Dont Hate, Participate: June 2011

Thursday, June 30, 2011

Best sign in Chelsea Today

Wednesday, June 29, 2011

5 Secret Credit Card Perks - My Money (usnews.com)

10 Costs That Can Ruin Your Retirement Savings

It's said that what you don't know can't hurt you. No so. What you don't know can cost you, and sometimes cost dearly. Case in point: Advisers and others say there's a host of unknown costs and fees lurking inside your 401(k) plans, IRAs and other such retirement accounts. And often, those fees can make a world of difference in your overall investment returns.

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Now truth be told, many an expert and firm the most famous of all being Vanguard are beating the drum about how 401(k) fee can be a drag on performance.

Many Americans are simply unaware of the fees they pay to their plan providers. More than seven in 10 (71%) 401(k) plan participants incorrectly reported that they did not pay any fees and 6% said that they did not know whether or not they pay fees, according to a recent AARP study.

Of note, AARP launched a 401(k) fee calculator on its web site that aims to help investors better understand 401(k) fees and their potential impact. You have to register to use the calculator, but it's easy. See the AARP 401(k) fee calculator here.

And come Jan. 1, 2012, plan sponsors will have to disclose the fees participants pay for their 401(k) plans.

But there are other lesser-known fees to consider. Case in point: An adviser with whom I am acquainted recently switched brokerage firms. And as is the custom in that world, he began asking his clients to move their accounts from the old brokerage firm to the new one. Well, as it turns out, those clients who moved their IRA accounts were whacked with two unexpected fees one was the so-called account transfer fee and another was the annual maintenance fee.

"Brokerage firms do not like having assets transferred out, so they like to create fees and charges to discourage asset transfers," said Michael J. Sommers, CPA/PFS, of Advanced Tax Strategies, PC

Advisers say the account termination and annual maintenance fees are perhaps the most common of the lesser-known fees and other examples of these costs abound. Jason Branning, a certified financial planner with Branning Wealth Management, LLC, moved his client accounts from one large custodian (firms that hold the assets that advisers manage for clients) to another some seven years ago and faced the very same fees.

Another variation on the account termination fee comes with retirement accounts that use managed-money programs, such as mutual fund wrap accounts. Often, these accounts have termination fees that must be paid prior to money being moved from the current manager to a new money manager, according to Timothy P. Bogert, CLU, ChFC, LIC, AIF.

RETIREMENT RESOURCES

Those fees, which are generally subtracted from the account balance prior to the transfer, might include that quarter's asset fee, management fee and custodian fee all of which are usually billed at the end of each calendar quarter.

And, depending on how the mutual funds owned in the account were purchased if they are A shares, B shares, or C shares there might be contingent deferred charges as well, Bogert said.

In some cases, those fees can catch account owners unaware. "Clients often fail to read the fine-print custodial disclosures that explain custody fees, annual maintenance fees and termination fees," said Branning. But in many cases, Branning said, these fees are unavoidable for all but the largest accounts. "There seems to be no way around the custodian assessing fees; retirement accounts require special reporting by the custodian," he said.

According to Denise Appleby, CEO and founder of RetirementDictionary.com, the fee with which most owners are familiar is the annual maintenance fee, which on average runs $35 to $50. "For an IRA with a large balance, this may seem negligible," she said. "But for a small balance for instance, someone just starting an IRA with a $5,000 contribution, a $50 maintenance fee is 1% of the account balance. This is in addition to any ticket charges and commissions charged for trades placed with the contribution. Not all custodians charge this fee, and some will waive it if the account balance is in excess of a specified amount."

10 fees that are eating up your retirement savings

According to Appleby, here are 10 of the fees that can eat away at your retirement savings:

1. Account termination fees

2. Account maintenance fees

3. Various account transfer fees

4. Roth conversion fee: This is usually charged when a traditional IRA is converted to a Roth IRA.

5. Federal fund wire fee and overnight delivery fee: For account owners who are unable to wait for regular delivery and instead choose to have the funds sent via federal fund wire, which usually means same day receipt, a fee might be charged to the IRA, as well as by the bank that receives the funds. For overnight delivery of checks, an express delivery fee might apply.

