Retire early and withdraw from your 401k without penalty.

Remember that time I wrote a post about why I hate my Roth IRA and why I would probably never contribute to it ever again.

But then, like a week later, I wrote a follow-up post saying I still hate my Roth IRA, but I’ll probably keep contributing to it for the foreseeable future.

Or how about that time, a few weeks ago, when I wrote a post about having a ton of money available to me at retirement, maybe even too much?

But then my most recent post talked about how I was going to add even more to my retirement accounts, specifically my 401k.

 

This personal finance stuff can be confusing

What might sound good one week, may not be my cup of tea the following week.

With a government pension waiting for me on my 57th birthday, and social security kicking in shortly after, I’ve always just kind of resigned to the fact that I would work in to my late 50’s.

I mean, I’ll never make a huge salary in my line of work, so the idea of retiring early seemed like a foreign concept.

 

A Changed Perpective

But after reading J Money’s recent post on Early Retirement, and poking around with the spreadsheet he made, I found myself wanting to dig deeper.

According to J’s spreadsheet, if I change nothing about our spending (or saving) habits, I’m looking at being able to retire when I’m 45 years old. Check it…

early retire

Basically, the early retirement rule of thumb is you need to have 25 times annual expenses banked before you can retire.

Since our plan is to spend about $48,000 per year, we need $1.2 million stored away before I can call it quits. As soon as I hit that number, I can work my last day with reasonable certainty that I wont have to work ever again.

So the question remains, even if I had $1.2 million invested in my 401k right now, how could I possibly access those funds without paying the an IRS mandated 10% penalty for early withdrawal?

 

Introducing the IRS 72t withdrawal program. 

Without boring you to death, the 72t program allows an individual to withdraw an “equally substantial distribution” each year without paying a penalty.

Basically, if I have $1,200,000 in my retirement accounts by the time I turn 35 years old, I could take advantage of the 72t program and withdraw $56,420 from my 401k each year without paying a penalty.

There are, of course, a few catches to the 72t program. One of the most important being that you are required to continue making withdrawals until age 59 1/2 or for five years, whichever time period is longer. So no withdrawing some years, and not withdrawing others. It’s definitely a long term commitment for those that choose to retire early.

But hey, how bad can retiring early really be? 

Another big whopper for the program, is that if you modify your series of payments in any way, the 10% early distribution penalty is retroactively imposed on all money you’ve withdrawn. Ever. Yikes! That would be a very costly mistake.

Basically, once you pick an amount to withdraw each year (in this example $56,000), you have no wiggle room to withdraw any amount other than that from your 401k.

If you want to learn more about the 72t rule you can do so here

Some other things worth noting 

So far I’ve only been talking about withdrawals from my 401k, but as you all know, I’ve also been an avid contributor to my Roth IRA and most recently, a taxable investment account.

Having my retirement portfolio diversified across a number of avenues sweetens the pot. With the 72t rule and my example above, I was only allowed to take out $56,000 a year.

No more, no less. 

But what if I have Girl Ninja and I decide to buy a new car, or pay for Baby Ninja’s first year of college, or a potential future daughter’s wedding. Where is the money for those types of things going to come from?

My Roth IRA. Duh.

I’ll be able to use my Roth as a means to buffer any abnormal spending requirements. Because, as I’m sure you already know, Roth contributions can be withdrawn at any time.

Or in other words, I’d have about $75,000 of tax-free/penalty-free money accessible to me at any given time by my 35th birthday.

 

But wait there’s more. 

As you might recall from my post on Home Equity Lines of Credit, Girl Ninja and I have decided to stop keeping so much darn cash in the bank and begin throwing all our discretionary income in to our taxable investment account.

That’s right. Screw our savings account!

As our taxable investment account continues to grow, I can take advantage of all sorts of tax loop holes to to minimize my tax obligation on withdrawals, possibly even completely eliminating taxes altogether. Tax loss harvesting anyone? Or how about dividend investing? The loop hole list goes on and on.

Don’t believe it’s possible?

You’re wrong. Check out this inspirational blog post from a couple that paid NO TAXES in 2013.

 

It’s time you start drinking the kool-aid!

Like I said before, I’d always assumed early retirement was for two types of people.

Either the mega wealthy for obvious reasons.

