Jan's Posts - Page 5 of 7

10 Things You Should Know About Contracts

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I've listed these suggestions in order of importance, based on my experience with my kids as well what I've heard from their friends.

People who ask you to sign contracts don't necessarily know what's in them. And they don't like you to ask any questions!

I learned this the hard way when renting my first apartment in a new state. The landlord said, “don’t bother cleaning when you move out because they always pay someone to come in and clean and then automatically and deduct a flat fee of $125 from the deposit.”

Hmm…The contract said I (the tenant) was responsible for cleaning the apartment when moving out. When I asked, the landlord had no idea about that because they “had been doing it this way for years.”

Interesting how many years she’d been getting away with not giving tenants the opportunity to get back their entire deposit.

No contract is "routine"

That only means the people asking you to sign them uses them a lot, but it doesn’t mean they know or understand what’s in them as I pointed out above. And it certainly doesn’t mean you know what’s in them. Most people might see the same contract to buy a car, for instance, 4-5 times in a lifetime. And there is no guarantee that the wording hasn’t changed in the years since you signed your first one. Same with credit cards and especially with buying homes. Don’t “fall” for this very common pressure tactic!

3. Regardless of what's in a contract, you are both legally responsible for its content

But, when you sign a contract with a business rather than just between two people such as the sale of a used car, I’d say between you and a business, you probably have the most to lose if you renege on said contract. Which leads into this next point,

4. Know what "Breach of Contract" means

It basically means that if one person does not do what they agreed to do in a contract, then that person is in “breach” of the contract. People get sued for breach of contract all the time.

A simple example is when you buy a car. You sign a contract with a dealer that says you will pay so much per month in car payments for however long it takes you to pay off the price (loan) of the car. In return, the dealer allows you to drive the car even though you don’t technically own it yet. If you stop making payments, however, you are in “breach of contract” and the dealer has every right to take the car back (that process is called a “repossession”).

Oh, and you will lose in court if you decide to “go after them.”

5. You should read all contracts before signing them

Look at the fine print for details such as any definition of what a late payment might look like (one minute past the due date, one day, one week, one month?) and what kind of fees are attached to that? Some contracts have late fees that increase as time goes by. Is there a grace period? Sometimes utilities and mortgage companies have those.
Look for any “pre-payment” penalties. This means if you pay off a loan early they will charge you a huge fee. The reason for that is because in essence, when you pay off a loan early, you are preventing them from collecting interest on the remaining length of the loan. Most companies really don’t like that because it’s less money for them.
Look for the details on those “no interest for 12 months” deals too: That’s not always what you think it is.
Many companies count on customers to NOT read contracts and to NOT ask questions before signing them. This allows them to sneak in crazy high-interest rates, late fees, random “administrative” fees and weird penalties.

6. You must question anything you don't understand

Do not let them rush you! They will always try to do this (because they are sooo busy and their time is much more valuable than yours-not!) thus preventing you from finding the details. So don’t ever feel stupid asking questions, or calling a friend to ask questions.

Remember the first point I made about them not knowing? Many companies update and change contracts more often than you change your underwear. In the real estate and banking industries for instance, the government changes regulations all the time which leads to new versions of contracts being created on a regular basis. Combine this with the fact that most employees are usually kept pretty busy during their work day and don’t always have time to sit down on the job and read up on all the changes. They also aren’t very likely to want to do this on their off time. In most cases, they are probably learning when someone, like you, asks questions.

So, again, do not be afraid to ask questions and do not ever assume the sales reps are smarter than you are: That is a huge disservice to you!

7. Be prepared to walk away for ANY reason at all!

Before you sign a contract, you have every right to walk away for any reason.

For instance:

If a salesperson cannot explain any part of the contract.
You do not understand or agree with any part of the contract.
You simply changed your mind.
You don’t like the personality, looks, or smell of the salesperson.

And you are not obligated to explain why you are walking away, regardless of what they say or if they threaten you with some sort of made up legal action.

These are sales people and yes they will probably be pissed if you walk away after all the time they may have spent with you, but that’s one of the risks they take by being in sales.

It is not illegal for you to walk away if you have NOT signed anything – regardless of anything that was said.

8. It is very rare that a verbal agreement is legally binding or enforceable

Surprisingly enough, there are a few exceptions to this rule. From what I’ve read, if you are dealing with horses or cattle, verbal agreements that are confirmed with a handshake are legally binding.

I’ve also read that when it comes to an engagement, the ring is a sign that one has legally agreed to be married. When a woman breaks the engagement she is legally obligated to return the ring because it was given to “seal the deal.” (It’s up the to the guy on whether or not he wants it back, but it’s still kind of interesting, isn’t it?)

If you are ever thinking you might find yourself in this kind of situation, do some homework: This gray area differs from state to state and per each situation.

9. If you are over 18, your signature is legally binding

If you aren’t, then it’s not.

Contracts can only be legally signed and enforced when both people signing it are over the age of 18. That’s pretty much the “legally an adult” age in the entire USA when it comes to contracts and most laws.

The only exception that I know of might be in regards to getting married. And remember, 18 or not, if marriage is legal at 16 in your state, it too is a very legally binding financial agreement.

10. How to handle doubts

Lastly, if you are ever in serious doubt about a contract that could make or break your business or seriously affect your finances or lifestyle, you should always call a lawyer that specializes in whatever business said contract is all about. In many situations, such as a buying a car, renting an apartment, or financing your first refrigerator, you can always ask a friend or family member with some experience in that arena. You might even want to bring them with you to guide you through the process. (I did this with both my kids when they bought their first car.) But if they have no experience with the type of contract you’re dealing with, contact a lawyer. Your family or friends may not be equipped to represent you in a court of law if it ever comes to that and you really don’t want to get into that sticky situation.

I hope this information prevents you from getting yourself into any sort of legally binding financial agreement that you don’t fully understand.

