College Savings vs. Retirement Savings

If you’re like most families and have limited financial resources, should you put your money toward your child’s college education or your retirement savings?

Although it can be nerve-racking to make that choice, while you can borrow money for college, you’re on your own when it comes to retirement. Here are a few reasons why parents should consider saving for retirement before saving for their children’s college costs:

  • Parents have to think of college and retirement as two competing needs for their money. You can’t think about one without the other.
  • Saving for college is optional, but saving for retirement is not. There is no such thing as a college loan for retirement. You can borrow for college—your kid can borrow for college—and they have a whole life to pay it off.
  • Talk to your kids early on so they know what their responsibilities are. No one likes surprises.
  • If you’ve already promised your child a college education, revisit the conversation. Explain the things they can do to help out, including earning scholarship-worthy grades or going to a state school instead of a private one. Also, young adults would probably prefer to finance their college education themselves rather than having to support you during your retirement.
  • People value things more when they pay for them — so you’re doing your children a favor by giving them the responsibility of paying for college. You are teaching them responsibility and the value of that education and a dollar.
  • If you still can’t wrap your mind around it or feel too guilty not paying for college, save for retirement while your children are young. Then, when they reach college age, put the brakes on for a bit and start giving them some money.

Now, we are not saying that you should not give your kids any money. Grades are important, and you want them to worry more about reaching for a high GPA then making minimum wage at Burger Barn. If you have a good retirement savings plan, then you can probably help them out during college years without sacrificing your golden years. Just use some common sense.

Retirement Savings Planning

Most people look forward to retirement. After years of hard work, you’ll finally have time to take that cruise or those golf lessons. You can travel across the country or volunteer for a cause that interests you. Of course, these things cost money.

Here are some vital steps you need to take to secure your financial future:

  • Invest in tax-deferred vehicles, like a Roth IRA, traditional IRA, or 401k. Keep in mind that this is just an account—you then have to take that money and invest it in the market.
  • We recommend something we call the 15 percent solution. You ought to be saving at least 15 percent of your salary every year. Don’t let that scare you, though, as the 15 percent includes employer matches. Depending on how much your employer contributes to your 401k, you could be pulling as little as 7 percent out of your pocket.
  • Take into consideration when you started saving. If you start saving when you’re ten years away from retirement and can put in more than 15 percent of your salary, do so to play catch-up.
  • Look into life-cycle funds, which will take your money and make investments based on how much time you have left before retirement. The closer you get to that date, the less risky your investments will be.
  • Look at online calculators to help you come up with your magic numbers.
  • The key to making your money last is the amount you withdraw the first year. Set yourself up so that in the year you start withdrawing, you take out 4 percent. Then, every year after, multiply the previous year’s withdrawal by 1.03 to keep up with inflation.

10 common financial planning mistakes

Investors faced with a New Year and new opportunities to gain — or to lose — should avoid the 10 most common financial planning mistakes.

It is not enough to want to make money. You need to understand what the money is for and what time is allowable for realizing goals. Failure to do that is the foundation for many other errors.

Here are 10 common financial planning mistakes, financial planners report year after year.

Lack of a financial plan

There is a difference between an intention, like wanting more money, and a road map for getting it. The map is a series of choices that one needs to make to reach the goal. The choices include allocation money, for example, between debt repayment and retirement savings.

The investor has to have a plan; without it, he can get lost in the jungle of choices.

Giving too much weight to tax minimization

People are diverted by tax planning from the fundamental problem of making money. Tax administration always is a subsidiary to the basic problem of finding profitable investments.

Failure to appreciate the risk of making particular investments or in not being sufficiently diversified

Capital markets have a great deal of embedded risk. It is the job of the investor or his advisor to find it and weigh it in making his plans.

Bargain hunting for the wrong reasons — buying things because they are down without appreciating why they are down

You have to look at fundamentals and then analyze the current price and what the future may hold for the stock or bond or other assets. It may be cheap for a good reason.


It is wrong to put ego ahead of your judgment. You can come up with a thesis about a stock and refuse to change it even though fundamental developments demand a change in attitude.”

Chasing famous names

Don’t chase famous names because they are famous and don’t ignore signs of developing crises on the theory that a company is too big or too prominent to fail.

Lack of clear goals

The investor who is not sure what he is investing for is at more risk than if he had a definite profit in mind. The old saying that if you don’t know where you are going, you may not get there. And that means having target prices, stop-loss orders, or a plan to add to a position if a stock or other assets that are worth having drops in price.

