Tuesday, October 9, 2007

Clinton's 401k for Every Family Plan

I recently read an article on Yahoo! titled Clinton Proposes 401(k)s, Matching Funds. I have to admit I am a fan of this idea. I believe that the majority of Americans are not going to be ready for retirement and thus have to continue to work well past normal retirement age. This plan calls for a 401k for every individual in which you can save up to $5,000 a year and the government will match your first $1,000. I like this idea and if I was eligible then I would definately participate, at least up to the match. The program would be paid for by taxing those with estates of over $7 million per couple. In order to get the $1,000 match you must earn less then $60,00 a year which is me. I'm not sure if she wants people who already participate in 401k's at work and recieve a match to be eligible.

The one thing that puzzles me with her proposal is the sentence in the article that states that for 1 estate over $7 million being taxed they can match at least 5,000 families. The math doesn't quite work out in my head and maybe I don't quite understand. If each family has only one 401k and get a $1,000 match, then that is $5 million for 5,000 families. Most families have more then 1 individual. I don't think you can tax someone with $7 million a total of $5 million. That's a hefty tax. So although I don't see how it would work as laid out in this article, I do believe this could be a good idea if figured out and proposed correctly. I know I certainly would like the extra $1,000 a year for retirement!

Sunday, October 7, 2007

Looking for New Income

Part of my goal of paying down all my debts involves finding new ways to bring in more money to put towards my credit card balances and my car and other debts. This is hard to do. I am currently taking H&R Block's Tax Course and hoping that I can get hired on by them for tax season to prepare taxes. This will bring in maybe $1,000 of income more then I am used to. Another way I am trying to bring in money to pay off debt is by selling some old books, movies, and video games on Amazon. I placed 5 books on Amazon this morning and have so far sold 2 of them. This will give me about $12 after I ship them to put towards my credit cards. I guess every little bit helps! Any other ideas on how to scrounge up some more money to put towards debts? I could sure use them.

My Total Money Makeover!

I just finished reading the book entitled "The Total Money Makeover" by Dave Ramsey. I was impressed. I have decided that I would like to try to follow the instructions given in Ramsey's book for the total money makeover. To me, it makes complete sense. Basically Ramsey is talking about paying off all your debts and living life debt free. If I have no debts then I will be able to save the $600 a month I am paying off in debts. And $600 a month will add up quick.

Ramsey's plan has 7 steps which he calls Baby Steps. The steps are as follows:
Step 1: Save $1,000 for emergency fund.
Step 2: Eliminate debt using a debt snowball.
Step 3: Finish the emergency fund with 3-6 months worth expenses.
Step 4: Maximize retirement investing with 15% of salary.
Step 5: Save for your children's college education.
Step 6: Pay off your home mortgage.
Step 7: Build wealth like crazy for fun, investing, and giving.

These are the steps I hope to follow to work towards my very own Total Money Makeover. I already have step 1 complete. I have more then $1,000 in my emergency fund. I have decided to take the excess money and pay down my credit cards. I will keep my brokerage account as extra emergency money. Therefore step 1 is complete with actually about $2,000 for emergencies. Another difference I am doing is that I am going to still contribute to my 401k. I have decided to take the money I am contributing to my IRA and put that towards paying down my debt and then saving for a wedding for the next year at least. So I am on Step 2. I am trying to eliminate all of my debt. Currently I have what I feel like is a pretty substantial amount of debt. I currently have about 19,000 in debt and I am going to do all that I can to pay this debt down as fast as possible. I should have my 2 credit cards paid off within 4 months and then continue to pay down the other debts and hopefully be debt free in 22 months. I will keep track each month of how much debt I still have and what month it is from now, this being month 1. Keep posted for my progress from month to month and wish me luck!

This means that my goals for the year have now changed. My current goals are now to pay down all of my debt as fast as possible. I will continue contributing 5% of my salary to my 401k and use all of my other available money to pay down debt. I hope to be down close to 15,000 by the new year.

Tuesday, October 2, 2007

Hannah Montana and Selling Tickets through EBay

Wow! There is such a frenzy going on currently about the Hannah Montana tour and tickets selling out at every venue. You can find tickets of course still for sale on ebay and from ticket brokers but be prepared to pay one hefty price. A headline on Yahoo! shows that tickets have sold for as high as $2,565! This concert recently went on sale in my city and there was a big fuss in the paper because a lot of parents were unable to get tickets and were told it was sold out immediately when tickets were supposed to be on sale! However, by searching on the internet you can find the same sellers who have multiple tickets on sale for a much higher price then they originally sold for. This has parents mad that these ticket brokers were able to get so many tickets while the parents could not get them for thier children.

I followed this story because it is something that interests me. I had a friend in college who would by tickets to hot concerts and sell them on ebay for a nice profit. My father recently tried this out and made double his money on one entertainer that was coming through town. However, he quickly blew the money he made and then some by trying to sell tickets to less popular artists. Unfortunately for him, he missed the Hannah Montana bandwagon.

