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Now that the government backed down on its proposed changes to 529 plans for future education expenses, we can expect the same tax benefits present for education to be applied to families and individuals who face expenses caring for disabled people.

Families will be able to deposit funds into special savings accounts, called 529As, and earnings in these accounts will grow and can be withdrawn without any tax consequences. The annual contribution limit will start at $14,000, linked to the amount of the gift tax exclusion, and accounts can grow to $100,000 without being counted against qualification for Social Security benefits. The actual account maximum will be defined within each state’s regulations.

As long as the money withdrawn will be used to pay for qualified expenses, like housing, education, transportation, health care, and rehabilitation for the disabled beneficiary, these tax advantages will apply. This new account is a result of Congress passing the Achieving a Better Life Experience (ABLE) Act of 2014 and President Obama signing this bill into law.

Like 529 plans for college education, 529A plans will be managed by each state. This will provide another stream of revenue for the companies contracted by the states to provide these services, an economical benefit to organizations usually within that state. For an idea of what kind of fees consumers will see with 529A plans, you can see this chart that outlines current 529 plan fees on a state-by-state basis. There’s no reason to assume that 529A plans will be any less expensive than 529 plans.

Will 529A accounts help people with disabilities?

Federal benefits like Medicaid aren’t helpful to households that have more than $2,000 in savings. Medicaid could have been an essential tool for helping families afford medical expenses for disabled people, but the asset limitation does little to encourage financial security. A 529A plan would allow a disabled person to have much more sizable assets while still qualifying for Supplemental Security Income.

Some families have been able to establish a special needs trust to get around the $2,000 savings maximum for Medicaid, but not every family with a special-needs member can afford to establish a trust and these trusts don’t offer the tax benefits that 529A plans will. Some savvy savers have used 529 college savings plans inside a special needs trust to pay for educational expenses for a disabled beneficiary, but with the 529A plan, this can be done without the special needs trust.

One disadvantage of 529A accounts is that a household may take advantage of only the plan available in its home state, unlike 529 plans for college savings. Savers won’t be able to shop around. AARP also points out that any funds remaining in an account after a beneficiary passes away may be turned over to the state to help pay for Medicaid expenses. Also, if a beneficiary withdraws funds from a 529A plan and doesn’t qualify for special tax treatment, the withdrawals will be subject to a 10% penalty as well as the income tax, just like a 529 plan.

Excess contributions, deposits made into 529A plans beyond the gift tax exclusion, will be subject to a 6% penalty — so if you choose to save using this vehicle, be careful.

The added cost of typical expenses for an individual with autism over the course of his or her lifetime is $1.4 million according to the U.S. Department of Agriculture. The added cost increases to $2.3 million for a person with intellectual disabilities. Keeping that in mind, the advantages of a 529A plan represent a small drop in a bucket for people who are embarking on a life journey with an automatic financial disadvantage. When some families can take advantage of 529 plans for savings on education expenses, 529A plans could help create a complementary opportunity for families whose children may never attend college, but are certain to spend just as much, if not more, money on educational expenses for specialized services.

529A plans are protected in bankruptcy proceedings, as long as the contributions were made at least two years prior to filing for bankruptcy. A portion of contributions made more recently may be available to creditors’ claims. Due to the sometimes unmanageable cost of living with a mental or physical disability, the need to declare bankruptcy is more likely than it would be for other individuals, so this protection could be important or even life-saving.

These are the full qualified expenses, and they are quite comprehensive: Education, housing, transportation, employment training and support, assistive technology and personal support services, health, prevention and wellness, financial management and administrative services, legal fees, expenses for oversight and monitoring, funeral and burial expenses. Any withdrawals made for other expenses will be subject to the penalty and tax.

Who qualifies to be a 529A plan beneficiary?

In order to qualify, a person must be or have been blind or disabled before his or her 26th birthday. If the person qualifies as blind or disabled under Title II of the Social Security Act or has a disability certificate on file with the IRS, he or she will qualify. Disabilities that qualify are those that include a mental or physical impairment that can lead to death or will last for at least 12 months, by the determination of a physician.

