Money, Health, and Other Things

Educational Blog in the Area of Family and Consumer Sciences for the Middle Peninsula


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[Replay] FAT-TOM

With all of the holiday cooking this month, we thought we would revisit a previous post. This week, we’ll dive a little deeper into the topic of food safety and discuss “FAT-TOM”, and how remembering that can help reduce the chance of food poisoning!

The F stands for food – bacteria require nutrients to grow. Foods high in protein and carbohydrates, such as animal proteins and dairy foods, may be at a particularly high risk of bacterial growth.

A is for acidity – bacteria generally require a pH of 4.6 or higher to grow. Low-acid foods, such as meats, need to be properly cooked and processed since they can often be breeding grounds for bacteria. This is also the reason low-acid foods, like many vegetables, need to be pressure canned and not water bathe canned; without pressure canning, the low-acid environment makes the canned food susceptible to clostridium botulinum, the bacteria responsible for botulism.

T is for temperature – most bacteria grow in the “Temperature Danger Zone” between 40 to 140 degrees Fahrenheit, and particularly well between 85- and 120-degrees. Through refrigeration and hot-holding, keep foods out of the Temperature Danger Zone as much as possible.

The other T is for time – certain bacterial cells responsible for food poisoning can double approximately every 20 minutes in the Temperature Danger Zone. That would mean, in 12 hours, 1 bacterium would become 68 billion bacteria! The “Cooking for Crowds” curriculum suggest leaving food that requires hot holding or refrigeration in the Temperature Danger Zone for no longer than 2 hours before consuming, and only one hours if it’s between 85 and 120 degrees.

O is for oxygen – while most bacteria require oxygen to grow, there are some bacteria that actually grow better in the absence of oxygen, such as the previously mentioned clostridium botulinum.

Lastly, M is for moisture – bacteria need water to grow. This is why dehydrating food can often lengthen how long food will be safe to eat. It’s also why salt and sugar, which binds with water molecules and make them unavailable for bacterial growth, are often used as food preservatives.


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[Replay] What are Periodic Expenses and How can they Wreck your Spending Plan?

Looking to cut back on spending and save some more money ahead of the holidays? Over the next few weeks, we’ll revisit past posts on reducing spending. This week, we’ll discuss periodic expenses!

First thing, what are periodic expenses? Periodic expenses, also known as irregular, seasonal, or occasional expenses, are expenses that occur just a few times a year and are often overlooked when developing a spending plan. Some examples include personal property taxes, certain insurance plans with annual or semi-annual premium payments, gifts, birthday expenses, holiday expenses, school expenses, home furnishings, repairs, auto licenses and inspections, home warranty plans, and vacations and trips to name a few. These have a way of really throwing off your month-to-month spending plans if not adjusted for. Let’s say your monthly fixed and flexible spending is typically $3000 a month. However, in August you have about $400 in back to school expenses, as well as $200 for a birthday, and $600 for a home warranty annual premium. Then in December, you have $500 for holiday expenses, $100 for personal property taxes, $200 for another birthday, and another $400 for an annual insurance premium. All of a sudden you have two months that are measurably different than the rest, creating potential challenges towards having the funds to cover those two months.

So how do we adjust for this? One way is to create a reserve fund. To do this, we’ll total all of our periodic expenses for the year, divide by 12, and save that much each month. Going back to our previous example, we’ll add up the $400 for the back to school expenses, $400 for the two birthdays, $500 for the holiday expenses, $600 home warranty annual premium, $100 for personal property taxes, and the $400 for the annual insurance premium, totaling $2400. Divided by 12, we’ll save $200 a month, much more reasonable than coming up with $1200 in August or December. Keep in mind, this reserve fund savings should be separate from savings plans you’ve developed for other financial goals. You can also keep track of your reserve fund by creating a simple table, each month tracking how much you spent on periodic expenses, how much you saved for periodic expenses, and your balance.


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[Replay] Tips: Saving some Green at Home

Looking to cut back on spending and save some more money ahead of the holidays? Over the next few weeks, we’ll revisit past posts on reducing spending. This week, we’ll discuss ways you can reduce that power bill!

