Wednesday, October 14, 2009

More Money Less Angst: Don't Max Out Your 401(k)

Latest information from Bridget Sullivan Mermel - one of our favorite financial planners. Get on her mailing list if you can. You won't regret it!

If you were to get on the Internet and poll the financial gurus, the message you would get load and clear is: Save Money. No matter how much you've saved, you will be woefully short when you get to retirement.

The first suggestion of these pundits? Put money in your 401(k). (I will use "401(k) as a surrogate for all retirement savings plans: 401(k), 403(b), SEP, SIMPLE etc.) I'm not against 401(k)s. Actually, I'm a big fan. However, I think the advice is wrong.

Here's my message: Save 10% of your income. Put your money in a savings account. This will become your emergency fund. Accumulate 10% of your annual income in your emergency fund if you've got a regular job. 20% if you worry you're on the brink of losing your job or are self-employed.

For the first 6 months or so, this amount might seem measly and the whole project might seem like it's not worth it. You can supplement your saving by putting in money from any cash gifts, tax refunds, or other windfalls. Don't put 100% of the unexpected money in your saving. Put 33% to your savings, 33% toward your credit cards or other debt, and 33% go out and spend. If you don't have any debt, the proportion is 50/50.

Once you're got a fully funded emergency fund, start saving in your 401(k). But even then, don't max out your 401(k). Find out what your company match is. (Your company match is how much your company puts into your 401(k) for every dollar you do.) Instead of putting the 10% of your saving into your emergency fund, contribute to your 401(k) up to the company match. If your company doesn't have a match, start putting 3% into your 401(k). With the other 7% of the earnings you are setting aside, start saving for a house.

Don't max out your 401(k) until:

  • You have an emergency fund
  • You have paid off your credit cards
  • You have bought a house or condo (or know that you either have enough saved for a down payment, or that you will never buy a house.)
That means that if you are maxing out your 401(k) now and don't have an emergency fund, stop maxing out your 401(k). Does this sound like heresy? I'll say it again. STOP.

I recommend this because the number one thing you can do lower your financial angst is to have an adequate emergency fund. Grow up and stop living paycheck to paycheck. Adding to your 401(k) won't lessen your current angst, establishing an emergency fund will.

What if you try this and, after a year, you haven't accumulated any savings? In other words, what if you're incapable of leaving the money alone? Cut up your credit cards. Start paying for everything with cash. A colleague of mine, Ken Robinson, has a terrific book that just came out about how to start saving. It's called Don't Make a Budget. If you can't figure out how to save, or if you try and you just can't do it, get his book.

Sometimes people object to this advice. But Bridget, they say, money in a savings account isn't doing anything. It's just sitting there.

I tell them, instead of thinking your money is just sitting there, think it's meditating. Your money is meditating so you can relax.

Besides, these days, with the Internet, there are high-interest savings accounts. I like INGDirect, and a lot of advisors I know recommend Emigrant Direct.

These are online savings accounts that make it easy to transfer money from your checking account, are insured up to $250,000 per account by the FDIC, and offer a higher interest rate as part of their marketing strategy. The two banks I mentioned have offered high rates for more than 5 years, so I don't believe their interest rates are one-time teasers.

What's the difference? ING Direct is paying 1.3 percent now. I saw a recent Fidelity statement showing a money account earning .07 percent. Chase currently pays .01 percent for the standard savings account. That means that if you have $10,000 in your savings account, you'd make $130 a year at ING Direct, $7 at Fidelity, and $1 at Chase. At Chase, you could argue your money wouldn't be doing much.

But one thing you know for sure is that it won't be going down. There's some charm in that. People who have lost money in the stock market plunge can see a lot of charm in that.

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New on Bridget's website: www.sullivanmermel.com
The latest Financial Focus including the following articles:

A Lost Decade?
Read Any Good Ones Lately?
Holidays and Gifts
Saving Our Economy the Old-Fashioned Way

Any Good Ones Lately, by Linda Leitz, is a review of personal finance books. This article struck me; I've read all of the books on her list and agree 100% with her assessments.

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Shameless self-promotion
I've been invited to contribute articles to the FI Guide, which is a blog of fee-only financial planners. My recent article "Is Now the Time to Get Into Real Estate?" is their number one viewed article. Check it out!

