Personal E-Newsletter - August 2013
What’s the Best Time to Buy?
Savvy shoppers know there's a best time to buy everything. Winter coats, swimsuits, electronics, furniture, etc. Knowing when to shop for specific items (whether they're obviously seasonal or not) can be a very effective way to stay on budget and save money. Here's a quarterly breakdown of what items to shop for.
First Quarter: January - March
Late winter is the best time to buy gas grills and air conditioners as manufactures and retailers get rid of last year's stock in preparation for spring and summer sales. It's also a good time to buy water sports equipment (including boats) as well as winter apparel. The later into winter you get, the better the prices on hats, gloves, coats and boots.
Second Quarter: April - June
Japanese manufacturers' fiscal year ends in March and they're eager to get rid of old stock, so spring and early summer is the best time to purchase TVs and other electronics. Spring is also peak home buying season, so if you're shopping for a new house be prepared for fierce competition. Spring is also a great time to shop thrift stores. After spring cleaning, many households donate their unused or unnecessary items, so thrift stores will have lots of new inventory.
Third Quarter: July - September
Summer is peak sale time for furniture, kids' clothing and school supplies. New furniture inventory comes out in August, so July is the best time to look for on-sale home furnishings. Retailers are also preparing for back to school sales, so children's clothing and school supplies will be cheapest this time of year. Third quarter is also the time to book your holiday travel tickets. Plane tickets should be purchased two months in advance, especially for peak travel times such as Thanksgiving and Christmas.
Fourth Quarter: October - December
Fall and early winter is the best season to purchase a car, because the new models roll out in late summer. That means the older models are on clearance to make room for the brand-new vehicles. Grills and other summer appliances also start to go on sale this time of year. Christmas sales start early and continue through most of the holiday season. For most toys and games, now is the time to buy.
In addition to shopping during the right time of year, savvy shoppers also know the benefit of buying on the right day of the week. For example, appliances tend to be cheaper on Sundays and major holiday weekends, like Memorial Day or Independence Day. Computers and other electronics are typically less expensive on Mondays, when manufacturers apply their rebates. By planning ahead and shopping at the best time you can stretch your budget a lot more!
Source: WBA Article
End-of-Summer Home Maintenance Checklist
A sweltering summer can take its toll on your home both inside and out. Heat will cause surfaces to contract, increasing the chances of cracking. Humidity will increase the growth of mildew, mold and bacteria. Here's an end-of-summer home maintenance checklist to get your home ready before the winter snow comes.
Protect your deck, patio, or porch
Sweep away the summer dust and check the surface of your outdoor spaces for signs of holes, cracks or chipping paint. Use wood putty or stone filler to repair any surface damage. Sand away chipping or cracked paint or stain, then repaint the surface before the wet season starts.
Repair your driveway
Fill any cracks in your paved driveway to prevent winter snow and moisture from eroding the surface further. Depending on the type of surface and the desired look, use cement, epoxy filler, liquid cement filler, asphalt filler or concrete crack sealant. Be sure to remove any vegetation growing in the cracks first.
Clean your kitchen sink and garbage disposal
Humidity and sun will increase bacteria population in your kitchen sink. Pour garbage disposal cleaner down the drain to remove small clogs and disinfect the drain. To remove any food stains or rust in your sink, use bleach or calcium, lime and rust cleaner.
Clean or Replace the Air Filter
Summer humidity will add bacteria, mold and mildew to your dusty household air filter. Wash the old filter and leave it to dry in the sun. For disposable filters, buy a replacement at home improvement stores, or order a hypo-allergenic, mildew resistant filter at specialty online stores.
Clean your garbage cans
To counter the effects of summer heat and humidity, wipe your garbage cans and the area around them with anti-bacterial wipes. Then spray the area with disinfectant spray that will kill lingering bacteria. Place a garbage bag in the can immediately after spraying to keep the cleaning agent trapped in the can.
Clean your bathrooms
Mildew, mold and soap scum build up more quickly in the hot summer months, especially in humid bathrooms. Use a strong soap scum cleaner for your tub, tile and shower glass surfaces. Spray mildew or mold with bleach based killer. Leave clean grout to dry, then repair any cracks with fresh grout, or reseal the area with bath silicone sealant.
Gutter debris from the summer or previous winter might clog your spouts and cause gutter overflow when the rain/snow starts. Use gutter cleaning tools that fit the height of your gutters and your accessibility. To avoid having to repeat the cleaning after the fall foliage, trim any low hanging trees near your gutters.