Some details about 529A plans still need to be worked out by the government, but as the plans exist on paper, they could provide some relief to people managing life with a disability. Once 529A plans are available to savers and consumers, readers will be able to find more information on Consumerism Commentary.

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Since December, federal banks and credit unions have been allowed to offer savings accounts that include a raffle element, after some states have allowed accounts like these for some time. The goal of these lottery-like accounts is to encourage more people to save money, particularly those households with low and moderate incomes. This was the single provision of the American Savings Promotion Act, a bipartisan bill signed into law by the President of the United States.

How prize-linked savings accounts work.

When you open an account with a certain value, you receive an entry in the raffle. While account holders don’t necessarily earn interest, one lucky winner will receive enough interest to change one’s life. The more you save, the more chances you have at winning.

Here is an example of how this works, based on the “Save to Win” model, organized by the Michigan Credit Union League (MCUL) in 2009, in which some state credit unions are all ready participating. If you open up a 12-month certificate of deposit within a prize-linked savings account and deposit $25 into the account, you receive one ticket (like a raffle ticket). For every additional $25 you deposit into the account, you receive an additional ticket, up to ten chances per month. With the tickets linked to CDs, keep in mind that you may be penalized for withdrawing your money before each deposit matures at the end of the initial twelve months.

The prizes are generally awarded as small monthly prices or larger annual prizes. Even the small monthly prizes would be larger than the interest you could earn in the highest of high-yield savings accounts, but there’s no guarantee of receiving it. Some of the winners have been publicized like lottery winners or charities, with big checks indicating $10,000 in prize money.

For North Carolina credit unions in the Save to Win program, on the 14th of each month, there are 3 grand prize winners every year, receiving $10,000 each; three quarterly winners each year, with prizes from $500 to $1,500 depending on the quarter, and 312 winners each month across the state, winning prizes from $25 to $100. These are the Save to Win central drawings — each participating credit union may also supplement the program with their own drawings.

The state credit unions already offering these accounts may be successful in encouraging saving behavior among individuals who may not already be saving money — at least, not saving money in a bank. The accounts may attract people who are prone towards gambling or other risky behavior. Prize-linked savings accounts have been around in other parts of the world and have been shown to be successful in attracting depositors. The question remains whether encouraging good behavior through the potential of a prize has any lasting effect on savings behavior.

If people begin to associate saving money and other behaviors that ultimately benefit a family from a financial perspective with the chance to win a prize, they may only desire to take on these behaviors when they could win something — a prize more immediate than long-term financial stability. When parents pay their children a monetary prize for good grades, those children could be associating good school work with financial gain, which may not always work out well in the end.

Parents can control how they use rewards with their children, adapting the strategy to ensure they are working hard for the right reasons, but financial institutions look out for one thing: the bottom line. Banks and even nonprofit credit unions will continue to run programs like these as long as they’re profitable, with no regard for whether customers are overall in good financial shape.

Bloomberg explains some of the history of prize-linked savings accounts:

A bank in South Africa tried this in 2005. The First National Bank’s Million-a-Month Account promised savers a chance to win 113 prizes a month, including a grand prize of 1 million South African rand (about U.S.$150,000 at the time). Within 18 months, the bank had more prize-eligible accounts than regular ones. These new customers, many of them poor, saved an extra 1 percent of their incomes, a recent study found, and boosted their overall saving 38 percent…

A prize-linked savings account won’t help raise incomes, and it won’t lower the costs of health care or housing. But it may nudge Americans to pay just a little more attention to their savings, so that an unexpected expense doesn’t become a financial disaster. At the very least it could give some lucky savers the thrill of hitting the jackpot. (Bloomberg)

People are drawn to lotteries, usually for worse, but maybe also for better. If you look at the lottery as a “tax on stupid people” or a “tax on poor people,” this is a little different. In a typical lottery, you buy a ticket and never see that money again. It’s a terrible investment, yet people, not just the stupid and poor, continue to pour money into the lottery.

