Money in the Bank: Is It As Safe As You Think It Is?

The term “Money in the bank” is usually used to describe something that’s safe. That’s a sure thing. That’s solid as a rock.

That is, unless the bank you’re talking about is IndyMac.

You see, this past weekend, IndyMac failed. Yup, it up and went under. And Uncle Sam had to come to its rescue in the form of the Federal Deposit Insurance Corp. (FDIC).

“So what?”, you might say. “The money in that bank is insured.”

Uh, are you sure?

While reading a great article on today’s MarketWatch.com by Eva Rosenberg, I learned that not all banks are FDIC-insured. But luckily, IndyMac is.

I also learned that there’s insurance that goes beyond the limits that the FDIC insures.

Before we get to this additional insurance, let’s be clear about what the FDIC does insure. Each account is insured up to $100,000. Each joint account is insured up to $200,000. And each retirement account (IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, Section 457 plans, Keogh plans and a few others) is insured up to $250,000.

Now, what about that extra insurance? Read more

Ed McMahon Can Save Your Financial Life.

He’s the guy who surprised people every year with those million-dollar checks from Publisher’s Clearing House. He hosted or co-hosted a ton of shows. And he pitched everything under the sun.

But at the tender age of 85, Ed McMahon finds himself in a deep financial mess. His mortgage company is foreclosing on his multi-million-dollar house. Citibank is suing him for hundreds of thousands of dollars in credit card debt. And he can’t work because of an injury – at age 85.

I can see how some people can feel sorry for Ed – he’s an 85-year-old celebrity who’s broke. And I can see how some people can’t feel sorry for him – he’s a celebrity who’s made hundreds of millions of dollars.

But whatever you feeling are about him, there’s one thing you can learn from him – manage your money wisely.

You see, if Ed had just done a little better job managed his money, he wouldn’t be in this situation now. If he didn’t spend more than he made. If he didn’t buy so much on credit cards. If he kept a closer eye on where his money was going, he’s be fine now. And we wouldn’t be talking about or reading about his financial problems.

OK, so what can you do to prevent your life from being “Ed McMahoned”? Read more

10 Million Millionaires in the World. Are You One of Them?

Read an interesting article on the NYTimes.com today. It seems that, for the first time ever, the Earth is home to 10 million millionaires at once. This is according to research by Merrill Lynch & Co. and Capgemini Group consulting firm.

And 33% of the M-aires (1 out of 3) live in the good ‘old U.S of A. Africa, the Middle East and Latin America combined have just 10% of the group.

The article goes on to say that last year, the combined wealth of these 10 million has grown to almost $41 TRILLION, up 9% from the year before.

This means that each M-aire has an average wealth of more than $4 million. And that doesn’t include the values of their homes!

So, when I read this, a few questions came to my mind.
1. How did they do it?
2. Why ain’t I part of that group?
3. What do I have to do to get into that group?

Obviously, every one of them has taken a different journey to get to that point. Some inherited it. Some made it. Some stole it. Some got lucky. Some made their own luck. Read more

Pay Yourself First, Win $5,000!

Have you had your fill of Reality TV. With its crazy contests to see who can lose the most weight, who can find love and who can survive on a desert island?

Well, now the world of reality contests is about to invade another medium: the internet. But this time, it’s not about losing or finding or surviving anything.

It’s about saving MONEY. That’s right - stashing away some moolah, clams, greenbacks.

In The Pay Yourself First Challenge, sponsored by FNBO Direct, a division of the First National Bank of Omaha, 5 contestants will go head-to-head to see who can save the most over a 6-month period. Each participant’s savings will be matched dollar-for-dollar, up to $5,000. Which means, a contestant can walk away with more than $10,000 total!

And it will all be captured online - in video and on blogs.

Think you’ve got what it takes to win? Then create a 1-minute video about what you’re saving for. Enter the contest and you could be selected as one of the 5 finalists. Just visit pyfchallenge.com. Read more

Emergency Cash: Where to Get It if You Need It

I don’t have to tell you, that cash is pretty tight for a lot of us, no matter how good our financial situation is. And for those of us who haven’t paid close attention to our finances over time, cash is probably even tighter.

So, what can you do if you need some cash? Well, Christine Benz gave 8 great options on today’s Morningstar.com. And she ranks them from the easiest to live with to the toughest to swallow.

And guess what? Not one of those options includes getting one of those Payday cash loans. Whew, I’m glad about that.

OK, so then what does Christine talk about? Well, she begins in the obvious place – your emergency cash fund or short-term securities. But let’s be honest, a lot of us don’t have an emergency fund or short-term securities, or we have a small amount of money in either one.

So, then where can you turn? How about long-term assets in taxable accounts. Yeah, you can sell some stocks or bonds or mutual funds. But you have to beware of their tax implications. If they appreciated since you bought them, you might have to pay 15% in long-term capital gains tax. And if you sold a mutual fund that we owned for just a short time, you might have to pay a redemption fee.