This information was provided by: Sullivan Mermel, Inc., 3744 N. Southport Ave., Chicago, IL 60613

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posted by The Office Grapevine at 12:23 PM 0 comments

Friday, June 05, 2009

I GOT A GUY

Here in Chicago, whenever you're looking for help or specifically a referral, you'll here, "Oh yeah, I got a guy." It's one of our favorite colloquialisms and is used in jest by me whenever I make a referral (sheesh at least once a day!).

Yesterday, however, I got a notice in the mail as a reminder from my guy. Because of this I wanted to remind you that now is the time to start thinking about buying calendars for your clients if you do that.

My guy has a summer special - "The Early Bird Gets the...." - and it says you can send your production-ready orders by July 1, 2009 to take advantage of their early order pricing. They'll hold your order for you and ship it free of charge.

So if you've "got a guy," be sure to contact him or her about your calendar needs now. This economy is offering all business owners opportunities to manage your funds in a way that's a little more fluid than in times past.

Happy Weekend!!

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posted by The Office Grapevine at 8:43 AM 0 comments

Friday, May 29, 2009

CELL PHONES GO PUBLIC ON MONDAY - FTC DO NOT CALL INFO

Snopes says this is FALSE:

REMEMBER: Cell Phone Numbers Go Public next month.

REMINDER.... all cell phone numbers are being released to telemarketing companies and you will start to receive sales calls.

...... YOU WILL BE CHARGED FOR THESE CALLS

Even if the message is saved on your phone, you will be charged for the minutes to listen to it.

To prevent this, call the following number FROM your cell phone:

FTC Do Not Call: 888-382-1222 .

This is the National DO NOT CALL list. It will only take a minute of your time. It blocks your number for five (5) years.

You must call from the cell phone number you want to have blocked.

You cannot call from a different phone number.

HELP OTHERS BY PASSING THIS ON... It takes about 20 seconds.

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posted by The Office Grapevine at 9:40 AM 0 comments

Thursday, March 12, 2009

Big costs to your firm hidden in the stimulus in two expensive acronyms: SBP v. ABP

More valuable information from AIPB (American Institute of Professional Bookkeepers).

It was unintended, but in helping unemployeds, the stimulus ended up adding new payroll costs. Here's one buried cost:

Currently, most states use a standard base period (SBP) to determine eligibility for unemployment benefits. Under the new law, one-third of the federal incentive funding (available through federal fiscal year-end 2011) for state benefits is available to states that use - or agree to use - the alternate base period (ABP). The remaining two-thirds of the incentive goest to states that have or will have at least 2 of 4 other provisions.

The current system: SBP. The SBP is the first 4 of the last 5 completed calendar quarters (in Massachusetts, the last 4 completed calendar quarters). Every state requires that an employee earn a certain amount in wages over a certain period, generally, 1 year (4 calendar quarters), to qualify for unemployment payments.

Case Example: Your former employee Joe files a claim for unemployment benefits in February 2009 (1st q. 2009). Your state's SBP runs from 4th q. of 2007 through the 3rd q. of 2008. Thus, 4th q. 2008 (the "lag" quarter) and 1st q. 2009 are not used in the eligibility calculation.

The new system: ABP. There are incentives for states to use ABP, under which the last 4 completed calendar quarters determine eligibility for benefits. The base period for an employee terminating in February 2009 is the 4 quarters of 2008. But when the last 4 completed calendar quarters determine eligibility, claimants' most recent paid work history is included, substantially increasing the likelihood of qualifying for benefits and receiving higher payment amounts.

Bottom line: If - more likely, when - your state adopts the ABP, your company's SUI account will be charged for more unemployment payments and your SUI rate could rise in response to more charges to your account.

The administrative burden: When your state adopts the ABP, it will need your last calendar quarter wage reports much sooner to determine claimants' eligibility. For example, say that you now file 4th q. unemployment wage reports by Jan. 31. If your state adopts the ABP, it will need this data immediately. Thus, instead of using your filings to evaluate claimant eligibility, it may start asking you for data on former employees before you file. This can be time consuming.

Alternative: States adopting the ABP can accelerate due dates for wage reports and/or mandate electronic reporting - e.g., a state might require quarterly wage detail by the 15th of the month following the quarter - or set lower thresholds, such as only 25 employees - before you must report electronically. Faster wage report filing puts time pressure on employers, particularly multi-state employers.