While offering the chance at a financial windfall might encourage more saving, is a $10,000 windfall enough to encourage behavior? I can remember my days (not too long ago) working in a corporate office environment. When the multi-state lottery prize money was high enough, well into nine digits, a group would organize and co-workers would pool money together to buy some lottery tickets. Throw a dollar in, have an infinitesimal chance of winning enough money to buy the moon. The odds are better when you deposit $25 into a bank, but the prize is not as significant. But at least you can get your money back.

Ultimately, the prize-linked savings program in South Africa was shut down because it was determined to be unlawful. But here in the United States, states and federal governments are making way for the potential for more accounts. It might take some time, but eventually, banks like Citi, Wells Fargo, and Chase could be jumping into the game.

In theory, banks would not need to charge fees for these accounts because they will be big money-makers for the institutions. As of September 30, 2014, J.P. Morgan Chase Bank was holding $1,377,661,000,000 in customer deposits, which would include interest-bearing and non-interest-bearing accounts. The bank spent $210,000,000 in interest on deposit accounts that quarter. That’s an average annual interest rate of about 0.00375%. Banks can profit on accounts that don’t pay interest — these are basically free loans from consumers to the institutions. They can use the deposits to earn a low interest rate. With interest-bearing accounts, banks pay the profits back to consumers, but they can keep more of the profit by paying a larger amount of interest to a much smaller number of depositors.

That’s how it would work out if each bank ran its own program. But like lotteries, an outside organization could handle the management of the prize accounts, which means that like multi-state lotteries, the funds are pooled and prizes are awarded across financial institutions. That’s where Save to Win comes into play.

How to open a prize-linked savings account.

It isn’t simple today.

To open account, first, you need to be a resident of one of the states that currently offer these prize-linked savings accounts: Michigan, Nebraska, North Carolina, or Washington. Then you must be a member of a credit union that offers a partnership with Save to Win, which seems to be the only lottery service catering to credit unions so far. For the most part, you won’t be able to open an account online. First, you’ll need to become a member of a participating credit union if you aren’t all ready and if you qualify. Some credit unions allow online applications. You will almost always need to visit or call the credit union to open a 12-month CD account linked to the Save to Win program.

Programs like these will continue to expand as national banks and credit unions begin taking advantage of the new law that allows these accounts in national financial institutions, both banks and credit unions. I expect that as the programs grow, they will be accompanied by significant advertising campaigns designed to get new customers in the door, appealing to the communities that banks expect would be most likely to respond to lottery-based promotions. In other words, this could be a way for banks to make profitable entries into low socio-economic status neighborhoods, something the financial industry has avoided.

To find a participating credit union in the four listed states, visit the Save to Win website. Frequently mentioned alongside Save to Win is SaveUp, a for-profit company that offers prizes to customers who exhibit positive financial behaviors, like paying off debt. That isn’t exactly the same as prize-linked savings accounts, but it follows the theory of treating customers like children (through financial rewards) to train better financial behavior among Americans.

Do you think prize-linked savings accounts are good ideas? Would you open an account for the chance to win one a lottery like this? Or is this just another way for the financial industry to take advantage of lower-class customers?

Photo: Flickr

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People like rules of thumb and quick answers. When a complicated question can be answered by an authority with a simple response, the reaction is likely to be one of two possibilities: a feeling of well-being and satisfaction if the questioner is meeting the requirements, or motivation to improve if the ideal situation is not being met. So if that’s all you need, the answer to that question I’m posing today, a number that represents the ideal savings rate as a percentage of income, let’s go with an answer of ten.

If you can save ten percent of your income throughout your life, you’ll probably be fine; in fact, you’ll be in a better financial position that most of your peers.