6. "Special investment" fee: According to Appleby, this fee applies to non-traditional/non-publicly traded investments such as private placements, real estate and certain limited partnerships. She said this fee can range from a few hundred dollars to more than $2,000 per year.

7. "Special investment" set-up fee: As with the special investment fee, this fee also applies to non-traditional investments that are not publicly traded. But unlike the special investment fee, it's not an ongoing fee. Such fees are usually one-time charges applied for reviewing and setting up the investment, Appleby said.

8. Form 990-T filing fee: For accounts that hold non-traditional/non-publicly traded investments, the custodian/trustee may need to file IRS Form 990-T with the to report unrelated business income. This fee can be up to a few hundred dollars.

9. Loan processing fees: Account owners who take loans from their 401(k)/403(b) or other employer plan account may be charged a loan processing fee, said Appleby.

10. Recordkeeping fee: And Appleby said small business owners with solo-K/individual-K plans may be charged a recordkeeping and filing fee of several hundred dollars, if they use the services of a recordkeeper. This is in addition to fees charged by the custodian.

While the fees are troubling, there are some things you do about it to make the costs less onerous. "We can't make the fees go away, but there may be a tax-efficient way to pay them," said Sommers. "If the account owner can be billed direct, and if allowed by the custodian, some fees may be able to be paid direct by the account owner which may have some tax benefit."

So, for instance, if the account owner is in the so-called "accumulation" phase of saving for retirement, it would also make sense to pay any allowable fees with what's called non-qualified money, money outside of the retirement accounts. "This would allow more money in the account to grow tax-deferred, Sommers said.

By contrast, if an account owner is in the distribution phase of retirement, it may make sense to have these fees paid from the qualified account, Sommers said.

Other even more obscure fees include those sometimes absorbed by the plan sponsor that effect plan participants in subtle ways. "I have come across 401(k) plan sponsors who suffered a market value adjustment because they fired the third-party administrator (TPA) and tried to move the stable value fund to a new provider where the Committee on Uniform Security Identification Procedures (CUSIP) was attached to the TPA," said Ary Rosenbaum, an attorney with Rosenbaum Law Firm P.C. "In that stable value fund, this restriction was added because the producing TPA received an extra 25 basis points in fees. There are also termination costs that some TPAs don't spell out."

And though it's not a fee, Bogert said one troubling trend with 401(k) plans is this: Depending on the type of investment the participant has chosen, the money manager may have actually frozen the assets in a fund or investment. "I have seen this happen over the past three years with the market meltdown," Bogert said. They may totally freeze withdrawals for a period of time or limit the withdrawals to a percentage in the fund over a period of time. If a plan participant has money in a fixed account this can happen too."

Tuesday, June 28, 2011

Louder than words

Understand the Value of a Graduate Degree

Michael Brenner earned a doctorate in education from the prestigious Teachers College at Columbia University in 2010, assuming a degree from an Ivy League institution would open numerous doors for him and bolster his chances for success entering the field of corporate consulting. However, after starting his own leadership and team-building consulting firm, he finds the doctorate has added little value to his business. "At this point, I would say that attending graduate school was not worth the cost," he says. "However, I recognize that it is early in this venture and the doctorate may pay off financially in the future."

Though many with graduate degrees echo Brenner's feelings, graduate school does lead to increased earnings across every discipline, according to a recent study on the economic value of college areas of study by the Georgetown Center on Education and the Workforce. Among the 15 fields of study analyzed in the report, median earnings of those with a graduate degree in the field, irrespective of tenure, are an average of 38.3 percent higher than those who only possess a bachelor's degree in the same field. "Is it worth it?" asks Reid Linn, dean of the Graduate School at James Madison University. "I am unaware of any study that has ever proven that more education and more guided practice and direct experience has hurt anyone or negatively impacted someone's life over a lifetime."

[See the 10 M.B.A. programs with the most value at graduation.]

