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Author Archives: Kristina Tahnyak

Avatar photo About Kristina Tahnyak

Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.

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Friday Roundup: Product Reviews and Recommendations

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Happy Friday DINKS! Today we are using the wonders of social media to learn about new products.  Have you heard of a product or service but you have not yet tried it because you aren’t sure if it’s worth the price? Please allow DINKS and the online Personal Finance community to help you. Here are some of the best reviews from around the web about everything from Virtual Bank Accounts to a new 3D Television.

I hope you enjoy reading our reviews. If you have a favourite product or service please post a comment and let us know.  Have a great weekend DINKS!

– Amber @ Blonde and Balanced reviews the virtual convenience of online banking in her post ING Direct Review.

– Dave @ 50 Plus Finance reviews the cash back rewards of an online banking in his post Perk Street Financial Review.

– Young and Thrifty reviews one of her two Self Serve Online Brokerage Accounts in the post BMO Investor Line Review.

–  Dad  reviews and recommends four different virtual banks in his post the Best Online Banks.

– JD Roth @ Get Rich Slowly discusses his personal finance bookshelf in the oldie but goodie post Building a Personal Finance Library: 25 of the Best Books About Money. Do you have any of these books? What is your favourite Personal Finance Book?

– Brad @ Enemy of Debt weighs the pros and cons of Netflix’s recent fee changes in the post “Is Netflix Really the Devil?” Are you still a Netflix client?

– Money Crashers reviews new digital technology in the post What Is Roku-Review of Streaming Digital Media Player.

– Moneyville  helps consumers with their new television dilemma in the post Which 3DTV is the best to buy? I honestly don’t understand why people buy electronics just because a new model or technology has been released.  I definitely understand buying a new model when our old one doesn’t work anymore, but buying something just for the sake of it being new is beyond my comprehension.

 

Exchange Traded Funds and Latin America

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exchange traded funds, Latin America, traded funds

Good Morning DINKS.  Today we are discussing a popular investment option that may sometimes be overlooked by investors. Exchange Traded Funds can add diversification to an investment portfolio as well as give us exposure to Foreign or Emerging Markets.

What is an ETF?

An Exchange Traded Fund is the perfect balance between a Stock and a Mutual Fund.  Exchange Traded Funds offer investment diversification just like a Mutual Fund, but they can be traded throughout the business day just like a Stock.  An Exchange Traded Fund is offered through some Financial Institutions as well as Discount Brokerage Firms and Mutual Fund Companies.

Not so long ago our friend James made a comment on our Investing in Foreign Markets post about using ETFs as an efficient way to gain foreign exposure. I couldn’t agree more, and neither could The Globe and Mail.

When we invest in Foreign Markets and Emerging Markets there are added risks involved such as interest rate risk, and currency exchange risk which is the change in the value of the US Dollar versus the foreign currency.

If ETFs are too risky of an investment for your investor profile we can also achieve Foreign Market Exposure through Fixed Income Investments. I currently hold a Foreign Bond Mutual Fund in one of my Retirement Portfolios.  It gives me exposure to Foreign and Emerging Markets without the risk of investing in Equities.

Here are 3 Latin American ETFs to keep on our watch list according to The Globe and Mail:

  1. SPDR S&P International Telecommunications Sector ETF — This Exchange Traded Fund follows an index that tracks the telecommunications sector of developed global markets outside the United States. This ETFs second largest holding is the Spain-domiciled Telefonica which makes up 13.6% of this ETF’s portfolio.
  2. Global X FTSE Colombia 20 ETF — This ETF follows a Colombian Stock Index, which holds 20 of the most liquid stocks in the Colombian market. The Financial Sector accounts for almost 39% of this Exchange Traded Fund, with the Energy Sector coming in a close second with almost 23% of the fund’s holdings. Utilities and Materials are the other two top holdings in this ETF.  This Colombia based ETF has current assets of over $195 million (U.S.).
  3. Wisdom Tree Dreyfus Brazilian Real Fund — This ETF follows both the Brazilian money-market rates as well as the value of the Brazilian real return relative to the U.S. dollar. This ETF has total current assets of over $450 million US Dollars. This Wisdom Tree Exchange Traded Fund achieves to invest in high-quality United States money-market securities and enters into forward currency contracts.  Unlike the US, Brazil has resisted economic overheating by firming its interest rates. Therefore, Brazil can be a very tempting investment for foreign investors.  Brazil has a very strong economy and it is known as one of the major emerging markets to watch.

