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What Did 2013 Teach Us About Money?


As another year comes to a close, it's a time to do a little dance because you're still here, and then to sit down and reflect on money matters. What did you do right, what did you do wrong, what could you have done better?

What happened in the world that impacted your wallet and what can you learn from that?

The experts weigh in on financial lessons of 2013 that should serve you well in 2014.

Stock markets can be surprising

With all the turmoil at the end of 2012, many personal finance voices would have guessed the stock market performance in 2013 would have been anything but exciting. "But the S&P 500 is up 30 percent year-to-date. Again, it's a great reminder of just how unpredictable the markets are," says Scott Halliwell, a certified financial planner with USAA.

Reacting to every twist and turn in the market is foolish. When it comes to investing, slow and steady wins the race.

"If you pulled your money out of the market early in the year because you thought that the market would surely go down, you are now in a more precarious position. You are probably even more nervous about going back into the market it is now at a much higher point/level than it was a year ago," says Tom Rauchegger, vice president of Cramer & Rauchegger, a firm specializing in retirement and estate planning.

Having a well-balanced, diversified portfolio and investment plan which includes both stock market and non-stock market correlated investments built on a strong foundation will protect and grow your money in both the short and long-term and in both volatile and bull markets, says Rauchegger.

Washington is unpredictable

This year brought the following news topics: the government almost shuts down, the government does shut down and the government nears a deal to avoid another shutdown. "Along with these events, millions of Americans became more concerned about their own personal finances," says Halliwell. "As if we needed more reasons to get our financial houses in order, those either directly working for the government or impacted in a second, or third-way, should be sure to manage their finances in such a way that they spend less than they earn and have money in the bank Nothing is for sure."

Axioms can fall

retirees pulling out 4% from their portfolios could find themselves in trouble

Many financial pros will tell you that it is safe to withdraw 4 percent of you retirement assets a year. The 4% rule was the subject of debate. "Michael Finke of Texas Tech University and Wade Pfau from The American College suggests that in low interest rate environments like that of today, retirees pulling out 4% from their portfolios could find themselves in trouble in later years," says Halliwell, who adds that in this climate, 3% may be better.

There are holes in your pocket

Even when the market goes up, you may feel less wealthy because of increased taxes. The average American family that makes over $110,000 per year saw their wealth decrease by $6,000 due to increased taxes and the elimination of the 2% payroll tax break, says Mary Kelly, PhD., author of Money Smart: How Not to Buy Cat Food When You Don't Have a Cat. "It is important to make sure that you are paying attention to spending."

Saving is not optional

"We had fires and floods throughout the U.S. and people were waiting on insurance claims. You have to have an emergency fund because you never know when you might need those three-six months of savings on hand as cash," says Kelly.

If mother nature doesn't get you, your employer might. The economy is still not a point where you can assume that your industry, your company is lay-off proof.

Saving for retirement should be a priority, not optional. "Social security is not enough to live on and this year the hot topic in the personal finance world was about people working longer and retiring later because of lack of funds," says Leslie Tayne, an attorney specializing in financial issues with the Tayne Law Group.

Set an annual savings goal

Set an annual savings goal and start with whatever you can. This can mean signing up for, or increasing your contribution to your employer's retirement plan, or setting up an IRA and having part of your paycheck sent to it. Says Linda Descano, president and CEO of Citi's Women & Co., which provides financial information for women, "Remember, just as you don't hit a fitness goal on day one, you don't hit a savings goal on the first day either."

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Shorebreak   |     |   Comment #1
The year 2013 once again confirmed the Federal Reserve's powerful influence on the financial markets of this country and the world. If one were heavily invested in equities they were elated. Those whose primary assets are in deposit accounts were disappointed once again that the historic low rates will continue until further notice. Gold bugs took it on the chin. Lesson: Once again, a truly diversified reduces investment risk.
Anonymous   |     |   Comment #2
Taparing or not, the interest rates will stay low for long time, maybe a decade, why, because of the national debt and the deficits projected to last for more than 10 years.
If the rates on 10 year treasury stay above 3% for prolong period of time, we as a nation can no longer service the debt and most of the tax money will be diverted to pay the obligations instead of the entitlements.
There are no more trust funds for SS or medicare, all are raided and empty and Obamacare will add trillion of dollars in the next decade to the national debt.
Obama and the democrats refuse to cut the spending and want new taxes to distribute the wealth and the word 'cut the spending' crates panic among them.
Someone has to print the money to cover the deficits and the FED is the perfect place to print and to lie abiut it under the name of extra stimulus to help the unemployment and to buy fictitious mortgage backed securities that the banks created out of the defaulted loans that no longer need the servicing of such debt.
The savers and the taxpayers are the biggest losers under this administration.
Shorebreak   |     |   Comment #3
"There are no more trust funds for SS or medicare, all are raided and empty..."

