Money Talks Blog by Oxford Planning Group

At Oxford Planning Group we hope you will be amazed by a unique experience. In our two blogs we will include periodic information and viewpoints that we hope you will find interesting. Seasoned Savers is geared towards financially experienced individuals. OPG Basics is aimed towards younger generations just starting out.

We welcome your thoughts and ideas, if you'd like to learn more about any specific area, send us an email at kirsten@oxfordplanning.com

Who’ll Let the Dog Out? The Price of a Puppy

Thinking about getting a pet? Let's walk through the true cost of having one. To keep things simple, in this blog I am going of focus on the cost of having a dog and use mostly average prices. Pictured above are our very much loved family dogs Finn & Haley.

One- Time Fees:

  • Initial Price: Cost depends on age and breed and whether you want to adopt a rescue or adopt from a breeder.
    • Maryland SPCA adoption fees for dogs range from $125 to $325 plus $25 for mandatory microchipping
    • According to an article by Forbes, adopting from a breeder can range anywhere from $500 to $3000
  • Neutering/spaying: Cost varies. Many vets offer puppy packages that can reduce the cost for shots, visits, and spaying or neutering. Vetstreet.com states that at private vet practices, the procedures can run from $100-$600.
    • There are plenty of low-cost spaying/neutering clinics available with a quick google search; however, don't go that route just to save money. Do your research. They must skimp on many things to be able to provide the procedure at a low cost
    • Question to ask yourself: Which price point allows me the standard of care I am looking for, for my pet?
  • Crate: $40 to $50 for a heavy-duty crate that can grow with your puppy
  • Shots: Puppy shots series can average $120, plus annual shot fees

*If you aren't adopting a puppy, the dog you adopt may already be spayed/neutered and have most of its early shots already so some of these costs may not apply.

Annual/ Monthly Fees:

  • Toys: Varies for each pet owner. If you have a toy shredder like my family, you could have to replace them every month. $10-$20 per month.
  • Dog food and treats:Anywhere between $200-$500 per year depending on the type you want to buy
  • Annual Medical Checkups: $50 to $100
  • Random: pet collars ($20), leashes ($15), beds ($30), food and water bowls ($10 to $20)
  • Medicine: Either for acute incidences or chronic conditions. Pets get sick and can also be diagnosed with lifelong problems. Be prepared for either and have enough emergency fund money for your pet to pay for them.
  • Grooming: Certain breeds require regular grooming because they don’t naturally shed or maybe you don't have enough space in an apartment to bathe your dog at home. Also, if you aren't comfortable clipping your dog’s nails that is another fee to consider.
  • Pet Sitting: Do you have friends or family that can stay with your dog if you go on vacation? If not, you will need to look into having someone dog sit or find a place to board them. Also consider vacations that you can bring dogs on. Boarding a dog averages about $35 a night for a medium size breed.

Emergency Fees:

  • If you are unfortunate enough to have a pet need urgent medical attention, the cost can hit hard. If it is outside of normal veterinary practice hours, an emergency vet is probably your only option. The fees for emergency vets can add up quickly (our puppy ate a bee and cost us $1000 one weekend). Dogs and puppies alike get into random trouble all the time so once again make sure you have an emergency fund for your pet.

Other Costs:

  • Training classes: Whether you are a first-time dog owner or have a rambunctious puppy like we did, classes are awesome for socialization and help with training. Prices vary per company and number of sessions.

Time:

  • One really big consideration before adopting a dog is time. What kind of hours do you work? Will you need a dog walker or some type of doggie day care while you’re at work?  If you like to go out multiple times a week after work or maybe you have a side hustle to help make some extra money, adding a pet will change that routine a lot.  

 

In my opinion, a dog is so worth the cost - as long as you have the extra cash and time to spend!

 

Author: Kirsten Eddy, Junior Portfolio Analyst 

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The 20 Year Old’s Guide to Investing in Yourself

  

As a young adult, it can be daunting to try to find information about the best way invest for the long term – specifically retirement accounts.  I know, it’s easy at this stage to think “I have tons of time to start thinking about getting my finances in order!” and - it's hard to sort through all the information out there to get down to the basics of what you need to know.

In this blog, I'm going to break down four retirement accounts (there are many more) and give you some facts to help you understand your options. This is by no means meant to be a comprehensive list of information. My goal for this post is to create a starting point that you can use to jumpstart further research into the type of account or accounts that will best work for you.

Types of retirement accounts:

401(k) and Traditional IRA: Contributions are made before being taxed (saving you taxes upfront) and your money grows tax deferred

  • The money is taxed when you withdraw it for retirement
  • 401(k)’s are sponsored through employers; however, not every employer offers one
  • An IRA is a good choice for people who do not have access to a 401(k) or other retirement plans at work

Roth 410 (k) and Roth IRA: Contributions are made with money from your paycheck that has already been taxed, so it’s tax free to withdraw during retirement if certain criteria are met.

  • If you believe you’re in a lower tax bracket now than you will be later, it’s smart to choose the Roth option and pay the taxes now instead of later.
  • Not everyone qualifies for a Roth account, you must meet certain salary requirements.

