Financial Planning, Retirement Plan, 401k, Investment Blog

Financial Planning, Retirement Plan, 401k, Investment Blog

Archive for June, 2009

Emergency Fund: How Much Do You Really Need?

Posted June 23, 2009 by Bernz

Keeping an emergency fund available for unforeseen crises is a financial planning tip that is widely quoted. Any number of situations could come up where you may need to dip into this short term savings fund, such as loss of job (a more likely occurrence with the current economic situation), emergency medical expenses, or home repairs.

But how big does this emergency fund really need to be? Some financial planners suggest three months salary is a good general rule. If you would ask Suze Orman, (yes I do watch her show especially the “Can You Afford It” segment) she will say 6-8 months or even one year if you can afford is more advantageous. However, the right answer for you will depend on your circumstances and the risks that you are trying to cover. Some of the risks that people put aside savings for can be covered less expensively with insurance.

Take home repair for example. If your air conditioner or furnace were to quit for good, the expense of buying a new one might damage your current cash flow. (more…)

Posted in Financial Education, Financial Goals, Frugality, Investing in Real Estate, Retirement Planning, Saving Money, Wealth Building | 2 Comments »

Dogs of the Dow- Investing Strategy That Needs to be Retired?

Posted June 21, 2009 by Bernz

I was doing some research online about stock investing two days ago and came across this strategy and thought I should share my insights with my readers.

The Dogs of the Dow is an investing strategy first promoted 35 years ago by Michael O’Higgins, a fund manager who now runs his own firm. The strategy calls for choosing the 10 stocks in the Dow 30 index that have the highest dividend yields at the end of the year. You hold these stocks until the end of the following year when you re-balance your portfolio based on the new Dogs. A dividend yield is calculated by dividing the dividend by the stock’s price. Therefore, the stocks with the highest dividend yields have the lowest stock prices and may be ready for a jump.

Because all of the stocks in the Dow 30 are large cap, stable companies, the Dogs of the Dow strategy states that the companies chosen are likely to be solid in bad times and rise quickly in price in good ones. 2009’s Dogs are: Alcoa, AT&T, Bank of America, DuPont, General Electric, JPMorgan Chase, Kraft, Merck, Pfizer, and Verizon. (more…)

Posted in Financial Education, Investing Strategies, Stock Market Investing | 2 Comments »

Getting Out of Debt vs. Saving Money

Posted June 15, 2009 by Bernz

There are two conflicting tips that are offered by financial experts during these turbulent economic times. The first is to pay off your debts and to save money. For an individual who is already overextended, how would you know which one you should prioritize? Well, each situation is unique and it is difficult to generalize when it comes to situation of each person.

However, there are several questions you need to ask yourself before making the decision:

• How much do you have in your savings right now?
• How much money do you owe?
• How much interest are you paying for your debts?
• How much are you earning every month?
• How secure is your source of income?

Essentially, people who are not worried about losing their current source of income in the near future should focus on debt repayment. They should start paying off the debts with the highest interest such as credit cards before moving to secured debts. In addition, if the amount of debt you owe is easily payable within one or two months, don’t put it off because it is just a waste of interest money. The main point is, you should plan debt repayments thoroughly and carefully. (more…)

Posted in Credit Card Management, Debt, Financial Goals, Saving Money | 1 Comment »

The $787B Economic Stimulus Bill

Posted June 11, 2009 by Bernz

Ever since President Barack Obama took office in the January of 2009, there had been endless economic problems that faced his administration. His proposed solution? An economic stimulus plan that involved billions of dollars. On the short term, proponents of the program believe that it will provide tax cuts and create an estimated three million jobs in the United States. Over the long term, economists predict that it will stimulate growth by helping create economic activity.

In February, the $787 billion package has been passed. Though some sectors have lauded it, the economic stimulus has also been called “careless” and “wasteful” by some critics. This is because it contains a lot of the so-called earmarks for politicians. But a deeper problem persists. The $787 billion, as big as it sounds, may not be sufficient to spur economic recovery.

As the global economic condition takes a turn for the worse, the US is also affected. The US economy is already contracting in ways not seen since the Great Depression. With forecasts showing a vicious cycle, it is no wonder that economic contraction is difficult to stop despite everyone’s best efforts. (more…)

Posted in Financial Education | No Comments »

Are You Wasting Money On Water?

Posted June 7, 2009 by Bernz

I just found out from my wife yesterday that our water bill was up by almost 20% from previous and started investigating for possible leaks and sure did find that one of my faucets outside the house (by the deck) was leaking. I readily replaced the shut off valve and then realized that this maybe a good topic to post here. Hope that you find these tips valuable.

The cost of water is not something that most people think about. The price of water has actually risen at double-digit levels compared to several decades ago. And with scarcity becoming a serious problem in different parts of the world, it is safe to assume that the price of this commodity will increase even more in the near future. The amount being forked over every month for this commodity is not something to be sniffed at. Significant savings can be realized by simply conserving water. (more…)

Posted in Frugality, Saving Money | No Comments »