Your comments or suggestions are always welcome: Leave them here on my site or email me at jan@janetmnast.com

Jan

7 Tips to Save $$$ on Car Loans

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I've listed these suggestions in order of importance, based on my experience with my kids as well what I've heard from their friends.

1. You need to know your credit score

The higher your credit score, the lower the interest rate you'll have to pay on your car loan.

Credit scores run between 500 and 850. Paying your bills and paying them on time are two ways to ensure that your credit score stays higher.

2. You don't have to use dealer financing

Call your bank first to get pre-approved for a loan. Having your own financing lined up gives you a little bit a room to negotiate with the dealer as well. They might be willing to beat your bank’s interest rate just for the sake of getting the loan. In that case, go with the dealer’s lender and you both win.

3. Your bank can tell you interest rates

They can also offer you options for the number of years you will be paying and what your new payments should be.

Click here to use a Car Payment Calculator if you’d like to just get a ballpark idea before you call the bank.

These first three pieces of information will be helpful to you as you begin negotiating pricing and interest rates with any dealer. Sometimes they can beat your bank’s rates, sometimes they can't. It’s always a good thing to have this Plan B so you get the best loan possible for your budget.

4. Your insurance company can tell you what you'll have to pay for insurance

Call your insurance company with the year, make & model of the car you want to buy. They can then tell you what your monthly insurance payments will be.

When you add that to your new car payments, along with the cost of gas (explained next), you can then decide if you can really afford that new car or if you should consider a different one.

5. You can calculate what it's going to cost you for gas each week

Here’s how to do the math:

How big is the gas tank on the new car? (20 gallons, for instance.)
Multiply that by the cost of gas per gallon. (20 gallons X $2.50/gallon = $50 cost per tank of gas.)
Then how many miles per fill-up does this new car get? (25 miles per gallon x 20 gallons = 500 miles on a tank of gas.)
500 miles per tank divided by your 70-mile commute per day = 7.14 days of driving on one tank of gas that cost you $50
If you want just 5 days cost, divide that $50 by 7.14 days to find the cost per day which is right around $7 per day.
Now multiply that $7 per day by 5 days for a typical work week, which is $35. Or multiply it by 30 days for the month, giving you your monthly cost of gas.

After you add the new car payments to the insurance cost, you can now add the cost of gas per month and decide if you can really afford this car.

6. You are not required to purchase an extended warranty

Almost all new cars these days have such incredible factory warranties, that paying an extra $500 or $1000 for another one is really just a waste of money. Know that the markup on those policies is about 300% - it’s almost pure profit for the dealer – and the cost will be rolled into your car loan so that you'll be paying interest on that too, as well as the car loan, until the car is paid for.

Now, if you are buying a used car, I would say you might want to consider it. Just be very clear on what that warranty covers. Basic car maintenance (wear-and-tear items and routine scheduled maintenance) is rarely covered.

7. It is OK to walk away if you don't feel comfortable with the dealer, the transaction, or the the car itself

So what if you’ve been talking for two hours; your time is just as valuable as theirs and ultimately, it’s your wallet, not theirs. You owe them nothing – selling is their job – so don’t feel bad.

Now that you are armed with all the costs related to buying a car, you can make a better decision when you walk into a dealership. (Click here to save and print a 99c PDF to carry with you so you don’t forget it all when you get caught up in the excitement of test driving the car!) That in itself will make the whole buying process that much more fun and stress-free.

Have fun!

Jan

Are You Too Young to Start Saving for Retirement?

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My brother, a long haul truck driver, dropped in this past weekend accompanied by his co-driver, Jeremiah Johnson (yes, that’s his real name for those of you who remember that movie.) During good meals and good conversations we came around to the topic of retirement.

Jeremiah had this to say about that:

“I don’t understand. People work their whole lives and make good money. Why do so many of them struggle financially when they retire? Where do things go wrong?”

Two days later I shared this conversation with my son, who then told me he had just encountered an elderly homeless couple when he stopped in a parking lot to make a phone call. He said,

“Mom, it was so sad especially because they were your age. I can’t imagine you being in this situation...how does this happen?”

Good question. But honestly, it didn’t take me long to come up with five very solid answers. See if one or two of these don’t resonate with you.

1. Most people don’t really understand what it means to “retire” so they don’t know how to plan for it.

This is what it means to retire:

You quit your job. Voluntarily.

So what’s that look like on paper? Remember that 50k a year you were earning? Yeah, well, that goes away and now you make zero dollars. So, no more automatic payroll deposits into your bank account and no more raises (aka, “fixed income”).

But guess what doesn’t drop to zero: Your financial obligations, aka, your debt. You know, things like your rent or mortgage payments, car payment, utilities, cell phone bill, credit card debt, and any insurance you have.

With that in mind, how do you think you’re going to continue to pay those bills with no income?

2. People make 50k a year, but spend like they’re making 100k.

We all do it especially as easy as it is to get caught up in the more recent trend (due to massive marketing) of using credit cards for every darn thing.

3. YOLO: You Only Live Once.

This isn’t an uncommon attitude at all. Most people under the age of 35 or 40 do this and it’s not meant as an insult. I mean, I don’t know about you but when I was in my 20’s I really didn’t give retirement a single thought, let alone a second thought. If there was any saving to be done at all it might’ve been to save for a vacation or Black Friday shopping.

4. Job loss/Layoffs

Some companies have a nasty habit of either going out of business, shutting down various locations (General Motors) or laying people off/firing them/ forcing an involuntary retirement a few years short of government retirement age. (That would be 59.5 for any 401k or Roth IRA accounts, and 62 for Social Security.)

In my experience this seems to happen when a long term employee has been working for a big company for 20+ years. While it’s illegal as hell to practice age discrimination, big corporations will find a way to work that option if they want to save money by hiring younger, lower paid workers.

