What is a 401(k) Investment Plan?

Have you heard about 401(k) investing when researching all the different ways to save money for your future? It is a type of retirement savings plans that is designed so that employees and employers alike can contribute to a fund that is set aside for your future retirement.

Many people invest pretax earnings into their 401(k) funds, which they then have the option to invest in mutual funds of many options. You will find these mutual funds in a wide array of choices from money market accounts to very aggressive and risky stock portfolios. If you work for one of the many companies across the country that offers the option of a 401(k) plan you would be literally robbing your future self not to take advantage of this offering.

There are 3 general types of contributions to 401(k) plans:

  1. Matching contributions are very nice from the standpoint of the employee as the employer matches a predetermined amount of the funds invested by the employee towards this fund. Different companies will offer different amounts for their matching contributions. If your company will match up to a certain percentage of what you invest into your 401 (k) you should take them up on their offer. This is money that will benefit you later in life and should not be thrown away without a darn good for doing so.
  2. An elective contribution is money that you invest before taxes are taken out of your salary. This means that you aren’t paying income taxes on these funds at today’s rate of taxation. Many people believe this is a good plan because the assumption is that you will be in a lower tax bracket upon retirement though there are no guarantees that that will be true. This money is money that you have elected to invest in your 401 (k) plan, rather than bring home in the form of salary, thus the name of elective contribution.
  3. Non-elective contributions are money that employer deposits into your account. In most cases you cannot opt to take this money as cash rather than an investment in your 401 (k) plan.

 

There are limitations for how much you can invest into your 401 (k) plan on a given year. You should check with the IRS to get the actual numbers as they have changed over time and are likely to continue doing so as the cost of living increases across the country. Once you reach the age of 50 you are allowed to make extra contributions to your plan in order to ‘catch up’ and better prepare for retirement.

When studying your options for retirement financial planning you should carefully consider taking your employer up on any type of assistance they offer in this endeavor. If they offer to match the funds you invest in your retirement you can bet that money has already been deducted in their calculations of your salary. In other words, they are giving you the money you’ve earned in a different manner. The good news is that when the time comes to retire you will be able to appreciate every dollar that has been invested along the way.

We could never hope to simply save the money that we will need in order to retire. Even investments are tricky for the vast majority of the population. For this reason, it is a wise investment plan to take advantage of any opportunity to increase your funds by employers matching your contributions. If you can, investment as much as you can in your investment plan to secure your financial future when you retire.

Easy Guide: Seven Steps to Organizing Your Finances

You might not consider yourself to be an organized person, but your finances are the last place you want to be disorganized. Having too little cash at the end of the month is a challenge, but overdraft fees and late fees every month are an even bigger concern. By using our Seven Step Easy Guide to getting organized, you dramatically cut down on the likelihood of these things happening.

You’ll Be More Organized Than You Ever Thought You Could Be, When You Follow These Easy Guide Steps:

  1. Look at your budget every month. Ensure that your budget is accurate. No two months are ever the same, so be sure your budget reflects reality for the upcoming month. For example, electricity bills can be much higher in the summer if you use air conditioning or in the winter if you have the heat turned up.If you don’t have a budget, make one now! There are an unlimited number of resources available to make the job a lot easier. 
    • Budgets are critical. Your budget is your key to having your money work for you!
  2. Utilize financial software. Some of the software available now can really help you to get organized, track your spending and bills, and help with budgeting. Many programs are free.
    • You might actually find working with your money to be enjoyable when you can use a computer and specialized software. It’s a whole different experience than laboring over your hand-written figures on paper.
  3. Keep all your bills in one place. Avoid leaving some of them on the kitchen counter, some in the junk drawer, and some on the desk. Having one specific location for all your bills will ensure that nothing gets lost, and it’ll also give you the best chance to ensure that everything gets paid on time.
    • Store your bills close to where you normally sit and pay them. Keep them out in the open where you can see them regularly.  
    • When you’re done paying them, retain any records you need and shred everything else to protect yourself from identity theft.
  4. Pay your bills weekly. Each week, pay any bills that are due in the next couple of weeks. Choose a day and make a habit of paying your bills on that same day each week. Developing good habits is a big part of staying organized.
  5. Make a checklist of your bills. This should include all your recurring bills. Then, when the bill arrives, you can note the day it arrived, the amount due, the date it’s due, and the day you actually paid it. Any non-recurring bills can be added to the checklist when they arrive.
  6. Communicate regularly with anyone who shares your account(s). Whoever pays the bills needs to know what the other person is doing with the account. Develop a system to ensure that the bill payer is kept in the loop at all times.
    • Financial matters can be a source of stress in relationships, so work out an effective system before it becomes a challenge.
  7. Have two accounts. Mishaps are a lot less likely to happen if you have one account that is only used to pay bills. Use a separate account for everything else.

Getting your finances well organized is a pretty simple task once you set up a system that works for you. Anytime you can eliminate financial clutter in your life, your mental chaos goes down and things seem to go more smoothly as well.

These seven tips will provide a great foundation for your organization effort. Regardless of how you’ve handled your finances in the past, you can put this plan into action today to make your future financial organizing easy and beneficial.

What Is Peer to Peer Lending?

The Basics of Peer to Peer Lending

Peer to peer lending is often referred to as people to people lending. The lending occurs between two individuals instead of between an individual and a bank. Peer to Peer lending can be advantageous to both lenders and borrowers.

These loans are typically easier to qualify for than loans from a bank, though normally at higher interest rates. One main advantage to the lender is receiving a much better rate of return than they would get from simply depositing their money in a bank account.

