Why It’s Worth Your Time to Meet Your Financial Advisors
A few weeks ago, my wife and I planned a meeting with a financial advisor that was the representative for her 403(b) plan. Due to some rule changes, she was no longer eligible to receive an employer match with this plan, but she had been happy with their offerings and performance, so we had made the tentative decision to leave her supplemental 403(b) savings with that company.
Her advisor wanted to meet with us to facilitate all of these changes. I thought it was a good idea, since I hadn’t actually met the advisor face to face and my wife had only met him a few times for very brief meetings.
During the meeting, however, it became obvious that we needed to choose a different direction with our money.
We spent the first fifteen minutes of the meeting waiting for his computer to start up and run “updates.” Because the advisor hadn’t prepared for the meeting at all and his file with my wife’s information in it was out of date, there was nothing else to do during this time other than to sit there and make small talk. Red flag #1
He spent most of the meeting attempting to sell us on a whole life insurance policy. He kept showing us how great the returns were, but he refused to compare the amount being spent on the policy each month to a comparable term policy. Red flag #2
When he did finally get around to the actual purpose of the meeting, he had my wife fill out incorrect forms not once, not twice, but three times. Red flag #3
He argued at length with my wife about whether or not she should get a traditional IRA or a Roth IRA instead of the 403(b). He argued that we should use a traditional IRA because our income was relatively low. My wife (and I) repeatedly insisted that the Roth IRA is better in that case. He argued with us for several minutes, insisted that she fill out the forms for a traditional IRA, and then eventually looked up the information. “What do you know? You’re right – the Roth IRA is the one you should be using.” Red flag #4
Needless to say, we took our forms with us and then quickly shredded them upon arriving home. My wife is now opening a Roth IRA through Vanguard independently.
The real lesson of this story? Just because someone has the title “financial advisor” and has all of the appropriate certifications does not mean that that person can effectively and efficiently meet your needs. You should always meet with any and all of your financial professionals and draw your own conclusions.
It never hurts to know your stuff. Because my wife and I have been intimately involved in our personal finances for years, we knew what kinds of questions to ask and what to look for. We knew our stuff – and it revealed that our “advisor” did not.
After that meeting, my wife felt more competent and ready than ever before to take control of her own retirement savings and manage them herself through Vanguard. In the end, our disastrous meeting actually ended up being a confidence-builder, putting her in a place where she felt much more sure of herself than before.
Meet with your advisors. You might learn things you never expected to learn.
Continue reading Why It’s Worth Your Time to Meet Your Financial Advisors …
From The Simple Dollar.
Reader Mailbag #93
Each Monday, The Simple Dollar opens up the reader mailbags and answers ten to twenty simple questions offered up by the readers on personal finance topics and many other things. Got a question? Ask it in the comments. You might also enjoy the archive of earlier reader mailbags.
I am 50 years old, live on SSI, have $25.00 in savings. My SSI is $845.00 per month. I rent my apartment. On housing, so thats a great dicount. I have nothing else. My family is my two children, both adults and moved out, the last one left 2 months ago. How do I manage my money so I can eat all month? Each month I start with $645.oo. And I am backed up on utility bills. I refuse to turn on my heater this year. So far, we havent frooze. (I have two cats). Please advise
- Jana
Since you’re on SSI and under age 65, you must either be disabled or blind. However, since you were able to write this email, you do have some capacities for earning additional income, plus you have internet access.
My suggestion would be to seek out simple online opportunities to earn a few extra dollars. Given the unknown nature of your disability, I’m going to assume that sustained tasks – like starting a blog – might be challenging. However, simple independent tasks (like sending this email) are within your means. Plus, it sounds like you’re able to mostly make ends meet with what you have, so you only need a limited additional boost.
Why not give Mechanical Turk a try? Whenever you feel up to it, you can sit down at a web browser and earn small amounts for simple tasks. I was able to earn a little over $10 in an hour doing it a while back, so it’s not too bad. Plus, it’s something you can do when it works for you and your health conditions.
You might also want to take advantage of any charitable offerings available in your area. Is there a food pantry from which you can get food to supplement what you have? Are there assistance programs for your energy bill? You may want to simply call them and see what you can learn. Many people are too “proud” to take charity. Others use charity as a tool to get by without doing anything. My belief is that if you need it, you should take it – and it sounds like Jana does need it.
Good luck.
