Money Crashers » FAQs

How Much Did Your 401(k) Lose This Year?

Erik Folgate — Thu, 18 Dec 2008 13:59:23 +0000

I don’t like to dwell on the past, but I was curious how much you all lost in your 401(k) this year. Obviously, this is personal information, so you can share with us the percentage lost rather than an actual dollar amount. My money was pulled out at the end of October, because I left the company that held my 401(k). I decided to roll it into an IRA, rather than keep it there. Just in September and October, my account lost about 30 to 35% of its value! That’s pretty depressing, but I found solace in the fact that much of that money was matched contributions from my company.

So, was yours worse or better than 30%? Related Posts:

How Much Did Your 401(k) Lose This Year? is a post from: Money Crashers

Bailouts, Bailouts, and more Bailouts

Erik Folgate — Wed, 19 Nov 2008 19:13:44 +0000

I could talk for days about these bailouts, but I don’t think you’re interested. We shoud be interested, but I’m just sick of it. Here’s the bottom line: We’re rewarding failure and punishing success. So many Americans want to tax the hell out of rich people and successful corporations, and they want to bail out companies that sowed their failures years ago. The auto industry has been failing for years. It’s not just because the economy is down for a year. They produced CRAP in the eighties and nineties. Toyota and Honda saw an opportunity, produced a quality, reliable product, and they took market share. The auto unions have gotten out of control, and they are sucking the life out of the industry. They have made it impossible for the “Big Three” to compete.

What’s your take? What do you think the long-term effect of all of these bailouts will be? Related Posts:

Bailouts, Bailouts, and more Bailouts is a post from: Money Crashers

Frequently Asked Questions: Should I Sign Up With A Debt Consolidation Service?

Erik Folgate — Tue, 28 Oct 2008 15:07:35 +0000

Should I Sign Up With A Debt Consolidation Service?

It depends. First, identify your financial goals. What led you to thinking about signing up with a debt consolidation service? A credit counseling agency or debt consolidation service does not wave a magic wand to reduce your debt. Good ones will methodically help you get out of debt, but the bad ones can really destroy your credit. Here is the difference:

Bad Credit Counseling Agency: They will ask you to send them a lump sum amount every month to pay off your debts, but instead of paying your minimum payments on time each month, they will default on all of your debts. Then, they’ll try to reach a negotiation settlement with each debt owed. This trashes your credit, and it takes months, sometimes even years to get creditors to reach a settlement. An agency like this will destroy your credit for years to come. Remember, just because an organization is a non-profit doesn’t mean it’s a good company.

Good Credit Counseling Agency: They will gather all of your financial information including all of your debts owed to credit card companies and other charge accounts. Then, they will come up with a lump sum amount that you will pay them every month. Then, they will pay each minimum payment and put the rest towards either your smallest debt or debt with the highest interest rate. To find a reputable debt consolidation company, go to the National Foundation for Credit Counseling to find a list of their preferred agencies.

Things to Remember:

You can do what any reputable debt consolidation company would do for you on your own. if you have the discipline to write down your debts from smallest to largest, pay the minimums on all but one, and apply the rest to the smallest debt, you can be your own debt consolidation company.
Sometimes when you sign up with one of these companies, it shows up on your credit report. Banks will treat this like a foreclosure, and they won’t lend you a mortgage for at least three years. This is why it’s always best to put together your own debt elimination plan if you have the discipline to follow it. For any responsible adult, the discipline to do it is there, you just have to believe that you can do it.

Frequently Asked Question: Should I Cash Out My 401(k) During Weak Economic Times?

Erik Folgate — Fri, 24 Oct 2008 02:53:07 +0000

I am starting a new section of Money Crashers that will be labeled under the “FAQ” category. These are questiions that I either receive from my contact form, questions I hear people ask on radio/TV, or questions that I hear people asking in everyday conversation.

Should I Cash Out/Stop Contriibuting to my 401(k) During Weak Economic Times?

My answer to this is that you should definitely not stop contributing OR cash out your 401(k) and/or retirement account. Your retirement is long-term investment, and trying to time the market with your retirement is not a good idea. When you see your retirement account balance falling, think about all of the shares you are buying at an extreme discount. And don’t even think about cashing out your retirement account. You’ll get penalized 10% and the IRS will tax the lump sum based on your current tax rate. So, kiss goodbye 25 to 35% of your money if you cash it out. Think long-term. This stock market plunge most recently happened in 2001 and 1987, so it’s not the end of the world.

The answer to these questions is merely my opinion, and make sure you consult a professional, friends, and family before making a huge financial decision.

Question For The Weekend: Do You Value Investing Or Paying Down Debt?

Erik Folgate — Sat, 13 Sep 2008 04:24:39 +0000

Do you find yourself more inclined to invest your money first, then pay off debt, or vice versa?

My philosophy has always been to pay off the debt first, then invest the money. I know that many of you subscribe to the idea that if you can earn more interest investing the money than the interest you pay on the debt, then it makes sense to invest the money. However, many of you don’t factor in inflation and taxes when comparing the return on your money to the interest on the debt. It’s something to think about, but I thought that I would re-open the debate about paying off debt versus investing.

Question of the Day: Which Presidential Candidate Will Be Better For Our Economy?

Erik Folgate — Tue, 26 Aug 2008 12:13:16 +0000

Please, keep this civil. I’m interested to know which candidate’s economic plan will be better for our country? Don’t know their differing plans? I’m not going to go through all of it here, so research it on your own.

