First this week, I’d like to share Kevin Mercadante’s guest post on Fiscal Geek Is a 15 Year Mortgage Financial Suicide? Kevin’s post is what inspired me to write a post earlier this week comparing the 15 to the 30 year fixed rate loan. I agree with Kevin’s view on this, that the difference to go 15 is pretty high and in times like this, the cash flow may be more important.

Bucksome Boomer asks Can Baby Boomers Afford to Retire? The more data I see on this, the more concerned I become. It seems the average boomer has a nest egg of $84,000. Of course that implies the median number is much lower as many boomers have millions. A nice article discussing the options that lie ahead for this generation.

Frugal Real Estate reminds us that there’s a 2009 Property Tax Deduction for Non-itemizers.

Hank at Own The Dollar wrote the excellent There Is No Such Thing As The Lost Decade With Dollar Cost Averaging. I’m not going to ruin the punchline, take a read and see how an investor who started in 2000 would have fared by simply putting in an equal amount every month, the decade wouldn’t have treated her too badly. A great analysis, all I’d add myself is that thse number would have been better still had they been partially matched in a 401(k) account, as many of us have the bulk of our savings there.

On that same note, I’ll move on to Why You NEED To Contribute To Your 401(k) posted at My Two Dollars. For those who don’t contribute to their 401(k) this article offers an explanation of how they work, the present tax benefits, and potential for saving, long term. I’ve been 401(k)ing for 25 years, others may need a little push and better understanding of the process. This is a great start.

Living Almost Large talks about Buying too much, too much house, too much car, too much stuff. I suspect many of us fall into this trap. She’s not talking ‘frugal’ here, the sentiment leans more towards Dr Stanley’s  book “Stop Acting Rich.” The difference from the well chosen house to the ‘too big’ house really adding up over time. Today’s title taken with this blogger in mind.

With that, I’ll end this week’s roundup…..

Joe

written by JOE \\ tags: Finance, Frugal, pfblogger, Retirement, saving

Jimmy had Billy (Carter) and Bill had Roger (Clinton). Our president has no embarrassing sibling, but Joe fills the void nicely.

written by JOE \\ tags: joe biden, obama, president

A couple weeks back, in a roundup, I referenced Jim Wang’s Devil’s advocate: Being frugal is foolish. I pointed out to Jim that one can’t always turn their next hour of labor into money, that for many, this was a quick way to save cash. His reply, “but the risk of focusing too much on frugality, especially after the low hanging fruit, is that you start chasing savings that are mere pennies when you could be earning dollars (or at least trying to improve your skills so you can earn more dollars)” left me thinking. And reconsidering some of my view.

Maybe what struck me most after I re-read his post was the concept that there’s no limit to one’s income, yet frugality not only has a limit, but it can reach a point of diminishing return as you find the easy savings first, and may wind up putting in incrementally more effort to save even less. I think for those with a frugal mindset, it’s tough to break some habits and maybe there’s no need to. When the TP, laundry soap, canned soup is on sale for half price, I’m always going to stuff a closet with it. Yet, if my income isn’t high enough for my lifestyle, there’s a more fundamental change needed, I either need to Stop Acting Rich, or improve my situation by increasing my skills and earning power.

If you are still looking to carve some money out of your budget, read Tom Drake’s 10 Money Saving Tips. A good read to help you find some places to save.

Joe

written by JOE \\ tags: Frugal, frugality, lifestyle, spending

I’ve been reading many articles recently about the choice between 15 and 30 year mortgages. One of the interesting things that occurs to me is how years ago my “rule of thumb” was that a 15 year mortgage was only about 20% more than the 30. This seems to have changes as we can see.