But while the study found that earnings for students with graduate degrees increased, the extent of that benefit varied wildly. Biology and life science majors earn 70 percent more with graduate degrees in those disciplines than those with bachelor's degrees in the same field and social science workers with graduate degrees earn 55 percent more than their counterparts with bachelor's degrees, according to the study.

[See U.S. News's rankings of Best Graduate Schools.]

Shane Ellison, for instance, who received a master's degree in organic chemistry fromNorthern Arizona University in 2000, parlayed the degree into a successful career as a medicinal chemist-turned-health author. "The education was invaluable to me as a chemist, as it taught me how to handle the unique rigors of scientific research, namely pharmaceutical drug design," he says.

At the opposite end of the spectrum, the median journalism/communications major and arts major earns only 19 percent and 25 percent more, respectively, with a graduate degree, though degrees from top programs in those fields can cost $40,000 a year or more in tuition alone.

In fields where the median salary increase after graduate school is below average, work experience might prove more helpful than another degree. Eric Peters thought the master's degree he earned in 2009 from Radford University in corporate and professional communication would bolster his job chances and boost his earning potential, even amid the recession. In his job search, however, he found that his master's degree was trumped by those with more work experience in the communications field. He ultimately landed the type of entry level job typically reserved for younger workers with less educational experience.

[Is it time to go back to school?]

"I expected to get out of grad school and find a job fairly easily, even in the down economy," he says. "What I found after applying to more than 150 jobs was that experience weighs far more than education. And I'm talking paid full-time experience, because I had four internships under my belt when I graduated that didn't seem to matter very much."

Students shouldn't look at graduate degrees holistically, academic officials say. Instead, they should carefully examine the payoff an advanced degree typically garners in their field. "I would not recommend enrolling in any graduate program—if your primary goal is full-time employment—without some hard, externally verifiable evidence that the program is successful at placing its graduates in positions that the applicant would regard as acceptable," says William Pannapacker, professor of English at Hope College in Holland, Mich.

Ultimately, career experts say, it's up to the students to make the most of their degree, no matter their field. Simply earning a graduate degree and slapping it on a résumé isn't enough to guarantee increased earnings potential. That's the case even in the fields identified in the Georgetown study—such as the physical and social sciences—where graduate degrees appear to drastically boost income, consultants say. "Professionals are not entitled to work because of a degree; they earn work based on their ability to do work and think," says Lorrie Ross, a career and marketing consultant.

Monday, June 27, 2011

EDC 2011 - watch the middle part! warning: NSFW

How Laziness Can Cost You Money

While some consumers are experts when it comes staying within the streamlined family budget through comparison shopping, haggling, negotiating, coupon-clipping and making necessary cuts, some of us are—ahem—a bit lazy. Here’s where we’re coming up short and what you can do about it:

Failing to set financial goals

Many consumers are leading a “spend as you go lifestyle,” which is not productive. The bottom line is that we are much more inclined to save when we’re saving for something specific, whether a home, or college tuition, for example. Write down your short and long-term goals (where do you want to be in five years or ten?) and have a plan to meet those goals.

Being disorganized

I’m talking largely about paying bills late. What you may not know is that when you pay your bills late, you’re not only faced with late fees (which could easily exceed your minimum payment on your credit card), but higher interest rates and credit score consequences, which affects your ability to buy a home, a car, or even get a job. Get it together: have a designated place for bills, and set aside a time to pay them, or arrange to have them paid automatically.

Ignoring your credit score

Your credit report has a huge impact on what you can do, financially. Ideally, you should check it – from each of the three credit reporting agencies—once a year. Go to annualcreditreport.com; it’s free. Why should you bother if you’re not taking out a loan anytime soon? It’s important to identify potential problems, such as unauthorized charges/fraudulent behavior, and inaccuracies. After all, error rates range from about 3 percent to 25 percent (and some studies put that figure as high as 80 percent).

Loan options

It’s amazing that we’re spending twice as much time researching a car purchase as we are a home loan, particularly since a home is the single biggest investment people make. Try the new Zillow Mortgage Marketplace iPhone App. It makes it easy since you can shop for quotes—anonymously—and even contact the lender right from your phone—while out touring homes.