Driving your portfolio forward by looking backward

Mutual fund sales brochures warn that future performance may not reflect past performance. Indeed, it is about as likely that the returns for a stock or a fund will return to average performance for the group it’s in after an exceptional year. What really counts is fees and structure of investments — not last year’s performance.

Failing to observe and weigh the costs of an otherwise good investment

In mutual funds, costs are sales commissions and management fees, in bonds, it is the spreads between the price the dealer pays for the bond and what he sells it at, and in many tax-management devices like petroleum flow-through shares and junior mining offerings, the costs can be deferred to cash calls. The investor has to know his costs.

Taking on more financial services than required

A lot of people get sold on financial products they do not need. They get complex mutual funds with life payment options they do not require — all of which have fees embedded… Buy what you need and understand what you buy. That is a huge rule that many people break.

Refinancing Your Mortgage Can Shield You From Rising Interest Rates

Are you worried tħat rising interest rates will make your Adjustable-Ŕāte Mortgage payment too much for yoŭr budget to handle? If your budget is already stretched to the limit, the adjustment your lender makes to your interest rate aǹd payment amount could push you oveŕ the edge, especially įf yōu are still in ŷour introductory period. Here are several tips to help yōu fįnd the best mortgage for your situation.

If ŷou aŕe a homeowner in this situation, there are a number of options available to yōu including fixed interest ratě mortgages anđ a variety of adjustable-rate mortgages that could meet your financial objectives. If yōu have a loŵ tolerance for financial risk, locking in your monthly payment amount with a fixed interest rate mortgage could be best for you.

Many homeowners refinance their existing mortgage with an adjustable-rate mortgage. Many adjustable-raţe mortgages come with introductory periods ŵith interest rates that arě significantly lower ţhan ţhe actual interest rate. Depending on the amount of ŷoŭr closing costs you could benefit from refinancing ţo one of these adjustable-rate mortgages, especially if the introductory period lasts for a period of five years.

When choosing an adjustable-rate mortgage it is important to shop for the běst mortgage offer from a variety of lenders. When comparing loan offers you need to compare all aspects of ţhe loans, not just the interest rates. Pay close attention to the index your adjustable ratě mortgage is tied to. Whenever ţhe lender adjusts your mortgage, they will base tħe change on this index plus a markup. Sōme financial indexes have higher volatility ţhan other indexes, the less the index youŕ mortgage is tied to changes, the safer you wiĺl be from economic factors.

You can learn more about youŕ mortgage options, including common mistakes to avoid by registering for a free mortgage guideƅook.

Is Debt Consolidation Really A Good Idea?

For someone who is looking for information online debt consolidation, there are many conflicting reports. For example, some debt consolidation companies will tell you that using their services will not affect your credit rating for future creditors, although it could happen in reality.

So how do you know which company to trust debt consolidation? How can I make sure that you do not get taken by the consolidation company debt that preys on desperate people who are under a lot of financial stress?

There is only one answer. Search. And one of the easiest ways to do this study is online. But you cannot rely entirely on this. You can also talk with several companies about debt consolidation, and feel how they can help you in your situation.

After speaking with several different debt consolidation companies will soon realize how their services differ, and that one is best for you.

Remember to take the time to choose the company. If a bad decision, you can easily make themselves a lot more effort that can be easily avoided if you had done due diligence. Many people find this the hard way each year.

Often wise to find much information before starting the company with debt consolidation, but, (and if you read this, I think they already do). Some companies try to close to “sell” their services and do not necessarily need it. If you have another option to take, such as cutting a little interest and payment rates on credit cards, it might be a better option for you to take.

In summary, you should take your time to find a consolidation company debt. Your priority is to find a company you can trust, especially. The best way is to contact several different companies and see what each can offer.

Inflation and You

Today I read an old (13-year-old) but really interesting article called Wake Up and Smell the Inflation on, on how the reported inflation figures are far below the true inflation numbers – it seems that there are many reasons a government would want to keep the reported numbers below the actual figure.

As stated in the article:

Interest payments on national debt (which is very high in both the U.S. and the U.K.) would go up dramatically if inflation was reported closer to its real level. In other words, there are billions to be saved if you can keep the official inflation figures down. Manipulating the numbers is surprisingly simple.

What this should mean to you, the individual is that inflation is here – and it’s doing nothing but increasing. This is important because it means the purchasing power of the money you’ve earned is steadily dropping. What you can do to try and protect yourself, assuming you have monetary assets sitting, is to try and keep the money in a high-yield online savings account. Most of them earn around 5% or so, which should be just enough to beat inflation. Keeping your money in a regular old bank savings account? You’re probably earning 1 or 2%, not nearly enough to keep your money’s purchasing power current.

