Minding Your Money 360 - Quick tips to manage your money for success

Today on the minute – Are You Maxing Out Your 401(k)?

But first the holiday is coming and I’m having a flash sale of my How to Get Divorced Without Losing Your Blouse book on Amazon. Tomorrow, the 1st and Saturday the book will be absolutely free and on Sunday and Monday it will be 99 cents. So if you know someone who is thinking about or going through a divorce please pass this on to them.

Now, yesterday we talked about the fees that can be associated with 401(k)s and talked about how important it is for you to understand what you are paying so you can make the best choices and maintain as much of your money as possible.

Today I want to focus on a slightly different topic and that is times when you might not want to max out your 401(k). Obviously, if all of your options have high fees associated with them that might be a case where you stop with where the match if any ends. If you still want to save for retirement, you might consider investing in an IRA where your choices are virtually unlimited and don’t forget if you own a business or a side hustle that you have set up like a business, you can set up your own retirement plan such as a SEP and you can set aside a tremendous amount of money – up to 25% of your net earnings, up to $54,000. That’s a lot more than you can contribute to a 401(k).

Another example might be when you have other goals such as paying off credit card debt, building an emergency fund, buying a house, etc. My point is it’s important to have a plan in place to know what your priorities are not just for retirement but for your life so you can choose the best options for you. Without a plan and doing your homework, you run the risk of putting your money in all the wrong places like the guy or gal who’s looking for love in all the wrong places.

And that’s the minute for today. Hey, never miss a Minute, hop on over to iTunes and subscribe and while you’re there, leave us a review it would really help us so we can continue to help you. You can find a link at mindingyourmoney.org.                                                   

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Today on the minute – a 401(k) fee analyzer

You’ve heard me talk on many occasions about how the fees you pay can severely limit the growth of your money and this is especially true when it comes to retirement plans like 401(k)s. Some plans are so loaded with fees that they can take up nearly a third of your investment returns and I sometimes recommend that clients look for other ways to invest for retirement. But, now you may not have to go it alone.

I just found Nerdwallet’s fee analyzer for 401(k)s and there is a link included in this Episode. Episode 723. Now a quick disclaimer: I don’t have a 401(k) so I have not been able to personally test this tool. So, if you have an opportunity to test it, I would appreciate it if you would let me know how effective you think it is.

So what kind of fees are you likely to find in your 401(k)? Here are just a few:

Brokerage account fees: These include annual fees to maintain a brokerage account, subscriptions for premium research to help with trading strategy, and fees to access trading platforms.

Trade commissions: Charged by a broker when you buy or sell certain investments, such as stocks.

Mutual fund transaction fees: Charged by a broker to buy and/or sell some mutual funds.

Expense ratios: Annual fees charged by all mutual funds, index funds and exchange-traded funds, as a percentage of your investment in the fund.

Sales loads: A sales charge or commission on some mutual funds, paid to the broker or salesperson who sold the fund.

Management or advisory fees: Typically a percentage of assets under management, paid by an investor to a financial advisor or robo-advisor.

401(k) fees: Administrative fees to maintain the plan, often passed on to the plan participants by the employer.

If you are curious about what these fees are I have included definitions in my notes for this episode and you can find them at www.mindingyourmoney.org.

Fees are real and they take money out of your pocket. Be an informed consumer.

And that’s the minute for today. Hey, never miss a Minute, hop on over to iTunes and subscribe and while you’re there, leave us a review it would really help us so we can continue to help you. You can find a link at www.mindingyourmoney.org.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Today on the minute – let’s talk about annuities

Janet asks, “I was approached about buying an annuity for retirement. Is that a good idea? I don’t know a lot about them.”

That’s a good question and because it’s for retirement, it’s important to really review and understand your options before you sign on the dotted line because it could be costly. Yes, you can change your mind but since most annuities have surrender charges that can last for years, you may have to pay to get out.

So here are some annuity basics: To begin with an annuity is an insurance product or contract which means that it is only as good as the company that backs it. Depending on your goals, an annuity may or may not be right for you so look beyond the ad stuff and get to the details of how an annuity will add to your financial well-being.

Here are 3 pros of annuities:

You can get a guaranteed income for the rest of your life or the time period you choose

You can postpone paying taxes on your investments until you take the money out

There is no annual contribution limit

Here are 3 cons of annuities:

Fees and expenses – they can be really high especially since most include a life insurance policy.

When you invest in an annuity, your money is literally locked up. As I mentioned earlier, there is typically a surrender charge that can last for years and if you take money out before 59 ½ you could also be subject to a 10% penalty.

There are no guarantees. Annuities aren’t guaranteed by the federal government. The promise to guarantee your principal or future payments is only as good as the insurance company you sign up with so do your homework.

Annuities are not necessarily a DIY project, you might need some help on this one because there are so many options and it’s easy to get overwhelmed. So do your homework and really look for someone you trust for answers.