What does this have to do with personal finance and why am I writing about it? The reason I am interested in this and writing about this is because I have wanted to try my hand at buying tickets and selling them for more money on ebay. This is a personal finance blog and I feel this could be a good way of bringing in some additional income. It is all about looking for the right opportunities and knowing what artists are going to sell out and bring a high demand for thier tickets. Tommorrow, I believe I have this opportunity to give this a shot. A huge artist is coming through my city and tickets go on sale tommorrow. I am going to try to go to ticketmaster on my lunch break and pick up a couple tickets. I will then post them on ebay and see if I can make a decent profit. What if they don't sell? Well then I will take my girlfriend to a wonderful show. But I'm hoping there is someone out there that will want to go more then me and will be willing to pay me more for the tickets then I bought them. I will post more on this adventure later!

Monday, October 1, 2007

Summary of Goals

I have recently written about my main goals of retirement, debt reduction, increasing emergency fund, and coming up with a solid budget. Here is a brief summary of my goals that I hope to achieve by the end of this year:

Stick to established budget for one month.

$3,260 in retirement accounts.

$17,500 in debt accounts.

$2,500 in emergency fund.

I haven't talked about my emergency fund other then stating that I will not be contributing to it while trying to reduce my debt. However, I decided to make a small goal of increasing the balance by $300 by the end of the year because this should easily be attainable. I will be earning interest on my current balance and should be able to put in a little bit of money over the next three months to reach this goal as well even though it is not budgeted for. We'll see!

Goal 3: Get out of Debt!

One of my main goals along with retirement is getting completely out of debt. Currently I have over $19,000 in debt when you add up my car, credit cards, bike, and engagement ring. I am also taking my girlfriend to a bed and breakfast at the end of this month where I plan on proposing to her. The cost of the B & B will be $400 on my credit card. I have worked up a debt snowball plan to pay off this debt hopefully as quick as possible. By my calculations, I hope to have this debt reduced to $17,592 by the end of the year. This will be a reduction of over $2,000. Therefore, I am setting my goal of having debt of less then $17,500 by the end of this year. In January I will recalculate some numbers, see if I have reached this goal, and set a new goal for 2008. I have a plan of action that I am putting into place and hopefully we will find that this plan works. I am going to be paying off the minimum on all of my debts except for one of my credit cards which I will had what I can afford to pay off to the minimum. My main focus must be to pay off this debt without incurring any new debt. This can be difficult with Christmas coming up and hopefully a wedding to start preparing for!

The Joneses have us Fooled!

I just finished reading an interesting article I found on Yahoo! Finance entitled "How to Avoid Money Envy." I found this article very interesting because it is talking about ways to avoid the want to keep up with those dang Joneses. Everyone believes that they are worse off then others and don't understand how so and so can afford such a nice house or such nice clothes or cars or vacations. This article talks about getting right down to it and realizing that so and so can't actually afford those nice things they are buying. I like the idea presented in this article where you find out your neighbor is going on a great trip to Paris. The author suggests saying to this neighbor how wonderful that sounds and you wish you could go on such a nice trip but just can't afford it right now. Then ask the neighbor how long they had to save in order to afford that trip. The neighbor might tell you they financed it or give you a look which lets you know they really can't afford it either! This makes you feel better and makes you realize there is no reason to keep up with the Joneses because chances are, they are in debt!

I find the money envy a problem with me. We have a couple that we are friends with who seem to be doing soo much better then us. When we go out to eat they try to pay for our check. It seems they are always buying such nice stuff and spending lots of money. Now I wonder how they are able to afford all this nice stuff. I know for a fact that they don't make any more money then us! I try telling myself that they are just digging themselves into a big debt hole but sometimes it is tough and I want to rush right out and prove to them that I can afford the same things they can. I must resist though and stick to my newly formed budget and continue to save. I have a feeling in 30 years or so I will be happy with my decision and notice that I am living much better then they are because of my larger retirement savings. Let me know what you think.

Goal 2: Budget!

One of my goals is to establish a firm budget and get it right over the next few months. I don't think I'll ever be able to have it perfect, but I want it to help out so I can see where my money is going and find areas to save and spend less. This budget will hopefully help me attain my other "real" goals of saving for retirement, building an emergency fund, and becoming debt free. I won't post the details of my budget but I have worked into it my retirement savings of $300 a month and paying down $845 a month on debt. I have decided to put my emergency fund savings on hold until I have most of my debt paid off. I have about $2,200 in my emergency fund which should hold me over until I can get alot of this debt paid off and start contributing again. I also set up a "Fun" account for whatever I want. I am contributing $50 a month towards this account. I am getting ready to set up a debt snowball and will post later with the details.