Are You Losing Money By Living Abroad?

Pensioners Abroad Infographic HiF

Moving abroad for your retirement years can be an amazing experience. However, to what extent do you consider how much this will affect your pension? For many British expats the reality is that the impact can be quite significant. In total, around £10.6 billion is lost from British pensions. As this infographic created by HiFX points out, expats living in South Africa are the best off while those living in Switzerland experience the worst impact. It’s important t be aware of the implications of moving abroad when it comes to claiming your pension, but there are things you can do to minimize the impact. Make sure you research the best exchange rates and also consider using one of the Regular Payments schemes which several currency specialists in the UK offer. These steps will help you make the most of your retirement years with as little financial worry as possible!

MyHiFX   Currency Tools

Dear Debt, I am going to defeat you!!!

Beating debt, this that and the mba, mba, thisthatandthembaWhat does national financial literacy month mean to you?

Well for my wife and I, we have set up a plan to pay down some of our debt.  We have accumulated some debt over the past few years.  It was by choice so that she could stay home with our two beautiful children.  I wrote a post the other day asking you to take a moment to review your situation because April is National Financial Literacy Month.

Did you take a few moments to see where you stood?  Are you going to do anything about your situation?

Our goals are to have all of this done by June 1.  She has 4 payments left on her car and then it is ours baby!!!!  It will be nice to receive that title and see no liens.  Our approach is going to be contrary to what scholars recommend; which is to pay down card with highest interest rates first.  We are taking the approach to hitting a few with moderate rates to pay them down first.  We want the satisfaction of bringing down the overall amount of cards with balances on them down.  The minor victories are going to give us momentum to push ahead and pay down other debt that we have.

This past weekend my wife and I sat down to formulate a plan on how we were going to do it.  I am not going to get into detail right now, but this weekend I paid every bill that we had for the month.  It is really nice to have a second income now to give us the flexibility to do this.  Mind you that we chose to bring this all on, we wanted my wife to stay home with our kids we were fully aware of the situation we would be in.  Your kids are only little once, and money was not as important as their well-being.

My wife and I both have our master’s degrees and are both working now and our debt will be paid down hopefully by the end of the year. We are taking an aggressive approach to get back on track.  It is going to work great for us and I cannot wait to tell you all about it!!  Who ever thought paying down bills would be so fun!!

Did you give yourself a financial tune-up?

PHOTO BY: Eric731

National Financial Literacy Month: What it means to you!

financial literacy month, april, my birthday, this that and the mba, thisthatandthembaWhat a great success the Roth IRA Movement was.  In a few days we are going to enter National Financial Literacy Month, what a great month to celebrate it, ohhhh the coincidence it also happens to be my birthday in April too!  National Financial Literacy Month came about in 2004 when the Senate passed Resolution 316 which officially recognized April as my birthday National Financial Literacy Month.  Originally started as youth financial literacy, it was realized that we all need to be well versed money and personal finance.  For my Canadian friends sorry we will have to wait until November to celebrate your financial literacy month!

Financial literacy plagues many of us in the sense that we live our day to day lives and forget to plan for the future.  No matter what country you live in around the world there has to be some end goal that we are saving for, which is usually retirement.  Living pay check to pay check and not setting aside funds early on can wreak havoc on your financial situation as you near retirement.  Sitting at work about to turn 30, 🙁 I cannot imagine coming to work at 75 and flying through excel spreadsheets at the same speed I do now.  Granted employers are not to age discriminate, but realistically when I get older I do not see myself as having the capacity to do the complex functions I do now. 

What am I doing about it?  I am saving for retirement so that when I am 75, I can be sitting around with my grandchildren enjoying the fruits of my labor with my wife.  What I am asking is for you to take a moment and look at your financial situation and decide what you are going to do about it!  If you look at your retirement portfolio at the moment, is it large enough that you could see yourself living on that for the 20-25 or more years in retirement?

I am not telling you to put aside your whole paycheck to retirement but see if you have any wiggle room to increase your contributions, if you can’t see the money outlasting you.  Every now and again we get caught up in the daily routine that we have to look at the big picture.  This month is not only to make you aware of financial literacy but also to look at your own situation!

Take inventory and maybe you will find an opportunity to save some money by refinancing a car loan or a mortgage now with the low interest rates.  Even a personal loan with low interest rates to consolidate high interest credit cards, there are many ways out there at the moment to save a little money. 

What tips or tricks can you offer the readers as ways to either make additional money or find ways to save?  Any interesting side hustles like the mobile hotspot?  How does your retirement portfolio look at the moment?

PHOTO BY: Yourdoku

Roth IRA March Madness Style!

