Are you 1 Paycheck away from Living on the Street?

by Justin Weinger on January 25, 2015

The results of a recent survey performed by personal finance website Bankrate.com are shocking, to say the least. Of 1000 adults questioned, 62% of them said that they had no emergency savings whatsoever!

Ironically, with the economy improving along with job security, many Americans were actually feeling a bit better overall, financially speaking. The results of this recent survey however show that this isn’t true, not by a long-shot.

When you consider that the cost of, for example, a major car repair can easily run upwards of $500 or more, and an emergency room visit can hit up your bank account for $1000 (easily), not having an emergency savings account to pay for those emergencies, especially if a person is living “paycheck to paycheck”, can be financially disastrous.

According to the survey, most Americans would raise that’s emergency money by reducing their spending on other items, Borrowing from either family or friends or by using the credit on their credit cards. While all of these are viable options, none of them are nearly as good as having an emergency savings account.

When you consider that a survey last year conducted by the US Federal Reserve, one that included 4000 adults, had very similar results, you begin to realize that the average American is either not making very much money or not putting nearly enough into savings as they should be.

What do these survey results actually mean?

Two takeaways from the results of these surveys are this; one, many Americans are living very precariously, financially speaking, and only one emergency away from a financial disaster. Two, most Americans don’t realize that putting money in an emergency savings account is vitally important.

While it’s true that it’s difficult to save money when one is living paycheck to paycheck, it still can be done, albeit at a slower rate. Even saving as little as $25 a week will put $1300 into savings at the end of one year. Double that, and put $50 a week aside, and you’ll have nearly $3000. It’s not a king’s ransom but it will certainly cover a wide variety of emergencies without forcing a person to use high interest credit cards, payday loans or their family to pay them.

When you consider that most people spend between $25 and $50 a week on things like cigarettes, alcohol, expensive coffees from Starbucks, eating out for lunch and clothing that they don’t need, it really boggles the mind that most Americans have so little saved for a “rainy day”.

One bit of good news from the Bankrate Survey was that, in comparison to 2012, more Americans are using a household budget to keep their finances under control. Over 80% responded that yes, they do use a budget, meaning that when it comes to finding ways to cut down on spending, and thus find money to put into an emergency savings account, they already are a step ahead.

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How to save money in 2015

by Justin Weinger on January 19, 2015

Every year Australians spend a lot of their money on discretionary items. Whilst spend on recreation ($19.0 billion), fashion ($5.1 billion) and beauty ($8.0 billion) are expectedly high, there’s also the not so healthy $14.1 billion on alcohol spent each year. Another $9.5 billion are spent on gadgets, which adds to an estimated total of 55.7 billion dollars of non-essential spending.

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There are more tips on how to save money on the MyBudget website.

If you’re feeling the pinch towards the end of each month take a look at the infographic and see where you could save. It’s really not that hard – examples? Here! Saving $12 per week on coffee will add up to an extra $624 per annum. Spending $30 less on alcohol accumulates extra savings of $1560 per year. Adopt just a few of these sneaky budget busters and watch your savings soar!

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The Best Reasons for working Past the Age of 65

by Justin Weinger on January 18, 2015

For decades the traditional retirement age was thought to be 65 years old but, in the last few years, that thinking has changed dramatically. Many people are now working well into their late 60s and even into their 70s, and for good reason; the longer a person waits to fully retire, the more wealth they can build and the more security they will have when they stop working completely.

There are, to be sure, a large number of excellent reasons to keep working past the traditional retirement age, including the fact that social security payments increase substantially between the age of 62 and 70 (if a person doesn’t start collecting them). Also, consumers with a 401(k) who don’t use the funds in these  retirement accounts until they hit the age of 70 will have significantly more money available to them then consumers who start using those funds earlier.

Someone who decides to retire at age 70 will have eight more years of contributions that go into their 401(k), eight more years of returns on the investment sitting in that account and eight more years to let compound interest work it’s magic.

Also, living expenses typically tend to drop when a person reaches their 60s and 70s (extra costs for healthcare a side) making the decade between 60 and 70 years old one of the best for putting a lot more money into savings and retirement accounts.

The actual numbers are different for every consumer, of course, but the substantial amount of extra savings, interest and revenues that’s a consumer will be able to put aside by putting off retirement for only eight years are significant. In fact, they can be the difference between having too little money to retire at a particular lifestyle and having enough to do it comfortably.

Another reason to put off retirement is simply this; once a person retires, it’s much more difficult to get back into the workforce in any way, shape or form. If you think finding a job in your 40s or 50s is difficult, try doing it in your 60s or 70s. We’ve all heard of sexism and racism but, at that age, most people will also be introduced to ageism, or the bias against someone because of their age.

In the end, continuing to work for approximately 20% more of your life could add 70, 80, 90 or even 100% more to your retirement funds. Studies have also shown that people who work longer actually live healthier lives because they’re more engaged, use their brains and bodies more, and feel as if they are still a big part of society  and still “matter”.

If you have questions about retirement, retirement savings or personal-finance questions in general, please send us an e-mail or leave a comment and we’ll get back to you with advice and answers.

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Why getting a Jump-start on your Taxes is a Good Idea

by Justin Weinger on January 11, 2015

Now that the holidays are over the next “big thing” on the mind of many consumers is tax season. That being said, even if you don’t have the files and forms you need just yet, there are a number of things you can start doing so that, when April 15 rolls around, you’re in good shape and ahead of the crowd.

First, you can actually send in your taxes to the IRS on January 20 this year because they are going to be starting on time. If you recall, in the last two years this was delayed until the end of the month of January,  but this year that’s not the case. The earlier you file of course, the more quickly you will receive any tax return that you’re due (and to be able to use that money to pay down some of that debt you accrued doing the holiday season).

Also keep in mind that the Affordable Care Act is going to make it a bit more difficult and complicated to file your taxes this year. The ACA, If you don’t already know, requires that all Americans have health insurance, and this fact will affect practically everyone, including their taxes, what they owe and what they’ll get back. You can find out more at IRS.gov so that you’re prepared.

This year there are also a number of tax preparation service companies that will allow you to file taxes from your phone, including both H&R Block and TurboTax, both of which come with different features that, they claim, will make filing taxes a bit easier. (Some complain that there are also extra charges for the service which, frankly, only makes sense. Make sure you know what those charges are before you start.)

Lastly, starting to work and prepare your taxes early is a good idea for the same reason that shopping and preparing for the holidays is a good idea. It will cut down on your stress because you won’t have any nagging doubts in the back of your mind that you’ve forgotten something, or feel anxious because the days are slipping by so fast and the “big day” is approaching too quickly.

While it may not be as fun as Christmas, Hanukkah or Kwanzaa, filing your taxes is infinitely more important and, if you’re due a tax return, the more quickly you file the earlier you’ll get your “present”.

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