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{Millennials Guide to Money} What Is A 403(b)?

Published on February 19, 2016December 22, 2016 by Danielle YB Vason2 Comments

People are living longer nowadays, which means that it is more important than ever to get aggressive about saving for the future. While everyone’s vision for retirement varies, there is still an underlying need for basic expenditures. The cost of living is steadily increasing and as most people approach retirement, they are stunned when their new normal is a reduced fixed income. Not saving now could cost you peace of mind in the future. So let’s get our financial Zen on, together!

When most people hear the words “retirement plan”, their minds immediately go to a 401k plan. While it is the most talked about, it certainly is not the only option for retirement. Today, I’d like to introduce you to the 403(b) plan. A 403(b) plan is a retirement plan offered to employees of tax-exempt organizations that fall under the code 501(c)(3), like schools, churches, and hospitals. If you are eligible to participate, I would highly recommend that you do.

ADVANTAGES of a 403(b) Plan

1. Your contributions toward your 403(b) are pre-taxed. Meaning your contribution reduces your current income and the amount you owe in current income taxes.

2. All contributions and earnings are tax deferred, which presents you with tax savings since most people are in a lower tax bracket at the time of retirement. This is another instance where time is on your side because the sooner you start to make contributions, the faster your money will grow.

3. Similar to a 401k, employers are able to match contributions. 403(b) contributions must be made through a salary reduction agreement with an employer, even though your company does not directly administer them.

4. Hardship withdrawals can be made. While hardship withdrawals can be made, I would highly recommend this as a last resort option. You must prove that you are experiencing extreme financial distress and the money must be used to cover expenses such as medical bills, tuition fees, or in the event of an eviction or foreclosure. Just remember that you are only allowed to withdraw the exact amount needed and that the money will be taxed as income.

People who are eligible for this type of retirement plan are ones who make a living being of service to others. If you qualify for a 403(b), be of service to yourself and your financial future, by getting serious about your plans for retirement. They say the older you get, the faster time passes. Don’t miss out on your opportunity to make time and youth work for you.

This article was originally posted on the Feex Blog

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{The Woman Behind the Brand} Danielle YB Vason of “She Makes Cents”

Published on February 17, 2016March 4, 2016 by Danielle YB Vason1 Comment

Hello Lovelies! Are you curious about the person behind the brand? Who is SHE? Well, I am very excited to invite you to check out my updated About Me page (click the picture below). So much has happened in my life and in the lives of my readers since I created my first about me page… that I was way past due for an update. Over the years I have enjoyed getting to know my readers and I have been inspired by your stories that you bravely share on the site and the personal ones that are emailed to me privately. I never feel alone in my journey because of readers like you are right there for every step toward financial freedom.

Photo Credit: Bri McDanielle Photography

Feel free to tweet me @shemakescents using hashtag #SMCmoneytalks or stop by our Facebook page to say hi, update me your progress, goals, and topics you would like to see more of. I’d love to hear from you.

Let’s Get Social!

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{Week 7 Money Challenge Recap} RESET Your Goals = Success

Published on February 12, 2016February 27, 2016 by Danielle YB Vason1 Comment

“Personal Finance Really 80% Behavior and 20% Head Knowledge”- Dave Ramsey

We are closing out week 2 of February and I have a good feeling that people have started to forget the motivation that most feel at the very beginning of the year. Whether you have forgotten your goals, lost sight of your personal mantra for your year, or given up on your resolutions, know that it is not too late to reset. In the past three years, I’ve gotten off track more than a few times when doing this challenge. That’s why it’s called a challenge. It is not supposed to be easy. Lucky for us, my BINGO version of this challenge isn’t particularly difficult either. Making necessary changes to help you reach your goals, be it financially, socially, or vocationally is all about behavior. You have to retrain your brain and as soon as you start seeing results, you will begin to establish that positive change as a habit and one day you will look up and it will be a lifestyle. You can do it, whatever “it” may be for you. As far as this journey toward financial freedom goes, you are not alone. We are in this together. I’m proud of myself for going strong every Friday with the 52 Week BINGO Money Challenge. Today I crossed off $46.00 on my BINGO money sheet for a total of $70.00 extra dollars that went toward my credit card debt (on top of the monthly minimum, of course) this month. Instead of spending $70.00 on my taco habit (Hi, my name is Danielle and I have an unhealthy LOVE of tacos) I invested that $70.00 into my financial goals.

