If you have been reading my blogs for a while, you realize that blogging is more of a hobby for me. I certainly keep track of the revenue and expenses like a business, but I certainly don’t devote time on a daily basis like I would a business. As a result, I don’t make a ton of money from maintaining a blog, but at least the expenses are covered.
Since I treat it like a hobby, I am not too upset if I have more important things that I need to get done and which require my attention. In this regard, my blogging hobby is a lot like my golfing hobby. I have only managed to play 3 full rounds so far this year (although my most recent was one of my best ever).
The Busy Life
You may have noticed that over the past few months, my blogging activity has taken a nosedive. Needless to say, I have been quite busy. Some of the things that are happening:
- The most pressing issue has been with the commercial building. My (former) partner is in the process of declaring bankruptcy and did not do a good job of managing the funds from the partnership. We now have 100% ownership. He says that he wants to make it all right. My wife is skeptical. I am busy dealing with the banks and trying to come to a resolution that will minimize our damage to even worry about that right now. Dave Ramsey is right about partnerships not sailing.
- We are busy trying to get some work done around the house. A new roof is being started today. It is being replaced due to hail damage from last year. Insurance has covered the majority of the cost, but getting through the bidding and scheduling is a hassle. We are also simultaneously working on finishing the final portion of the basement and fencing the backyard for the dogs. Dealing with all of this takes time and money. Ugh.
- The final big headache is dealing with a tenant that has not been able to maintain one of our rental houses. The grass does not get cut in a timely fashion and we suspect that the inside of the house is not the cleanest either. We are in the eviction process and will probably be replacing carpets and painting the whole place after massive cleaning. More time and money. Double ugh.
So, blogging has taken a back seat to all of this.
Also, it has been some time since I posted carnival links so I will be doing that now as well:
401ks, like most other things concerning finance is a boring subject, but you have to know more about this boring topic because it concerns you. A 401k is something that you can use and you should know about it because it is for your benefit that it was created.
Overcoming the Boredom
You have to overcome the boredom that you feel whenever you are studying financial matters especially when it deals with 401k because it concerns your future. The first thing that you need to know is what a 401k is in the first place. A 401k refers to a tax-deferred retirement plan. The term 401k refers to the part of the legislation that was enacted which made this kind of plan a possibility. Under this type of plan you do not have to pay taxes for the amount that you contribute towards it. Taxation would be put off until the time that you use it or when you retire.
How a Tax Deferred Retirement Plan Works
If you are receiving $30,000 on a yearly income and the amount of taxes that you have to pay is valued at $6,000 then that leaves you with $24,000 that you can use. If you contribute $2,000 of your total income to your 401k then only $28,000 would be taxed then. This means that you put more in your savings. Employers usually match a portion of the amount that you contribute towards your 401k. Sometimes the employers add 50% of the total contribution of the employees. This means that the more you contribute to your 401k the faster it grows.
Investing Your 401k
You might have the option of choosing how the money in your 401k can be invested. You can choose to invest it in the stock market. There are various stocks that you can choose from and they all vary in risk potential. You can choose to be safe and invest in food companies or those that are engaged in infrastructure projects. You can choose to be daring and go for the bigger returns but higher risks of computer and hi-tech companies. Planning for your retirement? Figure out how much super you need to retire at Suncorps superannuation site.
You should learn to diversify when it comes to your investments. You should invest in some products that are high risk and some that are relatively safe. That way you can minimize your losses and still take advantage of any trend in the market.
When it Becomes Taxable
Your 401k will become taxable when you use it during your retirement. The rates that would be followed then are those that are in effect in the market.
Do You Have a Good 401k Plan?
Do you think that that you have a good 401k plan? There are several things that you can use in determining whether you have a good plan or not. The first thing is whether it is compliance with government regulations. Is it following what the law says? How are the investments for the plan doing? You know that your money could all end up as nothing if it is invested in the wrong companies.
Discussing a 401k plan might be a boring topic but there would come a time when you would wish that you paid more attention to it.
The preceding was a guest post.