Are Target Date Funds Worthy of Your Portfolio?

target date fundsIf you have looked at your 401(k) investment options recently, chances are you have noticed a list of funds that all have similar names with the exception of a year at the end of each. These “Target Date” funds were built as an all encompassing investment to help you plan for your retirement all in one product. These funds were allocated in a way where you would receive full diversification of both equities and fixed income, with maybe a hint of other diversifiers thrown in the mix. As you get closer to that “target date,” the fund gets more conservative. This sounds great in theory, but are you really getting the best option for your nest egg with this?

All in the Family

The way these mutual funds are built is by using the mutual funds in the fund family arsenal. For example, in a Fidelity Freedom Fund, you will find holdings such as Fidelity Series High Income or Fidelity Advisor Large Cap. Franklin Templeton investors will find items like Franklin Rising Dividends and Templeton Global Bond. You get the bad with the good with these “basket” funds. For every four and five-star fund you have access to, there is a dog that is limping along, dragging down your return.

Apples to Apples?

These funds can be very difficult to compare to each other. Investors in the 35-40 year range who are looking at a retirement age of 70, would look at a target date fund with a 2045. We looked at four different versions of these funds and have found glaring differences. First, in terms of allocation, there was a difference in equities in as much as 10%. The most aggressive was the American Funds version with 84%, of which 30% was international. Franklin Templeton and JP Morgan both came in at 78% with the first one having 28% international exposure and the second 31%. The least aggressive of the four was Fidelity at 74%. Of that, 31% was international.

Looking at the fixed income side of the fund also showed a wide range of differences. While Fidelity had the least amount of equity, it pushed the envelope on the debt side with almost 70% having a credit rating of BBB or lower. Compare that to American Funds with just over 10%.

The expenses of the funds varied as well. Using the A-shares, there was a difference in the Gross Expense Ratio of almost a full percent in these funds. These differences make it very difficult to compare them to each other.

The Payoff?

Ultimately, the big question is do these funds deliver? Take a look at the stats below (as of 4/30/2013):



It may very well be that these target date funds are the only options in your retirement accounts. However, if they are not, you may be best served to look elsewhere for your investing needs. At the very least, look under the hood of these mutual funds and see how they are really doing. There are plenty of free resources out there for you to learn about these funds before you invest in them.

What are your thoughts on target date funds? Leave a comment!

Free Resume Tools for the Unemployed

resumeWhen you lose your job, the first thing you need to do is update your resume. While it’s better if you update your resume periodically, even during your employment, sometimes a job loss catches you by surprise and you aren’t ready.

If you are trying to figure out how to best update your resume, you’ll want to do what you can to take advantage of free tools that can help you create a resume that is more likely to help you get a job:

Workforce Services

Find out where your state’s workforce services office is in your town. Most states have some sort of organization with a mandate to help the unemployed find work. Locate an office, and then go take advantage of the tools available.

Most workforce services offices have workers who can help you update your resume – or create a new one. These tools are at your disposal, and you don’t have to pay for them out of pocket. Attend workshops and get pointers, and you can tailor your resume.

Free Resume Builders

There are also a number of free resume builders online. These are sites that help you put your qualifications into a resume format that is easy to read. The prompts provided can help you organize your thoughts and your accomplishments in a way that highlights the best points. Here are some of the free resume builders you can use (some of them have additional premium tools and services that you can purchase on top of the free basics):

  • LinkedIn: Using the helpful prompts from LinkedIn, you can put together a professional resume. Then, if you want a copy of it, it’s possible to “export to PDF.” 
  • JobSpice: Spice up your LinkedIn profile with this resume builder. This site will import your LinkedIn profile data and help you plug it in to various templates.
  • Pongo: Get help putting together a resume with one of the first online resume building services. You can choose your template, fill in your basic information, and then share information about your history to generate a resume. You get plenty of tips throughout to help you create a professional and attractive resume.
  • CV Maker: You can use this fill-in-the-blanks site to help you get going. It’s also customizable and available in 17 languages. You can easily move sections around, and then export to three different formats.
  • This website allows you to build your resume, and then send links of your personalized resume to potential employers. You can also export a copy to PDF or DOC in order to print it out.
  • LiveCareer: Use this site to build your resume step-by-step. You can import a resume you’ve already made to get started. There are several templates to choose from, and you can customize the layout of the templates to reflect your own aesthetic. There are five different export options.

