The simple life: Minimalists shun excess

Recently, a woman showed up in the conference room of a Midwestern bank wearing a T-shirt. She was 93 years old and had driven an old stick-shift car to the meeting.
She was a minimalist, and her net worth was $2.4 million.
Minimalism gets a lot of attention today. It’s all about living with less. Minimal or no debt. No unnecessary expenses. No excess stuff.
Pick an item you own. Any item. Have you used it in the last three months? If not, will you in the next three?
Look around your home. Do you really need that extra square footage? How much money could you save without heating and cooling it?
Minimalism is a theory rooted in the value of experiences over possessions. Quality over quantity may be a cliche, but it is a tenet in minimalism.
To live a minimalist life, you don’t have to get rid of everything you own but the essentials. By asking yourself, “Does this thing bring meaning to my life?”, you can pick and choose what’s right for you.
Getting rid of a few needless possessions, for example, in exchange for a hobby.
According to moneyunder30.com, living by a few minimalist philosophies can do wonders for an individual’s or couple’s finances.
Use one credit card (preferably one that offers rewards). Have one checking account, and one savings account for cash emergencies.
Don’t try to live up to another minimalist’s standards, advises medium.com. Respond to your own emotions, desires, needs, and goals. Educate yourself about minimalism. Do what serves you, rid yourself of what doesn’t. Allow yourself to evolve and to make changes. Once you know what you want, it’s easier to be a minimalist.

Four different money pros for different needs

Sometimes navigating financial issues seems impossible. Here are four situations that might require a money pro.

In debt and in trouble
This problem requires credit counselors. They can help build a plan to get out of debt, give information about bankruptcy, or even completely manage money, giving clients an allowance to live on, according to creditcards.com.
Find one at National Foundation for Credit Counseling or Association of Independent Consumer Credit Counseling Agencies.

When you need help managing assets
A Certified Financial Planner (CFP) can help manage assets built up over the years or from windfalls. They offer advice on insurance and investments for retirement, and help plan financial goals. Search for a CFP in your area and find one you trust.

Just ready to retire? Now what?
A retirement planner, usually a CFP specializing in retirement, can give you an idea of the money you will need in retirement and ideas on how to manage it.
It’s a good idea to consult a retirement planner about 10 years before you retire, but you can get good advice even on the verge of retirement.
Check out FPAnet.org for suggestions.

Can’t make ends meet
A budget counselor helps those who maybe don’t need a full-scale debt repayment plan. Budget counselors are best for those who make enough money but can’t seem to live within their means. They might have some credit card debt, which may even be manageable, but they are building debt.

Online college courses: Path to degrees, low debt

Today’s students have excellent options for their pathway to higher education. They include traditional and community colleges, online courses, or combinations of all three. In fact, even high-profile colleges and universities are offering online programs today.

According to Stetson.edu, each online-course student usually engages in class material and activities on his or her schedule. This freedom allows students to complete work and family commitments with more flexibility. All online-course lectures, emails, explanations, and discussion boards, among others, are available around the clock.

Additionally, online programs can dramatically decrease or even eliminate the costs associated with college. With student loan debt now exceeding the entire nation’s credit card debt, any chance to cut the cost of college today is worth considering.

Also, contrary to current public opinion, online college programs can be every bit as rigorous as any form of higher education.

According to educationcorner.com, the advantages of initiating one’s pursuits of higher education at a community college include the flexibility, increased quality of teaching, cost of courses, and the capacity to transfer degrees earned to time-honored institutions of higher learning.

Moreover, community colleges are dramatically changing the landscape of higher education by offering students more options in seeking their degree.

In the final analysis, it is up to each person to figure out how much time he or she will have to devote to earning a degree, what type of degree program is desired, and how much money can be spent. At the same time, it is possible to take some courses online and others in person. Some individual classes may include both elements of interaction.

Should you refinance your mortgage?

