Friday, February 25, 2011

PFStock Readers Have Above Average Retirement Savings

For several months, readers have been responding to a survey of retirement saving on PFStock. The poll is now closed and the final results are in. A total of 32 readers voted on this poll. The poll is based on my April 2010 post about retirement savings. This post contains data from the Employee Benefit Research Institute (EBRI) about retirement savings in the United States. One conclusion of their research is that the majority of Americans have less than $25,000 saved for retirement. However, PFStock's reader survey paints an entirely different picture.

Below are the results of the reader poll compared against the data in the EBRI survey.

How much have you saved for retirement (exclude primary residence and defined benefit plans)?

Retirement SavingsEBRI SurveyPFStock Survey
less than $1,00027%0%
$1,000 - $9,99916%3%
$10,000 - $24,99911%6%
$25,000 - $49,99912%9%
$50,000 - $99,99911%15%
$100,000 - $249,99911%25%
Over $250,00011%40%

Note that the percentages do not add up to 100% due to rounding.

From these statistics, I found it interesting that a large percentage of PFStock readers fall into the higher retirement savings categories. Fully 80% of PFStock readers have more than $50,000 saved up for retirement.

Over the years, I've written several posts about Net Worth for PFStock. Sometimes I've received very insightful comments that try to explain why such a large discrepancy exists between my blog readers and the general population. This one reader comment seems to provide some insight into the discrepancy:

This poll brings to light several questions including are readers of financial blogs more financially savvy? Are they taking the information they gain from online and putting it to practice? Even the fact that they are on a financial blog demonstrates their interest in properly managing their finances and their financial security and thus impacts the way they spend and save. It's a very interesting poll to say the least.
Another reader submitted this comment:

Whether or not the figures reported [in the poll] are accurate, they're not representative. People with a high net worth (or at least an above average interest in personal finance) will be over-represented due to self-selection.

Since you, PFStock readers, answered the poll, I'll ask if you would like to share your insights on this data? As always, anonymous comments are welcome on

For reference, the original EBRI survey can be found here.

Additional related posts:
Annual Income and Net Worth (7/10)
Annual Income Survey (2/10)
Net Worth Update (8/09)
How Much Do You Make? (4/09)
Net Worth Comparison (6/08)
Are You Wealthy? (3/08)
Calculating Net Worth (9/06)


Friday, February 18, 2011

Guest Post: 5 Ways to Overpay Your Mortgage

There are obvious advantages to paying off debt as early as possible. First, there’s the availability of more money. Second, nothing feels better than being in a debt-free position. For most people, purchasing a home comprises the largest amount of debt for the longest period of time. Many people no longer find comfort or security in 30-year loans since it means they’ll be in debt for a major portion of their lives. Given the instability of the economy and job market, deciding to pay off a home as soon as possible would insure that no matter what happens, a family has a roof over their heads. There are several options available to homeowners, but there are rules that must be considered before deciding on a particular procedure.

Considerations Before Selecting a Plan
  • While paying down the balance means less interest will be paid, it’s important to find out from the lender whether there are stipulations on the amounts that can be overpaid.
  • Some lenders have little appreciation for paying off mortgages earlier than scheduled. Find out if there’s an early redemption penalty for paying off the loan early, as having to pay a penalty could defeat the purpose of attempting to pay off the loan early. Also, make sure the payments will be credited to the principal.
  • The general rule is to pay off the most expensive loans first. If there’s heavy credit card debt, it may be wiser to concentrate on paying off this debt first since the interest rates are higher (possibly 15 – 20%) than mortgage loan interest rates (approx. 6%).
  • If paying off earlier, the homeowner could fall short if an emergency occurs. Homeowners must remember that money paid into their mortgage will be locked into the mortgage so if needed, the only option may be to borrow by refinancing at higher rates of interest.

Options for Overpaying Mortgages
  1. Make bi-weekly payments instead of monthly mortgage payments. Bi-weekly payments result in 26 weeks of payments which is 13 payments per year instead of the standard 12 payments. With this method, homeowners will find that a significant amount of interest payments and term years can be eliminated. However, if this option is offered, it will likely come with an enrollment fee, and monthly fees to be paid thereafter.
  2. Perhaps choosing the extra amounts to pay and making those additional payments either each month or when convenient is the better thing to do. This method is beneficial because there are no fees attached. Adding as little as $25, $50 or $100 each month can make an enormous difference in the final balance paid and the number of years erased over the life of the loan. Since interest is calculated according to balances due, ask the lender to recalculate the loan periodically so the charges for interest rates can be properly reflected (don’t assume that the lender will automatically do this). Incidentally, it’s best to make the overpayments during the first half of the loan since this is when the most interest will be charged.
  3. Take out the loan for less than the standard 30-year term; the lower the term, the less interest will be paid and the sooner the loan will be paid off. Before signing for a lesser-term loan, homeowners have to be reasonably sure that they’ll be able to make the higher monthly payment, as well as be able to handle all their other expenses and have money left over to take care of the basics like utilities, food, clothing, emergencies and leisure activities. If the loan has been paid off by the time they're ready to sell, homeowners stand to make a sizable profit no matter what the condition of the real estate market.
  4. Plan to make a yearly lump-sum payment. Paying as little as $500 extra per year can result in a substantial difference in the overall amount paid and the number of years it takes to pay it.
  5. Taking the above scenario a step further, by depositing a certain amount of money each month into an interest-bearing savings account, homeowners can then keep the interest earned in the account and make the lump-sum payment with the actual cash balance in the account whenever they choose. Thus, make lump-sum payments and make a little extra money at the same time!

