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

Getting out of debt is one of the best things you can do for yourself and your future. It’s no secret that being in debt is like taking the money you have to pay in interest and throwing it down the toilet because that would provide you with the same benefit. So I applaud people who are willing to bite the bullet or whatever they have to do get out of debt. But let’s not take leave of our senses when you do that. In other words, don’t make the situation worse by not being smart about how you pay your debt off.

Rule #1 – you can’t borrow your way out of debt. It just doesn’t work that way. Here are 3 bad debt hacks you shouldn’t use:

Using home equity to pay credit card debt – if you’re strapped for cash but you have equity in your home, this can be tempting. But resist the urge. There are many reasons but bottom line, credit card debt is unsecured and home equity lines are secured by your home. If you fail to pay your credit cards, creditors don’t have a lot of options but fail to pay your home equity loan, you could end up losing your house.

Taking a cash advance on your credit card – this could turn out to be extremely expensive. First, there is like to be a cash advance premium to pay such as a dollar amount or a percentage of the money you take out. Second, the rate is likely to be higher than regular purchases – a lot higher. And, third, interest starts accruing immediately so there is no grace period. That’s why I say it can be very expensive.

And #3 on my hit list is using a debt settlement company – the idea is that they will negotiate with your lenders to get your debt amount and/or rates decreased and you only make one payment a month. The problem is, your creditors have no incentive to negotiate with them and if they do, it could all come back to bite you in the form of lowering your credit score, extra fees and penalties, and taxes on the forgiven amount.

There is a right way to get the ball rolling on get your debt under control and we’ll talk about that tomorrow.

And, that’s the minute for today. Did you miss a minute? You can listen to them all again, along with my notes and resources on my website at www.psworth.com.

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. If you could go back, what would you tell your younger self? A recent New York Times article challenged journalism students from five colleges and universities to talk with retirees, and find out what they wish they had known when they were the students’ age.

As you can imagine the answers were all over the board from wanting to go back to work to the realization that retirement wasn’t at all what they thought it was – as one retiree said, instead of being a place to go die, it was really a place to live and knowing that would have made him less frightened about retiring.

So here’s a suggestion. Instead of trying to figure out everything on your own, go ask someone who’s been there. So often we struggle with things that someone else could help us instantly. Find out what they did and what they wish they would have done differently. Getting the wisdom from lessons learned is often quire priceless.

And, that’s the minute for today.  Like the Minute? Subscribe and leave us a review on iTunes or your favorite site so you never miss an episode.

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 the Age 55 Rule.

I chose Age 55 Rule because yesterday we talked about retiring early and this rule can make a huge difference for anyone who wants to retire early (specifically at age 55 because it is only applicable at this age) and use some of the monies they have saved in qualified plans such as 401(k)s.

Ordinarily, you have to wait until age 59 ½ to take money out of a qualified retirement plan without having to pay a 10% penalty regardless of when you retire. But this rule provides an exception to that. Basically, the rule states that if you turn 55 and you separate from your company (either by retiring or through downsizing) you are eligible to take money out without incurring a 10% penalty. But let me be very clear, both things must occur when you are age 55 that is, that you are age 55 and you separate from your company, and the money must still be in your company plan. You will be ineligible if you leave the company earlier, at age 50 for example. Even if you leave your money in the company plan you can’t come back at age 55 to take money out – it doesn't work that way -- if you do you will owe a 10% penalty.

Also, if you rollover money from your company retirement plan to an IRA, withdrawals before age 59 ½ will be subject to a 10% early withdrawal penalty unless an exception applies such as disability. The age 55 exception does not apply to IRA distributions. So, if you meet the Age 55 Rule requirements and you need to spend some of your retirement money, don’t roll it over to an IRA. If you do, and then take a distribution from your IRA, you will owe 10% penalty because the IRA rules will apply, not the Age 55 Rule.

Our word of the week Age 55 Rule: This rule is very specific. If you follow it, you can save yourself the 10% penalty which could add up to thousands of dollars, but remember you will still owe taxes on your distribution.

And that’s the minute for today. Like the Minute? Subscribe and leave us a review on your favorite site so you never miss an episode.

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

There was an article on Money.com called The Comprehensive Guide to an Early Retirement and in this article they laid out sort of a step-by-step plan to retire early. And if this is one of your goals, you might want to read this entire article and you can find the link in my notes at www.psworth.com for Episode 629. The math behind this plan is based on withdrawing 4% each year and if you can get at least a 4% return that will make your money last longer.