Photo by SFMission

 

Cut Your Home & Car Insurance Costs with 5 Easy Tips!

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cutting home insurance costs, cutting car insurance costs, cutting costs

cutting home insurance costs, cutting car insurance costs, cutting costs

If you have a home or a car then you probably have home owners or auto insurance.  The Globe and Mail says that homeowners have seen a spike in their home owner’s insurance premiums over the last few years; the Globe and Mail  provides tips on how to cut down our insurance costs. The increase in homeowner’s insurance premiums is because of the increased number of claims due to water damage in people’s basements, as well as the increased value of people’s basements. As people finish their unfinished basements and renovate their homes with expensive electronic equipment insurance companies have been forced to increase insurance premiums.

We don’t want to have too much insurance because it can be just as big of a financial mistake as not having enough insurance.  Homeowners insurance just like auto insurance and even life insurance is purchased to protect our most valuable assets in case of an unforeseen loss.  Having too much insurance can be an unnecessary expense.

In order to asset how much home insurance we need we should take an inventory of all the things in our home.  The easiest and most efficient way to do so is to take a video or pictures of every room in our house.  This inventory is also helpful in the event that we have to make an insurance claim for our losses.  Whenever we buy home furnishings or electronics we should keep the receipts in a safe place to prove the value of our items.

The Globe and Mail suggests that we can save several hundreds of dollars on our homeowners insurance and our car insurance premiums by following these 5 steps:

  1. Shop and Compare. Use websites to compare prices between three different companies.  We should get a minimum of 3 different insurance quotes before deciding which insurance policy to purchase.
  2. Choose a Higher Deductable.  This may not seem like an ideal strategy, especially if we have a loss and have to make a claim.  However, insurance policy owners rarely make claims and therefore choosing a higher deductable can cut down our insurance premiums.
  3. Take advantage of Discounts. We can bundle all of our homeowners, car, and life insurance policies with the same insurance company to get discounts.  Our profession and our credit rating can also help us qualify for additional insurance discounts.
  4. Put Snow Tires on our Car.  Insurance companies may not always ask if we have snow tires on our car, but we should definitely always tell them.  This may give us an additional discount on our insurance premiums.
  5. Make a Lump Sum Payment.  If we choose to make our insurance premium payment once a year instead of monthly we may be eligible for a discount.

Photo by  BoxChain

DINKS Reality: The Lottery Changed My Life

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winning the lottery, lottery experience, winning the lotto

I often wonder this about people who win the lottery or win money in Television Game Shows and Reality Shows. I wonder what they do with their money, and I often wonder if I would do the same thing. Whether you are a lottery winner or not, consider an mba in fraud management to better protect yourself and your finances.

Robert Sage from Dirt Poor to Filthy Rich

Robert from Florida declared bankruptcy only a few years before winning $14.5 million in the lottery.  He bought a house and bailed out his mothers failing dry cleaning business. Robert’s mother still works at the drycleaner but she says that now there is no pressure.  If she is not happy she can walk away.  Robert says that the best thing about winning the lottery was being able to help out his mother.

Before winning the lottery Robert lived in a trailer, and now he lives in a 4100 sq foot house in Jacksonville Florida.  He spent this money on an expensive comic book collection which is complete with figurines and movie props.  Robert’s other indulgence is cars. He bought a Hummer each year for the first 2 years and he paid cash for both Hummers. Robert recently purchased a 1 in 500 collectors’ edition Hummer and only 1 of 5 in Jacksonville.

Gary and Bev Ruff are in a Temporary Situation

This couple won $50 Million Dollars in the Powerball Lottery.  Gary and Bev have always played the lottery and even after winning they continue to play the lottery.

Gary and Bev Ruff bought a big house in an upscale neighbourhood.  Their neighbours admit that they weren’t sure how the “new money” neighbours would fit into the wealthy community.  Gary and Bev admit they felt the same way.  They were very nervous about the neighbours would think and if they would make friends.  All they wanted was to be accepted.