Most people don’t need to delve any further. If a reader is saving less than ten percent of her income, this bit of information may be all she needs to get the inspiration to save more, though additional motivation might be necessary to achieve a ten percent savings rate. If a reader is saving more than ten percent of his income, he might feel satisfied with the status quo, and not see the need to improve his situation. In that case, a rule of thumb could actually be preventing a reader from realizing his potential.

Very few things in life are strict prescriptions, black-and-white. This is why I’m not a fan of generalized advice. The self-help industry uses generalized advice as its foundation. Yes, there’s a possibility to motivate, but there’s also a potential for serious harm. A nutritionist who becomes familiar with your lifestyle and your needs can offer you better dietary advice than a popular diet book. A good business coach can understand your family’s needs and your skills and tailor advice to your situation. A financial adviser can study your financial situation, your goals, and your potential, and tailor an investment plan to you that makes sense. These types of advice can’t be sold to a mass audience.

In order to really figure out what your best savings rate might be, and if you want a better answer than “as much as possible,” you have to think about a number of other questions first.

What does it mean to save money?

The concept of saving money has had a good run since the Great Recession. Large-scale economic problems have affected people on an individual level, and as a result, the idea of frugality experienced a surge. The trend seems to have died down as the economy improved, but some people who got into the habit of making better choices about spending money have maintained those habits.

But being smart about using coupons and looking for deals isn’t really saving money. To have an impact on your finances, you have to do more than just spend less. You have to take that differential and put it away. You’re not saving money if you take advantage of a sale and then use your surplus for another spending purpose. That money must be put aside for the future, whether in a bank account, a long-term investment, or your mattress. That, and only that, is saving money.

What am I saving money for?

There’s more to life than having a big bank balance. Money is meant to be used for some real purpose. I feel somewhat sorry when I hear about someone who recently died intestate possessing millions of dollars that no one knew about, even family. Perhaps the money offered these people some peace of mind while they were alive, but aside from that, there are so many other possibilities, so many missed opportunities. You don’t need to be wealthy to be happy, but if you’re going to amass significant savings, it’s better than you direct how it will be used than leave it up to the state (who will have to go through the trouble of finding an heir).

It’s good to create a guiding principle for living your life, a personal mission statement. That can help you determine exactly why it’s important for you to save money faithfully. Perhaps there is a charitable cause about which you feel strongly, that could use your assistance. Perhaps you just want to have the freedom to never need to work to make a living. Perhaps you want your children and grandchildren to not need to worry as much about financial problems. Maybe you just want to travel.

Whatever you goals are, you should make it clear to yourself exactly why savings is important. Being able to retire should be the lowest bar. What will you do when you’re retired? How do you want to spend your time when you don’t want or can no longer be able to work?

Who am I saving money for?

Your savings needs depend on who is depending on you. Do you plan to support a spouse? Do you want to pay for your children’s education? How many children do you want to cover, and how much money are you willing to commit to their expenses? Private high school or public? Expensive university or community college? Are you saving money for starving children living in poverty in the world (or just to visit poverty)?

What is my number?

I’ve read a lot of books about personal finance, and The Number by Lee Eisenberg is one of my favorites. That says a lot considering I don’t like most personal finance books at all. Once you know why you’re saving money and who needs that money, you’ll be in a better position to determine your target, and this book can help you hone in on what that number might be.

Your target can change over time, and I like to remind people that a bank account balance is not a real goal, but having a number in mind will help you determine your ideal savings rate.

How much have I already saved?

To determine your needs, you have to know where you stand today. I know I couldn’t get started on my path to improve my financial situation without taking an inventory. Even before you get to listing your assets and liabilities on a sheet of paper or on the computer, you need to do a little self-evaluation. What is your relationship to money today? Does money make you anxious? Are you worried about being poor? First, determine what kind of emotional effect money and your financial situation have on you (and your family, if applicable). Then look at the logical side — the numbers.

You want to be able to end each month knowing exactly how much money you have (or owe) and how that value is changing on a month-to-month basis. You can see examples illustrating exactly how Consumerism Commentary readers go through this process of accounting for and analyzing their net worth, income, and expenses each month through the Naked With Cash series.

