This week let’s start with Bob at Christian PF asking Does Saver’s Remorse exist? It’s a great question, but a tough one to wrap my brain around. If I knew for certain (a) my future income stream, (b) the market return, and (c) the day I’ll die, I’d be able to plan things pretty well. I just pulled out a calculator to see what $500/mo invested over 40 years would turn into at different rates of return. At 4%, it’s $590.981, at 6%, $995.745, at 8%, $1,745,504, and at 10%, 3,162,040. The higher return will give you 5X the money you’ll get at the lower return in this range. This implies that you can have a target, but must keep your eye on the goal and change as time passes. If you assume a low return and have a lucky couple decades (anyone remember the 80’s and 90’s?) you may have saved more than you needed, but to count on 10% and then have a lost decade, well, ouch.
Jason at Redeeming Riches offers up 5 Dumb Mistakes That Smart People Make. A nice mix of observations ranging from Keeping up with the Joneses to not taking advantage of the 401(k) match. The list contains mistakes that are easy to make, but at the same time, easy to avoid. Take a read and see how many you’re guilty of doing.
Len Penzo is Not Cutting Up his Credit Cards, and neither am I. Len offers both sides of the debate, a number of great reasons why you shouldn’t use credit cards and a number of reasons why you should. In the end, the decision is yours, of course. Are the cards making your life better (added protection, extended warrantees, rewards) or worse (You can’t pay in full and the interest is just adding up each month)? One of the best pro/con credit card articles I’ve seen in some time.
JSWesey wrote about the Side Effects of New Credit Card Law. I wrote on this myself a few weeks back in The Unintended Consequences of CARD and JSW’s post is confirmation to me that card issuers are doing what they can to extract every dollar out of the consumer. The new law just has their lawyers rewriting the agreements to get fees from people not paying interest, or raising rates from those that do. (The link to JSW’s article is removed as the site is no longer valid)
And I’ll end this week’s best with the Fiscal Geek’s 10 Things Your Baby Doesn’t Need that Can Fund Their College Education. We do spoil out kids, and Paul is right, they don’t need a warmer for their baby wipes. And yes, my mother in law was right, my daughter didn’t ‘need’ a Bose Wave Radio when she was two. On the other hand, I had gift certificates to The Sharper Image and the life size Yoda would have just freaked her out.
Enjoy the week ahead,