financial Sites from Kiplingers - Washington Post- They could save you money

Are you looking for creative ways to start saving money?  Then you may want to consider SmartyPig.com. According to the Washington Post personal finance section this is a free site which helps you set up an online FDIC-insured savings account at Iowa’s West Bank.  The account is to be earmarked for a specific goal.

 

You simply tell SmartyPig how much you need to save and when you need the money and it will suggest a monthly contribution to be deducted from your checking account. 

 

You can make your account public so family and friends can chip in toward you goal.   Smartypig is offering a rate of 3.9 percent annual yield on the account.  SmartyPig has partnered with 25 retailers including Amazon.com and Macy’s where you can redeem your savings for a gift card with a bonus of up to 5 percent. 

 

To start an account you must commit to a minimum goal of $250 and a $25 deposit.  Your timetable must be at least three months and no longer than 50 years. 

 

Redeem funds with a gift card or debit card or transfer the money back to your checking account.

 

HERE ARE SOME OTHER WEBSITES FOR FINANCIAL HELP

These sites will provide you with some great information and help you save money in a variety of categories.   All of the information came from today’s edition of the Washington Post Personal Finance Kiplinger Section.

These are Kiplinger’s picks for 2008 best investing and financial services web sites. 

Bonds:  Investinginbonds.com.   A one stop shop, this free site provides historical prices and call information for specific issues, plus a wealth of market data.

Stocks and funds:   Morningstar.com.  For copious commentary and statistics on both stocks and fund, this site is hart to top. However a premium membership will cost $159 per year.

Credit Reports:  Annual CreditReport.com.  This is the official web site where you can get a free report from each of the three credit bureaus once a year.

 

Credit Score:  myFICO.com.  Buy your score from one credit bureau for $15.95 or from all three for $47.85.  Plus, get advice on how to raise your score, and use the site’s EZ error Correct system to dispute mistakes.

 

Tax calculator:  Kiplinger.com.  If you got a tax refund, give yourself a pay raise by using the easy tax-withholding calculator (Kiplinger.com/tools/withholding).

 

Social Security calculator:  www.ssa.gov/estimator.  Type your name, social security number, birth date, birthplace and mother’s name into this secure site, and it will show your estimated benefits based on your up-to-date earnings record.

 

Health Insurance:  eHealthInsurance.com.

Provides immediate quotes for most major health insurers and compares policies.  For personalized attention, call 800-977-8860 or find a local broker through www.nahu.org. 

Health insurance:   coverageforall.org.  Offers strategies for finding coverage, especially for people with medical conditions or modest incomes.

 

Medicare:  Medicare.gov.  Chock-full of detailed information about Medicare, with excellent tools to help you pick the best Part D plan or Medicare Advantage policy based on your specific medications and health condition.

Life Insurance:  AccuQuote.com.  An easy way to get term-insurance rates from many of  the top companies.  Call 800-442-9899 for personalized help, especially if you have a medical condition.

 

Life insurance:  Insure.com.  Use this site to see the detailed criteria you must meet to qualify for each company’s term-insurance rates.

 

Auto insurance:  InsWeb.com.  Lets you compare price quotes from several major insurers (the number varies by state).  Also a good resource for money-saving tips on every kind of insurance.  For personal help, contact an agent through the Independent Insurance Agents & Brokers of America.

 

Homeowners Insurance:  AccuCoverage.com.  For a fee of $7.95, you can calculate how much coverage you need.  Plug in data about your home’s age, building materials and other details, and get an immediate estimate of its replacement cost.

 

Customer Service:  Naic.org/cis.  The National Association of Insurance Commissioners maintains complaint records for each insurer in every state.  Focus on the complaint ratio:  the number of complaints for every dollar the insurer collects in premiums.

 

To Your Great Success

 

Mel Richardson

Melvin21@msn.com

216-956-3640

 

Tax Issues Regarding your Investments

A lot of people are doing some different things with their investments and stocks and bonds and just reviewing their portfolios in general.  Here are some key facts you should be aware of.

• If you earn dividends on stocks or any capital gain or profit they are taxable in the year in which the trade takes place unless the stock was purchased as a part of an IRA or qualified retirement plan
• Your dividends are taxed as regular income, but long-term capital gains will be taxed at a maximum federal rate of 20% if you are in the 28% tax bracket or higher; they are taxed at 10% if you are in the 15% bracket. 
• If you are in the 15% bracket and realize a capital gain on an investment you have had five years or longer then your gain is taxed at 18%.

To Your Great Success.

Mel Richardson

P.O. Box 538

Jessus, Maryland 20794

Double Your Profits in 6 Months or Less

I was able to read a book by Bob Fifer called, “Double Your Profits in 6 months or less”.  This book outlines 78 different ways to cut costs, increase sales and improve your bottom line. 

There were so many outstanding concepts and strategies that I am going to review a lot of those principles over the next several posts.

The first step asks a question, who should read this book?  This book should be read by anyone who cares about the profits of their business.  Wouldn’t it be great if everyone had the mindset of an owner?  Cutting costs would then become second nature.  Consider the plight of a landlord who is plagued month after month with high water bills.  How does he get the tenants to think as he would, an owner?  Simple make the tenants responsible for paying the water bill and just watch the change in mindset and the decrease in the water bill. 