AT & T for instance, laid off my husband (after 35 years) when he got hurt on the job and needed major surgery. Tom was 57. My brother’s hours were cut to 16 per week at the plastics company in Flint when he was mid 50’s so he could no longer pay his bills. Thank God I was still working full time and my brother’s wife was too, but boy did we all have to make some serious adjustments!

5. Debilitating Illness

This could include, but not by any means be limited to Cancer, Heart Disease, Diabetes, etc.

So how can you avoid becoming homeless when you’re a senior citizen?

Denying the fact that you will become a senior citizen will only get you into trouble... and possibly homeless. (Hey, with some good living, good luck and a few prayers, we will all eventually become senior citizens.)

The only way to ensure a good lifestyle in your later years is to make a plan.

You’re Never Too Young to Start Planning

I strongly suggest you think about doing this when you get your first job. No, that’s not too young; there’s no such thing as too young to plan for retirement. Just like it’s never too late either. Heck, I didn’t start till I was 40!

Make a plan: Five Steps to Retirement

Here are the five basic steps:

Buy a house if, or, as soon as you can.

Avoid debt and/or pay off as much of your serious debt as soon as possible.

Calculate how much you think you’ll need to save/ live on in your retirement years.

Determine the age at which you want to quit working/retire.

Start saving ASAP: Saving’s account, 401k, 401k Roth IRA

Let’s take a closer look:
1. Buy a house if, or as soon, as you can.

I know that not everyone is in a position to do this. I mean, for those who have jobs that require them to relocate every six months or every two years, such as the military, this just isn’t going to happen 'till you change jobs or retire.

Then there are those who just don’t want to be “tied down,” or “put down roots” because they have a wandering soul. And that’s fine. But keep in mind, with that type of life style, you will have zero control over the cost of your housing as time passes and you grow older.

That said, I would say that after buying a car, this is one the most important financial goals you can set for the simple reason that it’s the best rent control you can ever have.

Look at it this way: Once you have a 30-yr mortgage, your “rent” won’t go up for the next 30 years! No more $50 - $100 rent increases every six months. Then, in 30 years when that debt is paid off and you retire, you get to live rent free forever!

Yes, you will still have homeowner’s insurance and property taxes, but that will always be a small fraction of what you would pay in rent or a mortgage.

Either way, SWEET!

2. Avoid debt/pay off your serious debt.

“Serious” debt would include a house, a car, or major credit card purchases of say, over $1,000.

Seriously, paying everything off is actually doable when you start with considering a 30-year mortgage. Yes, it will take 30 years to pay it off, which seems like a long time. But look at this way: If you buy a house when you’re 30 it’ll be paid off by the time you’re 60. All you have to do is buy the right one the first time and keep it. Just avoid the temptation to up-size because everyone else is or because you just got a raise.

Then think about buying a car. Five-year car loans really are paid off in 5 years. Again, keep the same car, do the required routine maintenance, and most vehicles will last 15-20 years.

Ok, I know some of us start out with a hand-me-down junker so this might seem a little more challenging. I get it. My first car at 16 was my family's 1963 Rambler; my last was this used 2013 Dodge Ram truck. (BTW, you save a TON of money when you buy used.)

And I know it’s easy to have a need for a larger vehicle when your family grows, and then when all the kids move out you have a desire to downsize. So yeah, you may just go through a few cars by the time you’re 50 or so, but still, if you buy your last one at that age, just be serious about its maintenance and you won’t have another car payment for the rest of your life.

Also, limit your credit card usage. There’s no doubt when they offer incentives such as 15% discount and zero interest when using their store credit card, it’s a great idea. But still try to be good and just charge what you can pay off in a couple of months. Otherwise this kind of debt can follow you right into your grave!

3. Calculate how much you think you’ll need to save/ live on in your retirement years.

How much do you think you’ll need to save/ live on for those retirement years? Look at your current lifestyle: house, car pmt, credit cards. Keep in mind that if you’re paying rent rather than a mortgage, that dollar amount will continue to rise (to who knows what) after you retire, along with the cost of your utilities, gas, and food. We can’t possibly predict what all those dollar amounts will be so let’s just look at your current total monthly payments.

For example, we’ll say if you’re making $50k per year, 10% goes to taxes and 10% goes to other payroll deductions (Medicare, soc sec, etc), and the remaining 30k goes out to bills, gas and groceries.

That means that you need a minimum of 30k per year to live on. Take that 30k a year and multiply it by however many more years you think you might live after you retire.

To figure that out, let’s say you want to retire at 62 so you can collect Social Security and draw on your 401k. And you’re in reasonably good health so you believe you’ll live another 25 years after retirement bringing you to 87 years of age. Hey, it could happen! And even if you don’t, I’d suggest planning for it just in case you surprise yourself. Ha!

Either way, that would be 25 years x $30k per year = $750,000 Yikes!!! Yes, ideally you should save a three quarters of a million dollars. Yikes again!!! When someone told me that years ago, I freaked! There’s no way I could save that!

But wait!

Before you freak out, let’s re-calculate how much you need to live on each month when some of that “serious” debt is gone. I doubt you’ll need that much...I sure didn’t.

Let’s start with the house: In 30 years your house will be paid off. Remember? So imagine your house payment is $1500 per month. But part of that is taxes and insurance (say $250), so maybe you’ll no longer have $1,250 a month in mortgage payments. That’s $15,000 per year taken off that $30k per year you thought you’d need. Now you only need $15,000 per year to live on. Multiplied again by those 25 years of retirement life. Now we’re looking at $375,000 you need to save. That feels a little more doable, don’t you think? And if you get your car paid off before retirement, that’s even better, yay!!!

To see what you need to save annually, then monthly, let’s do a bit more math.

Take that 375k and divide it by the number of years you’ll be working. This is where you look at how old you are when you start saving and decide how long you should work, aka, how many years before you want to retire. Let’s say, you’re 25 now, and want to retire at 62...so that’s 37 years. At that rate, you should save $10,135 per year or $845 per month.