With a little looking around, it’s possible to find plenty of free resume builders. There is no reason to just use a template for a guide when you can fill in a few forms and have a resume generated on your behalf.

Job Search Websites

Most of the major job search websites, including Monster, CareerBuilder, Indeed, and SimplyHired all have a way for you to save a profile. Your profile includes your qualifications and other information that goes on a resume. You can usually use these free services to create a standard resume that can be sent along with your job application. These sites make it a little easier to apply for jobs, since everything is completed in one package.

What’s your favorite resume tool? Leave a comment!

Job Application Tools to Help Manage Your Job Search

employment applicationAs you participate in the job hunt, it is easy to lose track of what you’ve done. Pretty soon, all of the places you’ve applied to start to run together and you end up trying to remember who has your resume, and what appointments you might have.

In order to keep it all organized, it makes sense to use apps to help you manage your job search. Here are a few tools that can help keep you on top of your job search:

Google Apps

As you might expect, Google provides a number of tools that can help you keep track of your job search. Add your resume and cover letter to Google Drive, and you can tweak them as needed for the next job, and even rename them. It’s possible to add comments and notes so that you can see which have been sent, and if you have received any replies.

Use Google Calendar, and use reminders, to help you keep track of your job search actions, as well as stay up-to-date with appointments and interviews.

Huntsy is a site that helps you easily manage your job search. You can keep everything in one place, managing which jobs you’ve applied for, and seeing where you are in the process with each application attempt.

On top of helping you keep track of where you’ve applied and when, Huntsy will also search your social networks to find connections. Perhaps someone you know has an “in” at one of the companies you’re applying to. Huntsy will help you identify that connection so you can increase your chances of successfully applying.

JibberJobber is a career management tool designed to help you manage all the data involved in a job search. See where your resume has gone, and keep up with the status of each job application. This site also helps you identify helpful social networking contacts in your job search.

It’s much easier to manage all this information from one place, rather then constantly trying to keep up with everything. There are also premium options with JibberJobber that can help you continue to manage your career – even after you land a job.

CareerBuilder for Mobile

CareerBuilder is one of the major job search and career management websites, and you can improve your search with the help of the CareerBuilder mobile app. You can get the app from Apple’s App Store, or from Google Play.

The app works on your smartphone or tablet device, and allows you to manage everything easily no matter where you go. You can sync your resumes and cover letters, and even apply for jobs right from the app. It’s easy to keep track of each job you’ve applied for, and look for additional possibilities.

Indeed is another major job search site, and it also comes with the ability to personalize your experience. If you get a account, you can pull from multiple job search sites, and keep track of your progress. It’s possible to make notes on jobs, as well as search for new jobs. All of the information is saved via the web, so you can access it from anywhere as long as you have Internet access.

You can also add job alerts from, as well as use plugins for different browsers and even use the Facebook app. This makes it easy to keep up with your job search no matter what you want to accomplish.

Bottom Line

The job search is tough. There is no reason to make it more difficult on yourself by losing track of where you are and what you’ve accomplished. Choose a job hunt management tool, and make best use of it.

What are some other job application tools you can use to enhance your job search? Leave a comment!

When You Should Refinance Your Mortgage Loan

refinance mortgageThere are different times when you should refinance your mortgage loan, but contrary to popular belief lower interest rates are not the only reason. Sure, when interest rates hit new lows millions of homeowners flock to refinance their homes. But there are also times when you should refinance when rate is not the driving force.

When should you refinance your mortgage loan?

