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Tight-Wad Tuesdays ~ The Average Person Has This Much Saved in a 401(k) — How Do You Compare?

The Average American Has This Much Saved in a 401(k) — How Do You Compare?.

I know I haven’t done a Tight-Wad Tuesdays post in like, years, but Personal Finance is still dear to my heart. (I just prepared a year ending financial report card for my family New Years day ~I am such a nerd).

I ran across this easy to read article today (its has pictures!) by the Motley Fool on doing a report card on your 401K’s. And while it is a Thursday I still thought I might lob a Tight Wad post out to help educate, enrich or inform. …or bore

Of course, a big part of YOUR family’s financial report card isn’t savings per se, but also resources built up for your retirement programs sponsored by your employer and to some degree, your bank.


That is what a 401K is, Free Money, if an employer matches your contributions, dollar for dollar. It is free money in YOUR pocket. (sorry, does anyone like the sound of that as much as I do?) Then you should ind some good or reliable mutual funds to invest your hard earned money in and watch that free money grow! It is one way to pad your nest egg as you head towards your days of not working any more.

vacation 2But 401k’s are not enough. As an ex-financial adviser I can tell you, you need more than money being saved in a 401k to live a standard of living you are used to in retirement. I mean a 401k contribution is what, 4% or 5% of your annual wages in most cases? Coupled with the employer’s match its maybe close 10% of what your check was last week. Is 10% of that paycheck what you want to live off of when you finally have the time to LIVE and travel and spoil your grandkids?

The Beverly Hills Housewives type wedding for your grands

The Beverly Hills Housewives type wedding for your grands

That’s where a few good DRIPs (Dividend Reinvestment Plans) can come in handy to add a lot of value and cash flow to your nest egg. Contributing to a DRIP account regularly in small amounts is a safe, slow and steady way to build wealth over time, with guaranteed growth through reinvested dividends.

dripWhen you retire simply chose to accept the quarterly dividends as cash payouts instead of reinvesting them. And if you begin funding a DRIP account when you are younger instead of older that quarterly dividend will be larger than that of what your employer generously gives you matching your 401K contribution right now.

So how do YOU want to live in your retirement?

vacation 3

Your 401K may not be enough. Check out this easy read by the Motley Fool and see how your 401K stacks up to those of your peers saving. Their graphs are broken down by ‘savings per age’ and ‘savings per income’ using simple Medians (average) and Mode (most common) illustrations.Fooltmf234x60_13001

All you have to do is know how much you and / or your household has it its 401k balances right now.

The Average American Has This Much Saved in a 401(k) — How Do You Compare?.

Do you know?

Do you trust that your balances will magically be enough?

MS-Nest Egg

If you have any questions or concerns or ideas about your savings plans, just ask. I don’t need to know how much, or where, or even get paid. (its just nice to know I got you seriously thinking about it) I just need to know your goals and how you feel about risk in your investments.

Tight-Wad Tuesday’s ~ What a surprise!

I was trying to think of some cheery way to start off a personal financial post for this Tight-Wad Tuesdays but my cold put up a wall of accessing warm-n-fuzzy land.

But THEN I got a little gift in the (e)mail from an new,blogger that made my day, Gull at The Magfiqueway. Check out the surprise: http://themagfiqueway.wordpress.com/2013/02/05/reader-appreciation-award-i-feel-blessed/ . She ‘smiles’ through her writing, is very likeable, open to everyone and a bit of a fashionista. OK, a BIG fashionista! Drop by and say Hello.

I’ve enjoyed this blogging world from meeting many new and interesting people. I’ve said this before. But it really tickles me when I can connect with someone from around the world; someone from a far-eign land, maybe different culture, different life yet we can still find things to make each other smile. Too cool! The world is a smaller place now and filled with great, interesting people that one ought to know, like you; and Ms. Gull! Thanks WordPress.

So did you guess what the $219,000 stood for? I was afraid it was too ambiguous but then outta nowhere Kelly (One Fit Momma), up in Canada, nabbed it. I mean she defined the answer word for word. It turns out she spent some time in the financial industry too, illustrating again that there is way more to a book then just the cover. Great job Kelly!

So, yes $291,000 is what you and your spouse will need just to eat in your retirement. 2 people x 3 meals a day x 20 years x 365 days / year x $5.00 / meal. Just to eat? What about other things in your retirement like utilities, medical, along with the things you’ve earned the right to do like travel and spoil those cute grand kids? How much will that take over time? And at tomorrow’s costs?

