According to the June 14th, 2008 edition of The Wall Street Journal, fewer than one in ten workers save the maximum amount allowed in a 401k plan.
More disturbing one-third of 401k participants are not saving enough to qualify for the full matching contribution from their employer.
If you have debt and want to be debt free, the first thing to do is to cut off your credit cards so you don’t use them anymore. You are probably wondering how you are going to survive, well, if you destroy your credit cards then you will not be tempted to use them and you will have to manage with your cash. This will force you to a cash based economy. In other words, only use cash (for everything) from now on.
Get a piece of paper and write down all your balances from smallest to biggest. You really want to start paying off the smallest balances first, once you are done with the smallest balance move on to the bigger balances. This will accomplish several things: first, psychologically you will feel like you are going somewhere, you are accomplishing something. Secondly, it will show your lenders if they look at your credit history that your liability is shrinking.
Depending on your type of debt, you might have to postpone paying some types of debt. Student loans for instance you should start paying the minimum until you settle all your credit card debt. Once you are caught up your credit card debt, then start paying your student loans at the max you can afford. Health-care debt also can be in some cases negotiable and you can always do a payment plan (small installments)
Always pay off your debt, it’s the right thing to do. You got in this mess to begin with, so try to organize yourself, create a budget and if needed get a second job.
This is very controversial, some people that believe credit scores are rubbish/garbage and you should not care about them at all. This is due to the fact that they will operate using cash only. If you feel this way, as soon as you pay off your lenders, close the accounts. If you do care about your credit score, do not close the account but rather keep it open for ever and NEVER ever use that credit card again.
Also remember that if you carry a balance on a credit card, you will pay interest. Interest is bad. Think about it, why are you giving away your hard earned money just for carrying a balance when in the first place if you were to operate using cash only, you would not have. This could save you a huge chunk of change.
Food for thought: “Never buy on impulses and only buy what you really need“
Never ever buy a brand new car again!
Why? the minute you drive that new car off the dealer’s parking lot, the car has lost value. A car can loose up to 25% of its value the first year. Then the percentage of devaluation slows down even-thought it continues at a much slower pace. The second year you own a car, it will loose up to 15% of its value and so on.
The worst years (the biggest drop in value) are usually the first 2 or 3 years. So get a new car which is used (low mileage and in excellent condition)
Lets do the math, if you buy a car which is 2 or 3 years old, you could save anywhere from 25% to 40% of the retail value. Lets say that a brand new car would you $20,000.00 if you wait to buy this same car 2 years, you could save anywhere from $5,000 to $8,000 and buy the same car for about $12,000 to $15,000
In other words, let someone else pay for the devaluation of that car and then you buy it when it has lost most of its value and the rate of devaluation is smallest.
I did purchased a 2 year old car with 15K miles, it still smell new and there was nothing wrong with it. I actually saved about 10% due that this car was in high demand and it was fully loaded (leather seats, moon roof, etc) I found my car on eBay Motors.
For piece of mind, make sure you get an extended warranty through your bank (not through the car dealer). The warranties offered by banks, are exceptionally good, they will set you back about $1000 to $2000 and you can have that money roll into the car loan. Theses warranties can last up to 6 years or 100K miles and pretty much cover everything. Mine paid for itself the first time I visited the dealer, I had a problem with the outside mirrors and the dealers suggested replacing them. They did, and it cost me about $900 to have the 2 mirrors replaced. I felt like I was robbing a bank!
So you work for a company that offers a 401K savings account and you are wondering how much should you invest or what percentage of your paycheck you should invest. Well, the answer is: it depends.
If you don’t have an emergency fund then make sure you work on that first, normally you want to put away 3 to 6 months of expenses. Enough to pay the mortgage or rent, utilities, insurance, gas and food.
After talking to a group of very smart engineers that I work with, I compiled a list of things anyone can do to improve your miles per gallon (mpg). Note, you might experience different results than the results I am getting due to the way you drive, type of car, etc…
My 96 Honda Accord is supposed to get 22 MPG city. I **only** drive city and today I am getting 26.2 27.94 MPG
and I am very happy with it.
) , spurk plugs, I bought really good ones (qty: 4) ( Denso 5303 Iridium Spark Plug
) and spark plug wires ( Bosch 09819 Wire Set
)
Useful links:
Here is pretty cool link to check your car real MPG: http://www.fueleconomy.gov/feg/findacar.htm
One of the best resources about how to save gas: http://www.fueleconomy.gov/feg/drive.shtml
Let me know what your experience is, I am curious to find out if you get the same results. Check out this screenshot, it is an application that keeps me track of my MPG on my iphone:
A very nice way to save for your emergency fund is via HSBC Online savings account. As of 5/12/08 the Annual Percentage Yield is 3.05%
You will not get rich with these types of returns but it beats any regular bank hands down. This type of account would qualify in my book as a ‘put your money to work for you‘. The good thing about this type of accounts is that you can get your money relatively fast versus having your money lock on a CD on a regular checking account not making anything at all.
It is quite easy to setup an account, transfer money into it (via ACH) and out of it. It seems like it takes about 3 business days to get money in or out of the account. This is under the Bank to Bank transfer feature. You can setup a one time transfer or a recurring transfer. So, if you have direct deposit (your paycheck is deposited directly onto your bank account) you can setup a recurring transfer to HSBC. The trick to making this work is via HSBC web interface, you go into Bank to Bank transfer and setup a recurring transfer from your bank account into HSBC’s saving account. You can setup up to transfer any amount and there are no fees. This way you can accumulate wealth and it is an utomatic process, no pain.
I have been using HSBC for 3 years and I have never had a problem with them. The rate does fluctuate depending on what the Federal Reserve does with interest rates. HSBC is quite good at letting you know what the current interest rate is.
The website have 2 layers of security (user name, password plus security key)
Highly recommended!
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