Wednesday, October 8, 2008

How to Cure Obsessive-Compulsive 401(k) Checking

Author: Nick
Category: Money
Topics: , ,

comic 62 - retirement party

If you’re like me (you poor, depraved soul) then you’ve been checking your retirement accounts rather obsessively over the last few weeks thanks to headlines like “Dow Drops Below 10,000!” and “Is the Next Great Depression Right Around the Corner?” and “Lindsay Lohan Comes Out of the Closet.”

Some anecdotal evidence is suggesting that many people have lost 5-10% of the values of their retirement accounts in 2008. Others have been even less fortunate; some folks heavily invested in their own companies only to see them go under and take their nest eggs with them.

I’ve been moderately more fortunate than others as my own company’s stock is still in the vicinity of its all-time highs and is countering losses in the other parts of my 401(k). When I checked this morning, I confirmed that I’ve actually netted 13 big dollars on my investments this year. And that brings me to the point of today’s rant discussion: why am I obsessively checking my 401(k)? Is there something I think I can do about it by watching its value decline day by day? Perhaps my subconscious believes that by keeping a close eye on it, I can magically reverse its course.

Well, it’s time for me to come clean: today was the first day I’ve checked my 401(k) balance in over four months, and it’s at nearly the same value as it was four months ago. I realized early on that obsessively checking my 401(k)’s balance every day would only cause me needless worry. After all, I’m at least 35 years from the normal retirement age, and the balance of my 401(k) is relatively small enough that it’s hardly worth worrying about in the long run. If anything, I’ll only cause myself pointless stress checking it during this time of economic turmoil.

Unfortunately just about everyone I know has not been as successful in fending off the “401(k) OCD.” I frequently walk down the hallway at my work and see people logged on to our retirement account management website to check how their money is doing. And many of these are workers that are my age or younger! Even worse, there are those who have shifted most or all of their retirement funds to non-stock assets. If you wanted to sit on the sidelines while the market takes a nosedive, the time to do that was months ago! Now many of them will likely leave their 401(k)s parked in “safe” investments and will miss out on any rebound the market makes in the coming months and years.

Lucky for them and you, there are ways to fight 401(k) OCD. Talk to your doctor about prescription Cialis… oh, wait, that’s for an entirely different problem. Here are some ways you can keep yourself from obsessing over your retirement accounts that have worked for me:

  1. Lock yourself out of your accounts. Call the company which maintains your retirement accounts and change your access passwords. When they ask what you’d like to change them to, say “I don’t care. Pick something and don’t tell me.” Just make sure you have a way to unlock your account a few years down the road.
  2. Stop watching financial news. Call your cable provider and cancel CNN, MSNBC, and everything else that isn’t Cartoon Network and Playboy.
  3. Dump your company’s stock. If you still wanna stick in the stock market at this point, make sure your retirement accounts are diversified. Having 90% of your retirement wealth tied to the success or failure of your company is not diversified—it’s stupified.
  4. Make smarter investments. Perhaps when you first set up your 401(k), your friends told you which investments you should pursue. If your retirement account is down 30% this year, you may want to switch your investments around a bit to include a nicer variety of investments like commodities and foreign stocks. And also find new friends.
  5. Temporarily stop contributing to your accounts. This move probably only makes sense if you’re in the 50+ crowd. If you’re contributing $300 to your 401(k) each week, and your 401(k) in turn loses $3,000 a week, you may want to temporarily halt your contributions and stick your money into conventional savings. But if you’re young and/or your employer matches your contributions, you’ll need to do the math to see if contributing still makes sense.
  6. Mind your debts and cash savings. You’ll feel a lot better about your plummeting retirement account balance if your debt is also plummeting rapidly. Paying off debt quicker is one of the safest investments you can make because you’ll know exactly how much money you’re saving as you do it.
  7. Address the real financial issues in your life. Perhaps your obsessive 401(k) watching is merely a symptom of a much bigger personal fiscal problem. If you’re worried about your retirement funds drying up while you’re buying Mercedes and vacationing in Tahiti, then your priorities may be a little mixed up.

Follow those steps to relieve your retirement account stress and your 401(k) OCD should be cured in no time. And now that you have an extra 5 or 10 minutes a day that you aren’t watching your retirement funds crumble, you can put that time to good use by fortifying your house and stocking up on supplies for the coming Even Greater Depression.

