Embed Size (px)
Citation preview
Personal Finance : the basicsJoseph Rugger, CPA, [email protected]
Budget Written plan
On paper, on purpose, before the month begins
“Failing to plan is planning to fail”
Get on the same page with your spouse
Each month’s budget will be different
DO IT EVERY MONTH!
Tell your money what to do or it will tell you what to do!
Cash / Envelope system
•We spend 12-18% more when we swipe a card vs. using cash – Consumer Reports
•Specific budget categories: Food, Gas, Entertainment (blow money), Clothing
•Use real envelopes•Easier to keep yourself (and your spending) in
check•Credit Card Reward points – The more
you spend the more you save?
Credit report •27% of Americans have never checked their
credit report – Consumer Action, 2006 survey
•79% of credit reports have errors – some major! US PIRG Survey
•5.2% of consumers have errors that result in less favorable loan terms – USA Today/FTC February 11th, 2013
•By law, you are entitled to 1 free credit report annually from each of the 3 credit reporting agencies
•www.annualcreditreport.com
Dumping Debt – The Debt Snowball •$15,422 – Average Credit Card Debt in
the U.S. •$149,782 – Average mortgage debt •$34,703 – Average Student Loan Debt – NY
Federal Reserve Household Credit Report – September 2012
•Forbes 400 survey - #1 key to becoming wealthy?
•Dump debt – use the debt snowball
Emergency fund
•50% of Americans could not come up with $2,000 cash for an unexpected expense – WSJ
•Bad alternatives: 1) Credit Cards 2) Payday Lenders 3) Selling household items 4) Boodle Fund
•3-6 months worth of living expenses•Must be in cash – not investments• = Peace of mind
Save for retirement•15% of your income is your target•Automate your contribution• Increase your contribution rate 1% with each
annual raise•Take advantage of employer match – FREE
MONEY!•Social Security must be a supplement!•Over 60% of those over age 65 say that Social
Security is their main income source $1,230 average monthly benefit – Health & Retirement Survey
Types of Retirement Accounts
•Individual Retirement Account (IRA)•Roth Individual Retirement Account
(Roth IRA)•CALS Pension Plan•CALS 457 Deferred Compensation Plan•CALS Matching Contributions
• Employees who commit to saving .5% of their pay get a match. Employees can increase their contribution by .5% annually and receive additional matching funds, up to 2%.
• Example: A full-time employee earning $10.82/hour could put aside a mere $4.32 a pay period, matched with another $4.32 from CALS. At the end of the year, that employee would have netted $225 in an account, plus whatever interest was earned on it. After four years, that same employee would be able to contribute up to $17.31 a pay period, matched with another $17.31 from CALS. At the end of the year, that employee would have netted $900 in the account, plus interest.
A full-time employee earning $17.60/hour (the current mean wage of CALS regular employees) could put aside $7.04 a pay period, matched with another $7.04 from CALS. At the end of the year, that employee would have netted $366 in an account, plus whatever interest was earned on it. After four years, that same employee would be able to contribute up to $28.16 a pay period, matched with another $28.16 from CALS. At the end of the year, that employee would have netted $1,464 in the account, plus interest.
CALS 457 Match
Social Security Benefits Calculated•Based on your lifetime earnings•Average of your top 35 years earnings•Full retirement age is 67, if you were born
after 1959. If you were born before 1938, your full retirement age is 65. Sliding scale in between.
•www.ssa.gov – determine your individual benefits
• If you declare early, you take a discount. If you wait until after full retirement, you receive a premium.
How much will I need in retirement?•4% withdrawal rule•70% of expenses rule•Determine your estimated budget.•Do the math.•Retirement Calculator
www.money.cnn.com
Reading Recommendations
•41% of Americans won’t read a non-fiction book after college & high school
•Dave Ramsey – The Total Money Makeover
•David Bach – The Automatic Millionaire•David Bach – Start Late Finish Rich
