Re: Money Tips down2basics: Put Retirement First
Sounds a little selfish, I know. But when it comes down to it, saving for retirement is a more important goal than saving for your kid's college education. College tuition comes with a safety net to fall back on (financial aid), but your golden years do not. Stick to your retirement savings plan, and save for college tuition as if it were a down payment for a house. Aim for at least a third of the amount you think you'll need. The more you can sock away ahead of time, the less you and your children will have to borrow later.
Re: Money Tips down2basics: Beyond Allowances
Allowances are great. But when your kids are trying to buy something expensive, sometimes an allowance just won't do the trick. Here are a couple of ideas to help your kids stretch their savings:
The 401(k) for kids. Try offering matching dollars. Tell your child that you know saving is hard, so to help you're willing to match each dollar he or she is saving for a particular big-ticket item.
Work for hire. Particularly industrious kids may also want to take on extra chores. Consider paying them for jobs that you might pay outsiders to do, like weeding the garden, shoveling the sidewalk, or ridding the upholstery of pet hair.
Re: Money Tips down2basics: Life Insurance for Singletons?
If you're single, chances are you don't need life insurance. After all, life insurance is protection for other individuals who depend on your income. But there are a few exceptions. Here are a few reasons to get a policy if you're single:
If you support in any way your elderly parents and want that support to continue.
If you've incurred substantial debts and want to make sure there's money to pay them off if you die.
If you want to cover your own funeral expenses.
Re:Money Tips down2basics: What's Your Credit Score?
Your credit score is a computer-based determination of the risk you pose to your creditors. In fact, each lender calculates your score differently, using those particular parts of your credit report that are thought to be the most telling. According to Fair, Isaac & Co., a leading supplier of credit data, those scores include things like the number of times you've paid bills 60 days late; the size of your credit line (particularly the part that isn't being used); the number of recent inquiries into your credit history (an indication that you're looking for more spending power); and, of course, any bankruptcies, liens, and foreclosures. You can estimate your credit score for free at myFICO by using their Credit Score Estimator. Or go to www.myfico.com and order a single credit report or all three for $38.85.
Can you improve your score? It's not easy, but you can by improving your credit patterns. Your score is based on these patterns over time, but as negative information ages, it becomes less important. For example, the fact that you paid a few phone bills late four years ago will matter less than the fact that you've paid on time since then. Also, close accounts you're not using (lenders view them as a risk, imagining that you may go on a spending jag); don't hit all your credit limits (using 80 percent of the credit you have available is a sign to lenders that you're stretched); and keep applications for credit to a minimum in the six-month period before you seek a mortgage or other large loan.
Re:Money Tips down2basics: Indexing Makes It Easy
Conventional wisdom has it that index funds are terrific in good markets, when they're able to go with a rising tide. But in poor markets, managers who can rely on their smarts to help you avoid debacles like Enron and WorldCom are supposed to be able to save your skin. The last few down- years have shown it doesn't always work that way.
The truth: Only 37 percent of actively managed funds beat the market in 1990. And from 2000 to 2002, only 46 percent of large-cap funds, 23 percent of mid-cap funds, and 28 percent of small-cap funds did the same. Overall—excluding fees—the S&P 500 (and, thus, S&P 500 index funds) has outperformed actively managed funds by about 1.5 percent a year on average since 1971. And with the market up more than 25 percent in 2003, there's really no excuse to ignore these funds.
Another plus: The other nice thing index funds have going for them is they're easy. If you're one of the 25 percent of people who say the fun of saving and investing is gone now that the market is no longer doing well, indexing takes much of the work out of the equation. Besides, my feeling is that if you can do better by not trying than you can by racking your brain, there's very little point in trying at all.
