Just a few more days till the end of the month, right? I’ll get paid and we’ll have a little more breathing room in the budget. You see, Mrs. PT and I have been saving aggressively over the past few months for some upcoming goals. We do our saving automatically, a few days after we get paid. That way we have the rest of the month to spend the remaining funds on whatever. This month, however, our aggressive saving and spending finally got the best of us. Now we’re running a bit low. So, instead of dipping into our savings or using debt, we are challenging ourselves to not spend any money this week.

One exception: If we earn extra money by selling something or by returning something and getting a refund we get to use that money however we like.

Because of the exception above, I made some moves over the weekend. I grabbed a few items around the house that we didn’t need anymore and listed them on Craigslist.org. Two have sold so far, giving us $38 dollars. We also brought some of our old clothes by a consignment store, which gave us an additional $10. That’s almost $50 to spend this week without having to dip into savings. And if a few more items sell, we’ll have even more cash. Sweet!

More thoughts going into this week:

1. I don’t pretend to think that this is going to be easy. We’ve gotten into the habit of spending when we feel like it. Especially dining out for lunch or dinner. So, believe it or not we normally spend a lot more than $50 on food in a week. It’s our biggest frivolous expense, you could say. Plus, we have all the other normal expenses to avoid: groceries, personal care, and convenience items. Although, I think the groceries will be easy since we have so much in our cupboard already.
2. I know some of you guys are a lot smarter with your spending, do this sort of thing all the time, and are probably laughing at me right now.
3. Hopefully we can do it successfully and get more in tune with our needs vs wants. I see it as a chance to get back to the basics.

I’ll report back on Friday and let you know how we did.

If you’d like to take on this experiment with me, let me know in the comments below. You can also follow along on Twitter for more timely updates.

If you’re tweeting too, use the hashtag #weekwithoutspending

Carnivals from the last two weeks:

Economy And Your Finances, Pecuniary Delights, Money Hacks, Frugality, Money Hacks, Twenty Somethings

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Results of a Week Without Spending
2. How is Your Spending? – Your Mid-Year Financial Check-Up #1
3. Go Cash Only for a Week

Photos by: mateoutah, Henry M. Diaz, Crystl, SykoSam

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Carnival of Money Stories: May Two-Four Edition
2. The 89th Carnival of Debt Reduction
3. Carnival of Debt Reduction – Mother’s Day Edition

Today’s post comes from Danny Kofke, a school teacher with a family of four that he raises on his salary. His wife is a former teacher and now stay-at-home mother to his two young daughters. Despite earning a moderate income, he has no debt except the mortgage, has a 12-month emergency fund, invest so that they are on track to retire with a sizeable nest egg, and lives a financially secure life on a teacher’s salary.

Danny recently wrote a book, “How To Survive (and perhaps thrive) On A Teacher’s Salary“, to show others how they can make the most out of their salaries. You can pick it up for yourself in paperback ($9.99) and digital download ($5.99).

Tips to Live on a Small Income

It seems like everywhere we look these days we see something telling us how bad the economy is and how tough times are. I agree that it has become more difficult for some but also feel that this a great learning opportunity for many. Here are some tips that have enabled my family to live on a teacher’s salary:

Get a New Cell Phone Plan

This might not apply to all, but we only use our cell phone for emergencies. A few years ago we had a plan in which we were paying $50/month and barely using it. We switched providers and now spend an average of only $10/month.

Look Into Changing Your Home Phone Plan Too

A lot of people are now using their cell phones in place of a home phone. If you still find yourself in need of a home phone, it is important to analyze your plan and make sure you are signed up for what you really need. I once analyzed my bill and realized we had too many options that we were not using. I changed my plan to the basics and saved almost $25/month by doing so.

Use Cash

Cash is king these days. Most stores are hurting and are willing to negotiate prices – especially if you are using cash. I recently had a friend that wanted to buy a new tv that was listed for around $1,000. I told her to walk into the store with $700 in cash and say that she really wanted the television but could only spend the money she had. Well, after some talk, she walked out with this TV for the money she had in her purse. Not all stores will do this, but, with the economy where it is, it doesn’t hurt to ask.

