Citizens Bank is offering an intro 5% cash back on all gas, grocery and drugstore purchases!

How to Get Your 5% Intro Bonus

1. Open a Citizens Bank Cash Back Platinum Mastercard.
2. Earn 5% cash back on all gas, grocery and drugstore purchases during the first 90 days that your account is open!

Terms and Conditions

• No annual fee.
• Once you have applied for an account, you will be notified of the status within 30 days. Your 90 day promotional offer will start on the date your account is approved allowing up to an additional 20 days for you to receive and activate your card. Your card typically arrives within 10 days once your application is approved.

More on Citizens Bank

Grocery Store Gift Cards. For those of you who have already maxed out your grocery store gift cards with the American Express 6% Cash Back Credit Card, this card may provide another opportunity to continue gift card purchases.

Intro 0% APR. This card is offering a 12-month intro APR of 0% on balance transfers. Depending on your arbitrage strategy, it could be a good opportunity but know that it does have a fee of 3% on the transfer.

Cash Back. In addition to the 5% cash back on the above categories, you’ll earn 1% cash back on all other purchases and you’ll automatically receive checks for your cash back in increments of $50.

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So when these cardholders are looking for the best product for their needs, they should always be looking for a card with the lowest interest rate and the fewest fees. The Pentagon Federal Credit Union offers its Promise Visa card with a low interest rate and no fees. Meanwhile, Barclaycard features its Ring MasterCard that has low rates and fees, as well as some other innovative features.

Let’s take a look at how these two cards match up against each other:

PenFed Promise

This little known product is among the simplest and most fee-free cards in existence. It features no annual fee, no foreign transaction fee, no balance transfer fee, no cash advance fee, no late fee, no over credit limit fee, and even no penalty APR. New cardholders enjoy a 7.49% APR for three years before the standard rate of 9.99% applies. Furthermore, existing balances can be transferred to this card and will have a rate of 4.99% for the life of the balance transfer, but with no fee.

But if there is one catch, it is that this card is only open to members of the Pentagon Federal Credit Union. And although PenFed was created to offer financial services to members of our armed forces, it is now open to anyone. Eligibility is available to family members and household members of active or retired members of the military as well as several other defense-related organizations. Otherwise, you can join by making a small one time donation to a military support group.

Barclaycard Ring

This card offers an 8% APR interest rate on purchases, balance transfers, and cash advances (not 7.99%!). There is no annual fee and no balance transfer fee. Cash advances cost a modest $1 fee and the foreign transaction fee is a more reasonable 1% than the standard 3%. There is no over-the-limit fee, and the late payment and returned payment fees are $25 instead of the customary $35.

Where PenFed holds the extreme “no fee” ground, the Barclaycard Ring takes a different, but unique stance. It claims to be the world’s first “crowdsourced, community powered credit card.” Cardholders collaborate online to propose new ideas and even vote on them. Customers that save the program money by opting for paper statements or paying on time can enjoy the fruits of their efforts in the form cash back rewards, charitable donations, or a combination of the two. And to be clear that the money is going where promised, Barclaycard takes the unprecedented step of opening its books to its cardholders.

How do these two cards compare?

This is an interesting match-up as these two cards are both unique. The PenFed Promise card is offered by a credit union that is clearly focused on offering value to its members. The Promise card has a slightly lower interest rate for the first three years, and unlike the Barclaycard Ring, it has a promotional balance transfer offer as well. The Promise also wins by having no foreign transaction fee, cash advance fee, or late payment fee.

But Barclaycard should still be commended for thinking outside the box with this innovative product. This kind of social media focused program will probably appeal to the Facebook generation in ways that other banks, and credit unions, cannot.

But for the vast majority of credit card users who struggle with debt, the fee-free PenFed Promise will remain the best deal. Nevertheless, those who are looking for something different and only occasionally incur credit debt, might want to give Barclaycard Ring a chance. Both of these cards are for people who think differently, and it is up to applicants to choose the one that best meets their needs.

Which credit card is right for you? Leave a comment!

The post PenFed Promise vs. Barclaycard Ring appeared first on Money Smart Life.

It's been a little more than a month since my last update, The Money Start-Up: Training and “What Is Your Time Worth?” (Part 3). That article explored a very common theme - is it worth paying for training/education when there are a multitude of free options available (some of them of high quality). With a month of more experience, I can say that the two options are mutually exclusive. I've learned a lot from the free options. (Not to get too techie, but here are the free ones: Try Ruby, Rails for Zombies, and Treehouse). I'd like to say that I learned a lot from the paid service (a subscription to Thoughtbot), but due to some unexpected life circumstances, I haven't given it a chance yet.

