The post How to Plan for Retirement When You are In Your 30s appeared first on Penny Pinchin' Mom.
For many of us, our 30s are a dynamic time in life. During these busy years, jobs turn into careers and relationships are solidified by marriage or transformed by children.Â Most people are also in their mid-30s when they purchase their first home.Â While these are all expensive items, one thing you should not overlook is saving for retirement.
Retirement seems a long way off when you are 30, but is much closer when you turn 39.Â The sooner you start saving and investing for your golden years, the more money you will have when the time comes. And, if you work it right, you may even be able to start your retirement earlier than expected.
Thirty-three percent of people ages 30 to 49 years old donât have a retirement account. YIKES!! If youâre within this one-third of people, and in your 30s, you need to make retirement savings a priority.
If you aren’t in your 30s, these articles can help with retirement planning:
Retirement In Your 20s: What To Do NOW To Get On the Right Savings Path
Saving for Retirement in Your 40s
In Your 50s? There is Still Time to Save for Retirement
Why It’s Not Too Late to Save for Retirement in Your 60s
STRATEGIES TO SAVE FOR RETIREMENT IN YOUR 30s
Invest in your 401(k)
If your company offers retirement savings through a 401(k), start by discussing your options with someone in human resources. They can get you set up with a plan that works well with your income and goals.
If you currently contribute to your company’s plan, make sure you are making the maximum contribution that they may match.Â For example, if they match 25% of what you contribute, up to 4% of your contributions, that is FREE MONEY!Â Make sure your contribution is 4% as they will give you 1% for free – for a total 5% contribution.
As you get a raise, continue to increase your contribution by 1% annually.Â You will not miss the money and will be on target for achieving your savings goals.
Open an IRA
Another retirement vehicle to consider is an IRA.Â An Individual Retirement Account (IRA) is an easy way to add more money to your retirement savings.Â You can contribute up to $5,500 (subject to age and income limitations) and the contributions may be tax deductible (see your CPA).
Visit with a Financial Planner
Financial Planners are a must when you have investments and are saving for retirement.Â They analyze and help ensure you are on the right path to achieving your financial goals.Â They don’t usually charge for their services (if you invest with them) and can tailor a plan just for you.
Don’t change jobs
Sometimes it is tempting to change jobs because it looks better.Â But, keep in mind that you will need to start over with service requirements and contributions to a retirement plan.Â The company may also have a plan that is not nearly as robust as the one through your current employer, making you miss out on additional savings.
Diversify your investments
As you get older, the level of risk you can, or are willing to take, changes.Â You can be much more aggressive in your 20s and early 30s, but as you approach your 40s, you may want to make adjustments.Â Ask your investment or financial advisor about changes you should make each year.
FINANCIAL GOALS IN YOUR 30s
In addition to saving for retirement, there are goals you may want to achieve and financial rules you should follow once you hit your 30s.
Make sure you have a written budget you follow every month.Â You should account for every penny you make — in essence giving every penny a job.Â Don’t forget to include items such as additional retirement and emergency fund savings accounts.
Watch your Credit Report and Score
Each year, check your credit report for free at AnnualCreditReport (this is the free site mandated by the government and the only one you should use).Â Check for errors such as items that should have been discharged, accounts you did not open and other issues so you can submit them for correction.
You should also know your credit score.Â You can use a free site such as Credit Sesame to check your credit score, but keep in mind it is your vantage score (so not your true score – but it is pretty accurate). If you want to know your actual credit score, MyFico.com offers this and access to your credit reports from all agencies for a reasonable fee.
Save at least six months of income
Experts have always said you should save three months of your income in case of an emergency.Â However, if we learned anything during the last recession, that isn’t quite enough. If you are single, work on saving at least six months of income and if you have a family, aim for nine.Â Â You can increase your savings in many ways, such as eating out less, selling items and even getting a second job.
Have a will and health care directives
It is something none of us wants to think about, but it is important to not only have a will, but also health care directives as well.Â For around $70 – $90 you can create one at LegalZoom. However, if your situatio is more complex, or you are not comfortable creating one yourself, it is important to reach out to an attorney who specializes in estate planning.
Check your life insurance
If you have kids, you need life insurance.Â And, it is also wise to purchase policies on them as well.Â If something happens to any of you, funeral expenses alone can be a financial burden.Â Then, if there are medical expenses you need to pay for on top of burial costs, it can cause a lot of financial strain for your loved ones.
Invest Time, Too
A 2014 survey conducted by Charles Schwab, found that only 11 percent of workers spent five hours or more assessing their 401(k) investment options. This is far less time than how long many of us spend researching a new car or a vacation! If the idea of investments and the terminology attached overwhelms, you might consider taking a course. Â It might be good to think about hiring someone to help.
A trained professional can ensure you are meeting your retirement goals. When you work with a financial planner, he or she will help you establish an account and assist with diversification â an important element to successful investment. A good financial planner can be invaluable when your accounts, and family, grow.
Steady As You Grow
Once children enter the picture, so do a host of excuses about why retirement saving is impossible. While itâs important to provide every avenue of support for your little ones, you must do so responsibly. For instance, starting a state-sponsored 529-college plan for your children is a great way to save for college expenses but itâs important to remember that they can always get a loan for school â you canât for retirement.
What is your key takeaway for saving if you are in your 30s? Start putting more money away for retirement. While saving 10-15 percent of your income for retirement might be difficult, it will feel so good when you are comfortably retiring in your 60s.
The post How to Plan for Retirement When You are In Your 30s appeared first on Penny Pinchin' Mom.
Winter can be a tough time of year for many of us, especially after all the holiday excitement dwindles down. Itâs cold. Itâs dark. Itâs gloomy. And this is when many of us start to feel the winter blues settling in.Â
But there is good news. By planning out a few simple home improvements you can easily transform your space into a happier and cozier place to be, while also enjoying time spent inside. Sprucing up your home can feel good during any season, but certain projects are perfect for giving you a much-needed mood boost during this time of year.Â
So, if winter is getting you down, consider these home improvement projects to help you beat those winter blues, no matter how short the days are or how low the temperatures drop.
1. Repaint living spaces
Feeling like your home is in need of a dramatic change? A new coat of paint can be a cheap and effective way to switch things up in no time. During this time when many of us need a mood booster, take a page out of the psychology book, and surround yourself with colors that help you relax and increase happiness. In general, cool colors have a calming effect, while warm colors add comfort and can be invigorating. White can help brighten rooms by reflecting light. It makes a small space feel larger and more open, which can help you feel more energized.
Painting can require some patience, especially if you are considering a brand new color, but it’s easy enough for even a DIY beginner to accomplish. And, with the right attitude and a few friends or even some favorite music, you can make repainting your walls fun, too. If youâre feeling overwhelmed by your painting project, consider hiring a local painting company to tackle it for you.
2. Update your homeâs lightingÂ
What better way to brighten and warm your spirits this winter than with the perfect lighting. Not to mention itâs an easy and affordable way to make your home a more comfortable place to spend time.
Instead of sticking with whatever fixtures came in your home when you bought it, you can use the doldrums of winter as an excuse to try this simple home improvement. Light fixtures are affordable and can often be installed without an expert. Whether you repurpose your holiday string lights or invest in a daylight lamp, the options are endless. You can also completely change the ambiance in your home simply by replacing any harsh white bulbs with calming yellow ones.
3. Maximize natural light with windows or skylights
With the shorter days and gloomy weather, one of the main factors leading to winter blues this time of year is the lack of natural light. The best solution for this is to increase the amount of sunlight in your home. If your current windows aren’t letting in enough light or air, it may be time to upgrade.Â
Skylights can also be an excellent way to improve natural light. This is true even if you live somewhere like Miami, where the sunlight is abundant. Skylights can be installed in many areas of your home, with kitchens and baths being among the most popular choices. Adding more light and sun can go a long way in making the winter darkness a little easier to manage.
4. Install a sound system
There’s nothing like a great song for instantly lifting the spirits. Playing some of your favorite tunes at home is the perfect remedy to help fight your winter blues. It’s a bit less impactful, though, when you’re listening to music through tiny laptop speakers. If you want to really immerse yourself in the sound of your favorite songs, invest in a home sound system.
Setting up a surround sound system or a sound system that plays across multiple rooms is quite simple. Modern technology allows for easy connectivity with Bluetooth, ensuring your home is ready for fun without a costly or complicated setup process.
5. Improve organization
After spending months inside due to the pandemic, followed by the holidays, your home may be overrun by clutter. Think about how good youâll feel when youâve cleaned your house, and everything has been put back in its rightful place
Improving the organization of a space can occur in a number of ways, from purchasing storage boxes and bins to custom pieces for the closet. A few simple home improvements can go a long way. Whether thatâs just going through old mail, sorting clothing to donate, or filing papers, organizing can help create a nicer living space. If youâre feeling overwhelmed with the process, bring in a professional organizer or declutter to help.
6. Add greenery to beat winter blues
Plants are amazing gifts of nature. In both work and home environments, live plants can boost your mood, productivity, concentration, and creativity. Plants come in all shapes and sizes, from tiny succulents to large potted plants, making greenery a functional and flexible option for everyone. You can choose from flowers, greek plants like ferns, or even herbs to add color and life to any room.
If you have a large living area, potted trees can also be an excellent addition and one of the simplest home improvements you can do. Available from local nurseries and mail order services nationwide, plants make it easy to add a dynamic living focal piece to any room.
7. Create a bedroom sanctuary
Thereâs nothing quite like having a cozy place to escape to on a cold winter day. From fluffy blankets and bedding to essential oils and warm, ambient lighting, your bedroom can be a place of peace from the moment you walk in. Flannel sheets can keep you nice and warm while a plush rug to sink your toes into will add comfort.Â
Making it through yet another winter may seem tough, but a few simple home improvements can be just what you need to turn a cold-weather frown upside down. From a little repainting to installing skylights, there’s plenty you can do to increase your happiness and take your home from bland to beautiful this season.
The post 7 Simple Home Improvements to Beat the Winter Blues appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.
Marnie and Tom live in a nice suburb in the Midwest with their two young children. Marnie’s mother, Elaine, lives about an hour away.
When the kids were babies, Marnie's mother used to drive to Marnie and Tom's every day to see her grandkids and help out. But lately, Marnie's mother's health has been declining, so she can’t drive over anymore.
One day Marnie gets an idea: What if she and Tom sell their house and move closer to her mother? Then the kids would be able to see their grandmother more often. Plus, Marnie would be able to keep a closer eye on her mother in case her health gets worse. Seems like a perfect solution.
There’s only one problem—Tom doesn’t want to move. Tom likes the neighborhood they’re in. He thinks he and Marnie paid too much for their house, but other than that he’s very comfortable.
Tom says no.
Tough decisions and zero-sum situations
Faced with big decisions like this, a couple will ordinarily try to compromise. But in this case, there’s really no half-way. Economists call this kind of thing a zero-sum situation. Someone’s going to win, and someone’s going to lose.
For over thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so.
Some classic zero-sum problems for couples involve whether or not to move—often for one partner’s career—and whether or not to have another child. But there are lots of others.
For thirty years, I’ve watched couples struggle with zero-sum problems. Some more successfully, and some less so. Today, we’re going to talk about what works, and what doesn’t, when you’re faced with one of these situations.
Three ways not to make tough decisions as a couple
First, let’s talk first about what doesn’t work. There are three main approaches that don’t work. Unfortunately, most couples try all three:
Mistake #1 – Trying to convince your partner they'll be better off
The first mistake is to try to convince your partner that they’ll be much happier if they do things your way. In Marnie’s case, this might involve demonstrating to Tom all the wonderful things about the neighborhood she'd like to move to. Wouldn't Tom be better off there?
No one likes to be told they’ll be happier if they just do things your way.
Here’s the problem: No one likes to be told they’ll be happier if they just do things your way. It's better to assume each person has good reasons for feeling the way they do. And that those reasons aren’t likely to change. In couples therapy, we call this "staying in your own lane."
Mistake #2 – Suggesting there's something wrong with your parnter for disagreeing
The second thing that doesn’t work is to suggest there’s something wrong with your partner. Otherwise, they'd see it your way. If only they were less anxious, less obsessive-compulsive, less oppositional, less stuck in their ways, or less damaged by unresolved childhood trauma. Then they’d surely agree with you!
A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work.
A lot of people get sent to my office for therapy by their spouses for just this reason. Believe me when I tell you, it doesn’t work. It usually just leads to a lot of bad feeling.
