Monday, December 31, 2012
As of late, my distrust of the stock market and feelings of wariness have grown. When I hear investment advisors immediately jump on IRAs and 401(k)s as their main form of retirement investment, and tell people to max out their contributions to maximize tax savings, it reminds of the good ‘ol days when the housing market was all the rage. “Buy a home. You have to buy a home. It’s such a great investment!” I kept hearing.
I’m of the opinion that if I hear that everyone is doing or advocating one thing, it’s probably best to step back, re-evaluate and maybe even do the opposite.
If you think I’m a little overly cautious, I’m providing a link here to a great article on NPR taken from the Associated Press about the current state of the stock market to back up what I’m saying. It’s not just me who is concerned.
Friday, December 21, 2012
Here are some of the things that having that lifetime income number helps me do using numbers and examples that don't pertain to my actual financial situation.
First off, here’s a quick review of my previous article and the equation I used to calculate my lifetime income number, using $20,000 (this isn’t my expense number, but it works for this example) as my current annual expense number and 3 percent as my annual lifestyle inflation number over the next 45 years (my life expectancy):
“Personally, I make this calculation by way of a financial calculator that I keep handy on my desk, but it can also easily be done by way of a future value online calculator, by inputting:
Present value: $20,000
% Change per time period: 3
Time periods: 45
Future value: $75,631.92
Determining Retirement Age
After seeing my income needs and Social Security benefits, I can begin to put a finer point to my retirement age number. Knowing that if I wait until age 70 to retire, that my monthly payments might be $2,000 instead of $1,500, I could wait to take my benefits in order to bolster my retirement income. Or working an extra five years or so could provide me with enough money to increase my income from retirement savings. If nothing else, it might tell me if I need to mix some amount of income earning work into my retirement to supplement Social Security and retirement savings income streams.
Sunday, December 16, 2012
Start Early and with Variety
But just starting early isn’t where I leave my New Year’s resolution preparation. Instead, I consider multiple resolutions that are both short and long-term in nature. Meeting a few resolutions shortly into the new year can provide the motivation to maintain interest, keep pushing to meet my longer-term resolutions throughout the rest of the year, and maybe even set more goals.
Make Resolutions Lofty, Yet Realistic
While I might use certain short-term, simpler-to-meet type resolutions to push myself to attain various goals during the year, I don’t make the majority of my resolutions too easy to achieve. Instead, I like to set certain lofty, yet realistic resolutions to push myself.
What’s the point of setting goals, if they don’t push me to achieve?
Therefore, I utilize a combination of easily met goals, paired with loftier financial expectations to drive me in meeting a tiered goal structure. For example, cutting expenses a little each month helps drive me toward an overall 10 percent expense reduction goal year-over-year, or increasing productivity by an extra 5 percent each week can help me achieve a goal of producing an overall increase in profits for the year of 20 percent.
Make Resolutions that are Pertinent to My Financial Life
Tuesday, December 11, 2012
Hi there readers! Wanted to let you all know that I've started a new blog -- Simple Man's Money -- focused on simple saving tips, tactics, and techniques that I use -- or at least attempt to use -- to maintain a simple, low-cost lifestyle. Feel free to pop by and take a look. Don't forget to add yourself as a follower while there!
Monday, December 10, 2012
Of course it was this year that my wife got a job that required a roundtrip commute of 50 miles each day. And of course, it was this year that gas prices in the Chicagoland area easily exceeded $4 a gallon.
This means that we paid at total of about $5,500 this year for a vehicle that we own outright. It’s kind of a shocking total considering that we didn’t even have to make a single payment on it, and it’s a good example of just how costly vehicle ownership can be.
Sunday, December 2, 2012
Even though I’m a good saver and I could handle the upkeep of our property on my own, having a set $300 monthly fee to pay to cover items such as common insurance, water/sewer/trash fees, exterior maintenance, snow removal, and landscaping, as well as fund a condo reserve account, is great for a person like me, here’s why.
Proper Insurance Coverage
Now I’m not one to scrimp on homeowners insurance, but I’m not going to sink a ton of money into over-insuring a property. I’m more apt to get the standard coverage and be done with it. This means that should a damaging event occur to the property, we’d be covered, but not necessarily covered to the extent of certain other homeowners.
With our condo association though, I’m well covered in this area. With the combination of many individual owners throughout our condo building, we have a much higher liability limit that most of us would likely assume on our own, and this is just made a portion of our flat monthly association fee.
Preventative Maintenance and Upkeep
While in our previous, single-family home, I did pretty well at maintaining our property through a lot of do-it-yourself type projects, it’s kind of nice to have someone take care of many such aspects of home maintenance for us. It was always hard for me to take on preventative maintenance work in our previous home. I hated spending money on things if they were still working, being more of the mindset of waiting (if possible) until they broke completely to fix them.
However, such an attitude isn’t always the best one to take, and while it can save money in the near-term, it can end up costing money in the long-term. This is why it’s nice to have regular maintenance projects such as tuckpointing, drain rodding, door repairs, cleaning of public areas, landscaping, and similar items that I’m forced to pay for whether I would have done them myself or not, thus maintaining the appearance and quality of our living location without forcing me to make decisions upon what I’m going to fix, when, and how much I’m willing to pay to do so.
Even when I set money aside for a repair or a repair fund, to me, it’s still like it’s saved money and part of my asset total, so it doesn’t make it any easier when I eventually have to spend that money on repairs. This is why I really like paying our association fee. It takes that ability to choose whether or not I want to spend the money on repair work out of the equation, plus it acts as a communal pot into which we can all pay to fund larger projects down the road.
This means that when it comes time for new windows, a new roof, or similar big-ticket repairs, I won’t be left “going cheap” on the cost of the repairs and getting a lousy product in return. And since our association fee goes to fund a general reserve for such items, it makes for great peace of mind knowing that by the end of 2013, that fund is projected to be at nearly $200,000, which can go a long way in funding repair work for which I won’t have to pay any additional funds.