Be certain to discuss your obligations with either your accountant or payroll company.

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posted by The Office Grapevine at 12:09 AM 0 comments

Wednesday, March 11, 2009

Hidden stimulus traps — how federal COBRA subsidies can choke company cash flow

This is something I received recently from AIPB (American Institute of Professional Bookkeepers).

The new law includes a 65% federally funded COBRA continuation subsidy that lasts up to 9 months for workers (and their families) involuntarily terminated from Sept. 1, 2008 - Dec. 31, 2009. The subsidy terminates when the former employee is offered employer-sponsored health care coverage by a new employer, or becomes eligible for Medicare; or has COBRA coverage that has expired.

Notify within 60 days of Feb. 17 former employees involuntarily separated between Sept. 1, 2008 - Feb. 17, 2009. Notify those who elected COBRA that they are entitled to a lower premium starting in the first coverage period after Feb. 17. Notify those who rejected COBRA that they have have 60 days to elect COBRA and receive the subsidy. You can let former employees choose a less expensive plan. No subsidy is available to former employees whos income is over $125,000 a year or a family income over $250,000 a year, but employers are not required to monitor for the income phaseout.

The impact on small businesses: Because the new law allows employers to collect from qualified COBRA participants only 35% of the premium cost (instead of the current 102%), employers must recover the federally funded 65% by reducing their federal employment tax deposit. Result: Monthly and quarterly depositors must advance 65% of the premium cost for each COBRA enrollee for as long as it takes to offset in their tax deposits the amount due them. Problem: When the subsidies add up to more than your company's tax deposit, your company must request reimbursement from the U.S. Treasury. At this point, there is no way to know how long you will have to wait for reimbursement.

Administrative burdens: Subsidized health care premiums may be due as soon as Mar. 1, leaving you little time to compute the lower premiums and issue the required notices.

Contact your health insurer (and payroll service, if applicable) to assure the fastest possible COBRA subsidy refund. Any delay may cause you bigger cash flow problems.

The first period for reporting COBRA subsidy refund requests is 1st q. 2009, with your 941. For timely filing, make sure you are familiar with changes in Form 941 and related guidance.

Be ready for the IRS to require reports of annual COBRA participant subsides. Because of the subsidy's income phaseout, the IRS may also ask you to file an annual 1099 or W-2, Box 12 data to report total premium subsidies for COBRA participants receiving the subsidies.

Be sure to review with your accountant how this and other tax changes impact your business.

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posted by The Office Grapevine at 11:43 PM 0 comments

Thursday, February 12, 2009

Ways to Twitter - I have 11, Can You Add to My List?

Because I work as a virtual assistant within real estate and bookkeeping, primarily with small businesses, I am being asked a lot about Twitter, Facebook, LinkedIn, etc. How should I use these platforms? Should I use them? What do you suggest?

Below are some ideas that I share with all my clients because the reality is that if you don't use these platforms on a consistent basis then you won't get anything out of them either. Like anything else in your business, consistency and clarity of information is necessary as well as a plan.

11 Ways To Twitter

1) What you're working on right now

2) Links to interesting websites or articles you've found

3) Announce a new product or service you're preparing to launch

4) Links to cool tools or services you've found helpful

5) Thanking people that have recently inspired you or helped you with something

6) Questions about something you want to know about, like an issue you're having with something

7) Send out a poll or link to a survey. The answers can be the subject of your next blog post or video

8) Mention how cool it is to be working on "x". This highlights the type of work you do, and people looking for this type of help will be able to find you

9) Announce to your tweeps that something great just happened to you.
--you just received an award or nomination
--you been asked to speak at a big seminar
--you just landed a huge client
--you just finished completing a certification course
--you been contacted to do an interview about your business

10) Schedule a series of tips as individual tweets

11) If you're at an event, tweet about the experience as it's happening

So what other suggestions do you have for your Tweeting practices? I'd love to learn more.

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posted by The Office Grapevine at 7:18 AM 0 comments

Wednesday, February 04, 2009

SEO Tips from Business Wire

I wish I had thought of this information myself, but it comes to us from Business Wire. Remember that it's still early in the year and accomplishing your marketing goals starts with some of these great tips.