Mistake #3 – Appealing to your partner's love
The third thing that doesn’t work is to appeal to your partner’s love and insist that if they really love you as much as they say they do, they’ll give you what you want. Almost every couple tries this.
Marnie is no exception.
“Tom,” she says, one night as they're getting ready for bed, “Don’t you see how I can’t sleep at night worrying about my mother? I can't stop thinking about how she’s missing out on so much of our kids’ lives. Can’t you see what this is doing to me? Don’t you love me?”
“The answer’s still no,” says Tom. “And it has nothing to do with whether I love you or not.”
I'd be inclined to agree. Just because you love someone, that doesn't mean you're responsible for giving them everything they want.
A better way to make tough decisions as a couple
The good news is there’s a much better method. There are three steps involved.
Step One: Let’s make a deal
In business, this would be a no-brainer, right? You’d never ask someone to give you something you want for free. Instead, you’d find out what their price is.
In marriage, it’s the same thing. The main question is: What’s going to motivate the other person to do a deal?
Let’s see what happens when Marnie tries this approach.
One night in bed, just before they turn off the lights, Marnie turns over to face Tom.
“Tom, what can I give you to make you agree to move?” she asks.
Tom is silent.
“A promise to never complain ever again about you watching TV?”
Tom smiles. “It’s going to cost a lot more than that,” he says.
Marnie thinks some more. “How about if I agree to spend every Thanksgiving and Christmas with your family?”
Tom shakes his head. But now Marnie has the idea. She’s not asking for favors anymore. She just wants to do this deal.
“I'll do all the cooking and cleanup three times a week,” she says. "And we spend Thanksgiving and Christmas with your family."
Tom raises an eyebrow. Now he knows she's serious. "Let me think about it,” he says, and turns off the light.
Time for Step Two.
Step Two: The $64,000 Question
The following night, Tom is sitting at his laptop paying bills. Suddenly it hits him. “Marnie,” he says, “I think I see a way to do this. If we’re going to move, let’s get a smaller house and start saving money again. What do you think?” Marnie’s actually been hoping for a bigger house. It’s painful to hear that this is what Tom wants. But hey, now he’s named his price. That means he’s in the game.
To me, this looks promising. Marnie gets something she wants very much. And she pays for it, fair and square. Same thing on Tom’s side.
Marnie thinks for a minute.
“Let’s see what we can find,” she says.
Step Three: The Price is Right
Now comes the fun part.
The following Sunday, Marnie and Tom drop the kids off with her mother and start house-hunting in earnest. After a few weekends, they find a house they both like well enough. It breaks Marnie’s heart to be downsizing, but it was the only way to make things work. And it helps that once they find a place Tom likes, Marnie gets him to agree to new cabinets and closets.
Decision making builds strong relationships
A good deal will have both of your dreams in it. That’s important, because it means you’re both fully in. You never know how a move like this is going to work out. If it goes well, you both share the satisfaction. If not, you share the blame.
A good deal will have both of your dreams in it.
One sign of a good deal is that in the end, neither of you got everything you wanted. The final result didn’t look exactly like what either of you originally had in mind.
But hey, isn’t that the case with anything creative? Eventually you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.
Sometimes life brings you to a fork in the road, where no compromise is possible. When that happens, assume you’ll need to do some serious deal-making—as if your relationship depended on it. Which in fact, it will.
Eventually, you have to face reality. And in a couple’s relationship, reality often takes the form of the person next to you in bed.
As Yogi Berra famously said, “When you come to a fork in the road, take it!”
In the long run, how you settle the issue may matter more than which fork you take.
For this podcast about financial planning I sat down with Scott Trent of Skylight Financial. During the podcast we discussed financial planning in general, qualifications to be a financial planner and how a financial planner can benefit homeowners and real estate investors. This podcast is helpful for those who may not be certain what a financial planner does and can learn how they can benefit from working with one.
I hope you enjoy the podcast and find it informative. Please consider sharing with those who also may benefit. Listen via YouTube: You can connect with Scott Trent on LinkedIn.
You can connect with me on Facebook, Pinterest, Twitter, LinkedIn, YouTube and Instagram.
About the author: The above article “Podcast #11: Financial Planning and Real Estate” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at [email protected] or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you. Contact me today!
I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.
Paul Sian: Hello everybody. This is Paul Sian Realtor with United Real Estate Connections licensed in the state of Ohio and Kentucky. Today I have with me Scott Trent Financial Planner with Skylight Financial. We’re going to talk about financial planning and add a little bit of real estate information on that. Scott, how are you doing today?
Scott Trent: Do an excellent, how are you Paul?
Paul Sian: Good. Glad to have you on. So let’s get started, tell us a little bit about your background. What do you do and how long have you been doing it?
Scott Trent: Sure. Well, it started in 1999. That’s just wrapping up college and started working for a local retail bank back in the day that was bank one, which of course became chase bank. And uh, for about three or four years with the banking industry, had a couple of different roles started off essentially kind of right on the teller line, cashing checks and making deposits. And then within about a year I was tapped for personal banker role and was able to acquire my insurance and investment license and to be able to expand the services I provided my client. And you fast forward to working primarily in that space and the investments in the insurance space. A couple of different companies such as nationwide in western southern and was right about 2007 then I had an opportunity to expand my role into leadership and management and so from about 2007 to 2017 I’ve trained and developed and recruited and was in a leadership position in the financial services industry. And right about 2017 I just decided to lean back towards my personal practice and spend more time with my clients, which really is my first love is just spending the time with those clients, helping them achieve their goals and seeing their eyes light up when you give them hope that they can actually accomplish the things that they set out to accomplish when they first signed on with that first job right out of college.
Paul Sian: Very nice. You did mention something about licenses and they in your statement there, so like I guess we can go on with that. What kind of licenses are you required to have and what kind of licenses are helpful to have in your line work?
Scott Trent: That’s an excellent question. So at a minimum you want to work with a financial planner that has an insurance license and at least one securities license. And the reason for that is because any financial plan is going to ideally holistically look at the different moving pieces of someone’s life. We’re going to look at cash flow and protection, risk management, wealth accumulation, tax reduction, retirement and ultimately a state of planning. And it’s with those different areas, there’s going to be some, some expertise needed as it relates to saving money, investing money as well as protecting your income and your assets. And so again, at a minimum bar you’re going to work with someone who has an insurance and investment license. On top of that, there are other designations of the industry provides such a CFP or cou chfc is going to emit apple bet soup out there of different designations that you can achieve. But I tend to tell people you want to work with someone. Again, that is looking at from a big picture, looking at both the protection and the wealth accumulation side. And I would say just as important as licenses or designation. Do you want to work with someone that has a rather quit experience?
Paul Sian: Okay, great. What kind of licenses do you have?
Scott Trent: So I have an insurance license in Ohio where where I reside and also uh, about a dozen other states that I conduct business said on a regular basis as well as uh, a series six license, the series 26 license, a series 63 license. And I’m also approved for financial planning through my broker dealer.
Paul Sian: Okay. So it looks, sounds like some of the licenses to our state restricted just like real estate or are all of them state restricted or though some of their general that you have licensed you can work anywhere?
Scott Trent: That’s a great question. So typically what happens is any insurance side of the house, once you are licensed in the state that you reside, you can fairly easily become what they call non-resident license in other states that you wish to do business and which is essentially filling out a background report, paying a fee and they kind of stamp stamp off and approve it. And so then in that way you’re able to conduct the insurance transactions in those states that you have clients that are, you know, for example, I have clients in the west coast and east coast ever where in between and I, I need to be licensed in the state that they reside as well as my own. On the security side or the investment side, you have one set of licenses that determines what type of business that you can conduct for your clients. And then the series 63 that you might’ve heard me mentioned that says that I can service the clients that reside outside of Ohio or I do, but you also need to be registered and approved and those surrounding states as well. So there’s a bit of administration that needs to take place, but at the end of the day, as long as you have filled out the proper forms and you’re mindful of your continuing education, just like you are as a real estate professional, you should have no problem servicing clients anywhere in the country.
Paul Sian: Okay. And we did a, you did kind of talk about, you know, one financial planner does coming, explained it in the light detail and through your intro, can you boil it down to us, boil it down to somebody who’s never met a financial planning before. We never talked to a potential central planner. What, you know, what exactly you do and how can you help somebody?
Scott Trent: That’s a great question. So you’re, from a bullet point standpoint, I would say it’s really about the why, how, and why and the what speaks to goal clarity. What I find working with our clients, Paul, is that mom and dad or partner’s, they’re getting up every day. They’re going to work and they’re doing their job. Then they’re coming home and will oftentimes doing mom things and bad things and catching their breath and then we get the little ones off the bed and next thing you know, we’re waking back up doing it all over again. And you know, kind of big picture. Intuitively we’re working to provide for our family and we’re working to have a great lifestyle. But you’d be surprised that most often people aren’t actually having a good conversation about what they’re really trying to accomplish and setting benchmarks for things like we want to have x amount of debt paid off in three years, or we want to save up for a great family vacation.
We’ve always wanted to go overseas. But yeah, we ended up just going to Florida every year because we don’t take the time to plan it through. And next thing you know it’s summertime. And so it’s about that clarity that the conversation that needs to happen between the partners in a hole, the spouses often let’s say, hey, where are we really getting up and working for a day to day basis? And so goal clarity, what do we want life to look like? If we wake up 20 years from now looking at a rear view mirror, what things would we have wanted to accomplish, make, make it feel like we’ve made some progress. So that’s a lot of it. The houses, the strategy or the roadmap. So once we identify what a client wants and help provide, help them have that conversation of clarity among all interested parties, then it’s how do we get there? And that’s where our expertise comes in and that’s looks like cash flow design that looks like different vehicles or products sometimes. Sometimes it’s as it’s a matter of saving, saving the right amount and the right kinds of buckets. And so again, that’s that more technical roadmap piece of it and it ultimately the why of it is this, the accountability, it’s, it’s part of my job is to keep the, why are we doing this in front of them? It’s what, what do we want to feel, what do we want to experience? And so if we, we’ve looking to the future and we can see our future selves waking up with the confidence of knowing that, that all of our financial lives are in order, that all the moving pieces are fitting together like a, like a perfect puzzle. There’s total efficiency there. It’s, it’s making sure that we keep that in front of our coins to say, Hey, this is why we’re saving this much. On a monthly basis. This is why we have that insurance in place. This is why we are investing in these types of instruments and vehicles. It’s all about, it’s about the experience that we want to create for ourselves and for the people that we love the most. So I guess that’s a little bit more than bullet points fall, but in a bullet point, it’s the why, how, and why. Otherwise it’s the goal, clarity of strategy and accountability that we provide.
Paul Sian: Actually that’s, yeah, that’s very well said. So it’s not just long term planning, it’s not just you know about retirement. It’s also about your short term. If you want to go, like you mentioned the vacation plan or even then you know, my case, I deal with a lot of real estate investors. So somebody who wants to set up a plan for investing in real estate, you can help out with that too. Correct?
Scott Trent: Oh absolutely. And so, you know, the time frame, it has a lot to do with what their client has going on in their life and this season that we meet them in. So, you know, for example, and we hear a lot about, I’ve really liked to get in to real estate investing. And then we say, well, when do you see yourself doing that? And sometimes they’ll say, well, you know, in the next two to five years. And sometimes they say, well, like right now I can’t. And so we’ll take a step back again, kind of coordinate all the moving pieces of their financial world and letting math and math have a seat at the table and not just intuition and not just kind of what we want and, and you know, let things that, you know, sometimes we see something on the internet or hear a friend talk, we’re like, Ooh, I want that. And so then we just go do it. And so again, that’s a big part of it. But also its let’s, let’s have the emotions have a seat, but also led logic and math and rationale habits. Have a seat, the tables.
Paul Sian: Well, yeah. And you mentioned long term plan, also short term plans, looking at things. So, I mean just uh, and we can go a little situations or specific, basically you have to look at everybody’s individual situations and how they’re, you know, what they’re doing and what their goals are. Let’s say we have somebody who’s a, you know, there were w two income earner, they make x amount of money per week, per month, what have you, and so they’re interested in, in a real estate investing. What kind of general advice would you give to that person and you know, maybe they don’t have a full down payment saved up yet and they need 20-25% for whatever they’re trying to buy. What kind of suggestions would you have for them.