Your contention is not backed by any factual data.

However, unless Congress acts, trouble lies down the road for funding of both programs for future recipients of their earned benefits:

"Projected long-range costs for both Medicare and Social Security are not sustainable with currently scheduled financing and will require legislative action to avoid disruptive consequences for beneficiaries and taxpayers. If lawmakers act sooner rather than later, they can consider more options and more time will be available to phase in the changes, giving the public adequate time to prepare. Earlier action would also provide more opportunity to ameliorate any adverse impacts on vulnerable populations, including lower-income workers and people already dependent on program benefits."
Marko   |     |   Comment #5
As always, shorebreak has to come in defense to the democrats.
Number 2 is more correct than your outdated links that are full with lies and misguidance to avoid panic among the readers and recipients of SS. The democrats are raking so much debt, that we are almost at a point of no return for this country to ever get out of the payments on the national debt. The standard of living is already declining and there is no hope under this government to see a light at the end of the tunnel.
Anonymous   |     |   Comment #28
Well said.
lou   |     |   Comment #10
Shorebreak, as much as I respect your contributions to these forums, I really think your link gives only a partial picture of the SS trust fund.

Yes, for many years revenues have exceeded payouts but that money has not been squirreled away in some bank account waiting to be paid out in the future. Instead, the trust fund has purchased treasury securities with those surplus funds to be repaid from future tax receipts or borrowings.

In reality, we have spent the SS surpluses every year. The creditworthiness of the IOU's in the trust fund is only as good as the ability of future generations to fund these securities. The trust fund having these dollars ready to be paid to SS recipients is a fiction perpetuated by disingenuous politicians.
Anonymous   |     |   Comment #14
Shorebreak, there is no SS trust fund, SS payments are coming from the general fund and that is why Obama and the democrats want unlimited ceiling on the national debt, they are afraid of future defaults, because they don;t want to deal with the problem, got that!
Shorebreak   |     |   Comment #4
"Obama and the democrats refuse to cut the spending and want new taxes to distribute the wealth and the word 'cut the spending' crates panic among them."

Well, can you avoid the hypocrisy in your claim that only one political party is responsible for the increase in debt?

At the beginning of the George W. Bush presidency, the United States debt limit was $5.95 trillion. Despite promises that he would pay off the debt in 10 years, Bush increased the debt to $9.815 trillion by the end of his term, with plenty of help from the four Republicans currently holding Congressional leadership positions: Speaker John Boehner, House Majority Leader Eric Cantor, Senate Minority Leader Mitch McConnell, and Senate Minority Whip Jon Kyl. Database searches revealed no demands from the four legislators that debt increases come accompanied by drastic spending cuts, as there are now. In fact, the May 2003 debt limit increase passed the Senate the same day as the $350 billion Bush tax cuts for the wealthy.

No one funded those "Bush tax cuts for the wealthy". Besides, no prior administration has ever advocated, or put in place, tax cuts during not only one, but two wars at the same time.
Marko   |     |   Comment #6
Typical democrat's denial. Put the blame on someone else and wash your hands from the dirty water. Shorebreak, your comments are moot, you are democrat's loud mouth and stop spreading misinformation, the democrats in congress with Obama want to destroy this country, I guess you can not see that and will blame it on the taxpayer for not paying enough tax, but you defend the out of control spending that the democrats do.
gregk   |     |   Comment #7
What is the "misinformation" in Shorebreak's post?

