My Pocket Change

Most people know they should put money towards their retirement, but very few know how much.  The more, the better – sure!  But personal finance is a balancing act.  And to balance retirement into your budget, you need a clear plan with goals.  A path forward.  So, how much should we budget each month for retirement?  And more importantly, why?  Over the next few posts, I hope to outline my answer to these questions.  For myself, I’ve found that number to be a little over $1000 a month.  I’ll break down this answer into three steps.  There will be a fair amount of math involved, but I’ll spare the details for those interested.   Continue Reading »

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I know I’m not breaking new ground by saying finding a local auto shop is the best way to go when it comes to car maintenance, but I wanted to try to put some numbers to the old saying.  I drive an ‘03 Acura RSX Type S (bought it new).  Just the other week my car hit the 40k mark.  Check up time!  I’m pretty good about maintenance because I want to make sure to not void my extended warranty.

I’ve been going to a local shop (Foreign Auto Experts, for those in the Baltimore area) for a year or so now.  So, I took my car in and had them do their rounds.  Turns out I needed new front brake pads.  My total bill was $155.29.  For kicks I called my local Acura dealer for a price check.  $175.00 for the 40K check up, and $195.00 for new front brake pads.  I’ll do that math for you: I saved ~$215 or 58%.  We’re talking significant money!   Continue Reading »

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So no one knows exactly what’s going on with the housing market.  Is it a bubble bound to burst?  Wide spread panic everywhere?!?  Many people think so, or that at least things are due for a little correction.  According to some reports, the slump is getting worse.  So those looking to buy in the near term are faced with an interesting dilemma.  Buy when prices are high and interest rates are still low… or wait for prices to drop and risk a raise in the interest rates?  I’ll tackle this question and try to provide you the numbers to come up with your own “break even” point. Continue Reading »

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Within the last month, I’ve had two friends ask me the same question. Both friends have healthy jobs (lawyer in LA and finance in NYC) with salaries well into the six figures. Their salaries make them ineligible for deductible traditional IRAs and Roth IRAs. Their question was this: Since I can’t get a tax-deductible or Roth IRA, should I even bother in getting an IRA?

(I would like to note that I originally posted this subject here, but Samerwriter pointed out an error in my assumptions.  This is my revised conclusions.  Big thank you for Samerwriter!)

The answer? MAYBE (unsatisfying, I know).  Non-deductible traditional IRAs offer great tax benefits that should not be overlooked. While you can’t deduct your contributions or pull your money out tax free, you can grow your money tax differed.  However, as Samewriter pointed out to me, IRA distributions are taxed as income, not just capital gains. Okay, what does this really mean? I’ve broken this down into five main points. Continue Reading »

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In financial modeling, inflation can make things messy.  Not only does inflation devalue our money over time, but it also makes it harder to get a sense of the value of the dollar in the future.  Hence, one common tactic is to do all modeling and analysis using real returns.  This means that the numbers will represent present day buying power.  It describes the value of the money, not the quantity of the money.    Continue Reading »

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[This post is being re-done here after a commenter's great input.  The new results will be quite different!]

Within the last month, I’ve had two friends ask me the same question.  Both friends have healthy jobs (lawyer in LA and finance in NYC) with salaries well into the six figures.  Their salaries make them ineligible for deductible traditional IRAs and Roth IRAs.  Their question was this:  Since I can’t get a tax-deductible or Roth IRA, should I even bother in getting an IRA? 

Here’s the short answer.  YES!!!  Even non-deductible traditional IRAs offer great tax benefits that should not be overlooked.  They don’t allow you to deduct your contributions or pull your money out tax free, but they do allow you grow your money tax differed.  Okay, what does this really mean?  I’ve broken this down into four critical points.  Continue Reading »

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About a week ago, I wrote about my snowboarding trip to Austria.  I tried to predict what the total costs of the trip would be before hand and came up with a figure of $1600.  Well, now that the dust has settled, I have a final figure.  How well did I do?  Actually, pretty damn well.  My final cost was $1619.80.  I’d say I was more lucky than accurate, but it’s good to know I was in the right ballpark.  Continue Reading »

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This June, one of my two roommates will likely be making the big move from the East Coast to the West Coast.  We’ve been roommates for 3.5 years, and he’s been an ideal roommate.  I will miss him when he leaves, but not as much as I’m going to miss… his 50″ HDTV!!!  So, it looks like I’m going to have to get one myself.  I’ve happened to notice that prices right now are really low. There are tons of deals out there!  So, should I buy now or wait another ~4 months to see what happens? Continue Reading »

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