As we approach the end of 2008, now is the time to start thinking about your retirement contributions.  Most people are aware of the rules for corporate 401(k)s, Traditional IRAs and Roth IRAs, but here are four retirement plan options that you might not know.

1. Individual 401(k)
Sometimes known as the Individual(k) or the Self Employed 401(k), the Individual 401(k) was created by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).  It is designed for owner-only (or owner and spouse) small businesses, and allows them to establish an Individual 401k plan, similar to those run by large companies.

Compared to other self employed retirement plans, the Individual 401(k) allows for greater contributions, and thus greater tax deductions.  In 2008 the contribution limits for an Individual 401(k) is $46,000, or $51,000 if the owner is over age 50.  This is made up of a maximum salary deferral of $15,500 and profit sharing contribution of up to 25% of compensation. In addition, like a corporate 401(k), the Individual 401(k) allows for tax free loans of up to 50% of the total value, to a maximum loan of $50,000.

2.  SEP IRA
The Simplified Employer Pension (or SEP) plan is another retirement savings vehicle for small business owners and the self employed.

The annual contribution limit is 25% of W-2 compensation, to a maximum of $46,000 for 2008.  Like a Traditional IRA, monies invested in a SEP IRA are tax deductible and earnings are tax deferred.  To make the maximum contribution into your SEP IRA as a self employed or small business owner, you must declare at least $230,000 in earned income.

3.  Simple IRA
A Simple IRA is an employer sponsored plan for small businesses with up to 100 employees.   It consists of two parts: an optional employee salary deferral and a mandatory employer match.

Like a 401(k), employees can defer up to 100% of their compensation, to a maximum of $10,500.  This amount is tax deductible for the employee.  Employers are required to match the employee’s contribution on a dollar-for-dollar basis, up to 3% of the employee’s compensation.

4.  Spousal IRA
There are two flavors of Spousal IRA: nonworking spouses, and both working spouses.

A nonworking spouse can make a tax-deductible 2008 IRA contribution of up to $5,000, as long as the couple files jointly on their tax return, and the working spouse has enough earned income to cover the contribution.  There are income limits and rules surrounding the working partner’s coverage in an employer’s retirement plan (such as a 401k) which phase out the deductibility of this contribution, so always check with your tax specialist before making any contribution.

If both spouses work, and neither participates in a qualified retirement plan at their job, both can make deductible IRA contributions of up to $5,000 as long as there is enough earned income between them to match the amount of the contribution.  For example, a wife works a regular 9-5 job (which does not offer a retirement plan) and the husband has a small part time business at home.  Her income is $65,000 and his is $4,500.  They can both make deductible IRA contributions of $5,000 (for a total of $10,000) because combined their income is over $10,000.

Spousal IRA contributions can be made into either a Roth (non-deductible) IRA or a Traditional (deductible) IRA.

There are pages and pages of rules and regulations surrounding all of these options, so please talk to your financial advisor and tax professional first.

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I’m not sure if I speak for the majority of people, but when I think of retirement, I think of being 70+ years old.  (Then again, I have enjoyed most, if not all, of my jobs at some point, and as long as I am happy, I don’t mind working until I am at least 70.)  However, you may not be as lucky as I am to enjoy what I do.  If this is the case, then maybe you are looking at trying to retire early.

Can this be done?  Of course!

Madison, over at My Dollar Plan, recently left the workforce in order to focus on her children, as well as enjoy her freedom.  One should not assume that she woke up one morning and decided to just quit.  This plan took time to organize.  Thanks to Madison, we have an idea of what it took to get her to this point.  She outlined 29 steps that allowed her to leave the workforce at the age of 29.  Here are a few of her thoughts:

The very first one that Madison mentions is to “Start Early.”  She started her first IRA at age 16 based on advice from her mom.  Proof that teaching your kids about money is very powerful.

She also mentions that being organized is the way to go.  It’s very important to stay on top of all of your accounts so that you know what you have, what you don’t, and what you can and need to plan for.  (Geezeo can help you by allowing you to see all of your accounts in one place.)

You should also endeavor to set some goals.  They can be big, however, just be sure to break them down into smaller, attainable sections so that you do not get overwhelmed with it.  (Again, Geezeo can help here by letting you see what your goals are and if you are making progress to achieve them.)

Madison also said that she has been frugal, but not too frugal.  There were a list of things she was just not willing to do.  And that’s OK!  However, the important thing to remember is that if you aren’t willing to compromise in one area, then it’s important to replace that with another one that is doable.  It doesn’t have to be all or nothing.

