One thing that has never made sense to me is playing the lottery.  The odds against you are astronomical, and it’s nearly impossible to win.    So why even bother?

Instead of playing the lottery I’ve started doing something with slightly better odds.  In my free time I like to enter online contests – usually ones found on smaller sites and blogs.  Instead of having odds of 300 million to 1, your odds are often closer to anywhere from 200:1, down to 50:1.
In the past year or so I’ve won the following things through blog contests:

• Nice 18V Cordless Drill
• $100 Amex Gift Card
• $50 Amazon Gift Card
• $50 Smarty Pig  Gift Card
• 2 Books

Now granted, I did enter a lot of contests, but that’s not half bad for leaving a few comments, and subscribing to a few sites via RSS.   You can do the same thing!

Where Are All These Contests?

So how do you find these contests? I’ve found an easy way to find a ton of contests and giveaways to enter, and I’m going to share the secret.  Twitter!  All you have to do is go to twitter and search for contests using hash tags.  For example, two of my favorite keywords to search for are:

• #contest
• #giveaway

When you do those searches you’ll almost always find tens of contests and giveaways to enter.  Got a free 15 minutes? Go to twitter and you can easily enter 4-5 contests in those few minutes.  It isn’t too long before you end up winning one of them like I did (5 times)!

Enter This Contest Now!

To get you started on entering all these contests, here’s a great giveaway currently being hosted by Elle over at CoupleMoney.com.  To celebrate her blog’s 6 month anniversary she’s giving away a netbook computer!  We bought a netbook for my wife a year ago, and she loves it!   I’d love to win one of my own now!

Here’s what she’s giving away:

Asus 10.1″ Netbook – Crystal Black

• Windows 7 Starter
• Processor Type: Intel Atom
• Hard Drive Capacity: 250 GB

Netbook Kit

• Black neoprene bag with pockets for flash drives and small accessories
• Optical mini mouse with USB interface
• Self-powered USB hub distributes power equally among four ports

Contest Rules

All you have to do to get a chance to win is simply subscribe to Couple Money either with email updates or through RSS and follow Elle on twitter. Head on over to the site and there are additional ways to get entries to win!

There will be a drawing to pick the winner on Friday, March 26, 2010, so enter now for your chance to win!  Last I checked you had a better than 70:1 chance of winning!

Even More Contests

Elle’s contest isn’t the only one going on right now.  Here are some other contests you can check out, enter and hopefully win!

• This site is giving away $50!  $25 will go to email newsletter subscriber #500, and another $25 will go to one random subscriber once we’ve reached 500.  Subscribe now to win!
• Steve at My Wife Quit Her Job is giving away an HP iPaq Glisten Smartphone.
• Get Rich Slowly is hosting a video contest to celebrate the site’s 4th anniversary and the release of JD’s book, Your Money: The Missing Manual. Head over to read the rules. There are some pretty good prizes.
• Jenn at Frugal Upstate is giving away a copy of $3 Low Calorie Meals Cookbook by Ellen Brown.

As always you can also head over to twitter, and search for contests as well.

Do you have other ways to find contests to enter?   Have you won any contests this year? Tell us about it in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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Good intentions can ruin you financially.

People who are looking for someone to co-sign a loan for them often look for the nicest, sweetest, and gentlest person they know well.  If you have been asked to co-sign for a loan, congratulations on being one of the nicest people in the world.  But, now it is time to do the right thing.

No matter how long and tragic story their story is, you need to remember that co-signing a loan is dangerous.

Why Is Co-Signing Dangerous?

• The lending conditions are a high risk: If someone is trying to get you to co-sign with them, it is because they could not get a loan from a bank or other financial institution.  This means that those organizations consider this person too high of a borrowing risk.  When someone cannot get out of debt they are a credit risk.  If you look at how much money credit card companies are willing to extend to people, I take it as a very bad sign when a bank says someone is not lender worthy.  I would not lend to someone who is not eligible for a bank loan.  Best case scenario, I might point them in the direction of Lending Club, but depending on the situation, that could cause more damage than help.
• When you co-sign a loan you are putting your own funds on the line:  When you co-sign a loan, you are committing to paying back all of the money, interest, payments, and fees if the other person does not.  You are assuming complete financial liability for this transaction.  It is your loan that you are asking someone else to repay.
• The co-signing relationship puts a friendship on the line.  Best intentions do not pay bills.  If a person cannot afford to make their payments, what do you think will happen to your relationship with that person?  When a person who you cosigned for does not pay, you will likely feel hurt, violated, and taken advantage of,  Your kind gesture may not be returned in kind.  As a result, it will be nearly impossible to maintain a healthy relationship with someone after they default on a loan you cosign.  Is that a risk you want to take with a good friend or family member?

