It Is Never Too Late To Start Investing For Your Retirement No Matter Your Age
I hear it time and time again from my coworkers. They say, “I am only a few years away from retirement and have never saved a thing. It is too late for me to start.” I’m here to tell you that it is never too late to start investing for retirement. What else do you have to do? Okay, I got it….you waited too long. There is nothing that we can do to go back and fix that mistake, but now there is no time to lose! Now is the time to start investing. If you have never invested for retirement before, no matter what your age is, what are you waiting for?
Don’t Expect Help. Unless you are in your 60s right now, it is almost safe to assume that the US Social Security system will not be available for you when you retire. Of course the program will be around, but it will not look like it does right now. The program cannot survive in its current form. It pays out more money than it takes in every year and has a huge unfunded liability. So, what does this mean for you and me? We can expect to see either a reduction in the amount of Social Security benefits we will receive in retirement, or we will see an increase in the age where we can claim those benefits. Or, we will see both of these things happen at the same time. So, the morale of the story is that we must save for our own retirement. We cannot only hope that the government will take care of us in our Golden Years.
The Depressing News. If you had saved $5,000 a year since you entered the work force when you were 22 years old, you would have saved approximately $1.8 million by the time you reached retirement age of 65 (assuming an 8% average annual rate of return). You can see the detailed math in the blog’s Resource Page where there are several MS Excel spreadsheets with interactive calculators for you to use. But, if you wait until you are 40 years of age before you ever start investing for your retirement (using the same scenario above), you will only have saved $365,000 over the last 25 years of your working life. You will have missed out on a lot of compounding interest by waiting so long. But, having $365,000 saved for retirement is a lot better than having nothing and depending on the government for help.
Start Investing Now! So, where do we go from here? Time is the most precious commodity that we have. The power of compounding interest is incredible! We have to use it in our favor. There is nothing that we can do to go back and correct the mistakes of our past with respect to waiting. All we can do now is move forward. What else do you have to do? Now is the time to start investing if you have not already. It is never too late to start investing for your retirement.
Supply and Demand – College Tuition Rates Will Continue to Rise To Enormous Levels
Classic supply and demand tell us that college tuition will continue to rise faster than inflation. I went to a small southern private liberal arts college, and the total cost of a year for tuition, room, and board was approximately $22,000. Next year, my alma mater will charge incoming freshmen $36,000. That is a 63% increase in only ten years and equates to a 5% annual rate increase.
According to the College Board, a not-for-profit membership association comprised of more than 5,400 schools, colleges, universities, and other educational organizations, the national average cost for a year of education at a private four-year college costs $25,143 annually (up 5.9 percent from last year) and $6,585 for a public four-year university (up 6.4 percent). You might not think that 5 or 6% annual increase is much, but it really adds up when inflation hovers around 3% annually and Americans’ real wages are barely increasing by 1% every year. Our wages are not keeping up. Do you realized that a college graduate who has a baby soon after graduation will have to pay approximately $79,000 a year for private college and $22,700 per year for a public institution when their kids enter college twenty years down the road. But, why is the cost of education in America skyrocketing too much? Supply and demand of course!
The Supply Curve. For the most part, there are no more major colleges being formed in America. Now granted, there are a few online universities that have been started over the past few decades, but it is safe to say that there will not be any new brick and mortar large schools to compete with the likes of the University of Georgia, FSU, Harvard, etc. There is a finite number of colleges in the US. The market for brick and mortar institutions of higher education is pretty well saturated. Now, many schools are enrolling more students each year, creating larger class sizes, and higher student to teacher ratios. But, even this gimmick can only go on for so long. My own college commissioned a study that at 1,500 students, the quality of education would diminish. So, they chose to stop expanding. So, the supply of education spaces for new freshman each year is staying the same. Classic finance tells us that when supply stays constant with increasing demand, prices will increase.
The Demand Curve. So, since supply is fairly constant, that leaves us with the demand side of the equation. The demand to earn a Bachelor’s Degree is huge now. More and more high school seniors are going to college or feel the need to go to college than ever before. According to the National Center for Education Statistics, college enrollment in increased by 16% between 1985 and 1995 and at a faster rate (23%) between 1995 and 2005, the last available date for data.