1. When mortgage rates are at least 2% below your current rate.

This rule was more important when interest rates were higher. But it served two useful purposes. First, it set a standard as to when you should be looking to refinance. If your interest rate was 10%, and rates were dropping, you would know to look more seriously once interest rates dropped to the 8% level.

The second purpose was probably to avoid serial refinancing. Back when interest rates were higher, and especially when they were in double digits, it wasn’t unusual for mortgage rates to swing by 1% or more in a short space of time. By setting the threshold at a 2% rate decline, you could avoid refinancing every time rates dropped by a point. Since refinancing often comes with hefty closing costs, refinancing too often could cost you more than you would save.

A 2% drop in rates is extremely unlikely when mortgage rates are already below 4%, so this rule has pretty much fallen into obscurity. But rest assured that it will be back when we return the higher rates.

2. When you can recover your closing costs in 24 months or less.

This one is the gold standard of refinance rules. It focuses on closing cost recovery. And as the name implies, it recommends refinancing only when the savings in your monthly payment will be sufficient to recover your closing costs in not more than 24 months.

For example, let’s say that you have a $100,000 loan, and you have an opportunity to lower the monthly payment by $150. If the closing costs on the loan are $5,000, it would take you proximally 33 months to recover them ($5,000 divided by $150). The refinance would not be worth doing.

Using the same example, if the closing costs were just $3,000, you would be able to recover them in 20 months ($3,000 divided by $150). That refinance would be worth doing.

Some homeowners – and many mortgage loan officers – might play fast and loose with this rule. For example, they may ask, “how long do you expect to be in the house?” If you say that you think you will be in the home for at least another five years, they might convert the 24 month rule into the 60 month rule. That is to say, as long as you can recover your closing costs within five years, the refinance will be worth doing.

On some level that may sound logical, but it really is a stretch. While it may be possible to expect you’ll be in a home for the next two years, the anticipation that you’ll be there for five years requires a fully functioning crystal ball. You may intend to be there for five years, but if you get a job in another city, or lose your job because of economic conditions, you may have to move much sooner. In addition, for any number of reasons you may also decide to refinance again within five years. In that case, at least part of your closing costs on the last refinance will go up in smoke.

Stay with the 24 month rule, and avoid morphing it into something longer. The farther out you go with projections, the less likely it is that they will be accurate.

3. When you want to pay off your mortgage early.

Here’s where we get into a consideration that has a lot less to do with rate. If you want to pay your mortgage off early, but don’t think that you have the discipline to make optional higher principal payments, you might want to refinance to shorten your loan term. This will force you to pay off your mortgage in less time than your current mortgage will allow.

If you are in a financial position to take on a higher monthly payment, you may convert your 30-year loan to a 15-year term simply so that you can pay it off quicker. The rate may even be a little bit higher than what you’re now paying, but you might opt to do it anyway.

There is yet another reason why rate is less of a factor when you are refinancing to a shorter term loan. Interest rate is less of a factor on shorter-term loans because more of your payment is principal.

4. When you need to get out from under a high payment.

This scenario is the exact opposite of the one above. You may have a 15-year mortgage that you are struggling to make your monthly payments on. Or you might be facing the prospect of a pay cut or a job loss. Whatever the reason, you might have a need to lower your house payment.

The quickest and easiest way to do that will be to refinance your 15-year loan into a 30-year loan. You will of course be extending the amount of time it will take to pay off your loan, but the reduction in payment could be the difference between keeping your home and losing it.

And for what it’s worth, yes, people actually do refinance 15-year loans into 30-year mortgages. It sounds like reverse logic, but sometimes you have to do what you have to do.

Have you ever decided to refinance based on any of these reasons, especially the last three? Leave a comment and tell us about it!

How to Estimate Your Social Security Benefits

social security benefitsAn often overlooked component of retirement planning is Social Security. It’s not that no one knows it’s there – but more that getting reliable estimates of your benefits is something of mystery. In addition, many people believe that Social Security will become “bankrupt,” so they try not to rely too heavily on it as a source of future income.