With windows kept open throughout summer and fans circling air, furniture upholstery, pillows and curtains collect more dust than usual. Vacuum pillows and upholstery using the attachments on your vacuum cleaner. Freshen your curtains according to their type of fabric, by dry cleaning, vacuuming or placing the curtains in your clothes dryer.
Prepare outdoor furniture for winter
Wash the summer dust off your outdoor furniture and leave it to dry in the sun. If you detect signs of rust or paint chips and cracks, spray paint the furniture with outdoor paint for wood, metal or plastic. Buy a cheap painter's tarp at your home improvement store to cover your furniture if you store it outside in winter.
Trim trellis vegetation
If your garden, backyard or porch is shaded with a vine-coated trellis, trim down the vegetation before winter. This will reduce debris in your outdoor space as the rain/snow starts. In addition, wet leaves and branches may begin to rot on the vine and damage the wood surface of your trellis unless you remove them.
10 Back-To-School Shopping Tips that Save Money
To your kids, shopping for new clothes, gear, and school supplies may be the only good thing about going back to school, but that doesn't mean you have to spend a fortune every year. Here are 10 great ideas for how to get everything they need and save a few bucks doing it.
Hold off buying trendier gear like lunch boxes and pencil cases. Kids may love a version they find in August, but once they start school and see that their friends are all using another kind, they'll beg you to upgrade them, and that only results in wasted cash.
Shop end-of-summer sales. You know as well as we do that kids wear short sleeve polo shirts all year long, so hit the big summer sales and snap up discounted duds that can be worn well into fall.
Stick to the list. The teacher's supply list at the start of a new school year is daunting enough so don't waste time and money on unlisted items. Extra supplies, while they may be cute, will probably never get used and just leave your pockets empty.
Head to the supermarket for basic supplies. Check weekly circulars for great deals on pens and loose-leaf paper, and get your weekly grocery shopping done at the same time. Bonus: buying everything in one place will save time and gas money!
Let your kids raid the home-office supplies, then personalize them in unique ways. For example, decorate inexpensive plain, white binders with digital photos by creating a collage and inserting the page into the plastic outer cover.
Host a back-to-school swap. Round up a couple of other moms with kids the same gender as yours but different ages, and host an annual clothes swap. Trade toys and books, too! You'll save a bundle.
Plan lunch. When you're in charge of what your child eats, you'll save yourself money. Check the weekly circulars at your local supermarkets for sales. If turkey isn't on sale one week and ham is, go for the ham!
Buy bright. Lost school supplies may be a given, but gear that's hard to miss can stave off the inevitable. Pack all their pencils, erasers, and other goodies into a bright backpack or pencil pouch to keep them from disappearing.
Shop the big three. Old Navy, Gap Kids, and The Children's Place rotate merchandise often -- ask when they do their markdowns so you can grab the deals. Also, if you see an item you bought in the past 14 days on sale later, you can get the difference refunded; you don't need the clothing, just the receipt.
Browse craigslist.org. Yes, you can find top-quality stuff on the cheap, but you can be a seller, too. Why not get some cash for that barely worn, now outgrown brand-name outfit? Just enter your location and click on "Baby and Kids."
10 Things You Must Know About 401(k)s
When you start a new job, one of the first decisions you'll likely make is whether to participate in the company's 401(k) plan. The earlier you start saving in a 401(k), the better. But no matter how old you are, it's never too late to contribute more to your 401(k) and bolster your future retirement security. Here are ten things you need to know about these company retirement plans.
You Will Benefit From Tax Breaks
With its name derived from the tax code, the 401(k) is an employer-based retirement savings account known as a defined-contribution plan. You contribute pretax money from your salary, which lowers your taxable income and helps you cut your tax bill now. For instance, if you make $4,000 a month and save $500 a month in your 401(k), only $3,500 of your monthly earnings will be subject to tax.
Plus, while inside the account, the money grows free from taxes, which can boost your savings. Say you saved $6,000 a year for 40 years and the money grew at 6% annually. If that money was taxed along the way at 25%, you'd have $642,182 after 40 years. With the tax deferral of the 401(k), the account balance grows to $928,572.