Biblical Teaching on Co-Signing Loans

Here are three of several passages from proverbs on the topic of pledging for another (what we would call co-signing):

My son, if you have put up security for your neighbor, if you have struck hands in pledge for another, (Proverbs 6:1 NIV)… Free yourself, like a gazelle from the hand of the hunter, like a bird from the snare of the fowler. (Proverbs 6:5 NIV)

A man lacking in judgment strikes hands in pledge and puts up security for his neighbor. (Proverbs 17:18 NIV)

Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you. (Proverbs 22:26-27 NIV)

Each of these passages make it clear that co-signing on a loan is not a biblically advisable action.

Why Do People Still Co-Sign?

1. They want to help someone else.
2. They don’t understand what they are committing to.

Are you really blessing someone when you co-sign for them?

I tend to think there is little benefit from borrowing money.  Borrowing money you cannot afford to repay is even more nonsensical.  By becoming a barrier to someone borrowing money, you are actually blessing them more than if you enable them to get a loan they cannot afford.

I know people break the rules all the time so…  If you are going to co-sign either way, be sure the item being purchased in the loan is in your name.

Here’s why:

• You’ll have access to the account information so you’ll know if payments are being made.
• You’ll be able to repossess and sell the item.
• You significantly minimize the risk (though it is still risky and a bad idea).

Have you ever co-signed a loan?  Would you do it again?  Any other dangers I forgot to mention?  Tell us your thoughts in the comments.

This article was written by Craig Ford. Craig is a fulltime missionary in Papua New Guinea who writes Money Help For Christians and Help Me Travel Cheap, a frugal family travel blog. He is the author of Money Wisdom From Proverbs, has a Masters of Divinity degree, and (most importantly) eats homemade pizza with his family every Friday night.

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Spring is here again, and so is Free Money Finance’s March Madness!  Last year I was lucky enough to come out on top as the winner, and this year one of my posts has somehow found itself  in the running for top personal finance post of the year again!    There have already been 2 rounds of voting, and we were able to advance against stiff competition.

Round 3, or the Sweet Sixteen,  launched today!  If you feel so inclined, please head on over to Free Money Finance and vote for me, and help put me over the top!  Just vote for my article, Managing Your Money Is An Exercise In Both Mathematics And Psychology (Psych) in the comments.

• Free Money Finance March Madness – Sweet Sixteen

My Charity I’m Playing For

In case you’re interested, I’m playing in this game so that I can win money for my charity, Second Harvest Heartland. Second Harvest is a great organization, and for each $1 donated, Second Harvest Heartland will distribute more than $9 worth of grocery products to those in need in our communities.

First place in the contest means $500 donated to the charity of the winner’s choice, all the way down to $100 for fourth place.

That means a 1st-4th win for this blog would help donate anywhere from $900-$4500 worth of groceries to needy families!  Help me make that happen! Vote now!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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This article was written by John Frainee, author at TheChristianDollar.com. His goal is to provide biblical financial principles that encourage people to live healthier lives. Beyond personal finance, John enjoys spending time with his wife and two crazy cats, playing a good game of Monopoly, and reading anything he can get his hands on. You can subscribe to his articles for free by clicking here.

There’s no doubt we live in the information age. I’ve heard it said that the average American consumes several gigabytes of information a day. With all of this knowledge at our fingertips, it can be difficult to find solutions when everyone is pointing in a different direction. Learning to invest can be a difficult process for those who haven’t had a formal education. I know this because I haven’t had a formal education in investing, but I have found some great methodologies for getting up to speed quickly. In the beginning, I made several mistakes that I wish I could have avoided such as single stock investing. By following these three simple tips you’ll be well on your way to wise investing.

Three Tips for Beginners

1. Meet with the professionals. Look up a few investment brokers in your area. Make a list of three offices to visit. Give them a call and let them know you are new to investing and would like to sit down and have a free lesson on what investments are and how to use them wisely. Most brokers will be willing to do this. Do not invest anything until you have met with these three brokers and have a few good perspectives on growing your money.
2. Follow biblical principles on investing and finance. Jay Peroni wrote a great guest post on BibleMoneyMatters.com regarding biblical finance and investing. Biblical principles on diversification, seeking advice, being diligent, and screening your investments will propel you to success.
3. Take your time and build a solid foundation! Don’t rush into an investment strategy. It is unwise to invest your money into something you don’t fully understand. If you can’t explain to a layperson what you’re investing into and how it works, you should probably hold off investing until you can. Also, don’t begin anything until you put into practice some foundational elements of financial freedom. A strong foundation will ensure your investments are safe from collapse.

