Why You Need To Start Investing Now & How TF To Do It

Even though more womxn are working and earning higher salaries than ever before and breaking glass ceilings all over the damn place, we’re still behind when it comes to retirement and investing—yet we live longer than men do. So what gives? 

Well, a lot of the womxn I know in my life feel like they have time to wait, they can invest later when they have more available cash, after they save for a wedding, or after they pay off student loans or credit card debt. Or it’s just not that important right now. Even worse is my biggest pet peeve: that they can rely on their spouse’s 401(k). In other words, they’re contributing to their spouse’s retirement for THEIR future. Well, I’m here to tell you that in most cases, you’re wrong. 

You need to be investing what you can, right now. Not only for your future self, but for your present self. So you can change things in the world, literally put your money where you mouth is (or values are), and invest in ESG or SRI stocks (aka, socially, environmentally, and ethically conscious investments). Plus, if you walk away from a marriage or a relationship, you need to have your own damn money to fall back on. Yes, you can have a healthy relationship while still prioritizing your own financial well-being.

And if you’re over there thinking you’ve got it all figured out because you have a good chunk of money in a savings account, kudos. Money in savings is a GREAT first step, but even in the highest interest savings account you can find, your money is still worth less with each passing year. The only way to combat that decreased buying power is by investing that money in something that beats the rate of inflation (which has been an average of 3.22%/year). 

First, I’m going to define a few important terms I’m going to use throughout this article:

Compound Interest/Compounding Returns: Interest/returns paid on both the principal balance and on accrued interest/gains.

Retirement Accounts (SEP IRA, Roth IRA, 403b, 401k, Traditional IRA, etc): A plan for setting aside money to be spent after retirement. For the purposes of this article, the retirement accounts I refer to are all qualified retirement accounts per the IRS. Some of them help you pay less in taxes now (SEP/Traditional IRA 401k), and some help you pay less in taxes later (ROTH). For these accounts, you can’t take your money out without incurring a 10% penalty before the age of 59 ½. This is to incentivize you to keep your money in here, and not touch it until you’re actually retired (and also why I recommend also having savings accounts and non-retirement investment accounts).

Investment/Investment Account: A type of account that is post-tax, doesn’t have any long-term retirement benefits, but money can be withdrawn at any time, regardless of your age.

Inflation: A general increase in prices and fall in the purchasing value of money.

Why You Need To Invest

We’re going to talk about compound interest here for a minute. One of my strongest beliefs is that you should get retirement and investment accounts set up first, followed by a savings account. That’s because your retirement and investment accounts will generally give you an 8% average return over a 10-year period. 

Now we’re going to do some math (I know, but trust me, it’s important).

If you’re 25 and invested $5,000 now, contributed $100/month to retirement for the next 40 years, and retired at 65, you’d have somewhere around $470,467.71. If you waited until you were 30, invested $5,000 and contributed $100/month for 35 years and retired at 35, you’d have $310,851.00. That’s a difference of almost $160,000, and the amount invested only decreased by $6,000 (5 years of $100/month).

Even crazier, if you’re 20 and invested $5,000, contributed $100/month for 45 years, and retired at 65, you’d have around $708,271.99!!

So when I tell you that compound interest is important and that investing something now is better than investing a larger amount in a few years, trust me on it.

How To Invest

Invest in yourself and your future right now, even if it’s only five dollars a month. Something is better than nothing, and like I talked about above, compound interest is your friend when it comes to taking care of your future self. 

If you have a retirement plan offered through a job, you can start now by:

Opening a retirement (or multiple) accounts (if you don’t have access to one through a job).

If you have one through your work, you want to contribute to both a ROTH and regular option. ROTH contributions help future you with taxes, and regular/traditional pre-tax options help you with taxes. 

If you’re self-employed or don’t have a retirement plan offered through a job, you can start now by:

Opening two types of retirement accounts: a ROTH and a Traditional IRA (or a SEP IRA if you’re self-employed).