Learn from your mistakes (and the mistakes of others).  To keep tabs on yourself, keep a journal (it doesn’t have to be detailed) outlining what your goals are, how you plan on achieving those goals, and any slip ups you may have along the way.  You can also find out how others have fared  by checking out some Geezeo groups such as It’s Time To Budget and Penny Pinching to Early Retirement.

Whatever your decision, don’t look back.  Madison says: “Once you make your decision, enjoy your new life. There will be a transition period, but give it some time. I’ll be reminding myself of this in the next few weeks as I settle into my new routine.”

Congratulations Madison, on your new found freedom.  We hope that things go well for you, and we can’t wait for the updates on how you are spending your time.  If you would like to keep up-to-date with Madison’s journey through early retirement, you can check out her blog over at My Dollar Plan.

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Before this summer, I was never one for saving my coins. I would carry tons of coins around in my wallet until they got on my nerves and then I would find a way to get rid of them. But this summer while on vacation in Acapulco I invested in a piggy bank that has proven to be a huge help with my saving!

Think you are too old for a piggy bank? Think again! Saving your coins in a piggy bank or even just a jar is a great way to save and provide yourself with a little extra something later on down the road. Think of it as a rainy day fund. When the jar or bank is full, take yourself out and buy something that you have been wanting but haven’t found that little bit of extra money for yet.

There are several things you can do with your coins:

Roll Them – This is obviously your best bet, but can be extremely time consuming as well. First you have to pick up the rolls from the bank, then roll the coins, and then take them back to the bank. I know a lot of people who find this really beneficial, I think I am just someone that enjoys instant gratification and find that rolling the coins just takes me too long.

CoinStar – CoinStar is a machine that is located at many grocery stores and other retail locations. It is the green machine that you may often see right when you walk through the door. There are 3 things that you can do at a CoinStar machine:

Donate – All of your coins can be donated to a charity through the machine. You just have to choose donate before you start putting your coins in and the machine will do it for you! The machine will also give you a tax deductible receipt for when you file your taxes. Some of the non-profit organizations that CoinStar works with include The American Red Cross, The March of Dimes, The World Wildlife Fund, etc.

Cash Out – This is simple as well, just pour your coins in, print the voucher, and take it to the customer service desk to get your cash. The catch is that CoinStar will take out 8 cents per dollar that you put in. Although it is taking money away, you are paying for the easy convenience of the machine.

Gift Cards – This is a great option through the machine. If you don’t want any money taken away from you, put your money into one of the gift cards offered instead. Some of the gift cards offered includes Amazon.com, Starbucks, Old Navy, etc.

I saved in my piggy bank all summer and just cashed out this past weekend. I wanted to do a gift card, but the CoinStar machine nearest me did not offer this option. Instead I cashed out and was still happy to realize that I had saved about $55.00 (this was a big surprise to me). I decided that this was money I had already forgotten about and treated myself to a pair of shoes for work.

Another way to save your money without using a piggy bank? Bank of America offers a ‘Keep the Change’ option that many of my friends have recommended to me. Every time you make a purchase on your Bank of America debit card, they will transfer the left over change from that purchase into your savings account. For example, if I bought something a CVS that cost me $9.25, Bank of America would transfer $0.75 into my savings account automatically.

For the first 3 months, Bank of America will also match your savings 100%! After these 3 months, they will match 5% per year for up to $250 per year! These savings could really add up for you. Make sure to check out the Geeezo Marketplace for other great accounts that can help you save your money!

As you can see, there are many ways to save that are simple for you and take none of your time! In the long run you could have some money for a rainy day, or reach some of your Geezeo goals just by saving some of your extra change.

Photo Courtesy of Michael Connors

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I currently drive a 1999 Honda Civic and love it but with around 106,000 miles and averaging over 100 miles per day with my work commute, I am thinking into the future towards buying a new car.

I have decided that it will definitely be hard for me to part from the first car I have ever owned. It has been extremely reliable and never caused any major problems. However, as the exhaust starts to become louder and my stereo starts to struggle, it is definitely time to look forward.

My boyfriend recently purchased a brand new Toyota Camry Hybrid. When he did his research on cars he found that the Camry Hybrid is one of the best for the money that you spend. It is known to be one of the fastest Hybrid cars to get your money from in the shortest amount of time. What I mean by this is that although the Hybrid costs more, you will start saving money on gas in the shortest amount of time. The price difference between a regular Camry and a Hybrid Camry is not overly large.

Another plus?…The Camry has changed its look and now can be seen driven by a younger generation. However, I’m not too sure that my boyfriend would be overly excited about us owning the same exact car (especially since he took my advice and purchased the color I liked best).