Plans fail for lack of counsel, but with many advisers they succeed. -Proverbs 15:22 NIV

If you have the money to obtain a formal education in investments, you might consider signing up. But remember, investing does not require years of training. You’ll learn with time. The key is to be proactive and seek out solid financial advice before diving in. Don’t let the excuse of not having a formal education hinder your investing. Everyone needs to save for retirement and pursue a sound financial footing. Surround yourself with knowledgeable, caring people and you’ll be on your way to investing with confidence. Investing is a powerful vehicle for building wealth. The ability to compound your money with time is a mathematical wonder. After you have destroyed your non-mortgage debt, built your fully-funded emergency fund, and obtained the know-how on investing, you are ready for wealth-building.  Are you ready?

This article was written by Guest Poster. We love guest contributors here at Bible Money Matters. Would you like to write for us as well? Please check out out our guest post submission guidelines and then contact us with your post idea!

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Sometimes being the owner, operator, writer and editor of a blog isn’t easy.  Most of us are writing about personal finance because we have a passion for the subject.  Blogging is a great way to share information to help others and provide ideas or opinions around a specific topic.

But sometimes, as a weblog owner, you have to step away from blogging to operate and maintain your blog.  For me, this proved to be a big learning experience recently.  I thought I would share more about it in hopes to help others who might encounter similar challenges in the future.

What Happened To My Blog?

Well, to keep it short, I was simply working in the WordPress administrative module editing and cleaning up some posts for better readability.  After making a few updates, my posts page refreshed and showed a total count of 0.  After refreshing the admin page a few times and no luck I visited my website and found it to be missing most of my content and displaying older posts (nothing recent).  I have over 200 posts, so obviously, something was wrong.

My Previous Webhost Was No Help

I knew I didn’t do anything to result in the issue just by updating a few posts, so I contacted my web host.  And this is where my problems got worse.  Without giving you all the details, let’s just say they weren’t helpful and did everything they could to point the finger back at me.  I spent hours on the phone with them and much of the time sitting on-hold.  One time it took over an hour to get through to speak to them.  It was a painful and frustrating customer service experience.

Time To Make A Decision

Fed up with poor support, bad customer service and ready to have my blog up and running again (now down for 2 ½ days), I felt I had not choice but to find a new host.  To me it was also the only way I could tell if my problem was with the host or my actual website.  As a side note, I had been thinking about moving for a while because of what I felt like were performance issues with my weblog.  I noticed other WordPress blogs screaming fast that seemed to have similar content, images, etc. as me on their pages.

Moving Hosts

After reading Pete’s ebook, Blueprint for How to Make Money with a Blog, I knew he was using Media Temple and had a handy coupon.  Trusting Pete, I decided to give them a try.

At a high level, here is what I did to get moved over to my new host:

1. Signed up at Media Temple (I chose the dedicated VM option)
2. Contacted support to seek help in setting up the basics on my new server (domain, user, creating a database and uploading my back up).  By the way, I was on-hold about 5 minutes which was very nice compared to over an hour.
3. Downloaded all of my WordPress files to my desktop using my FTP client and then uploaded to my new host.
4. Changed my wp-config.php file to point to my new database and input my new database username and password.
5. Through Media Temples test tool, I was able to view my site before changing my name servers (see Pete’s eBook for more about name servers).  When tested, I noticed all of my articles were displaying again.  Yay!  This confirmed the problem was with my previous host’s environment.
6. I signed back into my previous host and changed my name servers to point to Media Temple’s name servers and waited about a 6 hours.  Note:  sometimes this takes 24 hours according to Pete’s eBook.

A Few More Problems

Okay, with the worst behind me and seeing I had a working weblog again, I ran into a few more set up related issues with WordPress.  You can read about these issues in the resources section for WordPress set up issues.

Lessons Learned And A Great End Result

So, with any trial there are lessons that can be learned.  More than just learning ad-hoc on how to move a weblog, there were some other valuable take-aways you need to be aware of if you’re operating your own blog or website.

Know Where Responsibilities Begin And End

If you’re running a blog, make sure you know the scope of responsibility for you and your webhost.  While my previous webhost was completely unhelpful, most of them will not help you resolve application specific configuration issues.  They are typical responsible for the environment.