You want to open and contribute to both types of accounts because post-tax ROTH contributions help future you with taxes, and regular/traditional pre-tax contributions help you now when it comes to taxes.

Whether you have a retirement plan offered through your employer or not, I recommend splitting your pre- and post-tax contributions 50/50, so if you can set aside $50/month for now, I’d send $25 to a ROTH and $25 to a Traditional account. I also recommend opening an investment account, then a savings account. I like Ellevest and Betterment.

That’s it. Your step-by-step guide to starting investing today (in like 15 minutes). You’re worth it, and the world needs more womxn investing and taking control of their financial future.

Images: Startup Stock Photos / Pexels

WTF Is A 401(k)? An Expert’s Guide To Retirement Accounts

Farnoosh Torabi is a financial expert, host of the podcast So Money and co-founder of Stacks House, a massive experiential museum for female financial empowerment. Currently stationed in downtown L.A., Stacks House, together with its presenting partner Zelle, as well as Charles Schwab and Day Owl, plans to travel the country and make financial literacy fun. Use this link for 40% off your ticket.

Women, I’m told, are obsessed with retirement. Over the past four years as the host of a financial podcast, my largely female audience has been sending me their biggest money concerns over email, Instagram DMs, and during chance run-ins on the A train. One of the most pressing issues I hear from listeners is how to prepare for retirement. Specifically, women want to know: Where do I begin investing so that I can have enough when I retire? Our obsession makes sense. We’re living longer than men (on average) and have the wage gap to battle, which makes shoring up money for the golden years all the more stressful. In a recent survey by Charles Schwab, three out of four young women said putting together a financial plan is very important to reaching their financial goals—versus 64% of young men. Should I invest in a 401(k)? How about a Roth IRA? And, wait. There’s a Roth 401(k)?

The questions I field often relate to all the different accounts and how they work. If all the financial lingo is getting in the way of you and your older, richer self, I have some help. Here’s a breakdown of some of the most common retirement accounts and whether they’re right for you.

Workplace Retirement Accounts

what (and I cannot stress this enough) the fuck is a 401k

— Betches (@betchesluvthis) February 15, 2019

Best for: Those with access to a plan that carries a company match. If you’re not sure where to begin investing and have access to a 401(k) through your job, this may be a great place to start. Named after a section of the IRS code, the almighty 401(k) is the most popular retirement savings vehicle. Recent numbers show about 80 million people are actively participating in a 401(k) or a “defined contribution plan.” Many employers offer 401(k)s as a workplace benefit. (If you work for a non-profit, school or government office, your plan is probably called a 403(b). It basically works the same way.)

You get to contribute automatically out of every paycheck. And with the help of the plan provider, you can select your investments within the plan to reflect your risk tolerance and retirement age. Annual contributions are capped
at $19,000 in 2019 or $20,000 if you are age 50 and over and can be deducted from your taxable income, which helps you save on your taxes today. Your tax burden is then pushed off until you start making qualified withdrawals at age 59 ½.

Bonus: Some employers will throw in a match. For example, they may provide a dollar for every dollar you invest, up to, say, 5% of your salary. And if that is the case, you should absolutely invest in a 401(k) to at least earn the company match. It’s sort of like free money!

Traditional Individual Retirement Accounts (or Traditional IRAs)

Best for: Those who may not have access to a workplace retirement account and want to save on taxes today. The traditional IRA (Individual Retirement Account) is a popular retirement savings vehicle that you can open up at a financial institution or bank. Like a 401(k), contributions made to a traditional IRA are tax-deductible up to $6,000 in 2019 ($7,000 if you’re 50 or older). Funds aren’t taxed until they’re withdrawn, but there is a penalty for taking money out before age 59 ½.