I recognize that one of the biggest hurdles I have to overcome is attempting to do it all myself. My hope is to get a good proof-of-concept out there and then explore getting funding to take it to the next level. However, in the meantime, it's worth asking the question, "What if I were to outsource the development of my idea completely?" There's something to be said with hiring a group of expert Ruby on Rails developers to attack it head on. There's also something to be said for not spending tens of thousands of dollars. If you are a regular reader, you know that I can be frugal and that's a lot of money.

I noticed that Heroku, the platform that I intend to use has some recommended developers and I immediately gravitated to the local one in Boston. That would be Terrible Labs. As someone who has spent the last 7 years with the name "Lazy" attached to his name, it was hard not to identify with a business embracing a negative adjective in their name. I appreciated their story behind it. As I looked that Terrible Team, I could myself working with them (and hoping that I could pay Maggie Steciuk in dog play hours).

As much as I like Terrible Labs, I'm going to make them my plan B. Plan A is still for me to learn Ruby on Rails and make a go at it myself. It may mean that the odds of my Money Start-up being successful will go down, but at least I won't incur a massive debt and I'll learn a valuable skill in the process.

The exploration of Terrible Labs didn't just result in a plan B... I learned that I was going about things the wrong way. However, that's a story for next time on The Money Start-Up.

Several such institutions now have their own online degree programs. These schools also bring their highly regarded academic rigor to Internet delivery of course materials. One of the most obvious programs of study for an online degree is IT (information technology). The schools below have been singled out by U.S. News and World Report, as well as Top5.com as the best online IT schools in cyberspace.

University of Southern California
Through a system that rates schools based on faculty credentials and training, student services and technology, student engagement, and admissions selectivity, U.S. News has concluded the University of Southern California has the best online information technology program. Situated in urban Los Angeles, USC is a private university that is most well-known for its sports programs, but is also very selective, large, and is known in the education community as providing some of the best education money can buy. USC has recently expanded its education services to online courses, a service of which anyone interested in information technology should take advantage.

Sam Houston State University
Founded in 1879, Sam Houston State University, located 70 north of Houston, is the third oldest public institution of advanced education in the state of Texas. SHSU enrolls over 18,000 students a year in a variety of undergraduate, masters, and doctorate programs. While the school is most well-known for its college of Criminal Justice, it also boasts a comprehensive variety of online courses, included classes in information technology. SHSU has been recognized by U.S. News for the effectiveness and quality of its online programs in a variety of categories, including information technology, bachelor’s degrees, and graduate education.

Virginia Tech
Nestled in Blacksburg, Virginia, the Virginia Polytechnic Institute and State University, most commonly known as Virginia Tech, is a public university well known for its affluence and expertise in the technology industry and applied sciences. Virginia Tech has pioneered an online system of computer software and feedback that streams one-on-one discussion and small group tutoring, which makes it the perfect learning environment for an individual interested in online classes. With classes from Virginia Tech, you can rest assured that you’ll have the resources and help to succeed in information technology.

University of Bridgeport
One of the most racially diverse campuses in America, the University of Bridgeport is an independent, privately funded university that ensures an individualized learning experience. This University was ranked by U.S. News as #1 for its information technology program in 2012 and is #4 in 2013, demonstrating that this program is consistently one of the best and most successful and reliable programs in the country. UB also has a variety of resources for English as a second language, or ESL students, if you wish to have a quality educational experience but worry about your mastery of English.

Pennsylvania State University – World Campus
Also known as “Penn State Online,” this is a component of the world-famous Penn State University that allows students from across the globe to get a quality education. This system was established in 1998 and hosts over 6,000 students every year from various states and countries, and offers more than 90 online undergraduate and graduate degrees. This program treats the student exactly as if they were a physical student at the University, holding them to the same academic standards; for instance, students must complete exams at educational institutions close to them in front of webcams. If you need an online educational experience but don’t want a watered down system where you aren’t treated like a real student, Penn State Online is an ideal choice.

The post Best Online Schools for IT appeared first on Frugal Dad.

The reality is that having life insurance is probably a good idea, but shopping for it can be a chore. If you work full time and receive benefits from your employer, you may want to check to see if they offer a group term life insurance plan for starters. Since this may only require a quick call to the human resources department it makes sense to start there.

