Financial Fellow

   Written by J.P. Wicklein
     The following summarizes each of the Financial Fellow articles for November 2008 in two sentences or less.
1)   How to Avoid a Big Tax Refund:  If you wish to increase your take home pay throughout the year, while decreasing your annual tax refund, you can do so by increasing the number of [...]

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   Written by J.P. Wicklein

     Recently, I read an article on Gen X Finance in which the author discussed pension plans.  The article rekindled my distaste for defined benefit pension plans provided to government employees at the expense of the taxpayers. In short, defined benefit pension plans provide retirees with a consistent source of income from retirement to death. How much the retiree receives depends upon their age, salary, and length of service. The problem with defined benefit pension plans is that they are horrendously expensive.

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Written by J.P. Wicklein

     In the spirit of Thanksgiving I thought it appropriate to make a list of financial things to be thankful for.  Although some of the items listed below are certainly negative they also present a silver lining.

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Written by J.P. Wicklein

     Set up your retirement plan as soon as possible and regularly contribute to it.  The more you save toward retirement while you are in your 20’s, the more savings you will ultimately amass. Should you be forced to stop saving for retirement in the middle of your career, saving at the beginning of your career could be your saving grace.

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   Written by J.P. Wicklein

     Ever wonder what tax bracket you’re in?  To answer this question you need to know your taxable income for the year. The last taxable dollar you earned in a year will tell you what tax bracket you belong in. For example, if you had a taxable income of $68,000 during 2008 the last taxable dollar you earned for the year is the $68,000th dollar.

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Written by J.P. Wicklein

     If money is tight and you are struggling to make ends meet you may be in a situation that requires drastic change.  Perhaps you’ve made small improvements such as eating out less, getting rid of cable television, or clipping coupons. In the end, though, if little steps aren’t enough you may want to consider taking more serious measures. Here are a few suggestions that may not be for the faint of heart:

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   Written by J.P. Wicklein

     I graduated from college with $25,000 in student loans.  Shortly thereafter I consolidated the loans at a fixed annual interest rate of 4.125% over a 20 year period.  Each month I make the minimum payment on my consolidated loan and not a penny more. Why? Since the interest rate on my student loans is so low, any additional money I could use to pay down my student loans is better spent contributing to retirement savings or paying down higher interest debt.

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Written by J.P. Wicklein

     I don’t use my local library to check out books.  Instead, I go to Borders.  I find a book I want, buy it, read it, and return it within 30 days.  Provided I don’t mark the book up, or damage it, Borders will always accept the return with the original receipt. Why do I prefer “checking out” books from Borders instead of the library?

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   Written by J.P. Wicklein

     In 1998, the U.S. Congress created the Roth IRA.  The Roth IRA differs from the Traditional IRA in several ways - the key difference being its tax structure. Whereas contributions to a Traditional IRA are often tax deferred, contributions to a Roth IRA are made with earned income that has already been taxed. Each type of IRA offers its own set of advantages.

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   Written by J.P. Wicklein

     Barring any changes the social security trust fund is expected to run out of money around the year 2041.  My generation (the border of Gen X and Gen Y) has been told to assume that we can’t count on receiving a social security check during our retirement years. This is a good thing in that it provokes people to save for retirement with their own funds. That said, I think that social security checks will be paid out for decades after 2041.

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