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Colleen's Corner

Asset Allocation

Often financial "experts" make asset allocation difficult to understand. My goal in this series of articles is for you to understand asset allocation thoroughly, in an easy to understand format.
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How to Save
$100 a Week
In Three Easy Steps

Dear Smart Saver,

Well hello folks! With the healthcare debate in full swing and politicians fighting it out, something came to mind. It's time to start taking care of ourselves. I'm going to do my level best on providing ways to add more money to your retirement fund.

First up are three easy ways to save $100 a week. You can take that extra money you're blowing and stick it in your 401K, IRA or Roth IRA. As long as the green is piling up for your retirement, I'm happy!

Three Powerful Steps

Step #1: Don't Eat Out

Okay, we all eat out. Special occasions come up and sometimes those commercials practically push you out the door. But when ya do the math on that dining bill, reality hits like a heart attack. When my wife and I used to go out every chance we got, here's what a typical bill looked like.

The Cliff House: $79.00
Salty's Seafood & Grill: $125.00
AMC Theaters: $48.00
Total: $242.00 (ouch!)

In 2008 the average household spent $4,932.00 on eating out. I have a strong feeling we were in that crowd.

I'd put some others on here, but I'm tired of puking. Here's my point. We realized were going out 2-4 times a week. Can you imagine how much that would've helped our 401K's? Now we've shrunk our eating out bill to less than $200 a month. At one point it reached $850. When you limit or eliminate eating out your money will grow.

Step #2: Catch the Sales

I'm a big believer in something bigger than a garage sale. Have you ever been to an estate sale? Man, the deals are endless! Instead of financing that living room set you want, try this on for size. You can head to an estate sale and nab a couch for $100 or less. Estate sales have everything from dining room tables to bedroom sets. Check your local paper for times and dates. The best ones are held on the weekends. Don't hesitate to clip coupons and use those deals while grocery shopping. My wife and I save a bundle shopping at Albertsons.

Step #3: Carpool

Do you have the gas price blues? See if your employer offers a ride share program. This can cut your gas bill by 50%. If not find a coworker you can carpool with. Both of you will enjoy the savings.

Now let's say all of this saves you $800 a month. You decide to put in $100 a month into your 401K on top of your normal contribution. We'll take into consideration an employer match, etc. Here's what can happen in just a year:

Current 401K Balance: $2,000
Current Annual Income: $40,000
Annual Salary Increase: 3%
Salary Withheld for 401K: 6%
Employer Match: 50%
Frequency of Match: 6%
Years to Fund: 1
Compounded Interest: 9%

In just one year you'll pull down $5,877.46. But I didn't calculate the extra $100 a month. Now let's compound that extra $1,200 a year by 9%. That's an extra $2,280 dollars added to your 401K. Through your own efforts your 401K will grow from $5,877.46 to $8,157.46 in one year. Not bad for saving a measly $100 a week, right?

Taking the time to save money will literally add to your retirement fund. Use these tips and let me know how much you're saving. If you're racking up triple digits in saving, put at least $100 a month into your 401K.
Keep saving for a glorious retirement!

Clyde McDade is a Financial Copywriter. He's the author of the upcoming E-book, "How to Grow More Money for Retirement and Your Child's College Fund." He can be reached at accelcs@comcast.net.