Studies have shown that college educated citizens can earn up to 60% more over their lifetimes than their high school diploma only counterparts. And, let’s face it. Our world is not getting any cheaper. Unfortunately, many graduating high school seniors view that they almost have to earn a Bachelor’s Degree to keep up in the new work force.
New Paradigm. There has been a fundamental shift in our collective thinking. Now a Bachelor’s Degree is almost expected by our society. A Bachelor’s Degree is now the new equivalent to a high school diploma. More and more jobs in America require a degree where originally a GED or high school diploma would have sufficed. Now, a Master’s of Science degree is the new Bachelor’s Degree.
Everything has shifted. Part of the reasoning is the shift in America’s competitive advantage. The US is no longer blue collar despite what people and the unions want us to believe. We outsource textiles and other once dominant hard working industries. And, the US assembly line jobs which we invented and made prominent are all slowly being phased out as well. We can all see that case every day in the news and in Detroit especially with the Big 3 auto makers.
What Is A Parent To Do? Stay tuned. Over the next few days I’ll talk about a few possible solutions to help us fund the education of our children.
Twitter Weekly Updates for 2009-06-28
Top Ten Highest Paid Musicians For 2008 from Concert, Ticket Sales, and Other Ventures
Last year, I posted the Top Five Highest Paid Musicians. It was a great list. I only posted it on a whim, and it quickly became one of the most read articles here on Own The Dollar. So, now that Forbes has compiled its newest list for the past year, I thought that I would share the top ten highest paid musicians for 2008 with you. While a lot of this data is not readily published and not all inclusive, the dollar figures combine music royalties, endorsement deals, ticket sales, and other side ventures like perfume, clothing, and other deals.
Top 10 Highest Paid Musicians For 2008
- Madonna - $110 million
- Beyonce Knowles - $87 million
- Coldplay - $70 million
- Bruce Springsteen - $70 million
- Kenny Chesney - $65 million
- Rascal Flatts - $60 million
- AC/DC - $60 million
- Toby Keith - $52 million
- Bon Jovi - $50 million
- Brittney Spears - $35 million
Other notable musicians…..
Jay-z - $35 million
Kanye West - $25 million
Miley Cyrus - $25 million
Jonas Brothers - $25 million
50 Cent - $20 million
Taylor Swift - $18 million
Carrie Underwood - $14 million
There is quite a bit of change from last year’s list. Some acts did not even make the list this year. A lot of that has to do with who is on tour around the country and the world.
Book Review: The Foreclosure Of America - The Inside Story of Countrywide Home Loans
Have you ever wondered how America got into this home mortgage meltdown mess? Have you ever wondered what those giant mortgage originators were thinking of when they invented interest only home loans with no income proof required and then were shocked when it blew up in their faces? Adam Michaelson recently wrote a book called, “The Foreclosure of America: The Inside Story of the Rise and Fall of Countrywide Home Loans, the Mortgage Crisis, and the Default of the American Dream“.
In July 2004, the author who was the Senior Vice President of Marketing for Countrywide Home Loans entered into an underground bunker at Countrywide’s headquarters for a meeting about a new loan product that would allow borrowers to pay less than their minimum monthly payment. Michaelson asserted in the book that he witnessed the invention of interest only mortgages and “pay option” mortgages where people could choose their own low payment (lower than the monthly principle and interest required) which would he feared correctly would bring down the American Dream of home ownership. It’s pretty easy to accurately predict a major meltdown in hindsight. Michaelson stated in the book that he brought his fears up to his bosses and was ignored. But, in the end, he proved to be the good corporate soldier by marketing and helping to sell millions of Americans on the idea that they could buy more house then they could afford and to pay less for it as well. The booming housing market would only get bigger, of course, with increasing home values supporting homeowners in a never-ending cycle of borrowing against the value of their inflated home equities and refinancing at a later date until those values ultimately plummeted.
The book gives us an incredible insider’s knowledge on the ripple effects the mortgage meltdown had on American families and the economy. The book examines the morality of a career spent marketing mostly unattainable dreams and the market forces that destroyed a company. The book is a fascinating look at the motivation, politics, and inner workings of Countrywide from someone who was actually on the inside.
While this book is only one man’s view of one institution’s role in our current recession and the mortgage meltdown specifically, it is a great look inside the company that started all of this mess. I always find these inside, behind the scenes look in companies and institutions fascinating, and I think that you will as well.