The amount of money you’ve already saved towards your goals can affect your future needs to save. How that money is stored — whether in long-term growth investments, interest-bearing savings accounts, or your mattress — also factors into the calculation. For example, if you’ve already exceeded your long-term savings goal, you don’t have to concern yourself as much with a future savings rate — you just want to maintain.

How much income do I have?

Given the same goals and the same final number, as well the same initial savings balance, a household earning $100,000 a year will need a lower savings rate than a household earning $80,000 to reach those same goals. If you’ve noticed, many of the early retirement gurus have saved money during periods of time while they were earning more money than the average American worker. Saving money is just easier when you have more income to work with. Yes, there is always a possibility of increasing saving rate by reducing expenses and spending less, but there’s a finite limit to that. You need to spend money to meet your basic survival needs.

The income side is relatively unlimited. And an increase in your income can be your biggest friend as you save towards your financial goals.

What will my future income and expenses be?

If you are on the path for a career of high earnings, or you have a good probability of receiving an inheritance, this could bode well for your ability to save enough money to meet your goals. Beware of lifestyle creep; as your income does grow, your expectations tend to change, as well. As a twenty-year-old beginning your career, you may have no idea what kind of lifestyle you want to live in the future, nor will you know how much that lifestyle will cost. As you gain more experience as an adult, you learn new things. You may start a family, and now you’re thinking about more than just yourself when you consider your future needs.

It’s extremely difficult to predict what your income and expenses will be in the future. People who predict their needs with confidence are often wrong. Nevertheless, making some educated guesses about the future, based on your chosen career path and your other life choices, is better than moving forward blindly (or not moving forward at all).

What will the world be like in the future?

Just like it’s difficult to predict your future situation, it’s even more difficult to have a good understanding of what the world might be like thirty or forty years from now. We make financial decisions based on the environment today, whether those choices involve good places to raise a family or investing accounts that have tax-related consequences. We never know when, for example, Congress might change the law so that Roth IRA withdrawals are subject to a tax, but we invest in Roth IRAs today with the assumption that withdrawals will be tax-free.

Seemingly even more extreme, we don’t know what form of government might exist in this country several decades for now. There’s a good chance it will look like today’s system, but you just don’t know. Ocean levels could rise and climates can change, prompting significant population migration. These changes as well as some we wouldn’t even be able to conceive today could have a significant affect on your ability to reach your financial goals in the future.

But the best we can do is make assumptions based on what we do know today while taking precautions to protect against things we don’t know.

So you might take all of this into consideration and determine that as a non-profit worker who doesn’t plan to go into management, you need to save 50% of your income in order to reach your goal of retiring on time. Or you might look at your job as a bond traders and figure you need to put away 1% of your income in order to retire to Fiji by the time you’re thirty-eight years old.

Your situation might reflect the “average American,” and chances are good that you’re close enough. But there’s also a good possibility that you are living in a situation that makes average advice irrelevant. Either way, take some time to think about these questions when you decide to take your future seriously. But don’t wait for the perfect answer — start saving ten percent today while you think about what you really need.

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It’s easy for me to look back in time and analyze the faults of my twenty-two year-old self. If only I had started saving and investing sooner, I’d be in a better financial situation. My younger self would assume I had forgotten what it was like for me during that time period, when I had barely enough money to make rent, I was still looking for the perfect job, and I managed to avoid many bills for at least a short period of time before borrowing more money from somewhere.

As luck would have it, the older self would be wrong. Had I been in a better financial situation when I was twenty-two, I may have never considered writing publicly about my money situation, which would never have led to my side business, which would never have allowed me to quit my job at age thirty-four, work full-time for myself, sell my business, and become somewhat financially independent. Had I been smarter about money — or at least found a way to be solvent — I might still be teaching or working for a non-profit. There’s nothing wrong with that, and I would probably be enjoying it, but my life would have progressed differently.