Identify a few WP Consultants Just In Case

It may be a good idea to identify a WP consultant and possibly someone who can help you with MySQL if ever needed.  I have no idea today what caused my weblog to crash, but again I can only assume it was a webhosting problem.  Regardless, it might be a good idea to find a few companies that can provide WP consulting services should you need some hands-on help.  I haven’t done this yet, but considering it.  The WP forums are also a good place to look for help.

You Probably Get What You Pay For

As with many things, sometimes paying more means a more quality product or service.  I’m paying more, but very happy.

Don’t Be Afraid To Escalate Or Switch Hosts

If you’re talking to anyone in customer service about a problem, don’t hesitate to escalate if the customer service representative isn’t helpful.  If the escalation doesn’t work then consider making a move.  While it was a learning curve, it was the right decision.

Always Have A Backup!!!

I can’t stress this enough.  I wouldn’t be up and running today if I didn’t have scheduled back up sent to me everyday.  Before reading Pete’s eBook, I was having a back up sent to me once a week.  No, have one sent to you everyday!

Push Through It

I enjoy blogging so much I was prepared to start over if I had to.  The interesting thing about such situations is sometimes they get your creative juices flowing.  I completely prepared myself to have to start over again.  I began asking myself what I would do differently and began brainstorming ideas.  The cool thing is I’m up and running and can leverage some of those ideas now.  But remember; don’t be intimidated about what you don’t know.  The internet has a wealth of information and Google became my best friend.

Have you had a similar experience you’d like to share?  Do you have any additional tips for others operating their own weblog?

If you would like to know more about some of the issues I encountered and how to resolve them, feel free to contact me.  Obviously, I didn’t mention my previous host in this article because some people might have a good experience with them.  It just didn’t work out for me.  However, if you’re interested to know who they are feel free to contact me directly.

Helpful resources

• Blueprint for How to Make Money with a Blog
• WordPress.org Forums
• Media Temple
• Backing up and restoring your database
• Installing WordPress
• Migrating your website to a dedicated virtual server

Resources to resolve WordPress set up issues

• Weird characters in posts
• Can’t upload files and pictures
• Missing .htaccess file
• Links not working

This article was written by Jason Price. Jason Price is a personal finance writer at One Money Design and a Money Map Coach. His mission is helping people achieve true financial freedom. He provides practical tips for managing money wisely and shares Biblical financial principles. Beyond personal finance, Jason enjoys spending time with his family and playing soccer. You can also find him on Twitter and Facebook.

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There’s been a lot of talk about Roth IRAs this year. Some folks still aren’t sold on them – and of course no one particular investment vehicle is right for everyone.

But, for the right person, the Roth IRA is a great way to save some additional cash for retirement! Here’s three important things to remember about investing into Roth IRAs.

You Can Access Your Principal At Any Time

This is a huge advantage! Your contributions are available to you at any point in time regardless of age and regardless of how long the money has been in the account.

Don’t confuse this with earnings. Only your principal is available, not any of your earnings. Your earnings must stay in there until age 59 1/2 to avoid the 10% premature distribution penalty.

The great thing about this is that it makes the Roth a viable long-term investment vehicle, but also gives some flexibility in terms of needing to access the money for an emergency.

Of course, don’t start the Roth with this idea in mind – in other words, emergencies should be handled from your emergency fund, not from your Roth! But, it is nice to have this in your back pocket if you really were in a desperate situation.

There Are Income Limits

Yes, unfortunately there are income limits to these things. Of course, Uncle Sam doesn’t want any one and every one having the ability to max fund these things so they set limitations.

Generally, the IRS will phase you out of your contribution or reduce the amount you can put in if you make between two set amounts and then they will deny you a contribution altogether if you make too much.

In 2010, your Roth IRA contribution limit is reduced – or phased out in the following situations.

• Your filing status is married filing jointly or qualifying widow(er) and your modified adusted gross income (AGI) is at least $167,000. You are phased out completely if your modified AGI is $177,000 or more.
• Your filing status is married filing separately, you lived with your spouse at any time during the year, and your modified AGI is more than -0-. You cannot make a Roth IRA contribution if your modified AGI is $10,000 or more.
• If you’re a single filer and your modified AGI is at least $105,000, you’ll be phased out up to $120,000. You cannot make a Roth IRA contribution if your modified AGI is $120,000 or more.

You Do Not Get A Tax Benefit Up Front

This one is pretty basic, but it bears repeating. It seems like a lot of people ask about how the Roth IRA works. The thing to remember is that your contributions are NOT tax-deductible. You do not realize any tax benefit up front.

So, someone who contributes to a traditional IRA instead of a Roth IRA (provided they meet certain qualifications) gets an immediate tax savings equal to the amount of the contribution multiplied by their marginal tax rate while someone who contributes to a Roth IRA does not get this immediate tax reduction.