First, I set the mortgage amount at $200,000, and then calculated the monthly payments at various rates for both 15 year and 30 year fixed rates. You’ll note that I use a 15 year rate that’s 1/2% lower than the 30 for payment comparison. You can see history going back to 1991 comparing the two showing that the average difference is about that much. (Note: the chart has a drop-down menu, choose the 36 yr chart)

Next, I simply divided, to find out the extra payment required as a percent of the original figure, to reduce the mortgage from 30 years to 15. What I find interesting here is that when rates were higher, for me it seems like yesterday, it took at little as 17% extra to bring a 10.5% mortgage down from 30 to 15 years. Yet with today’s relatively low rates it’s actually tougher to do this, the payment will be more than 40% higher.

The choice of mortgages is a tough one. There’s a movement away from debt, an almost “debt is evil” mantra. Yet, it comes when we live in interesting times, a combination of historic low rates, concern about employment, and fear of inflation around the corner. It’s for these reasons that I’d caution against prepaying at the risk of not having an emergency fund (as much as a full year of expenses) at the ready. It also bears repeating that one should never pass up matched 401(k) savings especially if your employer offers a dollar for dollar match.

Is your mortgage your only debt? Are you paying it off early? Let me know what your approach is, and why.

Joe

written by JOE \\ tags: Finance, Mortgage, Retirement

Last week, the Hiring Incentives to Restore Employment (HIRE) act was enacted into law. It contain two key incentives to encourage employers to hire new workers. I was asked by my friends at TurboTax to guest post Basics of 2010 HIRE Act, and invite you to read the entire article there.

Meantime, I’m sifting though the 121 summary of the Health Care Bill, reading Stop Acting Rich, with a review to come soon, and sketching out the framework of a number of future post ideas. Also, as a result of the Plutus Awards, I was invited to join a select group of bloggers, more details to follow.

Joe

written by JOE \\ tags: book review, Finance, Taxes

It hit 70F this week and if that doesn’t say Spring, I don’t know what will.

photo credit: Kuzeytac

Another great week of financial reading, let’s start with Frugal Zeitgeist’s Realizing The Frugal Monster You Have Become! An interesting look at how frugal becomes a habit to some of us, along with a tongue in cheek reference to our inner frugal monster. As with anything, there’s a line beyond which you are likely to bring yourself more misery that joy. Short of that, being aware of what you spend and applying some sense can really help your wallet.

Miranda Marquit guest posted at MoneyNing Money Isn’t Just for Hoarding — It’s For Spending, Too. With all the talk of saving for retirement, paying off the mortgage early, etc, Miranda takes a view that gives one pause, perhaps spending is okay too. Not crazy go nuts spending, but an approach that says it’s possible to go too far in the other direction and maybe there’s a happy medium. I like her “money as a means to an end” approach and have been thinking about this a bit myself, spending too much time thinking about some purchases I should have made sooner.

At Budgets are Sexy, Lisa Rowan guest posted 7 Stupid Tax Mistakes to Avoid. When I read this it occurred to me that most articles are about what to do, not mistakes to avoid. Yet, think of how much grief, time, and money we might save if only we had some decent warning. That said, here’s an excellent list of the mistakes you don’t want to make when filing your tax return.

Just as I finished the writeup above I noticed the next article I tagged for sharing today was Free Money Finance’s Nine Roth IRA Conversion Mistakes.Maybe the ‘mistake’ articles are more common than I thought? This one gives a nice overview on what mistakes to avoid when it comes to the new Roth rules. You may know a few of these, but I’d bet you’ll learn at least one or two things by reading, I know I did.

John Frainee guest posted at Bible Money Matters How To Learn Investing Without A Formal Education. The title describes it well, some thoughts on how to start to gain a knowledge of finance. I agree with a couple commenters that reading is an additional source of knowledge and can provide a good foundation.

I’ll wrap up the week with Matt Jab’s Saving Money to Repay Debt in Lump Sums. Decisions regarding one’s finances are rarely clear cut, and in this post, Matt discusses why he’s stashing some money aside instead of paying off his debts faster. Theory is all well and good but in my own blog surfing I often enjoy when the author shares his or her own personal experience and approach to a financial matter.

Have a great week.

Joe

written by JOE \\ tags: Finance, Investing, Roth, spending