There are seven things you need to know about The 2006 Pension Protection Act. Amazingly, while we were all out enjoying the sunshine this summer, the government did some serious work on a bipartisan level to protect our pension plans and make it easier to save for retirement. The new law is called the Pension Protection Act of 2006, and it represents the most sweeping change since the Economic Growth and Tax Relief Reconciliation Act of 2001. Many even say it's the most important tax reform in 30 years. Here are the top seven items in the Pension Protection Act that you need to know about.
1. The tax law changes of 2001 are now permanent.
2. Retirement plans and savings incentives have been increased.
3. Enrollment in 401(k) plans can now be automatic.
4. Now 401(k) savings can be inherited by non-spouse beneficiaries.
5. Tax refunds can now be deposited into IRAs automatically.
6. Starting in 2010, even the rich can Roth.
7. The 529 college savings plans are now permanent.
(This information was pulled from the David Bach Finish Rich September Newsletter - you can subscribe to it for free on his website)
Friday, October 06, 2006
Monday, October 02, 2006
Beware of "Payday Loans"!
Recently there has been much negative news about the misuse of pay day loans. Now, the United States government has intervened in order to curb the problems that occur when military employees abuse short term loans. In reality I should say it's the loan companies that are abusing their customers. Imagine how much money they are making off people - these quick loans centers are popping up on every corner! Their favorite locations to set up shop are in neighborhoods where people live who don't use banks. Generally the best customers are those that are undereducated about how to deal with dangerous detours (people who are looking for a quick resolution to their financial problems). If I may be blunt without offending you, anyone who NEEDS to use such a service is the WORST possible candidate for a quick loan. Payday loans can literally drive people over the edge and into a financial downfall.
It works like this: Payday lenders offer short-term loans against borrowers' paychecks and charge fees. Borrowers who cannot repay the loan by the next payday often "roll over" the loan repeatedly, leading to more charges. The average annual percentage rate for payday loans is about 390 percent. Yes, you read that correctly-- 390%! As lending fees pile up, borrowers can end up paying annual percentage rates of 800 percent or more. Compare that with a credit card that charges 9.9 - 22% and credit cards suddenly sounds much smarter. For the record, I do NOT advocate the use of credit cards for most people, as most people use them incorrectly to begin with.
The bottom line is you want to avoid getting into trouble by spending less than you make; Live Under Your Means (LUYM). Study where you can trim your budget and put that extra money aside in a special account and let it grow. Develop a comforting safety net for true emergencies and you will sleep much sounder at night.
It works like this: Payday lenders offer short-term loans against borrowers' paychecks and charge fees. Borrowers who cannot repay the loan by the next payday often "roll over" the loan repeatedly, leading to more charges. The average annual percentage rate for payday loans is about 390 percent. Yes, you read that correctly-- 390%! As lending fees pile up, borrowers can end up paying annual percentage rates of 800 percent or more. Compare that with a credit card that charges 9.9 - 22% and credit cards suddenly sounds much smarter. For the record, I do NOT advocate the use of credit cards for most people, as most people use them incorrectly to begin with.
The bottom line is you want to avoid getting into trouble by spending less than you make; Live Under Your Means (LUYM). Study where you can trim your budget and put that extra money aside in a special account and let it grow. Develop a comforting safety net for true emergencies and you will sleep much sounder at night.
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