Maybe this is just my thought on the bankruptcy issue, but it will be virtually impossible for Social Security to go bankrupt in a vacuum. If Social Security becomes bankrupt, then so is the entire U.S. government. If that is the case, the economic and financial world as we know it will be completely gone. That will probably also include your IRAs and 401(k) plans as well!

Social Security will have to be there no matter what, so we may as well consider it in planning our retirements.

Importance of Social Security Benefits

The average Social Security benefit per retiree is $1,230 per month, while the maximum benefit is $2,513 per month.

Even if you are aggressively preparing for your retirement, it is likely that Social Security benefits will still represent a substantial percentage of your retirement income. In addition, many millions of Americans have no other retirement provisions at all, and still more have provisions that are generally inadequate. For most Americans then, Social Security will be a critical component of their survival in retirement.

How dependent are Americans on Social Security income in retirement? The Social Security Administration provides the following statistics:

  • Nine out of ten individuals age 65 and older receive Social Security benefits.
  • Social Security benefits represent about 39% of the income of the elderly.
  • Among elderly Social Security beneficiaries, 53% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security.
  • Among elderly Social Security beneficiaries, 23% of married couples and about 46% of unmarried persons rely on Social Security for 90% or more of their income.

How to Estimate Your Social Security Benefits

Since most of us will be relying on Social Security for a significant part of our retirement income, it’s important to have at least a rough idea as to how much our benefits will be when the time comes. You can determine this by using the Social Security Administration’s Retirement Estimator.

The estimator enables you to calculate what your Social Security income will be at any time, and it only takes a few minutes to do it. At a minimum, this will help you to determine how much income you’ll need from other sources, including your retirement portfolio.

But the estimator does more than just letting you know what your benefit will be – it also allows you to run different scenarios based upon various retirement ages and future income projections. Though the Social Security Administration is pretty vague in releasing details on the formula that it uses to calculate benefits, the tool will enable you to do this yourself using the administration’s own system.

When you go to the estimator page, you will be asked to provide certain information, including:

  • Your name.
  • Your Social Security number.
  • Your date of birth.
  • The state you were born in.
  • Your mother’s maiden name.
  • An estimate of your income for the most recent year.

With this information the Social Security Administration will be able to pull up your previous earnings history and all other information they have to date.

From that screen – and after you agree to abide by the site’s waivers and disclaimers – you will get your estimate of benefits based on your earnings history. After that, you can move to a different screen, that will enable you to revise your retirement age and future earnings projections. In that way, you can get more specific benefit estimates that are tied to different retirement assumptions that you want to run.

For each change in assumptions, the estimator will give you benefits based on four retirement dates: at age 62, at your normal retirement age (67 for those born after 1960), at age 70, and the age you select. You will find, for example, that your benefit will be about 24% higher if you delay collection of benefits from age 67 to age 70. That’s good information to have if your retirement plans aren’t quite where they need to be.

The Missing Social Security “Annual Earnings and Benefits Statements”

You may be wondering why you even need to go to the Social Security Administration website to get a projection of your benefits. Why not just wait to receive your Annual Earnings and Benefits Statements that will give you the most up-to-date information?

Those statements were popular, but unfortunately they’re gone. The Social Security Administration eliminated them in March of 2011 as a result of budget cuts.

In addition, while the statements did provide a fairly accurate estimate of future benefits based on earnings to date, they did not give you the capacity to project what your benefits will be based on higher future earnings. The Retirement Estimator will allow you to do exactly that.

Have you gotten a recent estimate of your Social Security benefits? Leave a comment!

How Does a Loan Affect Your Credit Score?

credit scoreYou just completed the paperwork on a new loan. Because of your excellent credit score, you got an outstanding rate on the loan. But 30 days later you pull your credit report and find out that your credit score dropped by 40 points. Everything else on your report is consistent with what has been there before, the only difference is the new loan.

Did that cause your credit score to drop? And if so, why?

Unproven Payment History

If you are not fully familiar with the credit universe it can be a shock to find that a new loan will cause your credit score to drop. That is actually more common than not.