Or

People like Mr Money Mustache, who live such a frugal lifestyle that they spend less than $25,000 per year. (editor’s note: Nothing wrong with the frugal and resourceful lifestyle, I personally am just not as interested in giving up my vehicle, moving to a cheaper cost of living area, growing my own food outback, etc. I’m lazy in that respect and am willing to pay the premium for it I suppose.)

Now that I’m digging deeper and getting in to some of the nitty gritty aspects of personal finance, my eyes are open to a whole new way of thinking. While I might not be retiring at 35 like the examples above, I could see 45, or maybe even 40 being a real possibility. And I don’t know about you, but that sounds a heck of a lot better than retiring at 57 like I’d always planned on.

 

P.S. I’m aware the future will obviously have some expensive seasons ahead (multiple children in high school, potential house projects, big family vacations, etc), but we will also have seasons of reduced expenses or greater income(paying off our mortgage, kids moving out and becoming self-sufficient, Girl Ninja going back to work, pension, social security, etc). 

Get Rid Of Debt And Start From Scratch

Are you the type of person who was never properly weaned off their parents’ credit cards? Have you racked high figures on four, five, possibly even six credit cards to keep up with your luxurious lifestyle, but now all of a sudden are stuck paying for them all by yourself because you finally stepped into the adult world? Welcome. You aren’t alone by any means. Your situation isn’t even all that uncommon, if we’re being honest about how today’s society works. If this described your situation down to the teeth, know that your path to getting all of your debt consolidated starts with just one simple mouse click to www.fasttrackdebtrelief.com

Fast Track Debt Relief is a company that aims to bring together debtors who owe up to $100,000 and dedicated debt experts who can greatly help. Not only can these professionals offer general debt help, they can work with credit card companies, bill collectors, banks, and other bothersome entities on your behalf to lower and consolidate your payments. The experts at Fast Track Debt Relief have a good track record — if you look at the list of debts they’ve settled provided on their website, you see that every single customer that hired them paid, at most, 40% of the debt they owed. That’s a guaranteed 60% off, and that’s just the minimum! Upon inspection, you’ll see that some of them only paid 15 to 20 percent of what they owed!

To get your financial life back in order, you must get rid of your debt as soon as possible. Don’t hesitate to hire a professional to help you work your away around the intricacies of the debt world, where creditors can easily forward your commitment to annoying collectors known for harassing individuals. Don’t be a victim of debt, nip it in the bud as soon as possible! And when you do, you’ll be able to start your debt free living lifestyle and be able to build the life you want!

Buying Property: Is This the Best Investment for You?

Once upon a time, if you were going to achieve the “American Dream” you’d need to be a homeowner. However, recent studies have indicated that many are starting to believe that owning property isn’t the best financial investment with 43% of participants in a study believing this to be the case. Furthermore, nearly 50% felt that financial success could be achieved just as easily by those renting property as those who owned it.

So, is owning property a good long-term investment? Or, are people given more financial flexibility and just as much security if they rent a property?

Long-term Investments in Property

As mentioned previously, many Americans now believe that strong long-term investments aren’t achieved through housing. A leading expert on housing in the U.S., Robert Shiller, found that from 1890 to 1990, there was almost no change in the real inflation-corrected prices of houses.

Evidently, these statistics go against the reasons why people will purchase property to invest, as most will believe that buying property will provide them with a financial gain in the future when they come to sell it. With decreasing housing prices witnessed during the early stages of this century and in the 20th century, the instability of housing prices doesn’t seem to be at the forefront of everyone’s mind.

While housing does stay in line with inflation (historically speaking), there are a vast amount of changeable factors that can have a negative effect, including changes in style preferences, technological advancements and changes in amenities.

Higher returns over time are far more likely to come from the stock market than property investments and are perhaps a more clear-cut answer for those looking to invest. Places like Money Morning offer advice on where the best investments can be made, helping to protect money from inflation. Nevertheless, many would still argue that housing offers security and a sense of pride when investing in this.

The Financial Security of Renters

Even though attitudes are changing towards buying homes and renting, it is still clear that being a homeowner is more likely to be a better financial decision than renting. A report conducted in 2013 found that a higher net worth was generated by those households who had a low- and moderate-income, compared to their equivalents who rented property.