Top 10 Purchases You Should Haggle Over, Plus The Best Negotiation Tips
- Home Mortgage Rates
- Home Prices
- Rent
- Furniture
- Cars & Car Financing
- Jewelry
- Hotel Rates & Vacations
- Television Sets and Expensive Electronics
- Handyman and Other Services
- Any big ticket item
Since the economy is in a recession, now is the best time to practice your haggling skills when making purchases. I’ve had a lot of great success haggling over jewelry and home mortgage interest rates. A friend of mine used to work for a national jewelry store, and they have up to 40 or 50% negotiating room built into the price of jewelry in the display case.
Try carrying cash into a store in large denominations and showing it to the clerk. Many stores now are in either financial trouble or just barely squeaking by. They would rather make less profit than no profit at all if you walk away from the sale. That is the key point. Do not let the salesperson know how badly you want the product. Be ready to walk away. That is your most powerful negotiating tool. Also, never be the first person to name a figure. And, make sure that you are talking when someone who has the right at the store to negotiate a better price with you. Go straight to the top if you have to.
Some lines to practice when shopping…
“Is that the best you can do?”
“What ca you do for me if I pay in cash?”
“Would you take less?”
“Well, I’ll have to talk it over with my boss / spouse / partner.”
“I don’t know.” (Don’t be afraid to just stay silent.)
These simple sentences can be quite powerful when you are trying to haggle a price down. Did I miss some? What works for you?
What are some purchases that you have had success in negotiating and haggling the price down?
Twitter Weekly Updates for 2009-06-21
- It is estimated that the average American family actually has approximately $90 in spare change lying around the house. #
- Thanks to everyone who made the Money Hacks Carnival on Own The Dollar a great success. See some great postings at http://tinyurl.com/lkqo4b #
- Don’t miss haggling, saving on groceries, buying in recession, foreclosures, & other topics this week at Own The Dollar http://bit.ly/4tcRO #
What Percentage of Your Paycheck Do You Invest For Retirement?
FiLife - a Personal Finance Site
FiLife has some great and most eye appealing polls on the internet, and I just had to share them with you. The website actually lets you create your own question for the FiLife community to answer, and the question above is mine.
So, take a minute and vote, and see where you compare. Thanks…
Money Hacks Carnival #69 - The Dollar Bill Edition
Editor’s Choice - $10 Demand Note, 1861
Demand notes were considered to be the first “greenbacks”. In an attempt to create confidence in paper money, government officials were paid in these early greenbacks, which were named after the color of their reverse side.
FMF presents Three Steps to Getting the Most from Your Credit Cards posted at Free Money Finance.
Jim presents Average Net Worth of an American Family posted at Blueprint for Financial Prosperity.
J. Money presents Save More Money by Concentrating on The BIG Stuff. posted at Budgets are Sexy.
nickel presents Planning a Family Vacation Without Breaking the Bank posted at fivecentnickel.com.
Debt & Credit - Fractional Currency (5 Cent Bill), 1864
Without authorization from anyone in the Federal government, Spencer M. Clark, an employee of the Treasury Department under President Lincoln, placed his portrait on this Fractional Currency note. This insubordinate act led Congress to pass legislation banning the portrait of living persons on all bank notes.
Patrick @ Cash Money Life presents Best 0% Balance Transfer Credit Cards posted at Cash Money Life.
Mr Credit Card presents Which Credit Monitoring Service Updates Most Frequently? posted at Ask Mr Credit Card’s Blog.
DR presents What is a Credit Card Balance Transfer - The Dough Roller posted at The Dough Roller.
Manshu presents Will I be sued for credit card default? posted at OneMint.
Silicon Valley Blogger presents Balance Transfer Credit Card Tips, Facts and Traps posted at The Digerati Life.
Bootstrap presents Spring Cleaning: Credit Report Review posted at Bootstrap Investing.
d. ninja presents Credit Card + Church = Hell? posted at Punch Debt In The Face.
Credit Shout presents 8 Benefits of the Credit CARD Act of 2009 posted at CreditShout.
ChristianPF presents 4 Steps to Get Your Finances Under Control posted at Christian Personal Finance.
Kevin presents The Importance of Teaching Our Children Financial Literacy posted at Parenting at More4kids.