Our partners at MainStreet.com offer several tips for purchasing a new car:

1. Decide what type of vehicle fits your needs, lifestyle and budget
2. Don’t rationalize an expense that is far beyond your budget
3. Shop around on the Web
4. Buy at the right time
5. Try to avoid a down payment for a lease unless it lowers your monthly payments
6. If you’re offered either cash back or a lower interest rate, choose the latter
7. Be aggressive
8. Don’t get snookered into snazzy, but superfluous, extras

To see the full article on Mainstreet.com and the explanations click here.

Other financial considerations to take into account before you make your car purchase:

- The cost of insurance per month and what company is best
- Monthly payments
- Purchasing AAA in case of emergencies
- Oil changes, repairs, etc.
- GAS!!
- Inspection cost each year

…the list can go on and on, purchasing a car is not a cheap investment.

I think that when I do purchase a car it will be a shock of me how much all the costs can add up. My parents have always been very helpful in the past with insurance, oil changes, etc. but this time I realize that I am old enough to do this by myself.

It helps me out a lot to use my Geezeo Goals to help me stay on track with saving money for my new car. Fingers crossed my current car will last at least another 6 months so that I can save some money and create a buffer for myself.

I think it is important to not purchase a car unless I am certain that I will not fall behind on my monthly payments. I want it to be an investment and not a burden. It is crucial that everyone considers this if they are thinking about purchasing a car. If you fall behind in your payments you can find yourself in a lot of debt.

Also do your research and follow the suggestions from MainStreet.com. If anyone has any suggestions as to great/affordable/reliable cars I’m sure many of our users would love to hear your input!

Photo: Gracey

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Many of us remember that back at the beginning of 2008, we sat down and made a list of the goals we wanted to achieve in the coming year.

My very simple list was as follows:

• Pay off my credit cards
• Pay off my husbands student loan
• Get a “new” used car that is more family oriented yet fuel efficient.

Well, I must say that while I mostly accomplished the first goal, I have put some money back on credit cards, and so I need revisit this goal and try to figure out a way to at least halfway complete it within the next 3.5 months.

The student loan will most definitely have to wait until next year.  Altho, it is only about $2,000 that needs to be paid, so maybe, just maybe we can squeeze that in somewhere.

As for the car, ha!  That will most definitely be waiting if we intend to pay on the other items.

We had an interesting year, and a lot of things change.  We moved from North Carolina to Texas.  Our boys started growing up - literally.  They are getting taller a lot faster than we anticipated, and so we are having to get bigger clothes and take them in, in the waist.  We have been trying to adjust our clothing as well to fit the needs of the weather here.  My husband now works in a different climate - a lot hotter than what he is used to, and so he had to go out and purchase new work clothes for his new job.

The point is, things have changed, and so we need to review our goals for this year, and try to set them up to be something that we can actually accomplish.

ASGreen over at Always The Planner also reviewed his goals for the year.  You will notice how he has had to adjust some of his goals to fit his circumstances.

Have you reviewed your goals lately?  Is there some adjustments that need to be made?  Let us help you keep track of them by taking full advantage of our goals section.

Jim over at Blueprint for Financial Prosperity has written several blogs recently about The 7 Deadly Sins of Personal Finance.

Just a few of the sins you will want to avoid are:

• Skipping Emergency Funds
• Don’t Budget
• Don’t Enjoy Life

Do you want to have help to be able to avoid these sins so that you can be successful with your money management?  Never fear, Geezeo can help!

Jim says: “When you have a pot of money set aside for emergencies, you don’t need to rely on loans or credits to pay for the emergency.”  A great example that he lists is having a flat tire.  You can’t plan for something like that to happen - or can you?  It’s not about knowing when you will need to use that money to pay for that tire, it’s about knowing you have the money available to take care of that should the need arise.

So just how can Geezeo help you here?  Make good use of our goals section.  Geezeo allows you to monitor and display your progress toward obtaining your goals. Plus, others with the same goal can offer encouragement, tips, and strategies until your goal is reached.  Set up a goal so that you can set aside the money to have as part of your emergency fund.

Another sin that Jim mentions is the lack of budgeting.  He gives a good analogy: “Without a clear picture of how much you’re spending and on what, you’re basically wandering the forest at night without a flashlight.”  He also states why you cannot improve your spending if you are not tracking it.  “With a budget, you can tell where you stand the greatest chance of improvement. You may discover patterns you didn’t know beforehand.” says Jim.

Geezeo can help you get started on your budget by helping you pinpoint where you are spending the most money.  Create spending targets based on what you think you are spending, let Geezeo help you keep up with your transactions & tag them accordingly, and then PRESTO! - You will be able to visiually keep track of where you are overspending and can use room for improvement.