With mortgages still at historically low rates, many people consider refinancing to save money. But is it a good idea? Maybe, maybe not.
Refinancing involves a number of moving parts and some understanding of amortization, so make sure to do your homework. Lenders vary on how long you have to wait to refinance, but you can sometimes do so within a year of purchase.
First, remember that refinancing involves closing costs, which can run into the thousands. So before anything else, calculate how long it will take you to recoup that amount and whether you’ll stay in the house that long.
Do the long-term math. If you are 10 years into a mortgage and refinance for 30, you could very well wind up paying many thousands more over the lifetime of the loan. This is of course a personal decision; sometimes it’s worth it to free up the cash on a month-to-month basis. Just understand the numbers.
Some homeowners refinance and increase their monthly payments — on purpose. You might consider refinancing from a 30-year loan to a 15-year loan to pay off the balance sooner. It’s often surprising how little it takes per month to make this happen.
Another good reason to refinance is if you’re in an adjustable rate mortgage and want to refinance into a fixed rate. This often occurs when rates are rising and you want to avoid the higher costs; if rates are low, it might not be worth the trouble.
Other folks refinance in order to pay off other debt, like credit cards or student loans, or to pay for a renovation project. Again, it’s time to do the math and consider the scenario. Although credit cards usually involve high interest rates, there isn’t much to lose if you default; transferring that debt to your mortgage, however, puts your house on the line.

Sell or rehab? The homeowner’s dilemma

If you are debating on whether to sell or renovate, first ask yourself some questions and then do some math.
First the questions:

  • Do you love or hate your home? If you hate it, will remodeling really make you love it or just hate it less? If you’ll just hate it less, sell.
  • Do you love the neighborhood or hate it? If you hate it, remodeling won’t help. Sell.
  • Do you want more improvements than are reasonable for the neighborhood? Carpet, kitchen, bath, and landscape all recoup costs. But if you want fixtures and amenities that will make your home cost way more than others in the neighborhood, consider moving. You probably won’t recoup the costs at your eventual sale.
    If you decide to remodel, calculate how much a renovation or rehab project will cost. Or should cost.
    Whether you’re debating on hiring vs DIY or deciding between competing contractors, it’s a good idea to understand what you get for the money as well as what constitutes a fair price.
    A few rules of thumb can help, so here are some tips on how to estimate your rehab costs:
    Be wary of finding overall estimates online and assuming they work for you. The cost of materials and labor vary by region of the country, so make sure you’re comparing like with like.
    Know the cost of materials. This is one of the easiest things you can do to prepare. Create a file and visit your local home stores to find the prices of lumber, windows, flooring, paint, and the like.
    Understand the time involved. Have a basic idea of how long it should take to replace a roof or install a window so you can better understand the contractor’s quote. (An entire roof can be done in a day or two, while an uncomplicated window install can be done in a half hour.)
    Accessories add up. Remember to budget for things like cabinet knobs, door hinges, trim, and the like.
    Think in terms of function, not space. If you’re undertaking a larger project and are the one drawing up a Scope of Work, it’s more accurate to calculate by category of professional. A plumber will take care of your kitchen sink as well as your bathtub, for example. This also helps with the flow of a project, as each of these contractors does their work at different stages.

Economy by the numbers: Signs point up

Wages are up, unemployment is low and retail sales are growing.
These are the headlines this year from the economy, which promises more good things to come.
What Americans are doing:

  • Selling and buying homes: 5.35 million sales of existing homes to April of 2019. More people are putting their homes on the market with total inventory up 1.9 percent in April.
  • Buying stuff: General merchandise sales have been strong and restaurant sales are rising. Total sales at department and clothing stores are expected to fall as online shopping takes over.
  • Getting new jobs: A shortage of workers and closings of retail stores have slowed hiring. Job growth is predicted to average 160,000 per month, down from 223,000 in 2018. But the labor market is tight with unemployment just 3.6 percent in May, the lowest since 1969. Pay growth is up with non-supervisor worker paychecks rising at an annual rate of 3.4 percent, according to Kiplinger.

Changing jobs? What to do with that 401(k)

There aren’t many things you can do with your 401(k) when you change jobs, but some choices are better than others.

