Len Cabrera's Blog, page 2

4-Year Degree Isn’t Only Path to a Good Job

I tweeted this, but I wanted to add a link to the blog so it would be searchable on the site. Gail MarksJarvis had a great column in the Chicago Tribune talking about all the good jobs available without a 4-year college degree. It’s based on a Georgetown University study that found 30 million jobs that don’t require a bachelor’s degree and pay an average of $55K a year.

A great line from the column: “28 percent of people who get associate degrees from community colleges end up with better job...

Car Buying vs. Leasing

Are you looking to buy or lease a car and wondering what the best decision is from a financial perspective? Car and Driver just posted an article based on an interview with Daniel Blinn, a Connecticut lawyer who specializes in automotive financing. Of course, the best way to get a car is to have someone else buy it for you. If that doesn’t work, the next best way (from a financial perspective) is to get a reliable used car that’s as cheap as possible… as long as it’s also a good track car, bu...

How’s Your Financial Wisdom?

After my last post on baby boomers failing their retirement planning, you might have some smug thoughts that you’re doing much better than them. Here’s a little test, thanks to The Atlantic:

Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow? A) more than $102; B) exactly $102; C) less than $102; D) do not know; refuse to answer. Imagine that the interest r...

Learn From Boomer Mistakes

A MarketWatch article over the weekend pointed out some important facts about baby boomers being unprepared for retirement. The article claims baby boomers will need $658K in their retirement funds, but the average employer-sponsored defined-contribution plan for boomers only has $263K.

The article goes into specifics on asset allocation, but that’s not important. Let’s look at the numbers to put them in context. Let’s assume these retirees will live 20 years beyond age 65. A $658K nest egg,...

Get Your Kids Ready For College

A new study in England shows incoming college students are woefully unprepared, both for the “reality of life” and for school. Two news articles (Daily Mail and BBC) are based on a Higher Education Policy Institute (HEPI) study of 2,000 incoming university students (incorrectly labeled as millennials by Daily Mail). The study found 61% of respondents are anxious about heading to college, and 27% have panic attacks.

Parents really need to prepare their kids for the realities of college academi...

“Refresh our Recollections of These Rights”

Happy Independence Day. Whatever you do today to celebrate our nation’s birth, take time to follow the advice of Thomas Jefferson and reflect on the document that gives this day its meaning:

[M]ay [the Declaration of Independence] be to the world, what I believe it will be… the Signal of arousing men to burst the chains, under which monkish ignorance and superstition had persuaded them to bind themselves, and to assume the blessings & security of self-government. [T]hat form which we have sub...

Student Loans Can Be an Albatross

A recent Washington Examiner article quoted some data from the 2017 Student Loan Report, and the results are disturbing:

27% believe the Department of Education will forgive all or part of their loan balance 20% believe there are no negative consequences for the cosigner if they make late payments 22% didn’t know their debt balance within $500 36% didn’t know their monthly payment within $20

The average loan amount is nearly $28K. For that much money, you’d think they’d pay attention to the...

Retirement Mistakes Before Retirement

Here’s an article from Yahoo! Finance that points out retirement mistakes many people make well before they get to retirement:

Not starting early Not having a Roth IRA Raiding your retirement account Cashing out your 401(k)

The article quotes a lot from CPA and “retirement expert” Ed Slott. He points out that starting early and maximizing your Roth IRA every year (age 25 to 65) is basically all you need to do to have a million dollar nest egg. If you wait and start 5 years later, you’ll hav...

Retirement Plan Math

A few days ago, I posted the two basic steps of retirement planning.

Step 1: Figure out what quality of life you want during retirement (i.e., how much you want to live on each year). This will determine the size of the nest egg you need to have ready when you retire.

Step 2: Figure out how much you need to start saving now to get there.

Of course, those makes sense to me, but my inner math teacher feels compelled to elaborate for those who need it (even if they won’t ask for it). The calcula...

Retirement Planning Includes Plans During Retirement

CNBC ran a story last week pointing out an obvious part of retirement planning that they think people don’t consider: “make sure you don’t run out of money.”

They start with the 4 percent rule recommended by “many investors”-only draw 4% of your total portfolio value in any given year. That way, you’re basically living on the gains, and your portfolio remains intact (assuming a 4% real return). Research by Wade Pfau suggests that the 4% rule may be optimistic if people transition their portfo...