While I like to consider myself adventurous, I’m not really one to take huge risks. In fact, every time someone asks me if I have a desire to go bungee jumping or skydiving I tell them the same thing; “Heck no!”. The way I see it there are really only two outcomes to skydiving. You fall for a minute or two and land safely, or you die.

“But Ninja,” they’ll say, “The feeling of the wind blowing past your face is incredible”. I bet it is, but if I want to feel wind on my face I’ll just stick my head out the car next time I’m driving. Big risks just aren’t my cup of tea.

I read the other day that “careers” are things of the past and the typical employee nowadays change jobs every two or three years. Not so much the case for this guy. I got my current job fresh out of college, and 4.5 years later, I’m still here. Unless someone calls me up out of the blue one day and offers me a six figure position, I probably will be here for a while longer. (those of you that have six figure job openings feel free to offer me one )

I like to pretend that I’m pretty risky when it comes to my retirement investments. Bonds are for wussies. I’ve got so freakin’ long until I retire, I’m stocks all the way baby. But even though all my investments are in stocks, they are still in relatively conservative funds. I don’t have an actively managed account. I don’t own individual company stocks. And I don’t buy and sell according to market fluctuations. Instead, I invest in three pretty boring Vanguard Mutual Funds (VTSMX, VGTSX, NAESX for those that care). Nothing too exciting about that.

About six months ago, I started getting antsy. I wanted to do something I’ve never done before, but I just couldn’t figure out what that “something” should be. Then it hit me. I need to buy three iguanas….

Oh who am I kidding. I didn’t buy three iguanas, or one for that matter. I just wanted to throw you a little curveball .

Sadly iguanas are not in my immediate future, but what is in my immediate future is a new business venture. Six months ago I had an idea (hopefully a good idea). Since I don’t have the required skills/knowledge/abilities to make this idea a reality, I had to hire people to do it for me.

Never in my life have I made a couple thousand dollar investment in something that wasn’t at least moderately safe. I wish I could go in to more details about the business, but for now I have to keep things hush-hush (I probably shouldn’t even be writing this post…haha). Not knowing if I just made the best or worst investment of my life is both extremely exhilarating and incredibly scary (kinda like skydiving I suppose). Two weeks from now I will find out if this six-month journey was one worth taking. Wish me luck

What risks have you taken lately?

P.S. A handful of you know what this venture is. Please be respectful and keep your lips locked. If you want to ask me any questions shoot me an email, DONT put it in the comments.

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In a little over month I will receive a small raise at work to the tune of $2,447. While I’m stoked to be getting any raise at all, let’s be real, it’s not a life changing amount. In fact, it only works out to about a $75 net gain each paycheck. Big Macs on me tonight guys. Wait… too expensive, ninety-nine cent Jack in the Box tacos on me instead

Since Girl Ninja and I are already able to put a good chunk of our discretionary income into savings each month, we decided to be responsible and increase our retirement contributions. Instead of throwing 5% of my gross income in to my 401K each month, we increased that sucker by another 3%, for a total 8% contribution. My employer matches 5%, so in total 13% of my gross pay will be going in to my 401K plan. Is that hot or what?

So I get a $2,447 raise, and before I even have a chance to see it in my paycheck, we decide to throw $2,200 of it in to our retirement. If that’s not keeping up with the Joneses I don’t know what is. SIKE! I hate the Jones family and everything they stand for.

Since I’m a self-proclaimed PF nerd, I thought I’d run a quick calculation…

If we keep throwing that $2,200 in to our 401K plan for the next 40 years, do you want to know how much extra we’d have come retirement? This example assumes an 8% rate of return.

$765,651.82

You can see the decision was easy. Get $75 extra in each paycheck? Or have an extra $765,000 waiting for me when I’m older? I don’t know about you, but I’m picking the latter every time.

Lifestyle inflation is cool and all, but if we are already content with what we have, what else is there to inflate besides our savings, retirement, and charitable contributions? I’m not going to go run out and buy another TV or laptop just for the hell of it (pardon my language).

