Three Reasons to NOT Save for Retirement

Most people are vastly under saving, but no matter where you are at with your retirement investments, it never really will hurt to save more. Life is spontaneous and will sometimes throw you in different directions, so there will likely be times when it is more important to allocate your money to other important costs rather than saving for your retirement. Here is a list of three reasons that you may NOT want to save for retirement at the time:

Silver CascadeCredit Card Debt

If you are in a significant amount of credit card debt it is probably a good idea to put a hold on your retirement investments. High interest rates on your credit card debt puts a drain on your finances and unless your investments are making more in interest than you are paying on your debts you are effectively losing money. It’s important to pay off, or at least minimize your credit card debt as a priority over retirement savings.

Have an Emergency Fund

Life can always go differently than you expect it to. By having an emergency fund you will be able to protect yourself financially if you suddenly lose your job or encounter any unexpected medical costs. It’s a good idea to have at least 6 months of living expenses saved up. Once your emergency fund is stocked you should then allocate those funds to your retirement savings.

Student Loans

If you are young, you likely have significant student loans. While you might think that it makes the most sense to direct some money to retirement investments and some to your loans. But if the interest rates on your loans are higher than the interest that you accumulate on your retirement investment, you are losing money. It’s wiser to pay off your debt as quickly as possible and then invest in your retirement.

An exception to this, however, is a low interest student loan where your interest rates are less than the interest that you make on your retirement investments. If this is the case it’s smart to allocate funds to both.

Retirement investments are important and should always be part of a healthy financial plan, but there will be times in your life where it makes more sense to prioritize other expenses over your retirement plan. If diverting money from your retirement investments can help you with current financial burdens, don’t be afraid to deviate from the plan. Finding a balance is important when allocating money to your expenses and to your savings.

 

When is it better to use a Credit Card?

The average person had credit cards and a debit card and uses the credit card when making big purchases and the debit card to make smaller purchases. Why? What’s the difference? Is it better to use credit cards exclusively? Or, is it better to use debit cards exclusively? When is it really a better idea to use a credit card over a debit card?

imagesCredit Card Points

This is the best reason to use a credit card – points! When you have a credit card that give you points as an initiative to use them usually you will get 1 point for every dollar spent, but, sometimes 2 or 3 depending on the card. Accumulated points can then be used to purchase several different things depending on the card that you have. The downside: Credit cards that offer points advantages generally have higher interest rates and maybe a fee to be a member – remember to pay off your cards to get the most out of its points reward system.

Debit Cards Track Expenses and do not Charge Interest

With a credit card it’s easy to spend excessively, if you have a tight budget this can make it harder to stay on track. If this is the case for you, a debit card is probably a better choice since it takes the money right out of your chequing account, forcing you to keep track of spending.

Another stark difference between credit and debit cards is interest charges. Credit cards charge interest on any accumulated debt on a monthly basis. If you spend excessively on a credit card without paying it off you will incur interest and this may be a substantial amount based n your balance and spending habits. Debit cards on the other hand do not charge interest on purchases since the use your money to make them.

Learning how to use debit and credit cards responsibly is an important skill. If you are someone that cannot use a credit card responsibly then it’s best not to have one, if you frequently pay down credit cards so that interest is not incurred using a points card as much as possible can be beneficial.

Finding Ways to Increase Your Bottom Line

Savings Ahead SignAs a business owner, you likely have one main objective–to sell your product.  Of course, you want to provide good customer service and to have satisfied clients.  You probably also hope that your employees will enjoy their jobs, do good work, and consider you a reasonable boss.

However, if you’re looking to increase your bottom line, there are several steps you can take:

1.  Raise the price of your product.  As inflation increases, it is reasonable to raise the price of your product.  If it is not a significant increase, most consumers won’t object.  You probably don’t want to do this frequently, but when it is warranted, raising the price is a good way to generate extra income.

2.  Reduce the cost of manufacturing.  Reducing the cost of manufacturing without lowering quality is also a possible option.  Many companies choose to move their manufacturing overseas where labor is cheaper, but business owner Jamey Bennett told USA Today that he moved his manufacturing back to the states because of too many headaches including middle of the night conference calls when his product was manufactured overseas.