You often mention that you’re a big fan of board games and card games. My family has a Christmas tradition of playing Trivial Pursit. Some of us would like to find a different game to play at our big Christmas gathering, perhaps also giving it as a gift. Do you have any suggestions?
- Erin
You’re clearly looking for more of a “party” type of game rather than one that requires a lot of strategy and deep planning. Usually, with such games, many people play it simply to socialize. If that’s the case, two games immediately come to mind.
The first is Apples to Apples. The game is really simple. There’s a big pile of red cards from which everyone gets a hand of seven cards. There’s also a big pile of green cards. Everyone sits around a table and the players take turns being the judge. The judge turns over the top card in the green stack which has an adjective on it (like “funny” or “smelly” or “obnoxious”), then all of the other players pick a red card from their hand (which has a noun on it like “stand-up comics” or “my feet” or “Rush Limbaugh”) that they think best matches the green card. After everyone has played a red card face down, the judge shuffles all of the played red cards, turns them over, then decides which one is the best match (with all of the players trying to make their case for why their card is the best one). The judge picks the best red card and whoever played it gets to collect that green card and keep it in front of them. The first one to some certain number of green cards (seven or so) wins. It plays really fast and can be a lot of fun with a big group.
The second is Wits and Wagers. It’s a trivia game like Trivial Pursuit, but each question is answered with a number (like “In what year was Columbus born?” or “How many baseball players were in the Hall of Fame as of 2008?”). Each player writes down an answer on a piece of paper, then the answers are lined up on a board. The players are then allowed to bet on which answer is right or that the right answer is between any two answers. The person with the most money at the end of a certain number of questions (usually seven) is the winner. It plays in about an hour, there’s a bit of gambling fun involved, and it’s not ruled by a painful die roll like Trivial Pursuit is.
My question for the reader mailbag is, when buying gifts for people, do you work to a dollar limit? Obviously all of these questions include the disclaimer assuming you can afford it, but do you just buy a gift you think somone will really like, regardless of the cost? Or do you try to spend approximately the same on people who fit into a particular ‘category’ relating to how close to you they are? [Example, do you spend the same amount of money on both your children/all your parents and in laws/your close friends etc?] What if you find a really really great gift for someone important (even Sarah?) for only $3? Do you then feel obliged to go out and get them some other things as well to make the money the same, even though the thoughtfulness will probably get drowned out by the other things? Please share all your thoughts about this.
- Katie
I don’t usually worry about a dollar limit at all unless it’s for a gift exchange where a dollar limit is specified, as is the case with the gift exchanges with my extended family.
Honestly, the thought of “what if the recipient thinks I’m cheap?” never really crosses my mind. I just try to find a gift that genuinely matches the person I’m giving it to. If I feel like giving them something more, I do so, but it has nothing to do with the price tag. I think my thought and care in most of the gifts I give comes through to the recipient.
On top of that, almost all of the people I exchange gifts with feel much the same way: they’d rather give an interesting or thoughtful gift than one that meets a price tag. If you’re surrounded by people who are obsessed with how much something costs, then you’re likely surrounded by people who turn Christmas into Debtmas, ruining the joy of the season.
Me and my wife are in the process of buying town home in NJ and are looking at mortgage rates with several firms. I received a note from a company called American Federal Mortgage offering a rate of 4.75% on a 30 year loan with no points. This rate is by far the best we have heard in the last week or so talking to Wells Fargo and looking at bankrate trends.
My question is, how safe is it to get a huge mortgage (~300K, i am putting 20 down) from a company such as American Federal Mortgage? Will I be better off going for a slightly higher interest rate but with a bigger more established firm like Wells Fargo?
- Pankaj
If you’re not dealing with someone local (which I prefer if you’re getting competitive rates – if your loan stays local, it’s much easier to sit down with someone and talk about it if there are problems), you’re basically just shopping for the lowest rate among larger banks. That’s often done with tools like Bankrate.
However, having the lowest rate by a few hundredths of a percent doesn’t mean too much if you’re going to get socked with fees. Don’t be afraid to request a description of charges and fees from all lenders you’re considering and also ask for guarantees that cap the amount of your fees in total.
If one bank is seemingly far ahead of the curve when it comes to rates, I would make sure that I knew the business was reputable and I’d also carefully read over my HUD statement before I closed on the house to make sure there weren’t any sneaky fees tossed in there. Unless you plan on living there forever or your mortgage is enormous, it’s not worth thousands in fees to get a 0.25% lower rate.