Stuck at home and the enlarging power bill got you down? Here are just a few ways you can reduce that power bill:

– Check your home for appliances that use standby power. These are typically appliances that have a digital display, or “instant-on” feature. Some examples include – TVs, DVRs, sound systems, video game systems, cable boxes, computers, laptops, printers, microwaves, and coffee makers, among others. Cell phone chargers and other items with an external power supply or a rechargeable battery use standby power as well. According to the Lawrence Berkeley National Laboratory at UC Berkeley, the average home has around 40 such devices which could add up to over $100 per year in standby power. You can reduce your electric use, and therefore your power bill, by not only turning off these appliances when they’re not in use, but also unplugging them. Alternatively, to conveniently reduce power to appliances, use a quality surge protector. For example, plug your television, cable box, and video game system into one power strip to be turned off when you are not using the TV. You can do the same for the microwave and coffee maker in the kitchen, as well as the computer, laptop, and printer in the office. This should help lower your power bill!

– Use fans instead of air conditioning. This doesn’t mean in the height of summer foregoing air conditioning entirely; however, setting your thermometer just a few degrees higher on those hot days, and instead using a fan to cool you down, can save you money with lower energy usage. In a simulation study by the Florida Solar Energy Center, a research institute of the University of Central Florida, using ceiling fans and raising a home’s temperature by just 2°(F), reduced energy usage by 14%

– Change your light bulbs. Lighting makes up about 10% of home energy costs. Switching from incandescent bulbs to CFL or LED will save on lighting costs. Although CFLs and LEDs are often more expensive than incandescent bulbs, they use up to 75% less energy and last 10 to 25 times longer. Replacing five incandescent bulbs with more energy efficient bulbs can save up to $45 per year.


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[Replay] 4 Tips to Plugging Possible Spending Leaks!

Looking to cut back on spending and save some more money ahead of the holidays? Over the next few weeks, we’ll revisit past posts on reducing spending. This week, we’ll discuss plugging spending leaks!

With these uncertain times, saving money is more important than ever. If you’re having trouble cutting back your spending so you can increase savings, here are some ideas to plug those spending leaks!

  1. Don’t fall for the sales – Sales, clearances, and coupons can be great ways to save money, but they can also be potential spending leaks if you purchase non-necessities that you weren’t planning on buying otherwise. Ask yourself this; “am I buying this just because it’s on sale?” If the answer is yes, chances are you shouldn’t be purchasing it!
  2. Don’t develop “payday syndrome” – Do you spend more money on paydays? Here’s a possible approach: after receiving a paycheck, don’t buy any non-necessities for at least 24 hours; this gives you a full day to reflect on what bills need to be paid off, how much of the paycheck needs to go to savings, and helps to rein in overspending!
  3. Don’t forget about those little expenses – Those little expenses can add up quickly. For instance, spending just $5.00 every day (whether it’s getting a fast food combo meal, getting expensive coffee, or smoking a pack of cigarettes) will cost you close to $2000 per year! Finding cheaper alternatives, or cutting those habits in half or out entirely will go a long way towards cutting back on spending!
  4. Avoid the minimum payment trap – Pay off as much of your credit card as you can to avoid accumulating interest, and pay in full and on time if able! On an 18% APR credit card, if you only paid off the minimum 2% of the balance each month on a $5,000 credit card debt, never purchased anything on the credit card again, it would take you 38 years and $17,674 ($12,674 in interest payments) to pay the debt off! Paying in full and on time will not only save you from owing any interest at all, but it is also the best way to improve your credit score! (For more ideas on improving credit scores, check out our previous post here!)


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[Replay] Planning for Retirement, Part VII

This week, we conclude our review of our series on retirement planning! We’ll discuss estimating how much you need to save for retirement, and strategies to make your retirement money last.

Over the past few weeks, we’ve discussed asset allocation, how much you’re putting aside for retirement, and how much and how long you’ll need retirement income. Once you have all of that information, you can plug it into a retirement calculator and see if you’re meeting your retirement goals! Below, you’ll see a non-exhaustive list of retirement calculators.

