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Trading Retirement Dollars for a Mortgage
Tweet Share on Facebook March 5, 2008 Comment (2)Dear Alpha Consumer,
I would like to use money in my IRA retirement account as a loan to buy a house. It would be a way to pay the interest to myself (to my IRA), rather than to a mortgage company. Is this possible? Could it be a rental property, or does it need to be my own residence?
To get the answer to this question, I contacted Pam Hamrick, vice president of LendingTree.com. She tells me the answer is yes, you can indeed do this, but with some restrictions and not quite the way you described. The maximum amount you can use from your IRA is small enough that it won't cover your entire mortgage, but it can at least help you get started. Here's what you need to know, according to Hamrick:
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401(k) Questions, Answered
Tweet Share on Facebook March 5, 2008 Comment (3)If you're looking for answers to confusing retirement account questions, here's your chance: Over at Wise Bread, David Loeper, author of Stop the 401(k) Rip-Off, is currently answering questions in the forum.
Here's an excerpt of his explanation for how a stay-at-home mom should save for retirement:
Well, the first thing you need to remember is that you effectively own half of your husband's retirement plan benefits and you accrue spousal social security benefits, as well. You cannot make contributions to an IRA without earned income.... You can, however, open a spousal IRA, provided you file a joint tax return.... The other thing you might want to consider is getting a part time job with an employer that allows you to defer most of your income to your 401k plan. This would enable you to accrue your own social security income benefits and to sock away a lot of money in savings, and if you defer your income into your 401k with your new employer, it wouldn't affect your joint tax bracket.
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Another Money-Saver: Cheap Dates at Home
Tweet Share on Facebook March 5, 2008 Comment (3)I received the following E-mail last night from Don Fenley, a journalist for the Kingsport Times-News in Tennessee, in response to my post that mentioned an affordable local restaurant, Mama's House Buffet.
As one journalist and aspiring foodie to another, here's the rest of the story about Mama's House. It's one of a vanishing breed—a family-owned buffet restaurant that is holding its own in a town that likes its bunch 'o lunch places. I used to eat there a couple times a week when I was doing the three to midnight shift at the Kingsport Times-News. The fare is basic, maybe a little above average, and yes, the price is right.
On his own blog, Fenley offers inexpensive home-cooking ideas, including one tempting mussels recipe for an at-home date night.
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Life on $7 a Day
Tweet Share on Facebook March 4, 2008 Comment (163)My friend Zack, who lives in New York City, recently told me that on average, he spends only $7 per day on food. I asked him to share his tips, many of which he gleaned from the personal finance blog the Simple Dollar. Here's how Zack saves money on food:
• Buy in bulk. Zack drives to the suburbs in New Jersey to shop at bulk retailers, such as Sam's Club. He fills large duffel bags of food to bring back to the city and estimates it saves a significant chunk of change each month.
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Hefty Portions Hurt Waists and Wallets
Tweet Share on Facebook March 4, 2008 Comment (2)As I found myself purchasing a monstrous 24-ounce smoothie yesterday, I had to wonder: When did 24 ounces become a "normal"-size drink? I could have ordered a 12-ounce smoothie, but that was called the "junior" size, which sounded like it was for kids.
Maybe because I write about money all day, my first thought wasn't the extra calories but the extra dollars. The 24-ounce drink—euphemistically called "regular"—cost $4.85, compared with the $3.95 "junior" size. Of course, I bought the more expensive one because, well, everyone else was doing it and it seemed "normal."
So far, much of the public discussion on portion size has focused on the health factor. A report last year from the Center for Science in the Public Interest calculated that many restaurant dishes are so large they exceed 1,000 calories. But with food prices rising, those hefty portions mean that bank accounts are suffering, too.
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Food Blogs Help Save Money
Tweet Share on Facebook March 4, 2008 Comment (14)In response to my blog post on saving money by cooking at home, a reader sent me a great website, Smitten Kitchen, which offers tempting recipes and photos of home-cooked meals. As an aspiring foodie myself, I also have a list of favorite food-related sites, all of which frequently post recipes that can help with meal planning (and avoiding spending more money at restaurants or on takeout).
My favorite sites include the Pioneer Woman Cooks, Chocolate and Zucchini, and Cooking with Amy.
I also heard from a reader telling me that I was wrong and that it is cheaper to eat out, because he can get an order of chicken, fish, vegetables, soup, beans, salad, plus a drink and dessert for only $6.56, plus tip. He says he gets this deal at Mama's House Buffet in Kingsport, Tenn. I guess I need to visit, because that sounds like an unbelievable deal.
Readers, if you have other useful resources for food-related savings, please post them below.
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Today's Best Money Blogs
Tweet Share on Facebook March 3, 2008 Comment (5)It's Monday, which means it's time for the Carnival of Personal Finance, a collection of highlights from the best money blogs. My favorites from this week include:
• Life Lessons From a Military Spouse: This blogger shares her positive experiences with a financial planner and tells readers what questions to ask, such as how he or she is compensated, before settling down with one.
• Wise Money Decisions: Jeff gives tips on how to use kids' allowances to teach them about money. (His strategy includes deductions for failure to perform chores.)
• Millionaire Mommy Next Door: This successful entrepreneur gives inspirational advice, such as creating a "treasure map" to your "rich life," which essentially involves brainstorming about your goals.
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Alpha Consumer
Kimberly Palmer, senior editor for U.S. News & World Report, writes about making smarter financial decisions. She’s the author of Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.
Generation Earn
Senior editor Kimberly Palmer’s book, Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back, is now available.
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