Contributions to a Roth IRA do not reduce a taxpayer’s adjusted gross income (AGI). Compare that to a Traditional IRA where contributions reduce a taxpayer’s AGI.

Because you are using after-tax dollars for contributions, if you fund a Roth while in a moderate or high tax bracket, you will likely pay more income taxes on the earnings used to make the Roth IRA contribution than a Traditional IRA contribution.

This is simply because, as stated, contributions to traditional IRAs or employer sponsored tax deductible retirement plans result in an immediate tax savings equal to the taxpayer’s current marginal tax bracket multiplied by the amount of the contribution.

If you think your income in retirement will be lower, or that you will be in a lower tax bracket than what you are in right now, then that means you may be paying more tax on that money now than you would in the future. The higher your marginal tax rate, the greater the disadvantage.

Don’t forget though, that if you don’t diversify yourself from a tax standpoint you could be creating a huge retirement time-bomb for yourself!

What are your thoughts – Do the advantages of the Roth outweigh the disadvantages?  Tell us your thoughts in the comments!

This article was written by Jason Topp. Jason writes at Redeeming Riches where he helps others Restore Their Money and Renew Their Minds. Subscribe to Redeeming Riches to catch more of Jason's posts!

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When we took the Dave Ramsey Financial Peace University class a year or two ago we started saving up our 3-6 months of expenses as is recommended in baby step 3 of the 7 baby steps. Over time we got our emergency fund fully funded up to 6 months of expenses. With the economy tanking, having an uncertain job situation and now expecting our first child we felt more comfortable having an even larger emergency fund. So my wife and I kept building the account and now have a 9 month emergency fund saved up. That should be enough to cover all our expenses and then some for 9 or more months.

This is definitely a considerable amount of money to have just sitting around, and up until now this money has been sitting in a high yield savings account at Bank Of America, earning next to nothing in interest, about .50%. Granted rates at other banks aren’t anything to write home about, but you can find a rate a whole lot better than .50%. Originally the account was an account with Countrywide Bank, earning about 1.1% interest, but when Bank of America bought them out last year, the account changed, and the interest dropped. Since then we’ve been shopping around for the best rate.

This past week I closed the account with BOA, and got a check for the account balance. I’ll be depositing that in my main checking account until we complete opening our new high yield savings account. We’ve narrowed our choices down to a few different accounts which seem to have some of the highest rates, while still getting decent reviews:

• Everbank Savings Account: My Review
• Ally Bank Savings Account: My Review
• Bank of Internet Savings Account

Currently we’re leaning towards the Everbank account as it has one of the highest rates (1.51%) for the first year, in addition to a bonus rate of 2.25% for the first 3 months. We’ve also heard decent things about them, so we’re willing to give them a try. The only downsides we can see? You have to have a higher balance (above $5000) to avoid fees on the account, and the opening balance has to be at least $1500. Since those amounts are not an issue for us, and they have one of the higher rates, we’re probably going to end up opening one of these accounts.

If any of you have experience with Everbank, Ally or Bank of Internet, I’d love to hear your feedback in the comments this week – before we finalize a choice! Let us know what you think!

Great Reads From This Week

It’s been a while since I did a roundup here on the site, so I thought that today I would give out some link love. Lots of great reading out there in the PF blogosphere!

• Refinance Home Loans – How One Call Saved Us Over $41,000 (We saved almost $20,000 when we refinanced!)
• Why Health Savings Accounts Are Great (My employer may be moving to these next year)
• Should You Invest With Lending Club? (My answer is yes, but diversify. )
• How to Save Money When Moving Your House (I could have used this post when we moved a few years ago!)
• Seven Ways God Works Through Our Finances (A good look at the ways that God can use money in our lives)
• Why I Bought A Portable DVD Player For My Kids (I’ve got one, so when our child comes of age, we’re all set!)
• Free Office Space: Use this Money Tip to Get Free Office Space Anywhere in the World
• How to File a Federal Tax Extension (Hopefully I won’t need this, but you never know!)
• Why the Gym is a Waste of Money (I prefer frugal exercise options as well!)
• 10 Benefits of Raised Garden Beds (I’m not much of a gardener, but everyone seems to love it. Maybe I should give it a try!)
• Financial Risk Test. (How to create and take a financial risk test, and what you need to do to mitigate your financial risks.)
• Interview with Adam Baker on Unautomating Your Finances (check out my own review below under e-books)
• Best Index Funds: Does Vanguard Still Rule The Roost? (When we finally start investing, I like the idea of index funds)
• How to Make a Budget (the unboring way)
• There is a time limit on filing an amended tax return
• QuickBooks Accounting Software = Small Business Relief (I probably need something like this)
• Great Financial Advice From The In Flight Safety Handbook
• Manners And Money Series (An interesting series from Lakita!)
• What’s a Good Credit Score ? Should You Care and How to Check It
• Change Banks in 5 Easy Steps
• 28 Tips to Save Money on Car Expenses and Save Thousands

Ebooks Galore!