The world of today isn’t trustworthy and the general rule for businesses now is to seriously consider what will be best and most profitable for the business. Therefore, homeowners have to look out for their own best interests and conduct research on their own. With the help of knowledgeable brokers or agents, they should strive to gain the best understanding possible of all mortgage plans and the rules that regulate these plans. Only then will homeowners have reasonable assurances of achieving their goals.

About the Author
David works at Money Choices, an Australian service where consumers can quickly compare home loans from a variety of providers.

Tuesday, February 15, 2011

Reader Submitted Tax and Money Saving Tips

The fifth and final winner in the PFStock Tax Tips Giveaway 2011 is Holly Blanco. She (and the other four winners) will be receiving free H&R Block At Home Online Tax Preparation. The drawing is now concluded. Thanks to everybody who entered.

I've compiled a list of the tips that were submitted by PFStock readers. Here are some of the great tax tips that PFStock readers sent in:
  • My advice is to not lie about your income. Be honest and pay your taxes.
  • I use the internet as a tool to make sure I'm claiming every deduction and credit that I can qualify for.
  • My father was an accountant and used to say the best thing was to break even every tax year and not give the government an interest-free loan of your money (by getting a refund). I know that I'd never be able to save the money otherwise so I always made sure to have plenty of tax deducted in order to get a nice refund check. Now I make that money work for me; I put some aside every year and put it into a CD.
  • I make sure that I organize all year. I have folders I make in January for that year's taxes so that come tax time, I don't have to hunt for my receipts and paperwork.
  • Contribute the most you can to a 401(k) plan at work.
  • Spend some time learning about every single deduction you are eligible for and then take them. Think; give away lots of stuff to charity; contribute as much as possible to retirement savings plans at work.
  • File your taxes for free online. Many websites let you e-file and offer free online filing if you meet their criteria.
  • Bloggers should keep track of all expenses throughout the year whether it is for mailing books for giveaways or hosting fees.
  • Contact your local libraries, chamber of commerce, or city officials, to find out which agencies offer free tax filing for low-income families.
  • Buy a copy of J.K. Lasser's Your Income Tax or the Ernst & Young Tax Guide to help with understanding tax laws and with preparing your taxes. Better yet, check out a copy of either one from your local library for free.
  • I'm just anxious to get this done. Get your taxes done early so you don't get stressed about it come April 15.
  • I came to realize the tax I paid on my car last year was tax deductible. Check for all the credits!
  • I have added extra to my payroll deductions in order to make sure that I don't owe any additional taxes.
  • Read PFStock and other personal finance blogs. (I think that this contributor has his own personal finance blog.)
  • Order your credit report from the 3 major reporting agencies—Equifax, Experian, and TransUnion—for free once per year at I joined to monitor my actual credit score for free too.
  • If you have a complicated return work on it a little at a time so you will not be overwhelmed.
  • If you find you owe every year and adjusting your with holdings just isn't working out make sure to take the number you owe each year, divide it by the amount of paychecks you get per year, and stick it in a high yield online savings account. I say add at least $5-$10 more per paycheck so you have a cushion. In the worst case, you will have extra savings!

PFStock readers also contributed these great money saving tips:
  • I look at sales fliers online weekly and match coupons and sales. 
  • My money saving tip is to use coupons.
  • My tip is to avoid impulse purchases. Make yourself go to a store 2 times before you make a big purchase.
  • My best money saving tip is to use coupons and match them up with sales.

Thanks again to everybody who participated. If you have more tax or money saving tips, feel free to share them in the comments below. Please visit PFStock again, and check back for additional giveaways in the future.


Disclaimer: Comments are user submitted tax tips. PFStock does not provide tax advice. I encourage readers to consult with a tax adviser if they have specific tax questions.

Wednesday, February 2, 2011

Tax Tips Drawing: Week 4

The 3rd of 5 winners in the PFStock Tax Tips Giveaway 2011 is "Henria O.". She will be receiving free H&R Block At Home Online Tax Preparation. If you haven't entered, please do so as soon as you can. Non-winning entries will be carried over to the next drawing. There are only 2 drawings left, so enter today.

Here are some of the tax tips that I've received so far:

  • Spend some time learning about every single deduction you are eligible for and then take them. Think; give away lots of stuff to charity; contribute as much as possible to retirement savings plans at work.
  • File your taxes for free online. Many websites let you e-file and offer free online filing if you meet their criteria.
Please keep your tax tips coming, and good luck to everybody who enters. This contest will run through February 11, with a new drawing every week until then.