Roth IRAs

At this point my retirement plan is just banking on the fact that climate change will kill us all by 2030

— Betches (@betchesluvthis) February 15, 2019

Best for: Those who think they’ll be in a higher tax bracket in retirement (i.e. most young people). Or, those who want to save for retirement, but are concerned they may need the money sooner. A Roth IRA is another type of individual retirement account. It is similar to a traditional IRA as far as the contribution limits go. This year’s cap is $6,000. The major difference is that you can’t deduct your contribution from your taxable income today. Instead, the tax benefit arrives later down the road, when you pay zero taxes on all future withdrawals in retirement (and when adhering to Roth IRA rules).

Another thing to note about Roth IRAs: You can’t contribute if you earn too much money. This year, if you’re filing taxes single, you’re no longer eligible for a Roth IRA once you earn $137,000 or more. For married couples filing jointly, you become ineligible at $203,000. The Roth IRA is also unique in that you can take out your contributions (note: not your earnings on the contributions, just contributions) at any time without facing a tax or penalty. Some really like this benefit because it provides better flexibility of accessing your money if you really need it.

Pro tip: If you already have a 401(k) or another type of employer-sponsored retirement account where contributions are tax-deductible—and you’re looking to diversify your tax exposure in retirement—a Roth IRA can be a solid vehicle for that purpose.

Roth 401(k)s

Best for: Those who want the best of both worlds. Now that we’ve reviewed the basics of 401(k)s and Roth IRAs, you can probably imagine how a Roth 401(k) works. Like a 401(k) this is an employer-sponsored investment savings account. The money you set aside, like a Roth IRA, is done so with after-tax dollars. You don’t get to deduct your contribution from your taxable income today, but you can make qualified withdrawals in retirement tax-free. Roth 401(k)s offer the higher contribution limits of a 401(k). And while a Roth IRA limits who can contribute based on income, a Roth 401(k) doesn’t have that rule.

Shop Betches What’s A 401k Tee

Images: Alexander Mils / Unsplash; betchesluvthis / Twitter (2)

What To Do If You Procrastinated Your Taxes

April 17 is officially the worst day of 2018. No, the pee tape didn’t leak; it’s motherfucking tax day. It’s a day when even the most commie pinko liberal SJW becomes a wingnut constitutional originalist. It’s also a day when we’re reminded (ad nauseam) of how much money the scumbag tax prep companies spend to keep our tax code complicated as shit. Coincidentally, if you’re reading this by the time it’s published and haven’t done your taxes yet, it means something else: you done fucked up. Luckily, the entire reason I got harassed into writing this was to explain what to do if you missed the tax deadline (or just fucked them up).

The good news is that it’s not all gloom and doom. Even if you hit the unholy trifecta of a) being late as shit, b) owing money and c) making dumbass mistakes, you’re probably ok. The IRS isn’t going to repossess your grandma’s house, and the jackbooted brownshirts aren’t coming to throw you into debtors prison. I mean, I’m also definitely neither a lawyer nor an accountant, so I guess those things could happen. More likely, though, one of the following (decidedly less threatening) scenarios apply to you.

What To Do If You Missed The Tax Deadline

Scenario 1: You’re Expecting A Refund

This is undoubtedly the best scenario for people who read this website, because you don’t have to do shit. Well, almost shit. If (like most Americans) you overcook your withholdings on your tax forms during the year (and you work an hourly or salaried job where taxes are automatically withheld), you’re probably owed a refund by the IRS. In that case, all you have to do is file them by November—no special extensions required. You see, the IRS has already held onto your money (interest-free!) for the better part of a year, and they’re happy to continue to do so. They won’t even charge you a penalty!

The only caveat is if you don’t e-file by November, you have to mail them in. I’d bet good money ($5) that 50-60% of our readers don’t know how to address an envelope at this point, so don’t let it get that dire.

