If you read yesterday's entry on 401(k) funding, here's some more advice.
1. Prospectuses are not written for the public audiences. Reading a prospectus without the language and understanding of what's involved is the same as going into a dark room without a flashlight. Even the items intended for the general public tend to read like a thick book of gibberish. If you're not sure of how your funds will be invested, it doesn't hurt to ask a financial adviser or your 401(k) administrator. Don't let them talk you into adding more money than you're willing to invest.
2. Be aware of your tax brackets. This is true at all stages: first job, current job, and retirement. If you're in the 15% tax bracket, contributing to a 401(k) plan pre-tax will certainly reduce your taxable income - the nicest thing about contributing to a plan like this, and these contributions can be put onto your tax form, along with your company's matching contributions. When you retire and begin to take the money out, however, your tax bracket will change depending on the funds and fees. Taxes must be taken out on any distributions due to you, which may raise you to perhaps the 25%-35% bracket.
3. Like to go solo? IRAs may fit the bill. Individual retirement accounts work just the same as 401(k) accounts, but you don't get a company match, and the most you can contribute to a IRA is $4,000 per year. On the other hand, some IRAs do not carry a 10% IRS penalty for withdrawals, but it's the "once it's gone, you can't replace it" variety, meaning you have to rebuild it from scratch. You can also supplement your 401(k) with an IRA, and vice versa.
4. Contribute 0% to your 401(k)? You're not alone. Not funding your 401(k) is considered a sin in the financial world, but a forgivable sin depending on your circumstances. If you're a college graduate paying $1000+ a month in student loans, a first-time homebuyer paying $1500+ per month in mortgages, or someone who has a mountain of credit card bills, those siren calls of "your leaving money on the table!" will force some to overcompensate their contributions, and bring them into worse financial shape than they were before. Which is worse - not contributing to your 401(k) plan, or having your wages garnished for student loan default, or your home foreclosed, because you neglected to plan ahead of time? Relax. Even a 2% contribution may be a head start and enough to start a nest egg, and your employer will do it for you thanks to a new law. Sometimes that money on the table is best taken a sawbuck at a time - but when that mortgage is paid off or the student loan is finished, THEN start putting more and more money into your account.
7/17/2007
How to fund your 401(k) safely for your retirement
Consumerist has three common mistakes...but neglect a few things we've noticed when we look in our statement.
1. A 401(k) account is NOT a substitute for financial planning. Your other obligations - rent, bills, debt, funding emergency accounts - come first. Then, any discretionary income you have left over you can put into your retirement fund.
2. 401(k) funds have fees - which is why 401(k) administrators encourage you to put money into the retirement account. Even if you do nothing, your 401(k) administrator can slice anywhere from 0.5% to 2% of your account in various fees. 2% may not seem like much, but if you manage to save $1 million for your retirement account, $20,000 gets sliced off for such mundane things as reports, research, pressing the RETURN button, etc. All that company match goodness...down the toilet.
3. Contribute only what you can afford. You can save up to the $15,500 limit in your 401(k), but most people save around 6% to receive the optimum company match. After the $15,500 is met, the company match ends - you can still contribute but you won't get any further company match from your employer. Don't be the idiot who saves 30% of their salary in their 401(k) and end up being short on your rent, bills, etc.
4. Remember the ages of 59.5 and 70.5. Those are the ages when you can withdraw funds. Younger than 59.5 - 10% IRS penalty if loan not paid back in 5 years. Older than 70.5 - 50% on difference of minimum distribution if not selected. In between - no penalties, but may select to take all or minimum.
5. If you don't know how to invest, don't contribute to your 401(k) until you have a clear idea what your goals are, what risk you're willing to take, and how much you need. Don't fund your account just because Suze Orman and Jim Kramer tell you to; all that extra money goes to fees and maintenance. Unless you know where you're going, and have everything mapped out, the money "on the table" from your employer might as well be set ablaze if your investment decisions and contributions sink like a rock.
