Author Topic: More ridiculous CNN propaganda  (Read 623 times)

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Offline Matthew

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More ridiculous CNN propaganda
« on: November 10, 2010, 11:51:33 AM »
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  • Kim Champney and Pat Minick -- if you're out there, PLEASE disregard CNN's horrible advice.

    I *knew* what the advice would be before I even clicked the article. CNNmoney runs articles like this about once every nine months or so. They keep trying to get people to sink their life savings in the Stock Market -- where it will soon disappear. That's what They want -- a bunch of serfs with no money or property.

    I feel sorry for all the people who fall for this garbage, because it comes from a "reputable" media outlet.


    (MONEY Magazine) -- For more than a year, Kim Champney, 40, and Pat Minick, 41, have been kicking in an extra $650 to their $1,048 monthly mortgage payments. "We don't like carrying a lot of debt," says Minick, who stays home with their three kids, ages 7, 8 and 10.

    At this pace, the couple will pay off the loan in 2018, eight years early. But with their mortgage rate a low 4.4% after a refi, they wonder if the house is the best place to stash their cash.

    "Definitely not," said Grand Rapids financial planner Ryan Sheffer, who adds that the low rate and the tax break on mortgage interest make paying off the loan a lower priority than saving for retirement -- which the couple are behind on.

    They make $87,000 a year, mostly from Champney's job as a quality-assurance director; yet they've saved just $68,500. She puts 1.5% of her pay in her 401(k); they each stash $3,000 a year in Roth IRAs. "By not investing more while they're young," says Sheffer, "Kim and Pat are missing valuable compounding."
    Their assets

    1. $68,500 in retirement plans

    2. $15,000 in 529 college savings plans for the kids

    3. $6,500 in cash earmarked for emergencies
    The solution

    1. Max out Roths. Champney and Minick are in the 15% tax bracket, and tax rates will likely be higher when they retire. So Sheffer says Roth IRAs make sense for them, as money going in is taxed upfront, while withdrawals are tax-free. (Also, Champney gets no 401(k) match.) They can boost savings to $833 a month, $10,000 a year, the max for two people their ages.

    2. Then feed the 401(k). They will still have $317 a month to work with, of the $650 they'd been using to prepay the mortgage. They should first beef up their emergency fund by $1,000, and after that, redirect the cash to Champney's 401(k) for additional tax-deferred growth.

    3. Cut investment costs. Their nest egg is in six funds, most with high fees and poor long-term returns. Philadelphia area planner John Sion suggests consolidating into a target-date fund. As conservative investors, they'll want one meant for those who'd retire sooner than they will: T. Rowe Price Retirement 2025 (TRRHX) is 77% in stocks.
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    Offline Matthew

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    More ridiculous CNN propaganda
    « Reply #1 on: November 10, 2010, 11:54:09 AM »
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  • For those who are interested, the best advice would be:

    Keep doing what you're doing. If anything, forget about saving for your kid's college and whatever 1.5% you're putting in the stock market (IRA, 401K, etc.)

    If your children are destined for higher education their grades will reflect that fact -- and they'll be able to get scholarships. Besides, when you pay off your house you'll have $1700 a month to save up for college very rapidly!

    Every $1 that leaves your house in interest is money wasted. Try to pay *as little interest as possible* and you will be ahead one way or another.

    Pay off your debts -- including mortgage -- ASAP if you want to be able to ride out the greatest depression this country has ever seen.

    If you were smart you'd even cash out your 401K -- penalties be damned. 90% of your money NOW is better than 0% of your money later, no?

    Matthew
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    Offline Belloc

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    More ridiculous CNN propaganda
    « Reply #2 on: November 10, 2010, 02:13:14 PM »
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  • when possible,I pay extra on principal.and a little on taxes (a looong story)
    Proud "European American" and prouder, still, Catholic

    Offline Alexandria

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    More ridiculous CNN propaganda
    « Reply #3 on: November 10, 2010, 02:22:04 PM »
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  • More good news! Things are even better than I thought.  Poverty is wonderful...no 401K plans, no mortgage, no credit cards, no student loans..but a bit of a problem coming up with $6,500 in cash or otherwise.


     

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