You probably know about Roth IRAs (post-tax dollars grow tax-free) and you probably know about 401(k)’s (pre-tax dollar growth to be taxed on disbursement), but what if the two gave birth to a kid? Then you’d have the new Roth 401(k) (it may be renamed to the Roth ESRA) that will come screaming out the gates January 1st, 2006 (the plans were authorized all the way back in 2001). There are still some details to be ironed out by the IRS in the months to come but below I’ll detail some of the key features that everyone is sure about and how this option (which can be used in addition to your current retirement accounts) may be a good one for you.

This article was originally published two months (5/18) ago but I pushed it up to the top since CNNMoney had a headline article about these new plans recently.

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One of the beauties of writing a personal finance blog is that you get exposed to a whole lot of other personal finance blogs - you want to keep abreast of what your ‘colleagues’ are talking about. The wealth of information out there is staggering because you get essentially full reports of what other people are doing and seeing. Lately I’ve read a bunch of individual accounts of ridiculously counter-intuitive and downright devious tactics used by various financial entities (banks, credit cards, etc) that I think should be thrown out into the open and exposed for what they are: legalized fraud.

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This month’s issue of SmartMoney magazine has a section all about credit cards and their picks and runner ups depending on what you’re spending on. As usual, I disagreed with some of their picks, you’ll probably disagree with their picks too, and I have pretty good reasons why they’re off-target. They broke their picks up into what you get as rewards from the card: Rewards (products), Travel, Cash-Back, and Low-Interest cards; which I think the wrong way to go about it. However, I’ll follow their paradigm in countering their picks.

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I’ve been participating in a discussion over at the Wealthy Blogger about whether or not you should carry a balance on a credit card in order to get a higher credit score. This sort of logic is akin to buying a little extra at a store so you can use a $ off coupon ($20 off $100 purchase) but the actual $ off you get is unknown and can be as little as $0. I am wholeheartedly against carrying a credit card balance, unless its 0% interest, for this purpose because the credit score increase you get is not quantifiable and as the old adage goes, a bird in the hand is better than two in the bush.

How your FICO score is determined has been discussed ad nauseum. If you do a quick Google search you’ll find that the different explanations have put varying weights on each element of the score’s equation. Based on personal experience alone, I can say that not having a single revolving account balance did not significantly negatively impact my credit score. When I applied for a mortgage, my FICO score was 729 out of a possible 850 and these were the four items that were considered “risky:”

According to Edmunds.com, a score above 720 “is considered excellent; those who score within this range have the easiest time obtaining loans, and get the best rates.” What that means is that, in my particular case, a few extra points based on carrying a credit card balance wouldn’t have helped me out.

If you get a credit report and score about 720, don’t give that strategy a second though. If you score under 620 (considered “subprime”), there are probably better strategies for you to explore to improve. If you find yourself in between, maybe carrying a balance is for you… but without knowing exactly how much it can improve your score, I don’t see the sense in paying off the credit card company for the possibility of a score bump.

I don’t know if anyone kept watching Morgan Spurlock’s 30 Days series after the first episode about living on minimum wage, but this week’s episode is about a mom who is going to binge drink for 30 days! She’s trying to teach her daughter about the dangers of binge drinking (what dangers? It’s fun!) while she learns about the pressures to binge drink from your friends. As a double bonus, both the mom and the daughter are smoking hot. (not that it should play a role in your television watching preferences :))

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I mentioned earlier that you should check your hotel bill for “billing inaccuracies” (that happen way too often), but check out the case of Laurie Dennington who changed receipts so that she’d get bigger tips! This is probably something that’d be hard to discover unless you paid extra special attention. One of my credit cards (I can’t seem to find which one) breaks out what part of the charge is food and what part is tips but that still requires a very high level of diligence.

A waitress at Lone Star Steakhouse in Pasco County has admitted to altering credit card receipts to increase her tips, according to a sheriff’s office report.

The folk(s) who run NetWorthIQ asked me (and a bunch of other personal finance bloggers) to take a look at their site and check it out. I agree with Flexo, the site has potential and I’m always glad to take a look at someone’s work and give them whatever little exposure I can - I find that personal finance bloggers typically are nice people and always like to extend a helping hand whenever possible.

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I originally wrote this at the beginning of February 2005 and this is a semi-major update to the original, please let me know if I messed things up or if you have your own opinions you’d like to share.

First, Netflix burst on the scene with a totally different business plan - let folks borrow movies via mail and keep them as long as they want. You charge a monthly fee based on how many DVDs they want at a time and you pay the shipping each way for the disc. Sounds horrible! Mail is so slow! But people bought into it and slowly, as distribution sites increased in number… bam! DVDs come in a couple days instead of a week. Gone are the complaints of slow mail-times and in come the competitors. I’ve personally used Netflix and I think it’s a great service with quick turnaround times and a huge inventory of movies.

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