My girlfriend’s car will cost $2000 to repair and it’s only worth around $5000. She will graduate in 7 months and has a $70k/year job lined up with a $6k signing bonus. She also has about $10k saved up but will need a lot of that to live on for the next 7 months. What should she do about the car? Thanks.
- Greg
Repair the car.
I think the underlying assumption here is that Greg assumes his girlfriend will obviously upgrade her car that’s “only” worth $5,000 the second she gets out of school. Coming from a person who is currently driving a truck that’s worth somewhere around $1,000, I really find that a strange perspective.
You don’t need a brand new car just because you’re earning a good salary. In fact, that brand new car will eat away big time from your other goals via car payments, much higher insurance costs, and so on. Hold onto that used car for as long as you can, then replace it with the car that’s the best value for you in your situation then – and pay cash if you can.
You’ve mentioned your distaste for Craigslist. Why? Is it from a bad experience (a la Aldi) or another reason? I’ve had very good experiences on Craigslist, made quite a bit of money, and found some great deals. I’m curious why you’re so against it.
- Michelle
My problem with Craigslist is the signal-to-noise ratio. For every interesting and useful offer to be found there, you have to trawl through acres of stuff that’s irrelevant and self-promoting. Even using the search doesn’t often lead you to what you want.
In large cities, there’s a lot of signal (good stuff), but it’s buried under a ton of noise (stuff that’s useless). In smaller cities, there’s just a little signal – often not enough to bother visitig with any consistency.
A better-policed Craigslist would be an incredible resource. The way things are now feels like I don’t get much benefit for the time invested there.
How do you handle Christmas with your kids? Do you have them make a list? Do they write letters to Santa? Do they pore over toy catalogs?
- Jim
My children are four and two, so actually making a list is beyind them, as is writing a letter to Santa. We have asked them what kind of things they’d like for Christmas and received a few vague answers, but I think they’re mostly just happy to open a few gifts on Christmas morning. We try to keep it as low-key as we can within our family.
As for the toy catalogs, we intentionally don’t receive any in the mail and if we do wind up with any, we throw them away. I have no desire to have my children covet the contents of what amounts to a glorified marketing flyer.
I don’t mind it at all if they hear about something they want from their friends or from other sources, but just simply browsing through lists of stuff to decide what they want is just encouraging pure consumerism.
Aren’t you better off hiring someone to do things for you like housework and using your time to earn a lot of money?
- Tess
That might be true if you were infinitely capable of turning every hour of your life into cold, hard cash. Unfortunately, the vast majority of people simply aren’t in that position. In fact, many people who think they are in that position often aren’t actually in that position.
Take my own life. One might argue that I’d be better off hiring a housekeeper because I can earn more during a productive hour of writing than it would cost to pay that housekeeper. The catch is this: not every hour of my life is a productive hour of writing. Sometimes I simply can’t write well – at other times, I’d rather not be writing. At those times, I’ll do housework or find other ways to spend my time.
In effect, if I hired a housekeeper, it would do nothing at all to increase the number of good writing hours per week. It would just give me more hours of leisure, something which I’m not interested in paying a high fee for at this stage in my life.
It seems in these difficult economic times there are more and more “internet opportunities” popping up every day. One that appears to be gaining in popularity is HubPages. Since there seem to be a good many aspiring bloggers who read your blog, I thought you might want to do a post or a reader mailbag with your thoughts on this website and those similar. Since you always share wonderfully insightful comments, I thought this might be a topic you’d like to tackle.
- Susan
Sites like HubPages, Squidoo, Mahalo, and the like all operate around a simple premise. You go there, create a page on a topic that you know something about, and they do the rest, adding advertisements to the page and so on. Then, you earn some portion of what the page brings in.
It seems good in theory. All you have to do is write and they handle the rest. However, there’s a catch: most people earn almost nothing doing this. I’ve experimented with several different sites (here’s an example of a page I made at Squidoo) and have never earned more than a penny or two for multiple hours of invested time at each site.
Yes, if you continued to work at it and built lots of top-quality pages, interlinked them a lot, and convinced other sites to link to your pages, you’d likely see your income on such sites take off. But if you’re going to all that work, why are you letting those sites take a big cut of it? Why not just start a site yourself and reap all of the rewards?
