MONEY OBEDIENCE

The Gold and Black Friday Mania

Sometimes I get the feeling that we humans like to get suckered into all kinds of things. Heck, think about the major financial booms and busts we have witnessed in the last 10 years or so. We had the tech bubble when anything “internet” was going to make money hand-over-fist until we realized that clicks per minute were not money. And then we had the housing market when almost everybody thought you could not lose money in the real estate market. We now know that you can lose a ton. You can even lose the health of the world’s biggest economy. You’d think that we live and learn.

Not so. We still get suckered into all kinds of things, it’s just that the suckering involves different things at different times. Think about gold. Don’t you get the sense that you’ve got to own gold lest you miss out on something big? Everybody seems to buy and own gold. Big hedge fund managers like George Soros, David Einhorn and John Paulson also own gold. Even more reason to get or stay involved, right? I get the funny feeling that some or most of these hedge fund guys will long have sold their gold when Mr. and Mrs. Average Investor still hold it and watch it take the same route internet stocks and housing have taken when these markets went bust.

And then there is Black Friday. Most of us get suckered into shopping on the one big sales day of the year, the idea being that “if you don’t shop for the holidays on Black Friday, you are missing out on the best sales of the year.” To me, that sounds like snake oil: too good to be true

Let me confess right here that I don’t really know what I am talking about since I have never shopped on Black Friday. I don’t even know what great deals I am missing, but I know one thing. My life has never taken a turn for the worse nor my holidays been tainted because I missed out on the greatest shopping day of the year.

As a matter of fact, ever since I have taken down my holiday shopping and gift buying a notch a few years ago, I have taken better and better memories away from my holiday seasons. I have found other ways of making holidays memorable without spending money I would rather use for something else. Staying away from Black Friday and buying things has forced me to focus more on the people with whom I am sharing the holidays, rather than the gifts I would otherwise have given them.

Why don’t you give it a try, too? Stay away from the crazy holiday gift buying pressures and see how your holidays turn out. My bet is that you will have a great holiday season anyway, and you’ll probably be more at peace yourself.

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Let’s not save enough for retirement

The ING Retirement Research Institute published a survey a little while ago in which they investigated the retirement savings behavior of employees. They came to one very interesting conclusion: almost 9 out of 10 participants in a 401k plan say that they can save more money than they actually do. About two out of these three people could even increase their savings by 3% of their annual salary. Yet, they don’t save more.

I think that to really understand this we would have to ask these respondents in more detail why they don’t save more money, but the survey gives us a clue. The survey found that a large majority of 401k participants are paying into their 401k savings plan without having an actual retirement plan – meaning a date/age/amount of money agreed upon so they can decide once and for all “it’s time to stop working!”

Many of these savers decide on their contribution with “their gut.” Now, some people may have a natural knack for such things and can contribute a “correct” amount thinking with their gut, but for most of us it is a good idea to put a little thinking behind it. As the survey shows, if a person doesn’t have a retirement plan she will probably save too little even when she is able to save more.

What’s the solution?

Your first step is to educate yourself. Use resources available on the internet, in the library, or in the bookstore. (Check out links to webpages at the bottom of this post.)

Once you have a little information about the ins and outs of retirement planning, set up a retirement plan – a real plan. Again, there are lots of tools on the internet that help you; some of these tools are even free. You want to go to the sites listed below to access some of these tools.

Last, you can decide to work with a financial planner. As a matter of fact, chances are that your company can set you up with a planner whose services are free and part of the 401k plan.

It would be a terrible shame if you let your working years go by without saving enough money for retirement, especially if you were in a position to save more now.

What have you done to plan for retirement? What resources have helped you save the right amount for retirement?

Social Security Retirement Planner

ING Retirement Research Institut

Yahoo Personal Finance

Retirement at Money Magazine

Retirement at Smart Money

Money Obedience’s Retirement Planning Calculator

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Our post “Financial Habits” was included in the Carnival of Personal Finance hosted by Sweating the big Stuff.

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Your Financial Habits

Personal finance is really personal. Each one of us is unique. Let’s pause here for a moment and reflect on this. “Each one of us is unique.” Isn’t it one of the greatest miracles of life that each one of us is unique? Amazing!

Pause.

Now back to finance. (This almost sounds like that popular Old Spice commercial, doesn’t it?)

There are some time-honored rules in personal finance that apply to all like “spend less than you make,” but how we go about applying such rules to our own lives is really up to the individual. What works for one person, will not work for another person; what works for an individual in one year or one phase of life doesn’t work in another.

We have developed a short questionnaire that lets you get a quick look on your financial habits. In keeping with the theme of MoneyObedience.com we ask the question, “Who is in charge around here?” Does your money obey you or is money in control of your life? Get an answer at “Financial Habits.” It takes only 2-3 minutes.

Enjoy! And after you check it our, please let us know what you think. You may either write a comment to this post, or click on “Contact Us” at the right hand side of the page where you read the questionnaire’s answers.

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We are proud to let you know that our post “Life without life insurance is like…” was included in LenPenzo’s Black Coffee.

Our post “Keeping up with the Spouses” was included in the Carnival of Personal Finance hosted by Simply Forties.

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