Gary and Bev Ruff have met their neighbours but they don’t really fit in.  The couple is often scrutinized by their neighbours for doing their own yard work and house cleaning when they can afford to have it done for them.  The couple admits that they just wanted a taste of the good life but the bigger house is a lot more work; they have no long term plans to stay in this house or this neighbourhood.  Gary and Bev Ruff expect to downsize within 10 years.

Alex Snelius Shared with his Family

Alex won $64 million in the Illinois State Lottery, after choosing a lump sum payment and after paying taxes Alex received $18 million. Alex Snelius shared his lottery winning with his family and told each member to choose their dream home.  Alex bought 8 homes for himself as well as all of his family members. “Choose Your Dream Home”

His daughter and son in law built their dream home which was a replica of Graceland. They bought Elvis memorabilia to furnish their home and they built a $70,000 Elvis themed home theatre. After 47 years of marriage Alex lost his wife in November 2004. The money all of a sudden didn’t mean anything.

Alex’s wife always told him that he can’t take the money with him and Alex doesn’t want to die with his money sitting in the bank. The couple shared their fortune with various Chicago White Sox charities.  For the past 6 years every time the Chicago White Sox hit a home run Alex and his Wife donate $100 to the charities.  They have been doing this for the past 6 years. As a very religious couple Alex says that he would rather have treasure in the afterlife than money on earth.

Donna Anderson the Frugal Millionaire

After winning $18.2 million in the Megabucks Lottery from a quick pick ticket, Donna Anderson still doesn’t buy anything brand new. Donna has bought cars but she has never a new model. Donna Anderson continues to live a frugal lifestyle but she is trying to learn to spend her money. However, Donna’s husband doesn’t have an issue spending their lottery winnings on new cars and other luxury items.  The couple bought a new RV which they use to travel. The RV is a luxury edition but it doesn’t have a dishwasher, Donna was very adamant about this because she really likes to wash the dishes.

Rusty and Ross who Bought What They Are Supposed To

Rusty and Ross are former Postal Workers who each won $57 millions in the Lottery. They bought a 3 bedroom 2 bathroom house with a pool because they feel that is what millionaires should do.  Millionaires should have a house with a pool. Rusty and Ross’ dream was to fly first class to Australia.  However, a first class ticket costs $12,000 and they couldn’t bring themselves to spend that much money on an airplane ticket, so the purchased a round trip coach ticket for only $2100. Rusty and Ross say that winning the lottery has allowed them time to do what they really want to do…which is keep Bowling.

If You Won The Lottery…

  1. Would You Still Work?
  2. Would You Care What People Think?
  3. Would You Share With Your Family?
  4. Would You Still Live on a Budget?
  5. Would You Splurge?

More interesting reads from Dinks Finance:

Photo by Jugger

Then & Now: How my financial habits have changed

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financial habits, changing financial habits, financial advice

financial habits, changing financial habits, financial advice

It is safe to say that my financial (and personal) habits have definitely changed over the years.  Back in 2005, 2006 and 2007 when the bull market was booming I was working in financial sales on 100% commission.  I was earning well over $125,000 per year.  At the end of 2008 I decided that the life of a fully commissioned employee was not for me, and I changed positions within my financial institution to become a salaried employee with a quarterly and annual bonus. With my choice to make a career change from commissioned sales to a fixed salary came a major financial and lifestyle adjustment.

My salaried job does not require me to work any over time. I work in my bank branch Monday to Friday from 9 to 5 without any late hours and without any working hours at home.  As a commissioned sales employee I was working 60 hours a week and also working a lot on the road.  I would meet clients wherever they wanted me to meet them and my cell phone was on until 10 pm at night.  I lived and breathed with my cell phone in my hand because when that phone rang it was money.  Needless to say this definitely took a toll on the relationship with my boyfriend Nick.

Making over $125,000 per year was great but since it was commissioned sales it was not steady money.  Believe it or not I actually accumulated debt during these 3 years of my life because a young professional sales person is “supposed” to have a certain image.  I spent money (sometimes that I didn’t have) on clothes, cars, and other materialistic goods just to show off. The money allowed Nick and I to enjoy the finer things in life, but we were enjoying them separately.  Sometimes I would get home after 8 pm and still have a few hours of work left to finish up things for the day.  The majority of my time was spent working, when it should have been spent with my boyfriend Nick.

