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April 06, 2011


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A 401(k)/403(b) employer match is the same as giving yourself a raise. For example, if your employer matchs one for one up to 5%, then if you contribute 5%, your employer contributes 5%. This is free money.

I always recommend putting as much into their 401(k) as possible and start as young as possible to benefit from the power of compounding.

The comment regarding your tax bracket never being as low as it is right now is inaccurate. Your tax bracket can change year to year, and depending on the amount you withdraw each year in retirement, it may in fact be quite low. This is a circumstance in which you need to do the math -- some years, it's best to use a traditional IRA, and other years it's best to use a Roth (and to roll a traditional IRA over into a Roth.)

what about 529 plans? great way to save and grow it tax free for your children's education

"Every year the government will allow each of you to move $5,000 from your taxable investment account into your Roth accounts where it will never be taxed again. Move the maximum each year"

Could you please elaborate on this!

In regards to resisting a savings account ... I disagree. I shuffle money over periodically from my checking to my savings account for a specific purpose, which is to have money available to pay college tuition for my sons each semester. Once the tuition is due, I swap it back from savings to checking and pay the bill. Of course I don't get much interest on my savings, but that isn't the point. I need easy access to the funds, yet I don't want to tempt myself into spending it on other things by having it sit in my checking account. Keeping my checking account balance relatively low is a good safeguard against extravagent spending.

Savings accounts are also good for your emergency fund.

I just closed my Chase accounts because of the extra fees. Seems like the fees on these different accounts just keep on going up. When's it going to stop?

I opened an online checking account at BofA for only one reason. The reason being that a nearby supermarket we use a lot has a very modern BofA ATM machine inside that is very safe and provides the most convenient way for us to obtain cash whenever we need it, and also to make a monthly deposit. Other than the convenience, the reason I chose BofA was that if you open the account online and elect not to receive paper statements there are zero monthly account fees and there is a zero balance requirement. Our primary Savings & Checking accounts are all with an excellent Credit Union that was on the grounds of my former employer and that I have used since 1960, and where I have our pension and SS checks automatically deposited every month, whose free BillPay system we use, and where I used to obtain loans - now fortunately I no longer need loans. Unfortunately after retiring, the nearest free ATM for my Credit Union means a drive of 2-3 miles which is most inconvenient.

OK, so far so good, BofA is great for this particular need however there is one problem with BofA.
There isn't a week that goes by without I get a call from a BofA telephone solicitor trying to sell me some extra service or insurance that we don't need and never will. They are very persistent, don't want to take NO for an answer, and usually I have to just impolitely hang up the phone to get rid of them.

I think BofA took a big hit during the financial crisis of 2008 and is desperately trying to find other ways of generating income. I have had the account now for 14 months and everything is great apart from the telephone harassment. I guess you can't blame them for tring but it's annoying.

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