This came up recently here, which is why I wanted to bring it up. My wife came home with a packet of information about the term life insurance offered through work, and since we have been meaning to reassess our insurance coverage, it was a perfect opportunity to see how much it costs and compare it with other companies to see if it was a good deal or not.

One of the benefits of using your employer’s group plan is that you may be able to receive a decent amount of coverage without the requirement of having a medical exam. For those who may not be in great health, this can be quite a benefit if the group plan doesn’t require this while outside companies may, and may end up costing you more or be denied entirely. So, that is one thing to consider.

The other benefit is that when working with your employer’s plan it will come out of your paycheck just like your other benefits, so it’s simple. No monthly or annual payments to make, no missed payments, no stamps or mailing anything in, no setting up automatic bill payments, etc.

So, after looking through my wife’s plan I noticed the rates were quite affordable. We could receive five times her annual salary for around $21 per pay period, and this was with no medical exam. Even though this seemed reasonable, going this far was just enough to encourage us to find quotes from other companies to compare. And good thing we did. After looking around a bit we found two other options that were actually a bit cheaper for the same amount of coverage. That being said, even though the employer’s plan wasn’t the most affordable, simply checking into it made us then explore more options and find out just how affordable the insurance can be.

Now, like many employee benefits there is one big drawback. If you go with your employer’s plan it will typically only be available as long as you are employed there. If you go on to change jobs, get fired, or quit, the life insurance will go away as well. When you get a policy with a company on your own, you’ll have coverage no matter who you work for, so keep that in mind.

In the end, getting life insurance through your employer may or may not be the best for your situation, but at the very least it’s worth checking into. It’s easy, it may not require any health exams, and the premiums will come right out of your check like your other benefits. But if you go far enough to check into your employer’s plan, take the extra step and get a few quotes from other companies just to compare. You may be surprised at how affordable this crucial part of your financial wellness may be.

Lets take a look at how these two cards compare:

Chase Slate

In an industry that loves to copy each others’ products, the Slate card stands alone as the only 0% APR balance transfer offer with no balance transfer fee. And since most other cards with similar offers charge a 3% balance transfer fee, this is a great way eliminate interest costs while paying down debt. With the Slate offer, new applicants receive interest-free financing on both new purchases and balance transfers for 15 months. Qualifying balance transfers must be made within 60 days of opening an account.

Once the promotional financing offer expires, cardholders with any remaining balance will be subject to a standard interest rate of 11.99%, 16.99%, or 21.99%, depending on the applicant’s credit worthiness when they originally applied for the card. The penalty interest rate is 23.99%, which isn’t as bad as some other cards that go up to 30% or higher when cardholders miss payments.

Chase also offers Slate cardholders the opportunity to enroll in its innovative Blueprint program. This no-cost feature allows cardholders to save money on interest by paying some charges in full while carrying a balance on others. It also includes powerful budgeting and goal setting features that makes it easy for customers to pay off debt on their schedule.

But beyond the outstanding promotional financing terms and the novel Blueprint program, this card is about as simple as it gets. There are no rewards, and this card doesn’t even include common benefits such as rental car insurance. There is no annual fee for this card, but there is a 3% foreign transaction fee added to all charges processed outside of the United States.

Insider tip: There is nothing wrong with using this card for its outstanding balance transfer offer, but still using another card when you need purchase protection or rental car insurance. Also, be aware that no balance transfer offer will allow you to pay off another card from the same bank. This is especially important to know with this card, as Chase is such a major player in the credit card world.

Citi Simplicity

Simplicity can’t match Slate’s no-fee balance transfer offer, but it does feature longer promotional financing terms. New cardholders receive an industry leading 18 months of interest-free financing on both new purchases and balance transfers, but there is a 3% balance transfer fee. New cardholders also have four months to transfer a balance and still receive the 0% APR rate. After the promotional financing period is over, a standard interest rate of 12.99%, 17.99%, or 21.99% will apply, based on your creditworthiness when you applied.

Simplicity still has a lot to offer customers beyond its promotional financing terms. For those who have trouble making on time payments, this card has no late fees and no penalty interest rate. It also features a comprehensive array of ancillary benefits. For example, purchases are automatically protected by extended warranty and retail purchases protection policies. Cardholders can also utilize Citi’s Price Rewind service that automatically issues refunds if a purchased product becomes available for at least $25 less.

Like Chase Slate, there is no annual fee for this card, but there is a 3% foreign transaction fee added to all charges processed outside of the United States.

Insider tip: Cardholders should not interpret Citi’s policy of no late fees and no penalty interest rates as a reason not to make timely payments. Those who pay late will still incur interest and may even damage their credit.