Letting bad habits slide

The numbers don’t lie: two-thirds of Americans are either overweight or obese, according to the National Center for Health Statistics. The costs over a lifetime? Nearly $260,000. As for smoking—another killer —a pack a day habit costs about $4,000 a year. Smoking also significantly increases your insurance costs, from life insurance (expect to pay about three times as much as a non-smoker) to homeowners (non-smokers typically get a 10 percent discount on their premiums), auto (non-smokers generally get a 5 percent discount), down to your health insurance. Run the numbers on ehealthinsurance.com and you’ll see: smokers pay several hundred dollars more per year than non-smokers.

Relying on the government—or an employer—for financial security

This is a big no-no, particularly with promised benefits like Social Security and Medicare headed for bankruptcy. The reality is that we’re going to have to work much longer, and retire on much less—or both. In an environment like this, you’ve got to take the initiative and be captain of your own financial ship.

Waiting for a miracle

A lot of Americans are waiting for something miraculous that will bail them out of their predicament. Why do you think so many of us play the lottery? Many of us think this our best chance for improving our financial situation. What’s particularly disturbing is that those earning an annual $13,000 or less spend a whopping 9 percent of their income on lottery tickets. Any idea what the odds are of striking it rich? As slim as one in 195 million.

Winners vs. Losers

Props to Kenny for this post

Differences Of Winners and Losers

	Winners	Losers
1	Winners focus on solutions.	Losers focus on problems.
2	Winners take responsibility.	Losers blame others.
3	Winners find opportunities in crisis.	Losers complain about crisis.
4	Winners enjoy being in the present and learn from the past.	Losers live in the past.
5	Winners make commitment and keep them no matter what.	Losers make promises that they always break.
6	Winners think about how they can achieve.	Losers give excuses.
7	Winners make personal development a priority.	Losers neglect personal development.
8	Winners face their fear, accept it and take the leap.	Losers dwell in their fear.
9	Winners constantly expand their comfort zone.	Losers stay in their comfort zone.
10	Winners take action consistently.	Losers refrain from taking action and lack consistency.
11	Winners take failure in their stride and learn from them.	Losers fear failure and avoid them at all cost.
12	Winners try different strategies when they are not getting the results they want.	Losers do the same thing over and over again expecting different results.
13	Winners set goals.	Losers lack goals.
14	Winners plan.	Losers hate having a plan.
15	Winners believe there are always things to be learn.	Losers consider themselves as an expert even though they know little.
16	Winners are humble.	Losers are egoistic.
17	Winners continue to hone their skill every other day without fail.	Losers make little effort in honing their skill.
18	Winners work hard.	Losers avoid work.
19	Winners give their best for the things that they decide to do.	Losers work half heartedly in everything that they do.
20	Winners are persistent and will do whatever it takes (ethical means) to achieve their goal.	Losers give up when obstacles pop up.
21	Winners manage their time well and indulge in high value activities that will bring them closer to their goals.	Losers lack time management skills and indulge in time wasting activities like playing games and watching re runs for the umpteen time.
22	Winners dream in the day.	Losers dream in bed.
23	Winners think about possibilities.	Losers focus on obstacles that will stop them from achieving.
24	Winners are certain.	Losers doubt.
25	Winners control their own destiny.	Losers leave everything to their fate.
26	Winners give more than they take.	Losers take more than they give.
27	Winners think whether the crowd is going in the right direction. If not, he will walk the other direction.	Losers follow the crowd.
28	Winners think and lead.	Losers refuse to think so they follow.
29	Winners listen.	Losers fight for every chance to talk.
30	Winners always find a better way to do things.	Losers stick to one way of doing things.
31	Winners spend money in seminars and classes to improve themselves.	Losers think that spending money on seminars and classes is a waste of money and they prefer to buy toys that gives them instant gratification.
32	Winners help others to win.	Losers refuse to help and think only about their own benefit.
33	Winners find like minded people like themselves that can bring them to greater height.	Losers find like minded people like themselves that will drag them to failure.