When you take a new loan, there is no payment history on the loan. While we might assume that a new loan should be neutral in terms of credit score – after all, you haven’t missed any payments yet – credit repositories take the position that a new loan represents a new risk.

Even though both you and the lender are extremely comfortable with your ability to pay the loan in a timely fashion, credit scores are a measure of risk – and new loans add plenty of it.

It actually makes sense. Let’s say that your total monthly debt payments are $1,000. That’s everything – car payment, student loan payment and credit cards. But you decide to buy a second car with the payment of $400 per month. Your monthly obligations will rise by 40%, and there is no payment history at that level of debt to indicate that you will be able to do that successfully.

The credit scoring models are assuming the worst here, but when you look at it as described above, the additional debt is a negative and that has to be reflected in your score.

Number of Loans Outstanding

Credit scores also reflect the number of loans you have outstanding. If you already had six loans with outstanding balances, and you add one more to the mix, you now have seven loans with outstanding balances.

The credit scoring models consider the additional debt to be an additional risk, and therefore it is a ding against your credit score.

Credit Utilization

Credit utilization measures the amount of credit you have outstanding to the amount of credit limits you have in available. For example, if you have a $10,000 credit line, and $6,000 of it is outstanding, your credit utilization is said to be 60% ($6,000 divided by $10,000).

The lower your credit utilization is, the more positive it is for your credit score. And obviously, the higher it is the more negatively it impacts your score. When your utilization gets up around 80% or higher, the negative impact is more severe.

Credit utilization is more pronounced among revolving lines of credit, which is mostly credit cards. But it is also likely that an installment loan will also have a negative impact while the outstanding balance is at or near the original loan amount.

Different Loans, Different Credit Score Impacts

The type of loan that you have is also a factor. For example, a new mortgage loan will generally not have as much of a negative impact as say, a new auto loan. There is actually a hierarchy within the credit scoring models as to loan type, and mortgages are at the top (seen as the least risky debt type).

Next in line are auto loans, followed by credit cards, and at the bottom of the heap are consumer installment loans, such as loans for furniture and such.

That being the case, taking a new loan to buy a computer, will have a greater negative effect on your credit score than taking a new mortgage.

Good News: “Seasoned Loans” have a Positive Effect

So far we been discussing the negative impacts of a new loan on your credit score. But there is light at the end of the tunnel.

The longer your loan has been outstanding, and the longer you have been making timely payments, the greater the positive impact will be. Yes, your credit score will drop upon taking a new loan, but as time passes the effect of the loan will go from negative to positive.

For example, if you take an installment loan for 60 months and you are halfway through, the payment experience on that loan will be a positive factor for your credit score. Lenders refer to mature loans as “seasoned loans” – they’ve been around for a while, there’s a readily identifiable pay history, and the payments have been made on time.

This is why people who have long credit histories usually have better credit scores than those who are fairly new to the credit world. A pattern of paid and almost paid loans has a major positive impact on your credit score.

So if you are worried about the new loan dropping your credit score, just sit back relax and make your payments on time – it will all start working in your favor soon enough.

Have you ever experienced a credit score drop after taking a new loan? Leave a comment and tell us about it!

How to Stay Out of Debt When You Lose Your Job

Lost a JobThe economy is finally showing legitimate signs of recovery from the last recession. But millions of people are carrying large amounts of debt owing to long periods of unemployment experienced during the downturn. That experience should strengthen your resolve to avoid the same fate in the future.

How can you stay out of debt when you lose your job? The answer to that question can be given in three parts – what to do before, during, and after a job loss.

What to Do Before You Lose Your Job

People often know several weeks, or even months, before a job loss hits. There are various signs – the company is making drastic cuts in spending, other people are losing their jobs, and there are negative forecasts for the immediate future. If it looks as if a job loss will be in the near future, it is important to take steps now to begin preparing for what will come later.