Hmm, saying that probably didn’t do anything to ease anybody’s anxiety. Sorry!

Monday, October 15, 2007

Search and Ye Shall Receive: Retirement Notice, Pregnant Buffets, and Uh…

Author: Nick
Category: Money
Topics: , , ,

It’s time for another episode of everyone’s favorite long-running Punny Money feature: the Personal Finance Swimsuit Competition. For the eighth year in a row, Nick wins by a mile! Now on to Search and Ye Shall Receive and even more answers to questions people have asked search engines that brought them to Punny Money.

How Much Notice Should I Give Before Retiring?

retirement guy is walking into the ocean

How much notice to give before retirement? (via Google)

Unlike your standard job quitting notice, people tend to give more than two weeks warning if they’re retiring. That’s because people in a position to retire are probably doing so from a higher-ranking job with more responsibilities than your typical career stepping-stone job. The CEO of a Fortune 500 company may let its employees and investors know of her impending retirement six months or more in advance. A middle manager may be able to get away with a couple months of notice.

But if you’ve somehow amassed a retirement nest egg working 45 years as a McDonald’s drive-thru cashier, you can probably give the standard two weeks notice so they can outsource your job to an Indian call center.

It may also be traditional at your place of employment to give more warning than is necessary before your retirement, so ask some of the old folks down the hall how they plan to do it.

Buffet + Pregnancy = Giant Mutant Baby?

candy buffets probably not best for baby

Are buffets bad when you’re pregnant? (via AOL)

Buffets are bad when you’re not pregnant! Anytime you stuff yourself with more food than you need for nutritional upkeep, you increase your risk of horrendous diseases like diabetes and gonorrhea. Okay, so maybe it’s not that bad, but balancing your buffet trips with diet and exercise in between can help you lead a long and healthy life.

It might seem like carrying a baby gives a woman the perfect excuse to make extra passes through the buffet line. After all, they’re eating for two. Just keep in mind that unborn babies are not garbage disposals, so you can’t just dump any old food into your body when you’re at the buffet.

So before you and your bun-in-the-oven sit down for ten rounds at the Olive Garden’s Never-Ending Pasta Bowl, consult with a physician to determine which alfredo sauce your baby will like the best.


i just happened to have the answer to this question handy

Do you lose nutrients when you masterbate? (via Google)

Possibly. Just to be safe, eat a sandwich afterwards. Or go to a buffet.

Friday, August 3, 2007

Five Mistakes Twentysomethings Make With Their Money

Author: Nick
Category: Money
Topics: , , ,

twentysomethings beware

By Matt Busse

I don’t know what it is about people in their twenties these days. A frighteningly high number of us are simply terrible about managing our personal finances. Why is that? To hear our parents and grandparents tell it, when they were young, they grew their own tomatoes, made their own clothes, and bought their first cars for fifty bucks each, all while fighting wars on the other side of the world. By contrast, I know people my age who can’t even balance a checkbook, let alone grow a proper vegetable.

Worst of all, there are a handful of mistakes many, many twentysomethings make when it comes to personal finance. You can trust me on this, because I have personally made all of these errors–some of them multiple times–so I know what I’m talking about. In no particular order, here are five common personal finance mistakes to avoid if you’re in your twenties, plus tips on how to steer clear of them.