In general, here are the basics to keep in mind:

Set an annual financial income that you will need and this will help you determine how much you will need to save before you retire. For example, if your income goal is $50,000 and you want to retire at age 45, you will need to have $1.9 million saved or $1.3 million to retire at age 65. On the other hand, if your income goal is $100,000 you will need roughly double that amount.

Cut your expenses and up your savings. If all of this seems a little pie in the sky, remember that if you earn $75,000 a year over 15 years that’s over $1.1 million so this is within the realm of possibility.

Put a plan in place and monitor your plan. Your plan should include your goals, your savings, your investments, a medical plan, etc. so that all of your bases are covered and that may also include some part-time work as a supplement.

One word of caution: things change so what works today may not necessarily work tomorrow so before you take the leap be sure that you do indeed have all of your ducks in a row.

And, that’s the minute for today. Got a burning question, send me at [email protected]

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

Okay folks scams are on the rise and seniors are especially at risk. Some of the scams are old ones – ones that have been around for a long time but they are still effective. Here’s one that’s been around for some time but people keep falling in the trap – the jury duty scam:

Usually, the call starts out by telling you that you failed to appear for mandated jury duty, but you may also be told that you skipped a court-summoned order to appear as a defendant, are in contempt or have a federal warrant out for their arrest.

Always, callers claim to be members of law enforcement, whether it’s the local police, the sheriff’s department or the U.S. Marshals Service.

The phone call is usually made after hours (one clue it’s a scam), that claims you are facing imminent arrest because you didn’t report for mandated jury duty. This news may seem real, with your caller ID showing phone numbers for a courthouse or law enforcement agency (but that can be manipulated), and the con artist citing names of actual police and judges. The aim is to scare you into making the usual response: “What?! I never received a jury duty summons!”

Then comes the gotcha part – you can avoid arrest, the caller says, by paying a fine (typically a prepaid debit or gift card). And to verify he’s called the correct violator, he asks to confirm your identity by soliciting personal information, including your name, birth date, Social Security number, etc.

The thing to do in this case is hang up without providing any information about yourself — or give them any money, cards, etc. Here’s why:

Real jury duty notifications, as well as “no show” summonses, are nearly always delivered by mail — and you won’t be asked for personal information such as your Social Security number, birth date or driver’s license number.

And, you won’t get a head’s-up phone call warning of an impending arrest, about missing jury duty or any other infraction.

If you have concerns, look up the courthouse phone number (don’t rely on caller-provided numbers) and verify missed jury allegations with the jury duty coordinator or court clerk’s office. But don’t pay.

This trap is avoidable if you put minding your money first. Got scam a question or a story to share? 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!

I’m all for saving money so when I saw an article in Money by Rachel Elson titled “This Money Saving Trick Could Save You $1,758 a Year or More,” I was curious. So I read on. It seems that is wasn’t one trick but a series of hacks that people were using to sort of well trick themselves into saving. Here are three cool hacks and one or more of them just might work for you:

Matching bad habits with good hack – this is where you pick something and you match it dollar for dollar. So let’s say you choose something like the amount of money on spend on alcohol, cigarettes, or the lottery for example, this would mean that for every dollar you spend there, you would match it with a dollar in savings. Depending on how much you spend on these, that could add up really fast.

Automatically transferring money from your checking account to savings hack. This is an old one but the trick here is to do it each week so it’s barely noticeable. You can start with something like $25 and over the course of a year that’s $1,300.

Saving money in a jar hack. This too is an old one but the hack here is that instead of saving pennies or your change, pick a dollar bill, such as a $5 bill and every time you get one, set it aside and put it in the jar when you get home. This last hack only works if you use cash on occasion and not just credit and debit cards for everything but it can be add up quickly if you do.

And, that’s the minute for today. Did you miss a minute? You can listen to them all again, along with my notes and resources on my website at www.psworth.com.

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. If being wealthy, achieving financial freedom or just living a richer life is one of your goals…On a scale of from 1-10 how important do you think your mindset is in achieving those goals? If you guessed a high number, you’re right. That’s because your money, skills and everything else are at the mercy of your mindset. A long time ago, I read a quote, I believe it was from Dave Ramsey. He said something like achieving wealth or your goals was 80% mindset and 20% knowledge.