You May Already Be Enrolled
An increasing number of companies are enrolling employees automatically into their 401(k) plans, allowing workers to opt-out if they choose. Often the initial contribution rate will start at 3% of pay. According to research by the Plan Sponsor Council of America, nearly 46% of companies use auto enrollment and about 55% of those companies also use an "auto escalation" feature. This feature gradually raises the default contribution rate over time. Again, workers may opt-out, or they may choose to set a higher (or lower) rate of savings. But beware: Employees who rely solely on the default rates may not end up with a sufficient nest egg, as most experts recommend saving 12% to 15% of pay a year.
There's a Limit to How Much You Can Stash
The IRS sets an annual limit on how much money you can set aside in a 401(k). That limit can change because it is adjusted for inflation. For 2013, you can put away $17,500. Those age 50 or older by year-end can contribute an extra $5,500. Check out the Financial Industry Regulatory Authority's 401(k) Save the Max Calculator, which will tell you how much you need to save each pay period to max out your annual contribution to your 401(k). If you cannot afford to contribute the maximum, try to contribute at least enough to take full advantage of an employer match (if your company offers one).
Your Company May Give You Free Money
Most employers will help you save in your 401(k). Many companies will match an employee's contribution up to a certain percentage, perhaps 50 cents for every dollar you contribute up to 6% of your pay. Be clear on what the company's formula is. "That's part of compensation," says Andrew McIlhenny, an executive vice-president of Firstrust Financial Resources.
Some companies will provide contributions to employees' accounts, regardless of whether employees contribute their own money. And some employers may provide the match in company stock. Whichever way the company helps you save, ask whether there is a vesting schedule for that employer-provided money. You may have to work for the company for a certain amount of time before that money becomes 100% yours.
Fees Will Take a Bite
Unfortunately, retirement saving doesn't come free. In fact, it can be costly: According to "The Retirement Savings Drain," a research report by Robert Hiltonsmith, of the nonpartisan public policy research and advocacy organization Dēmos, fees could eat up 30% of a 401(k) portfolio by the time you reach retirement.
Pay attention to each fund's expense ratio, which is a measure of a fund's operating expenses expressed as an annual percentage. Look at your 401(k) plan's Web site to find a fund's expense ratio, or check out Morningstar.com; the lower the expense ratio, the less you'll pay to invest. A total expense ratio of 1% or less is reasonable. The good news is that your plan may give you access to lower-cost institutional shares, which are cheaper than different share classes of the same investment bought through an IRA. The average expense ratio for stock funds in 401(k)s was 0.63% in 2012, according to the Investment Company Institute. One way to cut costs: Look to see whether your plan offers index funds, which tend to be cheaper than actively managed funds.
On top of investment fees, expect to pay administrative fees, too. Ask your benefits manager for details on your plan's costs. The federal government issued a new rule that requires companies to do a better job of disclosing all the fees you pay for your 401(k). Also, check BrightScope.com, which rates 401(k) plans. The site can show you how your 401(k) stacks up against other companies' plans. And if your plan isn't competitive with other company plans, start asking your company's benefits manager about ways to improve the plan.
You Have an Investment Menu
In a 401(k), your employer will select the investment choices available to employees. You, as the employee, can then decide how to allocate your contribution among those available options. If you don't make a selection for your contribution, your money will go to a default choice, likely a money-market fund or a target-date fund.
On average, 401(k)s offer 19 funds to choose from, according to the Plan Sponsor Council of America. Most plans will offer actively managed domestic and international stock funds and domestic bond funds, plus a money-market fund. Many plans also offer low-cost index funds.
Also common on the 401(k) menu: target-date funds, which nearly 70% of plans offer. Over time, this breed of fund typically shifts from a stock-heavy portfolio to a more conservative, bond-heavy portfolio by its target date.
You May Have a Roth Option
Another choice to consider: a Roth 401(k). Not all plans offer the Roth option, but if yours does, you are allowed to put in after-tax money in exchange for tax-free growth and tax-free withdrawals in the future.
You can choose to divide your annual contribution between the traditional 401(k) and the Roth 401(k). Any employer match will go into a traditional 401(k).
As of 2013, more workers gained the opportunity to convert a traditional 401(k) to a Roth 401(k). You'll have to pay tax based on the investments' value at the time of the in-plan conversion. But beware: Unlike IRA Roth conversions, you can't undo a 401(k) Roth conversion -- the decision is irrevocable.
There Are Ways to Access the Money Early
Money you stash in a 401(k) isn't meant to be touched until retirement, and any money withdrawn could be subject to a 10% early-withdrawal penalty. But if you leave a job as early as age 55, you can tap the 401(k) penalty-free (IRAs can’t be tapped penalty-free until age 59 1/2).