What happens if you’re not reaching those retirement goals? There are a few avenues to explore. Can you increase how much you’re saving each year? Are you willing to invest in something with a higher average rate of return, but with more risk? While you likely don’t want to consider working longer than you plan to, or adjusting your goal retirement lifestyle, these considerations may need to be made as well.

Alternatively, you can also look at some strategies to make your retirement funds last. While living off of your income – social security income, pension income, and any income from dividends and bond coupons – without touching your principal retirement savings would be great, it’s not realistic for most households. Instead, you could consider the 4% rule. The 4% rule involves withdrawing 4% of your retirement funds in your first year of retirement. For instance, if you had $750,000 in a retirement account, you would withdraw $30,000 in year one, and add that to any other sources of retirement funds you have. To account for inflation, you would need to increase that amount each year by 3% or so, withdrawing $30,900 in year 2, $31,827 in years 3, and so on and so forth. As long as your retirement funds are growing at least 3%, that would provide you a minimum of 25 years of retirement income. Additionally, if you want to protect against a down market, you can withdraw for the following year as well, and keep next year’s funds in a certificate of deposit (CD) or somewhere else safe that accrues interest. For instance, in the previous example, you could withdraw $60,900 in year 1, and place year 2’s $30,900 in a CD, so you won’t have to withdraw from your retirement funds next year if it’s a down market.

Whichever direction you choose to go with your retirement planning, the important point is that you need to begin planning as soon as you can, so you can make the necessary adjustments to your future retirement savings, to allow you to live the lifestyle you dreamed of during retirement!


That concludes our retirement series, if you have any questions or concerns, feel free to email me at gjsturm@vt.edu!

http://www.bankrate.com/calculators/retirement/retirement-plan-calculator.aspx

https://investor.vanguard.com/calculator-tools/retirement-income-calculator/

http://money.cnn.com/calculator/retirement/retirement-need/

http://www.schwab.com/public/schwab/investing/retirement_and_planning

https://www.aarp.org/work/retirement-planning/retirement_calculator.html

https://tools.finra.org/retirement_calculator/

https://www3.troweprice.com/ric/ricweb/public/ric.do

http://www.dinkytown.net/java/RetirementNestegg.html


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[Replay] Planning for Retirement, Part VI

Over the next few weeks, we’ll revisit our series on retirement planning! This week, we’ll return and continue our discussion on estimating how much you need to save for retirement.

Last week we discussed ensuring that your retirement savings are invested in a manner that helps those savings grow, without being too risky for your personal risk tolerance. Once your retirement savings are being put in the appropriate investments, it’s time to look at current and future retirement resources. How much are you saving each year for retirement? How much do you already have saved for retirement? How many more years do you plan to work, or alternatively, when do you plan to retire? When you retire, are you planning to do any part-time work, or “fully” retire?

Once you’ve answered all of these questions, you can estimate how much money you’d have at retirement. But how do you know if that will be enough? To answer that, you need to look at how much pre-retirement income you’ll need at retirement. As mentioned last week, a typically household needs anywhere from 70% to more than 100% of pre-retirement income. How much you’ll need will depend on what type of retirement you anticipate. Do you plan to do a considerable amount of traveling? Are you planning on downsizing your home? While many expenses may decrease at retirement – auto insurance, gas, and other auto expenses, lower utilities and housing costs for a smaller home, and often decreased income taxes – many expenses may increase – higher medical and health expenses, and higher travel and entertainment spending.

Lastly, you need to look at how many years of retirement income you’ll need – which brings up the darker question, how long to you expect to live? According to the CDC, for those who reach the age of 65, the average life expectancy of men is 83, and for women is 86. Think about your current health, and also consider being safe and planning for more retirement years than you estimate.

We’ll return next time to conclude our discussion on estimating how much you need to save for retirement, and discuss strategies to make your retirement money last.


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[Replay] Planning for Retirement, Part V

Over the next few weeks, we’ll revisit our series on retirement planning! This week, we’ll return and discuss estimating how much you need to save for retirement.

While many households need 70% to sometimes more than 100% of pre-retirement income during retirement, social security often only provides 25% to no more than 50% of needed retirement income. This creates the need for the majority of households to save a considerable amount of money for retirement. Which begs the question, “am I saving enough?” To answer that larger question, you need to answer some more specific questions.