So does this make you think a little bit? Do you have a plan? Are you ready to make a plan?

The good news is that younger readers have lots of time to prepare.  If you are close to my age, you better have a plan in place.

How do you want to live your golden years?

Have you ever thought about this? On a budget or a lifestyle that you worked hard to earn? And people are living longer every year!

The good news is I am here to offer some suggestions to help you get started. It’s what I do, er, did. You can thank me later. There are several, easy, almost painless ways to build wealth for your style of living. It is up to you to commit to them.

But wait!

People say, I’m scared; I don’t know anything about investing, I’m afraid I’ll make a mistake; I don’t know where to start, I don’t have any money to get started. I’m not that smart.

If you know that $10 in sales is better than $7 you are equipped to do this. If you can divide $1.56 into $43.80 you have the technical know how to make a fortune (Dividend Yield). I think, if you are smart enough to write a coherent blog and disciplined enough to do it on a regular basis you will be fine. If you know how to do a little research online and have confidence in yourself you can do great things!

MS-Nest Egg

Simple plans to build for a comfy retirement nest egg:

  • 401k’s: simply this is free money. If you have one at work, enroll and put at least the % of your wages that your employer will match. FREE MONEY. Make a good salary or live below your means? Put another % or two in.  Over time this can be your best ally for a jet set retirement. But, a 401K (free money), by itself, is not all the answer. $219,000? Travel? Grand kids? You’ll need more!

Here and here are a couple of posts that discuss how your 401K can perform like the Dream Team. If you have funds in a 401K you want them to perform like LeBron, not Randy Moss. If you  have 15 minutes you can have yourself an All-Star team in your 401K

  • Dividend Reinvestment Plans (DRiPS): Simple, slow, painless, investing on auto pilot, where you don’t need a lot of $$ to get started and dividends build up over time and snowball into a great sums of money along with a comfy quarterly dividend in retirement.


DRIPS, I believe, are the easiest way to accumulate wealth. Again, the younger the better. We have several plans we are in now, so I am not just preaching. I have gone over them in detail in previous Tight Wad Tuesday posts here and here and ending up here. Any questions, I am here to help!

  • Regular contributions to an IRA at your bank or other financial institution. The key here is low cost investing and fees. If you have to pay more than 1.5% commission you are paying too much. DRIPS are far better at low cost investing.
  • Join an Investment Club: Invest with your friends! Google investment clubs in your area where people like yourself get together and learn about stocks and investing. Club’s often invest a little bit of money to get their feet wet but you can take those experiences, plus leverage everyone else’s research in the club, to make very qualified decisions on your own.Bivo-friends

You can invest a little bit of money with the club but put your new found knowledge to work for you at home. Investment clubs can be fun, you don’t necessarily need to be a nerd to join one. Don’t look at me! Simply joining others interested in being smart with their money and watching it grew a little (a lot). I ran an investment club in the 90’s with the likes of Air Force pilots, grad students and future Senators! We do look kinda nerdy, don’t we?


Does any of this make sense? Would you like to learn more?

Investing doesn’t have to be complicated with pyramid schemes or selling futures. Simple investing strategies include ‘Follow the Leader(s) (i.e. Wal-Mart, Apple), Dogs of the Dow or Value investing, and Dividend Investing where your risk and returns are minimized by regular quarterly dividends. These are easy steps that make sense, easy to research and follow. And whether you prefer to do some research on line or with the help of an investment club these strategies can work for you. I have a few links in my TWT header to get you started.


The catch? First you have to know what kind of investor you are?

Does investing make you lose sleep at night or do you feel confident in your good choices? What is your timetable before you need to access your savings? As you get older you typically move from an aggressive to somewhat conservative stance, not wishing to lose the empire that you built. Understanding what kind of risk you are willing to accept should be a place to start.

If you are interested, next Tuesday I will offer an Investor Risk survey used by Charles Schwab associates to map out what kind of investor you are. A  short few, simple questions will reveal what type of Warren Buffett you are deep down inside.

It’s your life. You are educated, have the initiative, and the good research skills to be good at this.

Don’t you deserve some $15.00 meals in your retirement, instead of $5.00 meals? Don’t you deserve to travel to see all those other great places and meet interesting people, like Gull and Kelly, from around the world when you finally have the time?