The Verdict

I’d love to pick a winner here, but it really isn’t that simple. Those with credit card debt (with a bank other than Chase), can’t do any better than getting the Slate card and performing a no-fee balance transfer. And with Blueprint, Slate is a great product to help control debt over the long haul.

But at the same time, those with less debt will probably be happier with the full range of features offered by the Simplicity card, including 18 months of interest-free financing.

Therefore, I am going to have to call this one a draw as the beauty of these offers will be in the eyes of the beholder. Those looking to get out of crushing debt need the Chase Slate card, while others looking for a simple card will find themselves attracted to the Citi Simplicity.

Which credit card is right for you? Leave a comment!

The post Chase Slate Vs. Citi Simplicity appeared first on Money Smart Life.

Terms of the Cyprus Bailout

Cyprus’ economy is in bad shape, leading Cyprus to be the fifth European nation to receive a bailout (the first four were Greece, Ireland, Portugal, and Spain). Last year, its economy shrunk by 2.4% and unemployment reached 12%. Two of its largest banks sustained heavy losses on Greek debt during the restructuring of Greece’s economy and have been surviving on emergency funds from the European Central Bank ever since. In an attempt to keep Cyprus in the eurozone, ECB had threatened to cut off funds propping up Cypriot banks unless agreements were reached. This is particularly not good for a country that has a large banking sector (based on deposits, Cyprus banks are an unsustainable four times the size of its economy).

The initial bailout was for a total of €17bn with €10bn coming from the eurozone and €7bn coming from Cyprus. Within a month of this agreement, after more economic analysis, the bailout package was increased to €23bn with the extra €6bn (a total of €13bn) coming from Cyprus itself.

So how did Cyprus plan to come up with their part of the bailout? Cyprus decided to use austerity measures as well as a very controversial saver’s tax to raise the necessary funds.

The Cyprus Saver’s Tax

Aside from austerity measures, selling €400m of gold reserves, and renegotiating the terms of a loan with Russia, the Cypriot government agreed that most of their part of the bailout would come from tapping the savings accounts in its two largest banks. It should be noted that this bailout deal, or the way the Cypriot government decided to come up with its portion, did not need approval from the Cypriot parliament. This is because it was achieved by restructuring the country’s two largest banks rather than levying a new tax on all of its citizens. You read that right; without the consent of its depositors, a new, substantial tax has been levied. Not only has this new tax been levied on a portion of Cyprus citizens, but it is estimated that nearly half of the €70bn worth of deposits in Cyprus’ banks is held by foreigners (the vast majority is believed to be from Russian officials and oligarchs looking for tax havens).

The levy was initially set at 6.75% on accounts under €100,000 and 9.9% on any deposit above that sum (with the option to alter this agreement to 3% on the smaller deposits and up to 15% on deposits above €500,000). In return, savers would be given shares in the banks and/or future profits from the country’s gas reserves. This initial agreement was thrown out.

An agreement was reached on March 25, 2013. In the end, those with deposits of less than €100,000 will not be taxed to help raise the money for this bailout. Here are some of the details:

• Laiki, or Cyprus Popular Bank, is to be closed. Its €4.2bn in deposits over €100,000 will be placed in a “bad bank”. Those with smaller deposits will see their accounts transferred to the Bank of Cyprus.
• The island’s largest bank, Bank of Cyprus, will be spared. However, a huge restructuring is taking place. It is thought depositors with more than €100,000 at the bank will also be involved in the recapitalization, and are expected to face losses of around 30%.
• Bank of Cyprus will inherit a €9bn debt Laiki had with the European Central Bank (ECB).
• Temporarily, a €100 limit was imposed on ATM withdrawals in Cyprus (in the month of April the limit was raised to €300).
• Cyprus must shrink its banking industry to the EU average size by 2018.

Eurozone’s Deposit Insurance

In these bailout talks one of the initial agreements was to tax 6.75% on accounts under €100,000. This was despite having a law in place that dictates all EU banks are required to insure deposits of €100,000 or less (agreed upon in the aftermath of the 2008 banking crisis). Thankfully, it did not happen. But this was mainly because the Cypriot parliament refused to skirt the law and tax deposits of less than €100,000.