Mr. Fifer says doubling your profits requires a leader who is focused, consistent, tough and fair.  The leader must also be willing to stretch himself or herself and other’s in the organization to be different and better than the status quo.

Step 3.  The next step is setting the standard.  No matter what type of organization you have there needs to be a clear, single over-riding goal.  For a lot of companies this is called their mission statement.  The number one goal of the organization should be to become the best in whatever niche you serve.  This is the motivator for a lot of dedicated employees when they understand this to be the mission of the organization.  It creates excitement and enthusiasm.

Nothing could be more demoralizing than coming to work day after day and just going through the motions and picking up a pay check.  There needs to be meaningful work that is also challenging.

I’ll explore some more of these principles in future posts.

To summarize the first three steps are

1.       Who should read this book

2.       Your own commitment to profits

3.       Setting the standard

To Your Great Success

   Mel Richardson

How Far and Wide Should the Bailout Pendulum Swing?

I am confused about some things concerning the bailout.  If you are reading this perhaps you can help me to understand.  It would appear that the bailout put into place by the Federal Reserve is in full force.  My question is where is the accountability?  From what I understand the banks that were receiving the funds are not even using the money for what it was intended for and that is to start lending to consumers and business and replenish their reserves.

 

Instead we see these banks taking the money and using it to purchase other banks, some of which are not even in financial trouble.  No one is holding them accountable in terms of how they are using the money.  Were the banks given some direction on how they were to use the funds?

The Treasury Department has put together a $40 billion program to help delinquent customers avoid foreclosure.  Financially sound mortgage holders are now wondering if they should be a part of this bail out program because they are upside down in their mortgages because, through no fault of their own, the value has decreased on homes which now have balances higher than the values.  Nevertheless they are up to date with their mortgage payments.  Under the HOPE program started by the FHA on Ocgtober 1, 2008, homeowners can have 90% of their home value refinanced which automatically gives them 10% equity.

So if someone has a home valued at $100,000 but he/she owes $150,000 then $90,000 will be refinanced giving them $10,000 of equity while principle in the amount of $60,000 is wiped off the books.

One Guy according to the New York Times is wondering why he should continue to pay on his mortgage balance of $500,000 but the property is only worth $350,000.  He has a lot to gain by purposely defaulting on his mortgage.

Let’s see:    $350,000 X 90%  =  $315,000.  

$500,000 - $315,000 = $185,000

That amounts to $185,000 reductions in the principle balance owed to the mortgage holder.

Let’s look at some of the other devastating effects of the mortgage crisis.  Take a look at the following list:

·         Bankruptcy

·         Loss of jobs

·         Ruined credit history

·         Loss of life savings

·         Emotional trauma

·         Depleted 401K

·         Extended retirement date

·         Higher insurance premium

·         Affect ability to get job

·         Legal action

·         Judgments

Perhaps there should be a bailout program in place to remedy some of the things that the average consumer has had to experience.  There are some who now have to file bankruptcy through no fault of their own.  Perhaps they lost their job and have no way to pay their bills now. 

Hundreds and thousands of people will now have their credit ruined which results in their inability to get credit in the future, whenever the credit markets loosen their reins.  If they do in fact receive credit it will be at a higher cost.

Of course there will be individuals that will not be rejected for job offers because of the trauma inflicted on their credit files.  Others will have to pay higher premiums on their auto insurance.  A lot of insurance companies now base your premiums on the status of your credit file along with other factors.

People who were near retirement probably cannot retire now due to their 401k being depleted.  Of course it would be difficult to determine those things legitimately caused by the mortgage crisis but certainly there should be more accountability for the institutions that are misusing the bail out dollars.

What do you think?

To Your Success

 

Mel Richardson

P.O. Box 538

Jessup, Maryland 20794

Melvin21@ms n.com

 

 

 

 

 

Recession-Proof Jobs for a Tough Market

I was reading an article in the Washington Post  on Sunday called, “Recession-Proof Jobs for a Tough Market”.  The article was by Michelle Singletary and she was providing a mini review along with commentary  about a book called, “150  Best Recession-Proof Jobs”. (Jist Publishing $16.95). 

Now I have not read the book but according to the author the book is supposed to help you reduce your chances of being laid off in the event of an economic downturn as well as increase your chances of bouncing back if you are laid off.   

Out of the 150 jobs the No.1 spot on the list recession proof jobs were computer systems analysts.  Their annual salary on average is $70,000 per year.  The next two types of recession proof jobs were also in the field of computer technology.  Coming in at fifth were postsecondary teachers.

The book goes on to break down job rankings by pay, growth and number of openings.  You can also find a list of the 40 best paying recession-proof careers.

As I was reading the article I could not help but wonder where are debt collectors or bill collectors on that list of 150?  The worse the economy gets the more they are in demand. People are loosing their homes by way of foreclosure at a record pace.  The next stage in the financial crisis is going to be credit cards because of the high unemployment rate, which is approximately 6.1%.  Credit card companies are writing off billions of dollars in credit card debt.

An organization will always need someone to call on their past due debts as a friendly reminder or with a more stern approach for those that fall really behind.  Then you have debt collectors at the next level or those that work for collection agencies.  Certainly they will always be needed.

I guess I will need to purchase the book to see where they fall on the list.

To Your Great Success

Mel Richardson

P.O. Box 538

Jessup, Maryland 20794

Melvin21@msn.com

301-568-0174