When I changed positions from working on a 100% commission base to an annually salary I lost a lot of my annual income and I lost the majority of my disposable income.  I have adjusted my personal money mentality from we can never have enough money, to its only money, and money isn’t everything.

I don’t agree with the philosophy to spend money now to save money later.  However, I do believe that in some circumstances we can spend money now to make more money later.  It’s called an investment, and that’s what I did. I invested in myself and it did pay off just as I planned.  However, I (not so quickly) realized that money doesn’t buy happiness.

My lower annual income has definitely humbled me. I am grateful to still be employed because many people have lost their jobs in the past few years. Have less money is better than having no money at all. It is really the little things in my financial life like saving a little bit of money, paying our bills on time, and having a place to live that are important to me now. Buying the best of everything is not.

Here is how my financial habits have changed:

Spending Money

2007: I thought that I was financially invincible. I could drop $1000 on anything and not even think twice about it.

Now: I think twice about every single purchase I make. I rarely spend on myself and usually spend on things for our family and our apartment. I have learned that money will not always be here so we shouldn’t take it for granted.

Saving Money

2007: I would save money only to spend it later, I would transfer $3000 to my savings account and within 5 days it would be right back in my checking account. Thank goodness for forced savings plans.

Now: I still contribute regularly through forced savings. Most of my savings are directly invested to avoid temptation, but since I have learned to live on less I have been able to keep a balance in both my checking and savings accounts.

Investing for Retirement

2007: I always did it.

Now: I am still doing it through a personal retirement savings plan as well as my employer pension plan.

Personal Budget

2007: I could not live on a budget because my commissioned sales were not steady and therefore I didn’t have a steady income.

Now I have a fixed income so I live on a fixed budget.

Personal Expenses

2007 I had tons of debt that accumulated because sometimes I had really big pay checks but sometimes my pay checks were negative.  Even if I didn’t make any sales my employee benefits, savings, and insurance would still be deducted so they would actually debit money from my checking account. When I did have a pay check it was used to pay past due bills and catch up on late credit card payments.

Now My biweekly bills are automatically deducted from my account every two weeks to make sure that they are paid on time. I don’t manage the cash flow because when given the opportunity I mismanaged my money.

Friday Roundup: In Laws, House Guests, and Travelling

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blue couchHappy Friday Everyone!  I successfully survived the three and a half week visit with my Mother In Law.  She is visiting (and staying with) us from out of town for three and a half weeks and so far it’s been great having her around.  My boyfriend’s family is refreshingly normal compared to my crazy and dramatic family.  When my Mother in Law is around I dress a little nicer, clean the apartment a little bit longer, and scrub the dishes a little bit harder just in case I am under her watchful eye.

The downside to having my Mother in Law visit is that my boyfriend Nick and I have to sleep on our extremely uncomfortable couch.  The bags under my eyes are extremely apparent because both my eyes and my skin are very pale.  I haven’t slept a lot in the past three and a half weeks and therefore I am extremely agitated and very tired.  However, I try to smile though it because my tiredness is second hand to my boyfriend spending time with his mother who he hasn’t seen in over six years.

Since my Mother in Law has been here we have been visiting parts of the city that we don’t usually travel to, eating at restaurants that we normally don’t visit and buying things that we normally wouldn’t spend money on.  It is great having my Mother in Law stay with us and experience new things in our city.

Here are some posts from around the web about Travelling and Family:

Dave @ 50 Plus Finance definitely knows something about running a business and running a family. He has 4 children, 3 of whom are currently in college. Dave often blogs about his family, his home state of Florida, and the real estate industry.  Dave says that family and finances clash when it comes to debt in his post Debts True Effect on Your Self and Family. Follow Dave on Twitter @50PlusFinance.

Amber @ Blonde and Balanced is a newlywed who recently got back from her honeymoon. She blogs about her profession as a CPA, her passion for working out, as well as finding a balance between everything she loves in her life.  Amber appreciates her family in the post Monthly Mom Appreciation Night. Follow Amber on Twitter @AmberBalanced.

Clever Dude discusses Family, Marriage, Finances, and Life on his personal finance blog. He recommends 3 countries for a foreign vacation in his post Got cash for a foreign vacation this year? Try these countries! Clever Dude also passes the pen to his wife Stacie AKA Clever Dudette from time to time. Check out her post on Frugal Lunch by Clever Dudette Follow Him on Twitter @cleverdude.