Use Your Local Library

We all know that the library is a great place to get books for free but most do not realize that many libraries also have CDs and DVDs that you can check out. Instead of renting or buying many videos for my children, we visit our local library and check them out for free. You can also use the library to get passes to activities in your area. We have checked out a book that contained free passes to state parks. This enabled us to have a fun and, better yet, free family day.

Make Your Own Halloween Costumes

Tracy has made my oldest daughter’s Halloween costumes the past two years. Two years ago, Ava saw a skeleton costume in a Pottery Barn catalog and wanted that to be her costume. Instead of buying this, Tracy made an identical-looking costume using a tee-shirt and felt material. This homemade costume saved us $50. Tracy did the same thing last Halloween with a butterfly costume.

Ask for Free Stuff

Okay, this might surprise you, but we have The NFL Sunday Ticket. This is one splurge that is important to us – we have family time together watching football on Sundays (plus I never miss a Miami Dolphins game). I saw an add in a local magazine saying that new subscribers to this service would receive an added feature worth $99 for free. I called up my satellite company and said that I already subscribed and wanted this free feature too. Well, after about 15 minutes of being placed on hold and being told that I probably would not be able to receive this free item, I got it free and clear. It never hurts to ask.

Save Money on the Weekends

I know there are some people that go out every weekend to dinner and a movie. Let’s say the cost of this night out totals $50 – this is probably too little an amount. Instead of going out every weekend, just stay home one Saturday night and rent a movie and order pizza. This one act alone can save you at least $35! If you do it more than once a month your savings goes up. For even greater savings on movies check out Netflix.

Save a Little Every Day

There are some things you can do each day to save a little money that will add up over time. Make your own coffee at home. Some buy their coffee from a store on the way to work. This practice can easily add up to over $100 a month. If you instead make your own coffee at home, you can save up to $25 a week which adds up to over $1,000 a year! Another way to save is to bring your lunch to work. On average, you will spend at least $5.00 eating a fast food lunch – more if it is a sit-down restaurant. Instead of eating out everyday, bring leftovers from home only 2 days a week. You still get to eat out a majority of the work week and will save over $40 each month.

These are some of the tactics we use to get the most out of my paycheck. For most people, it is not how much you make but, rather, how well you plan and spend your money that leads to financial success. This philosophy has enabled us to live a very wealthy life on a moderate income.

Thanks for the great tips, Danny. As a husband to a teacher, I can attest to the hard work you go through, and how tough it is to make it on that salary. Kudos to you for having your family in such good shape financially, and for sharing your tips above and in your book.

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Are You Getting Paid? – Salary Survey Results for Finance Careers
2. New Cell Phone and Plan Through Amazon.com
3. Fat Tuesday: The End of Excess Spending

Know Your ATM and Foreign Transaction Fees- We ended up using our ATM card once and thought we’d only see a $2 fee. To our suprise, our ING DIRECT Electric Orange account charged us 2% foreign transaction fee. This is definitely something we should have researched prior to making the ATM withdrawal. Foreign transaction fees weren’t that bad on us the rest of the trip since we just used the local currency (Euro), but that’s definitely something you need to be aware of prior to using your credit card. Most fees are set at 1% to 3%. Capital One is one of the only companies that doesn’t charge you this fee.

Download Skype to Save on Phone Expenses – We’re still really big on Skype and used it make all our calls back home. We called both our friends and family who have Skype themselves, and occasionally used it to call a land line or cell phone using the Skype credits I had left over from my last trip. Skype is free for computer to computer video calls.

Consider Cancelling Services Back Home – Prior to leaving on our recent trip we’d been having some trouble with our Internet connection. So, we decided to call and just cancel it to save us from paying almost a month of service fees when we were out of town. AT&T offered to give us a month for free and then lowered our rate going forward to keep us from cancelling. Call your service providers today and let them know of your complaints or if you think you’re paying too much. They’ll likely work with you to help you cut some from your monthly expenses. Note: before cancelling anything, make sure you’re aware of any cancellation fees or big fees to have the service set back up when you return.