Debt Freedom Fighter presents 5 Effective Tactics for Dealing With Debt posted at Discover Debt Freedom.
Leave Debt Behind presents A Changing of the Debt Lawsuits: Can You Be Sued for Credit Card Debt? posted at LeaveDebtBehind.com.
Ben presents Your Fico Score posted at Money Smart Life.
Investing - $10,000 Gold Certificate, 1882
An extremely rare and valuable example of a Gold Certificate, this is one of two notes in existence. The reverse side of Gold Certificates was printed in a golden orange, symbolic of their redemption value in gold coin. The passage of the Gold Reserve Act of 1933 made it illegal for U.S. citizens to hold Gold Certificates and gold bullion.
MoneyNing presents Turbocharge Your Savings with Certificate of Deposits (CDs) posted at Personal Finance Blog by Money Ning.
Green Panda presents How My Retirement is Currently Doing? (June 09 Update) posted at Green Panda Treehouse.
David R. Lampsen presents Raiding the Roth: Using a Roth IRA as Your Emergency Fund posted at Personal Finance Analyst.
Aryn presents Should You Invest in Gold? posted at Sound Money Matters.
Jeff Rose presents Four things that are making you poor posted at Good Financial Cents.
Wealth Pilgrim presents Is This A Picture of a Snake That Ate A Mouse or The Key To Your Investment Success? posted at Wealth Pilgrim: Money Management Advice, Financial Stress Management, & Resources.
Dividend Tree presents Demise of Dollar – Does it Affect Dividend Growth? | Dividend Tree posted at Dividend Tree.
Kristjan presents Long Term Investing Is NOT Dead posted at Stuck On Wall Street.
ABC presents Safe withdrawal rate for retirement funds - 4% rule posted at ABCs of Investing.
D4L presents Five Stocks With A Low Dividend Payout Ratio posted at Dividends Value.
Investing School presents A Great Inflation Indicator posted at Investing School.
Jae Jun presents The Art of Selling Stocks posted at Old School Value.
Raymond presents Smart Money 2009’s Best Online Brokers posted at Money Blue Book.
The Smarter Wallet presents Should You Trade Stocks Online? posted at The Smarter Wallet.
Frugality & Saving Money - $10,000 Federal Reserve Note 1914
Salmon Chase, Secretary of the Treasury under President Lincoln, is featured on this extremely rare note. It was one of the last $10,000 larger-sized notes issued.
Paul Kamp presents “A Penny Saved is 1.76366843 Pennies Earned.” posted at Don’t Quit Your Day Job.
Abigail Perry presents Mixed marriages: When savers and spenders unite posted at i pick up pennies.
Charlie presents How to Break the Seductive Spell of Name Brands and Save Your Family Big Money posted at Pay Less For Food.
Lazy Man presents SEP IRA: Self-Employed Retirement Plans posted at Lazy Man and Money.
Jeff@StretchyDollar presents Cheap and Easy Ways to Protect Your Home While On Vacation posted at StretchyDollar.
Darwin presents Going Out of Business Sales a Scam or Worthwhile? posted at Darwin’s Finance.
CashAholic presents The importance of saving posted at CashAholic.
Chris Lang presents House-hunting expenses and how to minimize them (part 2) posted at Home I Own.
Four Pillars presents Save Money With Zero Percent Balance Transfers posted at Four Pillars.
Craig Ford presents Does Spending Cash Really Save Money When Compared to Using a Credit Card? posted at Money Help For Christians.
B Simple presents Eliminate your Banking Fees with these simple tips posted at Simplified Financial Lifestyle.
FB @ FabulouslyBroke.com presents How we screw ourselves over posted at Fabulously Broke ….in the City.
One Family presents Frugal Options for Families with Kids during Summer Months posted at One Family’s Blog.
Patrick @ Money Saving Deals presents $5 Babies R Us Coupon posted at Money Saving Deals.
Savings Toolbox presents Saving Strategies to Put More Money In Your Pocket posted at SavingsToolbox.com.
Economy - Two Dollar Bill
A portrait of Thomas Jefferson is shown here. In 1776, the Continental Congress issued the first $2 note. The $2 is still in circulation today, although it is not commonly used by merchants and consumers.
Len Penzo presents 18 Crazy Things You Didn’t Know About the National Debt posted at Len Penzo.com.