6. Matched contributions from your employer DOES NOT EQUAL "free money." Another thing that the financial gurus proclaim is the biggest thing about 401(k) accounts is that if you don't contribute, it's leaving money on the table. Hogwash. Matched contributions are not free - they are an appreciation of your service from your employer, sometimes in lieu of other compensation (e.g. an employer may give you a profit sharing bonus in your account rather than a bonus check, scalped in half by taxes). If your work ethic is bad, you're a slacker on the job and only exist for a paycheck, you're stealing that 401(k) match that a harder-working employee could use to supplement their accounts. That "free" money can also be eaten up by fees and penalties if you're not careful. A better way of considering a company match is as an encouragement - not a reward.
Discussion to be continued...
1. A 401(k) account is NOT a substitute for financial planning. Your other obligations - rent, bills, debt, funding emergency accounts - come first. Then, any discretionary income you have left over you can put into your retirement fund.
2. 401(k) funds have fees - which is why 401(k) administrators encourage you to put money into the retirement account. Even if you do nothing, your 401(k) administrator can slice anywhere from 0.5% to 2% of your account in various fees. 2% may not seem like much, but if you manage to save $1 million for your retirement account, $20,000 gets sliced off for such mundane things as reports, research, pressing the RETURN button, etc. All that company match goodness...down the toilet.
3. Contribute only what you can afford. You can save up to the $15,500 limit in your 401(k), but most people save around 6% to receive the optimum company match. After the $15,500 is met, the company match ends - you can still contribute but you won't get any further company match from your employer. Don't be the idiot who saves 30% of their salary in their 401(k) and end up being short on your rent, bills, etc.
4. Remember the ages of 59.5 and 70.5. Those are the ages when you can withdraw funds. Younger than 59.5 - 10% IRS penalty if loan not paid back in 5 years. Older than 70.5 - 50% on difference of minimum distribution if not selected. In between - no penalties, but may select to take all or minimum.
5. If you don't know how to invest, don't contribute to your 401(k) until you have a clear idea what your goals are, what risk you're willing to take, and how much you need. Don't fund your account just because Suze Orman and Jim Kramer tell you to; all that extra money goes to fees and maintenance. Unless you know where you're going, and have everything mapped out, the money "on the table" from your employer might as well be set ablaze if your investment decisions and contributions sink like a rock.
6. Matched contributions from your employer DOES NOT EQUAL "free money." Another thing that the financial gurus proclaim is the biggest thing about 401(k) accounts is that if you don't contribute, it's leaving money on the table. Hogwash. Matched contributions are not free - they are an appreciation of your service from your employer, sometimes in lieu of other compensation (e.g. an employer may give you a profit sharing bonus in your account rather than a bonus check, scalped in half by taxes). If your work ethic is bad, you're a slacker on the job and only exist for a paycheck, you're stealing that 401(k) match that a harder-working employee could use to supplement their accounts. That "free" money can also be eaten up by fees and penalties if you're not careful. A better way of considering a company match is as an encouragement - not a reward.
Discussion to be continued...
6/27/2007
The "We Hate Opposing Viewpoints" Doctrine
That's what the Fairness Doctrine really was about: For each point, there was a mandatory counterpoint in the green room, getting prepped by the producer. Then, in 1986, the Fairness Doctrine was scrapped, giving rise to such things as talk radio.
John Gibson: Those who want the Fairness Doctrine back into law will cut off a lot of its own noses to spite faces. Each time Bill Maher comes on, Ann Coulter must follow. For every Dixie Chick, a Tobey Keith, &c, &c. In other words, Hollywood, the movie industry, et. al. must become a defacto Fox News, fair and balanced and cannot rely on the polemic of one to stand while the response of the other is left unheard. (Hannity & Colmes are already a shoo in, no further parts required.)
Jon Keller: You might like all the roses in your garden, and find one rose rotting, but does that mean you put the flame-thrower to the entire rose garden? Jon puts the smackdown on a certain rotanes from Massachusetts whose $1.50 words contain zero nutritional value - sort of like cotton candy without the flavor or the teeth-rotting sugar.