Finally, another sin that was mentioned is that of not enjoying your life.  Says Jim: “Life, especially the personal finance aspects of your life, is all about balance… You don’t have to spend a lot to enjoy life but you don’t have to starve yourself of all fun… While all those goals are important, it’s also important that you enjoy life now so that you don’t burn yourself out.”

Where can Geezeo come into play here?  The goals are to save money, but also to enjoy doing things with friends and family, so how can you find inexpensive ideas of ways to spend your time?  Check out our groups section to find like-minded people searching for ways to enjoy their time without breaking the bank.  Whether it’s just you and your significant other or an entire family, we’re sure you can find a group that will suit your needs and help you find what you are looking for.

Check out the other 4 sins that you will want to avoid.  If you are having a particularly hard time with one of them, confess about it here.

If you’re feeling stuck in your current financial situation but don’t understand why, the answer may lie in changing an unconscious belief or habit that doesn’t jive with your larger goals.  Check out some common thoughts/habits that can hold people back financially.

1)  Money isn’t important.  
Nobody wants to be a slave to money, but it’s almost impossible to live free of it.  Money doesn’t guarantee happiness but as the currency for surviving in this world, it’s pretty darn important.
Your subconscious mind is very powerful.  If money isn’t important - why bother going to work, getting out of debt, or building a nest egg?  Talk about mixed messages.

2)  I deserve nice things. 
What exactly are ‘nice things’?  My guess is most people want universally nice things like money in the bank, a home of their own, and free time to spend with loved ones.  Yet we easily settle for the temporary satisfaction of buying the stuff we want right now.  Yes, you deserve nice things.  Get clear on what that means for you then set your goals.   Geezeo lets you track and share your progress.          

 3)  I’ll never get out of debt. 
If this is your mantra don’t be surprised when (surprise!) your debt never shrinks.  The subconscious gets hooked by ‘never’ and its job is to help you cope, not find solutions.  Consciously replace this thought with something positive that requires action like  “I’ll be debt free in two years”.  Get ready for awesome results.  
     
4)  Closing doors before they’re open.   
This is a biggie when it comes to making career changes or taking risks so your money can grow.  Develop the habit of seeing opportunity rather than problems.  This one shift in thinking allows for so much creativity in improving your financial life.
Seemingly harmless thoughts like, “That won’t work”,  “They won’t let me do that” or  “I don’t know how”, send the message that it’s okay to give up before trying.

The road to financial freedom is hard enough, why stand in your own way?   Do some money soul searching on the Confessions page.

Geezeo is all about community. It’s a great place to share ideas and tips. So I wondered, what’s the best money advice you’ve received? Did you get it at Geezeo, or somewhere else?

Here are my “top 3″:

Pay Yourself First

Where I Learned It: From my father, at age 18
When I Actually Did It: Um, uh… not consistently until age 30. Too bad! It really makes a difference.
What I Learned: Now it’s even easier to have the discipline. Route that money electronically into an account you can’t easily spend!

Invest a portion of every payday in your 401(k) and/or IRA

Where I Learned It: From my father, age 22
When I Actually Did It: Age 22 — thank goodness! But, there were times when I put in very little, and years when I didn’t contribute anything at all.
What I Learned: Even if you don’t work for a company that offers a 401(k), you should still contribute to an IRA. You won’t get any “company match”, but you will see this account grow over time.

Credit Cards Can Really Suck

Where I Learned It: School of Being-Out-On-Your-Own-And-Buying-Too-Much
When I Actually Did It: Credit card debt really stressed me out ages 23-26. Harsh lesson, but well-learned.
What I Learned: Overspending is a habit you can change. Credit cards are useful, but should be paid in full every month. Go without rather than charge it and think you can pay it off later…if you can’t afford something right then, chances are good you can’t afford it at all.

What if you weren’t lucky enough to have a father give great financial advice (even if you didn’t take his advice at first)? Or, what should you do to deal with your credit card debt and spending habits? Speak up and befriend people here at Geezeo! You never know what good tip you’ll discover.

With all the emphasis in the press these days about tightening the belt I thought it would be nice to think about life with less money. Does it always mean sacrifice?

Self-employed writer Rita Farin had these points to say. I’ve added my own comments, too. Thanks for the thoughtful writing, Rita!

* Life requires living, whether you have the money or not. It also requires a plan. If you have a plan for your new life, then you can start really living by doing what you love.