BankMan presents Ten banks paying back TARP early posted at High Yield Savings Accounts.
Rags presents How Unemployment is Measured posted at From Rags 2 Riches.
Relax presents Do we have to worry about inflation? posted at The Wise Curve.
Hank presents Hope Is Not A Method When It Comes To Managing Your Finances posted at Own The Dollar.
Insurance - $100,000 Bank Transfer Note, 1934
Featuring a portrait of Woodrow Wilson, this note was the largest note printed by the Bureau of Engraving and Printing. Bank Transfer notes were used only for transactions among Federal Reserve Banks and not for public circulation.
MBR presents How to Find the Best Home Owner Insurance Rate posted at MonitorBankRates.com.
Kathryn presents Finding Affordable Health Insurance posted at Out of Debt - Christian Finances and Debt Help.
Ryan P Smith presents How I Saved $652 on Car Insurance: My Geico vs. Esurance Story posted at SpendOnLife.
Taxes - $5,000 Federal Reserve Note, 1934
This note features a portrait of James Madison, member of the Continental Congress and the fourth U.S. President. In 1945, the Bureau of Engraving and Printing stopped printing notes with denominations greater than $100.
Tom Drake presents The Basics Of The Smith Manoeuvre posted at The Canadian Finance Blog.
Madison presents Tax Credit for First Time Home Buyers Improved posted at My Dollar Plan.
Other - Silver Certificates
First issued in 1878, Silver Certificates were our nation’s primary currency for many years. They were issued in denominations ranging from $1 to $1,000 and could be exchanged for silver at the U.S. Treasury. The last series of Silver Certificates was issued in 1957. When the price of silver began rising rapidly in the early 1960s, Congress stopped redeeming Silver Certificates in 1968 and began exchanging them for Federal Reserve Notes at face value.
Peter presents False Starts And Budget Malaise: Getting Back Your Budgeting Momentum posted at Bible Money Matters.
John Mellem presents Survival Stew: The Real Economic Forecast posted at Survival Stew.
TIP Guy presents Bloggers and Blogopreneurs Debate posted at The Income Portfolio.
Super Saver presents Planning to Retire Later also has Risks posted at My Wealth Builder.
Chris McClelland presents Saving: Bad for the Economy? posted at Lucrative Investing.
Passive Family Income presents 5 Reasons to Outsource Your Passive Income posted at Passive Family Income.
Writer’s Coin presents When Things Get Crazy at Work posted at The Writer’s Coin.
Tushar Mathur presents When It Pays To Use Cash For Purchases posted at Everything Finance.
Taking care of business:
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The U.S. currency information and pictures can be found at the Federal Reserve Bank of San Francisco’s American Currency Exhibit.
That concludes this edition. Submit your blog article to the next edition of Money Hacks Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.
Technorati tags: money hacks carnival, blog carnival.
Planning Ahead and Budgeting Wisely Can Help You Be Spontaneous
This past Friday at the dinner table, my wife said to me, “I want to go to the beach.” Now, I am sure that she meant that more like a sometime in the near future type of time span. But, my answer to her was, “Go pack real quick!” After making some fast hotel reservations online, we were at the beach three hours later.
What a great spontaneous little vacation our family had! But, the best part of the vacation was that we paid for it in cash! My wife’s and my prior planning set us up for success and enabled us to be spontaneous. You see, we have a vacation fund. The fund is a savings account that we put as little as $50 a month into for things like our beach getaway trip. Because we have that money set aside, we do not have to put any portion of our little vacation on credit cards. I cannot even begin to tell you what an awesome feeling it is to not have our little two day beach trip following us home.
Vacation Fund. For as little as $25 a paycheck or even less at some banks, you can have the piece of mind and spontaneity that a vacation fund can bring you. My wife and I have our vacation money in a completely separate savings account away from our emergency fund and regular checking account that we pay our household bills with. Our bank even lets us pick a nickname for the account so that we can see our goal online on their website and feel like we have a great target to aim for with our savings. My wife has named our account, “London 2012″, because she is planning to take the family to England for the upcoming Olympics. You spend a little less and try and save a little more when you have a reason to sock away money.
So, what are you waiting for? There are a few great banks online, like ING Direct, that will let you set up your vacation fund quickly and easily. You can even pick your own wonderful destination name! What would you call your vacation fund?