Dennis Miller also gives his two cents: advertisers like the Mr. Roarke approach ("smiles, everybody!") to radio, rather than the Marge Simpson as a blue squirrel against Itchy 'n Scratchy ("don't do that! don't do that!") or the crazy nutball who thinks George Carlin talks about doomsday from the Ms Pac Man game at the bus terminal.
To us, bringing back the Fairness Doctrine represents a temper tantrum by spoiled brats, who desperately want to be heard, but the fed up parents are walking away. It's also about MONEY - those juicy advertising dollars that businesses put out for radio shows that work hard for it, not a bunch of slackers who paste together a whole buncha nothin' (or a whole bunch of horsehockey) and call it a show. The solution? Reminds us of the story of the man who deals with screaming and naughty children, whispers something into their ears, and everything magically stops and they walk away...when the shopkeeper asks how he did it, he said, "I threatened to give them the biggest spanking of their lives."
John Gibson: Those who want the Fairness Doctrine back into law will cut off a lot of its own noses to spite faces. Each time Bill Maher comes on, Ann Coulter must follow. For every Dixie Chick, a Tobey Keith, &c, &c. In other words, Hollywood, the movie industry, et. al. must become a defacto Fox News, fair and balanced and cannot rely on the polemic of one to stand while the response of the other is left unheard. (Hannity & Colmes are already a shoo in, no further parts required.)
Jon Keller: You might like all the roses in your garden, and find one rose rotting, but does that mean you put the flame-thrower to the entire rose garden? Jon puts the smackdown on a certain rotanes from Massachusetts whose $1.50 words contain zero nutritional value - sort of like cotton candy without the flavor or the teeth-rotting sugar.
Dennis Miller also gives his two cents: advertisers like the Mr. Roarke approach ("smiles, everybody!") to radio, rather than the Marge Simpson as a blue squirrel against Itchy 'n Scratchy ("don't do that! don't do that!") or the crazy nutball who thinks George Carlin talks about doomsday from the Ms Pac Man game at the bus terminal.
To us, bringing back the Fairness Doctrine represents a temper tantrum by spoiled brats, who desperately want to be heard, but the fed up parents are walking away. It's also about MONEY - those juicy advertising dollars that businesses put out for radio shows that work hard for it, not a bunch of slackers who paste together a whole buncha nothin' (or a whole bunch of horsehockey) and call it a show. The solution? Reminds us of the story of the man who deals with screaming and naughty children, whispers something into their ears, and everything magically stops and they walk away...when the shopkeeper asks how he did it, he said, "I threatened to give them the biggest spanking of their lives."
6/25/2007
Pros and Cons of Providence, RI
Pro: Easily accessible from Boston by MBTA, as there is direct service. Secret: save yourself the $15.50 round trip ($18 via Amtrak) and take the Orange Line to Forest Hills, then either Route 32 or Route 50 to Hyde Park Station and pay $4.50 - savings a whopping $3.25. Going back, get off at Hyde Park and reverse route. Bonanza bus lines also offer fares for $14.95 round trip.
Con: Train often packed; sometimes trains make all stops between South Station and Providence; at night and on the weekends, you're at the mercy of
the vending machines, which feature 500ml of Poland Spring water at $2 a whack and stale packs of Doritos. (During the week, there's a nice souvenir shop selling Rhode Island-themed gifts and The Lot. More about that later.)
Pro: RIPTA is head and shoulders above the MBTA. The fare is the same ($1.50) but you can purchase an all-day ticket for the RIPTA trolley (covers the entire city, more or less) for $3.00. Buses are clean and drivers are polite and well-mannered. Passengers we met were not the ones staring us directly in the face with an invitation to fight.
