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Timeshares are vacation properties that several people share partial ownership of – usually over a time span of about 25 years. They’re typically located in exotic locations that are popular tourist destinations.
Starting in Europe in the 1960s, the concept of timeshares spread quickly to the United States. They became a huge trend with seasonal vacationers who liked the idea of “owning” property in an exotic area for a fraction of the price.
Today, timeshares are generally sold through high-pressure sales presentations that present them as a more financially responsible way to vacation.
COVID has decimated the timeshare industry for obvious reasons. Still, you know they are eventually going to come back and get people. In case you’re thinking about purchasing a timeshare now or in the future, here are some things you should know before you sign. [ continue reading… ]
Many of you know about the 4% retirement withdrawal rule, which claimed that a retiree can withdraw 4% from their nest egg each year, adjust the amount for inflation, and have it last for 30 years. The 4% rate is pretty much the gold standard when it comes to retirement planning since the Trinity report was published in 1995. You may also have heard many experts claim how 4% is no longer safe because the study was based on stock market history and how the stock and bond portfolio that the nest egg needed to be invested in won’t provide nearly the same return as what history has provided us. That can only mean one thing – a lower withdrawal rate.
I’ve spoken to many of you about this because the reasoning is undeniable. I mean, bonds used to provide good single-digit and at times double-digit returns in the past. The 10-year treasury is expected to return roughly 1% a year these days. Stock prospects aren’t faring much better. The vast majority of metrics people use to value the stock market is flashing warning signs of how everything is severely overvalued.
It’s scary, especially when some are now saying that 2.5% is the new withdrawal rate. Now 1.5% may not sound like much, but changing the withdrawal rate to the lower number means a 37.5% reduction in spending money in retirement. You can try to save more to keep the same retirement income, but we are talking about having to accumulate 60% more in savings. That’s working years if not decades longer.
So what are soon-to-be-retirees to do? Luckily, the situation isn’t nearly as dire as the doomsayers are claiming. Here are a few reasons why: [ continue reading… ]
The American Dream has always been based on the idea of homeownership and that bigger is better. If you need confirmation of this fact, then look no further than last year’s statistics that show how the average American home is 2,400 square feet. It averaged 2,000 during the housing boom years in the early 2000s and even less if you go back in history.
But even though average home sizes are increasing, there’s a small but growing trend in the opposite direction: tiny houses. Documentaries on tiny house dwellers highlight the incredible contrast between the average American home and the average tiny home, which is less than 500 square feet.
Although tiny homes still account for less than 1% of real estate sales, their appeal is increasing among many people who are tired of upside-down mortgages, the cost and time consumption of accumulating and maintaining 2,600 square feet of possessions. Some people just have a desire to live a simpler life. Who could fault them? Even if you’re content to keep living the American Dream, consider these financial advantages of living in a tiny home. [ continue reading… ]
I’ve been warming up to the idea of converting part of my 401k to a Roth for some time. The gist of the tax maneuver is to pay the taxes upfront on the conversion, and then the money that’s converted will be forever tax-free. There are several benefits of a converted Roth IRA for a younger investor like myself, especially if I’m not using any retirement account money to pay for the tax bill. Still, I want to make sure I cross all the “T”s and dot all the “I”s before I make the conversion.
Here’s a checklist I came up with for anyone thinking of converting as well.
Figure out ahead of time where taxes for the conversion will come from. Will you be paying for the tax bill out of your conversion, or will you be using outside funds? If you are planning to pay the taxes out of money inside your retirement account, then it’ll be pretty much a wash if your tax rate stays the same on the year of your conversion versus when you take out the money if you didn’t convert.
If however, you are paying for the tax payment with outside funds, then it could make sense even if you believe your marginal tax rate would be lower when you withdraw. That’s because paying for the tax bill when you convert with outside funds is similar to being able to contribute some of that outside funds into a Roth IRA.
“It’s amazing that parents get angry with their teens and adult children for not using a credit card wisely, but those same parents have invested nothing into helping their child understand anything about personal finance,” says Eva Baker, the founder of the blog TeensGotCents.
Baker is well-versed in the importance of teaching kids about money since she is a teen herself. Her own mother has encouraged her efforts to learn about money, and blog about what she’s learned in order to help more teenagers learn about the importance of developing good money habits as early as possible.
Do you talk to your kids about money? When was the last time you helped them save towards a goal, or talked about the importance of budgeting? Do you model good financial behavior as a family?
My daughter’s birthday is in two weeks. Although I think that all-out birthday parties are a little excessive for kids, I do think it’s fun to celebrate these special days. The only problem is that even the simplest parties can add up in costs.
Do you have a party coming up? Here are a few tips for saving money on the birthday parties without sacrificing a fun experience.
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