Where to Start: Does your employer offer a 401(k)?

  • If your employer does offer a 401(k) plan take advantage of it, especially if they offer a match. Put in enough money to get the maximum match. If you have maximized your 401(k) contribution and still have more you want to put into savings, review whether you are eligible to contribute into a personal IRA or Roth IRA. Depending on your income you may or may not be eligible to do so.

What to Know About Your 401 (k) Plan:

  • Employer's 401k plan documents: What you need to find out -
  • When you can contribute
  • Company match- is there one? And if so, what are the rules
  • How much can you contribute
  • Investment options offered
  • Maintenance costs and fees
  • Roth options- if available, do you qualify and is it a good option for you currently?
  • What happens to your money if you leave the company
  •  If your employer offers a 401(k) match, put in enough money to get the maximum match
  • Bonus note: you are lowering your taxable wage base in the process

What to Know About Your IRA Plan:

  • Opened individually at a brokerage or bank
  • Without access to an employer available 401(k), an IRA is a smart choice to start your retirement savings
  • Do you qualify for a Roth IRA?
  • Do you qualify for full, partial, or no deduction of taxes based on your salary?

Contribution limits:

                                                              Below Age 50               Above Age 50

2019 Contribution Limits 401(k):        $19,000                        $25,000

2019 Contribution Limits IRA:            $6,000                          $7,000

Don't take early withdrawals!

  • Roth 401(k)’s and Roth IRA’s are only tax and penalty free upon withdrawal if the account has been held for five years or longer and withdrawal is made in the event of disability, death, or the account holder is above 59 and a half years old.
  • If you wish to withdrawal money from your 410k before age 59 and a half, you must pay a 10% penalty fee on top of income taxes.

 

Final Thoughts:

Do: Start ASAP, Increase Contributions, Rebalance Annually and Diversify

Don't: Time the market, cash out early, or Take a 401(k) loan

If you can't max out both a 401(k) and an IRA in a year, max out the 401(k) first to get the total employer match and then put as much as you can (if eligible) into an IRA.

If your employer does not offer a match, still consider maxing out your 401(k). If your 401(k) has a Roth option, consider whether you are in a lower tax bracket today than you will be in the future. If so, consider using the Roth 401(k) option.

Start saving now!If you read through this information and thought "That was useful, but I probably won't start savings for another couple of years" rethink that logic! No matter your age, you are never too young to start saving for retirement. Compounding interest is your best friend. The earlier you start saving, the easier it will be for you to accumulate a healthy nest egg.

 

Tools and Resources:

Take a look at our calculator to see how you can grow your retirement savings with early planning.

Further Resources for Information

 

Author: Kirsten Eddy, Junior Portfolio Analyst

 

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Where to Keep Your Savings

1 U.S. dollar banknote on white surface

Last week's blog touched on how to save. Let's discuss ideas on where you should keep those savings. Having a specified savings account can be beneficial to help you meet savings goals. It can be hard to look at one account and see that you have a good amount stored in it, only to realize a good portion is supposed to be for savings, not that spur of the moment weekend trip with your friends. By placing your money for savings into its own account, you can make sure you are only spending what you should. A general savings account is okay but there are better alternatives.

The most important things to think about for your savings account are when you will need access to the money (monthly or yearly?) and the annual percentage yield you are hoping for. Ideally, savings should only be dipped into for certain predetermined expenses like that new car you've needed. However, things come up unexpectedly and cannot always be helped.

 

If you know you will need to take money out of your savings within the next six months, consider:

High Yield Savings Accounts: Lower interest but more accessible

  • Typically have a low annual percentage yield (APY); however, money can be withdrawn more easily than with other accounts
  • Savings accounts have a 6 time per month limit for withdrawals

Money market Accounts: Higher interest than savings accounts but slightly less accessible

  • Six time per month limit usually still applies

 

If you know you will not need to take money out in the next six months, year, or longer consider:

Certificate of Deposit (CD): Highest interest but penalties for early withdrawal

  • Savings certificate with a fixed maturity date and specified fixed interest rate
  • Must agree not to withdraw the money for a certain amount of time (times vary from six months to five years)

 

If you have no current savings, start small with what you can afford and start to build it up. While the APY for most small accounts won’t result in much money gained, it can add up to larger sums if you really try to stick to a savings plan per month and build up a good store. And hey, even if you only make $30 in interest over a year, that’s money you got for simply doing nothing and leaving your savings alone.

Check out our savings calculator to see how long it will take you to reach certain savings goals. You can play around with monthly savings, rate of return, and years to save.

https://www.oxfordplanning.com/resources/calculators?view=calculator&id=28

If you have a goal of savings $10,000 and already have $1,500 in savings, how long will it take to reach that goal? By putting $400 a month into savings, you can reach your goal in 1 year and 9 months. If you can put $550 into savings each month that cuts down the time by 6 months.