While the study didn’t provide conclusive evidence that homeownership is the right avenue to take, it did show that over three years, those with mortgages increased their net worth by $20,000 compared to those renting who achieved $15,000.

Many do argue that renting should increase wealth faster but research always tends to find that homeowners have this advantage instead.

Should You Invest in Property?

Homeownership isn’t for everyone and it may not be the right decision for you. To start with, you’ll need to find a large payment that you’ll have to make upfront, which will affect your liquid assets for quite some time. And, mortgages can vary so you’ll need to look into the rates, fees and payment schedules of these before proceeding. Also, take into consideration where you’re looking at property because some areas will provide greater benefits for renters than homeowners, and vice versa.

Should you be thinking about investing in property to rent out to others, there are also a number of financial considerations you’ll need to make here. Like a dividend-paying utility stock, rental income will provide you with steady payment amounts each month, where any price appreciation you achieve will be a welcome addition. However, unlike buying a low-cost index fund, you’ll have to consider the additional work of having to deal with tenants and maintaining the property.

You’ll need to establish whether you can take on this extra work and whether you’re prepared to deal with tenant calls out-of-hours and what you would do if a tenant stopped paying their rent. Make sure you’re aware of what ongoing maintenance costs you may have as well as the initial costs of renovations. If all of these aspects aren’t taken into consideration at the start of your investment, it could severely impact the returns you receive.

In summary; if you’re looking to buy a property to get your first step on the property ladder or you want to make some investments for the future, carefully consider what options are available to you. Analyze what return on investment you can realistically expect and calculate this against other avenues, such as investing in stocks. Doing your homework first will enable you to make an informed decision that provides you with the right financial investment for you.

Jade Gould is a consultant who works with individuals and selected small businesses. Keen to share his knowledge and always ready to offer his opinion he really enjoys writing articles and seeing his words help others.

 

Take Care Of Your Car Early And Often To Save Money

When you buy a new car, it smells brand new and sparkles on the outside, but it won’t stay that way for long until you take special care of your vehicle. You need to wash, clean, and polish regularly to keep your car in top shape. And the more time you spend on it, the better your car will look. But it takes time and effort! Personally, I didn’t take good enough care of my car, and after 3 years, it’s got some water spots and the interior could use a good cleaning. It won’t be cheap, and I would have saved money had I taken care of it properly from day one instead of waiting years to get serious about keeping it clean.

This is doubly true when it comes to regular maintenance. Whether it’s normal oil changes and air filter replacements, tire rotations, or more serious issues like brake replacement, the better you take care of your car, the cheaper it will be in the long run. Take it from someone who knows! You can get all the products you need to take care of your car from AutoZone, from cleaning supplies and replacement parts, to tools and accessories to give your car some personality. Just don’t get those headlight eyelashes, please! With their excellent customer service, you can be sure that you’ll get the right advice on products to keep your car looking as good as the day you drove it off the lot.

With all the different types of maintenance and upkeep you just read about, it might be a bit overwhelming to think about how much this is going to cost you. After all, you just spent tens of thousands of dollars on the car itself, who wants to spend more just to keep it looking good? Well, there’s good news for you! Groupon has some great AutoZone coupons that can help defray the cost of all these products.

This is true not only for AutoZone but for also hundreds of other retailers. So anytime you’re thinking about going shopping, head on over and see if you’re favorite retailer has a coupon. You never know, you could end up saving a lot of money by taking an extra minute to search before you buy.

With your car, the more time you put into a car early on, the more you’ll save in the long-run. The same is true when trying to save money on something you’re going to by anyway: spend a few minutes searching for a coupon and you’ll save money with minimal effort!

Should we be Using Mobile Banking?

Our smartphones have revolutionized the way we live our lives. They have become integral to communication, to organization, and now to banking. Mobile banking applications are becoming increasingly popular and are slowly but surely overtaking more conventional means of making financial transactions.

Acknowledging the fact that convenience is a key selling point, most major commercial bank offer the capacity to send money and make deposits using a mobile app. Bank of America has stated that more of their customers use their mobile banking platform than their online banking service and the technology is improving daily. Mobile phones can now even be used as contactless credit cards using near-field communication (NFC) technology. This means that PIN numbers and debit cards might one day become a thing of the past.

