401(k) Fail: How Your Old Retirement Account Could Cost You Thousands

401(k) Fail: How Your Old Retirement Account Could Cost You Thousands

Blog Post Originally From DaveRamsey.com When you’re focused on paying off debt or saving an emergency fund, other issues, like what to do with that 401(k) that’s still with your previous employer, fall pretty low on your list of priorities. Actually, old retirement accounts rank fairly low on most folks’ to-do list. Nearly half of American adults who participated in a workplace retirement plan last year said they had at least one other retirement account with a previous employer as well. If your old 401(k) just sat there gathering dust, it might be fine to leave it where it is. But by ignoring old retirement accounts, you could be losing tens of thousands of dollars thanks to 401(k) fees. For example, according to the U.S. Department of Labor, a $25,000 401(k) balance could grow to $227,000 over 35 years, based on a super-conservative 7% growth rate and a reasonable 0.5% fee. However, many 401(k) plans tack on an additional 1% in administrative fees, and as that compounds over 35 years, it reduces the final balance by 28%—a difference of $64,000! While you’re working, your employer’s 401(k) match balances out those fees. But paying them after you’ve moved on to a new job only cuts the growth of your retirement. The last thing you need to do when you’re working hard to pay off debt and build an emergency fund is throw away money that can help you secure your financial future. So, if you have an account with a former employer, here’s our challenge to you: Stop losing money to 401(k) fees and breathe new life into your old...
7 Money Tips for Newlyweds

7 Money Tips for Newlyweds

Blog Post Originally From DaveRamsey.com Have you thought about what life looks like after you get married? It’s easy to get so caught up in being engaged, booking your honeymoon, and planning for the big day that you forget all about life on the other side. But today, I want you to stop for a minute, take a breath, and think about this important topic: money and marriage. One of the quickest ways to put a strain on your new marriage is to not be on the same page with your spouse about money. It doesn’t matter whether you earn $10,000 or $1 million, if you and your spouse aren’t seeing eye to eye on handling your money, you will eventually have problems. The number-one cause of divorce in America is money fights and money problems. I don’t say that as a scare tactic, but I do want to remind you that you can’t avoid this topic. So when you return from your honeymoon and embark on that first year of marriage, what can you do to make sure you handle money the right way? 1. Communicate. Talk about your money goals with your spouse. Where do you want to be financially in a month? Next year? Five years? Talk about your strengths and weaknesses when it comes to spending and saving money. Set an amount—say, $100—and agree that all purchases above that amount need to be talked about and agreed upon. Communication in marriage is extremely important. To really win in your finances and your marriage, you have to be on the same page. 2. Make a budget....
3 Easy Money Hacks for Paying Off Your Home Faster (Without Wrecking Your Budget)

3 Easy Money Hacks for Paying Off Your Home Faster (Without Wrecking Your Budget)

Blog Post Originally From DaveRamsey.com If nothing’s certain in life except death and taxes, a mortgage surely isn’t far behind—at least that’s the case for 70% of Americans, according to a recent study by Zillow. But have you ever stopped to imagine life without a mortgage? When you’re on a budget, it can be hard to picture. After all, you kinda like the whole eating-three-meals-a-day thing and don’t want to give it up to make room for loftier endeavors. If you have to choose between food and freedom, cheeseburgers win every time. But here’s a little secret: You can pay off your mortgage without starving your budget. Let’s explore three simple tricks for getting ’er done based on a $150,000, 30-year mortgage with a 4% interest rate. Divide and Conquer One easy way to shave years off your mortgage is to pay a little extra each month. Every dollar you add to your regular payment each month puts a bigger dent in your principal balance—and you don’t have to double-down to make a difference. Adding just one extra payment each year knocks four years and nearly $17,000 off your mortgage! Can’t do it in one big lump sum each year? No problem! Break it down into smaller chunks using one of these two options: –Divide your payment by 12 and add that amount to your monthly payment. In this case, we’d add an extra $60 to our regular $716 monthly payment, bringing the total up to $776. –Pay half of your payment every two weeks—also known as bi-weekly payments—instead of a single payment once a month. That gives you...
Three Ways Managing Money Changes in Your 30s

Three Ways Managing Money Changes in Your 30s

Blog Post Originally From DaveRamsey.com If you’re a fan of the show Friends, you’ve probably seen the episode titled, “The One Where They All Turn 30.” Rachel is the last of the group to celebrate the big 3-0, and she has a major meltdown about the goals she hasn’t accomplished yet. But when it comes to facing our 30s in real life, we find ourselves agreeing with the (for once) level-headed Ross who tries to reassure them all that turning 30 “isn’t that bad.” In fact, there’s plenty to be pumped about in your 30s—like marriage, kids and career growth, just to name a few! With so many large, important changes in your life, handling money the right way becomes even more important. You’ll not only face these exciting changes and challenges with confidence, you will also set yourself up for a more secure future. 1. Move Past Basic Budgeting and Set Some Big Goals Most folks in their 20s are on a rice-and-beans budget. Entry-level jobs and student loans mean there’s not much room for luxury. But as you enter your 30s and start earning more, you can start setting—and meeting —important money goals. Don’t fall for the trap that a higher income means you “deserve” a new car or an expensive new wardrobe. Use your income to pay off all loans and credit cards and get rid of debt for good. Next, save up an emergency fund of three to six months of expenses. Once you’re debt-free and have a cushion of savings, you’ll have a financial foundation most folks twice your age can only wish they...