Inform Your Bank and Credit Cards – Most banks and credit card companies have fraud alerts set up on your account that prevent your card from taking any unusual charges, like in a foreign country. So, it’s usually a good practice to call them and let them know where you’re going. I usually do this at the airport while I’m waiting. We actually forgot to do this this time around. And suprisingly we never had a transaction questioned. Maybe it was because we were in Europe, I guess, versus a less developed country.

Add-On a Cell Phone International Feature - If and when we didn’t use Skype on our trip, we used our cell phones. Prior to leaving though, we called and made sure we had the international flat rate feature turned on. This usually costs around $5 for the month, but it lowers your per minute and per text charges to a more reasonable rate.

Do you have a good money-related travel tip? Leave it in the comments below…

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. The Best Credit Card For World Travelers
2. International Travel Tip: Making Inexpesive Phone Calls
3. Optimize Your Banking For International Travel

So, reluctantly I stepped into the nearest Blockbuster, knowing I was about to pay $5 for something I could have rented for $1. Still, I was pleased to find the movie I wanted heavily stocked on the shelf. Then, I proceeded to the register where the person checking me out asked if I wanted to rent it for the one-night price of $1.99, or keep it for a week at $4.99. Obviously, since I was planning to watch the movie that night, I happily opted for the $1.99 price. Does anyone know when Blockbuster began offering this price and if it’s a nationwide offering?

Anyway, I left feeling good about my purchase, and at the same time, pleased with Blockbuster (a Dallas-based company) for altering their pricing structure to compete with the $1 boxes. The way I see it, this move will keep the brick and morter Blockbuster stores around for a bit longer. Eventually everything will be digital and you won’t need a store, but for now it’s nice to see them making the smart changes required to stay competitive.

I realize $1.99 still isn’t $1.00 or $0 (the Redbox price with promo code), but Blockbuster has the advantage of being able to stock more DVDs. Thus, increasing the chances you’ll actually leave with the movie you want. I think I’d pay $2 instead of $1 if I knew the movie would be there. Also, Blockbuster allows you to turn the movie in by store closing, whereas the $1 boxes seem to give you a 24 hour window to return the movie (correct me if I’m wrong about that one). All this to say, I think going forward, I’ll probably be using Blockbuster more for my movie renting needs.

By the way, I’m not really a movie rental subscription service fan, but I have tried both Blockbuster Total Access and Netflix and written reviews. So check these out it you’re interested: Netflix Review, Blockbuster Total Access Review.

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Blockbuster Total Access – Should You Try It?
2. Man vs. Debt, Blockbuster Total Access, eGiving, and Movies on the Cheap
3. Rent DVD Movies for $1 with The New Release and Redbox

I’ve got some good stories from my trips to Canada that I’ll save for another time, eh. Instead why don’t you spend some time checking out the huge list of money stories below. Thanks to everyone for participating and for linking back to the carnival.

PT’s Picks

Madison presents An Auction Experience to Remember posted at My Dollar Plan.

Patrick @ Cash Money Life presents Be a Stay at Home Mom or Working Mom? posted at Cash Money Life.

Business

Celes presents Passion Paycheck posted at EmbraceLiving.Net.

Penelope Pince presents Business Decision: Turning Away a Customer posted at Pecuniarities.

Debt

Chris McClelland presents 10 Reasons Your Bank Never Wanted You to Read This posted at Lucrative Investing.

Mr Credit Card presents Auto Loan After Bankruptcy – One Reader’s Success Story posted at Ask Mr Credit Card.

Dave Ozment presents Bad Money Decisions posted at Do You Dave Ramsey?.

Housing

glblguy presents What should I do with my house? posted at Gather Little by Little.

Investing

Dividend Tree presents Shake the Dirt off and Take a Step-Up posted at Dividend Tree.