All of this advancement sounds incredible, yet there are often downsides to every innovation. So how do the benefits of mobile phone banking stack up against these drawbacks? And are we increasingly becoming reliant on technology that we don’t even fully understand?

Mobile banking is easy to set up

Getting started with mobile banking is easy and straightforward for those familiar with technology and mobile apps. With just a few swipes of your finger, you can get your mobile banking set up and running. You simply use your existing internet banking details and then everything is available to you at the touch of a button. The majority of banks even offer a customer service line that you can contact at any hour of the day.

Mobile banking saves a lot of time

There is no denying that mobile banking saves a considerable amount of time. Gone are the days when we used to waste what seemed like hours lining up to be served by a cashier at the bank. With mobile banking, you can check account balances, send and receive payments, schedule transactions, and transfer money at a moment’s notice from any location.

Mobile banking is unarguably convenient

Last year, research from the US Federal Reserve revealed that 87% of US adults own a mobile phone, and 71% of these mobile phones are internet-enabled smartphones. This was a 10% increase from 2014. This same research showed that 39% of adults with mobile phones used them for banking. This data demonstrates both the growing reliance on mobile phone technology and the increasing willingness of people to use mobile banking due to how conveniently it works in their modern lives.

People are wary of security risks

One major concern surrounding mobile banking is that of security. Smartphones are such a large part of our lives that we often forget how new the technology is and how badly things could go wrong if security was breached. There are risks with any banking method you choose, but there are steps that you can put in place to minimize the likelihood of fraud.

Ensure that you have malware software on your smartphone and always certify that the banking app you pick is authentic and not created by fraudsters. Ensure that your phone’s locking mechanism is active and that it requires a PIN, passcode, or fingerprint to open. Set up your phone to lock automatically after a set time. Update your mobile banking app whenever a new version becomes available. All of this should make it more difficult for hackers to reverse-engineer viruses or to find weak points in security. Out-of-date banking applications are much more vulnerable to attacks. Having said this, in many ways mobile banking beat out traditional security measures such as PIN codes and signatures. It is much easier to fake someone’s signature than to steal their phone.

Beware of impulse overspending

With enthusiasm and innovative new mobile technology comes the temptation to spend especially when access to our own money is so easy. Regardless of how inviting it might be to take to the internet and spoil yourself with an impulse buy, it is best to reign in this behavior. New research shows how mobile banking apps are causing young people (aged 18 to 34) to be far too willing to embrace compulsive spending with the impulse spending of this age group being double that of those aged 55 and over.

 

Reckless spending and lack of control can easily send you down a debt spiral. If this occurs, consult an expert in debt management. These professionals have access to innovative insolvency software, which can help track your incomings and outgoings and calculate payment plans, thereby getting you back on sturdy financial ground.

10 Jobs That May Help You Pay Back Your Student Loans

The high cost of a college education has left many young professionals with crippling student loan debt as they graduate. Once you enter the workforce, however, you must make sure that you don’t get behind on your loan payments. If you’re looking for a way to get some relief from this debt, you may want to consider a different career. Here are the ideal jobs to have to get help paying back your student loan debt.

1. Teacher

In some cases, landing a teaching job can help you reduce your student loan debt. There are multiple opportunities for teacher loan forgiveness. In most situations, you must work in a school for at least one year to get some of your debt cancelled or forgiven. There are more loan cancellation programs for teachers in low income areas, teachers in subjects where there are staff shortages, special education teachers, and math and science educators.

2. Nurse

For nurses, there is a program that can help you get your payments on track by reducing the amount of debt you owe. This program is found through the Nurse Corps Loan Repayment Program. Nurses enrolled in this commit to working in low income areas in order to provide quality healthcare to those who may not have had full access in the past. Once a nurse has worked for two years in the program, then he or she is eligible to get a debt reduction.

3. Soldier

Individuals who have decided to serve their country can also take advantage of some of the programs offered for student loan assistance. After enlisting, soldiers can take advantage of free tuition benefits with the GI bill, but that doesn’t address existing student loan debt. For previous balances related to the cost of education, military members can use benefits that are given to any public service employee. After making payments for at least ten years, the remaining balance can be forgiven.

