Thursday, March 22, 2012

Real Answers to Money Questions, or Why I Hate the Radio

Trust ye the voices that come from this?
Do so at your peril!
As I was driving to work this morning, I was switching between my preset radio stations.  One thing that adds to the pain of my morning commute is that most of the music stations that I listen to don't actually play music in the mornings.  What they play instead are these annoying morning shows where the local talent, scrambling for something to talk about, comes up with incredibly stupid things that I can't believe anybody would want to listen to.

Perhaps you're familiar with shows like this too? The ones that make you want to merge across 6 lanes of traffic and take out as many people as you can? No? That's just my own murderous rage? Good to know.

With how little I think of these programs, you can imagine my surprise when I heard that the station was going to have a segment where people could call in and get answers to their money questions ... by some guy who was adopting a Boston accent.  I say "adopting" because he didn't keep the accent up the whole time.  That should have been my first clue that I wasn't going to like the segment.

Having said that, let's take a look at the callers' issues and see if I can provide better answers.

Caller 1:  This guy's issue was that he had received a speeding ticket, and he had not paid it on time.  Because of this, the original cost of the ticket ($391) had increased to $700, and he wanted to know what to do about it.

DJ's Advice:  On his way to the courthouse to pay the fee, the DJ recommended that the caller should keep an eye out for change that was minted prior to 1965 because of the higher silver ratio that this change contained.  At one point, the DJ referred to pre-1965 coins as coming from "the early nineteenth century, " ostensibly to clue listeners in to the fact that he was dropped repeatedly on his head as an infant.
Pictured: Money from the early 1800s.
Never mind the obvious date.
And that was it.  That was the actual advice given.  While I consider myself to have a pretty good sense of humor, even in humor of the irritating and the absurd, I wanted to reach my fist into the radio, have it travel through the airwaves, and punch this mouth-breather right in the back of the head.

REAL Advice:  In the first place, don't be the moron who doesn't pay his ticket on time (also: don't be the moron who speeds).  But since this caller was already past this, the only reasonable advice I can give would be to get into contact with the county clerk to see if you have any options.  Beyond that, you might attempt to appear in court and explain your situation and throw yourself at the mercy of the judge.

However, because our friend the speeder is already late in payment, I suspect that he'll have to pay the full amount.  With that being the case, I'd advise him to sign up for traffic school if he's eligible, so that he can get the ticket off of his record to ensure the ticket doesn't affect his insurance.

Caller 2:  From a theoretical standpoint, this question was more interesting to me.  This person asked if he should save money for retirement by putting money into a 401(k) or a Roth IRA.

DJ's Advice:  The DJ told him to put money in the 401(k) because the caller would not have to pay taxes on that money.

This is absolutely not true!  Money is put into a 401(k) pre-tax; that is to say, you don't pay taxes on the money right now (and money contributed lowers your current tax obligations), but you will have to pay taxes on the money when you take it out.

REAL Advice:  A frequent benefit of 401(k) plans is that your employer will usually match what you put in, up to a certain amount.  Because of this, if you can swing it, you should max out what you put into your 401(k) to ensure a full company match.  When you do so, you are receiving a 100%, immediate return on your money.  You can put up to $17,000 into your 401(k) for tax year 2012 (up to $22,500 if you're older than 50).

If you have more money that you'd like to invest for retirement beyond maxing out the company match with your 401(k) (and if you'd like to have a comfortable retirement, you should pretty definitely do so), I recommend looking into a Roth IRA, assuming you are not making too much money to contribute.  You can put up to $5,000 a year into your Roth for tax year 2012 (up to $6,000 if you're older than 50).  Studies have shown that people who have both a Roth IRA and a 401(k) tend to have more retirement savings than those who only have one account or the other.

I guess the real take away for this article is that, if you have a money question, you should NEVER CALL IDIOTS ON A MORNING RADIO SHOW.  Search the internet instead.  Google is your friend.

Photo 1 by infousX.
Photo 2 by Kevin Dooley.


Kelly said...

I gave up on morning radio in this beautiful city years ago. You can't have everything. I endure commuting with audio from the library.

Bryan said...

Yeah, I'm between audio books that I want to listen to right now. I need to hit up the old library.

Lindy Mint said...

Satellite radio is my friend (no commercials! no DJs!), though not so frugal. But now that the retro-fitted Sirius radio in my car is broken, NPR is my friend. Down with morning shows.

I'm gonna have to track down some of those early 1800s coins from the 1960s.

Emily @ evolvingPF said...

Wow, how infuriating! I hope they COA'd by stating repeatedly that this was for entertainment purposes only.

Also, may I suggest NPR? I also listen to podcasts during my commute. I like knowing I'm going to get quality programming and can't stand morning DJs.

Well Heeled Blog said...

Love NPR. I especially like Planet Money and This American Life. Lots of finance related content, and doesn't dumb it down but is accessible to non-finance folks.

MoneyCone said...

And these guys are on the air dishing out advice! Sensible counter advice Bryan.

As others have mentioned, stick to NPR. I haven't seen a better radio station for my commute.

Dannielle @ Odd Cents said...

What's even worse, is that someone will take his advice. The advice to the firt caller was so far out there... How embarassing for that radio station!

AverageJoe said...

That's funny. Were they really going for humor in the segment or was it unintended humor? It sounds like their answer to the first question was humor, but they tried to take the second question seriously.

Bryan said...

@AverageJoe: I think the DJ was thrown off by the seriousness of the second question, and he was left scrambling, trying to articulate an answer.