Net Worth

KeithMcC presents Never Move for Money! posted at {be} Wealthy / [get] Happy.

Shopping

BeThisWay presents Frugal Lemon Leads to Frugal Lemonade posted at Are You Going To Be This Way The Rest of The Time I Know You?.

That One Caveman presents Don’t Fall For the Convention Center “Liquidation Sale” Scam posted at One Caveman’s Financial Journey.

Money Beagle presents How We’re Trying To Support The Local Economy | Money Beagle posted at Money Beagle.

FMF presents Do You Respond to Solicitations? posted at Free Money Finance.

Adam presents Our Cell Phone Company Is Scamming Us posted at Your Money Relationship.

More Stories

Silicon Valley Blogger presents Have A Mind For Business? Entrepeneurs Think Differently! posted at The Digerati Life

The Happy Rock presents Saving Money with Old School Technology – Answering Machines posted at The Happy Rock.

Lazy Man presents » Save Money on Cell Phones posted at Lazy Man and Money.

Peter presents Hard Times Make Us Stronger: The Story Of The Butterfly posted at Bible Money Matters.

J. Money presents Credit Card Roulette – To Play or Not to Play? posted at Budgets are Sexy..

Mr. ToughMoneyLove presents Whittling Away at the Expense Ledger posted at Tough Money Love.

My Journey presents Barter System is Alive and Well! posted at My Journey to Millions.

AG presents Haggling Works: Try It, Save Money posted at Let’s Be Curious.

KCLau presents The Most Common Habit of Rich People posted at KCLau’s Money Tips.

Shadox presents Car Trouble, Still Worth it posted at Money and Such.

Even More

Jeff Rose presents Identity Theft – Capital One saved Me! posted at Consumer Boomer.

DR presents Lies, Damn Lies, and Personal Finance posted at The Dough Roller.

MB presents TradeKing Brokerage Review posted at Money Blue Book Blog.

jim presents What Is A Good Credit Score? posted at Blueprint for Financial Prosperity.

nickel presents Investing With Lending Club: Low vs. High Risk Loans posted at fivecentnickel.com.

Ryan Suenaga presents What’s in My Portfolio: Toyota posted at Uncommon Cents.

Donald presents How to Make More Money posted at Life Optimizer.

Dan presents New Discover Current Card – Like Spying on Your Kids? posted at Everyday Finance.

Darwin presents Advanta Freezes Credit Cards – High Yield Notes in Jeopardy? posted at Darwin’s Finance.

FIRE Finance presents Top 7 Energy Saving Tips for this Summer! posted at FIRE Finance.

Photo by René Ehrhardt

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Carnival of Money Stories: Halloween Candy Edition
2. The 89th Carnival of Debt Reduction
3. The 14th Money Hacks Carnival – Weird Golf Facts Edition

Since I’m known amongst some of my friends and family as the money guy, I often get viewed as being all about money. I really cringe when I hear that, or when I get the sense that people view me that way. I don’t think they mean any harm by the comment. Still, I want to make it perfectly clear that money (i.e. making more, having more just for the sake of having more, etc.) isn’t what rules my life.

What’s led me to this point in my life (blogging three times a week on the topic of personal finance, having a bunch of money books and magazines strewn about the house, etc.) are a few things, the least of which is money, in my opinion.

Personal Responsibility and Security

There’s a time in my life that I’m not too proud of: post college, when I had to move back in with my parents and rely on them for shelter and employment. It’s a long story, (you can read it here) but the bottom line is this: in the end I got fed up with not being responsible for myself and burdening those around me.

Something changed in me during those few months and since then I’ve valued personal responsibility, independence, and securing my future over most other things. I never again want to depend on anyone else or burden them because of my poor choices. Money is just the tool that can help me create that personal responsibility and security.

Another aspect to this is the fact that, as a Christian, I feel that God calls me to take care of myself, those under my care, and those that cannot help themselves. So much so, I feel it’s one of the building blocks for living a life that is pleasing to God.