Want more Minding Your Money Minute episodes? Then visit MindingYourMoney.org and there they are.

Got a burning money question, send it to me at [email protected].

Thanks for listening and as always remember that minding your money really is the path to a richer life!

It's Monday and I have a question.

And, my question is this…

But first, I have to take a moment to say that our hearts and our prayers go out to the people of Texas who are caught up in Harvey and all of his after effects. Please do everything you can to stay safe.

Now as I was saying, my question is this… are you passing up free money?

I know it’s hard to believe but there are some people out there who are passing up free money and hope you’re not one of them. I could hardly believe that so many people are doing this and it could cost you big time in some cases over $1,300 a year and tens of thousands of dollars over time. What am I talking about? The match in 401(k) plans of course.

In an article in US World News and Reports by Rebecca Lake, Steven Forrester, the senior vice president and head of financial planning at EMM Wealth in New York quoted this example. If an employee making $65,000 gets a dollar-for-dollar match at 6 percent, he could get up to $3,900 a year. After 30 years at a 7 percent rate of return, the total match and earnings would come to $390,000. Now that’s a lot of free money.

But I know, because I have talked to a lot of you that it’s hard to come up with the dollars to save. But I also that sometimes we make decisions without having all of the facts. With a salary of $65,000 a year that’s $3,900 or $325 a month or a little over $81 a week. Before you pass up free money check to see if there is something in your budget that you can cut out to take advantage of the free money if your company offers a match.

And that’s the minute for today. Keep your eye on the Minute because some big changes are coming in September including guests to share their money stories and ideas. And, don’t forget if you like the ‘Minute’ leave us a review on iTunes.

Thanks for listening and as always remember that minding your money really is the path to a richer life!

It’s Friday and time for our word of the week –the word this week is Purpose.

I chose Purpose as the word of the week because all this week, we have been talking about your money attitudes and yesterday we talked about how to makes changes if your money attitudes are holding your back. But, I want to step back for a moment and get a little deep. I believe we all have a purpose in life and sometimes that purpose is overshadowed by problems, especially money problems and other hiccups in life. As you think about your money attitudes and especially if you are thinking about making some changes, consider your purpose and what will help you fulfill it.

When I say purpose, it doesn’t have to be something grandiose. It could be something as simple as giving of your time to a cause you believe in or helping someone else get on their feet. The problem is, even if it is something simple, it’s difficult to imagine have you would accomplish it if you are mucked and mired in your own financial problems because when you are worried about your finances it’s hard to think or do anything else, trust me I’ve been there. It is so true what they say on airplanes, put the mask on yourself first and then help others. As you contemplate your purpose, what do you need to do to put the mask on yourself first so that you can fulfill your purpose?

Our word of the week is Purpose. What were you put here on this earth to do/accomplish and what’s standing in your way.

And that’s the minute for today. Want more Minute? Connect with us on Twitter @yourmoneyminute

Thanks for listening and as always remember that minding your money really is the path to a richer life!

Today on the minute – Steps to Change Your Money Attitudes

All this week we’ve been talking about your money attitudes. Why they are important and how you can determine what yours are. But what if you don’t like what you find out about yourself? What if you have goals and your money attitudes and behaviors are not helping? How do you change those? Well, here are 5 steps to you can do to make the changes you want. But there is a caveat – this is not an overnight deal. You didn’t form your attitudes and habits overnight. Instead, they are the result of years, sometimes since childhood, when these have been reinforced over and over again and they are a part of the fabric of who you are. So don’t expect this to happen quickly or to even be easy since they are mostly housed in your subconscious and many are on autopilot.

With that in mind, here are 5 basic steps I learned from Dr Cathy Collautt to get your subconscious on board because getting it on board allows you to make changes faster and with less effort:

Realize that your subconscious wants the best for you. So the key is not to try to force change – that just doesn’t work. Instead recognize the wisdom it has.

Get real specific about what your subconscious is trying to protect you from. For example, it may be trying to make your life easier, less complicated by making automatic spending decisions for you.

Once you understand what it is protecting you from and why it may be resistant to change, make a promise to your subconscious that if taking control of your spending complicates your life and makes things more difficult, you won’t do it.

Find examples of people who have taken control of their money and their lives got better – they had more freedom and their lives became less complicated. Remember, your subconscious will do anything you tell it is possible and if you have real examples all the better.

Finally solidify and affirm the changes you want. This is the key to get your subconscious to start working for you. So your affirmation may go something like this: “Making conscious spending decisions increases my wealth, my freedom and makes my life easier.” And, keep repeating this on a daily basis. Repetition causes things to stick.

And that’s the minute for today. Hey, never miss a Minute, hop on over to iTunes and subscribe and while you’re there, leave us a review it would really help us so we can continue to help you. You can find a link at mindingyourmoney.org.                                                 

Thanks for listening and as always remember that minding your money really is the path to a richer life!