Last time you came in to a little extra money, what did you do with it? If you had to inflate your lifestyle in one aspect how would you do it? (We would probably dine out a little more, or maybe pay for a maid service).

Did you know thirty is greater than fifteen? Oh you did? Well, then why do so many people proclaim a 15 year mortgage is better than a 30 year one. I’ll tell you why, because they are wussy faces. Okay, maybe not wussy faces, but they are at minimum narrow-minded.

Girl Ninja and I are planning on buying a house some time between now and never (haha, how’s that for a time frame). Although we don’t know exactly when this will happen, it’s never too early to start planning ahead. Today I thought we’d take a look at how a 30 year mortgage and a 15 year mortgage would impact the Ninja household.

Let’s lay out some numbers real quick so we’re all on the same page…

• Let’s assume the house we buy is priced at $300,000 and we put 20% down ($60K) effectively making our mortgage $240,000.
• According to Wells Fargo, today’s 30 yr mortgage rates are 3.875%.
• Fifteen year rates are listed at 3.250%
• Private Mortgage Insurance is irrelevant since we would put 20% down in both circumstances.
• Taxes and Insurance rates are equivalent no matter the loan type since the purchase price of the house remains the same

Okay, now that you know some of the background info, let’s crunch some numbers. Speaking of crunching numbers, did anyone ever play the game “Number Munchers” in computer class back in elementary school? I freakin’ loved that game. It was right up there with “The Oregon Trail.”

If we took the 15 year mortgage plan through Wells Fargo, we’d be looking at a monthly payment of $1,686. Over the life of the loan, we’d have paid $63,552 in interest.

If we took the 30 year loan, our monthly payment would drop to $1,128. That said, we’d end up paying $166,284 in interest over that time frame. YIKES! That’s over $100,000 more than the 15 year loan. Looks like the 15 year loan is the clear cut winner in this hypothetical situation.

If you’re like me, however, you believe liquidity is king. There is something comforting about knowing you have a healthy positive cash flow each month. With a 15 year mortgage I am committing an extra $558 every month to my mortgage. Good, because I’m paying my loan down faster. Bad, because I’m not able to use that cash for other things like investing, savings, or entertainment.

A shorter loan forces you to invest more capital in your house. And as we all have seen, home prices can drop sharply in a short period of time. Sure would suck having to invest all that extra money in a depreciating asset every month. Besides, just because you took out a 30 year mortgage, doesn’t mean you can’t pay it back faster. Remember, I had 20 years to pay back my student loans, but instead I punched them in the face in a little over two. A little discipline goes a loooooong way.

I could throw a whole bunch of other arguments out there as to why a 30 year mortgage isn’t as bad as some of you 15-ers make it out to be (things like the benefit of inflation, or the ability to invest the $558 in an account that will earn me a higher yield than 3.25%) but I wont. If you like 15 year mortgages then you should get a fifteen year mortgage. Just don’t make me feel like I’m being irresponsible for going the 30 year route (if we do).

If you have a mortgage what length is your loan for? If you haven’t bought a house yet, are you going 15 or 30 year loan? Any other points to consider?

p.s. I’m going to Korea

Keeping it simple today because we had a crazy night yesterday (we had 20 high school freshmen over for an epic game night). Let’s jump right in to it shall we?

I’ve always believed investing should be kept simple. In fact, I probably keep things too simple. Since I am young, I have chosen to invest 100% of my retirement portfolio in stocks. The stock markets historical long-term performance is too good to deny. As a result, I’ve personally decided to invest in index funds. I invest in small, mid, and large mutual funds as well as an international funds (VTSMX, VGTSX, NAESX for those that care about the ticker symbol). I’ve contributed to the exact same funds since 2007, when I opened my Roth IRA.

This strategy keeps investing– something I’m not particularly interested in– easy. And for me, easy is crucial.

That said, I’ve been reading a ton about people investing in gold, commodities, and the like. Some people who were primarily all stocks, have jump shipped and are looking for alternative places to grow their money, while others are putting more money than ever before in the stock market because they believe it is on sale.