Scott Trent: Paul What I would say with someone who’s looking to take their first step into the financial independence or looking at that opportunity to, to start a real estate investment portfolio, it is always looking at it through the filter of what we call our four pillars of financial security or the value system, that value system that we use when it relates to financial planning. And those things are going to be making sure that you’re protected against major financial risks, that you are becoming a world class saver, saving upwards of 15 to 20% of your income on a monthly basis, making sure that you have a life events fund. We have says that I have upwards of a year’s worth of my income in places that I can access outside of my qualified plans such as his Iras so that I’m able to deal with not just rainy days in emergencies, but I’m also able to take advantage of great opportunities like I ain’t a great property for a great price and also taking a look at the debt that I have on my balance sheet that already exist and so we would do with a client is to say, Hey, let’s take a, let’s take a holistic look or three 60 look about how a purchase of a real estate property, what impact these other creek cake, key critical areas of financial planning and your overall wealth strategy.
Paul Sian: Okay, great answer. You had mentioned a debt in there. Let’s go talk about that a little bit of an most people are buying real estate using that, you know, your mortgages, commercial mortgages, residential mortgages. What are your thoughts on debt? I mean a good, bad avoiding to some that’s good, bad. What do you think?
Scott Trent: That’s a great question too. I think that it is difficult especially you’re right up in the Midwest to ever say Ted is good. However, when it comes to that, when I, when I’m, what’s an easier answer to give is the what, what is the fat kind of debt and so bad debt is higher interest rate, unfavorable terms, excessive fees, consumer base that such as credit cards or retail store cards, things that we, that that we acquire just for lifestyle. Because a lot of times what that represents on someone’s balance sheet is that they have let their once supersede their actual needs.
And so what lending institutions are happy to do is to say, hey, if you want an extra money to be able to keep up with the Jones’ is it will give us a call or come see us on credit card.com and so I always caution against that kind of debt because it speaks usually to a bigger problem on the other side of things. Acquiring that for the purpose of acquiring assets like real estate, like vehicles, that can be very wise decision because it helps you leverage your own cash flow and leverage your own opportunity to earn income and your own savings and oftentimes, particularly as it relates to real estate for home purchases for example, there are, there’s some tax favor ability to be found with those kinds of debt. And so what I’ve, what I’ve loved the, the good debt, Paul, the best debt is low interest rate, tax deductible kind of debt.
That’s good debt. But again, this kind of summarize, I would say the bad debt is usually represented by death that we were required to just improve our lifestyle, close trinkets in the house, furniture, things like that. That’s usually about ego, about lifestyle as well as just as much to do with our neighbors and our neighborhoods. What does ourselves or the people that we care about the most.
Paul Sian: You had mentioned the taxes in there too. I do. I guess Texas do come into play as a financial planner when working with your clients.
Scott Trent: Yeah, absolutely. And so one of the things that we’ve helped the client with recently is to help weed through the confusion of the current tax situation because of the tax cuts that will were implemented in 2018 and so as an example, all you brought up about, it’s not just long term planning, it’s not just retirement plane that we help our clients with.
It’s also short term goals. And so taxes is a great example of that because what we do know that unless there’s some overall legislation that gets passed, what we can expect is that in December 31st, 2025 the current tax cuts are going to that. So another way to think of that is come January 1st, 2026 everyone’s taxes are going to go up if they’re earning the same income of the art today. And with that creates opportunity. It’s one of the things I’m working with a family right now on is this idea of exploring, does it make sense to take advantage of after tax investing rather than what most people focus on kind of cause they told to just what they see their neighbors and their friends and family doing, which is maximizing their pretax dollars is what could happen without getting too far into the weeds fall is because of the current tax environment.
We might be deferring taxes at 20 or 24% all the way to wake up and later in life and find that we’re now paying taxes on those same dollars at a higher rate, 30% 32% 36% and higher. So we just have to be careful about that. And so taxation is a area of emphasis that is necessary working with any financial planner. And I would just caution folks that if their financial planner is not having a meaningful conversation about long term impact of taxation, then they might want to seek out a higher authority on the matter or maybe it might be time to start interviewing other financial planners. I think the asterisk that I would add there fall is that that’s also why we partner with local professional CPAs so that they can have the kind of final say so in these matters as it relates to wealth building in financial planning in the in the area and Ronald Taxation, we are very familiar with that have very powerful tools that speak to taxes.
However, what we are not as certified public accountants and so as you can imagine, we want to make sure that we always work with someone who, who is that when it comes to crossing those ts and dotting those I’s. Also, I think with the financial planner, bigger picture is working with a successful financial planner also should give you access, favorable preferable access to the financial professionals that they network with. Such as personal make herself a professional real estate agent as well as an attorney as well as a property casualty specialist to CPA, a benefits consultant if it’s a business owner on and on. And so it’s really working with the right team, but ultimately working with someone who is going to be that can symphony conductor or that quarterback of their team, who’s going to take the responsibility to make sure that all the orders are running in the right direction.
Paul Sian: Great answer. Actually that wasn’t, that answers my, uh, it wasn’t going to answer my next question, which is a financial planner is not a solo person. They work with, uh, with a team as you mentioned, you know, working with the accountants, the attorneys, CPAS, what have you. So that’s a great answer. We had discussed earlier you had discussed about building up an emergency savings fund. Then you mentioned a year, which is great. And that’s the idea was the year, you know, we’ve heard online from anywhere from three months up to six months. I mean, what’s, how do you suggest people go about building that savings funds? I mean, especially for somebody who thinks they’re living paycheck to paycheck, I mean, where do they find that, that room, that gap to start, start that savings fund?
Scott Trent: SoI guess it would clarify first the difference in an emergency savings fund in a life event. It’s fun. So for an emergency savings fund that’s best suited typically at the local bank, and that’s going to be in the form of a savings account on or maybe even a and no fee checking account. And that’s going to be where you want to have about three months, maybe six at the most. A lot of it has to do with the comfort level, the individual client. But typically three months is more than fine to have on hand at the local bank. That’s money that I’m an ATM card or a debit card swipe away or uh, a dash over to the local branch away from getting access to my funds. Outside of that, the next six to nine months that we talked about from a life events that doesn’t necessarily have to be in cash at the bank, but it just needs to be somewhere outside of a qualified plan.
Because as you probably know, and your listeners know, Paul, money that’s inside of a qualified plan is largely inaccessible until I’m 59 and a half. And last I want to jump through hoops, pay interest rates to access my money or God forbid pay taxes as well as IRS penalties. And so when we talk about life events, fun big picture, we’re talking about braces for the kids. We’re talking about a $2,000 car repair emergency that jumps out the bushes on us. We’re talking about, um, the vacations that we want to go on. So it’s the experiences that we want to have in life for the people that we care about most, but it’s also the things that life is inevitably going to do, which is getting, throw those curve balls. Dot Us good and bad. So as far as how do we get there, take baby steps, it’s just sometimes it’s as simple as going to your HR coordinator, your payroll director and saying, Hey, can I split my direct deposit between two counts right now?
This is kind of hitting the checking account. And then from there it’s, it’s um, you know, all bets are off and it’s a feeding frenzy. And ultimately, uh, fortunately for the bills and the lifestyle expenses and gas money and everything else, uh, the best way to say fall, no matter how you do it or what vehicles you use is systematically and consistently. So it’s those things that you don’t have to pull ever go online, go to the local branch and things that just happened. That’s why good and bad, most of Americans well is in their qualified plans are the 401k because it comes out before it ever hits our bank account. It’s out of sight, out of mind. It just piles up. You know, the, the, the tough part about that is, again, that’s a qualified account. So there’s some heavy restrictions that keep us from being able to access our funds when we might need them most.
So just like the 401k if for example, I talked to a college student this afternoon and it was as simple as go to the HR director happens, split your direct deposit into two separate accounts and just start taking out $25 a pay check and having that diverted to a secondary account just so that it starts to pile up and the idea that the money’s there but really need it, but it’s just that extra layer that helps reinforce the discipline to say, okay, I’m not supposed to touch that. That’s for future purposes. That’s for rainy days, real emergencies and not frivolous spending. And so start with baby steps. And next thing I would look at is working with an advisor who has tools to help you analyze your spending. Your cash flows ideally will help bring awareness to where those dollars are going. What I find fall is that what most of our clients, there might be 10 to 15% of their monthly income.
That just seems to just disappear. It’s not accounted for it. And so using the tools such as, uh, we use a tool, Claudine money for example, and we’re personal financial view that will really electronically analyze someone’s spending habits so they can say, oh, I wonder how much money we’re spending out spending on a monthly basis eating out. Well, click, click, click. This is exactly how much that is. And we can set short term goals on what we think that should be and we can keep, we can track our progress through these financial tools. The other thing that we look at in a financial planning process is we want to analyze the cost of the services that you’re currently receiving. So for example, when we work with our lending and credit specialist or real estate professionals or CPAS or attorneys or property and casualty specialist, we’re making sure that our clients are getting value, not always looking for cheap.
In fact, the chief is not a word that I tend to use or any of the professionals and network with. We’re making sure that we’re getting the best value since we have a finite amount of dollars coming in. We want to make sure that those are being used, maximized and leveraged the most appropriate way. So it is taking the baby to start somewhere. It is working with an advisor to find the awareness of where the money’s actually going as well as taking a look at the cost of service for the services that we’re currently enjoying as well as I. Lastly, I would say looking for ways to minimize the impact of interest rates wherever possible, whether that be through right refinancing or creating a debt payoff strategy so that we are avoiding those excessive interest rates in feet.
Paul Sian: Yeah, it takes a, an overall, you like you’re, you’re saying you have to look at the budget, get to look at the incoming money, outgoing money as well, and kind of build that plan. So I mean that’s, that seems you to be your specialty. Very much. So. Moving on, let’s go back to the topic of real estate. And I go over one of the controversial statements made by Gary Vee, Gary Vaynerchuk. I mean he had, he had say stated, uh, rather than buying a house, it’s better to go, you know, go rent and I don’t know that upset a lot of real estate agents too. I mean that’s kind of our bread and butter. We’re, we’re buying and selling real estate. I’m of the opinion though. I mean I, I help a lot of buyers and sellers with the investment real estate too. So it’s not that, you know, I have to own a house personally, but I can own an investment property and I’m helping somebody else, you know, live in a place. What are your thoughts on the ownership of a house or renting, renting the place to live.
Scott Trent: Interesting and not, I read an article last week that talked about the difference in buying and renting or leasing in different pockets of the country. And as I said, it’d be four people. I work with clients all across the country and in some markets it’s really hard to justify a home purchase as it, as it compares to renting a home. You know, for example, a lot of clients on the west coast where housing market is very tight and there’s certainly a premium for home homes costs there in that part of the country. And so what we find is that the monthly cost of leasing a home can oftentimes when you consider the fact that with home ownership, I also am now responsible for property taxes, homeowner’s insurance, as well as the upkeep of the property that that can sometimes more than double the living expenses as it relates to housing. Whereas compared to here in the Midwest where sometimes it can actually be much more cost effective to own a home rather than rent a home from a monthly cash flow outlay. Even when you add in insurance and taxes and the kind of monthly maintenance, if nothing else, it’s oftentimes a break even when you consider all factors. So I think that would go back to as you say, Paul, you know, or Scott does it. Does it make sense to own or rent when you think about Gary V’s advice way I would look at that is again, just like any other decision that our clients would come to us and ask our feedback on. We would take a, at the basics we’d say, okay, before pillars of financial planning or financial security or these value system that we use to build our clients’ financial plans on the perfect protection, the become a world class save or having the life events fund to be debt free or have a, have a plan to get us there.
If a, if home ownership or home purchase would get in the way of us living out those values or achieving those financial objectives then and renting would, then we’re going to say it. We should think about writing for another year or two. However, if, if our clients can own a home and be protected well and be a great saver and be building their life events fun and have a handle on the that that’s already existing on their financial balance sheet, then by all means we’ve been encouraged folks to take, take ownership of a home so that they have acquired an asset. They’re building a liquidity in the form of equity and they’re also able to take advantage of the things we talked about earlier, which is having the tax deductibility from interest payments on the mortgage and so on and so forth. And so the other astronauts that I would have there is the sense that if someone comes to us and says, yeah, you know, my job, we’re an up and coming or a rising star and you know, are two of the five year goals are too.
