Withdrawing Money From a Roth IRA: How Does It Work and When Can I Do It?

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Withdrawing money from your retirement account is something you only really want to do in retirement.

That’s obvious.

What is also obvious is there are definitely times in life when you find yourself with a significant cash crunch and that nest egg looks ripe for the harvest.

Unfortunately for a majority of your retirement account options any early withdrawals are disastrous.

You get hit with fees and taxes; your overall withdrawal can easily be reduced by 25-40%… which means you just have to withdraw even more money to get to the amount that you actually need to use.

It’s a lose-lose situation: you’re paying a lot in fees and taxes while also losing out on potential growth of the account in the future.

…unless you’re using a Roth IRA.

Withdrawing Money from a Roth IRA

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Student Loan Debt Bubble – Is This Our Next Economic Crisis?

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As if the student loan problem wasn’t already approaching crisis levels, it may get a lot worse.

In 2010 more than $100 billion worth of student loan debt was taken out, making the total amount that Americans owe for education now more than $1 trillion.

The average graduate leaves school with $25,250 in student loan debt and faces decades of payments.

Although the recent student loan reform may ease the burden by making it possible to lower the payments based on the borrower’s level of income, some students face loan payments that are higher than they would pay on a modest size home mortgage.
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Bank of America to Rent Foreclosed Family’s Homes Back to Them and Links

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Facing foreclosure from Bank of America?

BofA has realized they have a problem on their hands: you can foreclose on millions of delinquent homes all you want, but getting rid of them before they fall apart due to disrepair isn’t as easy.

If you’re sitting on thousands of properties it takes a lot of potential upkeep to keep damage through nature, vandalism, or just general maintenance from ruining the home.  It takes time, money, and effort to air the home out, keep mold from growing, and to keep the yard trimmed.

To combat this problem, Bank of America is running a pilot program in Arizona that will let homeowners facing inevitable foreclosure to hand over their properties to the bank.  In return they are forgiven the mortgage debt and allowed to rent the property back from the bank for up to three years.  The bank gets the bad mortgage taken care of, gets to keep the asset, and generates a little bit of return in the monthly rent back to the bank.

Will this solve the foreclosure problem for the big banks?  Probably not, but it is a step in the right direction.

Don’t get foreclosed on. Stay in the loop on your finances with these great articles:

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Did You Get a 1099-K Tax Form This Year?

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One of the newest tax forms to be released is the 1099-K.

This new 1099 tax form is designed by the IRS to help catch those who under-report their income from online business transactions.

Concerns that sellers on eBay are not reporting their income, as well as other third-party transactions handled by banks and processors like PayPal, are being overlooked as income, the IRS is hoping that the 1099-K tax form can help them recapture lost revenue.

Who Issues the 1099-K?

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The Cost of Food Waste and How to Prevent It

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Every week you clean out the refrigerator, and every week you may find some food to throw away—broccoli you didn’t get to eat before it went bad, leftovers from last Tuesday night’s dinner, lettuce that can no longer be revived…

If you are throwing away food on a weekly basis, you are not alone.

According to The New York Times, Americans throw away 27% of their available food.  This includes waste from people’s homes, restaurants and grocery stores.  Timothy Jones of the University of Arizona, who studies food waste, estimates that the average family of four wastes $600 in food each year.  (TLC)

The Financial Cost of Food Waste

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What is Mortgage Amortization and How Does it Work?

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Paying off a mortgage is an overwhelming task.

A mortgage is a big debt—almost as big as your house—so the best most of us can hope to do is to shorten the term by prepaying as much of the loan that we can as quickly as we’re able.

Why should we want to do that?

Owning your home free and clear is a good place to be.  You’re living in your home with no mortgage payment and that’s when saving money and life in general get easier.

But there’s something more.

The cumulative interest on mortgage loans makes your loan balance even bigger.

A mortgage of $200,000 will require nearly $350,000 in monthly payments over a 30 year period.  Anything you can do to shorten the term can save a lot of money.

What is Mortgage Amortization?

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Grow Your Nest Egg with Automatic Retirement Contributions

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One of the essentials of preparing for the future is building your retirement nest egg.

The amount of money you save now can be a big help later, when you are ready to retire.  However, growing your nest egg can be a challenging task.

You might not remember to make regular contributions, and it can be difficult to put money away for retirement when you feel like you are struggling financially.

A great way to ensure that you save for retirement is to arrange for automatic contributions to your retirement account.

Setting Up Automatic Contributions

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What is the Alternative Minimum Tax (AMT) and How Does It Impact Your Taxes?

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There are few things in the world of taxes more terrifying than the Alternative Minimum Tax (AMT).

After taking all of that time with your W-2s, donations, and various deductions the AMT steps in and tells you that none of that matters; you suddenly owe thousands more in tax.

That’s scary enough for me.  Here’s an overview of the Alternative Minimum Tax and what can trigger it to impact your taxes.

What is the Alternative Minimum Tax (AMT)?

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March Madness 2012 and Links

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March Madness kicked off earlier this week and seemed rather mundane until Friday night.

Before this year’s tournament a #15 seed had beaten a #2 only four times in all of history.  On Friday it happened twice: Missouri lost to Norfolk State and the team that always seems to be in the Final Four, Duke, lost to #15 Lehigh.

It’s not all bad news for brackets: the #1 seeds are all still in play thanks to some awful officiating in the Syracuse vs. UNC-Asheville game.  And a majority of people have at least 3 #1 seeds in their Final Four.

That’s why they call it March Madness and once again the grand tournament is living up to its name.  Now, if we could only do this in every sport and extend this to college football…

Don’t forget your finances this weekend while you sweat over your bracket. Check out these good reads:

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What is the 403(b) Retirement Plan? – Overview

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Even though the 401(k) is the most common retirement account in the United States, not everyone has access to such a plan.

Those who work for governments, schools and non-profit corporations don’t have access to an employer-sponsored 401(k).

If you don’t have access to a 401(k), you can, of course, open an IRA.  However, the contribution limits are fairly low, which can be discouraging if you want to contribute a higher amount toward a successful retirement.

The good news is that many hospitals, schools, non-profits (including churches), and governments have their own retirement account offering: The 403(b).

What is the 403(b)?

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