1. Cut back on unnecessary spending.

One of the main reasons people go into debt is that they continue their spending patterns, certain they will get a new job soon. Better strategy: assume that your unemployment will last for many months. That will put you in the proper mindset to deal with the crisis that is coming. You should start planning immediately to cut back on any unnecessary expenses. That might include cable TV, landline telephones, gym memberships or any other amenities that you may not be able to afford on an unemployment check.

2. Save every dollar that you can.

The more that you can rely on savings, the less that you will need to use debt to cover your expenses. No matter how much or how little savings you have, start working now to increase your stash. The more you can save now, the easier it will be later.

3. If you believe that you will need financial help, line it up before the ax falls.

Most people don’t ask for help until they are past the point of desperation. In the meantime, they borrow money to put on the “all is well” face. Instead, if you believe that you will need financial help, it will be best to line it up before it is actually needed. This could mean getting financial help from family and friends, or even lining up a temporary job that will pay a lot more than unemployment.

What to Do Immediately After You Lose Your Job

Even if you’re pretty certain you’re going to lose your job, you will still have hope of keeping it up until the day that you lose it. But once you’re actually released, it could be panic time. The way to avoid that is by having a plan in place to begin moving you forward.

1. Put your credit cards away.

Denial is part of human nature, and often in the face of a job loss people will try to dull the pain by continuing to live the same lifestyle they always have. If you’re using credit cards in order to make that happen you’re courting disaster. Put your credit cards away in a safe place. And from now on, use your emergency fund for necessary living expenses, and let your credit cards become your new emergency fund.

2. Make the minimum payment on any debts that you have.

Some people “get religious” about their credit cards upon the loss of a job. But at that point, it is too late to worry about paying off any debts. Your main focus now will be survival, not paying off your debts. In order to keep your living expenses to a minimum, make the minimum payments on your debts that you can get away with.

3. Make looking for a job your new full-time job.

When you lose your job, think of it less as a job loss, and more as moving from one job to another. Your new job will be looking for a job – and it must be a full-time effort. From a financial standpoint, the most important strategy in dealing with unemployment is to make the time you spend in it as short as possible.

What You Can Do Going Forward

When you finally land a new job, it’s time to sit back and celebrate – but not for too long. Coming fresh off of a job loss is the very best time to begin preparing for the next one. The experience and the strategies that you used will be fresh on your mind, and so will the motivation.

1. Now is the time to pay off your debt.

Once you have a new job, you’ll be faced with an important decision: eliminate your debt once and for all, or go back to your previous lifestyle and spending habits. Eliminating your debts will be one of the best preparations for a future job loss. If you do lose your job, you’ll face it with a clean debt slate. And if you keep on working forever, you’ll have that much more money to put into savings and investments.

2. Rebuild your emergency fund, but make it even bigger.

You will also want to begin replenishing your emergency fund, which is probably empty. But you don’t just want to restore it to your previous balance before unemployment, you want to make it a lot bigger. Whether you are employed or unemployed, the more that you can live off of savings, the less that you need to rely on debt.

3. Look for ways to cut costs across your budget.

With the unemployment experience fresh on your mind, now is the very best time to begin making permanent cuts in your budget. You’ll be doing it at a calm time in your life, and you may actually find this to be easier than when you were unemployed. Any expenses that you are able to cut out of your budget will leave you more money to pay off old debts and increase your savings.

When you’re facing unemployment, debt should always be a last resort as a source of funds. The more you borrow when you’re unemployed, the more that you’ll have to pay back when you have a job. That will cast your unemployment shadow months or even years into the future, reducing the advantage that a new job will bring.

If you went through a long period of unemployment, did you run up your debts as a way to survive? Have you been able to repay them since being re-employed? Leave a comment!

The Finances of Losing Your Job – Getting Fired vs Being Laid Off

FiredIt’s never pleasant to lose your job. You lose a major source of income, and you have to find a new job.

However, when you are laid off, rather than fired, your situation is a little bit better. Being laid off provides you with a degree of protection that being fired doesn’t come with.

Laid Off or Fired?