I think you deserve it. You just have to start somewhere / sometime.


Congratulations again Kelly and thanks to Gull for a wonderful Tuesday surprise!

TWT’s: Pop Quiz

A Blonde is watching the news with her husband when the newscaster says
‘Two Brazilian men die in a skydiving accident.’

The blonde starts crying to her husband, sobbing ‘That’s horrible!!! So
many men dying that way!’

Confused, he says, ‘Yes dear, it is sad, but they were skydiving, and
there is always that risk involved.’

After a few minutes, the blonde, still sobbing, says, ‘How many is a
Brazilian? It sounds like a really big number.’

I wanted to use that old Hooters joke to lead into this quick question. See, I was cleaning out some more closets this weekend and ran across this old forgotten number:


I wanted to ask everybody if they know what this number represents but, I know without any context, that question would be lunacy. So let me give you a hint:

2 x 3  x 20 x 365  x 5

Their is a clue in there somewhere but to give you a bit more context let me tell you this is the number I used in the beginning of my Financial Advisor presentations when I met potential new clients. It represents a significant number in your financial future.

Phew! Practically giving it away there.

Now, anyone that can guess the meaning or the significance of that number I will do a guest post for. ~Sorry, we are squirreling our nuts for the big move so no big cash prizes.

I will field some answers tonight and tomorrow and give you my answer(s) on a Tight Wad Tuesday post on, er, Tuesday.

Go (insert team name)!!!

Good Luck!

Oh, and it involves your retirement…


Tight-Wad Tuesdays ~ Let’s Go Shopping!

Our house selling project is going slow but steady. We are in the process of getting our house in shape to make it more presentable to buyers. Our realtor gave us a small list of things to fix. More money down this drain!

Of course we want to net as much as possible from the sale of our house. The proceeds, after paying off our current mortgage, will be the down payment for our new house. But here is where I want to cry.

Can you imagine my leaf problem now?

Can you imagine my leaf problem now?

We have been in our current house a little more than 10 years. In round numbers, we paid $150,000 for the house when we bought it. Being a prudent financial advisor, we were not going to get in over our heads, like many people did buying too much house. And we didn’t. The credit scores are still pretty good.

BUT, when I asked our realtor what she could get for our house, she gave me $1,000 LESS THAN what I paid for it originally….. 10 years ago! What? My jaw dropped. I was speechless.

You see, over the past 10 years we did some major improvements to our house. We did a major project every year it seems. Here is a list of some upgrades we did:

  • Installed  new roof
  • Installed aluminum siding
  • Had the foundation shored up
  • Added a new, more powerful A/C Heater
  • Added 2 remote controlled garage doors
  • Replaced the water heater
  • Replaced a wooden deck with a huge stone patio this year.

That was a lot of money. Really no cosmetic upgrades, just all functional ones. And our realtor says she can almost get what we paid for our house; if we want to sell it. We could hold out for more money but might not sell it at all then. I was stunned! I’m still stunned.

But our scenario just illustrates some of the bad stories you have been hearing about the housing industry; and what our local housing market supports in this economy. Not a great investment so far. 😦

And that’s what owning a house is, an investment. Look at the scenario above, housing markets, the economy, supply and demand. I had hoped our house would be worth at least $175,000 at this point, or a 16% gain (ROI). Nope. It is a zero % gain. ZERO. Which is typical for the housing industry in general now it sounds like. The housing markets have been in a crash slump of several years now, not unlike the stock markets being in a slump for much of the 21st century.

Being a student and fan of finance, and investments in general, I recognize this and forced to accept the value of my home. I sunk over $30,000 in improvements in it, only to lose that money it seems. Yes, your house is an investment, just like stocks are, as well as society, and even our children. They are all different types of investments, with many variables, but in the end we want the money we put into these investments to help raise the overall value of each one; and hopefully get some Return On your Investment (ROI). Not stay the same for 10 years (sniff, sniff)

With any important investment, one popular goal has been Buy Low and Sell High. So our housing situation made me think, what would a great stock of this past decade be priced at if it was at a value from10 years ago, similar to our house?    AAPL

Apple Inc, maker of some sort of fancy telephone that everybody has, some computers and other fancy high tech gadgets sold for about $15 per share 10 years ago. Today it sells for almost $500 per share; a gain of over 3000%.