If you have just a little bit of time, you’re better off doing something like Mechanical Turk, which I mentioned in the first question. If you have a ton of time, start your own site.
Got any questions? Ask them in the comments and I’ll use them in future mailbags.
Continue reading Reader Mailbag #93 …
From The Simple Dollar.
The Simple Dollar Weekly Roundup: Next Project Edition
Now that my book is finished, I’ve decided to embark on another big time-consuming project, but this one is a little different.
I’m a big fan of online banks. I think they’re an incredibly powerful tool for helping you with your personal savings. For a long time, I’ve wanted to talk about a slew of online banks, just to review all of the different options out there.
There’s been a problem with this, though. I don’t like to talk about products that I don’t actually use myself. I won’t review a book unless I’ve read it and thought about it. I won’t review a financial tool unless I’ve used it extensively myself. And I won’t talk about a bank unless I’ve used it myself.
I use ING Direct as my primary bank. I talk about it often. But I don’t mention other banks for the reason above, and I want that to change. There is a huge diversity in online banks, offering different features, different interest rates, different offerings, and different tools for managing your money.
Here’s my solution. Over the next several months, I’m going to open accounts at a bevy of online banks. I’m going to try them out, see in detail what services they offer, transfer some money in out, test their customer service, and close the accounts (if I don’t intend to replace an account I’m already using).
Then, once a week, I’m going to post a detailed review of that bank in an effort to outline clearly what distinguishes it from other banks. What do they do differently? Who is this bank most appropriate for?
So I’m going to open this up to you a little bit. What would you like to see in a review of an online bank? What features really matter to you and would cause you to make the move to switch to a new bank?
While you chew on that, here are some interesting personal finance articles that might interest you.
“Natural Inclinations…Are Hardly Ever Altered or Overcome.” Over the last few days, I’ve been enormously inspired by this little quote. (@ the happiness project)
Do you do your most important work first? I used to have a very organized morning routine, where I would do most of my “routine” tasks before starting the day. What I found is that I got my “routine” tasks done, but most of the real meat of my work – the creative tasks – didn’t go nearly as well. (@ unclutterer)
How to Change Your Motor Oil Changing one’s own motor oil is a tremendous way to save money – when you pay someone else to do it, you’re essentially paying someone $20 so you can sit in a waiting room while some guy unscrews a nut, collects some oil in a bucket, screws the nut back in place, then dumps some clean oil in the top. Why not do that at home where you can do something worthwhile while the oil drains and save yourself $20? (@ art of manliness)
What To Do With A Financial Windfall This is a great step-by-step guide to handling a windfall. If you don’t have a plan, windfalls can actually be a large negative disruption in your life, as we talked about a bit last week. (@ moolanomy)
Results of a Week Without Spending Can you go an entire week without spending any money? As an experiment, this family attempted to have a week without any spending and managed to get by only spending $3. Fairly insightful stuff. (@ pt money)
Continue reading The Simple Dollar Weekly Roundup: Next Project Edition …
From The Simple Dollar.
Should I tithe on my savings?
From: Michael
Recently I have found that my debt has risen to a high number. I
sought Christian financial advice and the gentleman told me that
i was tithing off of my savings which i shouldn’t.
At first it shocked me because i know God gave me that savings.
So i should tithe off of it. Then i realized that maybe he wanted
me to have it for a savings 
for emergency use. If i don’t tithe
off of it, that money can be used to go on my debt.
I still feel weary because i don’t want to say to God, “Hey, i’m
going to not tithe off of my savings to pay off some debt”. I am
not doing it to buy a bunch of toys, but to make up for the bad
decisions i made in the past for the debt i have now.
Are we supposed to tithe off of savings? or is that for us to keep
for emergency and paying off debt and a possible offering here
or there when the Lord leads us to?
Thank you for your time.
I completely agree with him. We believe that tithe should be the very first thing you do even before food and rent and God does call us to give offerings also but we are only to tithe off our earned income. If you already tithed on your paycheck and then put that into savings you don’t need to tithe again.
Take 10% off the top for the Lord, 10% for savings and live off the rest. If you have a good amount in savings, around $1,000, for car repairs, appliance break downs etc. then I would put everything else on your debt and not save the 10% for savings until your debt is paid off. It doesn’t make sense to save earning 5% or less interest and be paying 6%- 21% interest on your debt.