Historically, peer to peer lending would take place between friends and members of one’s family. But you may have noticed several new opportunities online that exist to borrow money from or lend money to other people just like yourself. There are a number of sites online that serve to introduce lenders and borrowers.

As borrowing from conventional sources continues to be challenging, it’s only natural that other avenues, like peer to peer lending, have developed to address the excess demand for borrowing.

Advantages of Peer to Peer Lending for Borrowers

  1. Interest rate. While you should expect to pay slightly more than a bank would charge, the interest rates are usually quite good. Individual lenders don’t have the overhead that a company has to absorb.
  2. Credit flexibility. While many individual lenders only want to deal with those with a high credit score, there is something for everyone. While every bank might turn you away, there is someone out there that is willing to lend money to you. Some things to consider about credit and peer to peer lending:
  • Lenders may be willing to overlook your credit woes, especially if they’re due to circumstances outside of your control. But they’re far less likely to overlook the fact that you’re just lousy at paying your bills on time. Remember, these individuals are lending you their life savings; it’s really important that you make your payments on time.
  • You’ll have less privacy than you would normally have when dealing with a bank. Much of your financial information will be made available to potential lenders, so they can make informed decisions.

Advantages of Peer to Peer Lending for Lenders

  1. Interest rate. With banks paying less than 1% on savings accounts, individuals are finding that they can earn significantly more by lending to other people. While there is more risk and research required, many investors are finding that it’s worth it.
  2. More personal. Many lenders enjoy knowing that they are helping someone. In fact, it is customary that the lender knows just about everything there is to know about potential borrowers. Many people find this more satisfying than buying a bank CD.

Special Considerations for Lenders

Typically, your funds are not insured when loaning under peer to peer circumstances. Be careful not to be taken in by a hardship story. It is natural to want to help someone in need, but try to be objective and remember that your personal funds are at risk. As with any investment, you must analyze the amount of risk involved.

With the amount of work required to do an adequate job of screening loan seekers and making bids, a good index fund might do just as well over the long-term and require much less work.

Conclusion

Peer to peer lending is here to stay. The current version of lending to individuals is simply a natural evolution of this historical practice that has been going on for thousands of years. If you’re interested in becoming involved on either the borrowing or the lending side, there are many lending networks available on the Internet.

Borrowers need to remember that they are borrowing money from an individual, and the failure to make payments on time affects that person directly. Lenders need to stay focused on making wise decisions with regard to risk management. Not everyone is a good risk.

Please remember these tips and precautions. You might find that peer to peer lending is just the solution for which you have searching!

What is The Best Financial Advice

There’s no such thing as the best financial advice for everyone. There’s only the best financial advice to suit your personal situation.

Your financial circumstances, your income and your goals are not the same as anyone else’s. When it comes to finding the right advice to help you meet your intended goals, it’s important to tailor your plans to suit your unique situation.

The best financial advice should consider every aspect of not just your investment goals or retirement savings plans or your insurance needs, but it should take into account tax effectiveness too. Once these things are taken into account, a tailored plan can be created to suit your personal needs.

People begin searching for the best financial advice when they realize that they need some direction and assistance in sorting out a particular financial situation. This could mean working to build a blueprint for debt management and mortgage reduction.

Your plans might include finding a more effective way to reduce the amount of tax you pay legally or it might be targeted towards increasing your retirement savings. It may also mean finding a way to begin an investment portfolio.

When you ask anyone who’s doing well financially what the best financial advice they ever received was, most of them will say it was a simple tip given by someone they admired. Those nuggets of financial wisdom can often build a basis for success.

That piece of best financial advice for you might be something as simple as “Pay yourself first” or “live below your means” or “save something for a rainy day.”  No matter what inspires you to take the first steps to your own financial future, what matters most is that it motivates you to take action to get your own financial goals under control.

Of course, once you’ve found your inspiration to improve your financial situation, it’s sometimes necessary to seek out the help of a professional to get your plan right. This could be a financial adviser who is qualified to give expert advice on the most effective ways to create a blueprint that could help you reach your goals.

When you’re searching for the best financial advice company to trust your financial future with, remember to take some time to research your options. Always check that the adviser you’ll be working with is qualified to give advice on every aspect of your financial plans.

If possible, you should also check that the adviser is able to offer a broad range of financial and investment products and options to suit your goals best. Some advisers are affiliated with a particular bank or insurance company or stock brokerage or accountancy firm and so are more likely to only recommend those products and services available through their own company. While this is acceptable in most cases, it’s still wise to check that you’re able to access the broadest range of information available to you.

So if you’re seeking the best financial advice, remember to find the advice that most suits your personal goals.

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Jimmy L Hancock Jr is the Owner of http://ProfitDistrict.com. Check us out anytime for marketing tips and a free subscription to our cutting edge newsletter. Need some extra Cash???…Check out Surveys Paid

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Dangers of Co-signing Student Credit Cards

We here at Personal Finance Made Easy  have been searching the web again. We came across a very interesting post today and thought we would share it with you.

 

To co-sign or not to co-sign? Parents: Whether or not your college freshman has a credit card this year is largely up to you. As of February 2010, students and other applicants under 21 years old must have a parent as a joint account holder unless the underage applicant can demonstrate that they have enough annual income (perhaps $3,500 or more) to repay the debt.

Specifically for underage applicants, the credit card application must include either:

(1) Information indicating that the underage consumer has the ability to make the required payments for the account; or

(2) the signature of a co-signer who has attained the age of 21, who has the means to repay debts incurred by the underage consumer in connection with the account, and who assumes joint liability for such debts.

You can read the article in it’s entirety here.