I Disappeared!

I wanted to apologize for the long stretch of non-posts.  I have several topics I would like to hit in the very near future.  Check back soon for more.  In the meantime, which horse are you riding to win the NCAA tournament?  I think I’m going to stick with Kansas. 

Spending Ourselves Into a Hole

When I first heard about this statistic, I was appalled.  I absolutely couldn’t believe my eyes.  In 2006, the average American saved a negative one percent of his/her after-tax income.  Please go back and read that statement again.  Not only did the average American fail to save a single cent, the average American actually went further into debt. 

This caps off the second consecutive year of negative savings.  Not since the Great Depression, in 1933, has our personal savings rate been in the red.  I understand that living isn’t cheap, but c’mon.  Our economy, for the most part, has been very strong over the past 12-24 months.  How in the world did we manage to go further into debt for the second straight year? 

Issues such as unemployment, rising medical costs, rising interest rates, and falling home prices can all be used to try to explain this horrifying statistic.  In reality, these aren’t new issues.  We’ve always had unemployment.  Medical costs have been an issue for decades.  Interest rates are very low on a historical scale.  The housing market has always been cyclical.  So why is it that, after going 73 years without a negative personal savings rate, we’ve have two consecutive years in the red? 

I would give my vote to negligence.  Our society is so plastic-burning, possession-craving greedy, that we are burying ourselves.  Instead of trying to save for our future, we are trying to live like rockstars today.  Am I just another prude trying to get on my soapbox against those of you who like to enjoy life?  Heck no.  Those of you who know me know quite well that I enjoy some of the finer things in life.

The race to retirement and financial freedom is a marathon, not a sprint.  If you start early and pace yourself, you will beat the pants off of the guy who waits and tries to sprint to the finish line. 

How much of your take-home pay do you save each month?  I would like to offer a challenge to every single person who happens to stumble across this post.  Whether you make $100,000 or $20,000, commit yourself to saving.  Set a goal for yourself.  Do a little quick math and determine how much you’d be willing to part with on a monthly basis.  Maybe it’s only 2%.  Do you have a 401(k) or a Roth IRA?  Even a savings account would be a start.  Once you know what amount you are willing to put away, set up a direct deposit that will take it right out of your paycheck.  If you can’t touch it, you can’t spend it. 

Although I’m just a regular Joe, I do know that you can have the best of both worlds.  Enjoy life and save for the future.  It can be done.  I realize that everyone’s situation is different, but I challenge you to at least try. 

Good luck!

Simply Stunning

This seemed to fly a little under the radar the last few weeks, but this year’s Superbowl commercials created much controversy.  Ever since the infamous wardrobe malfunction, you can’t broadcast anything on TV or the radio unless 100.00% of society is OK with it.  99.9% of society?  Sorry, that won’t cut it.

The most recent example includes a General Motors commercial featuring a depressed robot and a Snickers commercial featuring two men who accidentally end up in an awkward lip-lock. 

Both of these commercials faced intense immediate opposition from various awareness groups, all threatening the respective companies to remove these commercials from the airwaves or else.

It just absolutely baffles me.  Am I being insensitive here?  I thought the commercials were entertaining…….as Superbowl commercials typically are.  Since when has political correctness taken precedence over freedom of speech.  Are these companies pushing it too far?  If these commercials are as negative as some would argue, won’t these two companies suffer financially from the bad press they are generating, and get their just desserts?    Who is right and who is wrong?  I believe this issue runs much deeper than a few silly commercials.  I would love to hear your thoughts.

On a side-note, I’m pretty dumb when it comes to this fancy blog stuff.  Can anyone tell me how to embed a video in my post, as opposed to linking said video?  I see everyone else doing it, and I want to be part of the cool group too.  Any help would be greatly appreciated

Worthless Savings Accounts

Does anyone ever get sick and tired of earning next to nothing on your savings account?  You go to your local bank, open a savings account, and start socking away a little money at a time, hoping to one day save enough for that car, engagement ring, or house.  In reality, you are losing money on the deal.  The interest you are earning probably isn’t even enough to keep up with inflation.  I checked with a few local banks in the past few days:  0.85%, 0.75%, 1.00% and 0.20%?!?!  You might as well stuff a handful of $20 bills under your mattress. 

Fortunately for us folks living in the 21st century, we have the Internet.  All it takes is a couple clicks and you can get yourself a sweet savings account earning 4-5%.  What’s the catch?  You’ll have to take 10 minutes out of your day and be willing to make a lot more money than you currently are.

