How a Backdoor Roth IRA Conversion Could Help Your Early Retirement Strategy

convert money

In the past I’ve talked before about how a 72t is a key part of my early retirement strategy. In case you’re not aware of what that is, a 72t is a special exception in the IRS rules that allows you to take money out from your 401k or IRA before age 59-1/2 and without facing that stiff 10% penalty (we’ve got a whole post about it here).  For anyone looking to retire early, that’s a massive win! While that’s all fine and good, one of the things I like to make sure of when it comes to my money strategy is to always be searching for something better. Maybe an option with less rules or … [Read more...]

How a Good Asset Allocation Model Can Impact Your Financial Future

Asset Allocation Model

Assets allocation is just not one of those topics that most people find particularly sexy.  Usually it’s the sort of thing that gets about as much attention as the instruction manual to your Blu-ray player. But as you’ll see below, it’s one of those parts of investing that you simply can’t ignore – largely because it can have a MAJOR effect on your finances and how long they ultimately last. The reason I wanted to bring this up is because of the roller-coaster of market activity lately.  In case you haven’t checked your stocks or 401k balance in a while, there have been some pretty big … [Read more...]

Where to Park Your Rainy Day Savings for Growth Without Much Risk

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We all know that part of a good, healthy financial well-being is to have a decent sized chunk of money set aside in your emergency fund or rainy day savings fund as some people call it. Some advisers tell us it can start off with as little as $1,000 (I believe that one is a Dave Ramsey thing).  More commonly I see suggestions to have as much as 3 months, 6 months, even 12 months worth of living expenses set aside in easily accessible bank account. Fortunately for my wife and I we have done a pretty good job of building up our rainy day fund over the years to as much as $20,000!  That’s a … [Read more...]

3 Painless Ways to Build Your Emergency Money Fund

emergency money fund

The other day I was having a conversation with a few of my coworkers about how long we'd be "okay" financially if we were to lose our jobs.  (None of us were in any sort of trouble, it was just one of those conversations.)  Much to my surprise most of them said they didn't think they'd last more than a month. A month?  Perhaps I'm brain-washed from living in this money-blog community of mine, but doesn't everyone know by now that you're supposed to have 3 to 6 months worth of emergency money stashed up at all times?  Disaster could strike at any time whether you're ready for it or not!  And … [Read more...]

Ask MMD: Should I Do a Rollover, Pension Lump Sum or Annuity?

Pension Lump Sum or Annuity

How do you know you’re a true financial geek?  The answer: You get excited when one of your friends asks you a money question because it means crunching some numbers with Excel! Okay … maybe not to that extreme, but that’s pretty much how I felt recently for a friend who had a question about whether or not to cash out his pension with an old employer.  Here was his email: So I attended a webinar today about the buyout (with my old employer).  Attached is a snip of the five options they gave us and what the amounts would be. Rollover to an IRA or another employer’s plan = … [Read more...]

We Saved Over $1,000 in Taxes This Year By Contributing to Our Vanguard SEP IRA

Vanguard SEP IRA

One of the coolest things I discovered last year in terms of retirement planning was that I have the option to contribute to yet another tax-deferred savings plan – the SEP IRA. What’s even better is that not only was this contribution above and beyond everything I was already saving with my 401k and Roth IRA, but it also accomplished one VERY important task – saving me a boat load of money in the amount of taxes we owed for year on our Federal return. This year the story is even better!  With all the money my online business made, I’m going to end up contributing close to $4,000 this … [Read more...]

What are Mutual Funds and How Do I Invest in Them?

What Are Mutual Funds

What holds you back from investing? Is it stocks? Do they scare you to death? If they do, I really don’t blame you. All the “ifs” in the beginning can be overwhelming! Which ones do I pick? Where will I find the right stock metrics and information to tell me? Why do they keep bouncing around in price?  How long until I have a heart-attack? Would you prefer a way to “stick your toe in the water” and not have to deal with such wild fluctuations? If so, then let me introduce you to the world of mutual funds. “What are mutual funds” you ask? Well, for starters, they are where I … [Read more...]

What To Do With Extra Money In Your Budget – 3 Good Choices

crossroads

At the beginning of every new year, one of the first things I do with our finances is to take a hard look at our budget and see where we can get the most bang for our buck. At first this usually involves doing the normal thing that most people do - taking a look at our bills and seeing where we can shave some expenses.  But there’s something else I like to do with the extra money in our budget that I feel is just as important as cutting corners on expenses.  I like to take a look at where we can best grow it! There are lots of good options for what to do with extra money if you’ve got … [Read more...]