I launched my blogging e-book a couple of weeks ago, and I’ve been getting a lot of positive feedback, thanks everyone! If you sign up for our email newsletter, you can save $7 off the normal price, plus we’re giving away $25 cash to subscriber number 500 (should be happening soon!). My e-book isn’t the only one launched recently, however. Check out these other great e-books!

• Blueprint For How To Make Money With A Blog
• Unautomate Your Finances: A New E-book To Help You Find Your Financial Focus (Written by Adam Baker at ManVsDebt.com)
• Short Term Missions Handbook (Written by staff writer Craig Ford of Money Help For Christians. A handbook for missions!)
• 52 ways To Make Extra Money E-book (Written by PT over at PTMoney.com. I’m in the e-book!)
• Money School For Couples (More than just an e-book, a financial program for couples!)

Ok, so there you go, tons of great reading for the coming week. Go forth and read!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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If you’re a self employed person or are looking at taking the plunge and becoming an entrepreneur, one thing you have to consider is how you will save for retirement.  Since you won’t have the option of a 401k, there are several other retirement account type options that you will want to think about using.  Among them are:

• SEP IRA
• SIMPLE Plan
• Solo 401(k)
• Keogh Plan

Today I want to look at what many consider one of the better options for tax deferred investing for self employed individuals, the SEP IRA

What Is A SEP IRA?

First of all, let’s get the definitions out the the way.  What does SEP IRA stand for?  When I first started researching the topic I was reading lots of articles talking about how self employed individuals were taking advantage of the accounts, so I assumed it meant “Self Employed IRA”.    After reading up on it a bit more I realized that my assumption was wrong.  SEP IRA actually stands for Simplified Employee Pension Individual Retirement Arrangement.  It is basically an easy way for small businesses to set up a retirement account option for their employees with minimal administrative costs or paperwork.

The SEP IRA is pretty much like a traditional IRA account, although it does have some differences, especially as it relates to the contribution limits.  The contribution limits for a SEP IRA are higher.

SEP IRA Rules

As an employer there are rules and regulations you need to follow when you open a SEP IRA.  Most of the rules that apply to Traditional IRAs also apply to SEP IRAs.  Among the SEP provisions:

• All eligible employees must be provided with plan benefits, and a separate IRA account.   If you are self employed with no employees besides yourself, it isn’t an issue. If you have employees, it is something to consider.
• Part time employees who are 21 years of age who have worked 3 out of the preceding 5 years, earning $500 or more annually will be eligible.
• Only the employer can contribute to the SEP IRA.  If you work for a company that provides one, only your employer can contribute to the account.
• You have until the tax filing deadline of April 15th to establish and fund your SEP IRA.
• Withdrawals from a SEP IRA are treated the same as withdrawals from an IRA account – with a 10% early withdrawal penalty, and taxes charged at your current rate.
• Only income from the business can be contributed – you can’t contribute money from your day job if you have one.

SEP IRA Contribution Limits

Contributions to the SEP IRA are subject to yearly limits, however, they are higher than many other similar account types.  For example, for tax years 2009 and 2010 you can contribute up to 25% of an eligible employee’s compensation, up to a limit of $49,000.  Extrapolated from the 25% rule the income threshold for a SEP IRA is then $196,000.

Example: Let’s say you make $100,000 a year and you’re self employed.  Under a SEP IRA you would be able to contribute 25%, or $25,000 to your plan.

No catch-up contributions are permitted for older employees.

Benefits Of The SEP IRA

There are several benefits to having a SEP IRA account.  Among them:

• If you are an employee at a small business that has a SEP IRA plan, you are 100% vested in the contributions your employer makes, right away.  The money is yours!
• Tax deferred investing!
• High contribution limits for self employed individuals.
• Easy to setup.  Usually can be done simply by filling out IRS Model Form 5305-SEP
• Less paperwork and administrative costs after the plan is setup.
• Flexible annual contribution obligations – a good plan if cash flow is an issue.  You can contribute 10% one year, and then 5% the next if you want.