4. Volunteer

Certain volunteer programs may also be able to help you reduce your loan burden. If you are interested in volunteering after completing your degree, programs such as AmeriCorps or the Peace Corps make it financially possible. While you won’t generate an income as a volunteer, you can get some of your student debt forgiven if you complete the terms of the program’s service contract.

5. Social Worker

Those who choose to work as a social worker often have a low salary and lots of tough working conditions. One thing that is now being offered to these public service employees is the opportunity to get some of their student loan debt reduced. Since social workers work for the general good of society, they can take advantage of some of the student loan forgiveness programs offered for most public service employees.

6. Public Defender

Beginning a career in law sometimes puts a person in six figure student loan debt. One way to get some relief from this debt is to consider work as a public defender for a few years. In return, you may qualify for getting some of your loan balance cancelled.

7. Police Officer

Working as a police officer is another way you could get access to student loan debt reductions. While the salary for this career isn’t high, if you are interested in this line of work, you could provide a large benefit to society. Because of the selflessness of this career and the sacrifice, you can get part of your student debt taken away.

8. Federal Government Worker

Getting hired by the federal government gives you access to excellent healthcare, a competitive salary, and even possible student loan forgiveness. In order to get your loan cancelled, you must consistently make 120 payments. Missing payments can disqualify you from the program. If you know you may be short one month, you should consider a short-term loan, like some options from Speedy Cash, which is led by president and CEO Don Gayhardt, a financial services expert with a long record of success.

9. Military Doctorpre

Doctors are one of the professions that leave school with some of the highest student loan debt balances. While high salaries help medial doctors begin to tackle their debt, you can get even more help with your payments if you sign up to be part of the military’s medical team. Just like an enlisted soldier, working as a military doctor can give you some welcome relief from high student loan balances.

10. Automotive Worker

The last career choice that could help you pay back your loans is an automotive worker. One way that the nation’s automotive industry is being supported is through a student loan payback program offered by the Specialty Equipment Market Association. This group makes it possible to receive up to $5,000 in student loan forgiveness.

Confronting the reality of high student loan payments after graduation can be tough when you’re first starting out in your new career. If you have chosen some of these careers that are primarily based on public service, you could see smaller payments and shrinking student loan balances throughout your service.

Punch Debt in the face with a progressive win!

MoneyYou can punch Debt in the face with a progressive win! Lots of people specifically enter the world of online gambling because if they want to play games online, they figure that they might as well try to make money in the process. Naturally, casino games are ultimately games of chance, and even the most skilled gamblers are not going to win everything. Skill in gambling partly involves knowing when to quit and when to play. The people who know when to take the risks will often be the ones to carry home the grand jackpots.

The Royal Vegas Online Casino offers a lot of great opportunities for the people who are interested in being able to succeed at gambling. People can play progressive slots games at Royal Vegas, and these are the games that are going to be more likely to net them to opportunity to eliminate their debt. Progressive jackpots grow larger and larger as more people play them. With the most popular progressive slot games, the jackpots can reach the seven figure range.

It is true that people are technically taking a bigger risk when they play the progressive online slot games. They will usually have to make the maximum bet in order to get a chance at the huge jackpots, and most of the people who do this are not going to actually walk away with the jackpots. Progressive jackpots are situations involving high risks and high rewards. The rewards can be high enough that people can not only get rid of their debts, but they can also still be rich after all of their debts have been cleared. This is the kind of opportunity that is worth taking a risk in order to secure.

The maximum jackpot at the Royal Vegas Online Casino measures between two and three million dollars. Some people have hundreds of thousands of dollars worth of debt. Few people have millions of dollars in debt. As such, it is going to be that much easier for people to be able to pay off their debts and have plenty of money left over for their investments if they are able to secure these enormous jackpots, because the jackpots are still worth a lot even in this day and age.

A lot of people seem to feel as if a few million dollars is no longer a lot of money in an era of inflation. However, they are thinking on a bigger scale. For the majority of people who are making a low five figures a year, a million dollars or three really is a very large sum, and it really is capable of changing the course of their lives. People can play progressive slots games at Royal Vegas, and they will be able to earn enough money to live off of for the rest of their lives if that is what they want and if they manage to get lucky at the right time. It really is possible to punch Debt in the face with a progressive win!