Archive for February, 2009

Buying Stocks Now- Throwing Good Money After Bad or Smart Investing?

Posted February 26, 2009 by Bernz

It’s now official. The American economy is in recession. The S&P 500 index- a broad-based thermometer of the health of American corporations- has declined almost 50% in the past 18 months.

stockmarketThe volatility of the stock market in the current recession has touched the majority of households. Investing in stocks was once the privilege of the rich, but today, many retirement plans, especially 401(k) plans, contain stock-based mutual funds and the values of these funds have dropped precipitously.

So why would anyone want to buy stocks right now? Surely, it’s time to tuck your money under your mattress and wait it out? Smart investors know better. They are using this time of market fear to pick up great values in stocks. The one thing that stock market performance has taught us over the past eighty years is that it always goes back up. Even in times of economic crisis (remember Black Monday?), the stock market always finds its bottom and begins its climb once again. Over time, the stock market has outperformed any other investment vehicle.

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Cleaning Up Your 401(k)

Posted February 25, 2009 by Bernz

If you are like most employees who have a company-sponsored 401(k) plan, you filled out all the paperwork when you first signed up, chose your investment funds from the list provided, and proceeded to forget it from then on. In the last 12 months, it is likely that every time you take a peek at your plan, it has gone down in value yet again. Best to just not look at it and hope for a miracle, right? Wrong!

401kkWhile there is not much that you can do about the global recession or the sorry state of the stock market, you can take charge of your retirement funds, especially your 401(k). Every 401(k) has an option to buy and sell the underlying investment funds every so often. You may be able to make changes to your plan every three months or even every day. Find out when you will be able to change out your investments and then take some time to know what’s going on with your existing choices.

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Posted in 401k, IRA, Index Funds, Retirement Planning, Roth IRA, Simple IRA, Traditional IRA | No Comments »

The Cost of a Second Job

Posted February 23, 2009 by Bernz

With jobs disappearing at break-neck speed and personal finances teetering in today’s economy, many families make the difficult decision to bring in a second income while they still can. In many cases, it’s the wife who has stayed home to raise children that now launches herself out into the workforce. It’s a sacrifice happening all over the country, but does it really pay to have a second income?

womansleepingLet’s take the example of a family who currently brings in only one income. The husband works in the accounting department of a regional utility and makes $50,000 a year. The family is not sure how much longer the husband will have his job as layoffs have already begun. The couple decides that the wife should get a job to bring in more income to pay down debt and save for a possible layoff.

In order to start her new job with a temp agency, the wife has to first buy a wardrobe suitable for the office. This could very conservatively cost $1,000 or more. The couple already has two cars so transportation is covered but the gas to drive to and from the new job will cost about $50 per week. The couple’s two children are too young to be left home alone after school so they are enrolled in an after-school program costing $150 per week. The wife had always made lunches for the kids and the husband, but now that she has less time to spare, she signs the kids up for school lunches at a total cost of $17.50 per week. Her husband takes $5 a day with him to work to buy a sandwich and drink from the office vending machines. She takes frozen microwavable meals to her office at around $3 per day. Dinners more frequently consist of prepared meals from the grocery store than the scratch cooking she used to do.

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Choosing Personal Financial Software

Posted February 20, 2009 by Bernz

At the beginning of every new year, resolutions are made (and promptly broken) all over the country to get a grip on personal finances and budgeting. Without knowing what’s coming in and going out every month, it’s almost impossible to plan savings and investments in the future.

financsoftwareThere are many personal financial software programs on the market to help. It’s important to know what you need out of the program to be able to choose the one that’s right for you. Programs range from very simplistic spreadsheets to elaborate databases that track income and expenses, as well as net worth, savings goals and overdue bills. Some programs even print checks to pay those bills.

The one thing that everyone requires from a personal financial software package is a way to track the money coming in and the money going out. You should be able to enter the outflows of cash from your bank accounts on separate lines with spaces for notes. It is also useful to enter upcoming bills so that you can see what the impact will be on your bank balance.

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