Financial Samurai is slicing through money’s mysteries in his personal finance blog.  He discusses the need to help out a sick parent in the post Helping Out A Father In Need.  He also discusses mixing family and business in the post Family Businesses: Pros and Cons of Hiring Relatives.  Follow Him on Twitter @FinancialSamura.

Photo by Maka

My Favorite DINK Comments

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DINK comments, blog comments, reader's comments

Over the past year and a half we have had some funny, informative, supportive, and less than friendly comments from our loyal readers.  Here are some of my favorite comments from DINKS readers, did you make the list?

On October 20, 2010 Jaadyn made a comment on the post Our Parents Estate.  This is a post that discusses the importance of talking to our parents about their final wishes.  Sometimes our parent’s final wishes can be less than favourable when parents get divorced and a step parent enters the picture.  My Step Witch aka My Dads Girlfriend specifically stated in her Will that my Dad must move out of their house within 6 months after her death, and she wants all of the jewelry that she gave to him over the years gifted to her daughters.

The reason I like this comment is because many of the comments on this post focused on the posts negative tone and my dislike for the Step Witch, it was a relief to see that Jaadyn feels the same way that I do about my Dads relationship.

This is Jaadyn’s Comment:

“Normally, I don’t comment on blogs but I have to say, your evil step mom is a bad word that rhymes with runt. I enjoy reading your blog I would like to say that I find it really informative and funny. This whole thing with your dad and this lady pisses me off, he deserves better. Those will requests are just mean and really show how she doesn’t truly love him. Just my two cents.”

On June 23, 2010 we posted DINKS: Smart or Selfish? This post quickly became one of our most popular posts.  There have been over 90 comments on this post and over a year later the comments keep coming.  MOM of 3 is a wife and mother of 3 kids. This is one of my favorite comments on this post because MOMof3 tells us she is a mother but then she goes on to list 17 reasons why people should not have children.

Here is MOMof 3’s comment:

“Don’t have kids.  When you have kids,
1. You can’t eat, sleep, or go to the restroom whenever you want.
2. You can’t have the career that you want
3. Huge expense… not only to raise kids… but also for having reduced income
4. You always eat the left overs
5. Can’t dine at fine restaurants
6. Can’t take a nap whenever you want
7. You will always be tired
8. You will not have time for friends
9. You have to cook 3 meals a day, plus provide snacks
10. You have triple the laundry
11. You have to do triple the dishes
12. You are basically a housemaid, cook, doctor, teacher, psychologist, driver, shopper
13. You will have more arguments with your husband
14. You are more likely to get divorced when you have kids
15. You are more likely to end up in poverty
16. You will have less quality of life
17. Your health will decline”

On November 17, 2010 the post When Do We Have Enough Money? discussed the dilemma of adult children taking money from their parents.  I was specifically referring to the fact that my Dad’s Girlfriend aka the Step Witch is still financially supporting her two grown adult children who are now in their forties. Marie made a comment about my negative comments. This is exactly what I love about DINKS readers, you always tell it like you see it, you say what you feel, and you never sugar coat anything!

This is Maries comment:

“I am starting to think that you are the real witch.”

On November 5 Michele made a comment on the post A Financial Burden: Do Children Equal Debt? that would later inspire me to write a follow up post. Michele feels that children are definitely a financial burden, and that is because parents inflict that burden upon themselves.

Here is Michele’s comment:

“As a DINK with no plans to become a parent, I do take issue with your post a little bit. There are a lot of reasons why my husband and I have decided that kids are (probably) not for us, and the financial considerations are definitely high on that list.

I also take issue with your assertion that “when we have a child, we become financially responsible for them for the rest of our lives,” because again, it’s just not true. Some people might FEEL like they’re responsible for their children financially, even once they become adults capable of supporting themselves, and some people might actually WANT to be, but nobody actually IS. Many a parent has cut their adult children off financially at age 18 (including my own) and there ain’t nothing wrong with that.”

Live Love and Laugh with Lucy.

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This month Love Drop is working with two of the sweetest sisters you’ll ever meet. Lucy was a healthy young woman until last fall.  Less than a year ago Lucy was diagnosed with Aplastic Anemia which is a very rare and very life-threatening disease. Lucy’s best chance for survival is a bone marrow transplant, and her sister Tracy is a perfect match.