Protecting Your Own Money

FDIC Insurance. After reading all of this, you might be wondering what insures deposits in the United States. The Federal Deposit Insurance Corporation (FDIC) was created by Franklin D. Roosevelt in 1933 to insure the deposits of customers. Since 1980, the FDIC insurance limits on insurable bank accounts were $100,000. But with 25+ banks becoming insolvent around the time of the stock market crash in the fall of 2008, fears among customers and small business owners started to rise. It turns out that these fears were rational, as only 63% of deposit accounts were protected with this $100,000 limit. The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, allayed fears by making $250,000 FDIC coverage the new permanent limit.

FDIC Limits. How this limit works is per banking institution. So each of your accounts per banking institution is added up and counted towards this $250,000. You can open separate accounts at different banks to get more than $250,000 in FDIC insurance coverage. If you’re looking for a different bank to open an account to get additional FDIC insurance coverage, see our list of FDIC insured banks.

Does the Cyprus Tax Startle You?

As a diligent saver, all of this research and information has startled me. It’s not the fact that another European nation needed a bailout, nor the fact that a bank will be closing within the island of Cyprus that is shocking. What truly scares me was the levying of a tax without the consent of the Cyprus government/people (whether or not they would have reached a necessary consensus is a discussion beyond the scope of this article), as well as the ease with which there was an initial agreement to seize part of the assets of depositors with less than €100,000 despite a law being in place.

Let’s hope that we never have to deal with this in our lifetimes.

What are your thoughts?

More on Banking

• FDIC Insured Bank Rates
• $250,000 FDIC Insurance Limits
• Banks Versus Credit Unions
• Money Market Accounts vs Savings Accounts
• Do You Need a Local Bank?

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I’ve always been a giver.  In fact, I enjoy giving more than I do receiving.  That’s why it was hard for me to completely give up giving gifts when I started living on a strict budget.  Rather than forgo celebrations, I approach them in a much more frugal way than before.

cheap gift ideas

Here is how you can give gifts without putting a dent in your bank account:

1. Create a budget for gifts and stick to it.  Just like any other area of finance, your spending can be out of control.  With so many reasons to celebrate, it can become very easy to buy more than you can afford.  Rather than go broke buying gifts for your relatives and friends, set an amount for this expenditure and stick to it.  When you’re out of money, you simply stop buying gifts.
2. Shop clearance bins, yard sales, and thrift stores.  You can find a wide variety of items that make great gifts for cheap by shopping around.  The sooner you start looking for items the better.  You never know when the perfect gift will wind up on clearance at your favorite retailer or be sold for mere change at a yard sale.  Things are only as valuable as you believe them to be.  If someone doesn’t want it in their home anymore, they’re likely to get you a great deal on the item that you’re interested in purchasing.
3. Create a handmade gift.  Use your talent to make a one-of-a-kind gift.  If you’re a baker, create a loaf of banana or pumpkin bread.  If you’re a photographer, frame one of your best shots.  If you make jewelry, create a signature piece with the supplies you have on hand.  A little creativity goes a long way in making a meaningful gift.
4. Earn points and trade them in for gift certificates.  There are plenty of credit cards that allow you to earn points and trade them in for gift certificates. Here is a list of some of the best incentive credit cards for you to check out.  After you start spending you can build up a you can use you incentives balance to purchase a gift.  If you don’t have a clue what to get, give the gift certificate with a sentimental card.  Letting someone else pick their own gift is often ideal.

There are plenty of ways to give gifts on the cheap and as you just take some time to think about it the cheap gift ideas will start flowing.  You don’t need a black card to treat the people in your life well.  By planning ahead, scoping out sales, and making use of points programs, you can extend your gift giving budget by a lot.

A recent 2013 Consumer Federation of America and VantageScore Solutions survey of 1022 Americans uncovered that many adults don’t know much about their credit scores. The results revealed that between roughly one-quarter and two-fifths of the survey subjects were unable to correctly answer credit related questions ranging from who collects credit information to what affects credit scores.

So if this were a battle of the sexes, who scored better, men or women?

The survey results showed that women consistently answered more questions correctly than the men. Overall, according to the survey, women have a better understanding of what contributes to credit scores and the importance of checking them.

For starters, more women (74%) than men (68%) realized that credit bureaus are responsible for collecting consumers’ information for credit scores. And when it came to the factors that these credit bureaus use to determine credit scores, only 38% of women believed that age affected their scores, while 48% of men thought that age had some value. Similarly, just 34% women thought that marital status could contribute to one’s score compared to 46% of men who believed marriage played a role.

Just to get the facts straight, yes, credit bureaus report consumers’ information, but they do not use age or marital status to calculate the scores. Typically, the only way that a couple’s marriage will affect their individual credit scores is if they have joint accounts. Missed payments and current balances on a joint account will appear on both of their credit reports.