And we want to, we want to be really nimble because we’re very likely to be transferred across the country, maybe Chicago or San Diego here in the next two to five years. Again, why would attend to encourage those folks is and can be consistent with say, nimble homeownership home purchase, maybe a terrible idea. This is because it’s, it’s easy to, it’s much easier to give a landlord a 60 day notice that you’re moving out than it is to be able to sell a home in 30 to 60 days regardless of the market. Also the fact of course you gotta be careful that we’re not holding an asset that we’re going to look to sell or relinquish in the next 12 to 24 months or even three to five years. Knowing that it’s not often, but every so often the housing market can regress such as 2007 and eight and we have to be careful that we didn’t make a 30 year decision based on 24 to 48 months factors, if that makes sense.
Paul Sian: Yeah, definitely makes sense. And it’s a a great point. I mean just like real estate, you know, when you brought up earlier the cost differences, you know, living in California versus living in Cincinnati, Ohio, it’s location, location, location is agency. So, I mean when you get over here for you know, $250,000 you know, in California you can easily do the, be able to get 1.2 million depending on the location you’re at. So same, same thing for the individual person. I mean it’s the, it’s the individual that matters. What’s your life goal? What’s their life plans? And you know, somebody who’s going to be here in Cincinnati for two years, it doesn’t make sense. It might not make sense. The, you know, there are high transaction costs, you know, where they’re from, your, your real estate closings, closing costs, your, your mortgage closing costs. So I mean that that kind of adds in and you might not get that pay off in two years. Especially if value state stay flat or decrease.
Scott Trent: That’s an excellent point perspective. If I could leave your listeners with one nugget of wisdom for what it’s worth, I would say the sooner that you can let go, other people have expectations of you and let go of what other people might think of you and the perception others have of you, the better off you’ll be. We find so often that the pressure to keep up with the Joneses that use that expression again or to to everybody else is doing it just kind of like kids in grade school. That same peer pressure exists with hardworking families, grownups, parents here in adulthood and the idea that we’ve got a finite amount of time and a finite amount of resources and at the end of the day being able to look in the mirror and have satisfaction about the progress you’re making it for yourself with people that you love, making sure that you have a plan that works and offer seen circumstances, good days, bad days, sunshine or rain.
Knowing that you’ve prepared a path for yourself and for your family. That is a general one that reaps benefits for generations and that we’re teaching the generation coming behind us about financial responsibility. I think if we can find joy and peace in those principles and those ideas and the visions of that kind of a future rather than making sure that, you know, we look good when we pull up to the company picnic or the family or a union or making sure that we form to the right neighborhood with the right car and the right toys in our garage. No, I think we’d be much better off as Americans because sadly enough, the statistics say that the average American to saving 5% or less of their income or an overwhelming majority of folks are not even prepared to deal with a thousand dollar emergency if it were topics that out of the bushes.
And so I think that what I’d like to leave your listeners with this idea of we can do better and one of the best ways to start doing better is to think a lot less about the perception and approval of others and really start thinking about the idea that the stakes are high and when, when we consider the magnitude of the impact of our financial decisions, not just for our lives but the lives of the generations that follow, I think we can make the best well informed decisions and whether that includes home purchase or renting or if it includes real estate and investing or for or not. I think that working with myself and my team, we really work very hard to make sure that we keep the main thing, the main things and minimize the distraction of other things I’ve mentioned.
Paul Sian: We’ve talked today, plan for now and plan for the future. All very great and solid advice. Thanks Scott. Appreciate you. Haven’t you on the show here and I will chat with you soon.
Scott Trent: Thanks Paul.
Last fall, I received an email that appeared to be from my web host. The email claimed that there was a problem with my payment information and asked me to update it. I clicked on the link in the email and entered my credit card number, thinking that a recent change I’d made to my site must have caused a problem.
The next morning, I logged onto my credit card account to find two large unauthorized purchases. A scammer had successfully phished my payment information from me.
This failure of security is pretty embarrassing for a personal finance writer. I know better than to click through an email link claiming to be from my bank, credit card lender, or other financial institution. But because the email came from a source that wasn’t specifically financial (and because I was thinking about the changes I had made to my website just the day before), I let myself get played.
Thankfully, because I check my credit card balance daily, the scammers didn’t get away with it. However, it’s better to be proactive about avoiding credit card theft so you’re not stuck with the cleanup, which took me several months to complete.
Here’s how you can protect yourself from credit card theft.
Protecting your physical credit card
Stealing your physical credit or debit card is in some respects the easiest way for a scammer to get their hands on your sweet, sweet money. With the actual card in hand, a scammer has all the information they need to make fraudulent purchases: the credit card number, expiration date, and the security code on the back.
That means keeping your physical cards safe is one of the best ways to protect yourself from credit card theft. Don’t carry more cards than you intend to use. Having every card you own in a bulging wallet makes it more likely someone could steal one when you’re not paying attention and you may not realize it’s gone if you have multiple cards.
Another common place where you might be separated from your card is at a restaurant. After you’ve paid your bill, it can be easy to forget if you’ve put away your card (especially if you’ve been enjoying adult beverages). So make it a habit to confirm that you have your card before you leave a restaurant.
If you do find yourself missing a credit or debit card, make sure you call your bank immediately to report it lost or stolen. The faster you move to lock down the card, the less likely the scammers will be able to make fraudulent charges. Make sure you have your bank’s phone number written down somewhere so you’re able to contact them quickly if your card is stolen or lost. (See also: Don’t Panic: Do This If Your Identity Gets Stolen)
Recognizing card skimmers
Credit card thieves also go high-tech to get your information. Credit card skimmers are small devices placed on a legitimate spot for a card scanner, such as on a gas pump or ATM.
When you scan your card to pay, the skimmer device captures all the information stored in your card’s magnetic stripe. In some cases, when there’s a skimmer placed on an ATM, there’s also a tiny camera set up to record you entering your PIN so the fraudster has all the info they need to access your account.
The good news is that it’s possible to detect a card skimmer in the wild. Gas stations and ATMs are the most common places where you’ll see skimmer devices. Generally, these devices will often stick out past the panel rather than sit flush with it, as the legitimate credit card scanner is supposed to. Other red flags to look for are scanners that seem to jiggle or move slightly instead of being firmly affixed, or a pin pad that appears thicker than normal. All of these can potentially indicate a skimmer is in place.
If you find something that looks hinky, go to a different gas station or ATM. Better safe than sorry. (See also: 18 Surprising Ways Your Identity Can Be Stolen)
Protecting your credit card numbers at home
Your home is another place thieves will go searching for your sensitive information. To start, you likely receive credit card offers, the cards themselves, and your statements in the mail. While mail theft is relatively rare (it’s a federal crime, after all), it’s still a good idea to make sure you collect your mail daily and put a hold on it when you go out of town.
Once you get your card-related paperwork in the house, however, you still may be vulnerable. Because credit card scammers are not above a little dumpster diving to get their hands on your credit card number. This is why it’s a good idea to shred any paperwork with your credit card number and other identifying information on it before you throw it away.
Finally, protecting your credit cards at home also means being wary about whom you share information with over the phone. Unless you’ve initiated a phone call of your own volition — not because you’re calling someone who left a voicemail — you should never share your credit card numbers over the phone. Scammers will pose as customer service agents from your financial institution or a merchant you frequent to get your payment information. To be sure, you can hang up and call the institution yourself using the main phone number.
Keeping your cards safe online
You should never provide your credit card information via a link in an email purporting to be from your financial institution or a merchant. Scammers are able to make their fake emails and websites look legitimate, which was exactly the reason I fell victim to this fraud.
But even with my momentary lapse in judgment about being asked for my payment information from my "web host," there were other warning signs that I could’ve heeded if I had been paying attention.
The first is the actual email address. These fake emails will often have a legitimate looking display name, which is the only thing you might see in your email. However, if you hover over or click on the display name, you can see the actual email address that sent you the message. Illegitimate addresses do not follow the same email address format you’ll see from the legitimate company.
In addition to that, looking at the URL that showed up when I clicked the link could’ve told me something weird was going on. Any legitimate site that needs your financial information will have a secure URL to accept your payment. Secure URLs start with https:// (rather than https://) and feature a lock icon in the browser bar. If these elements are missing, then you should not enter your credit card information. (See also: 3 Ways Millennials Can Avoid Financial Fraud)
Daily practices that keep you safe
In addition to these precautions, you can also protect your credit cards with the everyday choices you make. For instance, using strong, unique passwords for all of your online financial services, from shopping to banking, can help you prevent theft. Keeping those strong passwords safe — that is, not written down on a post-it note on your laptop — will also help protect your financial information.
Regularly going over your credit card and banking statements can also help ensure that you’re the only one making purchases with your credit cards. It was this daily habit of mine that made sure my scammers didn’t actually receive the computer they tried to purchase with my credit card. The fact that I check my balance daily meant I was able to shut down the fraudulent sale before they received the goods, even though I fell down on the job of protecting my credit card information.
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This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:
Oprah Asks A Great Question; What Can You Live Without?
Do You Need Credit Monitoring to Protect Your Credit?
Debit Or Credit? Which One Should You Choose At The Checkout?
Lower Your Credit Card Interest Rate and Reduce Your Phone Bill, Immediately and Easily
Hello! Here’s a guest post from a reader, Nick. Nick was feeling stuck a few years ago and wasn’t making progress on his student loans. He ended up researching a lot about salaries and the cost of living for English teachers in China and realized that he would be able to save far more money in China than back home. Even without teaching experience, and still living very comfortably, including taking vacations, it has been easy for him to save $20,000 in a year. For him, it had a huge impact on his life and financial freedom. Enjoy his story on how to teach English in China below!
It must have been about 4.5 years ago. I remember walking out of an interview in Chicago feeling completely dejected.
The interviewer mentioned the salary, and along with it, how most new hires take on a second job during the weekend.
I wasn’t expecting to find an amazing job, but this was just too much. None of my past decisions looked particularly good on a resume. I had just returned from a 3.5-year stint traveling around Latin America while earning a very modest living playing online poker.
But, I was burnt out, making no progress on my student loans, and realizing it was time to get a normal job. I was actually really excited to do so but job hunting was incredibly frustrating and when I realized how little money I’d be earning, I began looking for alternative options.
Somewhere along the way, I had heard about teachers in Asia making good money and motivated by the frustration of the job search, I began looking into it more seriously.
After spending countless hours reading online, I ended up settling on China as that seemed to be where it’d be easiest to save the most money.
I’ve since been in China for four years, paid off my student loans, and finally feel comfortable with my finances.
Without a doubt, moving to China isn’t for everyone or even most people. However, for those that are a little bit adventurous, not opposed to working as a teacher, and want to save money fast, it’s an option worth considering.
It’s not at all difficult to save $20,000 per year, without needing to be particularly frugal, and still have plenty of vacation time.
Related articles on how to make extra money:
12 Work From Home Jobs That Can Earn You $1,000+ Each Month
30+ Ways To Save Money Each Month
The Best Online Tutoring Jobs
How to start teaching English in China.
The demand for teachers in China
Chinese parents spend an average of $17,400 per year on extracurricular tutoring for their children.
More than 60% of students receive tutoring outside of school at an average of six hours per week and English is among the most popular subjects for after school tutoring.
While these numbers look insanely high from my Midwestern American point of view, it barely scratches the surface for the demand for English tutoring in China.
In fact, English is a required subject in Chinese schools. Private schools often take this a step further, with many classes and programs taught exclusively in English. Meanwhile, the online tutoring industry has created lots of opportunities to teach English online.
Chinese parents are obviously willing to pay for English education. This demand for English teachers becomes even more apparent when you consider just how huge of a country it is. With a population of over 1.3 billion people, there are 32 cities with more people than Chicago.
The requirements to be an English teacher
It’s not difficult to become an English teacher in China. The huge demand has made for relatively lax requirements. These are…
A bachelor’s degree
Two years of work experience
120 hour TEFL certificate
Clear criminal background check
Pass a health check
Native English speaker
The bachelor’s degree doesn’t need to be in any specific subject, nor do the two years of work experience. The 120-hour TEFL is easy and pretty cheap to do online.
Of course, having these doesn’t necessarily mean you’ll be able to get a great job right off the bat. Some of the best schools will have a very rigorous hiring process. However, even a standard first job in China can allow you to save a lot of money.
The types of English teaching jobs in China
Most foreign teachers in China come to teach English. However, there are other opportunities as well, such as with teaching sports, a specific subject, or as a homeroom teacher who teaches a variety of subjects.