Part of the typical financial advice delivered to new college graduates is to start investing in an IRA (Individual Retirement Account) right away. But I remember what life was like living on Ramen noodles. The thought of having cash to invest was completely foreign. I would have ignored any advice to set aside one percent of my income in a savings account, saving up until I hit had the minimum for investing ready to go. It would have been a mistake, but it’s incredibly difficult to get past that mindset.

Financial preaching of this type often falls on deaf ears, and that’s one reason that there are employers who initiate automated savings; young employees don’t have to think about how to come up with the money because they never see it in the first place.

But once you decide that your retirement is important to you, an IRA is a perfect vehicle because it shelters at least part of your income from tax, either today or when you retire. If your employer offers a 401(k) retirement plan with a match, that might be the priority, but otherwise an IRA comes first.

An IRA isn’t an investment in itself. It’s just a bucket for other investments. You can invest in mutual funds, stocks, bonds, and even some other non-traditional assets, but you don’t have to. You can also leave the cash you designate for your retirement uninvested. Cash is much less volatile than investments, in fact it’s not volatile at all if you’re staying in the same country, but it’s not completely risk free. If you have more of your wealth in cash than you need, you could end up missing opportunities for growth, and the real value of your money will erode over time thanks to inflation.

Despite the opportunity cost, many people do keep cash, cash investments, or cash-like investments in their IRAs. Because of this flexibility, investment banks and broker-dealers are not the only financial institutions allowed to offer IRAs. You can get an IRA at your regular retail bank if you just want to keep that money out of the stock market. In fact, because of the close proximity to your savings accounts, and everything will be in the same institution, banks can make it easier to open and maintain IRAs.

When you compare banks, you will see that many advertise IRAs alongside savings, checking, and certificates of deposit (CDs). Your IRA at a bank is covered under the same FDIC insurance as the other cash you keep there. That means that these accounts will never lose money, and if there’s any sort of problem, the government steps in and covers your deposit up to the insurance limit. In the 80 years of the FDIC’s existence, no retail banking customer has ever lost money due to a bank failure.

On the other hand, money invested in an IRA at a brokerage is different. Investments are protected with SIPC, which is a non-profit organization, not a government agency. SIPC doesn’t protect investors against losses; investments frequently lose money. SIPC exists so that if an investment bank fails, customers can still retrieve the value of their investments up to the protected amount. Investment banks might offer a money market fund as an investment option for IRAs, and that’s as close to cash as you will probably be able to get. Money market funds (unlike money market accounts) can lose money, and SIPC doesn’t protect against that loss.

For this reason, if you want to invest in cash for retirement, particularly if you are close to the age at which you want to begin withdrawing your retirement funds, you may want to consider an IRA at your retail bank rather than your investment bank. It also removes some temptation to use the money to invest in riskier assets like stocks.

Before you invest in an IRA at your bank, compare rates and fees. Certificates of deposit can often provide higher rates than savings or money market accounts, but you might have to pay a penalty or lose some accrued interest if you withdraw before the term of the CD is expired. You shouldn’t need to choose an account that requires ongoing maintenance fees; there are enough banks that offer free IRAs that you don’t need to waste your time on anything else.

Some accounts offer bonuses to new customers, too. Account opening bonuses help boost your interest income from your cash in a short time frame, and I’ve used account opening bonuses to increase my effective annual interest rates significantly.

One such bonus is currently being offered by Ally Bank. Ally Bank is a favorite among financial experts; the bank recently won Plutus Awards for best savings account and best checking account. I had an account with Ally Bank for a couple of years before closing it in a financial simplification process that I haven’t yet completed.

Ally Bank is offering a $250 bonus to new and existing customers.

This year through May 31, new and existing customers can receive a $250 bonus for depositing $50,000 into an IRA at Ally Bank. The deposit has to come from an external source, so you can’t just transfer the money from an Ally savings account to the All IRA and expect to receive the bonus. Banks offer incentives like these as an attempt to attract new customers and to increase cash on hand.