He accurately suggested that when you look at their actions rather than merely their rhetoric Republians are as much committed to huge unfunded government spending as Democrats are.  They might have different priorities as to where that spending should be committed, but deficit spending has been a bipartisan commitment of both Democratic and Republican Presidents and Congresses increasingly since Eisenhower.  BTW, however ephemeral it might have been, the last balanced budget (and even surplus) was achieved under Democrat Bill Clinton (though bogus inasmuch as it depended on Social Security tax surpluses to achieve).  Shorebreak also might have mentioned George W. Bush's huge (unfunded) expansion of the Medicare program via addition of the "Part D" drug benefit in addition to the Iraq and Afghanistan wars, as well as the TARP bank bailout boondoggle which, in fact, was a Bush administration proposed and sponsored piece of legislation.
paoli2   |     |   Comment #8
Our country going straight to financial Hell in a bread (if we still have any bread left) is definitely not the fault of one political party.  I'm so sick of the Republicans whining that they want to do something but they don't just have the "majority" to get enough votes!  Republican, Democrat, or Pigmy, no one should just sit back and watch it happen without doing something.  I actually heard a politician recently on the news urge Americans to let their senators know how outraged they are because without the help of citizens they just don't think they can put a stop to what is happening.  What is going to destroy our country is not the Republicans or Democrats, it will be the "apathy" of our fellow Americans who are sitting back and watching their once great country being destroyed.  Merry Christmas everyone.  While we can still call it "Christ"mas.
Anonymous   |     |   Comment #12
Don't forget it was under Clinton that the federal income tax on social security benefits was increased for some from tax on 50 percent of one's benefit to tax on 85 percent of one's benefit. I can't remember the exact income thresholds but they have never been increased or adjusted to reflect inflation.  I think Clinton may have signed the change into law in 1993.                                  
Anonymous   |     |   Comment #13
Sorry about that.  My comment should have been in reply to the previous post comment #7.
Anonymous   |     |   Comment #15
Biased post, Obama could have vetoed all that if he did not agree or supported such actions.
Anonymous   |     |   Comment #19
Shorebreak, the democrats in congress wanted loans for the poor (who are not qualified or responsible people) to obtain fraudulent loans from the banks just for stating the income without any proof.
When Bush pointed out that to congress, the democrats accused him of not standing for the poor and discrimination.
Being democrat is one thing, but to lie in their name makes you accessory to cover up and I believe that is the misinformation coming from your mouth.
The democrats are destroying this country that you fought many wars for her and now you are helping the democrats to her demise.
I believe you are a great patriot, but helping one side to take over the other side is a treasonous offense.
Anonymous   |     |   Comment #9
The fed can only control interest rates in the short run. The market determines interest rates and if the money becomes more in demand, interest rates will go up. Also, interest rates have been at historic lows, so all the money the government has borrowed in the past will be paid back at a very low rate.

The purpose of the fed is to try to keep the economy rolling. You may disagree with their policy and they may have created another bubble, but the economy has been steadily growing. Without the fed stimulus we could have seen massive unemployment and businesses dropping like flies. 

Health care has always been expensive. Developing better drugs and technology to help people cost money which is reflected in the health care costs. Everyone should be able to buy health care. It may be that people with more money will have to somewhat subsidies health care for the less fortunate, but so what, are we a nation of greedy people that are unwilling to help the unfortunate?
Anonymous   |     |   Comment #16
You are spreading misinformation like the media do. FEDs can control any term of the interest rates, including the long term, it all depands where the money is going to when created by the FEDs and the Treasury agreements. They can decimate any term on any length of time if they need to.
Anonymous   |     |   Comment #40
#16, you need to take economics 101. If the treasury cannot sell tbills at the current rate, then it must raise interest to make the bonds more attractive. If inflation rears its ugly head, then no one is going to buy treasury bills unless treasury interest rates are raised to account for inflation, otherwise one would have less money when the bonds expire. 
Anonymous   |     |   Comment #43
You are not following the scheme that the FEDs, treasury and the banks do, to shuffle the money as legit creation.
FED creates let say 10 year note as demand to purchase treasury, gives it to the treasury which starts to print the money to cover that note and gives those money back to cover the note, now, since the note is covered, those same money are lent to the banks at 0-.25% interest, The banks use the borrowed money from the FED window to purchase 10 year notes from the treasury which now equals the amount printed and the balance at the treasury is net $0 and the circle continues the next month with new IOUs from the FEDs.
FED piles up this debt as covered and secured from the banks assets, mortgages, long or short term obligations and as perfect cover up for the FED.
The money at the banks serve dual purpose to sell and at the same time to buy treasury and that is how the government creates and pays the bills that we are short about a trillion dollars per year.
If the FED is not doing this, that the taxes must go up or print uncovered money that will destroy the dollar, either way the people are the losers.
Anonymous   |     |   Comment #46
What happens if the interest rate goes up? The borrowers of course will win but who ever is holding the loans  are now the losers. It doesn't seem a good time to hold reits. 

