3 Money Hacks Every 40-Year-Old Should Know

3 Money Hacks Every 40-Year-Old Should Know

Blog Post Originally From DaveRamsey.com Is there a more financially challenging time of life than your 40s? In your 20s, you’re just starting out and you never have any money. But that’s okay because none of your friends have any money either. In your 30s, your biggest challenge is avoiding the living-large-on-huge-debt trap most of your friends will fall into. By the time you’re in your 40s, you’re facing some big-ticket responsibilities like paying off your mortgage and funding the kids’ college. But your top priority is saving for retirement and figuring out how to build a secure nest egg. Here are three  suggestions you can use to get started today! Hack #1: Make minor adjustments to your budget, one at a time. Soon, you’ll be saving more without sacrificing your lifestyle. If you’re ever going to win the battle with those everyday expenses that seem to eat up more and more of your paycheck each month, you’ve got to have an effective budget. Chadd Hoeft, another  investing Endorsed Local Provider (ELP) in Omaha, NE, understands why people have hang-ups about budgeting. “They’re worried that they’re going to need to change their lifestyle so much that it affects how they live today,” he said. He recommends you start by examining your spending in just one category, like entertainment or eating out. “Then let’s say you don’t go out to eat one or two times as often as you did the month before,” Chadd suggests. “Start with that position, and use those dollars to contribute toward your future.” Using this step-by-step approach, you’ll be able to see how those small...
The Basics: What is a Trust and Why Do You Need One?

The Basics: What is a Trust and Why Do You Need One?

Whether you’re seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility–many types of trusts exist, each designed for a specific purpose. Although trust law is complex and establishing a trust requires the services of an experienced attorney, mastering the basics isn’t hard. What is a trust? A trust is a legal entity that holds assets for the benefit of another. Basically, it’s like a container that holds money or property for somebody else. You can put practically any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, and artwork. The assets you choose to put in a trust depend largely on your goals. For example, if you want the trust to generate income, you may want to put income-producing securities, such as bonds, in your trust. Or, if you want your trust to create a pool of cash that may be accessible to pay any estate taxes due at your death or to provide for your family, you might want to fund your trust with a life insurance policy. When you create and fund a trust, you are known as the grantor (or sometimes, the settlor or trustor). The grantor names people, known as beneficiaries, who will benefit from the trust. Beneficiaries are usually your family and loved ones but can be anyone, even a charity. Beneficiaries may receive income from the trust or may have access to the principal of the trust either during your lifetime or after...
Planning for a Career Change? There are some things you should consider…

Planning for a Career Change? There are some things you should consider…

Blog Post Originally From DaveRamsey.com A higher salary. More job security. Doing what you love. Fewer hours. More travel. Changing careers can be rewarding for many reasons, but career transitions don’t always go smoothly. Your career shift may take longer than expected, or you may find yourself temporarily out of work if you need to go back to school or can’t immediately find a job. Planning for the financial impact can make the transition easier. Do your homework First, make sure that you clearly understand the steps involved in a career move, including the financial and personal consequences. For example, how long will it take you to transition from one career to the next? What are the job prospects in your new field? How will changing careers affect your income and expenses in the short and long term? Will you need additional education or training? Will your new career require more or fewer hours? Will you need to move to a different city or state? Is your spouse/partner on board? Next, prepare a realistic budget and timeline for achieving your career goals. If you haven’t already done so, save up an emergency cash reserve that you can rely on, if necessary, during your career transition. It’s also a good time to reduce outstanding debt by paying off credit cards and loans. And here’s another suggestion. Assuming it’s possible to do so, keep working in your current job while you’re taking steps to prepare for your new career. Having a stable source of income and benefits can make the planning process much less stressful. Hands off your retirement savings Planning...
Choosing a Beneficiary for Your IRA or 401(k)

Choosing a Beneficiary for Your IRA or 401(k)

Selecting beneficiaries for retirement benefits is different from choosing beneficiaries for other assets such as life insurance. With retirement benefits, you need to know the impact of income tax and estate tax laws in order to select the right beneficiaries. Although taxes shouldn’t be the sole determining factor in naming your beneficiaries, ignoring the impact of taxes could lead you to make an incorrect choice. In addition, if you’re married, beneficiary designations may affect the size of minimum required distributions to you from your IRAs and retirement plans while you’re alive. Paying income tax on most retirement distributions Most inherited assets such as bank accounts, stocks, and real estate pass to your beneficiaries without income tax being due. However, that’s not usually the case with 401(k) plans and IRAs. Beneficiaries pay ordinary income tax on distributions from pretax 401(k) accounts and traditional IRAs. With Roth IRAs and Roth 401(k) accounts, however, your beneficiaries can receive the benefits free from income tax if all of the tax requirements are met. That means you need to consider the impact of income taxes when designating beneficiaries for your 401(k) and IRA assets. For example, if one of your children inherits $100,000 cash from you and another child receives your pretax 401(k) account worth $100,000, they aren’t receiving the same amount. The reason is that all distributions from the 401(k) plan will be subject to income tax at ordinary income tax rates, while the cash isn’t subject to income tax when it passes to your child upon your death. Similarly, if one of your children inherits your taxable traditional IRA and another child...
The Secret to Stopping Christmas Stress Now

The Secret to Stopping Christmas Stress Now

Blog Post Originally From DaveRamsey.com Delaying something until the last minute is rarely a good idea. Christmas shopping is the perfect example of that. Many people wait until halfway through December and then dash through the snow to the mall so they can buy gifts in a mad panic. It’s the second quickest way to spoil the fun of the holidays. What’s the quickest way? Not saving up the shopping money beforehand. That’s when you put all the gifts on credit cards and run up huge bills, big interest rates and payments that last until–well, next Christmas. According to Bankrate, the average level of December credit card spending in America is just above $892 million. It could take the jolliness out of Santa himself. Wait, you may be thinking, isn’t Christmas still a few months away? Do I need to think about it now? Yes it is, and yes you should. Here’s the key to saving without stressing: Sit down and determine the amount of money you want to spend on Christmas gifts. Once you have the total, divide it by the number of months (or even weeks) left until you want to have all your gift shopping done. That number is the dollar amount you must save each week or month. So, if you want to spend $1,000 on gifts for your family and friends and there are four months left, that’s $250 a month. By putting a little money toward your holiday budget each month until the end of the year, you’ll find that saving is a lot easier than trying to come up with the money...