This Week In Your Wallet: Vacation And Home Savings
As we wake up this morning to news of yet another terror attack, our prayers and hopes are with any of you who have family or friends in Brussels. Developments like this always make me pause and put life in perspective. We (and those of you who have been reading TWIYW for a while know that I have a valuable team that helps me put this newsletter together each week) had pulled together a fairly lighthearted batch of news reports — saving money on travel, financial March Madness and the like. It doesn’t feel very appropriate.
And yet, life goes on. So, feel free to shelve this until you’re in the mood to read it. Or, if you need a pick-me-up, maybe this will do the trick.
I spent a fun and relaxing few days last week with my daughter on Spring Break. This week, we — and many others — are back in the real world. And, if we’re smart about it, we’re not wasting any time planning that next vacation. Because, as Money reveals, the saving often lies in planning ahead (sometimes way ahead).
The magazine has 27 smart ways to save money on family vacations. Among them, timing your trip is one of the smartest things you can do when it comes to saving the big bucks. Midweek, early morning, and late-night flights can be seen as less desirable, which often translates to less expensive. Many travel sites also give users the option to search by flexible travel dates (you just check the box that you’re willing to go a day or two earlier or later). This will give you insight into how much adjusting your trip by a couple days could save you. Money also suggests signing the kids up for frequent flyer programs early to build mile credit, and rather than staying in hotels, consider renting a house. If you split it with family or friends it brings the cost down. Having a kitchen means you don’t have to eat every meal out (just DIY-ing breakfast and lunch can mean big savings). You may even be able to get other added perks like a pool.
Do Now, Save Later
The end of vacation means returning home, and U.S. News & World Report identified seven financial sinkholes homeowners should deal with now if they want to save serious cash in the long run. An example: Your dryer vent, which costs $0 to change, but could lead to a home fire and thousands of dollars in damage if neglected long-term.
Another thing to keep an eye on? Your sump pump. A new one will probably set you back less than $500 plus installation fees, but the consequences of neglecting a sump pump could cost thousands in repairs. It’s also a good idea to clean the air filters in the furnace, as well as the gutters, to save other unnecessary expenses down the road.
Retirement Confidence? Up. Retirement Savings? Not So Much
This morning, the Employee Benefits Research Institute is out with its 2016 Retirement Confidence Survey. The results show that as we’ve rebounded from the Great Recession, the number of people who feel confident that they’ll have enough money for retirement continues to climb — this year 21% are very confident they’ll have enough money to live a comfortable retirement and 42% are somewhat confident. And yet it’s overwhelmingly clear that on the whole, we’re still not saving enough. This is especially true for folks who don’t have access to a retirement plan (like a 401(k)) through their employer. In that population, 83% say the total value of their savings and investments (not including their home) is less than $10,000. By contrast, among people who do have a retirement plan at work, 35% have amassed $100,000 or more.
The lesson here: If you work for yourself, a small company or any company without a retirement plan, you have to create your own. And you should model it after a 401(k). Money Rule #11: If you can’t see it, and you can’t touch it, you won’t spend it. This is why 401(k)s work — because the money comes out of your paycheck before you get your fingers on it. It’s like you never had it, so it can sit in your retirement account and grow. You can craft your own by automating contributions into an IRA, Roth or SEP (which allows you to contribute substantially more than you can into an IRA or Roth).
And if you do have access to a plan at work? If you’re not contributing at least 15% of your income (including matching dollars from your employer), it’s time to ratchet up your contributions by 2%. You should be able to do this online — or with a quick call to your plan provider. As Nike says: Just do it.
Attention Mac Users
One reason some people choose Mac computers over PCs is their reputation for being resistant to hackers, viruses, malware and ransomware. But Credit.com reports that earlier this month, Palo Alto Networks detected ransomware on the operating system. That’s a type of malware where cyber criminals demand a ransom in exchange for your regained access to your files.
Even though Apple reportedly shut it down and updated its anti-virus system, users should know how to protect themselves and their information in the case of a computer security breach. Back up your hard drive via an external one or a cloud system (ideally, both) so there’s no risk of losing your files. Also consider installing malware protection or anti-virus software.
Money Madness with the Financial Four
March Madness is fully underway, but brackets aren’t restricted to the basketball court. The fifth annual Financial Four is here, via the National Endowment for Financial Education and the Financial Planning Association. The site helps users decide which financial areas are most important for them this year with 32 interactive brackets. Based on the votes of financial advisors, the 2016 Financial Four — that is, concepts Americans should make top priorities this year — are to start saving early, use credit responsibly, live within their means and rein in debt. That sounds pretty good to me. You can figure out your own Financial Four here.
Have a great week,
Jean