That might not be too tough to live with. But what about the other options? Well, here they are in Christine’s order. Read more

The Half-Year Savings Tune-Up

Is it June already? I totally can’t believe it. But this is a good time – the halfway point in the year – to give your savings a nice tune-up. Here are a few easy things that you can do to help build your wealth. Try them and see how much more you can save. And then put these extra savings to work for you.

1. Make your change count.
You know all those dimes, quarters, nickels and pennies that you throw into a jar or a drawer or an empty 2-liter plastic bottle of Diet Pepsi? Well, they can really add up.

Don’t think so? Check this out. About every 3 months I take two 2-liter bottles full of my change to my local Commerce Bank, where I use their Penny Arcade change machine to turn my change into dollars. And every time, the total is around $300. That works out to about $100 a month. Or $1200 a year. That’s not bad for some loose change. And that money goes into one of my interest-earning accounts, not my pocket.

Just think of how much change you can turn into cash. If you’re like me, you’re probably looking at around $1200 a year.

2. Pay yourself $5 a day.
You’re probably worth a heck of a lot more than 5 bucks a day. But for this easy savings plan, just pay yourself $5 a day either by putting $5 into a jar every day or subtracting from your paycheck $5 for every day you worked and throwing it into an interest-earning account

If you work full-time, that’s about 260 days a year. At $5 a day, that works out to $1300 for the year. Read more

How Much Is A Dollar Worth? How About $53.70.

In the past year, we all experienced the dramatic fall of our Almighty Dollar. It’s been pounded by the British Pound (bad pun intended), smashed by the Euro, trounced by the Canadian Loonie.

Today, it’s the butt of jokes from New York to New Delhi.

But with all the trouble the dollar has been going through, it still must have some value. Right?

So, this got me thinking about the value of a dollar over time. Now, I’m not talking about the buying power of a dollar or the effect of inflation on the dollar. I’m just talking about a basic calculation of how much a dollar can grow over time.

To figure this out, I went to BankRate.com and used their Savings Calculator. I wanted to see how much a dollar can grow by earning 8% annually, compounded monthly, and 10% annually, compounded monthly. This range of 8% to 10% Annual Interest seems to be quite possible over the long haul when invested in solid mutual funds or blue chip stocks.

After running the numbers, I have to say that I was stunned by some of them. Check ‘em out.

The difference between 8% a year and 10% a year isn’t that much – until you get to 20, 30 and especially 40 years.

I mean, $53.70 after 40 years? That’s amazing.

So, the next time you’re putting down 4 bucks for that double mocha latte, take your time and really enjoy it. Because 40 years from now, you could’ve had an extra $200.

Is Your “Money Story” Keeping You Broke?

During my life, I’ve done almost everything to figure out what’s going on with me and money. I’ve taken dozens of money/self-growth seminars. I’ve read a ton of books. I’ve taken a bunch of university financial classes. And I’ve gotten a heck of a lot of advice from rich friends.

And after all of this, I’ve come to believe that the reason I have a rough relationship with money is because of my “Money Story”.

What’s a “Money Story”?

Well, it’s a story that we subconsciously tell ourselves – over and over – about money. It’s not something we verbally say. But it’s something that we believe on a subconscious level. And that makes it extremely powerful.

Mine is: “My family never had money. So, I’ll never have money.” Read more

Saving $451 a month can make you a Millionaire?

There’s an interesting article on today’s Kiplingers.com that talks about how little you need to save and invest every month to reach $1 Million.

According to the piece, you just need to save $451 a month. And it actually shows you have to save money on a bunch of things - like your income taxes and your food bill. Even your health care!

It assumes that you’ll put the money into a retirement account that averages a return of at least 8% a year over the next 35 years.

It makes sense. But I guess I’ll have to cut out my Dunkin’ Donuts coffee. That’s 2 bucks a day for a total of $60 a month.

What do you save per month for retirement? Or do you save anything per month? Let us know.

Build Your Savings by Paying a “Bill”.

We all know that the more we save, the more we have to use to build our wealth. And we all know that we should “Pay ourselves first.”

But, a lot of us, especially me, find that keeping to a regular savings schedule is pretty tough. Even with “automatic” savings, I can’t seem to save as much as I need to save.

Then I read this pretty cool article today by Walter Updegrave on CNNMoney.com that talks about treating your savings contribution as a “bill” that you pay every month or week. This way, every time you pay your bills, you pay a “bill” in the form of a deposit to your savings account.

Now, this is a pretty easy way to pay yourself first. I think I’m gonna give it a try. I think I can fit it in between my Verizon Wireless bill and my ConEd bill. What about you? How do you build up your savings? Let us know.

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