Apple was in a slump 10 years ago. Steve Jobs left to go do some work with an up and coming movie maker, Pixar. Apple’s market was down; way down. But not a lost investment.

Now I wonder, how much my house could be worth, if it had any amount of that good fortune that Apple had. A 1000% gain in the value of my house puts it at (tick, tick, tick, tick) $2,250,000 (heavy, heavy, heavy sigh)

Certainly the housing market and the stock market revolve around different elements. What effects one certainly does not affect the other, except for the nature of the economy. The housing market has been hit hard with over building (supply), a bad economy to buy (demand), unscrupulous banks writing loans for people that had no business buying houses larger than what they could afford, and so on.

So, our government has made it as easy as possible, right now, to buy a house, with interest rates at historical lows. Could this be similar to the status of Apple Computers 10 years ago? Buy Low Sell High?

This is what I am seeing. We can buy houses with values depressed to 10 year lows. YOU can buy houses at 10 year lows, similar to ours; Apple Computers for $15! We toured houses with nearly twice the value of ours these past few weekends.

PLUS, with mortgage rates where they are, you can buy a house with a value you never would not have imagined looking at in the past. That’s where we find ourselves today.

We just looked at a house which was built in 2007 and sold for $275K originally. It’s asking $280K today BUT has an awesome swimming pool added and a fully stocked media room included with it (there were even some Yuenglings in the frig). And, with the deposit from selling our house, I can get this house for almost the same mortgage payment as what I have today.

Sure I am not getting what I want for mi casa but neither is anyone else. Why not take advantage of these super low rates right now and trade up? The combination of over built housing along with historical low rates makes this such a buyers’ market I am finding. This could get fun! And sure adds fuel to packing all those boxes.

So, all I need help with now is just making a decision! Lets go shopping…

Can you help me out, all you great shoppers out there?

Here are three houses we have seen over the past 2 weeks. All houses have, or would have, practically the same mortgage payment, within $50 or so. Tell me which would you most like to live in?

Last week’s @ $270K:

Roma out

roma inside

roma pool

For more pic’s click on the link below:


This week’s tour @ $280K:

Carolina ouotsdie

The pool table, wet bar, and two sets of 'power reclining' theater sofas come with the house along with a projector and large screen.

The pool table, wet bar, and sets of  theater sofas come with the house along with a projector and large screen in their ‘Media Room’.

carolina pool

For more pic’s click on th elink below:


Or this one @ $140K:

Can you imagine my leaf problem now?

We seem to be moving at a great time (I hope). If you are considering a refinance or a move yourself, consult a mortgage broker and a realtor and see what you are able to do. Buy Low and watch it grow! Come on, let go shopping!

Tips For Tight Wad$: Time, Time, Time is on your side

If I could find a way to insert a WAV file in these darn WordPress posts I would right now as the Rolling Stones have the ideal background music for this next post. ~Darn you WordPress, no WAV files at WordPress!

My wife wants to buy a larger house, again. We need a bigger one for the kids and I am personally tired of this ‘fixer-upper’ but I will get back to this.

Just let me start with the idea “time Is on your side” when it comes to personal finance. Some people may debate this over  the last decade or so. I say maybe they weren’t so smart with their money and lived beyond their means (a future Tight Wad post). But time can certainly work positively or negatively in your personal finance.

Let me give you an example. Interest! In our house, interest is a 4 letter word. We don’t mention it. We don’t buy it. What do you get for buying interest? Less disposable income? Interest can work against you in your credit cards, home purchases, credit score and so forth. You have heard the sad stories so I won’t take up your time here with that. Simply, don’t buy interest. Lots of companies want to sell you things interest free.

For example, look for the terms, 6 or 12 months ‘interest free’ or ‘same as cash’ when buying a large ticket item. Figure out what you can afford in your monthly budget, extend that across the months in the terms and then stick to it. Bam! You just bought a new roof or siding or that coveted patio set without paying a single dime in interest. Don’t pay interest! Over time it can eat you up! And you have better things to do with your money, right?

Let me give you another example. I am not getting political here I just want use this for an example. I heard last year President Obama made roughly $800,000 a year.  Senator Romney made over $20 million last year. Obama paid taxes around 20% (yet another Tight Wad post) while Romney paid only in the 15% tax level. How? Most of Senator Romney’s money comes from stock and bond income or dividends…accumulated over time. Dividends are taxed at a lower rate than personal income.