If that’s true, then the first thing you have to do to achieve any of those goals is to manage your mindset. So how do you tame or manage your mindset? In other words, how do you get it to work for you? Well, the answer is simple but it’s not necessarily easy.

You see your mindset is housed deep in your subconscious. That allows you to make quick decisions without spending a lot of time thinking about them. So in order to change your behavior around money you have to effectively rewrite the scripts that your subconscious mind uses so your thoughts and actions lead you in the direction you want to go. Sounds simple right? But it will most likely require time, persistence and conviction to make changes. But, you can do it because your subconscious mind is malleable. It doesn’t care about right or wrong or if you fail or succeed. It only cares about creating and attracting the conditions and effects related to your thought energy. So positive thoughts about money and achieving wealth are a must if that’s where you want to go.

Give this one some thought and then get your mind on board. And, that’s the minute for today

Got a burning 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 Friday and time for our word of the week –the word this week is budget.

I chose budget because it is such an important tool and whether you are getting a tax refund or you owe on your taxes, setting up a budget is one of the best things you can do to mind your money even if you only keep it for three months. And, this is a great time to do it because you most likely have a lot of the paperwork you need to get started in your tax documents.

For example, how much you make and how much you keep should be very apparent to you. So, what’s a budget? A budget is really a spending plan because it allows you to decide how you want to spend your money before you actually do it. So this means understanding how much money is coming in, how much goes for taxes, insurance, etc. right off the top so you know what you have to work with. Then make a list of your expense for things like housing, food, entertainment, savings, church, charity, etc. Once you know your expenses, subtract them from your available income. If you have money left over great – you get to decide how to spend it – perhaps you could put it towards a vacation or your favorite hobby or even retirement. Having a budget gives you the freedom and the power to do that because you know that all the other essentials are taken care of. On the other hand, if you come up short, that is, you have more expenses than income, you will know in advance so that you can make some changes before you actually run out of money before the month ends.

Our word of the week budget: despite what you may have read or heard, budgets are not the bad guys – in fact, they can turn out to be really good guys and make it easier for you to mind your money.

And that’s the minute for today. Like the Minute? Subscribe and leave us a review on your favorite site so you never miss an episode.

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

Okay folks, it’s getting down to the wire. Taxes are due April 18th and if you haven’t filed your taxes by now, you might be thinking about filing an extension. The IRS has made it very easy to do that but it’s not all pie in the sky and there are some definite pros and cons related to filing for an extension.

On the pro side:

You have more time to gather your information and file. In fact, filing an extension now gives you six months or until October 16th. This is good if you have really complicated taxes or you are still waiting on an important document.

On the con side:

Having more time does not mean having more time to pay. If you will owe taxes, it’s up to you to calculate how much that might be and send at least 90% of that in now to avoid penalties and interest.

Another big con is that if you will be getting a refund, you will typically have to wait longer to get it. And, no Uncle Sam does not pay you interest for keeping your money.

And, that’s the minute for today. So whether you decide to file an extension or not will depend on your specific situation but the time to make a decision one way or another is fast approaching. Got a burning question, send me at [email protected]

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

I got an interesting question that I thought I would share. The question comes from Quid and he wants to know if he should invest in his 401(k) at work or put his money in a Roth IRA so it comes out tax-free at retirement?

That’s was a great question but here again – it depends – because every ones situation is different. So here are three factors to consider if you’re facing this same dilemma. Also, these factors apply to other tax-deductible retirement plans like 403(b)s and 457 plans as well.

Does your 401(k) have a company match? If it has a match and you don’t contribute you won’t get the match and that’s like throwing away free money. So if there is a match that gives the 401(k) a distinct advantage. And you should consider investing at least up to the match.

Do you meet the income requirements to invest in a Roth IRA. For example, if you are single your income must be less than $118,000 to contribute the max and $186,000 for married filing jointly. The maximum contribution is $5,500 if you’re under age 50 and $6,500 if you are over age 50.

Finally, how much money do you want to invest? I just mentioned that the max for a Roth IRA is $5,500 if you are under age 50. Well, the max for a 401(k) this year is $18,000 or $24,000 if you are over 50. There is a huge difference in the amount you can invest. And, in fact, if you have the money to invest in retirement and you meet the income requirements, you might want to consider putting some in both. They are both good options.

Hope that helps Quid and that’s the minute for today. Got a 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!