Amanda Stanhaus

Tag: financially literate

Traditional IRA

image

I’ve discussed individual retirement accounts (IRAs) before…remember they are a nice alternative to 401(k)s.

One of the main types of IRAs is the traditional kind. But being a newbie, I am not privy to knowing what is traditional.

It seems the tradition of Traditional IRAs is that the taxman favors these accountholders.  And when I say favors, I mean the taxman ignores the funds in the IRA account and doesn’t tax the $$ until withdrawn. The taxman is doing his favorites a favor, saving them $$.

A deposit into an IRA account is not taxed. Since we are under 50, we can contribute $5,500 each year (FYI this # sometimes changes) to our Traditional IRA.

Once the money is in the account, I will invest it as I see fit. There are no penalties for buying and selling investment vehicles within the account. Plus, the taxman does me another favor,capital gains are not taxed each year, only in the long run.

The taxman will catch up with me when I’m old (59 1/2 +) and withdraw the money. Ideally, my tax bracket when I’m old will be lower than it was at the prime of my life (AKA now). By asking a bit less of me, the taxman is rewarding me for saving for retirement.

But watch out, the taxman will punish me if I withdraw money from my Traditional IRA pre- 59 1/2. The punishment includes taxing the withdrawal and a penalty too. Ouch, that’s harsh.

Watch this Khan Academy video explaining Traditional IRAs and how accountholders save $$.

Psst…Roth IRAs are seemingly similar, yet the exact opposite of Traditional IRAs. I’ll explain later this week. Just focus on figuring out the tradition of Traditional IRAs.

image

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Creditor

These people give credit (i.e. loans). They love to be paid back, and will make themselves known, if they don’t get my lovin’ (i.e. my money)!

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

Bye Bye Ben Bernanke

image

Ben Bernanke has been Chairman of the Federal Reserve since February 1, 2006 and his chairmanship ends this month. No need to shed a tear though, he will stick around as a board member until 2020.

Plus, there is good news, chickadees! Janet Yellen will replace Ben, if the senate approves her today. If yay, she will blaze a trail for me & lady economists, as Janet Yellen will be the first lady to be Federal Reserve Chairman! She’s just as fabulous as us, Janet’s book is called The Fabulous Decade: Macroeconomic Lessons from the 1990s.

More to come about Janet Yellen, but today I want to give you a “bird’s eye view” of Ben Bernanke’s time as Chairman of the Federal Reserve.

Last week, Ben Bernanke said ta-ta in this speech, summing up his time as Chairman. The following is what he wants to be remembered for:

Transparency and accountability

Ben Bernanke broke with the past and during Ben’s chairmanship, everyone who wanted to know, could easily find out how America’s money is being managed. (Psst, the Federal Reserve is the U.S.’s central bank.) Ben became a TV star, print journalism prince, and a social media darling.

Financial stability & reform

Crises like 2008 and the fixes of post-2008 are nothing new. What was “different” this time was the complexity of our contemporary economy. (Psst, Bettie funnily explained the clusterf*** that was 2008 here.) Luckily, Ben Bernanke was a Great Depression expert even before his Chairmanship and used his  knowledge to correct the economy during The Great Recession of 2008.  Unfortunately, the reforms are a needle in a haystack, but better than nothing.

Monetary policy

We have Ben Bernanke and his monetary policy to thank for the near zero interest rates on our savings accounts. Interest rates so close to zero are good to get the economy back on track (AKA it’s very cheap to borrow and build businesses), but personally don’t make me feel great when I review my monthly savings account statement. He had good intentions and Bernanke’s monetary policy saved the U.S. from something much worse.

Ben Bernanke will be missed. He was a big deal. How big of a deal? A fellow economist wrote a song about him—and we know when a man writes a song about you, it’s serious!

See, economists can be fun…in their own way!

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

 

Cyclical Stock

stock that moves with consumer preferences and the market‘s movements.

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

Debt

Owe something to someone.

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

New Year’s Resolutions

Whizz! 2013 flew by.

Yikes! 2014 is almost here.

I have lots of big dreams for 2014…I’m not ready to broadcast them yet…they will be reality soon enough!

But in regards to mundane money management—and growth— I’m going to have fun with it!

Organized by category, here are my realistic—yet fun—New Year’s resolutions.

Essentials

The ideal is to pay my credit card in full each month. I’m going to break it down and pay off my balance each Sunday. If successful, I will celebrate by going out for a Sunday nightcap!

Milestones

I’m still saving up for my Vespa. In addition to my automatic saving system, whenever I walk somewhere, the public transit fare I saved will be placed in a jar for safe keeping. The more I walk, the sooner my Vespa will be mine!

Investing

Reading in full my monthly investment statements is no easy task. Eating coconut creme cookies constantly is the easiest task I can imagine. So I am going to mix the two. I will treat myself to coconut creme cookies once a month when I read the investment statements.

Insurance

While I am still on my parents health insurance plan since I am pre-26, I do want check out these exchanges everyone is talking about.  Not that I want to buy my own health insurance until I’m 26…so I will religiously attend weekly family dinners.

Oops

Just like I am able to spot my friends’ future husbands (unfortunately, only my friend’s, not mine), I want to spot my oopses before they happen..  If the potential oops has to do with being frugal, I will ask myself, what would Warren Buffett do? And If the potential oops has to do with being fabulous, I will ask myself, what would Helen Gurley Brown do?

Convo (By: Birdie)

Just like Bettie is making financial literacy fun, I am going to break the mold of the grumpy academic economist and be the world’s first PR-perfect conversational economist. I’ll build my fan base here by translating the economic news of the week into key takeaways to provide a bird’s eye view!

O Canada (By: Belle)

Inspired by Bettie, I will do a monthly review of my RRSP while eating maple creme cookies. And when the review is fini, c’est fini avec the cookies!

Happy New Year! Best of luck with your realistic resolutions!

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Save Money on NYE

I’m out & about being fabulous & frugal 364 days of the year.

My night of rest is New Year’s Eve. I can spend hundreds of $$ on a ticket to just stand in the hot spot. This is unproven…but I feel like drinks prices are upped too!

Earlier this month, I took charge of New Year’s Eve plans…or lack there of. This year’s plan is to stay in, watch a movie marathon, and drink whenever “new year” is mentioned.

The $$ I save by not going out on New Year’s Eve, will fund a whole month of going out.

Don’t believe me? Try it!

Constant party girls/New Year’s Eve party poopers unite!

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)