“If anyone has no care for his family and those in his house, he is false to the faith, and is worse than one who has no faith” – 1 Timothy 5:8

Creating Something of Value

Another reason I do this (spend time each week researching the topics within personal finance and subsequently writing an article) is that I really enjoy creating. This is fun for me. And it’s become somewhat successful. Even for a guy who’s not that great of a writer. There’s so much that goes on with running a blog: reading, writing, networking, coding, designing, commenting, emailing, selling, and the list goes on. I have a great time running what has essentially become my own small business. I may eventually grow tired of this subject, but for now I feel like there’s still a bunch to discuss, and more growth to be had with the blog.

Just a quick note to clarify that this is a niche blog written by a real person. But it is not a personal blog, in the traditional sense. The focus here has always been, and will remain on money and finance from my perspective. I say this because I get the feeling sometimes that people may not know the difference between what I’m doing here at Prime Time Money, and what Mrs. PT does with her personal blog, for instance.

Having the Right Perspective

Okay, back to my main point… For us to have success in our own personal dealings with money, I think it’s key to actually put money in it’s place. It’s really not money we’re after.  …It’s happiness, security, the ability to give, the freedom to have guilt-free fun, (fill in this space with what you value). Money is just one of the tools to help get you there.

So next time you find yourself focusing too much on money, try and remember what you’re really after. What is it you’re obsessed with? Money itself or something greater?

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. 5 Questions With The Money Life Network Members: Milk Your Money
2. Changing Jobs for More Money – Is it Worth It?
3. 5 Questions With The Money Life Network Members: Bible Money Matters

This interview is part of a new feature he’s developed called Subscriber Swap Saturday. The basic idea is to get the subscribers of one blog to subscribe to the other blog for at least a week, just to try it out. After a week if you don’t find that blogger’s content enticing, drop it. The hope is that over time you will find several writers that you weren’t familiar with who provide meaningful content to you. You can read more about Subscriber Swap Saturday at his get out of debt blog, as well as his interview with me.

Here’s my interview with Kevin:

1. What motivates you to get up everyday and write a blog post for No Debt Plan?

The idea that I am building an online business that helps other people. I started off writing to get my thoughts on money on paper and to challenge myself to blog consistently for a year. I hit that goal and I’m starting to see some income being earned from my efforts. The idea that one day I might be able to live off of blogging is a big consideration as well (or at least use the money to pay off our mortgage faster while holding down my job).

2. With so many voices to listen to in the personal finance blog-o-sphere, why should people pay attention to what you’re presenting at No Debt Plan?

I think its a mixture of me being just an average guy with above-average money management skills and the knowledge that I’m continuing to improve myself with an MBA (and likely a Certified Financial Planner certification in the future). I’m 25, happily married, and we live in a house that we can easily pay for (I won’t say we “own” it until we’ve paid off the mortgage).

3. What can my readers do in the next 15 minutes that will help them improve their finances?

That depends on their current situation. Recently I’ve had success calling my service providers and winning discounts ($175/year from DirecTV and $150/year by switching car insurance companies). These calls didn’t take a lot of time and for that time I saved a considerable amount of money. The DirecTV call was somewhere in the 15-30 minute range so I might be stretching it a bit.

4. If you won $20 million in the lottery, what would you do with the money?

Ahhh… how many times have I played this game with myself?

Without totally geeking out on your readers with a seriously complex answer, here’s what I would do if I won a $20 million (after-tax) lottery:

1. Not change who I am or what I believe — I wouldn’t go completely crazy and I doubt I would tell many people
2. Get a very high quality tax/financial adviser that would help protect us (set up trusts for future kids, etc.)
3. Pay off our house
4. Pay off any debt my parents have
5. Set my parents up for life with whatever they wanted
6. Travel and give the money out to people/friends in need
7. Let’s say that through all of the above I blow through $5 million (highly unlikely we would spend that much, but let’s roll with it). That leaves $15 million. I would then set up our investments to expect 1-2% after taxes each year. I would invest the money most likely in bonds that would earn well above that, but plan on 1-2%. That’s $150,000 to $300,000 per year to do whatever we want.
8. Continue blogging.