  • Worst choice: Cash out.
    If you went to all the trouble of saving money in a retirement plan, the worst thing you can do before age 65 is cash it out. Any distribution will require a 10 percent early withdrawal penalty if you are under age 59. Plus, anything you take will be taxable that year. There is an exception to the penalty if you are losing a job or changing jobs at age 55 or later, but it is still taxed.
  • Best choice: Rollover to the new company’s plan. You never get your hands on the money and it never stops growing.
  • Good choice: Rollover to an IRA. If you have less than 10 years to work, an IRA will offer a wider choice of safe investments and fixed income options, according to Presley Wealth Management.
  • Possible plan: Rollover to a Roth IRA.
    Consult an investment advisor before doing this. The downside is that you pay taxes on the money when you take the Roth plan. The upside is you can start tax-free withdrawals at age 59.
  • Good option: Leave it where it is.
    You won’t be contributing to your old 401(k) if you leave your job, but if you like the current options, consider keeping it where it is. You can roll it over any time

Earn high interest with online savings accounts

You might love your local bank, but it isn’t necessarily the place to park money over the long term.
Today, online high-yield savings accounts offer dramatically higher savings rates than brick-and-mortar banks.
A typical savings account in a brick-and-mortar bank could pay .02% APY (annual percentage yield) compared to 2.25% or more with an online bank, according to Magnify Money.
What this means to savings really matters.
A $15,000 savings account at .02% yields about $3 per year — a whopping 25 cents a month. The same amount saved at 2.25%, yields about $337 per year, or about $28 per month.
Online banks are FDIC insured as is the local bank. But online banks have lower overhead with no buildings to worry about.
However, they also may not have ATMs, they might have fees, or require high minimum deposits. But not all do.
Synchrony Bank, for example, has no minimum deposit and no fees, but you are limited to six withdrawals or transfers per month. APY is 2.25%.
The low-interest account at your local bank will give you access to money at all times and likely include easy transfers. Still, these accounts are best reserved for merely separating money to be used for different purposes.
Search for high-interest online savings to compare features.

Securing internet of things

You are on vacation; wouldn’t it be nice to check in on the family pet? Or you are at work; it would be nice to check to see if the baby is down for a nap.
The convenience of security cameras and baby monitors make them an important part of the Internet of Things (IoT).
But they can and do have security issues.
Most security flaws involve software called iLnkP2P, which is often bundled with IoT devices like doorbells and video recorders. The software makes it easy to access remote devices from anywhere in the world, according to Krebs on Security. But they are easily hacked.
Here is what you can do to protect your security:

  1. Avoid connecting devices to the internet without a firewall or in front of a firewall. Keep IoT devices behind a firewall, such as is found on routers.
  2. Change the device’s default credentials if you can. On cameras and DVRs, you might not be able to do that.
  3. Update the firmware when an update is available.
  4. Disable Universal Plug and Play.
  5. Don’t buy Peer-to-Peer (P2P) devices.
  6. Don’t go cheap.
    Check out the internet security site: grc.com’s Shield’s Up.

Vested: It’s not what you wear; it’s what you own

It’s a term thrown around a lot, and it sounds important: vesting. As in, being fully vested — that sounds pretty good and it is.
According to the IRS, being vested in a retirement plan means ownership. All employee contributions to a retirement plan are 100% fully vested — the employee owns everything he or she puts in.
However, employers usually provide a match of a certain percentage of employee contributions.
Matching contributions
Employers match contributions made by employees in different percentages. An employer might say: If you put 6% of your paycheck into the 401(k), then we’ll match your contribution by 50%. So suppose your 6% equals $3,000. Then the employer will put in $1,500. That would be an unusually generous match. Typically, an employer may match 3% of the first 6% of the employee’s salary. That equals a 9% contribution — still pretty good, especially over the long term.
They key idea, though, is that the employer sets a certain match percentage. The employer may also have rules about when their contributions are fully owned (or vested) by the employee.
Vesting rules
The employer, along with the fund managers, decides how much of the match the employee owns and when.
Newer employees may start out at lower percentages, but they become fully vested in time.
For example, an employee may become 20% vested in the company match after two years, meaning the employee owns their personal contributions plus 20% of the company match. Many 401(k) plans work out vesting in tiers. The longer you stay with the company, the more of the company contribution you own. An employee might become fully vested in, for example, six years. Then the employee owns 100% of the matching contribution.
Sometimes 401(k)s are set up so that an employee becomes 100% vested at a specific time — say after 2 years. Then they own all the matching funds on one day.
Being fully vested
The good thing about being fully vested is that you own all the money you put in and all the money your boss matches. (Plus, you own all the money that grows over time.) That means you can take the money with you if leave the company or retire.