Scenario 2: You Owe Money

Option One: File And Pay ASAP

LMAO you’re fuccccccckkkeeeedddddddddddddd. Jk, you really aren’t. But the bad news is, you can no longer file for an extension that would have bought you until November to get your taxes filed. Your best bet is to file ASAP to avoid the penalties and interest the IRS will gleefully throw at you. (Note, again, that you get no such recompense when they’re holding onto your money.) File now, pay your bill, and honestly nothing bad will happen to you outside of some (honestly pretty reasonable) fees. You can use the government’s online forms or whatever soul-sucking tax prep software you prefer. If you made under $58,000 last year, you can file your federal taxes 100% free through any service.

Wait, what’s that? You owe a lot more money than you have because you’re incredibly financially irresponsible? Ugh, you’ll still be ok. Step one is still to file ASAP, and to pay as much as you can upfront. If it takes you another paycheck or two to make up the rest, you won’t be out that much. But if you’ll need a lot more time than that (where the fuck does all of your tax-free money go, anyway?), you can set up a payment plan with the IRS. There will still be penalties involved, but they’re a lot less squirrely when they know when the money will be there. Note that you can’t do this, like, every year.

The good news is that this does not apply to the majority of workers, usually only contractors and others who receive 1099s instead of W2s. That’ll eventuallbe most workers if companies like Uber get their way, but not yet. Yayy gig economy!

Option Two: Become A Sovereign Citizen And Go Off The Grid

If you think about it, have you ever really read the Constitution and all of its amendments? I reckon that you have not, but there’s a nonzero part of the population that has, and an even nonzero-er portion of those people interpret it to mean that the government doesn’t actually have the right to tax you. Are these people insane? Fuck and yes, they’re insane as hell, but you have to admit that there’s a certain charm to living in Bumfuck, Oregon and shitting in an outhouse. So refreshing! You just have to get used to carrying a gun at all times and yelling “TAXATION IS THEFT AND THEFT IS VIOLENCE” every time you pass a cop.

What To Do If You Made A Tax Fuckup

Scenario 1: The IRS Rejects Your Return

So you filed on time, which is good! V responsible of you. But then, seemingly out of nowhere (read: like 24 hours after you clicked “file” in TurboTax), you get a harrowing message: The IRS has REJECTED your vile, no-good return! This sounds like the audit police are about to bust in and give you the Michael Cohen special, but fear not—they just need you to fix your obviously wrong shit. Your tax filing software (whether you do it through the government or otherwise) will tell you where you messed up. In this situation it’s a glaring, easily fixable error; like forgetting to claim any income or trying to write your Sephora points off as a charitable donation. Oops!

Scenario 2: The IRS Accepts Your Return

While this may sound better, it’s actually… not, somehow? That’s only because you have to play the waiting game, though. If the IRS accepts your return with something you know is wrong, that means you have to wait until it’s processed, and until you receive your return (if you’re expecting one) before filing an amended return. If you already owe money or made a mistake that could cause you to owe money, on the other hand, you should file that shit ASAP. And don’t worry about the little shit: The IRS will correct your math mistakes on their own, and they’ll kindly let you know if you’re missing any forms or schedules.

Finally, don’t worry too much about a mistake leading to an audit, even a kind of big omission. You want to know the biggest red flag for IRS auditors? Making more than $200k per year, which quadruples your chances. Otherwise, unless you’re just straight up not reporting all of your income (they receive the same forms you do, you know..), you aren’t worth the trouble.

Heads up, you need to keep up with the news. It’s not cute anymore. That’s why we’ve created a 5x weekly newsletter called The ‘Sup that will explain all the news of the week in a hilarious af way. Because if we weren’t laughing, we’d be crying. Sign up for The ‘Sup now!