3.  Reduce the cost of routine expenses.  People tend to set up their utilities and not think about them again.  The same can be true for your business.  When was the last time you compared rates on phone and Internet service?  Take the time to compare business electricity prices at Make It Cheaper.  You may be surprised that you can find lower rates now compared to what was the best price when you first signed up for service.

4.  Outsource some tasks.  There may also be some tasks that you can outsource that will free up your employees to do more important work that can help your bottom line.  While you don’t want to outsource all tasks, outsourcing some can pad your bottom line because you may be able to pay a lower hourly wage and not have to cover insurance, which can be costly.

There are many ways that business owners can improve their bottom line from increasing the price of their product to reducing manufacturing and everyday expenses.  The key is to keep exploring what options are available to you and to do this yearly.

How You May Be Paying Too Much in 2014

The New Year comes with scores of resolutions, many related to personal finance choices. Discretionary expenses such as dining out or fancy coffees are easy to identify. However, the savvy to look beyond obvious cuts further improves your personal balance sheet.

Certain items such as insurance are required and practical. Other costs may involve impractical sacrifice, such as living off dollar menus at fast food restaurants or giving up your car.

Low cost living needs planning but does not require excess compromise. This concept applies to areas outside of personal finance, as well. Elliott Broidy, a film financier, used cost effective methods through social media and crowd funding to help innovate movie marketing this past summer.

698567-old-leather-wallet-full-of-credit-cardsHere are common sources of overpayment to slash in 2014:

Cost of Car Ownership:

A sensibly priced car is easily justified as leverage, instead of debt. Your vehicle makes commuting to work easier, which saves time and increases productivity. Cars also open social outlets that have value beyond money. Instead of giving up on cars, try these options:

Adjust Auto Insurance:

As your car declines in value, raising the deductible is a practical choice. Major repairs may be impractical for older cars. Unfortunately, many drivers fail to raise deductibles to match their vehicle’s worth. The result is years of overpayments.

Even if you plan to keep a car, the monthly savings from raising auto deductibles can exceed out of pocket expenses for auto repairs.

Refinance Your Car Loan:

Interest rates are near record lows, which makes auto refinancing an attractive option. This particularly applies to those who bought their cars over a year ago. If credit issues previously limited your auto loan choices, on time payments may have opened new options.

Income Taxes:

Tax refunds do not utilize the time value of money, which states a dollar (or your currency) is more valuable today than in the future. In economics, money’s time value underlies inflation and other concepts.

For your everyday life, increased take home pay helps you start investing or finally put a dent in principal debt balances. The compounding effect of smaller, but more regular, investing or debt reduction provides better results than periodic lump sums, such as tax refunds.

Consider increasing your tax allowances to improve cash flow. Using an online tax calculator helps you increase deductions without owing money to the IRS. If you live outside the U.S., please choose a withholding calculator that is country specific.

Credit Card Balances:

Balance Transfers:

Aside from using compounding to reduce interest expense, balance transfers can accelerate debt payoff. If you have made timely payments for the past year or more, other credit cards may offer lower interest rates to transfer balances.

Be sure to understand the transfer terms. These include transfer fees and how long the lower interest rate applies.

Negotiate with your current card company:

Credit card companies rarely offer proactive rate reductions to current card holders. You could leverage an on time history to ask for a lower rate, especially by mentioning other cards are offering better incentive.

Home Insurance:

Identify Excess Coverage:

Some homeowners pay to cover their house and land. Unless your land is used to generate income, a fire or flood is unlikely to affect its use. By ensuring that only irreplaceable items are covered, your home insurance premiums will be slashed.

Raise Your Home Insurance Deductible:

How much is your home insurance deductible?

Many homeowners carry low deductibles that spike premiums. Upping your deductible by just $500 provides adequate coverage with improved cash flow. The money is disposable income that improves personal finances with little risk to your home.

Improve Your Cash Flow without Sacrifice:

Disposable income is often difficult to increase in the short term. By understanding how to meet legal and personal obligations with less overhead, your cash flow can quickly improve.