You can’t normally just contribute $50,000 to a traditional or Roth IRA. Tax-advantaged retirement accounts have annual limits that are much lower than $50,000. You may be able to contribute $50,000 to a SEP IRA, but that account type pertains only to self-employed individuals and their employer contributions. Ally expects that most people searching for this bonus have retirement investments elsewhere that can be transferred directly into an IRA at Ally, a process that’s called a rollover.

The $250 bonus on a $50,000 investment works out to almost a 0.5% interest increase, assuming the money stays investment in the account for the entire year. But because the $250 bonus is being paid in July, the funds must only remain in the account that long, making the effective annual interest rate increase closer to 1%, assuming you take the money and run after the bonus. I am not recommending this tactic; I’m just describing the mathematical consequence. Whether you leave your IRA at Ally until July, until the end of the year, or until the end of your retirement, the bonus is still $250.

When you open an IRA at Ally Bank, you choose among the bank’s savings products, including High Yield CDs, Raise Your Rate CDs which have the option of adjusting interest rates once or twice throughout the term to take advantage of raising market rates (assuming rates will continue to increase), and the Online Savings Account. The Raise Your Rate CDs offer the highest interest rates now, but your money is locked in the account for a longer period of time than it is with the other cash-like options.

Today’s rates, especially those for the CDs that are locked in for a longer period of time, reflect the assumption that interest rates will rise in the future. The Raise Your Rate CD is probably the best bet today, but if rates increase too quickly, Ally could cease offering the product. That’s not necessarily bad, but it does mean that when your CD matures you would have to choose a different investment type. That could be either a standard CD, a savings account, or a new cash-like product developed by the bank.

Because you can invest in cash in an IRA at a bank, and you can make certain withdrawals from a Roth IRA without any tax consequences and penalties, the combination is ideal for at least part of an emergency fund. When cash flow is tight, an account like this can perform a double duty. It’s your retirement fun on one hand, while it can serve as a short-term emergency fund. If you never have to withdraw your money for an emergency, you’ve saved for retirement, and if you do have an emergency, you have an incentive to replenish the account quickly to avoid the missed opportunity of investing in an IRA that year.

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Money Systems That Lead to Success: Extreme Calendaring

by Luke Landes
Extreme Calendaring

As a child with an inquisitive mind, I was fascinated by calendars and how we organize and measure time. I tried to learn why, throughout history, culture accepted new calendars to replace the old. Much remained — and still remains — a mystery to me in this topic; my interest in calendars waned as I ... Continue reading this article…

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Money Systems That Lead to Success: Food Planning

by Luke Landes
Money System for Your Meals

The diner is a New Jersey staple of the restaurant industry. Once you sit down at a diner, you are presented with a thick menu, enumerating more dining options than you could possibly handle. If there’s any indication that having more choices makes the selection process more difficult, it’s the diner menu. The story of ... Continue reading this article…

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Money Systems That Lead to Success: Automatic Savings

by Luke Landes
Make Savings Automatic

Last month, I wrote about the opinions of Scott Adams on his eventual success as the creator of the comic strip Dilbert. I focused on the failure aspect of the article he wrote for the Wall Street Journal, and I only touched lightly on the success factors. A system, a methodical way of approaching any ... Continue reading this article…

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Does an Emergency Fund Invite Emergencies?

by Luke Landes
Emergency

I was reading comments on older Consumerism Commentary articles and I came across an interesting statement. A reader, who had otherwise good advice to provide another reader who was pondering whether to use an unexpected $100,000 inheritance to pay off a mortgage or invest in the stock market, said the money or a portion of ... Continue reading this article…

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What Is Your Motivation for Saving Money?

by Luke Landes
Cash

This week has been dubbed American Saves Week by the Consumer Federation of America, a non-profit organization founded in 1968 “to advance the consumer interest through research, advocacy, and education,” according to the organization’s website. All this week, the group and many partners in the non-profit world, in the financial industry, and among publishers will ... Continue reading this article…