  1. Using credit cards. Scott Adams, creator of the “Dilbert” comic strip, says credit cards are the crack-cocaine of the financial world. He’s right. They trick you into ignoring how much you spend and pushing into the back of your mind the fact that you will, eventually, have to pay them off. And once you’ve received your first card, the sharks start circling. Other companies send you offers. They seem tempting. Zero percent interest for a year, one says. So you transfer your balance to that card instead of paying it off. Then you do it again with another card a month later. Soon, you’re playing hot potato, opening up one line of credit after another, racking up charges and flushing your credit score down the toilet.
    Solution: Use a debit card or cash for your purchases. If you absolutely must use a credit card, get a low-interest card and use it only when needed. Pay off your balance on time.
  2. Buying the latest and greatest. Why are some twentysomethings obsessed with always having the flashiest cell phone, the biggest television, the fastest computer? It’s an image problem, a consumption problem, and it’s a big waste of money. If you like luxury items, and you have the money in your budget to get them, that’s fantastic. Enjoy. Have a blast. But don’t do it just to have the hottest new thing. And don’t do it if you have more pressing expenses at hand, like paying off student loans or saving for your first house. Solution: Be satisfied with what you have. If you want something new and cool, make sure you can really afford it.
  3. Financing items that depreciate in value. This goes hand in hand with the previous item. That 52-inch television might look nice in your living room, but will it still seem as cool when you’re paying for it four years down the road? Even worse, four years from now, it’ll be worth only a small fraction of what you paid for it. Getting financing on big-ticket items can sometimes be considered necessary if it’s a washing machine or other appliance you would call a “need.” But for big-screen televisions, booming car stereos and other frivolous items, it’s just not worth it. You should only finance things that gain value over time. That includes not financing cars, if you can afford to always buy used.
    Solution: Save up your money instead and pay for what you want upfront. That way, not only can you avoid interest, but the extra time it takes to save up for a pricey item will force you to really think about whether you want to spend the money on it.
  4. Ignoring your 401(k). If your company offers a 401(k) retirement plan with a matching contribution, take advantage of it. Max out your investment to match the company’s contribution (in other words, if your employer matches up to four percent, you should put in four percent). It’s like free money from your boss. And you’re never too young to start thinking about retirement.
    Solution: Max out that 401(k)! Don’t touch it until you retire. You’ll be glad you did.
  5. Refusing to learn how to budget. I know a number of people in their twenties who just don’t want to learn how to keep a simple personal budget. They say it’s too hard, or it takes too much time and work. That’s ridiculous. There are a slew of books and websites available that can teach anyone to make an easy, low-maintenance budget using a computer spreadsheet. All it takes is a few minutes a day, or a little longer if you update it every week. If you learn to allot your money to different bills and expenses, track your purchases and save your extra cash, you’ll be much better off in the long run for it.
    Solution: Suck it up and learn. Go to Google and type in “learn personal budgeting.” It’s not difficult, and it’s definitely worth your time.
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Matt Busse is a journalist and freelance writer living in Lynchburg, Virginia. Since 2004, he has covered business, technology and government for Lynchburg’s daily newspaper, The News & Advance. He writes a
blog about writing at

Tuesday, April 11, 2006

What Does "Retirement" Mean To You?

Author: Nick
Category: Money

It’s always fascinating to read other personal finance blogs and see their writers’ retirement goals. People my age are starting to realize they’ll need a few million to retire comfortably in about 40 years, while those reaching retirement age soon may be able to get by with just a few hundred thousand.

While you may have a clear dollar figure in mind for your retirement, what do you intend to do with it? No, not with the money–with the retirement! Will you be someone content to relax on the porch sipping iced tea waiting for the end of time? Does retirement signal more of a “shift” in work habits rather than a complete halt to working? Or do you plan to work like you do today for as long as your body will let you?

Even at the age of 23, I already have my eye on retirement. I’m confident that I’ve taken care of the financial aspects of retirement, but I only recently starting thinking about what I’ll do with my retirement. Here’s what I’ve come up with so far:

  • I’d like to “retire” early. I’m sure most people would like to retire in their 40s or 50s, but I’m hoping that I’ll be able to retire from my current line of work by age 40. That said…
  • I’ll probably never stop working. I’m a bit of a workaholic, but I certainly wouldn’t mind if I could combine work with something I really love doing. While it’s true that I’ll probably keep doing some sort of work for as long as I can, I’d like to be doing something by age 40 that I wouldn’t mind doing for free (but still get paid for doing it). All too often, salary is a roadblock to people’s dreams, so eliminating salary as a major concern should help me explore my dreams… once I figure out what they are.
  • I’ll need financial independence first. Maybe not complete financial independence, but I’d like to be totally debt-free (including a paid-off mortgage) with a comfortable savings.
  • Yet I still don’t know exactly what I’ll be doing. Perhaps I’ll become a teacher or something else that really helps people. While I know that a tropical island isn’t for me, I don’t quite have this part figured out yet; but I’ve got plenty of time to think about it.

How about you? Are you eyeing an early retirement? And what will you be doing with your worry-free days?