Important Notes: 

  • Make sure that your savings plan is realistic. Make sure you are budgeting enough for groceries, rent, utilities and any other monthly necessities. If you can't meet your goal with your current budget, consider taking on a small part time job to make some extra money.
  • If you decide that one of these savings accounts is for you, do your research. Different banks offer different percentage yields. Some also require a minimum amount of money to open the account or charge a fee. Shop around and look at comparisons to determine the best option for you.

 

Whichever type of account you choose, don’t wait-start today!

Stay tuned next Friday for our post about understanding you 401(k) options.

 

Author: Kirsten Eddy, Junior Portfolio Analyst

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Talk Money to Me: Budgeting 101

  silver MacBook near papers and plant

Have you ever looked at your bank account at the end of the month or even the end of the week and wondered how you spent so much money? It's easy to get yourself into habits like spending too much at bars on the weekend or eating out multiple times a week. If you’re looking to save money, the first step is to create a budget for yourself.

In a society where we are encouraged to be constant consumers, it can be hard to figure out how to budget and save effectively. Let's break it down into a few simple steps:

  1. Calculate your monthly income
    •  Figure out your takeaway after taxes either by using your latest paycheck (if you work a set number of hours with a set rate per week) or by using a free online calculator
  2. Determine all your monthly expenses
    •  This includes rent, car insurance, health insurance, student loans, gym membership, Netflix subscription, groceries, gas, ect. An easy way to do this is by looking at credit or debit card statements from the previous month and writing down what you spend your cash on. Lastly, make a needs versus wants lists. These are different for every person, your needs might be on someone else’s wants section but that’s okay.
  3. Decide what to put into savings
    • Once you have subtracted your monthly expenses from your income, it's time to decide what to do with your leftover money. Start by writing out specific saving goals and put those as a priority before spending any of the “fun money” you have left after your expenses. This could mean putting a certain amount into general savings every month or getting more specific and putting some into general savings and some into specific savings for things like travel or a new car. Also consider having a separate fund for unplanned expenses like new tires or doctor's fees.
  4. Divide up the rest!
    • Create some categories for yourself such as date nights, weekend fund or whatever you want to spend it on. 
  5. Optional: Multiple Budgets
    • Now that you have a basic budget you want to stick to, consider creating a low, medium, and high spending budget. This is simply done by adjusting the amounts going into your savings for a specific month to allow for some extra spending. Then choose a budget to stick to at the beginning of each month. If you have a goal that you want to meet as fast as you can you’ll want to stick to the low spending high savings plan. If you are okay having it take a little longer to meet your goal and you have a couple of extra events you want to go to one month then choose to stick to your medium or high spending budget.

 

Where else can you save?

Now that you’ve created your budget, are you happy with how much you’re putting into savings and how much you have left to spend? If not then take a look at areas in your life where you may be able to save money. Here are just a few examples:

  • Eat at home: This category is my biggest challenge. Food can really add up whether its eating out or spending too much on groceries. Take a look at how eating out for lunch daily is eating away at your cash. You might be surprised!

Let’s say it costs you $5 to make a bagged lunch to bring to work versus $12 to eat out that day. By switching to the bagged lunch for a month (twenty lunches), you’ve already saved $140.

  • Memberships & Subscriptions: Are there any subscriptions or memberships that you don’t really need? Gym memberships that you rarely have time to use, streaming services for music and movies. If you’re using them, great, but they’re easy to forget about if you’re being charged automatically every month.
  • Finding free activities: As fun as it is to go out on the weekends with friends, it can also be quite expensive. Maybe one night a weekend or every other weekend try out something less expensive but still fun like a BYOB board game night or free live music in your area. Invite friends over to have a pot luck dinner and share some drinks at home.
  • Roommates? If you are currently living alone or thinking about moving into an apartment soon, considering roommates could save a substantial amount of money every month.
  • Less “Treat Yourself”: Everyone likes to get something special after a hard day or week, but are you doing this too often? Daily trips to Starbucks or frequent shopping for things on your wants list can cost a lot. If you have something in your life that you use to treat yourself, think about if there is some way you could make it cheaper. Maybe buy the ingredients to your favorite Starbucks drink to make at home or have a girls night to do your nails. If you really don’t want to cut back because it is important to you, then that is completely fine. Just add it to your budget!

Instead of thinking of a budget as a chore, think of it as a great tool to help you reach your goals.

 

Tools & Apps

  • Nerdwallet.com has a useful Monthly Budget Worksheet to help you get started:

                 https://www.nerdwallet.com/blog/finance/budget-worksheet/

  • Hourly Paycheck Calculator After Deductions:

                  https://www.adp.com/resources/tools/calculators/hourly-paycheck-calculator.aspx

  • Oxford Planning Group Lunch Cost Calculator:

                  https://www.oxfordplanning.com/resources/calculators?view=calculator&id=16

 

Some of the best budgeting apps:

  • Mint
  • Pocket Guard
  • YNAB

 

The newest member of our office, Kirsten Eddy our Junior Portfolio Analyst, will be taking over this portion of the Blog. Stay tuned every Friday for new posts!

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Woodstock, MD  21163
Phone: 410-995-8711
shaun@oxfordplanning.com

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