Images via Giphy (3)

All The Shady Sh*t The Republicans Hid In Their Tax Bill, Explained

Welcome back to tax hell, my friends. Remember last Friday night when Senate Republicans surprised Democrats with a 497-page House tax reform plan at 9:30 PM and then gave them 4.5 hours to read it before voting while we were all drunkenly celebrating the charging of Mike Flynn? It’s cool, neither do we. Ever since the Trump administration started, it’s like my memory wipes itself every 48 hours for self-preservation. Like 50 First Dates, but my brain trauma was actually caused by the President of the United States and not by dating Adam Sandler a car accident. (Is that how she loses her memory in 50 First Dates? Idk? I hate Adam Sandler movies.) We’ve already talked about why the GOP Tax Bill is shady af – and that was just about the tax related shit it included. “But why would a tax bill contain reform on non-tax related issues?” you naively ask in this, the cursedyear of 2017.

“BECAUSE EVERY THING IS ABSOLUTELY FUCKING AWFUL,” I cackle back while chugging a can of wine at 6:30AM on a Thursday. It’s fine. I’m fine. We’re all going to be fine.

That’s right, the GOP isn’t just here to make sure you can never own property or pay off your student loans – they want to fuck up other aspects of your life too! Who knew? It’s like they’re actual demons masquerading as rich, white conservatives! Oh. Wait.

Anyway, here’s all the shady shit the GOP snuck into their tax bill while we weren’t looking: 

Unborn Fetuses Are People Now

Honestly, how did we all not see this one coming? They managed to sneak this one in under the rule that allows parents to deduct a certain amount of money for their kid’s education, citing that an unborn fetus is included in the measure. Lol. As if anyone will be able to afford college 18 years from now.

This doesn’t really change how that particular law works, but it does set a precedent for an unborn fetus being a person, the first step in eventually attempting to turn over Roe v Wade. Get your red cloaks out ladies, it’s only a matter of time. Under his eye.

Separation of Church and State? Fuck that.

We’re one step closer to Pence’s America, folks. The House tax plan repeals the Johnson Amendment, which previously banned non-profit groups from engaging in political activism AKA churches can’t openly raise money and campaign for a candidate. If this bill makes it through the Senate review, every little Evangelical hellhole can start raising money to send their very own neighborhood pedophile to Washington DC.

Health Insurance Is (More) Expensive

SHOCKING. The plan repeals the Obamacare individual mandate, which made universal health care cheaper by spreading the cost of it across everyone because everyone had to buy insurance. Now that you’re not legally mandated to have health insurance, premiums will go up. You get cancer? Bankrupt. Break your leg? Say goodbye to your future. Get strep throat? Have fun living on the street you fucking animal.

Alaskan Oil and Gas Drilling

Because we learned nothing from the Dakota Access Pipeline, the Senate tax bill would open 1.5-million-acres of the 20-million-acre Arctic National Wildlife Refuge. There’s nothing fun or witty to say here, we’re just destroying protected land now. This bill has literally divulged me of a sense of humor. Thanks, Republicans.

Public School Funding is at Risk

Your favorite serial killer senator Ted Cruz snuck an amendment in that makes private or religious schools cheaper, but potentially cuts off funding for public schools by eliminating deductions for state and local income taxes and capping deductions for property taxes. Mandatory free education for children? Who needs it! Reading is overrated.

Beer and Wine Are…Cheaper?

Could there possibly be good news hidden within this sham of a bill? Maybe, as long as you’re not worried about cheaper alcohol raising the rate of drunk driving related deaths and addiction. Tbh, if any of us make it to 2020, alcoholism is the least of our concerns.

The bill would reduce special taxes on beer and wine, meaning an extra $4.2 billion in benefits. It’s not crystal clear if this is a win, but it’s the closest thing we have so I’m gonna take it.

The kicker in all this? Trump and his team are relying on the election of Roy Moore, A PEDOPHILE, to secure this bill. That’s right, our collective future depends on the discretion of a man who fucks children.

Cool. Everything is so great. I’m gonna go finish that box of wine now.

Heads up, you need to keep up with the news. It’s not cute anymore. That’s why we’ve created a 5x weekly newsletter called The ‘Sup that will explain all the news of the week in a hilarious af way. Because if we weren’t laughing, we’d be crying. Sign up for The ‘Sup now!