First, look at where your current and future retirement savings are being invested. Are they being invested in a manner that helps those savings grow, without being too risky for your personal risk tolerance?

The historical average annual return of a 100% equity/stock investment, with diversified investments similar to the S&P 500, is around 10%. However, that comes with significant variation. Historically that 10% average includes years with more than 50% gains, and some years with more than 40% losses. While we would all appreciate higher growth, many people saving for retirement, especially those only a few years away from retirement, cannot afford a 40% loss in retirement savings. To reduce that risk, you could save money in an investment with more high-quality bonds, and fewer stocks, with the tradeoff being a lower average annual growth. Many investors invest at a high risk when they’re younger, at a time where they can take advantage of higher average growth, with many years to recover from a down market, and invest more conservatively as they age, to avoid significant losses. One common rule of thumb for asset allocation, which is the percentage of investment in stocks/equity vs. bonds and other fixed incomes, involves taking the number 100, subtracting your age, and using that as the target percentage of stocks in your retirement investments. More aggressive investors may use 120 minus age. If you find that your retirement savings are well off your desired asset allocation, you may need to adjust your retirement portfolio. Keep in mind, there may be a cost to adjusting your portfolio if you need to sell and buy new investments. If you take this approach, you may want to make changes primary through adjusting future retirement savings, for instance, focusing on purchasing more bonds or bond funds if your portfolio has too high a percentage of stocks, and/or avoid adjusting your portfolio unless you’re at least 5-10% off of your goal.

We’ll return next time to continue our discussion on estimating how much you need to save for retirement.


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[Replay] Planning for Retirement, Part IV

Over the next few weeks, we’ll revisit our series on retirement planning! This week, we’ll return and discuss the difference between 401(k)s, 403(b)s, 457(b)s and IRA plans.

Your eligibility for any of the three employer-sponsored defined-contribution plans will depend on your employer. 401(k)s are generally for for-profit businesses, while 403(b)s and 457(b)s are generally for non-profits, hospitals, ministries, and government entities. 403(b)s are often used to supplement existing defined benefit or pension plans with your employer.

As mentioned in the previous segment, one of the big benefits for 457(b)s is that they do not have penalties for early withdrawals. Additionally, 457(b)s have separate contribution limits than 401(k)s and 403(b)s. This means if you’re able to contribute to both a 457(b) and 403(b) plan, for instance, you can max out both at the $19,500 or $26,000 contribution limit *($20,500/$27,000 for 2022, and expected to be $22,500/$30,000 for 2023)*. This is not the case if you contribute to a 401(k) and a 403(b), as they share the combined $19,500/$26,000 contribution limit. *($20,500/$27,000 for 2022, and expected to be $22,500/$30,000 for 2023)*

IRAs are a bit different than the three aforementioned plans since they are not employer-sponsored plans, instead being individual retirement accounts with just your own contributions. The ability to make tax-advantaged contributions or to be eligible to participate at all depends on your income and whether or not you have access to an employer-sponsored plan at your work. For 2021 for traditional IRAs, if a single taxpayer, with access to a workplace retirement plan, makes more than $66,000 in a year *($68,000 in 2022)*, their tax deduction on contributions begins to phase out and they are ineligible for tax-free contributions altogether at $76,000 *($78,000 in 2022)*. For married couples filing jointly, phase out starts at $105,000 until $125,000 *($109,000/$129,000 in 2022)*, and for those without access to a workplace retirement plan, but their spouse does, their phase out is from $198,000 to $208,000 *($204,000/$214,000 in 2022)*. With that said, if you do not have access to a workplace retirement plan, and you are either unmarried or your spouse also does not have access to a workplace retirement plan, no income phase out applies to you. For Roth IRAs for 2021, you are ineligible to contribute at all if you are single and make more than $140,000 *($144,000 in 2022)*, with a phase out on how much you can contribute starting at $125,000 *($129,000 in 2022)*, and for those married but filing jointly, the income limit is $208,000 with the phase out beginning at $198,000 *($204,000/$214,000 in 2022)*.

We’ll return next week to discuss estimating how much you need to save for retirement.