There’s a wide range of salaries and teaching environments, with the main positions being in kindergartens, public schools, international schools, training centers, and universities. Salaries, working hours, and work environment can vary quite a bit depending on the type of school.
Additionally, the chosen city will have a large impact on your life with bigger cities paying more but also having a higher cost of living. ESL Authority has a good breakdown of the different salary ranges for different school types and locations.
My teaching experience in China has exclusively been in Beijing at two public schools and one international school. I’ll share a bit about my experiences and salary at these schools.
Teaching at a public school in China
Public school teaching jobs typically focus on oral English, meaning you’ll help students with their speaking and listening comprehension. The class sizes tend to be quite large. I often had 30-40 students in a class and would see each class only a couple of times per week, while often teaching multiple classes and different grade levels. In a given week I’d see 200-300 students.
At the public schools I taught, I earned around $1,600 per month, which included a round-trip plane ticket to America, and housing. A typical schedule for public schools would be Monday-Friday, from 8 am – 4 pm, with 16-20 classes per week, with each one lasting around 45 minutes. There would be a lot of down-time during the day which I used to study Chinese.
Many public schools, but not all, will let foreign teachers leave if they don’t have classes. Both public schools I taught at while in Beijing allowed me to leave when my classes were finished, which meant I’d often be done for the day around 2 pm.
Vacation time is very generous, exceeding 3 months for summer and winter vacation, plus all of the national holidays during the year. Both public schools I’ve taught at allowed foreigners to finish the semester earlier and start later than their Chinese counterparts which makes sense as foreign teachers aren’t usually responsible for grading homework or preparing exams.
The salary at public schools is more than enough to live comfortably and save quite a bit of money. Still, many teachers use their substantial free time to teach extra on the side with private students or at training centers. Doing so can be quite lucrative with an average rate of around $30 per hour.
Having said that, it’s not exactly legal to teach with a different school than the one that sponsored your visa. If you got caught, it could get you in trouble and you could have your visa canceled and your time in China cut short. But, it’s one of those things that nearly everyone does and almost nobody gets in trouble for. So, if you choose to teach on the side, you should be aware of the risks.
It isn’t difficult to teach an extra six hours per week during the ~8 months of the school year. This would earn an extra $5,760. Teaching 20 hours per week during 2 months of the summer/winter vacation would earn an extra $4,800. Combining these with the public school salary would make your yearly after-tax income $29,760 – with housing already paid for.
Plus, you’d still have close to two months’ vacation throughout the year.
While I didn’t keep good track of my earnings and expenses while teaching at the public schools, these numbers are very close to my own experience.
My experience teaching at an international school in China
If you’re more interested in teaching a subject like history or math, as opposed to English, an international school would be your best bet.
These are the schools where wealthy Chinese and expats typically send their children to study. Teaching positions at some of the better schools can be very competitive, often requiring a teaching license, graduate degree, and a number of years of experience. Of course, those who qualify for these positions will earn higher salaries.
However, a large number of international schools don’t have any additional requirements for teachers above the bare minimum required to teach in China.
The work at these schools can be very demanding, much like teaching in America would be, requiring things like communicating with parents, creating exams, giving and grading homework, and plenty of meetings. Vacation periods are typically shorter than those for public school teachers. Likewise, working hours may be from 8 am – 5 pm, but most international school teachers will find themselves with very little downtime throughout the day.
On the plus side, class sizes are generally much smaller and salaries higher. While teaching at an international school, I earned around $2,800 per month or $33,600 per year after taxes, with housing and a round-trip plane ticket included.
However, due to the shorter vacations and more tiring day-to-day work, I didn’t have any interest in tutoring on the side.
What does a typical budget look like for an English teacher?
This can be hard to say as everyone has a different lifestyle and things they’re willing or not willing to spend money on. I’ll share my budget below.
Housing and Healthcare – $0/mo – In China, especially in the bigger cities, rent would make up the largest portion of a budget. Fortunately for foreign teachers, most schools include housing or a housing allowance. Housing would typically be a one-bedroom apartment, which may be on or off-campus, depending on the school. Some teachers may choose to add some of their own money to the housing allowance so that they can stay in a nicer place. But, I’ve been happy with the provided accommodation and didn’t pay any extra. Health insurance is also provided and many schools have gyms on campus that you can use for free.
Food – $350/mo – You can spend a lot of money on food or not much at all, depending on your preferences. Cheaper meals can be had for under $3 but you could easily spend $30 on a meal if you choose to go to fancier places. It also depends on how much you cook vs eat out and whether you like buying imported groceries. Most schools will offer free lunch to their teachers. Even so, I tend to spend quite a bit on food but am cheaper in other areas, so my food budget would be something like:
Entertainment – $100/mo – Being the old man I am, I rarely go out for drinks at bars and my preferred entertainment is also the cheaper kind – hanging out, eating, and playing games with friends. Still, my wife and I will go to the occasional show.
Transportation – $60/mo – Public transportation in China is fantastic and a single trip on the subway or in a bus can cost less than 50 cents. Shared bikes are everywhere and extremely cheap. Even using Didi, the Chinese version of Uber, is very affordable. This is another area where I spend more than necessary, often taking a Didi out of laziness when there are cheaper options.
Utilities – $15/mo – I think most schools typically pay for household utilities, like electricity and water. At least, the schools I worked at did. So, the only expense here is my phone which is on a pay as you go plan.
Travel – $250/mo – Living in China and working as a teacher opens up lots of travel opportunities, both within China and around Asia. Unfortunately, although plentiful, teacher’s vacation time is usually during national holidays when the cost of tickets is a bit higher. Still, I tend to go on at least one international trip a year and also like to travel within China. Plus, almost every school also provides a round-trip ticket to your home country. If I were to guess, I probably spend around $3,000 per year on travel. I know people who spend much more and others who spend much less, so this cost will depend a lot on each individual’s preferences.
Miscellaneous – $50/mo – These are other expenses such as buying household appliances, clothes, and other random things. I’m not a big shopper, but random things do come up.
Total Expenses – $825/mo or $9,900/year
Although I’m conscious of my spending, I wouldn’t say that I’m especially frugal while in China. Far much less than I’d be if I were still living in Michigan.
Some people might consider my spending extravagant while others might think I’m cheap. For me, it’s a good balance of comfort and enjoying my lifestyle with saving for the future.
How much money can you save teaching English in China?
In my experience, I earned between $29,760 and $33,600 per year with expenses around $9,900 per year. This led to savings between $19,860 and $23,700 per year. Unfortunately, I didn’t track my exact earnings and spending each year, but these ballpark numbers are pretty accurate.
It’s not particularly difficult to save $20,000 in a year of teaching in China while still living comfortably, traveling, and leaving yourself with enough free time to pursue other interests.
Plenty of people save more than this each year. There are also opportunities to increase your earnings as you gain more experience.
However, like most places, life can be as expensive as you make it. If you’re bad with money back home, it’s unlikely you’ll suddenly become good with money by moving abroad. In fact, the money may disappear even faster than it would back home as there are lots of exciting ‘once in a lifetime’ opportunities.
But, if you’re somewhat frugal and work fairly hard, you’ll have no problem saving a lot of money.
How to find a job teaching English in China
There are tons of websites with job listings for English teachers in China. I can’t comment on most sites as all the jobs I found started with a search on the eChinacities job board.
The start of your job search can be a bit overwhelming, especially if you’re still not sure where you’d like to live in China. This isn’t helped by the fact that a lot of recruiters will earn more money if they can get a teacher to accept a lower salary.
I’ve known teachers that came to China and received terrible salary packages, earning less than half of what a typical salary would be and with an apartment far from the school. These people tended to not do enough research beforehand and accepted the first offer they received.
I would strongly recommend talking with lots of recruiters before accepting any position. Be sure to ask tons of questions, and be willing to say no to a jobs that don’t fit your criteria. There is no shortage of opportunities, so be patient when looking for your ideal position.
Before accepting any position, be sure to do your due diligence on the school.
Most schools are fine and professional, but there are some sketchy ones. You won’t always find much information online about the school, but if they’ve done shady things in the past, you’ll probably see people talking about it.
Asking to speak with any current or former teachers can give you a bit more insight into the school as well.
Final thoughts on teaching English in China
Not everyone will be excited to live in China and I can understand that. It’s far from home, the language is difficult, and many people have a negative perception of the country.
However, I’ve really enjoyed my life here and the experience has been exceptionally positive. Sure, there are small annoyances, but these will happen anywhere. Plenty of people worry about air quality, and while still not great, it has been improving every year.
Beijing is extremely modern with no shortage of interesting and unique things to do. Moving here has been one of the best decisions I’ve made.
I came here with only a few thousand dollars in the bank and what felt like an endless pit of student loan debt. In only a few years, I’ve been able to completely turn around my finances, pay off my loans, and save up a nice nest egg.
I know that it’s not for everyone, but if you’re open to new experiences, can see yourself enjoying teaching, and want to save a lot of money, moving to China to teach English is an option worth considering.
Nick Dahlhoff is an English teacher living in Beijing. Since moving there in 2016, he’s paid off his student loans, studied Chinese, gotten married and started a blog. At All Language Resources, he tests out lots of language learning resources to help language learners figure out which resources are worth using and which ones are better off avoiding.
Would you take a job in another country to pay off your debt? Would you start teaching English in China?
The post I taught English in China to pay off my student loans appeared first on Making Sense Of Cents.
The only way to retire with financial security is by saving for retirement ASAP. Although setting aside retirement savings is a solid start in the right direction, making sure youâre saving enough toward your retirement goal is just as important.
Once youâve decided how much you’ll contribute to your retirement fund, youâll be closer to knowing if your savings are on track. Hereâs how to get started.
The main takeaway is that you can get on track to retire at just about any age. But you have to be willing to commit to saving as much as you can and on a completely consistent basis.
Compound Earnings Catapults Your Retirement Fund
Building your retirement savings isnât something you can do on a whim, work on for a few years, and then abandon. You need to set up a plan â and the earlier in life, the better â then commit to it for decades.
Why? Because compound earnings over time is what gets you to your retirement goal faster.
When you invest into your retirement, your funds earn interest. That interest is reinvested to earn more interest. This is the concept behind âcompound interestâ. To successfully plan for retirement, putting your contributions on auto-pilot is essential to maximize your compounded earnings.
This starts with opening the right to retirement plan, or even a combination of plans. From there, you can set up payroll deductions or automatic transfers from your bank account to fund whatever retirement plan youâve chosen.
Choosing the Right Retirement Plan
You can start saving for retirement by participating in a workplace retirement plan, if your employer offers one. This will typically be a 401(k), 403(b), 457 or Thrift Savings Plan (TSP).
Under current tax contribution laws, you can contribute up to $19,500 per year to any of those plans, or $26,000 if youâre 50 or older. Some employers also offer a matching contribution that grows your savings fund more quickly.
A limitation of an employer-sponsored plan is that youâre often on your own to manage it. There might also be limited investment options, including some that have high investment fees. A good workaround for this problem is to sign up with a 401(k)-specific robo-advisor, like Blooom.
Itâs a service that creates and manages a portfolio within your employer-sponsored plan, including replacing high-fee funds with those that charge lower fees. And it provides this service for a low, flat monthly fee. Your employer doesnât need to be involved in the process â just add Blooom to your existing plan.
If You Donât Have an Employer-Sponsored Retirement Plan
If you donât have access to an employer-sponsored plan, you have a few options depending on your situation. Here are other types of retirement plans to consider:
Traditional IRA or Roth IRA. It can either include brokerage firms if you prefer self-directed investing, or robo-advisors if youâd rather have your investments managed for you. IRA contribution limits for either type of retirement plan let you contribute up to $6,000 per year, or $7,000 if youâre 50 or older. Here are a few places to open an IRA account.
SEP-IRA. If youâre self-employed and a high-income earner, a SEP-IRA is the best way to build up a large retirement portfolio in less time. Rather than an annual contribution limit of $6,000 for traditional and Roth IRAs, the limit for a SEP-IRA is a whopping $57,000.
Solo 401(k). A Solo 401(k) is also designed for self-employed workers (though it can also include a spouse who participates in the business). It has the same employee contribution limit as a standard 401(k) at $19,500 per year, or $26,000 if you are 50 or older. But a solo 401(k) lets you make an additional employer contribution to the plan up to $57,000 (or $63,500 if you are 59 or older). Employer contributions are also capped no more than 25% of your total compensation from your business.