My Answer: In my opinion, it’s McCain all the way. He’s weak on the economy, but he’s going to pick a VP who is strong on it, and his conservative principles will create more job opportunities, ACTUALLY tax the middle class less, AND tax corporate America less which will keep corporations from going overseas and creating more jobs. When you look at the Bush tax cuts, it cut the lowest tax bracket from 15% to 10%. That’s a 33% decrease. If you let those tax cuts expire for the lower-middle class, you are in effect, raising their tax bracket 50% higher (going from 10% to 15%). I don’t like that Obama wants to raise the capital gains tax, because even working-class America will be affected by that, because much of the middle class has equity and real estate investments that would be affected by a capital gains hike.

What’s your take? Please explain WHY, not just because you love the way Obama smiles or that McCain is a patriot. Related Posts:

Question of the Day: Which Presidential Candidate Will Be Better For Our Economy? is a post from: Money Crashers

Questions About Paypal and T-Mobile

Erik Folgate — Fri, 13 Jun 2008 00:48:10 +0000

Please forgive me, but I am about to use you all for my own gain of knowledge. Actually, I do this every time I read your comments, because I get a lot of different perspectives from you all about various consumer and finance issues. Anyway, a couple of questions have risen today about paypal and t-mobile. I’m having a hard time finding the answers on Google, so I thought that I would ask you all.

1. When receiving a payment from someone through Paypal, does paypal still charge you a fee? The reason that I ask this is that I do some writing work online here and there, and I am usually paid through Paypal. It used to be that Paypal only charged a fee for receiving a payment from someone that paid you with a credit card. Receiving a payment through a bank account or from someone else’s paypal account did not yield a fee. Then, I started to notice that I was getting charged for fees even if someone paid with paypal funds. Now, it appears that I am not getting charged a fee. What gives? Does anyone know what the fee structure for paypal is now?

2. I read an article on Gizmodo from late 2007 that said that T-mobile was going to start prorating their early termination fees based on the amount of the contract you have used up. For instance, if the fee is $200 for a 2 year contract and you cancel the contract at 1 year, then you’d only have to pay $100. Does anyone know if this is true? I guess that I could call T-mobile and ask, but I don’t want to hear them give me the whole sales pitch about why I should stay. I want to switch to AT&T because they have much better phone choices. Related Posts:

Questions About Paypal and T-Mobile is a post from: Money Crashers

Question of the Day: What Will You Do If Or When Gas Prices Are $5.00 a Gallon

Erik Folgate — Thu, 12 Jun 2008 01:25:42 +0000

Some sources are predicting gas prices to rise to $5.00 a gallon by the end of July. We’re all cringing at the fact that gas is $4.00 a gallon right now, and $70 a tank is no fun, but it’s still not enough to cause most people to cut back on their driving. But, I think that $100 a tank will cause people to change their behavior.

My Answer: My wife and I have already cut back a little bit. We try to map out the most efficient route when we go places, and I’ve noticed that we do less joy-riding around town on the weekends. I think that if gas goes to $5.00 a gallon, we will definitely sell our Nissan Xterra and get a car with 25 to 30 miles per gallon. Our Hyundai Sonata gets 28 on the highway and 23 to 24 in town. I know that we’ll definitely be taking less trips to Orlando and Gainesville to see friends and family.

What will you do if gas goes to $5.00 a gallon besides curse at the pump?
Related Posts:

Question of the Day: What Will You Do If Or When Gas Prices Are $5.00 a Gallon is a post from: Money Crashers

Financial Question For the Weekend

Erik Folgate — Sat, 05 Apr 2008 01:28:38 +0000

The tax deadline is 11 days away. It’s probably one of the worst times of the year for those of you that have complicated taxes. I’ve had mine done for the past month, because my wife doesn’t work and we don’t have a ton of complicated investment income at this point. So, I thought that I would start this debate:

Are you in favor of the Fair Tax? Please explain your answer if you are in favor or opposed.

If you aren’t familiar with the fair tax, go check out their website or check out the book at your local library. Do your research about it, formulate an opinion, and let’s discuss it in the comments section. I am in favor of it, but i’ll get into why in the comments section. I’ll just say this: Imagine an April where you could do whatever you want and not have to think about doing your taxes! Related Posts:

Financial Question For the Weekend is a post from: Money Crashers

Who Is Your Financial Mentor?

Erik Folgate — Fri, 28 Mar 2008 18:56:14 +0000

Here’s the financial question of the day to bring us into the weekend. Ponder the question over the weekend, and post your answer in the comments section.

Who is Your Financial Mentor?

Name one person or a group of people that have influenced you in the way you manage your money. It could be a parent, a sibling, friend, pastor, or anyone else that has given you inspiration and motivation to manage your money wisely.

my answer:

In middle and high school, I attended a youth group at my local church in South Florida. I had several volunteer youth leaders that hung out with us just for the sake of being spiritual mentors to us and for some reason, they thought we were pretty fun to hang around. There were two couples, and I won’t name them for the sake of privacy, that I looked up to quite a bit when it came to spiritual and life matters. They were in there early 20’s when I met them, and I saw both couples start dating and get married. I also saw the way they managed their money, and they never lived beyond their means. They drove old cars, bought modestly sized houses, and didn’t blow their paychecks on expensive clothing and lavish vacations. They didn’t have much money, because they were just starting out. I always remember thinking to myself, “how come they don’t just buy a new car?” or “I wonder why they don’t travel much”. Now that I am older and on my own with a new wife, I understand their reasoning for living modestly and saving for the future. I am confident that their financial situations are secure right now, and they are saving for the future of their kids and their own retirement. Related Posts:

Who Is Your Financial Mentor? is a post from: Money Crashers