Don't Quit Your Day Job…

You’ve got an IRA, right? This site has been preaching the tax benefits of both traditional and Roth IRAs since the beginning… and we aren’t going to stop now. So hopefully you’ve been diligently saving in your IRA, with the hope that some day you’ll have a couple million dollars in there (or at least a good amount of funds you can tap in retirement).

Mitt Romney, it was revealed in financial disclosure documents, has an Individual Retirement Account worth somewhere between $20.7 and $101.6 million dollars. Note that IRAs have a small limit when compared to 401(k)s and other employer retirement accounts, so this came as somewhat of a shock to people with IRAs. How did Mr. Romney achieve such an impressive sum in his retirement account?

Greece – let’s call it what it is: a beautiful country with some horrible systemic problems. If you’ve been living under or behind a human-sized rock for the last few years, Greece is in the midst of a huge, solidarity-threatening fiscal crisis related to the fact that they have a debt much larger than their GDP- in 2011 those numbers are estimated at 354.7 Billion Euros of debt, or 161.8% of their GDP. Those are some hefty ratios for a sovereign entity to be carrying around – the equivalent of $161,800 of debt for someone making $100,000.

Greek has worked itself into a situation which is quickly coming to a conclusion. Greece pretty much has two options: either (when I say Greece, I mean the people of Greece – the aforementioned referendum was canceled) accept austerity measures handed down from the rest of the European Union nations, or leave the Eurozone, default on their debt, and bring back the drachma. Neither is very enticing: the first isn’t guaranteed to work (think: it might just keep Greece on life support until the next crisis), and the second, defaulting on debt, is never a fun situation since foreign investment will quickly run dry.

Let’s call this post PKamp3′s financial confessions!

In response to a Dollar Challenge by fellow Personal Finance writer Corey at 20′s Finances, we’ve decided to give all of you curious folks out there in the Internet a view of your humble host’s finances. As a condition of the challenge, all numbers included in this post are post-tax (For the record, more goes to tax than savings. Thanks California!). Without further ado, here are our non-GAAP 1st quarter finances, audited by the firm of DQYDJ.net.

When it comes to guaranteed returns, there is a list of investments perhaps as numerous as your fingers.  The most famous example is the 401(k) with an employer match.  In order to charm you into investing some of your money in the company’s 401(k) account, most employers tend to put up a bit of their own money as an incentive.  The return is immediate, guaranteed, and something that should be captured.  The bottom line is – in almost all instances you should make sacrifices elsewhere in order to receive the full employer match.

Tying to an article earlier that my colleague PKamp3 wrote, personal finance seems to have taken a dive in popularity in more recent years. As a writer for a confessedly self-aware personal finance crowd, this assertion may seem irrelevant, surprising, or, at worst, alarming. As a young college graduate, many of my fellow coworkers (as well as I) have student loans as one of their more significant financial obligations on top of car loans and (soon) mortgages. Some plan on paying down their student loans as fast as possible to deleverage themselves and then start saving for a home. I am of a different and not necessarily correct opinion: to hold onto the student loans for as long as possible due to their incredibly low interest rate and tax-deductibility for incomes up to $60,000 (partial deductions up to $75,000).

It’s a topic we’ve covered here at DQYDJ before, and we’ll definitely do it again in the future. Every once and a while everyone needs a reminder: if you qualify, open a Roth IRA. If you have one and you aren’t funding it: do it. Here’s a rehashing of why!

A few years back my cousin visited me while I was still in school. Since he had never been to Vegas, my roommate and I decided to take him there… as soon as he landed in Los Angeles. Hilarity ensued… and nothing was learned at all about retirement saving except how not to approach it.

I hope I convinced you in my earlier article you’ll soon be dealing with higher taxes. I’ve got some more slightly depressing news for you… you might be dealing with a reduction in the amount you can contribute to your 401(k) in the near future.

Yes, as Robert Powell says in this MarketWatch article, to go along with retirees not getting an increase in their Social Security payments, you may be losing some of your ability to sock away money in your 401(k). Nice.

Reverse mortgages are a relatively new financial product. Generally, if you are close to (or in… the minimum age is 62) retirement, you can take out a reverse mortgage on the equity in your home. Just like the product’s name, you would then get a payment from the bank which holds the reverse mortgage. Sound good? In some cases, a reverse mortgage can be a lifesaver. In other, it’s best to stay out of reverse…

If you saw $1,377.71 lying on the ground, would you pick it up?

I hope you would. That’s the sort of savings you could find from opening a Roth IRA. Any increase in your future tax rates means you made money simply from choosing the right account to invest in. Sound good? Read the article.