Presented by Jeanne Nguyen

Setting Priorities Making a Budget

◦ How to Start a Budget◦ How to monitor

Qualified Funds (401(k), Roth, IRA, and SEP) Good Debt vs. Bad Debt Questions?

Narrow your objectives◦ Decide what keeps you up at night◦ What are you saving up for?◦ Have long term and short term financial goals

Focus first on the goals that matter Start Now!

◦ Take advantage of compounding interest on your money

Importance of creating a budget◦ Identify how you are currently spending your

money (monthly)◦ Evaluate your current spending ◦ Set goals for yourself that take into long-term

financial objectives Use a Personal finance Program (Quicken or

MSFT Money) or Excel Spreadsheet

Monitoring ◦ A budget is useless if you aren’t tracking your

spending ◦ Compare your budget to actual and adjust

accordingly◦ Does not mean you aren’t going to meet your

financial goals, just means you need to pay more attention

IDEAL

Housing & Debt (Credit Card, Auto Loans, Personal Loans, Child Support)

30%

Taxes (FIT, Property) 25%

Insurance (Life, Auto, Health, Homeowner, Disability, and Other)

4%

Savings and Investments (401(k), IRA, Roth, Stocks & Bonds, College Savings)

15%

Living Expenses (Food, Clothing, Electricity & Fuel, Water, Telephone, Cable & Internet, Gas, Parking, Personal Care, Day Care, Doctors, Dentists, Rx Drugs, Entertainment and Hobbies)

26%

Expenses % of total Income 100%

Eliminate trivial but needless costs◦ Expensive premium latte or afternoon snack◦ Shop during sales◦ Take on chores that you usually pay someone

else Reduce larger expenses

◦ Trade in the luxury car or SUV for something a lot cheaper to buy, fuel and maintain

Refinance your mortgage Cut your taxes

Represents a way to reduce your taxable income

Federal limit is $16,500 or $22,000 if you’re 50 or older

Matching contributions are “free money” Taking money out of a 401(k) before

retirement is expensive You’re limited to the investments your

employer chooses for your 401(k) plan

The max contribution for 2011 Roth/IRA is $5,000.

SEP annual contribution is the lesser of either 25% of compensation or $49,000.

On average the American household has approximately $10,000 in credit-card debt

Borrowing for a home or college usually makes good sense

Don’t use a credit card to pay for things you consume quickly such as meals and vacations, if you can’t afford to pay off your monthly bill in full in a month or two. Put aside cash.

Pay off your highest-rate debts first Don’t fall into the minimum trap Expect the unexpected

◦ Build a cash reserve for emergency funds, it should be worth 3 to 6 months of living expenses

Don’t be so quick to pay down your mortgage

Home◦ Mortgages tend to have lower interest rates than

other debt◦ You can deduct the interest you pay on the first

$1 million of a mortgage loan College

◦ Saving for kids education (529 plans) Financing a Car