Roth IRA, IRA Market, This That and The MBA, Christopher@ThisThatandthembaShhhhhhhh…..can you hear that….that’s right  baby it’s the Roth IRA Movement.  So here is how the movement got started; Jeff Rose went to speak at his alma mater and polled the soon-to-be graduating seniors, and not a single one of them raised their hand when he asked if they heard of the Roth IRA.  Here we are today a group of about 150 bloggers preaching to the nation and hoping they listen.  For my friends following along on twitter it’s: #RothIRAMovement

In case you were one of the ones polled, here is what a Roth IRA is:  The Roth IRA is a retirement investment vehicle where the premiums that are invested are after tax.  This means that when you are ready to take the distributions that they are not taxed.  The money that you invest can be invested in stocks, bonds, mutual funds, CD’s and even real estate.

There are annual contribution limits for the Roth IRA:  For 2012 they are $5,000 and if you are over 50 you can contribute up to $6,000 assuming you fall below the income limits.  You may also qualify for catch up contributions as well, be sure to talk to your financial advisor for more details.  The income guidelines for 2012 are referenced below:

•Single or head of household: you must earn less than $111,000 to fully contribute to a Roth IRA
•Married filing jointly or a qualified widow: you must earn less than $173,000 to fully contribute to a Roth IRA
•Married filing separately: you must earn less than $10,000 to fully contribute to a Roth IRA.

The number one reason why I love the Roth IRA is the flexibility.   As an adult in my late 20’s, I am looking for flexibility in my investment portfolio and the Roth IRA delivers just what I need.  The Roth IRA is flexible if you need to take a distribution to purchase a house…no problem.  The Roth IRA will allow you to save for the kiddie’s college fund…no problem!  You can withdraw your contributions at any time with little restriction, and you don’t have to pay it back like a 401k and there is no penalty!  After you have had your account open for 5 years you can access the earnings without paying tax if your situation fits one of the “qualified” reasons.  The Roth IRA allows me to save but also have the ability to tap the money should I ever need it.

I hope to be living the lavish life when I retire and the great thing about this little retirement product, I won’t have to worry about paying taxes on the distributions.

It is very important that even your little brother who just started delivering the paper start a Roth IRA.  The great thing about the Roth IRA is that there are no age requirements to start an account, so he can!

While you are at it be sure to check out some of the other great sites that are focusing on the Roth IRA Movement today!  Follow us on twitter @thsthtandthemba @jjeffrose

PHOTO BY: SnapHappyGeek Jazzed up by Christopher!

Congratulations: You won $1,000,000 you can claim today or in 5 years, which do you choose?

time value of money, publishers clearing house, one million dollar, big check, future value of money, present value of money

Sure we would all choose take it today, but there is a finance theory behind why you may want to take it today.  Ever heard of the expression a dollar today is worth more than a dollar tomorrow but less than a dollar yesterday.  Well if not, now you have today we look at the time value of money.  What the time value of money calculation and the principle means is that a dollar today is not equivalent in value to a dollar tomorrow or a dollar yesterday.   It is a very simple principle to understand, but can have big ramifications in your retirement planning.

Now what do I mean it can have big implications in your retirement planning.  For starters you want to make sure you are putting away as much as you possibly can live without.  Start as early as you can, if you can start in high school and stick with it PERFECT!!  If you start investing younger you can invest smaller amounts to see the magnified returns later in life, remember compounding?  But if you wait till you are later in life you can sock away 4 times as much and still not catch up to the returns that the young person saw.  Start early and you can put time value of money to work right away, as you are able to increase the future value of your dinero (the extent of my Spanish after 5 yrs of classes) either through some type of investment vehicle or some type of interest bearing account.  Don’t get scared by what I am going to show you next!

present value of money, future value of money,

 

 
PV  or present value= the value at time 0 or now
FV or future value= the value at time n (see below)
i = the discount rate, or the interest rate at which the amount will be compounded each period
n = the number of periods could be years or could be months.   

Let’s do a quick calculation to see what the value of the cool million dollars that we won is in 5 years assuming 6% interest rate and discounted annually. 

PV = ?    
FV= $1,000,000
i = 6%
n = 5 yrs
PV = 1,000,000 x (1+0.06)-5
PV = 747,258.17               

The cool million that we would receive in 5 years would be worth $747,258.17 in today’s dollars!  I hope you would still take the million today and run.

Financial concepts can be fun when you look at in perspectives like this or with your retirement.  Save early, save often, save what you can!

Tomorrow I will be hosting a blog swap with a fellow pf blogger.  Make sure to come check out the best investment advice my fellow blogger has ever received.

PHOTO BY: Mike Bash