These two sisters and their family are staying strong with positive attitudes as they work together through the toughest time of their lives. This month Love Drop wants to provide Lucy with $3000 to help pay for six months of her insurance premiums.  Lucy is always worried that she won’t have enough money to pay her monthly insurance premiums.  I think we can all agree that Lucy has enough to worry about; she doesn’t also need to worry about losing her financial lifeline.  As a thank-you gift to the Love Drop community, Lucy’s family will be sending out special “Lucy” bracelets to anyone who gives more than $25 to help Lucy.

Love Drop also wants to deliver hand written letters with words of encouragement for Lucy and her family.  If you have 15 minutes and a stamp please take the time to write some kind words to Lucy and her family.

Lucy’s sister Tracy is very proud and happy that she is the one who gets to help save Lucy’s life.  Tracy says that her purpose in life is to help her sister because Lucy was her best friend when she didn’t deserve it, and Lucy picks her up when she is down.

Lucy’s family is a very close family with a special bond. Lucy’s Dad often tells her that she has to stay positive and that she can’t quit. He has always been a shining light for his daughters; it breaks his heart that he cannot fix this for his daughter Lucy.  He tries to help Lucy by keeping a positive attitude; I think that we can all do the same.

Please visit the Love Drop homepage to give a gift, and share some Love with Lucy.  Don’t forget to send Lucy a letter with your love and encouragement to help her and her family through this tough time in their lives.

Choosing the Right Bank for You!

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choosing the right bank, banking matter, banking advice

credit cardGood Morning DINKS.  Today we are discussing our banks.  Deciding which bank to use, is just as important as deciding how to invest our money.  Did you choose the same bank as your spouse if you merged your finances, or did your continue dealing with your individual bank? I opened a bank account at a bank branch close to my house as a young child; of course it was with the guidance of my parents. However my bank was not the same bank that my parents used, this is odd now that I think about it.

My parents moved to our city from their hometown in their early twenties, and they both continued their banking relationship with their original financial institution.  Later on, my Dad started a banking relationship with a credit union that was sponsored by his employer.  My Dad says that he switched from a major financial institution to a local credit union for the personalized service and employee benefits, as well as the convenient location (there was a credit union branch in the same building as his employer).

There you have it; we were a family divided by banking.  My Mother kept her original banking relationship, I opened an account close to our home, and my Dad dealt with a credit union because of the benefits.

How did you choose your bank? Is it the bank with a branch closest to your house, is it the same bank where your spouse deals, or do you share the same personal values as the corporate values of your bank? I surfed the internet to research 4 different banks; here are my personal opinions on their homepages, their images, and their values. My opinions are as a client, and not as a Banker.

Do you deal with one of these 4 Banks?

PNC was my favourite homepage of the four banks because it was colourful and welcoming.  PNC makes finance fun with their Virtual Wallet; they also keep finance informative with their interactive savings and budget tools.  PNC is a DC bank whose mission is to provide their clients with great service and powerful financial expertise to help them meet their financial goals. PNC is proud of their longstanding history of supporting the communities they serve in education and the arts.  The core values of PNC are Performance, Customer Focus, Respect, Integrity, Diversity, Teamwork, Quality of Life.

USAA is proud to be serving Americans, the Military, and their Families since 1922. The USAA homepage has information about the current Debt Ceiling Crisis which shows that they care about the concerns of their customers. I got the impression that USAA is a bank that helps clients by working together with them, as opposed to clients just being another number. USAA matches their products with client’s life events to create a balanced banking relationship.  We join USAA as a member and not as a client to take care of our Insurance, Banking, Investments, and Retirement needs. USAA stands ready to serve with Service, Loyalty, Honesty, and Integrity.

Bank of America has a totally different image and I know that some DINKS are seriously fed up with BOA.  However, I wanted to include them in my research because I definitely understand why clients are not happy with Bank of America.  Their homepage is a mortgage advertisement with the slogan “See what you can comfortably afford.” I had to ask myself is this the right time for BOA to be soliciting mortgage business? I know that BOA is a bank and they have to make money, but seriously where is the compassion? You tell me! Are Americans thinking about housing right now?  Is applying for a new mortgage on your mind?