Do you contribute to a SEP IRA as a self employed individual, or do you have one through an employer? How has it worked out for you? Have we missed any important details about the SEP IRA? Tell us about it in the comments.

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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Since I found out that I’m soon going to be a father, I’ve been thinking a lot about how I’m going to provide for my family in the event that I were to die, or to become disabled. A week or so ago I wrote about how I’m currently looking for the best term life insurance for my situation. I’m also looking into buying some good long term disability insurance as well because if I become disabled, I won’t receive life insurance, but I’ll still need to provide for my family.

Today I thought I’d talk a bit about long term disability insurance, how it works, what to look for, and what kind you should buy.

Before we get started, I thought I would share this audio clip from the Dave Ramsey Show. In the clip Dave Ramsey talks with a caller about why long term disability insurance is so important.

[See post to listen to audio]

Long Term Disability Insurance – Do I Need It?

In my opinion everyone should probably consider buying long term disability insurance.   If you were to become disabled during your working career, you will still have expenses to pay for.  If, however, you no longer have an income to rely on, you’ll be left high and dry.  That’s where long term disability insurance comes in.

While I was doing some reading up on long term disability insurance I found an article on GoodFinancialCents.com that quoted the following stats:

From the Life and Health Insurance Foundation for Education, November 2005:

• If you are between the ages of 25 and 55, you are more likely to become disabled that die
• 60-percent chance at ages 30, 40 and 50 that one in a group of five people will suffer a long-term disability before age 65 .
• There is a 1 in 3 shot that before they age of 35, that will be disabled for more than 3 months during the rest of your working days.

Another study sponsored by the Social Security Administration found that:

• A 20-year-old worker has a 3-in-10 chance of becoming disabled before reaching retirement age.

The numbers should be a sobering wake-up call that disability insurance really is an important part of a financial plan.  So, where should you look for coverage?

Where Do I Get It Disability Insurance?

There are a variety of places that you can go to get disability insurance, and depending on who you buy it through your rates can vary drastically.  Some of the options:

• Employer:  Many employers offer a company sponsored group plan that you can take advantage of.  Because the insurance is offered at group rates you can save quite a bit.  The options can be limited, however. For example, at my place of employment they only offer short term disability insurance, and it is tied to employment.
• Professional Associations:   If you’re a part of a professional group or association, often they offer a discounted group rate on insurance of different kinds, sometimes including disability insurance.
• Independent Insurance Broker Or Agency:  If you don’t have an option to buy through your work or other group, you can get insurance through an independent agency or broker.  AccuQuote.com, Insureme.com and others have options that you can look into online.

Do your homework and you can find a policy that fits your needs, and that doesn’t break the bank.

How Much Disability Insurance Coverage Should I Get?

One thing you’ll need to figure out when buying long term disability insurance is how much money you’ll need to cover your expenses if you do become disabled.  If you’re already doing a zero based budget, you probably know what your fixed monthly expenses are.  Based on the figure you come up with you’ll need to find a policy that covers that amount.

Long term disability insurance plans are usually limited to 75% of your income, but different policies will have different payment amounts. Be sure to find out what your policy pays out, and if it isn’t enough to cover your expenses, you may want to keep looking, or buy additional coverage.

If your policy pays out at 75% of your income and you made $4000/month before your disabling event, you would then receive $3000/month from your insurance policy.

You will pay a premium on your policy that is based on your age, occupation, health and other factors. You may need to undergo a physical exam before a policy is written.

Many policies are also capped at a certain payout amount, so be sure to ask about that when shopping around.

Disability Insurance Elimination Period

The cost of your insurance policy will depend on a variety of factors, one of which is the elimination period.  The elimination period is how long you choose to wait before receiving benefits.  For example, if you choose a policy that has a 3 month elimination period, you’ll probably pay more than if you have a 6 month elimination period.  If you’ve planned ahead and have an emergency fund of 3-6 months as suggested by Dave Ramsey and others, you should be OK in choosing a longer elimination period for your disability insurance, and in return have lower rates.  Choose the highest elimination period you feel comfortable with.

How Is Disability Defined By Your Policy?

When you buy your insurance policy you need to be sure what type of a policy you’re buying, and how disability is defined b your policy.  Depending upon the policy you may or may not be covered for certain disabling situations.  Here are the different definitions of disability:

• Own occupation. The most comprehensive definition of disability, this type of policy pays benefits if you aren’t able to perform the material and substantial duties of your own occupation due to sickness or injury, even if you are able to do some other kind of work.  It’s a common misconception that this type of insurance always costs more, which isn’t necessarily the case (although it may be)
• Income replacement. Policies with income replacement coverage define disability as sickness or injury that doesn’t allow you to perform the duties of your occupation and typically stipulates that you are not currently engaged in any other occupation.
• Gainful occupation. These policies define disability as the inability to perform the material and substantial duties or your occupation, or any occupation for which you are deemed reasonably qualified by education, training, or experience.

