Flashing back to 2009: I have images of articles from a February, 2009 BusinessWeek issue. Last week I mentioned that, in early 2009, 10,000 people a day were losing their jobs. What was also reported was the downsizing of industry. A variety of industries were expected to feel the burn of the economic meltdown. Because inventories were high and consumerism slowed to a stop, industries that produced goods were likely to continue reducing their employee headcount. Some of the sectors that were expected to continue dropping employees were apparel production, car, train and plane productions and construction.
The attached article reports on the surge of foreclosures and the big banks’ response in helping homeowners. The loan modifications offered didn’t help and the think tank of bank executives offered hollow promises. Sadly, most borrowers went into foreclosure or were forced to declare bankruptcy.
Based on information that I read last month at the 10-year anniversary, some people reported suffering equity losses that they’ve never recovered from.
This article has so much information about what not to do and is a learning tool for not repeating others’ mistakes. I’ve included it here.
When it comes to your financial knowledge, stop pretending that you don’t know what you’re doing. There are more resources than ever. If you’re a book lover, read a few on personal finance. If you’re a net surfer, start Googling up on financial terms.
Answer the following questions and take a few minutes to research anything that you don’t know. Don’t be afraid, we all have an area that we need to focus on. These items are off the beaten path, and from what I’ve seen, points that cause confusion. Some are Yes/No or True/False, while others are thought questions.
I’m all about sharing knowledge. I learn something new every day and never stop reading.
True or False: I have a progressive career plan that will increase my earnings within the next five years.
The last time I improved my work skills was ______________.
Interest rates do not make for the most exciting chat topic. You won’t find it in the conversation starter game that you unwrapped for Christmas. It’s probably easier to clear a room by yelling ‘Interest Rates!’ than FIRE! Watch your friends and family run from you as you broach the topic of how the Federal Open Market Committee voted to keep the Federal Funds Target Rate at 1.00% – 1.25%. Fed Prime Rate Info
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An Individual Retirement Account (IRA) is a great way to accumulate a retirement stash. It’s also a great way to protect asset growth and investment earnings from taxation.
I highly recommend contributing as early as possible. IRA contributions can begin when an individual has earned income. Therefore, it can begin with a teenager’s part-time earnings. Visit your favorite bank or online broker and open an account if you don’t already have one.
Learn what your maximum contributions are
IRA contributions come with conditions. There’s a maximum amount that can be contributed and it can change every year. Know what yours is. It’s based on your filing status, married vs. single, etc. The next condition to reach is eligibility for a tax deduction. Again, it depends on your filing status and whether you participate in your employer’s retirement plan.
For employees that participate in their employer’s retirement plan, a full or partial deductible contribution is still a possibility if the amount is less than the range specified for the type of filer. You can easily find the current year’s table for the income ranges by filing status by doing an internet search or by looking in the IRS publication. Notice that I’m not spelling it out, it’s up to you to gain some awareness.
I devised this schedule to predict what my future investments would be worth. The typical Future Value calculation involves taking today’s account balance, applying an interest rate and the number of periods for compounding.
That’s great if you are working with only one balance at one given time.
Because I make regular deposits into my investment accounts, I wanted to increase the balances at different intervals. I created quarterly segments where any additional investment can be entered. The formula will take the new end-of-quarter balance and apply the compounding. This repeats for all quarters.
The yellow fields are the input fields. The investment account balances can be entered at the top left. You will see the entire schedule update as soon as an investment balance is entered. Amounts can be entered in all the “Cash Invested” fields.
At the end of the schedule, I calculate a cash flow amount based on the final balance. I have used a conservative 3.5% return. Below, I have a short list of estimated living expenses. Both cash flow and living expenses can be calculated on a monthly or annual basis.
If you’re good at Excel, you change alter the rates and add rows for additional years. Let me know what you think of the schedule. I hope you find it useful.