5. I notice you like PC gaming. If you were a game character, who would you be and why?

Hmmm I haven’t spent much time thinking about who I would want to be since most games are set in bad times (zombie invasions, wars, etc.). If I had to choose I would pick Gordon from the Half-Life series. He’s quiet and intellectual, but kicks butt and takes names at the same time.

6. What is the last vacation you went on?

It depends on what you mean by vacation. Our last true week long vacation (the kind where you forget the rest of the world and all of your worries) was our honeymoon in January 2007. Since then we’ve been on several small trips — Memorial Day weekend with friends at the lake, two weeks at home over Christmas — but nothing really huge and significant. My MBA schedule includes summer courses so that has limited our availability to disappear for a while.

7. You and I have both been blogging seriously for about the same length of time (since January 2008). You mention on your about page that you’d like to be doing this full-time on day. Something I’d like to do as well. What’s your plan to get there and/or how will you know you’re ready to make the leap?

Let me grab my crystal ball! I’m planning to kick things into high gear after August of this year when I finish school. I think I’ll have more time to devote to all of the little details of blogging — more editing, more time to write posts in advance, more time to write guest posts for bigger blogs, more time to focus on building up my search engine rankings and monetization, more time for everything. (And yes, more time to actually come up with that plan!)

As to making the leap… I imagine that being a gut wrenching decision. I think the problem I’m going to run into is the possibility of being able to manage blogging on the side while maintaining a full-time income. That would be like having three incomes from two people — obviously a good thing. I think that will be my biggest hurdle… giving up that full-time income. Losing benefits isn’t as big of a deal because we’re on my wife’s benefits. But the security will be gone.

I guess I’ll know when I start to get quoted in major media outlets like many of the big time bloggers, yourself included. When I have a “Media Requests” page I think it will start to dawn on me that this is getting pretty serious.

—

Thanks, Kevin! To my readers: now it’s your turn! Head over to No Debt Plan and subscribe. Give him a week and see what he has to offer. You just might become a full-time reader like me.

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. A Plan to Be Debt Free
2. Obama’s Economic Recovery Plan: New Details About the American Recovery and Reinvestment Plan
3. 5 Questions With The Money Life Network Members: Bible Money Matters

Financial Products Often Characterized as Bad

• Retail Credit Cards
• Adjustable Rate Mortgages
• Whole Life Insurance
• Variable Annuities

Can you think of some other financial products that get a bad rap, justified or not?

Many Variations

One overall problem I see with blanketing these products with the “bad” label is that each can come in several different variations. The amount of choices within the personal finance realm is truly dizzying. Did you know that Vanguard (beloved, low-cost investment broker) sells variable annuities? They wouldn’t sell a bad product, would they?

Everyone is Different

Another problem with labeling all these products bad is that they are used by so many different people. It’s called “personal” finance for a reason. What’s good for you isn’t always best for your 80 year old grandmother, nor your neighbor down the street. Likewise, what’s bad for you might be perfect for another person.

Take the Time to Understand What You’re Getting Into

All this leads me to one take-a-way: since there are so many choices now, and since every one’s situation is different, we should each spend time learning about the financial products we are using. Is there a single financial product, that if well-researched, applied correctly, and used intentionally, will do a person harm? I don’t think so.

Now, I challenge the idea that you have to become an expert on each product. Although it wouldn’t hurt. All you really need to do is pick up a book, blog , or magazine and get a basic understanding. Then, seek out different opinions from various commission-free people in your life. This could be people you know, mainstream financial gurus, Certified Public Accountants, and Certified Financial planners. 

But don’t stop there. Don’t just depend on others. Apply what you learn, the opinions of others, and your own personal b.s. meter, to the decision. If you have doubts and things aren’t agreeing with your personal risk tolerance, then you still have the control to say no.

