This isn't illegal but it sure is misleading. I recently bought my first car in 13 years. I did my homework and then started looking for sales. A couple times I came across an advertised porice that looked too good to be true. Turns out it was. Under the large advertised price, in miniscule letters, it would say "after $3000 or even $5000 cash payment or trade-in." So a car tat looked to cost $16,999 actually cost $19,999 or more. I would have wasted lots of time visiting what I consider to be ubnscrupulous dealers had I not picked up on this ploy.
Your story is exactly why you have to do your homework. Read everything and know your financial limitations.
Before I ever step inside a dealership to purchase a car, I've spent months comparing prices.
Should I be moving all my retirement accounts out of securities and into cash? My 401(k)s have just now fully recovered from the recession and I don't want to watch them crash all over again and then spend years rebuilding. And I just want to add that this would mark the fourth time since I began participating in 401ks 25 years ago that my accounts would have had to spend years recovering--previous times were the dot com bust, 9/11, and, of course, the current Great Recession, which still isn't really over. I believe in supplementing my future Social Security with 401(k)s but I don't think I can afford a fourth hit.
I wish I knew what was going to happen. Like you I didn't panic during the last crash. Well, I did freak out. But I didn't lock in losses by changing the course of my retirement savings plan. I knew I had years -- years -- before retirement and that the market goes up and down. So now you have to do this again. If you are closer to retiring -- say five years -- then I would say you have a lot to figure out. But if you are years and years away and you are well diversified stay the course. Or if you aren't sure about that course talk to a fee-only planner. The thing is none of us can time the market because you have to know the exact time to get in and the exact time to get out. What if you had gotten out before? You would have missed out on the upswing. The same can happpen in the future.
Michelle, would you check your crystal ball and see if you think we'll have a government shutdown, how long will it be, and if we will get retroactive payment for the time shut down? I'm guessing yes to shutdown, time between two weeks and a month, and no retroactive payment. And I've got an emergency fund but it's already taken some hits this year, and I really don't like being a pawn in a political fight.
My ball is very cloudy. Always has been. This monkeying with people's money just because they are federal workers is bullying behavior. Having said that, you have to prepare the best you can for the possibility. Cut back, boost savings, etc. Hunker down. Try not to swear and if you do not in public.
Insurance companies need healthy, young adults to pay their premiums to be able to offer benefits to sick, old people. To trick the young adults into getting insurance, they present worst case examples of how they might benefit from having insurance.
Let's face it, if every 20 somthing adult fell off a skateboard or have eczema went to the doctor, the insurance companies wouldn't be able to afford the benefits.
Yes, let's continue with these broad scare tactics to discourage young adults from getting insurance. Or let's just stick with the awful system we have where millions of people, including 19 million young adults, don't have access to insurance so when they get sick they go to the emergency room, can't pay and that costs those of us with insurance. Or they wait so long to see a doctor their situation is worse and cost more.
Look, it won't just be young folks who will pay for insurance and not need as much as as others. There are plenty of healthy older adults who buy insurance and don't have to use it as much as others. This is about a shared responsibility. Every 20 something won't fall off a skateboard but they do get sick, they get cancer, they get pregnant (or get people pregnant), they get the flu, they need preventative services, etc.
But yeah let's go with your way. Nobody get health insurance until they need it and then it's not there for them when they need it.
How's that been working for us?
I'm a 45yr SBF, not working (on sabbatical after losing loved one, currently not looking), and have nice gains from a house sale (may not be taxable). After car and small house note payoff, what to do? (Don't worry, already living frugal, budgeting and lovin' it! - though watch out; have money, WILL travel) Yes market looks good right now & already have a small pension I *could* add to... but too many mixed messages re investing! Help! Top 3 tips please?
1. Get a financial planner.
2. Get a financial planner who charges a fee for a comprehensive plan so that you can sort through the mixed messages.
3. Get a planner to help you make sure that windful is used wisely.
That was a great column on mental health care. Often, after a mass shooting, the Republicans (and some Democrats) have said the answer is not more guns but mental health care. As your column reports, Obamacare does just that. So, why are they noew threatening to go into default and shut down the government unless it is defunded? It makes no sense. They say Obamacare will hurt America yet they are willing to hurt the world's economy in order to get rid of it. Never before I have ever seen government by blackmail. It is just ridiculous.