Be sure you know which type of insurance you’re buying when you look around. Personally I’ll be looking only for a policy with “own-occupation” coverage.

When Should I Buy Coverage?

Realistically you can have a disabling event at any time in your working career.  Looking at the stats we quoted earlier in this article should really be an eye opener, I know it was for me!  In my opinion it’s a good idea to have long term disability coverage as soon as you start working, and especially if you have others who are depending upon your income.

What do you think about long term disability insurance?  Do you currently have coverage? If so, what kind do you have?  If you don’t have coverage, why not?  Tell us your thoughts in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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Over the past year I’ve watched as Baker over at ManVsDebt.com has had a meteoric launch to become one of the premier voices in the blogosphere in several different niches. He is a recognized personal finance writer, landing a staff writer position at one of the premier personal finance sites, GetRichSlowly.org. He writes about his family’s travels as they globe trot – from New Zealand to Australia to Thailand – in the past year. His writing has been inspired, and lots of people (myself included) have come to enjoy his writing immensely.

One thing I know about Baker is that he is a genuine person, and his personality and real life experience really speaks through his writing. He has been open about his family’s own financial struggles, and how they rose above them.

New E-book Called Unautomate Your Finances

Today Baker is launching a new venture, an e-book called Unautomate Your Finances: A Simple, Passionate Approach To Money. The e-book has an interesting title, and one that I really didn’t agree with at first because I didn’t really understand what it it was all about.   I mean, I’m a big proponent of automating parts of your finances, making it easy and automatic.  Why would you want to “Unautomate” it?

When I actually started reading the e-book, however, I realized it wasn’t so much about not automating your finances as it was about becoming more involved and more intentional with your money.  It’s about making conscious decisions that you can sustain over the long term – focusing on your goals and keeping things simple.

Baker argues in his e-book that we have become almost too automated in our approach to our money.  Technology has made it easy to put little thought into why we’re making the decisions that we are, and because of it we often don’t think carefully about the choices that we’re making. The e-book explores why it’s important to simplify, focus and be intentional about our money, and then goes through step by step explaining how to do it – while giving examples of how Baker did it in his own life.

Baker’s writing is entertaining, engaging and and well reasoned.   It’s also sprinkled with bits of wisdom from the likes of Albert Einstein, Billy Joel and Tyler Durden. That’s quite a diverse group, how could you not love that?

What’s Included in The E-book Package?

Having launched my own e-book a couple of weeks ago I know how much work goes into creating one, and Baker really has outdone himself with all of the materials included in this package.  From his site – these things are included:

• A comprehensive 83-page eBook, featuring “The Unautomation Theory”, “The Science of Unautomation”, and “Applying Unautomation”. Over 25,000 words dedicated to providing everything you need to adopt a simple, passionate approach to money.
• A 27-minute video interview with Leo Babauta of ZenHabits.net. Baker interviews Leo on how he applied the principles of simplicity and minimalism to dramatically turn around his financial life.  Powerful insights from a leader in simplicity, blogging, and productivity.
• A 29-minute audio interview with J.D. Roth of GetRichSlowly.org, one of the top personal finance blogs on the web. J.D. joins Baker on a call to discuss his own financial recovery story and what it’s like now that he’s in the “third phase of personal finance”.
• A 2-page, custom-designed PDF version (printable) of the minimalist budgeting system discussed in main guide.
• A bare bones Excel template for those who want to take the minimalist budgeting system digital.
• Free Extended Updates! Over the next 6 months, I’ll be releasing sample case studies, FAQ’s, and exclusive interviews… for free!

In my opinion, even without all the extras the e-book is well worth the small price.  Add in all the extras and it really is a great deal!

I highly recommend this e-book from ManVsDebt, and suggest you check it out on his e-book page.    I do have affiliate links on this page, and will get a commission if you choose to buy through my links, but I only recommend the e-book because I’ve actually read it, and thoroughly enjoyed it. Find out more details by clicking on the banner below:

If you end up buying the e-book, please let us know what you think of it in the comments!

This article was written by Peter Anderson. Peter Anderson is a Christian, husband to his beautiful wife Maria, and loves reading and writing about personal finance. You can find out more about him on the about page or check out his other sites at http://www.quicktofit.com and http://www.logosforwebsites.com. You can also follow him on Twitter at @moneymatters.

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