Great job to those who are going all in and staying on the challenge like Alysa T. who check just about every Friday, Briana C., and Chris. C. I also want to welcome the newcomers to the challenge. The beauty of this challenge is that you can start or restart anytime, so if you have gotten off tract RESET today.

Twitter Check-Ins #SMCmoneytalks

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{Wise Words}…From Beyonce’

Published on February 11, 2016February 10, 2016 by Danielle YB VasonLeave a comment

People are still buzzing about Beyonce’s latest video, Formation, and trying to decide whether it’s provocative, political, entertaining or just another smart money move. While they are debating that…I will just LOVE on this quote below.

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{January Recap} 52 Week BINGO Money Challenge

Published on February 5, 2016March 4, 2016 by Danielle YB Vason3 Comments

deuces to the week and hello to the weekend!

This past Friday I was flat out sick and unable to live blog the week 5 progress report for the 52 Week BINGO Money Challenge so today’s post is a two-in-one. Last week I crossed off $41.00 on my BINGO money sheet giving me a total of $286.00 for the month of January. Think about it like this, I would end up with $3432.00 for this challenge by the end of the year if I kept repeating the same numbers from the month of January. While that sounds great for the extra money aspect of this, it isn’t that realistic for me since there were five Fridays in this month, I crossed off mostly of the larger amounts, AND did a $100.00 bonus box in week 3.

January Recap- By the Numbers

Week One: $35.00
Week Two: $40.00
Week Three $50.00 + $100.00 (bonus)
Week Four: $20.00
Week Five: $41.00

January Total: $286.00 Total Savings YTD: $310.00

Today is the first Friday of February (and my mom’s birthday….hi Mom!). I crossed of $24.00 today and applied it directly toward my first step in snowballing my credit card debt.

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{What Is an IRA?} The Millennial Woman’s Guide to Beginners Investing

Published on February 3, 2016January 7, 2017 by Danielle YB VasonLeave a comment

As a millennial woman, I know many of my female peers shy away from conversations about money and becoming financially fit for fear of looking ignorant for not knowing the basics. Financial vocabulary is spoken and some hear Charlie Brown’s teacher and stop listening. I want to help break down self-imposed barriers that could be keeping us from confidently making smart money moves.

THE BASICS

Whether or not you have an interest in saving and/or investing money, I could bet that you have an interest in learning how to make it grow. So listen up, take notes, and let’s start planting financial seeds of knowledge. First up, the IRA.

An IRA or an (Individual Retirement Account) is a savings account where money grows tax-free with a max contribution of no more than $5,550.00 ($6500.00 if you are 50 or older) for 2015 and 2016. TAX FREE. F-R-E-E! That free part is what should make it exciting and intriguing, even for those who have no interest in investing. There are two types of IRA accounts: a Roth IRA and a Traditional IRA and the differences between the two are when you pay taxes on the money. Regardless of the fact that your money is growing tax-free in both types of accounts, you still have to pay Uncle Sam his cut. With a Roth IRA you pay the taxes up front and with a Traditional IRA you pay the taxes at the time of withdrawal. Regardless of the type of IRA you have, you can access your money once you hit 59 ½ years old, without getting hit with a 10% tax penalty for early distribution.

IRAS AND MILLENNIALS

I know, I know….generally speaking millennials are not very interested in saving for retirement. We are, however, very good at saving for the emergency of the present or for big things like college/student loan expenses or even buying a house for the first time. If you needed to tap into your contributions right not, your IRA will give you far more flexibility than a 401K or a 403(b). Assuming you meet the necessary requirements, this type of account can be used to offset qualified education expenses (like tuition, books, fees, supplies, and equipment required for enrolling) if you attend an IRS-approved institution or even buying your first home without penalties.
The best thing yet, if you are a 20 something….or even a 30 something like me, time is still on your side. According to this article entitled, Why You Need A Roth IRA, writer Kevin McCormally explains it well with regards to the Roth IRA, youth, and compounding interest:

“If a 25-year-old contributes $5,000 each year until she retires and makes an average annual return of 8% on her investment, she’ll have $1.4 million saved by the time she retires at age 65. And the money is all hers—she won’t have to give the IRS a cent of it if she waits until retirement to withdraw the earnings”.