Yes, it sounds like a lot, but there are a few other things to factor in, such as compounded interest which means your money grows faster depending on how it’s invested while sitting in that 401k account. If you have payroll deductions for Social Security, that will also supplement your retirement income.

So please, don’t panic and give up. Something set aside, is wayyyy better than nothing and it may be just the right amount to keep you from being homeless in your senior / retirement years.

4. Determine the age at which you want to quit working / retire.

You must ask yourself at what age do you want to quit your job and rely on whatever you have in savings to live out the rest of your years. This is probably the most important factor in planning for a comfortable retirement. But before you decide, you need to be very clear on the government’s guidelines on what “retirement age” actually is.

First, if you plan on drawing Social Security, currently the youngest age you can do so is 62.

Second, the youngest age you can draw from your 401k or 401kRoth – without paying hefty penalties – is 59 1/2.

Also keep in mind that when you retire, your income, whatever it is, will now be lower than it was when you were working, and it’s also considered a “fixed income” meaning you will no longer be getting raises on a regular basis: it is what it is probably for the rest of your life. The good news is that you’ll be in a lower income tax bracket, therefore you pay a lot less in income taxes.

So let’s get back to when you want to retire.

In the previous example (question 3) we had you retiring at 62. When you look at how much you should save in an ideal world, you may want to work a bit longer. Of course if you find yourself in a position where you can save more, or your money grows in your 401k faster than anticipated, you could retire sooner. Only you can do the math and make this decision based on your circumstances. Everyone’s situation is different and there are no hard rules.

That said, keep in mind that you may have some other retirement income options. I’ve included an overview of a four of them in the following pages.

5. Start saving ASAP!

As I said earlier, there is no such thing as too young to save for retirement.

Seriously, set up a 401k as soon as your employer offers the option. Even if you don’t think you can save as much as you calculated, it’s better to save something rather than nothing.

I mean, I didn’t start my 401k until I was 40 because someone finally showed me the math (shown in the table below under the "401k" heading) and believe me, as a single mom with two kids, I didn’t save all that much. But I’m sure happy for what I did save. Again, it’s better than nothing.

Below I’ve described four common retirement income options to which most everyone has access. No matter which kind of retirement/savings account you choose to use, most of them will grow in interest over time, which means you will end up with a lot more money than what you actually put in. The reason for this is something called “compounded interest.”

Rather than inserting a techy definition for it, let me explain with the following simple example.

Compounded Interest Simply Put

Let’s say you put $20 in savings this month. You now have $20 in savings at the end of the month. And let’s say it earns 1% interest that month, which is 2 cents.

Next month you put in another $20 for a total of $40.02. You then earn 1% interest on total combined amount of $40.02, which is .4002,or 4 cents. Now you have $40.06.

The next month you put in another $20, added to the $40.06 for a total of $60.06. The 1% interest is now being calculated on $60.06...which gets you .6 cents in interest for a total of $60.12.

Basically, the interest is always being calculated on the new total balance, not just on the extra $20 you put in each month.

This is a very simplified example, but it illustrates the point that if you start doing this even with a simple interest account, you could have a lot of money saved over the course of your 35-40 years of saving.

If you invest the money in your 401k account, it could be a lot more because most times people will put that 401k money into stocks or money market accounts that pay a lot more than 1% interest.

How much does anyone save?
And in what type of account?

There’s no standard: All who chose to save do it differently based on their monthly bills and what they think they can afford. And they all choose different types of accounts whether it be putting “before-tax” dollars in a 401k account, or investing “after-tax dollars” in stocks and bonds or a 401(k) Roth account. There’s no right way to do this, just do what you feel is right for you and your situation.

Sadly, not everyone chooses to save even a dime. I would say that that’s the only wrong choice because it’s a major contributing factor to the issue of so many struggling and homeless senior citizens.

Following are simple explanations for a few of the most practical and easiest to set up options.

The following information is an excerpt from the book, “Shifting to the Business of Life,” available on Amazon.com

Retirement Accounts

Many employers offer the option of setting up and managing retirement accounts for you.

If your employer doesn’t offer these, check to see if your bank or credit union does; many offer these services at no charge.

There are many kinds of retirement accounts, but I’m only going to describe the four most common: Social Security, pension, 401(k) and 40K(k) Roth (aka Roth IRA).

Social Security Accounts

This is the one your employer is required to set up by the federal government. Your Social Security account number is your Social Security number, which is why you need to give it to your employer. The payroll department will automatically deduct a certain amount (outlined in a chart by the government) from each paycheck you get and it will be deposited into your (government) Social Security account.

You cannot access this money until you turn 62, minimum. At age 62 you can apply (to the Social Security Administration) for it but you will only get a percentage of it. In other words, at 62 you might get 60 percent of what you’re entitled to, at 65 you might collect 75 percent and at 68 you might collect 100 percent. I say “might,” because I really don’t know the exact age and percentage brackets. A tax accountant or financial planner can provide the exact numbers.

Pensions

This type of retirement account is set up and run by the company for which you work. Not many companies have pensions anymore. Pensions cost employers a lot of money, which is why so many no longer offer them. (Most offer 401(k) accounts, which are explained next.)

Here is basically how pensions work:

The employer deposits a certain amount of money into each employee’s account each month for as long as the employee works for that company.

The employee can collect payments from his or her pension account after he or she has worked for the company a certain number of years and has reached retirement age. The company determines what that number of years is and what that age is.

If the company did a good job of guessing how long you will live after you retire and what it will cost you to live and maintain your current lifestyle, you should be getting pension payments close to what your salary was, for the rest of your life.

So you can see why a pension would cost an employer a lot of money. That’s why many companies no longer do this.

401(k) vs. 401(k) Roth

What’s really sad here is that I didn’t learn the difference between the two of these until I was 56 years old! You should know this sooner in life so that you make the best choice when it can really make a difference. Both of these accounts can be set up and managed by your employer.