There are many great savings accounts out there that offer fantastic rates, but two of the more popular ones are ING Direct and Emigrant Direct.  ING Direct currently offers a 4.50% return and Emigrant Direct is sitting at 5.05%.  Which one is better?  There are people on each side of this argument, but they are both great choices.  Personally, I have an ING Direct account because of its user-friendly website and rock-solid reputation.  I also have friends that swear by their Emigrant Direct accounts.  Either way, you can’t go wrong. 

All you need to do is take a few minutes of your time to sign up for an account and deposit a couple bucks.  There are no minimums, no fees, and no hassles.

Give it a shot.  What do you have to lose?  Happy Valentine’s Day (or depending on your situation, Happy Single’s Awareness Day!).

Procrastination

A friend of mine sent me a link to this fascinating article about procrastination last week.  Ironically, I put off reading it for several days.  I find it very interesting that our society’s elevated level of technology and ease of communication is causing a staggering spike in procrastination, though I’m not surprised.  I’m certainly a guilty party. 

 My award for biggest procrastinator on earth goes to my beloved Chicago Cubs……..who always find a way to “wait ’til next year”.

Ding!

Unless you’ve been living in a hole (or Minneapolis) for the last few years, you’ve probably heard of Southwest’s Ding!.  Although this post is completely out of left field, I thought I’d write a quick note about this amazing sound. 

Where else can you find the deal of a lifetime……two times a day?  Chicago for $70?  Ft. Lauderdale for $120?  L.A. for $150?  I completely just pulled those prices out of my butt, so please don’t quote me.  That’s not the point.  Point is, download Ding!, find yourself a cheap ticket, and fly somewhere new. 

Explore the country.  It’s a wonderful thing.  Oh yeah, if you need a travel buddy to join you, count me in. 

Go to www.southwest.com to learn more, or just watch this hilarious commercial.  I am in no way affiliated with Southwest Airlines……more like a groupie.

401(k) Fun

So, I haven’t even made my first real post and I’m already falling behind.  Business travel and my general lack of creativity has led to a delayed beginning to this adventure.  Hopefully this won’t cost me my 3 readers.

 Today alone, I’ve talked to a handful of people asking about their company-sponsored 401(k) retirement plans.  As friends have trickled out of college and into the real world, this seems to be a hot topic.  Whether it’s fear, greed, or denial, most people hesitate to jump into one of the greatest investment vehicles available to us today. 

Although I’m running the risk of being accused of preaching, my best advice is to…DO SOMETHING.  The best place to start is to find out what your company’s matching policy is.  Most companies today will offer to give you free money just for investing part of your paycheck in your retirement account.  Say a company has a 50% matching policy up to 6% of your salary.  This means that if you invest 6% of your paycheck, they will throw another 3% into the pot.  Essentially, you’re getting free money just for simply investing in your future.  Can’t beat that.  Additionally, the 6% you put into your 401(k) account is exempt from federal income taxes.   

Well that’s all fine and dandy, but what do I invest in?  I’m sure many people would disagree with me, but someone in their early- to mid-20’s should have a mix of approximately 5-10% bonds and 90-95% stocks.  If you’re more conservative by nature, you could invest the majority of your stock allocation in large-cap index funds.  If you’re more of an aggressive person, maybe a mix of small-, medium-, and large-cap stocks should suffice. 

Start small.  Take 2-3% of your paycheck and put it into your 401(k).  I promise that you won’t even notice the money missing from your checking account.  Why not add a percent?  Still not feeling the pinch?  Add one more percent.  Next thing you know, you’re investing 6-10% of your paycheck and it’s no sweat at all.  At the very least, I would try to target a contribution that will allow you to collect all the free money from your company that you can.  

I will wrap up this eerily boring post by saying, DO SOMETHING.  It may not seem like a big deal today, but it could pay off huge 20-30 years from now.  Don’t rely on my word, I’m still a young cat.  Ask someone in their 40’s or 50’s, “What is your biggest financial regret”?  The number one answer is the regret of not starting their retirement planning earlier. 

First Post Ever

 So, I’ve been delaying this post for a week or so.  I spent quite some time trying to come up with a name for this webpage and what I was going to focus on.  Once I finally had everything set up, I was paralyzed.  There are so many great financial blogs out there.  What could I possibly have to add to the wealth of knowledge that already exists on the web today?  We’ll find out.  I want to thank Brook for helping me come up the name for the site and Chris for helping me get everything set up.

 My goal for this page is to discuss various financial topics, as well as any other random thoughts I may have.  It is my intention to educate, inform, discuss, and maybe even provide a bit of entertainment. 

Please forgive me as I begin this new adventure.  Also, please give me any of your thoughts, reactions, and questions.  Hopefully we can make this a give and take relationship.