So yes, I agree with him. Put it all on your debt and get rid of it as fast as you can!!!
Tawra
I totally agree with Tawra. The Bible says we are to give 10% of our first fruits (Lev. 27:30 & 32 two of many verses). Something I haven’t talked about as much but need too is the fact one of the main reasons we should strive harder to get out of debt is the fact God blesses us with so many things – much for our own use and pleasure but equally as much in order that we have the resources to help others.
It is so wrong to mis-use what God has given us and waste what He has blessed us with. We holler about the government and authorities mis-using our taxes which we have given them and sometimes rightly so but we don’t realize how we are doing the exact same thing with the money God has given us.
I just recently heard of a school superintendent who was called on the carpet because he was charging things like $100 meals for him and his wife to go out to dinner on the school expense account. He had done thousands of dollars like this.
Now as shocked as we all are with this don’t we do similar things with God’s money He gives us. We spend it on things like going out to eat at expensive restaurants, new trucks and cars, houses we can’t really afford, fancy birthday parties, high tech toys etc. instead of giving to those in need which is one reason he gave it to us in the first place.
It’s okay to use our money for what we need but when we buy excessively, get into debt from just plain over spending etc. we are mismanaging our funds just as that superintendent did.
I know this was a little (okay alot) off of the subject of Michael’s tithing on savings but it just reminded me that there are many good reasons why we need to do our best to get out of debt as quickly as we can no matter how much work it is or how hard it is.
Jill
Continue reading Should I tithe on my savings? …
From Living On A Dime Blog » Living On A Dime Blog.
Should I tithe on my savings?
From: Michael
Recently I have found that my debt has risen to a high number. I
sought Christian financial advice and the gentleman told me that
i was tithing off of my savings which i shouldn’t.
At first it shocked me because i know God gave me that savings.
So i should tithe off of it. Then i realized that maybe he wanted
me to have it for a savings for emergency use. If i don’t tithe
off of it, that money can be used to go on my debt.
I still feel weary because i don’t want to say to God, “Hey, i’m
going to not tithe off of my savings to pay off some debt”. I am
not doing it to buy a bunch of toys, but to make up for the bad
decisions i made in the past for the debt i have now.
Are we supposed to tithe off of savings? or is that for us to keep
for emergency and paying off debt and a possible offering here
or there when the Lord leads us to?
Thank you for your time.
I completely agree with him. We believe that tithe should be the very first thing you do even before food and rent and God does call us to give offerings also but we are only to tithe off our earned income. If you already tithed on your paycheck and then put that into savings you don’t need to tithe again.
Take 10% off the top for the Lord, 10% for savings and live off the rest. If you have a good amount in savings, around $1,000, for car repairs, appliance break downs etc. then I would put everything else on your debt and not save the 10% for savings until your debt is paid off. It doesn’t make sense to save earning 5% or less interest and be paying 6%- 21% interest on your debt.
So yes, I agree with him. Put it all on your debt and get rid of it as fast as you can!!!
Tawra
I totally agree with Tawra. The Bible says we are to give 10% of our first fruits (Lev. 27:30 & 32 two of many verses). Something I haven’t talked about as much but need too is the fact one of the main reasons we should strive harder to get out of debt is the fact God blesses us with so many things – much for our own use and pleasure but equally as much in order that we have the resources to help others.
It is so wrong to mis-use what God has given us and waste what He has blessed us with. We holler about the government and authorities mis-using our taxes which we have given them and sometimes rightly so but we don’t realize how we are doing the exact same thing with the money God has given us.
I just recently heard of a school superintendent who was called on the carpet because he was charging things like $100 meals for him and his wife to go out to dinner on the school expense account. He had done thousands of dollars like this.
Now as shocked as we all are with this don’t we do similar things with God’s money He gives us. We spend it on things like going out to eat at expensive restaurants, new trucks and cars, houses we can’t really afford, fancy birthday parties, high tech toys etc. instead of giving to those in need which is one reason he gave it to us in the first place.
It’s okay to use our money for what we need but when we buy excessively, get into debt from just plain over spending etc. we are mismanaging our funds just as that superintendent did.
I know this was a little (okay alot) off of the subject of Michael’s tithing on savings but it just reminded me that there are many good reasons why we need to do our best to get out of debt as quickly as we can no matter how much work it is or how hard it is.
Jill
Continue reading Should I tithe on my savings? …