Here are some facts and differences between the two:

The 401(k) is money deducted from your paycheck before any federal and state income taxes, and Social Security are calculated and deducted. In the long run, that means that when you pull money out of your 401(k) account you have to pay taxes on it. This is referred to as “deferred” taxes.

Surprisingly enough, this is not always a bad thing because when you retire, you no longer have that full-time, steady paycheck coming in, so your income is probably going to be a lot lower. Thus, you pay lower income taxes.

As far as I know, only an employer can set this up because only your employer can get a hold of your paycheck before taxes. But ask someone in your Human Resources (HR) department, a tax accountant or a financial planner to be sure.

Money for a 401(k) Roth account is deducted from your paycheck after all federal and state deductions are taken out of your paycheck. That means that when you retire and start taking money out of this account, you do not have to pay taxes on it. Most employers and most banks can set this up for you since you cash your check and make deposits after taxes.

While a 401(k) Roth account might sound like a regular savings account, it’s not. But it is similar to a 401(k) in these ways:

You should not take money out of either a 401(k) or 401(k) Roth account until you reach retirement age (59 1/2 as of this writing).
If you make a withdrawal and do not pay it back (vs. a loan against it that must be paid back with after-tax money plus interest), you will have to pay a 10 percent penalty on that money. And, in the case of the 401(k), you would also have to pay the deferred income taxes.

You can also decide where you want the money in these accounts to be invested over the years. That can be good because you have the potential of earning a lot more interest than just the 1 percent to 2 percent that savings accounts are currently paying.

The table (shown below) is an example of three scenarios using nice, rounded numbers. It uses $50,000 per year as a salary, and 10 percent being deducted in taxes every year and what your take-home pay could look like each year depending upon how you choose to save for retirement.

You can see in the first column, if you put 5 percent into a 401(k), that would be 5 percent of your $50,000 base salary, or $2,500, going into that account. Now you still have to pay 10 percent in income taxes, but it’s 10 percent of $47,500, which is only $4,750 instead of $5000.

The example in the next column shows what it looks like if you choose not to save anything for retirement.

The third column shows what your income and then retirement account looks like if you choose to put that 5 percent into a 401(k) Roth account.

On one hand, even though you’ll have the same take home pay with a Roth 401(k), you aren’t saving as much money. On the other hand, you are paying all your income taxes up front with the Roth 401(k) and you won’t be taxed again later, like a regular 401(k).

While this is a simplified explanation of how these two accounts work, it gives you enough information to at least think about it and get started saving.

If you have questions about this and can’t decide what you want to do, talk to your parents and see what they’ve done for their retirement.

If they’ve done nothing then talk with an accountant or a financial planner. H & R Block might answer some basic questions for you for free.

You can also look up terms such as “401(k)” and “401(k) Roth” on the Internet.

Bottom Line

Whatever you decide, it’s a smart idea to do something, and to begin as young as you can – even if it’s only 1 percent of each paycheck. Who knows what kind of money you will have coming in as you grow older and when you’re 62? But with one or two of these options, you will at least have something.

Which, as I mentioned in the beginning of this paper, is not something everyone realizes they need to do until it’s too late. That is why so many elderly retirees are struggling financially (or sadly, even homeless) even after they’ve worked so hard for so many years. Bottom line,

You are never too young to start saving for your retirement.

As I continued the conversation with my son he told me that out of all the classes he ever took in high school, math was the only one that will never change, was not open to debate, nor was it just a matter of opinion: It’s fact. He said that the simple math (described here) is what convinced him to open his 401k account at the ripe old age of 19 when he was a Marine making a lot less than minimum wage.

I’ll add to that by saying the only two things you can count on in life is taxes and death. Some feel that getting older is a crap shoot, but why not hedge your bets by planning for it? That and I realized a long time ago that there is no guarantee that anyone else will take care of me if I don’t do it myself: The same could be said for you.

I hope this helps you to decide to start saving now no matter how old you are.

Sincerely,

Jan

10 Simple Ways to Teach Your Children About Money

Your kids are never too young to learn about money and where it comes from, but there’s definitely a “too old” option.

A new survey by the National Association of Personal Financial Advisors (NAPFA) reports that one in three baby boomers who are nearing or starting retirement — hasn’t done any financial planning in the last two years.

Do you know how old these people are??? THAT would be the “too old” option.

Luckily you’re probably not a Baby Boomer and neither are your children.
Toddler To Approximately 6 – 7 Years Old
Tip #1: Start Having Your Kids Do Chores.
So the cool thing is all of you, and especially your kids, are probably at a good point to start learning about money if you haven’t already. No one is ever too young and it’s almost never too late either...well, except maybe for some baby boomers. I care more about you though.

To get started, know that when you talk with your kids about money...the whole discussion has to be kept simple and age appropriate.

For instance, a toddler won’t care about budgets and bills, but he will be pretty happy to pick up pennies off the ground and put them in a piggy bank.

That's why these tips are listed in order by age-groups:

The first one, for toddlers, will be the first block in your child’s foundation of financial knowledge. Then each tip after that is added to the previous one.

You shouldn’t ever stop or cut out any of these behaviors because eventually your child will be an adult...and all adults have to know these things whether we like them or not!

One caveat: If you’ve never done any of these things with your kids and they’re now pre-teens (teens or young adults), I’d say it’s never too late to start. It’ll just be a little bit tougher to get them started on new things such as doing chores. While that task would be a good start, if they’re fighting you, you might start with tip #6 so they can have a better idea as to why the first five tips are important to them. Kids always want to know “What’s in it for me,” right? (WIFM)

So let’s assume you’re a fairly new parent of a toddler; let’s take a look at what you can teach him or her.
Did you know that researchers identified two things that people need in order to be happy and successful (click to learn more):

The first? Love.

The second? Work ethic.

The work ethic part of this can be taught when you start having your kids help around the house, aka, do chores.

Studies or not, I’ve always firmly believed that all members of a household should contribute something to the running of said household. In doing so, it helps kids to understand that they are useful and just as important to the family (and household) as everyone else, thus building their self confidence.

