Back To Cash

The Issue

Have you noticed lately that more and more companies are getting hacked and your personal information is being captured by those who would like to do us harm? By harm, I am referring to destroying your credit, stealing your money and wreaking havoc on your credit report.

Unless you flat out do not listen to the news at all, you are aware of the more recent thefts of personal information from Target, where 70 million customers had their information stolen. Michael’s has been a more recent target of hacking. You can see other companies from an article written by Forbes.

It’s not just credit card information that is being hacked. It is also your debit card information. Here are just a few of the pieces of information that they get their hands on:

  • Name
  • Address
  • Account Number
  • Pin Number
  • CVV

My Opinion

Seems to me that it’s more dangerous every day to be using debit and credit cards. The systems we have in place are being breached all the time and it falls on us to correct it when it happens. You do not even get notified a lot of the time when something happens. Recently, there was a fraud alert on my credit report from a casino. I don’t do casino’s but the only way I found out about it was when I opened a new bank account.

The Solution

Use cash instead. It’s likely that the information in your bank will be pretty secure. Hopefully. Cash is accepted everywhere and you do not have to give your personal information out to use it. Another nice thing about cash is that you do not have to worry about creating an overdraft on your account. You either have the money or you don’t.

Of course, it’s hard to cut off credit and debit card use all at the same time. If you cannot do it right now, then make a plan to migrate in that direction. It is certainly convenient to pay your bills without having to write a check and get it in the mail three days early. It’s convenient to go to the store and not have to count out bills. It’s much easier to just swipe a card. Who wants to pay cash and stand at a register instead of swiping a card at the pump? I’m not even sure I want to do it with everything. However, I have already been doing it with some things. It just takes a little more planning.

Savings Challenge Update

As you know, my wife and I are saving and I think we have decided to use the money for a vacation next year. To date, our savings sits at $212.00. Still have not opened the bank account yet but when we do, I will include the account balance here. I’m excited that we can do this together.

What do you think about the hacking that has been taking place lately? It’s been going on for years but I think it is more visible today. Let me hear your thoughts on it.

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Savings Challenge Update

Success!

I’m so happy! My wife has decided to join me in the challenge of saving each week as I described in the post Challenge Yourself. Last week, she gave me three dollars. Today, I received another three dollars. I’m excited because it is another thing we get to do together. We actually have not designated the money for any specific purpose yet since we will not be done with the challenge until January 2015.

Current Status

As of today, we have a combined savings of $159.00. We have not put the money in a savings account yet. That will be the next step. In the meantime, we had some discussions about the challenge. Here is a picture of our current savings in a spreadsheet.

Savings Challenge Progress

I’ve mentioned in my post Cash – The Slow Road, that we give each other an allowance of $100.00 every two weeks. We’ve been doing that for a while now but it poses some problems with the ability to save according to the plan. I’ve been able to save what I have since I already had some of my allowance put away that I had not used. The problem is that with my current rate of savings, I will not have much in the way of an allowance for another few months.

My wife is starting at the other end of the chart so she has contributed $6.00 towards the savings right now. The problem here is that with this plan for saving, when we get to Thanksgiving and Christmas, a vast majority of her allowance will be going towards the savings plan.

A Compromise

We discussed the problem with the current way we are saving and came up with an interesting solution.

My wife gets paid twice a month. I get paid once per month. We decided that on the weeks that she gets paid, we will contribute from the top of the chart. That will use about half of our allowance for a few months. On the weeks that she does not get paid, we will contribute from the low end of the scale. This way, we will still have some allowance for things we want every week.

The Result

The result of this modification will be the same. At the end of the challenge, we will have a collective savings of $2756.00 plus interest once it goes in the savings account. If we want to increase some of that interest, we could put some of the money in a six month CD or money market account instead.

The point was not really to worry about how much gain we could get through this money. The point was to start saving on a regular basis and use that money for a specific purpose. Whether that purpose is an additional sum towards an emergency fund or a vacation or something else will be decided later.

The other thing this does is set up a practice of saving each week which will help with our financial health going forward.

Let me know how your savings plan has been going and if you have come up with other ways to modify the savings plan so that it works better for you.

Set Yourself Up Forever!

Retirement Savings

When is the right time to start saving for retirement? Most people do not start saving for retirement until they are in their 50’s. According to Dailyfinance.com, the average savings amounts might surprise you. The right time to start saving for retirement is right now no matter what age you are.

I wish I had listened to anyone who talked about personal finance when I was in my twenties. Fortunately for me and my wife, we are at least at a point where we are saving some money for retirement now. We won’t be broke when we decide to retire. I know too many people who have already given up on the idea of retiring. They just plan on working as long as they can and hope they do not get sick in the meantime.

Four Things You Can Do Right Now

Here is a list of some things that anyone can do to help with their retirement right now.

1.            Open a Roth IRA. The maximum contribution to a Roth IRA for someone under 50 is $5,500.00 per year, per person. If you are married, that means that you and your spouse can save $11,000.00 each year. The greatest advantage of a Roth IRA over a standard IRA is that the taxes are taken out now so that when you start taking money out when you are older, that money is tax-free. If you are over 50, then you can contribute $6,500.00 per year right now. You can open a Roth IRA at any age as long as you have an income. So, if you are waiting tables 20 hours per week at 18 years old, you can take a portion of that money and put it in a Roth IRA.

2.            Take advantage of your 401k. A 401k is a retirement savings plan that many companies offer. Some companies match your contributions. Those contributions might be a 100% match on the first 5% of you base wages or some fraction of that amount or no match at all. It is a savings plan for long-term. You can take out loans from the account (at a price) but the intent is for you to have that money after you turn 59 ½. Usually, the funds are put in an array of mutual funds or bonds or cash.  Some plans have the option of doing self-directed stock purchases. Unless you are studying stocks all the time, this might not be the best idea. Each company has their own limits for how much you can contribute to the 401k so check with your employer. If they are offering a match, that is free money and you should take advantage right away.

3.            Get Life Insurance. You never know what life has to offer. No one is guaranteed tomorrow. My wife’s first husband passed away when he was 46 years old. Nobody likes to think of 23 as middle aged. Life insurance offers a protection for your family in case the unthinkable happens. Talk to a financial planner and insurance agent to get details. There are a host of possibilities for life insurance.

4.            Get a will. There is nothing more devastating to a family than to have a loved one pass away and then have the estate thrown into probate court or for families to get divided because of arguments about what to do with the inheritance. Having a will allows you to specify where your assets go once you are gone. I’ve seen houses sit vacant for 6 years or more while families fight over what happens next.

No One Will Take Care Of You But You

It’s not a long list but they are things you can start doing right now to prepare for the future. The future is unknown and with companies abandoning employees once they “retire,” it only makes sense to start right away. It might be fun to get all the latest things but the reality is that none of your friends will take care of you when you retire. You will need to set that up for yourself.

It used to be that you could work for a company for 30 years or more and retire with a nice pension. Today, there are virtually no companies that offer a pension. Instead, they might contribute a little to your 401k. Once you leave the company, you take whatever is in your 401k and live on that for the rest of your life. Keep in mind that you will need to pay your medical insurance with that money too.

It’s never too early to start preparing for retirement. Your future lifestyle is in your hands.

Who else wants to share some ideas for taking care of your future needs?

Update on the Savings Challenge

In my recent post Challenge Yourself, I said I was starting a savings plan for the year. I’m still talking to my wife about contributing also but here is my total now: $103.00. I will be opening up a new savings account as soon as there are no fees involved in having the account. I hope your savings plan is working for you.