June 2020 Living Debt Free and Wealthy Newsletter

Saving For Your Vacation
With summer upon us, we have reached the time of the year where everyone wants to take a vacation. Taking a vacation can be very beneficial to your health and stress levels. They help us relax, recharge, and spend time with the ones who mean the most to us. Here are 4 tips, to help vacations to be less cumbersome on the wallet.

1. Make a Budget.

Saving for a vacation is a lot easier when you know exactly where all of your money is being spent each month. It allows you to cut out some of the unnecessary expenses and save towards your vacation. But you also want to take this further. You should make a budget for your vacation. This will show you exactly how much you need to save. And what you can or can’t afford while on vacation. So, you can maximize your enjoyment. Instead of worrying if you will have enough cash.

2. Create a Vacation account.

Now that you have figured out how much money you need to save, you need a place to put it. Open an extra saving account to separate the money from your main funds. This will save you from accidentally spending the money earmarked for your vacation. Plus, it will allow you to set up an automatic deposit to get you saving regularly. This is a great money saving tip that you can use for all your financial goals. (Retirement, College, etc…) 

3. Consider Small Trips or ‘Staycations’

A vacation doesn’t have to be a trip halfway around the world. There are many places all around you to explore and enjoy. Many of which you can do for minimal costs. Consider, most often the most expensive part of a vacation is the lodging costs. By staying home and taking daytrips, you save all of those costs! Remember, the most important thing is to relax and enjoy yourselves.

4. Side Jobs

If you are having a hard time finding money to put away, consider doing side jobs or a part time job. Picking up a few extra bucks here and there can go a long way. You might even pick up a few new friends along the way! Consider using sites like TaskRabbit and Fiverr, or maybe driving for Uber or Lyft. All in all, don’t let the planning and saving for vacation fill you with more stress. Hopefully these 4 tips helped you. If you would like further assistance planning your vacation or finding extra money give my office a call today.

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Interesting Facts:

-The words “silent” and “listen” have the same letters.

-The pound sign (#) is called an octothorp.

-Mickey Mouse was named after Mickey Rooney, whose mother Walt Disney dated.

-The shape of the Earth is called the geoid. It is oblate - flatter at the Poles than at the Equator.

-Every day more money is printed for Monopoly than the US Treasury.

-The Baby Ruth candy bar was actually named after Grover Cleveland's baby daughter, Ruth.

Firework Safety:

-July 4th is right around the corner, and if you are like most families on the 4th, you will light off fireworks with your friends and family. Here are a few safety tips to make sure your 4th is fun and safe.

-Light one firework at a time (not in glass or metal containers), and never relight a dud. Always use the original tubes for launching.

-Don't allow kids to pick up pieces of fireworks after an event. Some may still be ignited and can explode at any time.

-Soak all fireworks in a bucket of water before throwing them in the trash can.

-Point fireworks away from homes, and keep away from brush and leaves and flammable substances

-Steer clear of others — fireworks have been known to backfire or shoot off in the wrong direction. Never throw or point fireworks at someone, even in jest.

-Always use fireworks outside and have a bucket of water and a hose nearby in case of accidents.

Let's all have a happy and safe 4th!
Deciding between 401(k)'s. IRA's and Roth Pt. 1
A lot of people come up to me and ask, "Where is the best place to put money away for retirement?" The problem is that there is no 'best place' for it. It depends on your situation and what you are looking for. Factors that help determine your best place include: contribution limits, tax liability, withdrawal limitations, employer matches, transferability, control, and risk aversion. It is similar to picking out a jacket for the winter. There is no one jacket that is best for everyone. Think about all the things you decide on... How warm is it, how much does it cost, will it help me in the rain, can I exchange it or get a refund if I change my mind, and does it fit my style?

The first question you need to ask yourself is; how much do you want to contribute? Different plans have different contribution limits per government regulations. In 2018, in a Roth or regular IRA, the max you can put away is $6,500 (and that is if you are above 50!) and for a 401k that number is $24,500 (above 50). This is similar to how warm of a jacket do you need. Do you need to put away a lot of money to make up for the lost time (heavy jacket) or are you just looking to put a little away (light jacket)?

The next question is tax liabilities. What is it going to cost you? (How much does the jacket cost?) At some point, in all retirement plans you have to pay taxes on the money. The difference is, do you want to pay those taxes now or later. With the huge deficits and problems with Social Security, do you think taxes are going to go up or down in the future?

Do you want to pay taxes on the money now, when you can afford it, or later when you are on a limited budget? With IRA's & 401(k)'s you defer the taxes, while in Roth IRAs you pay taxes now.

The next question is about withdrawal limits. This is deciding if the jacket should be rainproof. Do you want to be able to use it on a rainy day? Do you want to have access to the money in case of emergencies? There can be harsh penalties if you withdraw from an IRA before the age of 59 1/2 (with few exceptions). You can't normally withdraw from a 401(k), you can only take a loan. In a Roth you can withdraw the money you put in (not the growth) without penalties, but if you do there is no way to pay it back.

The next question deals with 401(k)'s. Does your employer match your contributions, and if they do, how much do they match? Think of this as a bonus offer. It’s free money, and it definitely needs to be considered.

In next month's issue, we will talk about the remaining things to consider when deciding where to put your money away for retirement.