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[Replay] Planning for Retirement, Part III

Over the next few weeks, we’ll revisit our series on retirement planning! This week, we’ll return and discuss 401(k)s, 403(b)s, 457(b)s and IRA plans.

First, let’s start with the similarities.

All four plans are based on tax-advantaged money you invested. This is different from defined benefit or pension plans, which pay out a guaranteed amount based on a formula that often includes factors like years of service and highest earning salaries.

All four plans generally have traditional and Roth options – traditional allowing for tax-free contributions and Roth allowing for tax-exempt withdrawals. All four plans have contribution limits. For 2021, the three employer-sponsored defined-contribution plans – 401(k)s, 403(b)s, and 457(b)s – have maximum contribution limits of $19,500 for those under 50 and $26,000 for those 50 and older *($20,500/$27,000 for 2022, and expected to be $22,500/$30,000 for 2023)*. For IRAs, the 2021 contribution limit is $6,000 for those under 50, and $7,000 for those 50 and older *($6,000/$7,000 for 2022, and expected to be $6,500/$7,500 for 2023)*.

All four plans generally have required minimum withdrawals starting at age 72, with the exception of Roth IRAs, and all except 457(b)s have a 10% penalty plus taxes for withdrawing before 59.5, with a handful of exceptions, such as having high unreimbursed medical expenses, being a qualified first-time homebuyer for IRA owners, or the disability or death of the plan owner. More exception can be found at the IRS website.

All three employer-sponsored defined contribution plans have the possibility of an employer match, however, for 457(b)s, that match goes towards your personal maximum contribution limit, which is not the case for 401(k)s and 403(b)s. Instead, for 2021, there is a combined maximum contribution for both employees and employers of 401(k)s and 403(b)s of $58,000 for those under 50 and $64,500 for those 50 and older *($61,000/$67,500 for 2022, and expected to be $66,000/$73,500 for 2023)*; however, your personal contribution limit of $19,500/$26,000 still applies! Those matches are typically vested in one of three ways, either they are immediately vested, with the employee having immediate ownership to the match, graded vested, where you gradually get ownership of matching funds, or cliff vested, which gives you 100% ownership after a certain number of years, often three.

All three defined contribution plans may also have options to borrow money from the plan.

Lastly, all three defined contribution plans are typically portable, allowing them to be rolled into a new employer’s plan or into an IRA.

Next week, we’ll return and discuss the difference between these four plans.


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[Replay] Planning for Retirement, Part II

Over the next few weeks, we’ll revisit our series on retirement planning! This week, we’ll return and discuss some retirement terms.

What are defined contribution plans? Defined contribution plans are employer-sponsored plans, where the employee contributes to their own individual account, with a possible percent match from the employer. That match may be contingent on the employee remaining at that job for a certain period of time. Examples of defined contribution plans include 401(k)s, 403(b)s, and 457(b)s.

What are defined benefit plans? Defined benefit plans are retirement plans where an employer will pay retired employees a defined amount based on a formula that often uses factors such as highest earning salaries and years of employment. Another term for defined benefit plans are pension plans.

What is portability? Portability is the ability to move funds from one employer-sponsored plan to another employer sponsored plan. Some plans can be kept with your former employer, many plans can be rolled into your new employee sponsored plan, and the majority of plans can be rolled into an IRA, which is an individual retirement contribution plan.

What are tax deferred contributions? Tax deferred contributions are not taxed until you withdraw those funds from that plan. Examples include traditional 401(k), 403(b), and IRA plans. Tax deferred is different than tax deductible – tax deductible lowers your taxable income reported to the IRS. An example of this would be charitable contributions – even if you don’t itemize, you can reduce your taxable income by up to $300 with a $300 donation to a non-profit.

What are tax exempt withdrawals? Tax exempt withdrawals are withdrawals from a retirement plan in which no taxes are due. An example of this would be a Roth 401(k), 403(b), or IRA plan. Roth retirement plans are funded by post-tax contributions, but have tax exempt withdrawals, while traditional retirement plans are funded with tax deferred contributions but have taxable withdrawals.

Next week, we’ll return and discuss the differences between 401(k)s, 403(b)s, 457(b)s and IRA plans.