When it comes to getting your press release seen online, the rules for writing may be different from what you've practiced in the past.

  1. Choose and use your keywords. Think like your reader: What words are most likely to be searched for by people looking for what you want them to find in your release? Choose/use those words multiple times.
  2. Use bold, italics, headlines and subheads to make key phrases and keywords more visible. Emphasized text may help your release stand out and can positively impact search engine results.
  3. Keep your headlines short. Google recommends headlines between 2 and 22 words for optimum visibility and search results. Google results display only the first 63 characters of each headline.
  4. Keep it readable. While your goal is to appear high in search engine results, don't miss the mark by writing copy that's overly repetitive, spammy or unreadable. You want search engines to find you and for readers to click through to your text. Strike a balance.
  5. Be careful with puns, innuendo and double meanings. Search engines, spiders and robots have no sense of humor. Keep this in mind when trying to attract their attention.
  6. Write timely content that provides useful information to readers. Provide tips, advice, or analysis in your press release that is relevant to your industry or your customers' interests. Search engines are more likely to include releases that are honestly useful in their results.
  7. Utilize hyperlinks and anchor text, but don't overdo it. Too many links can flag your release as spam and get you kicked out. One link max per 100 words is recommended. Choose relevant links that direct traffic to the specific pages you are promoting rather than generic company links.
  8. Be consistent. Some words have multiple spellings— such as "t-shirt" and "tee-shirt," or "email" and "e-mail." Stick with one spelling to avoid appearing illiterate, preferably choosing the more frequently searched spelling.
  9. Keep it fresh. As releases age, they tend to drift lower in the search engine results pages. A campaign of several releases is more likely to drive results than a single press release.
  10. Publish on your own website. Be sure to publish releases sent on the wire or EON: Enhanced Online News to your own website also. Since links are like votes, link to them. Work with your web team to make sure your site is optimized.
  11. Use Business Wire for the Big Bang; EON: Enhanced Online News for the Long Tail. We've witnessed the best outcomes when press releases are sent on Business Wire and EON: Enhanced Online News. Business Wire provides the big burst of attention; EON: Enhanced Online News gives it the Long Tail and allows it to live forever online.
Below are the upcoming Feature Topic Series Copy Deadlines:
March
16 Easter & Passover
19 Sports & Hobbies II, Fantasy Sports
23 Personal Finance II, Taxes
26 Fitness & Health II
30 Family II, Men’s Focus
31 Workplace & Careers I

April
2 Going Green Consumer II, Earth Day
6 Education I, Graduation
9 Diet & Nutrition II
13 Family III, Baby
16 Technology II, Electronic Games
20 Mother’s Day
21 Arts & Entertainment II
23 Home & Garden II
27 Asian Heritage Month
30 Pets I

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posted by The Office Grapevine at 9:42 AM 0 comments

New Year, New Passwords - Look at Monster.com

I write a blog post for one of my clients all surrounding technology with tips, tricks, great free and open source stuff. I'm reprinting my post from this past Monday here because I believe it is important for as many people as possible to know what has happened over at Monster.com.

I wanted to share this important information that comes direct from Monster.com.

First of all, as a reminder, with the new year you definitely need to start changing all your passwords. It should be something unique to you with both letters and numbers. If you can remember to put in a capital letter or unique symbol all the better.

On January 23rd Monster released a letter to all subscribers about the full impact of the hack into their site. The information stolen from the Monster database were user IDs and passwords, email addresses, names, phone numbers, and some basic demographic data.

Thankfully, resumes were not hijacked. To Monster's credit they do not collect sensitive information like social security numbers or financial data.

Monster has already initiated corrective measures including changing your password. If you have not logged in recently, you should go and change your password immediately.

It's human nature and I have to admit that I use a similar login/password combination for the many sites where I need to login. I am equally guilty of this as well, so I have followed my own advice (for a change!). I would encourage you to change all your passwords on other sites especially if you use the same password for any other sites.

Remember, passwords should be unique and changed every 6 months to ensure your personal information is completely secure.

You may have several different passwords but keep it consistent and rotate among 4-5 different passwords to keep it safe. And don't forget, use something that you will remember without having to write it down.

And to quote Hill Street Blues, and "Hey, hey! Let's be careful out there!"

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posted by The Office Grapevine at 9:24 AM 0 comments