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Cool Retirement Article & Efund

July 23rd, 2007 at 11:38 am

I knew once our efund goal was reached I would be tempted to add more. But as I mentioned one of our not-so-good financial moves was hoarding too much cash in the past and not ivesting well. I am trying to fix that going forward. I mean what it comes down to is not having to work so hard if the money is working for us, right?

Anyway, I just had an epitome. One reason we have been so cash poor of late is we put a lot of cash into a newer car. After having been very happy driving an old car that merely cost me $1k (& not the first car that I paid so little for that did me good) I have mostly come to the conclusion that new cars are not all they are cracked up to me. Then again this one may last 20 years and at least it has collission coverage so I worry less about it getting totaled, as a whole.

Anyway, glancing at our net worth it just occured to me that we have an easy $20k assets in our cars that I know we could liquidate. IF we had to sell both and go buy a $1k car to get us by if I lost my job or something, so be it. It really would not be a biggie or a stretch for us.

So this just popped into my mind. My car alone is worth a good 3 month expenses easy. & though my dh would argue that 2 cars is a necessity, I am not sure I would agree in dire financial circumstances (or a true emergency). Even today obviously we could survive with one car. Since our cars are paid off there is little care about if we could sell them for more than we owe. So I just kind of had a ding ding ding in my head that though we did put a lot of cash into a car, does not mean it is gone forever or we could never tap it. I also feel a lot better about settling for the 3 months expenses in the e-fund, knowing another 3 months would be pretty easy to tap if push came to shove. Just another angle I hadn't thought of.

As the car depreciates we will have far more in the car replacement fund that we could likewise divert. THat one I had already thought of. I figured if we had a good decade we both might buy some pretty nice cars next time around. If not, an old clunker will do. There are much worse things...

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Anyway, in other news, check out this article on the new automatic 401k plan enrollments.

"This 401(k) plan hums along on autopilot"
http://www.latimes.com/business/la-fi-perfin22jul22,1,779646...

Don't worry, your employer can not enroll you without asking for your permission first pretty much. It is very easy to opt out if you so choose. But I mentioned these in an article for pfadvice and people did not take to it kindly, saying no one is jumping on this. From my perspective with small employers, everyone is jumping on this. This can actually help employers increase participation in 401k plans and reduce some of the limitations that employers face when they do not get enough participation in their 401k plans. I admit I am not much into big business these days, so maybe they aren't excited about this. But lord knows the small business are taking advantage.

This article had a really interesting comparison though on showing how an average person who waits until 45 to contribute to their 401k and invests more in bonds because more risk-adverse, where as the average 25-year-old who is automatically enrolled in a 401k that invests in a Target Retirement Fund will have SO MUCH MORE at retirement. Though they don't have to think about it or do anything - their employer just does it all for them.

It is definitely a good thing for young workers!

2 Responses to “Cool Retirement Article & Efund”

  1. debtfreeme Says:

    I started my new job on Monday of last week. On Tuesday there were two "classesĒ on the retirement system. One was for people who are enrolled but need help with the asset allocation piece and the other to stress to people the need for signing up. I took them both, filled out the paper work for the 401k and the 457 plans to begin on September 1 (first time I get a pay check) so I will never see it.

    It was funny when I asked to attend the courses, my boss just said, sure but do you need to go to both? I said, well the intro piece does not explain the asset fund allocations we can choose from and the asset course does not allow you to enroll for the first time. And I donít want to waste any time on waiting for the next class.

    In a way they were both a waste of my time because I have been doing the 401k thing for 10 years (I am 32) but you canít sign up or choose a plan with out taking these courses and they are only held once a quarter. I mean, why would anyone not participate? Even with the ďpensionĒ state employees get why would you not save money to cover the cap that the pension provides as it only pays between 50 and 80 % of what you make when you leave depending on how long you have worked for the state. You still need to make up the difference just to ensure what you are ok and cover the basics even though more planners plan to have your retirement income at 80% of what you currently take home . And I donít plan on staying here until I retire.

    I know Iíll get something from SS but I think of it as my vacation savings fund and donít plan on having to use it for retirement. And my pension is a bit different as I no longer pay into SS. I did not know that until I was pretty far into the application proves 18 months ago, but I already have my 40 quarters of service and more.

    Ah, I love this stuff and wish I had figured it out in college before I graduated. I dream about going back to study personal finance and do counseling. Maybe someday I will.

    Tahnks for the article! i love the things you drop in for us to read.

  2. baselle Says:

    In my workplace we heard from the COO that they are definitely thinking about the automatic 403B sign up. Default at 8% to get the max match. We have about 140 people, so not micro, but smallish.

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