Budget Snob

Retirement for Small Biz Owners

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Retirement plans for small business owners include Koegh, SEP-IRA, and a Simple IRA. These plans are offshoots of their typical 401(k) brethren. But have you heard of a cash-balance retirement plan? BankRate peeked inside these not so new retirement vehicles.

A cash-balance plan is a hybrid of a traditional pension plan and a defined contribution plan like a 401(k). The account grows annually in two ways: first, a contribution, and second, an interest credit, which is guaranteed rather than being dependent on the plan’s investment performance.

Unlike traditional retirement plans, the cash-balance plans are more complicated to setup and maintain. And, as a result, they cost more to jumpstart.… Read the rest

When you Walk Away from Your Mortgage

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I know I’ve been tempted to walk away from my mortgage. I have renters who are taking care of most of the monthly mortgage (not all though). But I’m having to rent another home as a result. While the net financial result is +$400 per month, there’s still a psychological toll. I don’t like being an absentee landlord. I don’t like not being able to check on my house every few weeks.

But what happens when you make that choice? To abandon your mortgage? According to a recent Miami Herald discussion, walking away from your mortgage isn’t risk free.

Yes, it might take as long as a year before you’re permanently evicted.… Read the rest

It’s Going to get Worse. Much Worse.

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I’ve discussed the issue of equity investment returns (i.e. stocks, bonds, mutual funds) in the long term and whether lower returns are the new normal.

I don’t consider myself a doomsday kind of guy. But I do like to keep my expectations in check. And questioning the “rule” of 10-12% market returns is how I like to do just that. Paul Farrell at MarkWatch.com seems to agree when he states:

Warning: More bad news ahead. Welcome to a bleak second half 2010, worse for 2011.

And, yes, I understand pundits like to tout historical stock market returns of 10-12%. So, if you wait long enough, the bad times iron themselves out.… Read the rest

Retirement for Young’uns

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If you’re under the age of say 45, have you ever stopped to think about what your retirement will look like? With the recent mulling over of raising the Social Security eligibility age (to 70 in case you didn’t know), maybe it’s time to take a reality based look at our golden years.

The good people over at FrugalDad are questioning the typical retirement rules.

As our economy shifts away from manufacturing (something I personally find very sad), and into service, I think people will be more likely to change jobs dozens of times in their lifetime.

I personally have worked for 5 different companies in the span of 10 years—not including the 5 legitimate and as many illogical businesses I started over the same period.… Read the rest

Saving as a Prudent Habit

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Yes, saving is considered a good thing. But why? Why should we save? When we’re busy pursuing careers (i.e. money), we rarely stop to think that one day we may not be physically or mentally able to work. We live for today.

The writers over at A Personal Finance Guide have something to say about this quandry too:

“Saving should be inculcated as a habit from early on so that when you are no longer getting a fixed paycheck every month, you are not financially dependent on some one else. It is important to start early so that you can build a sufficient corpus by the time you retire.”

… Read the rest