Where not to get your information: from the person selling it to you!

I definitely get sold from time to time on various products. Life just happens like that. I strive though, to get my information from several sources: other financial bloggers (they usually know the latest and greatest), financial gurus like Liz Weston and Dave Ramsey (their credibility depends on them being right) , and from my friends and family (they know me best and know the local implications). Hopefully after all of that is applied I can weed out the truly bad financial product and make a good decision for me.

Okay, so what do you think? Are certain products just bad, no matter what? Let me hear from you in the comments below…

FYI…Today marks two years since I first started blogging about finance here at Prime Time Money. Thanks for continuing to read and participate.

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Avoid these 5 Frugal Spending Traps
2. The Money Map by Crown Financial Ministries
3. How to Avoid Foreclosure

Beginning this month, my company is no longer matching my contributions to the company 401k. That’s essentially $2,000 less in compensation I’ll receive this year, if they don’t match for the remainder of the year. They do say that this is a temporary, precautionary move. Still, this is disappointing news.

I thought about making this post a rant about why that is a horrible cost cutting idea (hurts those that are most responsible, doesn’t really save that much, etc.), but I decided instead to talk about what I’m going to do in light of this change. How am I going to respond?

I also don’t want to rant because I know (a) not everyone even has this benefit to begin with, (b) not everyone even has a job right now, and (c) I don’t want to let them (my company) know it got to me.

I can tell you up front this doesn’t discourage me from saving for retirement (nor does the current economic situation, really). If anything both make me want to contribute more to retirement. The one thing it definitely does though is make me rethink how I want my investment mix to look once I’m 5 years from retirement. Can you say ultra-conservative!

For further thoughts on contributing once the match isn’t there, see Things to Consider if Your Company Cuts the 401k Match. Very useful article and definitely made me rethink the idea of ranting about this whole thing.

What’s Better Than a 401k?

Since I’m going to forge ahead, I guess the question I have to ask myself is, where does the 401k now fall in priority to the rest of my financial goals, and are there now better vehicles to help me achieve those goals?

The traditional order of action for retirement savings and improving your net worth has been:

1. Contribute enough to get the 401k company match.
2. Then, if you have more to save, put it to a Roth IRA and contribute the maximum.
3. Then, if you have even more, go back to the 401k and max it out.
4. And if you have even more than that, contribute to a taxable investment account.

The reason this is traditionally the way you’re instructed to invest is because of the limited number and higher cost of investment options held in a typical company 401k. Plus, some would tout the tax advantages of a Roth vs the 401k.

A Roth IRA is?

I just recently opened my first Roth IRA. And if you’ll remember, that was over and above my 401k matching and maxing out efforts. And you might also remember those Roth IRA contributions I attributed to tax year 2008. So, last year, I handled my 401k upfront to the max, and then moved to the Roth. Basically, I did 1, then 3, then 2 in the list above. fyi…the Roth is invested in a stock market index fund, while the 401k is in a target-date fund.

This year, I really don’t see any reason to make a drastic change from that plan. I will attempt to max out 401k contributions by 12/31 and max out Roth IRA contributions by 4/15/10 for both my wife and I. Since I plan to do both, I guess it doesn’t really matter what order I take it. In fact, I think the due dates lend themselves to doing it in that order. Do you agree? Let me know if I’m missing something here.

By the way, while I was writing this post I was also wrapping up 2008 taxes. It should be noted that maxing out my 2008 401k contributions saved me around $4,000 in taxes. Take that, upper tax bracket!

I feel like this post led to nowhere. Sorry bout that. Hopefully it will at least spur you on to saving more for your retirement. The benefits can be huge, even if the company isn’t matching anymore.

© PT Money - Visit PT Money for more articles on saving money, frugality, and debt reduction.

Download my free e-book: 52 Ways to Make Extra Money...Revisited!

Related posts:

1. Opening a Roth IRA for the First Time
2. Roth IRA Rules
3. CNN Money Article – Roth IRAs vs. 401(K)s