One way to start planning is to write it out. The list doesn’t have to be in any particular order. The important things is to get it all out. Some items you’ll commit to doing and others you’ll think, “that’s a cool idea but I’m not ready to commit to that, yet!”.

Even though we’re talking life goals the same could be said for your financial life. Your list could include goals like “Save 10% of my income”, “Give 10% to charity” or “Start a secondary savings fund for Goal X”. In the end you may decide that you can only commit to one of these immediately.

As they say, you must start with the end in mind.

* You have more money than you think you have. Even with a budget in place, it’s hard to know how much money you actually have until you have to spend it without bringing in any income. I had no idea until I started a business a couple of years ago and lived off of my savings. That savings lasted a lot longer than I ever thought it would. And I found pockets of money that I had forgotten about, lasting me nearly two years.

I totally agree here. I literally saved my “lunch money” for 9 months and then lived off of it for nearly the same amount. How did I do this? With a budget. Get yours here at Geezeo.

* You can easily learn to live on less. Having less money taught me how to do more for myself and become more resourceful. I used to shop retail. Now I don’t.

This is great advice because it works. There are multiple groups here at Geezeo with a living-below-my-means emphasis. Find one or more that you’d like to do (or currently do!) here.

* Not having money helps you overcome your fear of not having money. Ask yourself, what’s the worst that can happen? For me, the worst that can happen is going back to a career that I once loved and still enjoy.

This is a common fear among freelancers or the self-employed. Pursuing your life dreams shouldn’t be dictated by money. But the reality is money plays a role in that it can make it easier or harder. To gain control you have to control your money. While no one should “plan to fail”, there are always ways to get back on your feet.

* There are resources for living with no money. As long as you have good credit, you can take out loans or lines of credit. You can also research grants and other available money.

Rita makes a good point here. But I’ll add the caveat: be careful not to lean into these resources too heavily and find yourself with debt you cannot manage. Be sensible in your approach.

* Having no money is a choice and is temporary. It’s a time of investing in your future to rebuild. Transitioning to a life you love at every level brings abundance. Whenever I’ve needed money, it’s come—through opportunities that land on my doorstep.

It’s said that “broke” is a mindset. Don’t let it be yours.

* You always have something to fall back on. We have so many skills. If you’re transitioning out of a career, you can always go back if really necessary. Or you can turn that knitting hobby into a money-making endeavor.

Be flexible with what you can do and you’ll be able to do more.

* Listen to yourself and commit to your passion. Friends, family and strangers may tell you you’re crazy when you decide to make a change. “You can’t make any money doing that,” they may say. Just remember that they’re expressing their own fears, and you can in fact make money from anything you love and commit to do.

We’ve all experienced naysayers. That’s part of the reason money — and by extension, dreams — are so infrequently discussed. Rather than keep your dreams to yourself, find people who will support you and guide you. If these people aren’t in your life, look for them in any of the groups here.

Think big, take action, and believe. Money itself won’t make a life worth living. Yet, managing what you have will make your life easier and increase the chance you’ll reach whatever goals you pursue.

Good luck!

I’ve heard that many Americans are one paycheck away from serious financial trouble. That’s pretty scary, so I decided to check out the goals page to see who’s building an emergency fund.

I discovered lots of users with this goal, but only a handful following through. Maybe some of you are just forgetting to use the tools to track your progress. If not, it might be time to visit the confessional.

An emergency fund is critical for peace of mind. When the unavoidable happens it helps if money worries don’t have to cloud your judgment. Then you can calmly decide the best way to deal with a crisis.

Here are three things to remember when trying to grow your cash cushion:

1) Pay yourself first.
This is the best way to start saving and lots of us don’t do it because we’re stuck in ‘Wait Until’ mode.

The problem with this approach is that the right moment never arrives. There will always be something that requires our cash and attention. The only way to develop a ‘pay yourself first’ habit is to make the leap and start. Now.

2) Be proactive with the little things.
Procrastination and impulsive behavior create avoidable emergencies that suck energy and resources. Prevent surprise expenses by taking good care of your health, home, and car. Don’t sabotage your efforts with actions that ultimately work against your goals.

3) Prayer is not a substitute for planning.
Bad things happen to good people all the time. Nobody gets to avoid accidents, disasters, or general misfortune. Why not be prepared? Then you can focus your prayers on those less fortunate. Like people who don’t use Geezeo.

An emergency cash cushion is an important step on the path to financial well-being. So don’t give up, your peace of mind is worth the effort. Congratulations to Sunny who is 56% of the way to building his emergency fund!

Natural born spenders might be unclear about emergency vs. non-emergency needs. Check out the group My Wallet Is Bulimic for a checklist.