Now when I say “chores” for a toddler, I don’t mean full on laundry, dishes, vacuuming and scrubbing floors. What I mean is more simple and basic tasks such as having your little girl put all her toys back in the toy box before she goes to bed. Or helping you to carry the already folded clothes into her bedroom. In the kitchen it would be taking their dishes to the kitchen counter after dinner. (Yes, this means you should probably use non-breakable dishes such as Corelle ware, melamine or plastic.)

Keeping in mind that children at this age are still developing their balance and coordination so things may not be done perfectly at first, and accidents, like dropping things, will happen. This is a very important learning age for a child who loves and trusts you unconditionally therefore this is not the time to be scolding your baby for any accidents they may have. When stuff happens you need to be the adult who just corrects or fixes whatever happened while praising them for their help and the job they did do, and move on.
At Around 7 Years Old
Tip #2: Start rewarding your kids with an allowance for completing their chores.

When your kids get to around seven or eight years old you will also be adding things to the chore list such as loading the dishwasher, taking care of the pets, bringing dirty clothes to the laundry room on Friday nights, and / or making their beds each morning, etc.

Getting an allowance helps kids to understand the concept that all grownups/ everyone must to work to get money; it’s not just given to them. And the most important thing you need to remember in order to really drive this point home is to withhold said allowance until the chore is completed. (Which leads to the next important lesson about saving money.)

Now I’ve heard all kinds of arguments against this whole allowance such as,

“No one pays me to clean up around the house,” or,

“This is your house too and you have an obligation to take care of it just like I do.”

Ok, I get it, and those arguments are valid. But the housework is not the point here and this isn't about you.

The point is that we are growing kids who will eventually need to know how the grownup world works so this is a learning/teaching opportunity. And yes, it sucks that your parents may not have taught you this, but really, are you going to make your kids pay for the sins of your parents? Get over yourself.

What you can tell your son or daughter is that when you work, you get paid. So this is a chance for them to see how it feels to get paid for their efforts. Yes, it’s a little more complicated in the grown up world because of bills and taxes, but you’re gonna start them out with the easy part.
Tip #3: Buy your kids two, not one but TWO, piggy banks.
Again, at the same time you start your kids on an allowance, you have the opportunity to teach them about saving money. The idea here is to teach your kids the value of saving for a rainy day, or new toy/book/bike that they can eventually buy for themselves.

Saving for something is a good way for them to eventually learn about and understand budgeting.

The way to work this is to let them keep one bank – or even a change purse/ wallet – in their bedroom and the other one stays in your room...out of reach, like a real bank. Then, when they get their allowance they can then split it up between the two banks however you think is best. That could be 50/50 or 70/30...you decide.

From there you can explain to your child that the one in their possession contains the money they can spend whenever they want. And of course the one in your room is a savings account where they can save money until there’s enough there to buy that new toy/book/bike or whatever it is they want. Sort of like short-term goal setting. See? Two lessons in one!

Funny how I’m sitting here at 62 years old thinking, boy do I wish I had put more money in that second piggy bank than I did! I’ll bet even you might even be saying that – am I right?

Tip #4: Make a chart of who should do which chores and when.
After your kids have been doing chores for awhile, maybe six months to a year, they may also have figured out that Mom or Dad aren’t real good at keeping track of who’s supposed to be doing what and when.

So this tip serves two purposes:

It makes your expectations very clear as to who is responsible for what, and when.

Hm, there’s a new word, “responsible.” This is a good time for them to learn “responsibilities,” don’t you agree?

It helps you to remember what you’ve asked of them.

Seriously, before I wrote all this down and posted it on our fridge, my kids used to really mess with me by saying,

“No Mom, Alan was supposed to load the dishwasher this week,” or

“No Mom, Jenn was supposed to clean the litter box today.”

Since I didn’t remember, it was tough to argue so I’d just get mad and yell at both of them. Yeah, that was way too much stress. So trust me, you’ll be grateful if you write it all down.

Tip #5: Encourage your kids to pick up loose change off the ground.

Ok, yeah, I know, this is a weird one. But I think it teaches us the value of money and the fact that it should never be thrown away.

For 18 years my kids and I put that free money in one of those old 5-gallon water jugs. When my kids graduated high school we had saved around $175. Then I let them roll it, take it to the bank to cash it in, and split it between themselves.

They thought it was so cool to watch that jar fill up over the years and then to see how much it really was. Not bad for just a bunch of stray pennies!

They’ve both been gone from home for over 10 years now but they both still pick up pennies...so do I...it’s a hard habit to break!
From Fifth Grade Thru Approximately 15 Or 16 Yrs. Old

I think these next two tips usually come about when your kids are getting into junior high and high school and they start asking you to buy a lot more expensive things such as smart phones, tablets, designer clothes or backpacks. It’s kind of tough when all their friends have them and their allowance doesn’t quite cover it.
Tip#6: Keep a list of the bills you pay and review it with them each month.

Making your kids aware of what it costs to live in a house (and have food, water, cars, electricity, and a cell phone) is a pretty important lesson for them to learn. It’s probably going to be pretty shocking to them too!

This tip also gives them an introduction to budgeting.

The sooner they understand the concept, the easier it’ll be when you have to explain to them that if they want a cell phone, they’ll have to get a job that pays enough to cover the cost of it. Same with getting a car.

I started going over the bills with my kids when they were in junior high. The easiest way to do this was to write up a list of the bills in a spiral notebook. Then at the top of the list I would write down how much pay I had coming in, (honestly I would put a number that reflected what was left after I subtracted out savings and gas money) and then subtract out the dollar amounts for the bills.