General Retirement Find Milestone Guidelines
The number of variables involved in retirement makes it impossible to come up with a specific savings goal to aim for in your situation. But like any plan, youâll need to have milestones to let you know if youâre on track to retire or not.
Although there are different methods of calculating retirement milestones, the Fidelity Retirement Widget offers the best ballpark figure. The widget is incredibly user-friendly, produces easy to understand results, and is absolutely free to use.
It determines how much money you should have at each age, based on your answers to three questions:
What is your current age?
What age do you expect to retire?
What do you think your lifestyle will be in retirement? (You can choose below average, average, and above average.)
The last question about your lifestyle in retirement is admittedly vague, but an educated guess is enough.
Plugging in a starting age of 25, with an expected age of retirement of 67, and an average lifestyle in retirement, Fidelity provided the following retirement milestones in five-year increments:
Each bar represents a multiple of your current annual income at a specific age. For example, at age 30, your total retirement savings should roughly equal your annual income. At 35, you shouldâve saved double your income, and so on until age 67 when you retire.
At that point your retirement savings should be 10 times the amount of your annual income just before retiring. (It will be 12X your income at 67 if you expect an above average lifestyle, but just 8X if you expect to live a below-average lifestyle.)
How Accurate Are These Retirement Savings Milestones?
Thereâs no guaranteed method to project your exact future earnings or how much your retirement fund will compound over time. The best we can do is a ballpark estimate, especially if youâre only in your 20s or 30s.
But letâs work a loose example to demonstrate the validity of the Fidelity estimate.
Letâs say you reach 67, your final salary is $100,000, and youâve accumulated 10 times that income in your combined retirement savings (i.e. $1 million).
Itâs not reasonable to assume a $1 million portfolio will consistently generate 10% annual returns, fully replacing your $100,000 pre-retirement income.
General Rule of Thumb for Retirement Savings
Generally, you can plan on replacing 80% of your pre-retirement income. That means $80,000 per year of income in retirement. The reduction assumes you wonât have work-related expenses, like commuting, or making additional retirement contributions. It also assumes a lower annual tax bite. After all, once you retire, youâll no longer be paying FICA taxes.
If you have a $1 million retirement portfolio, you can withdraw 4% per year without draining your portfolio to zero. This is whatâs frequently referred to as the safe withdrawal rate.
Withdrawals of 4% will come to $40,000 on a $1 million portfolio. That will represent 50% of the $80,000 in needed retirement income.
Presumably, the rest will come from a combination of Social Security and any available pension income. You can use the Social Security Quick Calculator to determine what your benefits will be at retirement.
Using a Retirement Calculator to Track Your Goals
With your estimated Social Security benefits in mind, a retirement calculator can help you understand the remaining gap between your savings and how much you need for retirement.
For example, letâs say youâre 25-years-old, earning $50,000 annually, and your employer offers a 401(k) plan. For each of the remaining examples, weâll assume your employer doesnât match contributions, and assume a 7% annual rate of return on investments reflecting a mix of stocks and bonds in your plan.
If you want your 401(k) plan balance to match your salary by age 30, youâll need to contribute
17% of your income â or about $8,500 per year â to your plan. With a 7% annual rate of return, thatâll give you a balance of $50,717.
If you expect to be earning $75,000 per year by the time youâre 35, youâll need to have $150,000 in your plan by the time you reach that age.
Assuming your income averages $62,500 per year between the ages of 30 and 35, youâll need to contribute 21% of your income, or $13,125 per year, to reach the $150,000 threshold in your plan.
The Magic of Saving for Retirement Early
Looking long-term, at retirement at age 67, letâs assume your income will grow to $100,000 between age 35 and 67. In this scenario, your average annual income is $87,500. Since you expect to earn $100,000 just before retiring, you should have $1 million sitting in your 401(k) plan.
What will it take to reach that goal?
One of the biggest and best secrets of retirement planning is the earlier in life you begin saving, the less youâll need to save later on in life. And sometimes thatâs nothing.
In this case, since you already have $150,000 in your plan at age 35, simply by investing the money at an average annual return of 7% for 32 years your plan will grow to $1.3 million. Thatâs without making even a single dollar of additional contribution.
And for what itâs worth, if you simply made the maximum 401(k) contribution of $19,500 each year between 35 and 67, your plan would have more than $3.4 million by the time you reach retirement.
The most fundamental rule of retirement savings planning is: save early and often!
Planning for Early Retirement
If youâre 25 years old and you want to retire at 50, decide how much income youâll need to live on by the time you reach 50. Since you wonât have the benefit of Social Security or a pension, youâll rely entirely on your retirement savings.
Letâs say youâll need $40,000 per year to live in retirement. In this case, youâll need to have $1 million in your retirement portfolio based on the 4% safe withdrawal rate.
How Much to Save for an Early Retirement
To get from $0 to $1 million in your retirement plan between 25 and 50, youâll need to make the maximum 401(k) contribution allowed at $19,500 each year for 25 years. Assuming your investment produces a 7% return, youâll have $1,181,209 by the time you reach 50. Thatâll be a little bit higher than your $1 million retirement goal.
Itâll be difficult to carve out the full $19,500 on a $50,000 income youâre earning at age 25, but it gets easier as the years pass and your income increases. You might even decide to lower your contributions in your 20s, and work up to the maximum by the time youâre 30.
Just be aware that the foundational strategy of reaching early retirement is based on saving a seemingly ridiculous percentage of your income. Although others are saving 10% or maybe 15% of their income each year, youâll need to think more in terms of 30%, 40%, or 50% savings. It all depends on how early you want to retire.
What to Do if Youâre Not on Track to Retire
Unfortunately, this describes the majority of Americans. But it doesnât need to be you, even if youâre not currently on track to retire.
Letâs say youâre 45 years old and earning $100,000, and you currently have $100,000 in total retirement savings. That means that at age 45 your retirement fund is where Fidelity recommends it shouldâve been at age 30.
Donât give up hope.
If you make the maximum contribution of $19,500 per year between ages 45 and 50, then increase it to the maximum of $26,000 per year from ages 50 to 65, youâll have just over $1.3 million in your plan by the time you reach 65.
You wonât benefit from compound earnings that you wouldâve seen had you started saving aggressively in your 20s, but your situation is far from hopeless.
The main takeaway is that you can get on track to retire at just about any age. But you have to be willing to commit to saving as much as you can and on a completely consistent basis.
The post Am I On Track to Retire? appeared first on Good Financial CentsÂ®.
Is taking money from your 401(k) plan a good idea? Generally speaking, the common advice for raiding your 401(k) is to only take this step if you absolutely have to. After all, your retirement funds are meant to grow and flourish until you reach retirement age and actually need them. If you take money from your 401(k) and donât replace it, you could be putting your future self at a financial disadvantage.
Still, we all know that times are hard right now, and that there are situations where removing money from a 401(k) plan seems inevitable. In that case, you should know all your options when it comes to withdrawing from a 401(k) plan early or taking out a 401(k) loan.
If you take money from your 401(k) and donât replace it, you could be putting your future self at a financial disadvantage.
401(k) Withdrawal Options if Youâve Been Impacted by COVID-19
First off, you should know that you have some new options when it comes to taking money from your 401(k) if you have been negatively impacted by coronavirus. Generally speaking, these new options that arose from the CARES Act include the chance to withdraw money from your 401(k) without the normal 10% penalty, but you also get the chance to take out a 401(k) loan in a larger amount than usual.
Here are the specifics:
The CARES Act will allow you to withdraw money from your 401(k) plan before the age of 59 Â½ without the normal 10% penalty for doing so. Note that these same rules apply to other tax-deferred accounts like a traditional IRA or a 403(b).
To qualify for this early penalty-free withdrawal, you do have to meet some specific criteria. For example, you, a spouse, or a dependent must have been diagnosed with a CDC-approved COVID-19 test. As an alternative, you can qualify if you have âexperienced adverse financial consequences as a result of certain COVID-19-related conditions, such as a delayed start date for a job, rescinded job offer, quarantine, lay off, furlough, reduction in pay or hours or self-employment income, the closing or reduction of your business, an inability to work due to lack of childcare, or other factors identified by the Department of Treasury,â notes the Consumer Financial Protection Bureau (CFPB).
Due to this temporary change, you can withdraw up to $100,000 from your 401(k) plan regardless of your age and without the normal 10% penalty. Also be aware that the CARES Act also removed the 20 percent automatic withholding that is normally set aside to pay taxes on this money. With that in mind, you should save some of your withdrawal since you will owe income taxes on the money you remove from your 401(k).
The Cares Act also made it possible for consumers to take out a 401(k) loan for twice the amount as usual, or $100,000 instead of $50,000. According to Fidelity, you may be able to take out as much as 50% of the amount you have saved for retirement. However, not all employers offer 401(k) loan options through their plans and they may not have adopted the new CARES Act provisions at all, so you should check with your current employer to find out.
A 401(k) loan is unique from a 401(k) withdrawal since youâll be required to pay the money back (plus interest) over the course of 5 years in most cases. However, the interest you pay actually goes back into your retirement account. Further, you wonât owe income taxes on money you take out in the form of a 401(k) loan.
Taking Money out of Your 401(k): What You Should Know
Only you can decide whether taking money from your 401(k) is a good idea, but you should know all the pros and cons ahead of time. You should also be aware that the advantages and disadvantages can vary based on whether you borrow from your 401(k) or take a withdrawal without the intention of paying it back.
If You Qualify Through the CARES Act
With a 401(k) withdrawal of up to $100,000 and no 10% penalty thanks to the CARES Act, the major disadvantage is the fact that youâre removing money from retirement that you will most certainly need later on. Not only that, but you are stunting the growth of your retirement account and limiting the potential benefits of compound interest. After all, money you have in your 401(k) account is normally left to grow over the decades you have until retirement. When you remove a big chunk, your account balance will grow at a slower pace.
As an example, letâs say you have $300,000 in a 401(k) plan and you leave it alone to grow for 20 years. If you achieved a return of 7 percent and never added another dime, you would have $1,160,905.34 after that time. If you removed $100,00 from your account and left the remaining $200,000 to grow for 20 years, on the other hand, you would only have $773,936.89.
Money you have in your 401(k) account is normally left to grow over the decades you have until retirement. When you remove a big chunk, your account balance will grow at a slower pace.
Also be aware that, while you donât have to pay the 10% penalty for an early 401(k) withdrawal if you qualify through the CARES Act, you do have to pay income taxes on amounts you take out.
When you borrow money with a 401(k) loan using new rules from the CARES Act, on the other hand, the pros and cons can be slightly different. One major disadvantage is the fact that youâll need to repay the money you borrow, usually over a five-year span. You will pay interest back into your retirement account during this time, but this amount may be less than what you would have earned through compound growth if you left the money alone.
Also be aware that, if you leave your current job, you may be required to pay back your 401(k) loan in a short amount of time. If you canât repay your loan because you are still experiencing hardship, then you could wind up owing income taxes on the amounts you borrow as well as a 10% penalty.
Note: The same rules will generally apply if you quit your job and move out of the United States as well, so donât think that moving away can get you off the hook from repaying your 401(k) loan. If youâre planning to leave the U.S. and youâre unsure how to handle your 401(k) or 401(k) loan, speaking with a tax expert is your best move.
Keep in mind that, with both explanations of a 401(k) loan and a 401(k) early withdrawal above, these pros and cons are predicated on the idea you can qualify for the special benefits included in the CARES Act. While the IRS rules for qualifying for a coronavirus withdrawal are fairly broad, you do have to be facing financial hardship or lack of childcare due to coronavirus. You can read all the potential qualification categories on this PDF from the Internal Revenue Service (IRS).
If You Don’t Qualify Through the CARES Act
If you donât qualify for special accommodation through the CARES Act, then you will have to pay a 10% penalty on withdrawals from your 401(k) as well as income taxes on amounts you take out. With a traditional 401(k) loan, on the other hand, you may be limited to borrowing just 50% of your vested funds or $50,000, whichever is less.
However, you should note that the IRS extends other hardship distribution categories you may qualify for if youâre struggling financially . You can read about all applicable hardship distribution requirements on the IRS website.
Taking Money Out of Your 401(k): Main Pros and Cons
The situations where you might take money out of your 401(k) can be complicated, but there are some general advantages and disadvantages to be aware of. Before you take money from your 401(k), consider the following:
Pros of taking money out of your 401(k):
You are able to access your money, which could be important if youâre suffering from financial hardship.
