Posts filed under 'Net Worth'
Retire, who me?
A 401K, is a retirement plan your employer can offer you if they so desire. Yes, I know retirement is a long, long way off but as a fashion fashionista you know how good it is to start saving early. You can only get a 401K through your employer. A 401K automatically takes money out of your paycheck—you decide how much, up to the federal limit—and deposits it into a retirement savings account set up for you. You then decide, based on the options the employer provides how your retirement account will invest your money. Usually your employer will offer a range of choices, ranging in risk from preppie conservative to cutting-edge fashionista.
The money you allow your company to deduct from your paycheck and put in your 401K is deducted pre-tax, meaning before you pay taxes on it. In other words, you do not have to pay any taxes on the money you put in. You get to invest this part of your paycheck, earn money on the government’s share of its taxes, and keep the money you earned on that share when you eventually withdraw the money from your account and pay the taxes on the amount you withdraw. So you have the use of the government’s money to earn interest until you are sixty-five or older and can withdraw the money.
If your employer offers a 401K plan you should take full advantage of it. It will force you to save because it takes money out of your paycheck before you ever see it. Plus, it will lower your tax rate, since it is money you won’t be taxed on, and, even better, some employers offer you an incentive to invest in a 401K by contributing to your account as well, which should make participating irresistible.
The amount your employer contributes is called a matching contribution and usually consists of a percentage of your paycheck up to a defined maximum. For example, an employer might offer to match you fifty cents for every dollar you contribute up to some specific percentage of your salary, usually three or four percent. So over the course of a year, if you invested one thousand dollars, your employer would deposit five hundred dollars into your account. This is like getting an instant raise with no extra duties required.
If you leave the company, you can take the 401K account with you and roll it over into an Individual Retirement Account (IRA), a kind of stand-alone 401K, or leave it with your former employer to administer even after you leave. Sometimes they charge you a fee for doing this so I suggest rolling it over into an IRA. (Also, if you plan to have more than one employer before you are sixty-five, it is nice to keep your accounts together in one place that you control.) IRAs are more flexible than a 401K; your money can be invested in whatever you want, not just what your employer has chosen—from stocks and mutual funds to bonds and real estate. There are lots of different kinds of IRAs so you need to check them all out. The downside of IRAs is there is a limit on the amount you can invest in them each year, although 401K rollovers are exempt from this limitation. The limit changes so you need to look up the limit for a particular year. You can Google “IRA” to learn more.
June 2nd, 2009
Kitty tried to slam down the phone receiver. Damm her lack of opposable thumbs and damm Barbie. They had been vying for sexiest toy title for years. Kitty thought she had Barbie beat when she went for the big time bling. But now the diva was topping her with a runway show on Feb. 14 in Bryant Park, complete with designer inspired Barbie clothes. What was the world coming to? Then Kitty sat back and purred – she still had her line at Neiman Marcus and a higher net worth (see November 17, 2008 post for more on net worth). And, wasn’t Barbie turning 50?
http://www.nytimes.com/2009/02/05/fashion/05ROW.html?_r=1&ref=todayspaper
http://www.neimanmarcus.com/search.jhtml?N=0&Ntt=heloo+kitty&_requestid=15797″
February 5th, 2009
You’ve been really good. The statement chandelier earrings you were lusting after will have to sparkle on someone else. You’ve curtailed your spending and finally have some extra money this month. What should you do with it? Are you better off paying down some of your debt or tucking it away in your savings account? For overall finance purposes, paying off debt and saving are the same. Incurring debt is negative savings; paying down debt is savings; and savings are savings. That being said, the single best thing you can do for your finances is to pay down your credit card debt (see Barbie: January 23, 2008; Interest: January 15, 2008 and Gift Yourself: December 1, 2007).
Once your credit debt is gone, make sure you have some savings. You should have a minimum of three months living expenses saved up. This may take awhile, but it is really crucial. You want to be able to take care of yourself if you hit any bumps. Promise yourself you won’t touch that money unless there is an emergency.
Then turn your attention to your other debts – high interest, non-tax beneficial ones first. Just like there are good trends and bad trends, there is such a thing as good debt and bad debt. Not all debts are created equal.
For example, a college or graduate school education and a home are sometimes considered good debt because although you had to borrow money to pay for them, you have something of value after you have paid back what you owe, interest and all. You also get to deduct a portion of these debts from your taxes. Credit cards and car loans are often considered bad debt. The value of what you purchased tends to decrease after you borrowed the money to pay for them. Worse, you cannot deduct any portion of these debts from your taxes.
So pay off your bad debts first – as an added benefit, once you have paid them off your monthly income will increase. Earrings, here you come!
February 3rd, 2009
In this time of austerity, black is the new black. It fits the mood, makes you look thinner and taller, and can save you money…I’m going to guess you already own more than a few things in black and won’t have to add very many items to your wardrobe to be in style.
Fashionista Fact:
“____ is the new black” started with the legendary Vogue editor Diana Vreeland in 1962, when she observed that “shocking pink is the navy blue of India.” Vreeland was commenting on the copious use of pink as the base color for much of the attire in India, much like navy blue at that time the core color of most outfits in New York City. In the late 1970’s the expression changed to “X is the new neutral” which morphed in the 1980’s to “X is the new black.”
December 11th, 2008
I know you are priceless, but what are you worth? And by that, I mean your net worth. What is your net worth? Your net worth is a snap shot of your overall financial health. You measure it by knowing the total value of your assets and your liabilities. What are assets and liabilities?
Put simply, an asset is anything you own with commercial value. Think of an asset this way: can you sell it on EBay? Obviously, some things you own have more value than others. For example, if you own a vintage Burberry trench coat, it has a lot more value than a pair of Seven for All Mankind blue jeans. Real jewelry is worth more than fake. And, the right swimsuit is priceless. Your assets include things like: how much money you have – regardless of whether it’s in cash, a checking account, a savings account, a Money Market, a CD, a stock, bond, mutual or index fund, or 401K, your clothes, your furniture, your car, or your house. If you own something and you can sell it for money, it is an asset.
On the other hand, a liability is an obligation; something you owe. Examples of liabilities include: credit card debt, student loans, car payments, and rent or mortgage payments or any other kind of loan.
If you add up all of your assets and subtract all of your liabilities you know what your net worth is. Why should you know your net worth? The first reason is net worth tells you how you are doing financially overall. The more money you save or the more valuable the items you own, and the less money you owe, the higher your net worth. The second reason is calculating your net worth on a regular basis forces you to check on your accounts. The third reason is net worth can be a motivator. If your net worth is low, there are things you can do to improve it. If your net worth is high, knowing that and continuing to improve it can help you achieve your dreams. Hello [fill in the blank!] A little self competition can go a long way.
To calculate your net worth you need to collect information on your assets. For example, you need to find out your account balances and the current value of your car. You need to find out the current value of your liabilities, for example the current amount you owe on your student debt or car loan. While it can be difficult to collect the information, once you have the information you need, calculating your net worth is easy.
November 17th, 2008