Con: Kennedy Plaza. Ever want to experience what Times Square (or the South End during the Elevated era) was before Michael Eisner decided to gentrify it? Even though the entire plaza has been rebuilt - sort of like an open Harvard Square - and you can find the buses a lot more easily than the MBTA, it is an eye-opener for the dark side of Providence. Sleaze is one of the kinder words we could use, and a few years ago we went there and watched a full-blown brawl bust out, and 30-40 Providence Police vehicles arrived in less time that it takes to sneeze. The interior is...well, after three minutes of waiting for a donut while one of its "customers" described something in sickening detail, we left feeling super dirty. As long as you wait outside, Kennedy Plaza is OK. Otherwise, South Station Bus Terminal is the Taj Mahal. Kennedy Plaza is also an intercity bus stop for Greyhound and Bonanza/Peter Pan.
Pro: Thayer Street is a walker's dream. Brown University students, bohemians, punkers, and other residents are much friendlier and don't carry that "we're a famous Ivy League University" snitty tone. (No reference to a Cambridge-based university intended.) Brown University bookstore is neat and clean, and offers plenty for the voracious reader. CVS and Store 24 for the sundries and cheap eats, but many casual restaurants (and Starbucks, of course) and neat little shops.
Con: Thayer Street is located on College Hill, which has a hill than can be best described as one you don't dare trip on. Don't aggravate the Providence Fire Department, as they haven't had a contract after 1080 days (3 years, nearly). After the shops, Thayer Street becomes a plain vanilla residential area.
Pro: The Lot, Rhode Island's lottery. Games are much more fun to play and you don't feel as if you wait for an eternity while Fatso McScratchy orders up his fat little notebook of daily numbers and his daily ration of 60-70 instant tickets. (Disclosure: we played The Numbers and Powerball and didn't win a thing. However, we did win about $20 playing the instants, but put some of the money into other things...like lunch and fare home.) Unlike our Lottery, The Rhode Island Lottery has a $20 instant ticket you don't have to wait until the 4th of July to figure out if you've won.
Con: The Lot in Rhode Island isn't publicized as much, and the games could be a horror show for seasoned Mass Lottery fans who get the hives when they play Bingo or Cashword. Also, no trash pickers because there's no trash.
Con: Train often packed; sometimes trains make all stops between South Station and Providence; at night and on the weekends, you're at the mercy of
the vending machines, which feature 500ml of Poland Spring water at $2 a whack and stale packs of Doritos. (During the week, there's a nice souvenir shop selling Rhode Island-themed gifts and The Lot. More about that later.)
Pro: RIPTA is head and shoulders above the MBTA. The fare is the same ($1.50) but you can purchase an all-day ticket for the RIPTA trolley (covers the entire city, more or less) for $3.00. Buses are clean and drivers are polite and well-mannered. Passengers we met were not the ones staring us directly in the face with an invitation to fight.
Con: Kennedy Plaza. Ever want to experience what Times Square (or the South End during the Elevated era) was before Michael Eisner decided to gentrify it? Even though the entire plaza has been rebuilt - sort of like an open Harvard Square - and you can find the buses a lot more easily than the MBTA, it is an eye-opener for the dark side of Providence. Sleaze is one of the kinder words we could use, and a few years ago we went there and watched a full-blown brawl bust out, and 30-40 Providence Police vehicles arrived in less time that it takes to sneeze. The interior is...well, after three minutes of waiting for a donut while one of its "customers" described something in sickening detail, we left feeling super dirty. As long as you wait outside, Kennedy Plaza is OK. Otherwise, South Station Bus Terminal is the Taj Mahal. Kennedy Plaza is also an intercity bus stop for Greyhound and Bonanza/Peter Pan.
Pro: Thayer Street is a walker's dream. Brown University students, bohemians, punkers, and other residents are much friendlier and don't carry that "we're a famous Ivy League University" snitty tone. (No reference to a Cambridge-based university intended.) Brown University bookstore is neat and clean, and offers plenty for the voracious reader. CVS and Store 24 for the sundries and cheap eats, but many casual restaurants (and Starbucks, of course) and neat little shops.
