The Boulevard to Financial Independence

By Randy

Marriette, you have good instincts. While saving for retirement should always be a priority, one of the most effective ways to “earn” a good return on your money is to pay down your debt. When you consider that the long run returns of the stock market are somewhere in the vicinity of 10-11% per year pre-tax, a realistic after tax return expectation is closer to 8%. If you are paying interest on debt, other than the mortgage on your house, at a rate above 8% you actually will get a better “return” paying off the loan as opposed to investing the money in stocks. It’s easy to think of your student loans or credit card debt as just a payment, but a good part of that payment is interest. If you can’t earn more on your investments after tax than you are paying in interest on your loan then your priority should be to pay off the loan.

There is an exception though (isn’t there always) when it comes to most people’s 401k savings. If your employer offers a match for a portion of your savings then that’s a gift to you that you do not want to miss. Think of it this way, if your employer matches your 401k contribution up to $5,000 then your $5,000 savings just got a 100% return! I sincerely hope that a 100% return beats the interest rate on even your worst loan.

So good work Marriette and keep whittling away at your debt. The beauty of that is as you begin to eliminate debt you’ll have fewer payments and more free savings to make the rest of the debt go away even faster. It may not feel like you’re making progress at first but you’ll be surprised how quickly you’ll get ahead if you just keep it up.

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By Matt

Just like in the real world, the “Innovation” in our heading has a big “I” and a small “i.”

Curve-jumping, paradigm-shifting innovation belongs to the big “I.” Incremental change and tweaking belongs to the small “i.” They each have their place and deserve recognition, but here are Boulevard R, we’re more interested in the former. That’s mostly because we’re trying to do something that hasn’t been pulled off effectively online- financial planning. There is quite a list of companies who have gone the route of offering online financial advice to consumers, but only to be forced into other markets- Financial Engines (does mostly asset management now), AdviceAmerica (does mostly software for planners now), OneHarbor (sold to a large financial services company in order to re-coup investor’s money).
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By Mariette

It’s National Save for Retirement Week! Who knew? In an effort to promote the idea that saving for retirement is important for everyone, regardless of income, the Senate and the House have declared this National Save for Retirement Week. So in doing our bit to promote this idea I want to look at one of the biggest stumbling blocks that people have to planning their finances in general and saving for retirement in particular, feeling too intimidated or overwhelmed at the idea of learning something new.
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By Mariette

Yesterday’s Chicago Tribune reported that more and more cash-strapped Americans are borrowing or taking hardship withdrawals from their 401k’s. There are numerous reasons why someone may consider doing this: paying a down payment on a first home, unexpected medical expenses, prevention of foreclosure on an existing home, paying off creditors, etc. However, except in truly desperate instances this is a very bad idea, for a number of reasons.
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By Mariette

Change is difficult, and the hardest things to change are our habits. This is important to remember when we are trying to change our relationship to money. When we are trying to get out of debt, develop healthy saving and investing habits, or beginning to save for retirement, we must have patience with ourselves as it will not happen overnight. Most of us will slip back into our old habit patterns, particularly in the beginning; we will go over our budget with our spending, blow too much money on that gadget we thought we just had to have and therefore not be able to pay down the debt that month, or not put as much money into our retirement fund as we had intended.
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By Randy

For those of you who may not have noticed, the mortgage market has tightened up and banks that only a few weeks ago were calling you at home during dinner to refinance your mortgage now won’t even return your call. It’s not quite that bad but the mortgage market has changed dramatically and if you are hoping to buy a house or need to refinance your adjustable rate mortgage anytime soon you may have a problem. Let’s take a look at where we really are.
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By Felipe

A few days ago I was talking to a friend who is about my age (31) regarding what we’ve been doing here at Boulevard R, and he told me he simply did not have the time to review all the 401k literature and paperwork his employer sent him. Of course I told him that he just needs 10 minutes to get a personalized plan using Boulevard R’s software (shameless plug, I know), but I do understand his pain.
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By Matt

In thinking about the relationships that many consumers have with their financial provider, particularly around retirement planning, a dysfunctional marriage is what first comes to mind. Being a single guy with no marriage experience, I really have no idea what a dysfunctional marriage feels like, but I have a pretty good idea of that characteristics of a relationship gone south looks like.

As far as I can tell, it’s a downward spiral that continues to get worse as trust is lost, important dates are forgotten, a feeling of dissatisfaction sets in… sometimes leading to “irreconcilable differences” (or “switching” if you’re in the financial services industry).
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By Mariette

It is well established by now that ongoing communication with your partner is the key to happy, healthy relationships. This applies to discussing each other’s views and habits with regards to money as well as what your goals are for the future and your retirement vision. Transparency, while often painful, is healthiest in the long-run, and less painful than the potential fall-out that often occurs when couples find out that not only are they not on the same page with regards to finances, sometimes they aren’t even in the same book.

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