Although it is already 2016, you still have until the tax deadline to make/claim contributions from last year. That is to say, if you have $5,500.00 laying around in your mattress or in a money market, you might want to consider opening an IRA for that $5,550.00 deductible on your taxes THIS tax season.

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{Week 4 Progress Report} 52 Week BINGO Money Challenge

Published on January 22, 2016May 23, 2017 by Danielle YB Vason10 Comments

It’s the fourth Friday of the year which means it’s time for the 52 Week BINGO Money Challenge. Today I have crossed off $20.00 on my BINGO money sheet. This puts me at a total of $245.00 extra dollars to be applied to my credit card balance. What makes this challenge exciting to me is that fact that I’m saving little chucks of money that I don’t miss in my day to day life. I know with each passing week, those “little chucks of money” will start snowballing into something bigger.

Here is how month has broken down so far:

Week One: $35.00
Week Two: $40.00
Week Three $50.00 + $100.00 (bonus)
Week Four: $20.00

We are lucky enough to have five weeks in January, which is great because you gain an extra opportunity to save a little more while the momentum is good and people are still somewhat on focus with their 2016 resolutions.

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How Much Have You Saved So Far?

Snowball Your Money with Affirmations with She Makes Cents

{Money Hack} Quick Guide to the Debt Snowball

Published on January 20, 2016January 22, 2016 by Danielle YB Vason14 Comments

If you are a frequent reader of shemakescents, then you will constantly hear me referring to a snowball, but what exactly does a snow ball have to do with personal finance? The snowball is a metaphor that represents my current financial goals. Picture this… someone picks up a small handful of snow and creates a ball. That ball is then pushed down a hill and with every rotation picks up more snow and speed. By the time it reaches the bottom of the hill, the ball has multiplied in size. Photo Credit: PM Images

Now let’s break it down…

Simply picking up the ice to form a ball represents motivation. Most people would have seen the snow but left it alone because it’s too cold to bother with.
The small ball, created from motivation, is a manifestation of the strength of my current financial situation. It’s small right now, but will grow with better money habits ahead.
The snow ball being pushed represents my obligation to myself not to settle or stay stagnant. You have to keep moving to make progress. With every rotation (aka payment above the minimum) the fight against debt gains momentum until it gets to the bottom of the hill aka “The Land of Financial Freedom”.

Financially speaking, it looks like this:

Current Credit Card Minimum Payment = $89.00
The Average Monthly Payment I Make = $450.00 ($300.00 per month + the average of the 2016 version 52 Week BINGO Money Challenge) will have me credit card free in 9 months at the longest.

Once the credit card has a zero balance, that money will be “snowballed” onto my monthly student loans. Instead of paying the $200.00 minimum for those, I will then pay $200.00 + $450.00 to equal $650.00 per month on student loan debt. Doing this will shave 12 years and 7 months off my expected repayment term and save me about $6,555.55 on interest alone.

Once the student loans are eliminated, I will then have an extra $650.00 every month. That’s an extra $7,800 per year that could be applied to savings, investments, or a down payment for a large purchase.

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{Week 3 Progress Report} 52 Week BINGO Money Challenge

Published on January 15, 2016May 23, 2017 by Danielle YB Vason1 Comment

It’s Friday and week 3 for me for the 52 Week BINGO Challenge. This week I am crossing off $50 and my first bonus box for $100.00 for a combined savings of $150.00 for week 3 and a grand total of $225.00. Every day I receive emails with inspiring stories of people, their financial goals, and their progress of making smarter money moves. It makes me so happy to get check-ins on Fridays, especially from people who have joined the challenge. I hope is it shows readers of shemakescents that you are not on this financial journey alone.