In most cases, whether you are considered laid off or fired depends on the circumstances. Often being laid off is the result of larger company-wide issues. Lay offs usually affect an entire segment of workers at the business, and it’s considered more a function of the current environment than anything you actually did.

Being fired is often the result of something personal. You might be fired because your performance isn’t up to scratch, or because you are causing problems in the workplace. It’s common to be fired for sexual harassment, bullying, or other disruptive behaviors.

Consequences of Being Fired

There are dire consequences associated with being fired – beyond any legal ramifications you might face if your firing is the result of an accusation of harassment.

First of all, you aren’t eligible for unemployment benefits if you are fired from your job. Unemployment benefits are designed to help those who are victims of economic circumstances, and those who are fired don’t get access to those benefits. Additionally, there are no severance packages for being fired, nor is there the ability to use COBRA for health benefits. You also lose your vacation days and you won’t be hired back at the company. If you are laid off, your former employers can hire you back when the situation improves.

On top of that, the fact that you were fired is something that is likely to come up in job interviews as you search for a new position. This can have a huge impact on your ability to find a new job. Not only do you suffer from a lack of benefits to help sustain you when you are fired, but it’s harder to get more work.

When you are fired, you can only rely on your emergency fund, and helped offered by friends, relatives, and charity.

Similarities Between Being Laid Off and Fired

There are some circumstances that are the same, whether you are fired or laid off.

You have the benefit of your Flexible Spending Account money that you have spent. If you signed up to have $2,000 deducted from your paycheck over the course of the year, you can spend that money at any point. So, if you spent $1,500 by March (after having $500 deducted from your paycheck up to this point), and you are fired at the beginning of April, you don’t have to pay the $1,000 you still “owe” to the FSA, even if you are fired.

Another similarity is that being fired or laid off has no bearing on whether or not you are fully vested in your company’s retirement account. This provision deals mainly with the employer match portion. In many cases, to keep the employer match, you have to work a certain number of years at the company (usually between three and five). If you are fired or laid off before you are fully vested, you lost the unvested amount, which can be disappointing and set back your retirement efforts.

In the end, though, it’s much better to be laid off than to be fired (although you probably don’t want either situation to afflict you). If possible, avoid actions that are likely to get you fired, and instead focus on producing good work that your employers appreciate.

Tell us about a time you’ve been fired or laid off. How did it affect your life? Leave a comment!

How to Open a Business Bank Account

business bankWhen I formed my LLC, I finally opened a business bank account. I probably should have had a separate account prior to that point, even though I was a sole proprietor, but I waited until the business felt more “official.”

Opening a business bank account requires a little planning, and proper documentation, depending on the type of business you have. Before you go into the bank, figure out what information you need to open your account.

In most cases, if you open a business bank account as an organization other than a sole proprietorship, you will need to first obtain an Employer Identification Number (EIN) from the IRS. You can apply for your EIN online, and in some cases receive it almost instantly.

Once you have your EIN, make sure that you have the other documentation required by the bank. This documentation can include:

  • Proper documentation of your identity.
  • Social Security number (if you are a sole proprietorship without an EIN).
  • Business license from your state or city.
  • Business name filing document (if you use a “trade name” that is different from your actual name).
  • Partnership agreement.
  • Business organizing document.
  • Articles of organization, articles of association, or articles of incorporation.
  • Corporate resolution (to identify authorized signers if needed).

When you contact the bank, be clear about your business organization, so that the representative can tell you exactly what to bring in.

Opening and Funding Your Business Bank Account

Once you understand what you will need, the process is fairly straightforward. You will need to provide personal information and business information, usually in form format. You will also have paperwork to sign affirming that you aren’t engaging in terrorist activities, or funding terrorist activities.

If you are funding your account from another bank, you should be prepared with the bank account number and routing number. I opened my business account at the same bank where I do my personal checking, so I was able to simply transfer the money from my personal checking account.

Consider what accounts you need in addition to checking. You can also open a business savings account, and apply for a business credit card or line of credit. However, it might be harder to obtain business credit if you’re representing a fairly new company.

Can You Open a Business Account Online?