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Declining Interest Rates, Declining Common Sense

by Jason Larkins

This is a guest article by Jason Larkins. Jason is the Director of Financial Education at Wise Wealth, LLC in Lee’s Summit, Missouri and the author of the website WorkSaveLive. For years I had my personal struggles with money: spending more than I made, following the status quo, and living life like I’d die tomorrow. ... Continue reading this article…

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How Do You Preserve Your Money?

by Luke Landes
Money Bags

Preservation of capital is an important aspect of any financial plan, but in today’s economy, this is impossible without taking on some risk. At one time, you could confidently place any money you might need within one year in a high-yield savings account and be relatively confident that your money could buy at least as ... Continue reading this article…

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Saving $300,000 By Age Eighteen

by Luke Landes
Eighteen

CNN Money is featuring stories from six young Americans, all of whom have managed to save substantial amounts of money as kids. When I was a teenager, saving money was never a priority for me. I understood the concepts, but I was more concerned with other things in my life: my hobbies, activities, school, and ... Continue reading this article…

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The Unemployment Cycle

by Luke Landes

The dangerous thing about advocating more saving and less spending, a responsible approach to personal finances, is that when the public applies this approach, the economy doesn’t move forward. The Commerce Department released consumer data from June today showing that personal spending dropped 0.2 percent during that month, the biggest decline since September 2009. It took ... Continue reading this article…

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Upromise Review

by Luke Landes

Upromise takes the concept of earning cash back on everyday purchases and aligns this benefit with saving for college or paying off student loan debt. You buy groceries anyway; Upromise helps you earn cash back on what you buy and use that money for your education expenses, the education of a relative, or for any ... Continue reading this article…

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ING Direct Kids Savings Account

by Luke Landes

ING Direct unveiled a new savings product designed to help encourage kids to learn the benefits of better financial habits early on. The Kids Savings Account isn’t much different from ING Direct’s standard Orange Savings Account for adults. Even today, Orange Savings Accounts be jointly owned by a minor if the joint owner is over ... Continue reading this article…

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Yahoo Finance Looking for Savers: Be On TV!

by Luke Landes

Yahoo Finance is producing an ongoing series of videos for their Financially Fit column. Each video focuses on an individual’s story. For example, they follow a New York City resident who saved $14,000 throughout the past year by downsizing his apartment and by choosing staycations rather than traveling. Personally, I don’t really consider “not spending” ... Continue reading this article…

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Silent Inflation Is Destroying Your Net Worth

by Luke Landes

According to the government’s figures, inflation was a modest 2.7 percent over the twelve months ending in March. The Consumer Price Index (CPI) is the Bureau of Labor Statistics’ popular measure of economic changes affecting typical consumers in the United States. It’s a figure we often compare to after-tax savings interest rates, reminding us that our ... Continue reading this article…

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The Saver’s Dilemma

by Luke Landes

At Consumerism Commentary, I’ve been writing about putting money into high-yield savings accounts for as long as this website has been around. Just as people started getting the message, banks pulled the rug out from under their customers. The Federal Reserve made cash easy and cheap from banks to access, and since the low federal ... Continue reading this article…

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Low Savings Interest Rates: Good or Bad?

by Luke Landes

No one’s happy with savings account interest rates these days. Even so-called high-yield savings accounts are closer to zero than they have been in a long time. For me, they heyday of savings accounts was when they were earning 5 percent to 6 percent APY several years ago. Some people remember when savings accounts earned interest rates ... Continue reading this article…

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Sell Your Unwanted Gift Cards at Plastic Jungle

by Luke Landes

Whether you’re giving or receiving gift cards, it’s usually a pretty positive experience. Both the giver and receiver are often satisfied because most gift cards allow the receiver to spend money in the way they want, as long as the giver has taken the receiver’s interests into account. Sometimes a gift card can miss the ... Continue reading this article…

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