No matter how many times some myths are debunked, we may still believe them.
• Compound interest is interest earned on interest
• Compound interest may play an important role in meeting long term goals
• Time is an important component when thinking about compound interest
Of all the ways to save for retirement, backdoor Roth is possibly one of the most misunderstood. Perhaps it is the terminology “backdoor,” which is associated with something that is secret, hush-hush or downright improper. Who wants to consider making a “hush-hush” contribution?
Only a very small percentage of Americans have exceptional credit as reflected in a credit score of 800 or greater. The large majority of U.S. consumer have a FICO credit score in the 600s or 700s, but a significant number have “very poor” credit scores below 580. Gaining access to a credit card can be difficult for those with very poor credit scores.
The prospect of suddenly having to face life with a disability that limits your ability to work in the way you’re used always seems unlikely. Disability is something other people face, maybe in old age, but not you. While disability insurance may seem unnecessary right now the facts give cause for the preemptive action.
One of the first lessons of finance we are taught, by our parents or through some basic personal finance course, is to make creating an emergency fund our top priority. Having a reserve of cash equivalent to six to 12 month’s worth of living expenses is considered the most fundamental principal of financial security.