Justin, the point about compounding interest on the additional (because not paid in tax) principal in the 401(k) is one I have been stumped about for a long time. Does anyone understand the math well enough to explain it here?
Here's the scenario: let's say I have $5000 that I can invest for retirement. I can:
(1) Put all $5000 into a 401(k), earn compounding interest on the full $5000 all the way until retirement. Then I get taxed (maybe more, maybe less) on money and the interest when I take distributions during retirement.
OR
(2) Pay (let's say) $1000 in taxes now and invest $4000 in an IRA. I now have less money compounding in the investment, but I don't need to pay any taxes on it when I take distributions.
It seems to me that even if I am paying a higher tax rate during retirement, I'm still better off having all that compounded interest even if I have to pay a percentage of it in taxes. (That is, the compound interest on $1000 MINUS taxes is still better than no compound interest on $1000.)
A lot of people who understand the math of investing better than I do seem to still think IRAs are a better way to go, so I wonder what I am missing. Can anyone explain this?? Thanks!!
We still have a land line, mostly because we were traumatized during 9-11. Cell phones didn't work then, so the landline was essential in letting others know we were safe.
As of yesterday, we no longer have a (traditional) landline. We've had ooma for a while, but ATT makes it inconvenient to ditch the landline if you have DSL. Now we have faster internet (with uverse) for less money overall! I really wish I hadn't waited so long.
I had almost given up on my two pairs of eyeglasses which had become totally useless due to the scratching of the anti-glare coating. This was especially frustrating because my glasses have both progressive prescription and transition lenses. Big bucks! Now I can see again. They aren't perfect, but what a difference. Thanks to all who recommended this unique approach. Ironically, I had bought a bottle of Armour Etch many years ago to etch glass and never used it so I even had ti in my cupboard!
My parents have lived in the same area of the country all of their lives and never experienced an emergency situation until 2 years ago. Then they had 2 emergencies in one year (as in so bad the national news came to cover them). They had a major tornado rip through town and 6 months or so later an ice storm where they were without power for 2 weeks. They were, more or less, prepared and had plenty of food to see them through. They could still get mail so I overnighted them a case of handwarmers to help with cold. They spent a lot of those 2 weeks under blankets with a handwarmer tucked into their shirts. I have added a bunch of those to our go bags.
Beware of Net10, they spam your phone and will not stop. T-Mobile prepaid is a little more expensive but the minutes last a year after you spend $100 with them.
Organization is key when dealing with your finances. Knowing what has been paid and what stills needs to be paid is so crucial. Get behind on one bill, and interest rates will come back to bite you.
Now, during tax season, I feel most people are a little more organized with their finances and documents. Now if only they could translate that throughout the year they would be in much better financial shape!
Yes. We still have a landline and I intend to keep it as long as possible. I don't give out my cell phone number to anyone except for my family and friends. Schools, doctors, businesses etc. all get the landline #. I can easily screen my calls on my landline, and it always works when there is a power outage, even when the cell battery dies. I also don't want to be overly accessible to every charity, politician, business and whoever else can get around the Do Not Call list.
It is April 1st, right?
Justin, the point about compounding interest on the additional (because not paid in tax) principal in the 401(k) is one I have been stumped about for a long time. Does anyone understand the math well enough to explain it here?
Here's the scenario: let's say I have $5000 that I can invest for retirement. I can:
(1) Put all $5000 into a 401(k), earn compounding interest on the full $5000 all the way until retirement. Then I get taxed (maybe more, maybe less) on money and the interest when I take distributions during retirement.
OR
(2) Pay (let's say) $1000 in taxes now and invest $4000 in an IRA. I now have less money compounding in the investment, but I don't need to pay any taxes on it when I take distributions.
It seems to me that even if I am paying a higher tax rate during retirement, I'm still better off having all that compounded interest even if I have to pay a percentage of it in taxes. (That is, the compound interest on $1000 MINUS taxes is still better than no compound interest on $1000.)
A lot of people who understand the math of investing better than I do seem to still think IRAs are a better way to go, so I wonder what I am missing. Can anyone explain this?? Thanks!!
nice try! AF!
Just because it is not legal does not mean it is not theft.
Anyone with decent moral values would refuse to "Cash In" their coupons.
Bob L
So I can cut out every coupon in the circular, mail them in to the address on the front, with my address and they will give me cash?
Can I mail in multiples of the same coupons? Do they have to be unexpired?
April Fools!
(nice try !)
Boy, do I hope this is an April Fool's joke!!!
Great April Fools article! :)
This must be an April Fool's joke.
Is this an April Fool's joke???
April fools right?
We still have a land line, mostly because we were traumatized during 9-11. Cell phones didn't work then, so the landline was essential in letting others know we were safe.
look it says gullible on the ceiling :)
April fools!
Thanks for the mention Ashley!
Great message! Too bad that more schools don't teach our young ones how to responsibly handle money.
I do still have a landline phone but expect to get rid of it within the next couple of months.
As of yesterday, we no longer have a (traditional) landline. We've had ooma for a while, but ATT makes it inconvenient to ditch the landline if you have DSL. Now we have faster internet (with uverse) for less money overall! I really wish I hadn't waited so long.
I had almost given up on my two pairs of eyeglasses which had become totally useless due to the scratching of the anti-glare coating. This was especially frustrating because my glasses have both progressive prescription and transition lenses. Big bucks! Now I can see again. They aren't perfect, but what a difference. Thanks to all who recommended this unique approach. Ironically, I had bought a bottle of Armour Etch many years ago to etch glass and never used it so I even had ti in my cupboard!
My parents have lived in the same area of the country all of their lives and never experienced an emergency situation until 2 years ago. Then they had 2 emergencies in one year (as in so bad the national news came to cover them). They had a major tornado rip through town and 6 months or so later an ice storm where they were without power for 2 weeks. They were, more or less, prepared and had plenty of food to see them through. They could still get mail so I overnighted them a case of handwarmers to help with cold. They spent a lot of those 2 weeks under blankets with a handwarmer tucked into their shirts. I have added a bunch of those to our go bags.
Beware of Net10, they spam your phone and will not stop. T-Mobile prepaid is a little more expensive but the minutes last a year after you spend $100 with them.
Organization is key when dealing with your finances. Knowing what has been paid and what stills needs to be paid is so crucial. Get behind on one bill, and interest rates will come back to bite you.
Now, during tax season, I feel most people are a little more organized with their finances and documents. Now if only they could translate that throughout the year they would be in much better financial shape!
That 5-gallon jug really took me back to my childhood. My mom still has one - somewhere in her house.
Yes. We still have a landline and I intend to keep it as long as possible. I don't give out my cell phone number to anyone except for my family and friends. Schools, doctors, businesses etc. all get the landline #. I can easily screen my calls on my landline, and it always works when there is a power outage, even when the cell battery dies. I also don't want to be overly accessible to every charity, politician, business and whoever else can get around the Do Not Call list.
"Use the library" should have made the list. For books, magazines, music, videos, presentations, used book sales.