There is no right or wrong way to invest (this isn’t entirely true, but you get what I’m saying). Everyone has an opinion and I want to hear yours. I don’t want the comments to turn in to a pitch on why you think someone should or shouldn’t buy gold (that would be boring!). Instead, I just want to know “Has the recession caused you to change your investing strategy?” Have you become more conservative? More risky? Or are you like myself and haven’t changed a darn thing?

p.s. if you don’t invest your money in something, you are failing at life.

First things first, apparently I’m a little late to the game, but I made a Facebook fan page last night for Punch Debt In The Face (See the new widget in the sidebar on the right?). I don’t really get why that’s better than my Facebook profile page, but for some reason people tell me it is. I also don’t know why likes are important on a page, but again, someone told me they were. Would you take a moment to head on over to my new fan page and gimme a little Likey Likey. If you do, I will…well… do absolutely nothing for you. Sorry, just being honest.

Alright, on to the content…

Do you have an income? Do you have expenses? If you answered yes to either of those questions, you darn well better have some financial priorities in place.

While there are a million different things we could talk about in regards to financial priorities, I want to focus on just one. Which comes first: investing or paying down debt? Hey, speaking of…

Which came first, the chicken or the egg?

Answer: Chuck Norris.

In all seriousness, I think financial priorities are something most of us think we have figured out, but don’t always truly understand. Today I’m going to show you why investing in your 401K is often a better option than paying down high interest credit card debt.

Let’s look at an example:

Jane, makes $50,000 year. She’s 30 years old and her employer fully matches 5% of any contributions she makes to her 401K plan. Jane also has $5,000 in credit card debt, at 15%. What should Jane do, pay down the card as quick as possible, or start building up a nice little nest egg for retirement?

A 15% APR, on a $5,000 balance, means Jane will be paying about $62/month in interest. If she made nothing, but minimum payments, it would take her a little over 22 years to pay that sucker off. She’d also pay $5,729 in interest over that time resulting in a total payment just shy of $11,000. Yikes, that $5,000 original bill became a whole lot more expensive. Better pay that sucker off ASAP, right?

Now let’s examine the investing route.

Jane would be investing $208/month in her 401K if she contributed 5%. Her employer matches that and gives her another $208. If she earned a doable 6% return on this money, and never got a raise in her life, she would end up retiring at age 67 with $683,030 in her 401K. Not bad at all.

If Jane decided to postpone contributing to her 401K, she could use that $208 to make accelerated debt payments each month. But let’s not forget, that 208 number is pretax, so in reality she’d have about $175 extra to throw at her credit card. With the additional payment, Jane will now be credit card debt free in 20 months and will have only paid about $673 in interest. Sounds a heck of a lot better than the 22 years it was going to take in the first example.

Here’s where it gets interesting.

Wanna know what Jane’s 401k would look like if she didn’t start investing until after she became CC debt free? She lost nearly two years of company matching and compound interest, resulting in $596,388 in her 401K. That’s $86,642 less then if she started investing at age 30.

Guys and girls, this point is SOOOO important it can not be overlooked. It is absolutely in Jane’s best interest to start investing in her companies 401K, even though she is not debt free. If she waits until she has her credit card paid off, she loses a crap load of money. I know this seems to go against the grain. Credit card debt is evil, don’t get me wrong, but that doesn’t mean it should always be at the top of our financial priorities.

Obviously, in a perfect world you will have enough discretionary income that you can not only contribute to your retirement, but also pay down your debt quickly. I always have been, and always will be a DEBT PUNCHER, but only when it is in your best interest.

Does your employer offer a 401K match? (I’d like as many people as possible to answer this question since I’ve heard a lot of the retirement benefits in the private sector have been getting cut left and right). Are you taking full advantage of that match? If not, you’re stupid. I’m sorry, you just are. You are literally giving up FREE money. In Jane’s situation would you go the way of Dave Ramsey and still pay down your credit card first, or would you let number’s guide you and start contributing to your retirement?

p.s. Like me on Facebook, I’m desperate