Its unbelievable that the majority of the bloggers are Obama haters. I have no objection to someone who disagrees with the Demarcates,  the Fed or Obama but I would like an intelligent conversion on why one disagrees with their policy and not derogatory remarks which serves no purpose. It just shows the lack of understanding of the current issues by those people. 
Anonymous   |     |   Comment #29
What interest rates are controlled when the FED buys long term treasuries and mortgages backed securities. Why the lending rates on a 30 year mortgages where around 3% for 4 years and who made it happened.
Do you still think the FEDs can not control the long interest rates?
scottj   |     |   Comment #21
Being a saver and taxpayer really does get you ****ed, I removed myself from the taxpayer part and now at least get to keep almost 100% of savings interest. Plus once you stop paying taxes you can get freebies from the Government. Yep...system is broken  
Anonymous   |     |   Comment #26

Take a look at this chart, we were in more debt in the 40s and we came out of that....all you people that think the end is here, can you let me know when it happens so I don't miss it. 
Anonymous   |     |   Comment #27
People like to cry that they aren't making any money on their CDs, instead of coming to a blog and complaining about it everyday these past 5 years you should have been doing something about it.
Anonymous   |     |   Comment #33
#26, Stop with the diversions, those days are totally different than today.
There are 100 millions not working and sucking the system bone dry and the other 100 millions are on perpetual welfare and only 100 millions support the other 2/3 of the nation. The rest are 30 millions illegals in the shadow and waiting to pop on board for more freebies.
Shorebreak   |     |   Comment #36
Yup, "those days are totally different than today". As a result of 'Reaganomics' the top ten percent have 81% to 94% of stocks, bonds, trust funds, and business equity, and almost 80% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.
Anonymous   |     |   Comment #37
So you are saying the % of debt to gdp wasn't higher in the 40s than it is now?
Anonymous   |     |   Comment #38
You're probably right, it is much worse now than back in the 30s and 40s... hehe  Btw, you know the population was much smaller back then so you have to compare in percentages not numbers. You are also probably right that the end of the financial world is coming but could you be kind enough to give me a date so I don't run around like chicken little yelling the sky is falling like some people like to do.
Anonymous   |     |   Comment #42
I want to cut through some of the confusion in the comments above by pointing out the obvious:

Today in America there exists only one political party.  That party is the Democrat Party.  Actions speak far louder than words.  When persons calling themselves "Republicans" behave as Democrats, they are Democrats regardless their protestations.

In today's America we witness emergence of a sort of "political androgyny", with Democrat Party characteristics predominating.  We do still have a handful of genuinely responsible politicians who call themselves "Republicans" only because no Conservative Party formally exists in this country.  Not enough such politicians have been elected to matter or to influence policy in ways that matter.

If thought of a one-party system surprises you, it should not.  One party systems are commonplace in totalitarian countries, e.g., China, Cuba, North Korea, others.  And with the election of Obama and the emergence of the Fed as an uber-powerful instrumentality of government,  we are well on our way.      
Anonymous   |     |   Comment #45
And this is happening because we gave to many benefits to the lazies and cut the incentives to work and create. The democrats created a democracy instead of a republic, which means, the more welfare junkies are there the better chances that the democrats will destroy this country by default from their own policies.
The democrats, welfare, entitled, leeches, illegals and the stupid Americans will always vote for one democratic candidate, while the rest of us fight and divide our votes to  many candidates and become disappointed if our candidate is not on the ballot and then we refuse to vote, which means and auto cast vote for the democrats.
The independent do most of the damage to this country by pretending to not be affiliated with any party, but most of them vote democratic.
And there you have it, divided nation that can never agree to or unite to one single candidate to win an election. There is no such problem at the democrats.
Anonymous   |     |   Comment #47
Yes, no question.  Most Americans today do not want to live in a Republic.  President Thomas Jefferson foresaw this, and warned against it.  President Jefferson did his level best, and his work, aka "The Constitution of the United States of America", held up for a couple hundred years.  Now we see our Constitution crumbling as this country devolves into a democracy, just as you point out.  Trouble is, we cannot survive as a democracy.  Jefferson knew that.  Our leaders today are not as smart as President Thomas Jefferson and his contemporaries.  Those fellows were really quite extraordinary!  Leaders today are mere hacks, and that applies both to Democrats and to those who are more comfortable with the "Republican" appellation.  Today's Conservatives are not hacks, but Conservatism is far too demanding for most people.  Too few genuine Conservatives exist to matter.  
Shorebreak   |     |   Comment #49
Yup, all those "entitled leeches" like military retirees, disabled veterans and civilian employees of the DOD that defended your right to flap your gums in public. You self-proclaimed patriots sure make a mockery out of representative government.
Anonymous   |     |   Comment #54
"and the stupid Americans will always vote for one democratic candidate"

Hmm, interesting thought, except the blue states have most educated and technically advance people,  and they voted democratic. The red states, well, redneck comes to mind, voted republican.

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