Company 401(k)s also generally allow participants to borrow from their accounts. You may have to pay a fee to take a loan. Plus, you'll be charged interest on the amount you take out. But you'll basically be paying interest to yourself because the money goes into the account. Watch out if you have outstanding loans when you leave a company -- the loans will have to be repaid within 60 to 90 days. If not, the amount of the loan will be considered a taxable distribution.
You Can Roll Over the Account
Workers generally have four options for their 401(k) when they leave a company: You can take a lump-sum distribution; you can leave the money in the 401(k); you can roll the money into an IRA; or, if you are going to a new employer, you may be able to roll the money to the new employer's 401(k). (Note: Those with balances of less than $5,000 may not get the option to keep their money in their old plan.)
It's usually best to keep the money in a tax shelter, so it can continue to grow tax-deferred. Whether you roll the money into an IRA or a new 401(k), be sure to ask for a direct transfer from one account to the other. If the company cuts you a check, it will have to withhold 20% for taxes. And whatever money isn't back in a retirement account within 60 days will become taxable. So if you don't want that 20% to be considered a taxable distribution, you'll have to use other assets to make up the difference. (Once you file your tax return for the year, you'll get that withholding back.)
You Eventually Must Take the Money
Uncle Sam won't let you keep money in the 401(k) tax shelter forever. As with IRAs, 401(k)s have required minimum distributions. At age 70 1/2, you will have to calculate an RMD for each old 401(k) you own. Once you've determined the RMD, the money must then be withdrawn separately from each 401(k). Note that unlike Roth IRAs, Roth 401(k)s do have mandatory distributions starting at age 70 1/2.
If you hit that magic age and are still working, and you don't own 5% or more of the company, you don't have to take an RMD from your current employer's 401(k). And if you want to hold off on RMDs from old 401(k)s and IRAs, you could consider rolling all those assets into your current employer's 401(k) plan.
4 Questions to Ask a Money Manager
Asking a few important questions of a prospective money manager is a great first step, one that can mean the difference between meeting or falling short of your financial goals. Indeed, a money manager can play an incredibly important role. Not only do some serve as financial planners, helping you to save for certain goals -- such as your kid's college or retirement -- but their main goal is to make investment decisions that directly affect your ability to meet those goals.
That's why it's so important that you find a person who is the right fit for you. In fact, most experts recommend that you interview several managers before making a commitment. Here are some important questions to ask:
How will you go about investing my money?
While some money managers will focus on your particular goals and circumstances, others may use the same basic market strategy or philosophy for all of their clients, said Eleanor Blayney, a consumer advocate at the CFP Board, a nonprofit organization that sets standards for certified financial planners. So it's important to find out whether your stock market investments will be tailored to your particular savings targets and time horizons.
"The distinction is: 'Are my financial circumstances taken into account or are you managing money by a specific overall objective?'," she said.
How do you get paid?
It's essential you understand how much money the arrangement with your money manager will cost you.
Money managers are typically paid through client fees, which are usually based on a percentage of your total managed assets. Even a 1% management fee, which is pretty standard, can add up to thousands of dollars of year.
There may be other fees as well though, so it's a good idea to ask for a copy of their ADV form, which should disclose all fee details. Investors should be wary of any manager who does not freely provide the form when requested. It can also be viewed in the SEC's Investment Adviser Public Disclosure database.
In addition to fees, the form will also contain information about any disciplinary actions or conflicts of interest.
What are your other clients like?
You don't want to be someone's smallest or biggest client in terms of available assets, Blayney said. Instead, an ideal money manager will have experience helping people with similar financial circumstances and goals.
How will you add value?
Few money managers consistently outperform much cheaper index funds, especially once fees are taken into account.
If you're paying a money manager, you're likely looking for someone who is going to do more than you feel you could do on your own. So be sure to ask them: How will they do that? How will they help you manage risk? Will they change your investments if your goals are in jeopardy?
"I think it's important to understand at what point do they have a sell discipline, as well as a buy discipline," Blayney said.
The right answer will match your own level of risk tolerance, she said. Asking about past performance is also important, but beware of anyone claiming to be able to beat the market year after year. If it sounds too good to be true, it probably is.
If you’re looking for a money manager, contact Shari Hopkins of the Coulee Investment Center, located in Coulee Bank at (866)-784-9550