Thanks. And I agree ridiculous.
I understand there are people who don't think Obamacare will work. Maybe they are right. But at least there's an effort, one that may work, to help people get access to health care, which benefits us all.
For those of us that share your outlook on finances (save save save, no debt), having children can be a scary thought. So many unknown expenses! With health care for in flux, its hard to know how much it will cost even to have a baby, let alone raise one! What advice do you have for newlyweds who are repeating your money mantras but also want to have kids?
Count the cost of having a child the best you can. And then know you can't plan for everything. I have three children. Before we had the kids we talked about the cost, how we would save for their college education, cut expenses, raise them to be money smart, etc. We planned. We cut back. We spent when we had to. But in the end having them has been priceless even if it has meant I don't have my paid-for cold-winter sunny Florida second home.
What is your take on small cash investments in Foreign Exchanges, MicroLoans, Virtual Stores/ Bitcoin or unconventional techniques like "domain flipping?" For those who can't afford large shares in stocks or a large down payment on a property. What do you suggest is the best option for little to no minimum investment?
Personally, I think such investments are left to people with money to lose or more sophisticated investors, and even they get burned. It's not for the average investor. I certainly wouldn't do them.
I'm about dollar cost averaging. Investing a set amount every month for my long-term investment goals -- retirement, my kids college funds. And I invest in index funds, my 401 (k).
I worked with a man who, along with his wife, decided to cash out all their savings, including both their TSP accounts, after the financial crisis of 2008. Both of them now deeply regret their decision, since they left the market at the bottom. And they'll be in even worse shape if inflation rears its ugly head. Panic mode is never good for financial decisions.
The history of the stock market is up and down. When you are closer to needing your money you take less risk.
And you make an important point. One of the biggest concerns for people is inflation.
I think the worst thing about the constant chance for a Government shutdown because Congress failed to pass a budget is the inability to plan. It is all a big unknown. Financially, I can plan to have the money needed available if there is a shutdown and as a result, no paycheck, but I can't plan how to spend the time. The other year, I was laid off in September and got a job at the local farmer's market working their fall festival. They have asked me back several times, but as long as I have a job, I have to say, No.
Sometimes I think the polticians don't realize the trauma they are afflicting on real people. It's such a shame. And they would be he first to admonish individuals for running their personal budgets like they run the federal budget.
Hi, Recently I have been blessed to see my income triple. My dilemma is should I save and pay off my debt or poor all my earnings into paying of debt and then save $. I have considered building my 6 month emergency fund and once I reach that goal I will work aggressively to pay off cc debt, and student loans. Any suggestions?
If your job is pretty secure, I wouldn't aim for six months of saving and then start aggressively paying down debt. Aim for one month of emergency fund and a small "life happens fund" say of $500. Then stop and put all the increased pay you are getting toward the debt. I want you to have some savings in case of an emergency but you don't have to shoot for six months given the debt you have.
Hi Michelle! This may be a stupid question but I'm going with it anyway. Hubby just got a new job with 30% more earnings. We have no debt except our mortgage, have maxed out 401ks and have college savings on track for 3 and 6 year old. I have my emergency fund fully funded and a large stock pile of cash for the down payment on our next house (we plan to move in the spring). But I'm terrified of other investing. I'm very risk adverse and would like to just keep my money is a sock under a mattress but hubby really wants us to start investing so we don't have to wait to 70 to retire (currently in our mid 30s). What resources can help me get started?
Go to www.choosetosave.org. Plug in your information for the ballpark retirement calculator. It will encourage you to listen to your hubby. The greatest risk you have for the future if inflation. If you don't try to beat it by investing, the money you want to put under your mattress won't be enough to buy the things you'll need in the future. You have time to take some risk. You are doing everything right,saving, living below your means, etc. So I encourage you to venture beyond your comfort zone to invest so that your money works for you.