If you qualify for special accommodations through the CARES Act, you can avoid the 10% penalty for taking money from your 401(k) before retirement age.
You can take out more money (up to $100,000) than usual from your 401(k) with a 401(k) withdrawal or a 401(k) loan thanks to CARES Act rules.
Cons of taking money out of your 401(k):
If you take money out of your 401(k), youâll have to pay income taxes on those funds.
Removing money from your 401(k) means you are reducing your current retirement savings.
Not only are you removing retirement savings from your account, but youâre limiting the growth on the money you take out.
If you take out a 401(k) loan, youâll have to pay the money back.
Alternatives to Taking Money from your 401(k)
There may be some situations where taking money out of your 401(k) makes sense, including instances where you have no other option but to access this money to keep the lights on and food on the table. If you cash out your 401(k) and the market tanks afterward, you could even wind up feeling like a genius. Then again, the chances of optimally timing your 401(k) withdrawal are extremely slim.
With that being said, if you donât have to take money out of your 401(k) plan or a similar retirement plan, you shouldnât do it. You will absolutely want to retire one day, so leaving the money youâve already saved to grow and compound is always going to leave you ahead in the long run.
With that in mind, you should consider some of the alternatives of taking money from a 401(k) plan:
See if you qualify for unemployment benefits. If you were laid off or furloughed from your job, you may qualify for unemployment benefits you donât even know about. To find out, you should contact your stateâs unemployment insurance program.
Apply for temporary cash assistance. If you are facing a complete loss in income, consider applying for Temporary Assistance for Needy Families (TANF), which lets you receive cash payments. To see if you qualify, call your state TANF office.
Take out a short-term personal loan. You can also consider a personal loan that does not use funding from your 401(k). Personal loans tend to come with competitive interest rates for consumers with good or excellent credit, and you can typically choose your repayment term.
Tap into your home equity. If you have more than 20% equity in your home, consider borrowing against that equity with a home equity loan or home equity line of credit (HELOC). Both options let you use the value of your home as collateral, and they tend to offer low interest rates as a result.
Consider a 0% APR credit card. Also look into 0% APR credit cards that allow you to make purchases without any interest charged for up to 15 months or potentially longer. Just remember that youâll have to repay all the purchases you charge to your card, and that your interest rate will reset to a much higher variable rate after the introductory offer ends.
The Bottom Line
In times of financial turmoil, it may be tempting to pull money out of your 401(k). After all, it is your money. But the ramifications to your future financial wellbeing may be substantial. The CARES Act has introduced new options to leverage your 401(k), without the normal penalties. Find out if you qualify and take time to understand the details behind the options. We recommend speaking to a tax expert if you have any questions or concerns regarding possible tax penalties.
The traditional wisdom is to leave your retirement untouched, and we agree with that. If you’re in a financial bind, consider other options to get you through the rough patch. Tapping into your 401(k) should really be your last resort.
The post Should I Take Money Out of My 401(k) Now? appeared first on Good Financial CentsÂ®.
Meal Planning Can Help Save You $1,600 a Year on Your Grocery Budget!
Hmmm… donuts, pizza & mojitos OH MY! Isn’t it amazing how one stray sentence can totally take over your mind! Food is tasty, a treat, and can be downright mesmerizing! It can also be one of our biggest budget busters! We want what we want and when we want it (sometimes we hate wanting it (I’m talking to you brownies!) This gets us into trouble with our waistline as well as our wallet!
I have my fingers crossed that one day there will be a resurgence in renaissance body love, all curvy & pale Yet, I know that eating healthy needs to be a top priority. I know this because I tell myself this almost daily. You too? We want to do what’s best for our bodies and our wallet, yet sometimes those two things don’t always align. I mean, 1 lb organic strawberries in February can be $8.99! (don’t choke!)
So how do we align saving money on food while eating healthy? The answer is simple, yet kind of intimidating at first glance. It’s meal planning on a budget! DON’T WORRY and don’t get overwhelmed; it can be a lot easier than you imagine. I’m going to walk you through the main points to nail this piece of the grocery budget puzzle. So you never have to worry about hearing, “Mom, what’s for dinner?” ever again!
This post may contain affiliate links. Please read my full disclosure for more info
Feeding our body healthy foods has been a long time passion of mine. Previous to Money for the Mamas, I taught kids how food grows at combo learning farm & CSA. For 90 minutes, we talked about soil, farm animals, water quality, and most importantly, how our food grows and why fruits & vegetables are so important. I also did a stint with the State of Oregon and the national level, Farm to School movement, which helps schools create programing around healthy foods. Fantastic work, which is both heartbreaking and hugely rewarding!
With that experience, I know that meal planning can be a great solution, as moms, I know how we want to do our best to provide healthy foods for our family. Yet, rising food costs do not make this easy for us.
The Street reports that in 2018, the average American household spends $7,729 per year on food, which is about 12.8% of our after-tax income. Yet, with our current situation (August 2020), costs are rising. “April of this year food prices had the largest monthly increase in 46 years!” says ABC News.
There are many different ways that you can save money on groceries, but today we’re just going to talk about one specific element, meal planning on a budget! Which can still be healthy family meals, you just need to plan things out (and plan for the days when you “just can’t even” think of cooking)!
Now, I’m not going to say that an occasional frozen pizza doesn’t sneak into my freezer (and my belly), but I try really hard to balance those not so healthy items with better for you options.
Meal planning to save money on groceries
Let’s get down to specifics on exactly how meal planning can save you money in your grocery budget.
Saving money by not buying foods that you won’t eat
I cannot even tell you how many times I’ve bought veggies with the best intentions of eating them! And then that sad and guilt-ridden sound of the “thunk” as the jicama falls into the trash. Arg!
When you meal plan, you decide what you are cooking and eating and when, there is a “plan”, not some vague intention. When you know that on Tuesday it’s spaghetti squash & meatball night, you can be dang sure that the veggies are getting eaten and will not go to waste!
Speaking of food waste, you all know the squishy, greeny brown scenario at the bottom of the produce drawer. But what does this look like to our wallet? According to Marketwatch, “As much as 40% of food goes uneaten in the U.S! Americans throw away $165 billion in wasted food every year.” According to Harvard Law School’s Food Law and Policy Clinic and the Natural Resources Defense Council, some 160 billion pounds of discarded food also clogs up landfills.
What that means is roughly, “219 lbs of food per person is wasted a year” quotes RTS (waste experts), and that’s $1,600 a year for a typical sized family!
Think of taking your grocery budget, pulling out 40% of the money, and just throwing it in the trash! Oh. Hell. No.
That’s crazy! Yet, we don’t intend to do; it just happens. And meal planning is one of the best ways to combat this by buying only what you know you will use for that week (or however often you go to the store).
Know your food costs
You can still buy most of the same foods but know which of your local stores have the best prices. For example, there are two stores of the same chain, maybe 4 miles apart, and one of them has consistently lower prices than the other. So I always go to the cheaper one.
Also, when you sit down to do your weekly menu, you can look at store flyers to see who might have chicken breasts on sale, or who has digital coupons for your favorite brand of cheese.
You may go to a Kroger store for chicken and then go to Target for sale on frozen burritos (a favorite late-night snack of my husband). Yet, for this to be a genuine savings, you need to consider the cost of your time & gas driving to multiple stores. If you’re spending 45 minutes driving to a store to save $.40 per pound on beef, that’s not saving! Your time is valuable, so absolutely count that into the equation.
Many times stores will have loss leaders (items they sell at a loss just to get people into their store”. Did I mention that I worked in a grocery store for six years? No? Well, I did. It is a fantastic, socially conscious store (B-Corp certified) that helped bring healthy and local food to the communities they serve.
Yet, they weren’t cheap. Even with a staff member discount, I was paying a lot for my groceries. Yet I knew that certain times of the year, they would offer boneless skinless chicken breasts at $2 off the regular price (that was basically at cost for the store), $4.99 vs. $6.99. I bought enough chicken to last a long time. We’re talking like 20 breasts. Then I would take them home, portion two breasts into a freezer bag and boom, chicken for months!
I knew about these times, so I planned it into my budget. Other times of year stores have a sale is their anniversary day (or founder days), or holidays. Each chain is a little bit different, so don’t be shy. Ask them when their big sales are!
Go the extra mile and ask them which days they mark their items down. For example, canned goods may go on Tuesday, boxed goods on Wednesday. Or they may go by the department, dry grocery on Monday, and perishable grocery (dairy and such) on Friday. Ask them what time of day they start and when they finish. Then see if you can go in near to the time that they are wrapping up.
Meal planning saves you time
As a super duper busy mom (aren’t we all?), one of the things I hate most is standing in front of the fridge trying to decide what to fix. When this happens, my mind immediately goes blank; nothing in the refrigerator looks good to eat. In the past, I would waste maybe 10-30 minutes a day just trying to decide what to make. What a waste!
By meal planning, you always know because you posted the weekly menu on the fridge! And what’s better is that your family never needs to ask you, “what’s for dinner?”
Resources to meal planning on a budget
Luckily, many women have masted the art of meal planning (hey, no reason that we need to reinvent the wheel!). So let’s dive in to see how others have meal planned on a budget.
The Healthy Meal Planning Bundle
If you’re a one-stop-shop kind of mom (me!), then you’re going to love this fantastic resource! It’s a bundle of 58 products all around meal planning, tied up in one neat package! You just buy it once (for a crazy low price), and you have access to all 58 items! You need to act fast, as it’s only on sale for the week of August 17th – 21st!
There are 11 Cookbooks, 15 Meal Plans, 11 eBooks, 9 eCourses, 10 Printables, 1 Membership, and a Summit. (Plus some great free bonuses and an early bird buyer special thank you gift!)
The Healthy Meal Planning Bundle is a great option because it’s all around this very specific topic of healthy meal planning (not all are low cost specific). Still, the bundle as a whole is very cost-effective, so you can meal plan on a budget (and there are a few resources around being budget-conscious).
Here are the main categories that the bundle covers…
How to get started meal planning
Quick & easy
Real food & nutrition
Now, you may be wondering why you would ever need 58 items all around the same topic? Totally fair question by the way. Let’s just say it like it is; we won’t vibe with everyone we meet or learn effectively from one particular teaching style. So in the bundle, some information may overlap, but that’s a good thing!
So many times, I read about a topic that I already know a lot about. Yet, one person says something in a specific way, or in a particular tone where it just “clicks” for me! The lightbulb goes off, and I suddenly “get it”! I am thrilled when this happens as it could have something that I didn’t quite understand, or never really knew why it was a big deal.
The great thing about this bundle is that they are giving everyone a free jumpstart by hosting a free Meal Planning Bootcamp starting August 11th. Yes, that’s coming up soon! Here, you can get a taste of some of the information, and get geared up to start your own meal planning journey.
The best part is that it’s a challenge, so you are participating right alongside other women just like you! Going through things together, so you can bounce ideas off of each other, learn from those who tried XYZ, and help others with your own experiences. Don’t forget that it’s free! Yup, zero cost to join in and participate!
Now don’t worry, if you’re reading this after August 11th. The bundle still exists, but it’s only available for a limited time. However, they bring it back annually, and sometimes they even do a flash sale after a few months (no guarantees though). So still sign up with your name and email, and then you will be on the list to get notified once it becomes available again!
Ultimate Bundles also offers a phenomenal resource on learning about all things personal finance! Check out their Master Your Money Super Bundle right here!
If you haven’t watched Frankie work his magic in the kitchen, then you are missing out! He doesn’t do meal prep, per se, but his expertise is in cooking cheaply, using leftovers, AND he’s damn entertaining too! Check out one of my favorite video’s down below (hint – save this video for after Thanksgiving!)
Grab some meal planning printables to help meal plan on a budget
Oh, organizing… did you ever know that you’re my hero? Everything that I would like to be? For you are the wind beneath my wings. Or something like that. Yup, organizing makes my heart happy!
That’s why I am such a huge fan of my Organized Home printables, and I created one specifically for meal planning! This packet has…
weekly menu planner
food inventory tracker (so you never lose steaks under the frozen spinach again!)
family favorite meals list (that are easy go to’s when short on time & energy)
grocery shopping list, broken up by department (no circling back to aisle 7 five different times!)
Let me at ’em!
This meal planner & grocery list is an instant download so you can print it in just 2 minutes from now! (save it to your hard drive so you can print as many copies as you want!)