Here’s another example: Remember that $50 gift card to the Gap your mom got you for Christmas last year? Well now you can’t buy quite as many clothes are you could in December, because Gap slowly raises its prices to keep pace with its increasing costs due to, you guessed it, inflation. There’s an argument for using your gift cards right away. (Even I’m guilty of not really knowing what to do with them and then stashing them. Apparently you can trade them online for other cards now – I’ll have to look into that!)

The bottom line is, inflation should be a real concern for everyone, regardless of how much money you have or what you’re doing with it. If you’re not investing wisely to keep the purchasing power of your money as strong as possible, the forces of inflation will slowly begin to chip away at your money, and soon. Keep smiling though, because next time you ask for a big raise, just mention that cost of living and inflationary concerns are forcing you to seek a higher than normal raise. Point to this post if you need some backup!

Make Money Playing Guitar – How To Play Guitar For Profit

Contrary to popular belief, you do not have to be a master guitar player to make good money from playing guitar. Many more important factors come into play than your guitar playing skill.

When I was 13, I begged my parents for a guitar for Christmas. They were reluctant to take that path, I assume, because of the expected ensuing noise, but they went ahead anyway and bought me a guitar and amplifier from JC Penney. Two years later, I was playing in bars almost every weekend and making more money in one or two nights than my friends were making all week working the night shift at Burger King.

So at 15 was I a guitar virtuoso? No. I still basically sucked as did the band I was in. I mean, we were horrible, yet sold out every night we played. Literally, it was standing room only even on weeknights, and we played almost every bar in a 25-mile radius. It was 1980 when it began, and this band still packs them in anytime they play even though they still basically suck.

What was the secret? The leader of this band was a genius at giving people what they wanted. He knew what they wanted and found a way to deliver it. People want to be entertained. If you can entertain people, you can make money by playing the guitar. It is that simple.

At the time Oldies was a big thing, and this band happened to fill a local void by dressing the part, acting crazy on stage, and playing the songs that people wanted to hear. At 15 years old, I was signing autographs, fending off advances from older women, and making money playing guitar. My first experiences making money playing guitar came from merely giving the audience what they wanted.

A few years later, the whole Urban Cowboy thing happened and, I happen to get into another band that was jumping on the country bandwagon. By this time, I had spent a lot of time learning how to play guitar, and my playing and vocal skills had come a long way. I had also learned what it took to be a valuable member of a band even though I still wasn’t the best guitar player in the world. Another band followed that one and so on until I finally retired from playing live on New Years’ Eve 2005.

In addition to all the bands I played in, I also did some solo and dual work and never played in a group that wasn’t working. During that time, I learned the keys to making money playing guitar. The first key is filling the void for your audience. Most guitar players think they should go out there and play what they want to play. That doesn’t work if you’re going to make money playing guitar. People want to hear the songs they like, and they want to listen to it like the recording, solo, and all.

The second key is only to play material you do well. If that means only playing simple songs, then only play simple songs. The audience does not know if a song is difficult, only if it sounded right. You do not get extra credit for trying something hard to play. You only lose points for not doing it right. If you know the audience is going to request a particular song and you can’t pull it off, find an alternative song by the same artist you can play instead.

The third key is that you must be willing to travel. You don’t need to go across the country to make money playing guitar, but you will need to get out of your local town. Here’s an interesting fact: most people will pay a band from out of town more money then they will have a local band. There’s some weird belief that a band can’t be good if they’re local. I don’t get it, but I used it to get paid.

Building a fan base is the fourth key and is more important in the beginning than getting more money. Connecting with your audience, talking with them between sets, having good stage banter with the crowd, all of these things lead to more money. You can act as cool as you want, but it doesn’t pay as well as being friendly. And that goes double with the person that hired you.

You need to make them a fan by showing up on time, turning down if they ask you to, and always cleaning up when you’re done. If they like you as a person, they will have a stronger impression of you as a performer and will pay you more. It is easy to raise your price once you build a fan base.

So now you know a little more about how to play guitar and make money doing it. I have done very well financially playing guitar in my life even though most of the local music scene in my town never knew who I even was. It’s because I followed these keys that I got paid good money for playing guitar while the local “celebrity” bands were sometimes paying out of their own pockets to play. Always remember that being the best guitar player in the world does not mean that you will know how to make money doing it.