As for identifying a good credit score over a bad credit score, 36% of women were more in the know than just 29% of men who understood the differences. Generally credit scores range between 300 and 900, depending on the scoring system, but the higher the credit score, the better the score.

Although the women took the lead in correctly answering the majority of questions, the men did have better luck than women when questioned about credit repair companies. Only 32% men believed in the legitimacy of credit repair agencies compared to the 40% of women who saw these agencies as helpful. Men, more than women, understood that consumers need to remain skeptical of the services that credit reporting agencies offer.

Regardless of whether the women outdid the men or not, these statistics are rather alarming considering how much consumers’ credit scores can affect their financial lives. The results of this survey reveal that both men and women need to brush up on their credit scores and realize the importance of maintaining good credit scores.

[Editor's Note: I have to stand up for my fellow men here who thought that age had some value in a credit score. Credit scores take into account the age of credit accounts. This means that younger people are at an inherit disadvantage and that disadvantage is reflected in a lower credit score on average.

Also it's interesting that when the men perform better, it's attributed to "luck." Grrrr...]

Fast forward to today and because of the baby boomer generation retiring, we have turned the scale upside down. Now for every worker, we have 5 retirees. This is not good because only one worker has to fund five retiree’s benefits. It doesn’t take a math whiz to realize that this cannot be sustained. This is why you hear that the Social Security trust is going to run out of money.

Photo Courtesy: efleming

Decline in the U.S. Birth Rate

Recently, it has been reported that the birth rate has fallen to the lowest level since it’s been tracked. This means that soon enough each worker is going to be funding even more retiree’s monthly Social Security checks.

Tie this in with medical discoveries allowing for people to live longer means even more of a disparity between worker and retiree. In the past, you would work for 40 years and receive a monthly check for five years. Now you work for 40 years, but receive a monthly check for 20-plus years. This length of time will continue to increase as we move forward.

How to Solve the Social Security Issue

Lower Benefits. There are a few solutions to solve this problem. The first is to cut back the on the size of the monthly check retiree’s receive each month. Not many retirees are open to this option. And since the older population is more reliable when it comes to voting, no Congressman or woman is going to take the heat for suggesting cuts. For the most part, the government has slowed down the rate of increases in benefit amounts, even leaving it unchanged for a few years. The only other solution was to slowly increase the age in which one could begin receiving benefits.

Increase Taxes. The next option is to tax workers more to raise enough money to pay for the monthly benefits. I haven’t seen a study that says how much a worker would need to be taxed to make the system solvent, but my guess is that it is a lot more than anyone is willing to pay. See the Social Security Wage Base for current limits on Social Security taxes.

I don’t think that one thing should be done over another. I think there is a compromise that needs to be reached (but good luck on Washington DC agreeing to that!). I think that we need to increase the tax people pay along with decreasing the monthly benefit. We’ve already begun to see the shift where people are putting more into Social Security than they receive in benefits.

Create Private Accounts. I feel the best option is a private retirement account option. I know many people are against this because they have been burned in the stock market, but you would do much better this way as opposed to Social Security. As I mentioned before, at the current rate, you are paying in more than you are going to get out. Think about that for a minute. If you pay in $100,000 over your working life, you may only receive $70,000 in monthly benefits. (Note, I don’t know the exact number, I am just trying to make this point clear.) You are losing money! If you could instead invest that money in US Government bonds that are very safe, you would almost guarantee a positive return. Put another way, if you invested $100,000 over your working life, you might end up with $125,000 in monthly benefits.

Most people “see” their quarterly investment report and get scared when it drops and sell out of everything. They can’t “see” their Social Security gains or losses because it’s not on your Social Security statement. They just receive a check and are happy because of it. I’m sure if they saw that they were losing money, they would want to pull out of Social Security, but they can’t, even if they wanted to. So we are stuck on the out of control train, hoping a solution will be found.

How Should Social Security Be Fixed?

What are your thoughts on Social Security? Are you open to paying in more in the form of taxes? Would you be OK with your monthly benefit amount being decreased? What are your thoughts on private accounts? Do you think if more people realized they were losing money in Social Security they would be more open to private accounts?

More on Social Security

• Will Social Security Be Around in 20 Years?
• Do You Have to Pay Income Tax on Social Security?
• How to Calculate Self Employment Tax
• How to Qualify for Social Security Benefits
• New 2013 Investment Tax: What it Means For You

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