It is possible to open a business account online. Be prepared to scan and upload copies of appropriate documentation to complete this process. Opening an account online can be convenient and easy to do.

Understand, though, that government entities, dealers in precious metals, and businesses involved with telemarketing and gambling cannot open business accounts online. These types of business accounts must be opened in person.

Keeping Business and Personal Expenses Separate

Opening a business bank account is a smart move, no matter your organization. It’s much easier to keep track of which income and expenses are personal, and which are business related. Not only does this make your own bookkeeping easier, but it also makes record keeping easier for tax purposes. If there is a question, your separate bank accounts can make it a simple matter to clear things up with the IRS.

Do you have any advice for readers on when they should open up a business bank account? Leave a comment and share some of your experience!

Using a Salary Guide When Applying for Jobs

Salary GuidesIf you are looking to get a raise, or you will be applying for new positions in your field, it’s never good idea to just “wing it” when it comes to your salary requirements or expectations. There are ways you can get very specific information about salaries in your field, which will help you to be realistic in your salary requests to your employer or to or a prospective employer.

Below are some online salary guides that will help you to get the information you need. These are popular sites, but they vary in quality. I’m particularly partial to the BLS site, since it contains comprehensive government statistics on employment. My suggestion however would be that you use several of these, that way you can come up with a solid consensus of realistic salaries in your field and in your geographical location. might be most popular of all the salary guides, even though it is at least 50% job search related. (For what it’s worth, the site looks identical to the Salary Wizard, but they’re probably related.)

The site itself is fairly simple – which is an advantage – and provides some nice features. It allows you to enter different information giving specific title, experience, and education level to adjust income considerations. uses a survey system, in which you complete a survey that will result in a salary that is very specific to your skills and the position you’re applying to.

The questionnaire is very specific, and encompasses several pages of questions. It asks questions about your background and qualifications, but also about benefit levels.

It can actually be quite tedious, but by the time you’re done you will have a customized report that is probably one of the more specific salary sources available.

The Bureau of Labor Statistics (BLS)

The Bureau of Labor Statistics, or BLS is an agency of the United States government. As such, you probably have the most comprehensive database of all things related to jobs and salaries. The site will not only provide you with median salary information for nearly every occupation in the United States, but it will also give you the common ranges.

In addition to national job and salary information, it will also give you regional salary ranges, right down to various metropolitan areas. There can be wide differences in the salary of the same occupation from one city or state to another.

There is a secondary site within the BLS that has information that is equal in value to the salary information provided. The Occupational Outlook Handbook has detailed information on the requirements for a typical job in the field, the number of people employed in the occupation, and the future outlook for the field.

The outlook will list the number of new jobs expected in the field, the percentage growth within the field, and compare it to overall national job growth rates (below average, average, above average, and more).

The outlook for a specific job classification can be just as important as salary range if you’re looking to get a raise, or establish an acceptable salary for a new job. If the field has a high expected growth rate, your chances of getting higher pay will increase. But if the field is in relative decline, you may have to be more conservative with your salary request.

The site is CareerBuilder’s salary center. It’s a simple system to use and it will give you the information you’re looking for quickly. But as CareerBuilder is first and foremost a job board, there will of course be job ads beneath the salary information.

There’s one caveat on this site – it is advertising intensive. It may start out with a survey that looks like it’s part of the site system, but it’s not. It’s actually an education survey to determine if you’re interested in taking online college courses. It looks convincing because surveys are on other sites as well, and they also start out by asking career-centered questions, but then they quickly switch over to education questions leaving no way out. If this survey portion comes up, click the “no thank you” to move on. caters more to high-end employees such as executives and upper management. The site offers an executive salary calculator, which can be especially valuable since high level positions have a much wider range of compensation than most other fields.

In addition, high-level positions usually include a much wider variety of functions and responsibilities. The addition of one, or the elimination of another, could change the entire salary outlook.

Have you ever used these sites to determine your salary level? Are there other salary guide sites you use that you have a high degree of confidence in? Leave a comment!

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