Freezer meals are essential to meal planning on a budget
One of the very best things that you can do is plan on failing!
Yup, I freely admit that somedays I am a Hot Mess Mom! I am frazzled, I am running 54 errands, going to the eye doctor and end up getting my eyes dilated for what seems like forever, and on and on the tragedy of life turns into a comedy! And I am DONE!
That means I need to plan on things not going great, so on those days, I need something up my sleeve because I know that going to the drive-thru isn’t all that cheap, nor is it healthy!
There are two options for us Hot Mess Moms…
One – Frozen Meals – pizza, burritos, corndogs & tater tots (yum), etc. Now, these aren’t the healthiest, but they are cheap. Besides, who doesn’t like tater tots! So I am fine with doing this a few nights here and there.
Two – Freezer Meals! These are my secret weapon for when times are tough. For example, before I gave birth, I did a whole day of nothing but freezer meal prep, as I knew once the baby came, I would need all the help I could get!
A great resource that I have found is My Freeze Easy! It’s a freezer meal planning & prep plan, where you get access to new monthly freezer recipes! There are some great customizations too; gluten-free, dairy-free, paleo, instant pot, etc.!
Now not only are these designed to save time, but they stem from the $5 Meal Plan program, so all the recipes are budget-friendly!
If you’re not quite sure about diving into freezer meals, Erin (the founder) has a great free workshop to introduce you to freezer cooking, so you can feel it out and see if it’s something you might like. Again don’t worry, it’s not a 90-minute life or death training. She’s a mom; she knows you’re busy! It’s three videos for a total of approx 20 minutes. easy peasy, right! (Pssst… you get three free recipes & shopping list, nice!)
Some of you may be a bit wary of freezing meals, especially produce. I mean, does freezing take away all the good vitamins & nutrients? Answer: Not at all! According to Healthline, “Frozen fruit and vegetables are generally picked at peak ripeness (while fresh is picked before it’s ripe). They are often washed, blanched, frozen, and packaged within a few hours of being harvested. Frozen produce is nutritionally, similar to fresh produce. When nutrient decreases are reported in frozen produce, they’re generally small.”
They mentioned that most of the nutrient loss happens with extended periods of storage in the freezer, like two years or more. So generally speaking, frozen fruits & vegetables are a great way to get your vitamins!
The Healthy Meal Planning Bundle does have a freezer meal cookbook, but it’s not as customizable as My Freeze Easy plan! BUT, I know that the thought of buying 58 items, like the bundle, can cause your brain to shut down from overwhelm. So here’s one great resource. Easy Peasy!
Look to Pinterest for inspiration
So this is a love/hate relationship. Everything looks great, yet it can be overwhelming. Simply put in the search bar “Meal planning on a budget”, or “easy dinners”, “crockpot dinners,” or “frugal foods”. So many options will come up.
I have a secret board just for “dinners to try”, and then maybe once a month I’ll go in and pick a few to try during the next month, and I work those into my meal plan. I may find a new favorite, or it may be a dud.
Oh, and don’t forget while you’re on Pinterest checking out meals, head on over here, and follow me for lots of budget-friendly inspiration!
Know your grocery budget (and stick to it)
If you want to do meal planning to save money, you need to know your grocery budget! Better yet, if you’re stocking up on things at a low price, then you need to know how much of your grocery budget is for regular food, and how much is for stocking up. You can’t blow everything on your stockpile, and you can’t spend every last dime on your weekly veg.
A good place to start is 75/25 split. So 75% of your grocery budget is for everyday shopping, while 25% of your grocery budget is for stocking up. Initially, you may find you’re spending a bit more on your stockpile, but it will taper down as you go on and build up your pantry.
Some things that I stockpile when the prices are good…
Cereal (I only buy if it’s $1 a box)
Meat (buy in bulk and divide into 1 lb portions then freeze)
Paper goods (paper towels, TP)
Health & beauty – soap, shampoo, deodorant, etc
In talking about budgeting did your stomach do a little flip? I know you’ve been meaning to get back to budgeting, so here’s a great resource! It’s my Ultimate Guide on How to Budget Series, and it goes through everything you ever wanted to know about it!
Tip for Meal Planning on a Budget – Leftovers are your friend!
Don’t forget to plan on having a leftover day for dinners! Make it one day at the end of the week to clean out your fridge before the next week’s shopping trip.
Make it easy!
Have Leftover Day be as easy as possible for your family by getting some great clear glass meal storage containers! That way, you can easily see what’s in there to eat, and by buying glass containers, you can reheat these directly in the microwave without worry. It’s known that microwaving food in plastic containers isn’t the best choice.
Harvard Health states that “When food is wrapped in plastic or placed in a plastic container and microwaved, BPA and phthalates may leak into the food. BPA and phthalates are believed to be “endocrine disrupters.” These are substances that mimic human hormones, and not for the good.”
Now, I’m not a scientist, nor am I a fearmonger. But if I don’t need to take a risk, and can easily avoid it, I will. So I bought glass containers for my family.
I love these Pyrex containers. They are a perfect size (3 cup) and stack great in the fridge! So after dinner is over, if there are leftovers, I immediately portion the items out into meals in the containers. So all my husband has to do is grab one, take off the lid and heat it up and BAM, full dinner/lunch!
Pyrex 3-Cup Rectangle Food Storage
pack of 4 or 6
Glass is pre-heated oven, microwave, fridge and freezer safe, & dishwasher safe
Non-porous glass won’t absorb stains or odors
Make leftovers new & different!
If your family doesn’t love the idea of leftovers, then you can easily shake things up! All you need to do is change how it’s served. For example, get some tortillas to make items into a wrap, or add on soup & salad to make small amounts of leftovers stretch into a full meal.
Here are some other ideas to give your leftovers a makeover with a different presentation
make it a wrap
turn it into soup
add a grain and have a buddha bowl
make a frittata or an omelet
use leftovers as fillings for a quesadilla
or as a topping on pizza
Just Google “what to do with leftover ________”, and you should get some fun ideas! Or just go to Big Oven’s Use Up Leftovers feature! You add in your three main ingredients, and it gives you a bunch of tasty options!
At the end of the day
Our Mom List never seems to get shorter, does it? You cross four things off, and then two hours later, you add seven more things! ARG! Yet, there are some things (like meal planning) that can reduce your mental and physical load over time. Meal planning may take a few rounds for you to work out the kinks, but overall you will save so much time and money!
Imagine what you would do with 40% more of that grocery budget? (as you won’t be throwing away rotted out lettuce, or wait, was the broccoli? Yesh, it’s hard to tell now that it’s a squishy stinky blob.
Meal planning on a budget can give you that 40% back! Remember, RTS estimated that it was $1,600 on average, a year per family! What would you do with an extra $1,600 a year? Use it to fund a family vacation? Revamp your back patio living space? Use it to help offset the cost of braces for your youngest? There are so many things!
Articles related to meal planning on a budget:
How to Motivated While Saving Money
Your Ultimate Guide on How to Budget Series
Tell me in the comments, If you started meal planning on a budget, what would you do with the $1,600 that’s back in your pocket?
The post The Frugal Mom’s Guide to Meal Planning on a Budget appeared first on Money for the Mamas.
If youâre looking for ways to put some extra cash in your pocket, make sure to take advantage of credit card rewards programs.
Credit card companies and banks make some of their money from the merchant interchange fees that are charged when you use your card.
As an incentive for you to use their cards, many credit card issuers pass some of those funds on to the consumer in the form of credit card rewards.
If you have good credit and the ability and discipline to pay off your credit cards in full each month, you should try to maximize your credit card rewards. Otherwise you may be leaving a lot of money on the table.
But it can be challenging to navigate the world of credit card rewards. Hundreds, if not thousands, of different credit cards exist, and the type and amount of rewards vary with each card.
There are three main kinds of rewards card offers available:
Bank and credit card points: Chase Ultimate Rewards, American Express Membership Rewards, etc.
Airline miles and hotel points: Delta SkyMiles, Hilton Honors points, etc.
Cash back: Straight cash that can be redeemed either as statement credits or checks mailed to you.
How to Maximize Your Credit Card Rewards
You have three different ways to maximize any credit card rewards program:
The sign-up bonus or welcome offer: Many cards offer a large number of miles or points as a welcome bonus for signing up and using the card to make purchases totaling a specific amount within a specified time period.
Rewards for spending: Most rewards credit cards offer between one and five points for every dollar you spend on the card. Some cards offer the same rewards on every purchase, while others offer a greater reward for buying certain products.
Perks: Simply having certain credit cards can get you perks like free checked bags on certain airlines, hotel elite status or membership with airline lounge clubs and other retail partners.
Usually, the rewards for signing up are much higher than the rewards you get from ongoing spending, so you may want to pursue sign-up bonuses on multiple credit cards as a way of racking up rewards.
Consider a card like the Chase Sapphire Preferred, where you can get 60,000 Ultimate Rewards points for spending $4,000 in the first three months of having the card. That means that while youâre meeting that minimum spending requirement, youâre earning 15 Ultimate Rewards points per dollar. Compare that to the one or two points youâll earn with each dollar of spending after meeting the minimum spending. You can see the difference.
Other than getting the welcome bonus offers for signing up for new credit cards, another great way to maximize your rewards is by paying attention to bonus categories on your cards. Some cards offer a flat 1 or 2 points for every dollar you spend.
How Applying for Credit Cards Affects Your Credit Score
Itâs important to be aware of how applying for new credit cards affects your credit score.
Your credit score consists of five factors, and one of the largest factors is your credit utilization.
Credit utilization is the percentage of your total available credit that youâre currently using. If you have one credit card with a $10,000 credit limit and you charge $2,000 to that card, then your utilization percentage is 20%. But if you have 10 different cards, each with $10,000 credit limits, then that your credit utilization percentage is only 2%.
Since a lower credit utilization is better, having multiple credit cards can actually help this part of your credit score.
New credit â how recently youâve applied for new credit cards â accounts for about 10% of your credit score. When you apply for a new credit card, your credit score usually will dip 3-5 points. However, if youâre conscientious with your credit card usage, your score will come back up in a few months.
What to Watch Out for When Using Credit Card Rewards
While itâs true that careful use of credit cards can be a boon, you should watch out for pitfalls.
The first thing is to make sure that you have the financial ability, discipline and organization to manage all of your credit cards. Missing payments and paying credit card interest and fees will quickly sap up any rewards you might earn.
Another thing to be aware of is the psychology of credit card rewards. It can be easy to justify additional spending because youâre getting rewards or cash back, but remember that buying something that you donât need in order to get 2% cash back is a waste of 98% of your money.
Credit card rewards are alluring, but what do they really cost? Hereâs what you should know about the dark side of credit card rewards.
The Best Credit Cards to Get Started
Before signing up for a new credit card, itâs best to pay off your existing cards first â otherwise the fees and interest will quickly outweigh any rewards you earn.
If youâre ready to start shopping rewards offers, here are five credit cards to consider. Note that these introductory offers are subject to change:
Chase Sapphire Preferred â The Sapphire Preferred card earns valuable Chase Ultimate Rewards and currently offers 60,000 Ultimate Rewards if you spend $4,000 in the first three months. It comes with a $95 annual fee.
Capital One Venture Rewards â The Capital One Venture Rewards is offering 100,000 Venture miles, which can be used on any airline or at any hotel. It also comes with a $95 annual fee.
Barclays American AAdvantage Aviator Red â With the AAdvantage Aviator Red card, youâll get 50,000 American Airlines miles after paying the $99 annual fee and making only one purchase.
American Express Hilton Honors â If youâre looking for a hotel card, consider the no-fee Hilton Honors card, which comes with a signup bonus of 80,000 Hilton Honors points after spending $1,000 in three months. There is no annual fee.
Bank of America Premium Rewards â The Bank of America Premium Rewards card comes with a bonus of 50,000 Preferred Rewards points (worth $500) after spending $3,000 in the first three months. The card has a $95 annual fee.
FROM THE MAKE MONEY FORUM
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The Bottom Line
The best credit card is the one that gets you the rewards that help you do what is most important to you.
If youâre looking to maximize travel credit, then pick an upcoming trip and figure out what airline miles and hotel chain points youâll need. Then pick the credit cards that give those miles and points. If you want to maximize your cash back, look for a card with a good signup bonus that either offers cash back or bank points that can be converted into cash.
Dan Miller is a contributor to The Penny Hoarder.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.