Chase I personally love the accessibility and convenience of Chase Bank. However, their homepage is not overly inviting or friendly; the Chase image is definitely more professional and then personal. However the features on the homepage are Cash Back, Low Interest, and Travel Rewards Credit Cards; this tells me that Chase is giving back to their clients. They are offering something that is in their clients benefit; they are not just soliciting business because they need to increase profit earnings.

As a client I would open a bank account at PNC or Chase Bank.

Photo by Money Blog Newz

A Day in the Life of a Retiree

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life of a retiree, retired person, life of a retired person

rocking chairGood Morning DINKS! It’s time for the next post in our A Day in the Life Series.  We have already experienced a Day in the Life of an Intern, a Job Seeker, and a Banker

This is a Day in the Life of a Retiree

Jason, our Retiree, retired one year ago in July 2010 at 55 years old and 35 years of service with the same company.  Nowadays it may be less common for us to start a job in our twenties and build our career with the same company until retirement.  However, it was definitely not uncommon in the 70s and 80s.

Each company has a pension formula which determines the date on which its employees can retire.  Jason’s former employer allowed employees to retire with full pension benefits if their current age plus the number of years of service equalled 90.  At my bank the magic retirement number is also 90, there is also an option for early retirement with a reduced pension benefit starting at age 55.

Jason has been retired since last July and he has been living off of his employer’s pension for the last year.  Even as a young employee Jason always contributed into his employee pension plan.  Over his 35 years of service Jason contributed the maximum 4% of his annual salary into the pension plan and the company contributed 6% on his behalf.  If an employee chose not to contribute the maximum 4% of their salary into the pension plan the company would only match 50% of their contributions.  Therefore, if an employee elected to contribute only 2% of their annual salary into the pension plan the company would only contribute 1%.  Participation in an employer pension plan is mandatory by many companies; this ensures that employees have some type of savings for their retirement.

Jason was always advised to save for retirement.  Because of this advice Jason also invested his other personal savings, such as his employee stock purchase plan, into retirement saving plans. This would have been a good savings strategy if Jason was single.  However, he was married with kids and therefore in case of an emergency Jason was forced to withdraw money from his retirement savings. Now as he looks back on his former retirement savings strategies he wishes that he would have also saved money in a non registered investment account.

Jason decided to retire at 55 not because it was part of his retirement plan, just because he was eligible to retire.  He doesn’t have any plans for his retirement; he just plans not to work.  Jason has yet to start using his personal retirement savings for his personal retirement income. He is happily living off of his employer pension benefit which is approximately $3000 per month (net) after tax. For this reason Jason emphasizes the importance of contributing into an employer pension plan, if the option is available.  Even if we have no other personal retirement savings, at least we have our employer pension plan.

Jason is not one of the baby boomers who are fortunate enough to retire mortgage free.  This is also one of his financial regrets.  Jason wishes that he would have planned better to pay off his mortgage in full by retirement, however with changing homes and refinancing the mortgage this just wasn’t possible. Jason is currently contemplating selling his home and moving into a smaller apartment where he would pay monthly rent.

Jason’s employer benefits such as medical and dental benefits continue until he reaches the age of 65, when the Government benefits start.  Jason also had the option to convert his group life insurance policy into a personal insurance policy.  He declined to make the change because Jason no longer feels the need to protect his assets (formerly his children and his home) in the event of his death.

The mentality of a Retiree is not accumulation of wealth.  As younger employees we always want to know how much we are saving, and we want to watch our savings grow.  Jason just wants to make sure there is enough money in his accounts to live comfortably every month; he wants a fixed income stream.  Jason does not save any of his monthly income, he spends every dollar right down to the last cent; Jason admits that this is a money mentality that he was not used to.  He says it is liberating not to have to care about money; he spends what he has and then he waits for his next pension payment to arrive.

Living on a fixed income has been an adjustment in Jason’s money mentality.  There is no longer the possibility of a supplementary income in the form of an annual bonus or the option to work overtime; this was a shock during Jason’s first year of retirement. However, he has learned to adjust.  Jason admits that retirement has been an adjustment in both his lifestyle as well as his money mentality, but he says it is a change worth getting used to.

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Here are the other posts in our A Day in the Life series:

Photo by Jo Bourne

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