By fifth grade your kids can do simple math and they can see exactly what is left over at the end of the month. You can also point out how much is left for things like groceries, eating out, or movies. And this is when you could either say, “sorry, it all goes to groceries,” or some can go to groceries and then put the rest away for movies at the end of the month, or a trip to Disneyland in the fall, or new summer clothes. I’m sure you get the idea.
Sixteen Years and Up
Tip #7 Take them to a bank and open their first savings account.
Right off the get go this is going to make your teenage feel really grown up. (Boy, I sure did!)
There’s something about walking into that formal setting surrounded by all those other grownups, that just makes you feel so darn important. This ain’t no piggy bank anymore; this is real, and this is official because they have to fill out their first “official” form and actually sign it. And, this is an introduction to how the rest of the world manages money.

Wow! I get excited just thinking about what that was like when I first did it!

Anyway, as far as a debit card, those hadn’t been invented when my kids were growing up so I’m not sure how I’d handle that part of the process. But I mean, this is a savings account for something big, like their first car, so you really don’t want them to ever be tempted to drain it all for one wild and crazy night out. Sorry Mom and Dad, you’ll need to give that one some thought.
Tip#8: Explain all the information and deductions on a pay stub.
I’m guessing, by this age, your son or daughter will have gotten a part time job...or they may be thinking of one. Even if they haven’t, it’s a good time to get them thinking about what happens with a real live paycheck. (Although you may not want to share your exact income; God knows you don’t need them to blab that to all their friends!)

Ok, how many of you were stunned when your first ever paycheck wasn’t what you though it was supposed to be? Yeah, me too!

“$1.65 an hour for 35 hours should be $49.50. But wait, my check is only $30. WHAT? My boss is cheating me!”

Kids need to learn what all those deductions are for and why. It will help them to fully understand what they can or can’t do when it comes to budgeting for their first big expense such as a car payment.

Oh, and the why of this information is right here in these next two tips.

Eighteen To Twenty One
Tip #9: Explain how things like roads, parks, police & school teachers get paid.
Most kids are pretty shocked to learn that all their teachers are getting paid out of Mom and Dad’s paychecks by way of state and federal payroll deductions/income taxes. (More examples are included in tip #10, below.) Mine sure were.

You may even want to go so far as to even tell your kids about how streets and street lights, public parks, and schools are all being built using the same funds. Doing so just might get them to have a better appreciation for these types of things. I mean, I think it’s more personal when they know that someday it will be their money paying for it.

And I’ll tell you what, if more kids knew how this worked, they just might be less likely to swing from basketball hoops in public parks, trash public restrooms, trash schools or classrooms, or even harass all the city and county workers, including their teachers, who get paid the same way.

Surprisingly enough, telling my kids about this also made the discussion about various tax increase proposals much easier for them to understand. And that takes us to the last tip.

Tip #10: Explain where the government gets their money.

Your kids need to be aware that when the government spends money, it’s money that comes from Mom and Dad’s paycheck and eventually from their own. Be sure to emphasize the fact that the "Government” also includes salaries for all the politicians from the local mayor, right on up to the Vice President of the United States. (Usually this would also include the President, but the current President, by his choice, does not collect a salary.)

This will help them to understand the connection between a politician and said politician’s stance on how they want to spend all our tax dollars.

For instance: Cleaning up public streams, rivers and lakes, building new highways, maintaining national parks, space exploration, all things military such as bases, equipment and salaries, all things regarding prisons, again, such as the structures, salaries, food and clothing for prisoners, emergency responders, police, firefights, free housing or medical care for all Americans.

All in all, this is the tip that will get your kids ready for the number one adulting task in the country: Voting!

Remember you, me and all our kids have a dog in those fights which takes us right back to that old phrase,

"What's in it for me?" (WIFM)
Summary
I did my best to list these tips in age appropriate order for the purpose of showing you that if you start feeding your kids financial information at a young age (toddler) they may very well be ready to stand on their own two feet by the time they get out of school.

I’d love to hear any feedback or tips you might want to share with the masses so please feel free to email me directly at jan@janetmnast.com or post a comment below.

As always, I wish you luck in this wonderful but sometimes challenging journey of growing adults!

Sincerely,

Jan

Seven Other Things You Can Do to Hedge Your Bets Against Any Illness

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Such as COVID19, the Flu, and the Common Cold
There’s been an overwhelming amount of commercials and PSA’s on radio and TV all focusing on hand washing and social distancing to stay healthy. But there are quite a few other things that you can all do to ensure a better outcome if you do happen to pick up a nasty bug.

Don't get me wrong, washing hands is very good advice when it comes to preventing the spread of a virus, or any other germs for that matter. But I think we all need to remember that being healthy is not just about avoiding an illness; it’s about your body being able to fight it when you do catch something. I mean, Heart disease, COPD, diabetes, high blood pressure, high cholesterol, obesity, gum disease are all indicators of being unhealthy overall. Throw in a cold, the flu, or now the novel corona virus and, according to all reports, your chances of fighting it off drop exponentially.
How do We Fight the Good Fight?
Well, l’d like to throw out a few more options for hedging your bets for a good recovery if this novel virus does land at your door step.

If you’re reading this on my website, please, feel free to add your suggestions in the comments: I’m sure everyone will appreciate them.

Note: I am not in any way, shape, or form any part of the medical profession or community. I’m merely a fairly healthy mom with 60+ years of living under my belt who has never had the flu, has gone over five years without a head cold, and takes no meds for any health conditions. All of the actions I suggest below are based on my own experience in the workforce, reading books & newspapers, tv watching, radio listening, and observations of people around me in general. I strongly suggest you consult with a real doctor before changing any of your personal lifestyle habits.
1. Add an Extra Shower or Two Per Week
Germs can gather anywhere on your body (like a little party, hahaha!) not just on your hands. And I know a lot of you don’t do a lot of exercise in a day – especially me – or run around a lot when working, so it’s pretty common to only shower a few days a week. But maybe during this time of uncertainty with this crazy novel corona virus going around, you may want to take more precautions by adding to your daily routines. So, in addition to washing hands a gazillion times a day I would encourage everyone to consider bathing or showering every day and even washing your hair more often.

