Cwienkala & Salfi

Be Prepared

Jeremy — Mon, 24 Jan 2011 19:34:20 +0000

Life is all about change. Good things or bad can affect your financial planning. Be ready. Planning for the unexpected can make seemingly disastrous events like a job layoff, a house fire, or a long-term illness far less devastating than they might otherwise be.

Be Realistic

Jeremy — Mon, 24 Jan 2011 19:31:58 +0000

If you’ve never saved a penny in your life, you’re not gong to magically put aside thousands of dollars a month. So start small. It’s all about consistency. Far better to build up, than give up!

Know Your Weak Points

Jeremy — Mon, 24 Jan 2011 19:30:06 +0000

Understand your own personal psychology and avoid the triggers that will make you spend more or save less. For example, if you know you’re undisciplined, try to have money taken out automatically for saving or investing.

Keep It Simple

Jeremy — Mon, 24 Jan 2011 19:21:16 +0000

Often we get too complex in our planning. Result? Plans turn into burdens and are quickly abandoned. So don’t try to become an investment banker overnight. Just focus on what’s most important to you. Is it having enough money for retirement, financial security for loved ones, college? You decide and then take simple, straightforward actions.

Focus On Needs, Not Wants

Jeremy — Mon, 24 Jan 2011 19:18:28 +0000

Wish lists can be wonderful things to have – as long as you don’t use your credit card to turn every wish into immediate reality. Understand the difference between necessities, and be willing to forego what you don’t really need to stay on plan.

Get Specific With Your Goals

Jeremy — Mon, 24 Jan 2011 19:14:19 +0000

There’s an old expression: “If you don’t know where you’re going, any road will lead you there.” When it comes to your money, you need to have specific goals. They can be as simple as: “Put aside $500 a month for a down payment on a new home until we have $20,000,” or “Pay back credit card debt in one year with $300 a month minimum.”

Don’t Cash Out Your 401(k) When You Change Jobs

Jeremy — Fri, 14 Jan 2011 18:10:57 +0000

When you change jobs, you typically have several options. If your 401(k) balance is $5,000 or more, you may be able to leave your money in your former employer’s plan. You also can roll the money into your new employer’s 401(k) plan or into a rollover IRA. If the transfer goes directly from your old plan to your new employer’s plan or to a rollover IRA , you can avoid having taxes withheld.

Don’t Buy Too Much Company Stock

Jeremy — Fri, 14 Jan 2011 18:03:28 +0000

Even if you are confident that your company has a brilliant future, it is not a good idea to have your employment income and retirement income dependent on the fate of the same company. Most CPAs agree that you should not have more than 10 percent of your total retirement assets invested in your company’s stock.

Don’t Underestimate The Tax Benefits Of A 401(k)

Jeremy — Fri, 14 Jan 2011 17:54:25 +0000

Keep in mind that each dollar you contribute to your 401(k) is deducted from your taxable income, so you avoid paying income tax on that money until you withdraw it, typically at retirement. You may be in a lower tax bracket at that time and would therefore pay less tax. Since earnings in your 401(k) grow tax-free until withdrawn, your money grows at a faster rate than it would in a taxable investment.

Consider Roth 401(k)

Jeremy — Fri, 14 Jan 2011 17:50:25 +0000

Roth 401(k) combines the traits of a traditional 401(k) with a Roth IRA. Contributions are made with after-tax dollars. Accordingly, there is no immediate income tax savings. However, when you withdraw your contributions and growth during retirement – age 59 1/2 and 5 years in the plan – there will be no income tax due. In addition, there is no withdrawal requirement at age 70 1/2. The Roth 401(k) option makes the most sense when you project your marginal tax rate to be higher in retirement than now.