Hi Michelle, I love your column and advice so here is my question. I retired a few years back and purchased a second home to eventually move to in retirement however my husband and I recently decided to remain in our current residence for now and are planning to sell the second home. That home is paid off and will net us almost enough from the sell to payoff our present residence however we may need to add as much as an additional $15K for payoff. Doing that will make us cash poor for a few months but on the bright side we will be saving an additional $3K per month doing so. In your opinion should we move forward with the payoff? P.S. we do have other cash reserves in retirment accounts and investments in case of emergency.
If paying off your current residence won't make you severely cash poor going forward, I say get that monkey off your back. And as you point out you can take the $3,000 you are currently paying and quickly build back up your savings to get that $15,000 back.
My plan has been and will always be to be mortgage-free in retirement.
How much of your money should you have for everyday expenses (rent, bills, fun, etc) versus what you save? I am assuming I am missing part of the equation, but I don't know how to determine what is my actual savings versus just money I have!
This is a tough question to answer because there is no cookie cutter budget for everyone. What you spend depends on your needs and your wants. But I will say this. I would keep my housing expenses to 30 to 36 percent of net monthly pay. So all the cost for housing (insurance,escrow, etc) should be in that range. Other expenses depend on your family size, where you live etc.
As you calculate your expenses factor first what you are saving for -- retirement, paying off debt or saving for kid's college education. Once you do that then you can figure out the percentage. I save about 12 to 15 percent for retirement, have emegency fund of about 12 months of living expenses, a life happens fund and college savings plans (three for my three rugrats). But as you can see what you save and for what is your personal choice. Figure that out first, calculate how much you need and then back out the percentages leaving you with what you have left for everyday expenses. So bottom line. Let your savings dictate what's left for everyday expenses.
When you invest (be it in a diversified mutual fund or ETF, etc), do NOT watch the daily changes in the price/value. It will drive you nuts. As long as it is diversified, "set it and forget it". Review the investments annually (or maybe semi-annually) but never daily.
A good friend of mine in college got cancer as a kid. her mom didn't have insurance, so she worked three jobs to try to pay for treatments. When my friend was in college (on scholarship), the cancer came back. The mom literally worked herself to death (she had a heart attack) and my friend had no way of getting her treatments. She died. I just don't understand people like the first health care poster who think that this is the way we should treat people in this country. Another friend of mine was in a freak accident tubing on a river and became paralyzed. Luckily his parents had insisted on him buying student health insurance at college. You can't know whether you are going to be the healthy 20 something or not.
You hope for the best. Plan for the worst.
I am trying to figure out if renting an apartment or buying something small would be a better decision. I am 24 with a stable job making $45,000 and have been able to save $20,000 and am ready to get my own place. I am concerned about buying only because of the unexpected costs. What would you recommend?
1. Make sure you have at least six months of living expenses. I don't know your living expense so it could be the $20,00.
2. Create a life happens fund for the things in life that happen such as a major car repair. You want to keep this separate from your emergency fund, which is there for dire emergencies such as a job lost.
3. Be debt free. No car note. No student loans. No credit card debt.
4. Spend several months making payments to yourself as if it were the mortgage you would get. So if your rent is say $800 but your mortgage will be $1,200 every month for six months for example put the $400 into a bank account. Add to that amount other housing expensese you anticipate such has higher gas and electricity, etc. If you can handle having that money taken from your check you may be ready to buy a home.
5. Take a home buyers class to learn about all the things I don't have time to go into right now. You can find a HUD-approved housing counseling agency that provides first-time home buying programs.
I love that you are a young adult already thinking about homeownership. Just be sure you are ready for the financial impact.
I am the "ridiculous" writer. For clarity's sake, I meant, "not more gun control" after" Republicans say. " Thank you.
Thanks for the clarification.
Michelle- What are you thoughts on this post from Wonk Blog? http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/16/this-4x6-index-card-has-all-the-financial-advice-youll-ever-need/
I think it's right on point.
My 28-year-old daughter had surgery earlier this year to remove her gall bladder. This surgery is done on folks in their 40's - 60's. Thank goodness she had medical insurance.
Thank goodness indeed.