These two activities can definitely help you to wash away a multitude of bacteria and other germs...which brings this to mind:
2. Brush, Floss and Gargle Twice a Day
Do you know your mouth collects and carries tons of germs and bacteria? Click here to learn more.

In that case just think about all the stuff that comes flying out of your mouth when you sneeze – YUK!!! And then what you can breathe in when someone else sneezes – double YUK!!! My dental hygienist used to tell me this (aka, scare the heck out of me) all the freeking time! She said my biggest defense against this bacteria growing into a huge problem (cavities and gum disease – which can weaken your immune system) was to brush, floss and gargle twice a day, every day.

Here’s a good way to remember:

Brush (floss & gargle) every night to keep your teeth,

Brush (floss & gargle) every morning to keep your friends

3. Make Simple Adjustments to Your Diet
I just learned a few days ago that my bad cholesterol just went up 50 points in the last year! OMG!!! So you can bet I'll be changing my diet ASAP because it's a well known fact that high cholesterol leads to heart disease... and I kinda wanna live! So I've switched from white rice to brown rice, added quinoa to my diet as well as a daily handful of almonds; YUM!

Here are a couple other options.

Increase your daily water intake: Six to eight 8-oz cups of water per day is ideal but anything is better than nothing.

I've not been hearing of any shortages in the stores for fresh fruits and vegetables, so...

Make sure your diet includes 1-3 servings of vegetables per day (fresh or frozen, they're all good)

Make sure your diet includes 1-3 servings of fruit per day (fresh, frozen, or canned w/out sugar, they're all good)

Click here to see how much is considered a serving.

It's not as much as you might think so this could be pretty easy.

One other thing I recently learned is a great source of vitamin C is lemon water. One article said the juice from half a lemon provides all kinds of good health benefits in addition to the vitamin C. So now I buy a bag of lemons and juice them every two weeks. Add 3 tablespoons juice (Bonus - that's one serving of fruit!) to 8-oz of room-temp water with a teaspoon of honey and you are good to go! (Gotta sweeten it otherwise it's way too sour for me!)

Click her to see more about the benefits of lemon water.

And even more!

Click here to see more simple suggestions for updating your diet!

4. Get Your Big Old Heart Muscle Pumping a Bit More
Don’t worry, I’m not going to suggest you all of a sudden join a gym or start doing 30 minutes of calisthenics every day day. Heck, I wouldn’t do that myself especially knowing that my picture is right next to the word, “lazy” in the dictionary!

Nope, I’m simply suggesting you just add a few minutes of extra movement to your life every day. Think of it this way, if you already do nothing, then adding 2 minutes a day is a substantial increase, right?

Some easy ways to do this might be;

Do a few push-ups against the bathroom counter after you get out of the shower . You can also do this in the kitchen while waiting for your morning coffee to brew or dinner to cook.

Do a few toe-touches as soon as you get out of bed. Or before you sit down in front of the tv every evening.

Put your hands on your hips and twist at the waist as far as you can, from left to right, for a few minutes while watching tv. Yeah, that's just a stretch, but it sure feels good!)

If you have kids you could even have them join you with some jumping jacks or slight knee-bends at every commercial break.

Click here for a few more easy-to-do ideas!
5. Let’s Talk About Smoking
Yeah, I know I may be pointing out the obvious here, but if I’m not, let me be the first to tell you: Smoking wreaks all kinds of havoc on your lungs and your heart! This puts you at such high risk for sooo many things, but especially the corona virus right now.

That said, I know how hard it is to quit: I used to smoke.

But I’d still say try to make even a little change. I mean, maybe if you start slow by cutting back even one cigarette a day for a week at a time, this may increase your odds of eventually quitting all together and giving your lungs a chance to survive any virus that chooses to attack. To help this along talk to your doc about some patches or picking up some Nicorette instead of a case of TP the next time you hit the grocery store. (Yes, I’m being a wiseass there, but you get the point, right?)

The other up-side to probably living longer? Think of all the money you’d save! Cigarettes are crazy expensive! And speaking of expensive...
6. Let’s Talk About Drinking
I’m not sure how it all works, but I know that not only does drinking affect your kidneys, I hear it affects blood pressure, your cholesterol and weakens on your heart. Crap, it scares the heck out of me just talking about it!

So just like smoking, save some money and raise your odds of surviving the corona virus but cutting back a little bit every day until you’re down to that one-glass of wine – or whatever it is they recommend now – each day.
7. Don’t Forget to Sleep

When your body is sleeping it is repairing and rejuvenating. Every “body” needs to do this so they/it (how do I say that?) can get up and get through the next day.

Click here to read more.

Now that many of us are working from home it’s real easy to lose track of time as we type away on the computer till all hours of the night. Not only do we need to get up and move around every hour just to get the kinks out, we might have to set an alarm to remind us to just quit! And it’s not enough to quit to go to bed because, just like getting home from work, you need to quit a few hours beforehand so you can wind down from the day and relax. So maybe set an alarm to remind you that it IS the end of the work day and it’s time to go “home.” Just sayin’!

One Last Word...
Change is never easy for any of us – says the lady who has always hated computers but did PC training and tech support for almost 40 years now – so don’t feel you need to do everything on this list all at once. Remember that old adage, “everything in moderation?” Do that...in moderation.

It’d be great to hear other suggestions on what you think we can all do to stay healthy so please, leave a comment on this post. I’ll keep my eyes peeled!

Y’all take care now, ya hear?

Jan

Note: I am not in any way, shape or form, any part of the medical profession or community. I’m merely a pretty healthy mom with 60+ years of living under my belt who’s never had the flu, has gone at least four years without a head cold, and takes no meds for any health conditions. All of the actions I suggest in this article are based on my own experience in the workforce, reading books & newspapers, tv watching, radio listening, and observations of people around me in general. I strongly suggest you consult with a real doctor before changing any of your personal lifestyle habits.

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