Con: Thayer Street is located on College Hill, which has a hill than can be best described as one you don't dare trip on. Don't aggravate the Providence Fire Department, as they haven't had a contract after 1080 days (3 years, nearly). After the shops, Thayer Street becomes a plain vanilla residential area.
Pro: The Lot, Rhode Island's lottery. Games are much more fun to play and you don't feel as if you wait for an eternity while Fatso McScratchy orders up his fat little notebook of daily numbers and his daily ration of 60-70 instant tickets. (Disclosure: we played The Numbers and Powerball and didn't win a thing. However, we did win about $20 playing the instants, but put some of the money into other things...like lunch and fare home.) Unlike our Lottery, The Rhode Island Lottery has a $20 instant ticket you don't have to wait until the 4th of July to figure out if you've won.
Con: The Lot in Rhode Island isn't publicized as much, and the games could be a horror show for seasoned Mass Lottery fans who get the hives when they play Bingo or Cashword. Also, no trash pickers because there's no trash.
6/18/2007
Control freaks at Johns Hopkins University
The worst type of control freak is one who is put out by the slightest millimeter of offense, and then proclaims numbers of "acts" to gain back forgiveness. These are the types of people who are so insecure, so afraid of incivility, so afraid to offend, that they display their fit of pique in a way the Marquis of Sade would implore them to stop.
Witness the self-flagellation and acts of Job that the professors of Johns Hopkins attempted to put through this student (advice: read thoroughly re: Baltimore, please!) before the public and FIRE* screamed blue murder.
The extreme overreaction at JH screams academic totalitarianism - more worthy of the Soviet Union than at a college that pledges "diversity, tolerance, and understanding." Not when those three are at the discretion of very narrow minds.
*the Foundation for Individual Rights in Education
Witness the self-flagellation and acts of Job that the professors of Johns Hopkins attempted to put through this student (advice: read thoroughly re: Baltimore, please!) before the public and FIRE* screamed blue murder.
The extreme overreaction at JH screams academic totalitarianism - more worthy of the Soviet Union than at a college that pledges "diversity, tolerance, and understanding." Not when those three are at the discretion of very narrow minds.
*the Foundation for Individual Rights in Education
6/17/2007
Cursing to the Choir, middle school edition
Kids: if you're going to do Chris Rock monologues, find the clean and non-controversial ones, not the ones with abundant amounts of deleted expletives.
On the other hand, the girl who let loose with her Andrew Dice Clay rendition did a great service: since no one would listen to the complaints from teachers and other students about the choir teacher's litanies and tirades, what better place highlight your teacher's shortcomings than after a Rogers & Hart song!
Hey, it might cost you a ten day suspension and make you miss your graduation ceremony and party, but the best thing is that it forced some of these administrators with their hands on their ears to finally listen!
On the other hand, the girl who let loose with her Andrew Dice Clay rendition did a great service: since no one would listen to the complaints from teachers and other students about the choir teacher's litanies and tirades, what better place highlight your teacher's shortcomings than after a Rogers & Hart song!
Hey, it might cost you a ten day suspension and make you miss your graduation ceremony and party, but the best thing is that it forced some of these administrators with their hands on their ears to finally listen!
6/15/2007
Smug Kills, Same Sex Marriage Edition
Jon Keller makes perfect sense when he says "don't gloat." Even Deval Patrick was eloquent enough to tell the crowd to dial the smug way down:
Agreed, Governor Patrick. The Michael Corleone maxim is "keep your friends close and your enemies closer." Or, you may need your enemies one day if you're in a real jam.
The folks on the other side of this question are still our brothers and sisters. And we need them tomorrow and the next day and the day after that if we are together going to confront and solve the challenges facing up economically or in the public schools or on broken roads and bridges and a health care system we are trying to reinvent and a whole list of other issues on which we must come together.
Agreed, Governor Patrick. The Michael Corleone maxim is "keep your friends close and your enemies closer." Or, you may need your enemies one day if you're in a real jam.
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