Here’s where I plug Dividend Reinvestment accounts again, or DRIPs.  DRIPs clearly are a way to let time work for you in building wealth. This investing is not sexy or glamorous at first.  Its not a get rich quick scheme. But put on auto pilot it can build Romney-like wealth over time. Well, not quite that much. MY dividends received for the first 10 years or so were nothing to brag about but now, they are starting to look a little sexier now, by reinvesting the dividends paid.

Coke for instance, is netting a positive 68% growth over the last 10 years for me, with dividends reinvested. 68%! By the time my girls are in school I will look REAL sexy thanks to Coke and a few other DRIPs. LOL not literally mind you but enough to swagger into Perkins for the early bird special. I can here the popular girls saying, “Ohh, yuck, totally gross!”

Which brings me back to my wife wanting to buy a house. We have been in this house for about 10 years and, financially, we’re ready to move. How? Write this down…Bi-monthly mortgage payments. if you never heard of these before they make time work for you!

Several years ago the end of the month looked very bleak for us. The last 10 days of the month I had to cover the mortgage, my car loan, the cable bill, cell phone bill and an unfriendly adoption loan payment. Ouch! I stumbled upon bi-monthly mortgage payments.

If you have never heard of these, simply, bi-monthly mortgage payments are just splitting you mortgage bill in half and paying half on the 15th of the month and half on the 29th of the month. You are not paying any more money per month than normal; just splitting it up. That’s it. Put it on automatic drafts from the bank and it is mindless. Even faster payments to principle are bi-weekly mortgage payments, making half a mortgage payment every other week.

What does this do? You are paying more ‘principle’ off early this way. This amounts to an extra mortgage payment being made each year. Less principle means paying less interest. That’s not enough for you? Look what mortgage calculator web site has to say:

“With the bi-weekly mortgage plan each year, one additional mortgage payment is made. That extra payment goes toward the principal of the loan. Since the homeowner is reducing the amount of the loan balance quicker, they are also reducing the amount of interest charged over the life of the loan.

Here’s an example:

A 30 year mortgage for $100,000 at a rate of 6.5% means the homeowner will pay $127,544 in interest throughout the life of the loan. This also includes a $100,000 principal for a grand total of $227,544. Paying one-half of the regular monthly mortgage bi-weekly makes the interest $97,215, which is a savings of $30,329. The homeowner would have to earn over $42,000 before taxes in order to net that much money.

Benefits of Bi-Weekly Mortgage Payments

Here are some things that a bi-weekly mortgage schedule can do:

  • The mortgage will be paid off faster. A 30-year mortgage can be paid off in about 22 years. (!)
  • Equity will build in the home more quickly.
  • The homeowner can arrange to have payments taken directly from the homeowner’s bank account automatically.
  • The homeowner will save thousands of dollars over the term of the mortgage. For example: By paying biweekly on a 3o-year fixed rate mortgage of $100,000 at 6.5% interest, the homeowner could save over $30,000.

Did you catch that? You can pay off your mortgage as much as 8 years early! What could you do with the extra money of a mortgage payment laying around each month? Not to mention the “saving money on the I-word” part” .

And that is where we are at right now with our mortgage. We have paid off plenty of principle in 10 years to allow us to take some profits and move to a bigger pad for the kids. It is quick and easy. Just make a phone call to your mortgage lender and its done in 5 minutes. Five minutes saves you thousands and thousands of dollars; or rubles, pesos, or francs. JDI!

So my point here is (time, time, time, is on your side. yes it is!) Time is a friend of yours.  ~ My wife says ‘cheese’ is a friend of hers. My friend has been Jose C! But time wants to be your friend too. If you have a mortgage right now and you are paying a single payment a month take a look at this and what it can do. If you are going to be buying a home in the future please keep this in mind, “bi-monthly mortgage payments” . You will own that home A LOT faster or be able to trade up earlier too. There’s no catches here. Its just being smart with your money. There’s nothing wrong with being a Tight Wad!

For more information on bi-monthly mortgage savings Google the term(s) or click right here. And please don’t forget to invite us over to your mansion so we can awe. ~ I’m really good at that’ the ‘aweing’! And I can bring some snacks…

Live Well! Be Thrifty!

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