New Feature Alert: Item Re-Ordering & Equation Support

Two new feature enhancements to OnTrajectory this month!

Feature 1: Item Re-Ordering
Change the order your Income, Expense & Account items appear — just click and drag the ‘up/down’ icon to move items to a new position (note: the top-most ‘Deposit Account’ cannot be moved).

Feature 2: Support for Equations
You can now use mathematical operators to add (+), subtract (-), multiply (*), and divide (/)  values in ‘Amount’ fields. This feature is similar to typing in a spreadsheet cell. For example, to quickly calculate an expense that is billed 4 times per year @ $87, simply type in the amount field: =4*87 and press ‘Enter‘.

That’s it! No need to have a calculator open and nearby when entering values into OnTrajectory.

Top-20 Features Added to OnTrajectory in 2016

It was a busy year at OnTrajectory, releasing new features at a rate of over once-per-month. As we begin to look to 2017, here’s a list of the Top-20 Features we added in 2016:

  1. Ability to define central effective tax-rates for all items in your model, based on different periods of your life
  2. Ability to define a centralized retirement age (by using ‘R’ for a start/end age) letting you more easily analyze the effect of retiring at different ages
  3. Ability to designate ‘variable’ expenses (such as 4% of assets)
  4. Automatic calculation of Required Minimum Distributions (RMDs) for tax-deferred accounts (such as IRAs and 401Ks)
  5. Support for inherited IRAs by automatically calculating separate RMDs, as required by the IRS
  6. Ability to override the central Inflation Rate for individual Income or Expense items
  7. Ability to redeem ‘reward points’ for FREE months of our PowerPlan
  8. Ability to earn ‘reward points’ through referrals to friends
  9. Expansion of data output tables, with the ability to view in either Today’s or Tomorrow’s Dollars
  10. Ability to print or save data output in a separate spreadsheet
  11. Interactive tutorials, 9 and counting
  12. Ad-hoc inflation-converter
  13. Ability to type equations in number fields, e.g. ‘=500+500’ computes to 1000 (after pressing the ‘Enter’ key)
  14. Ability to define matching contributions for 401Ks
  15. Ability to define income, expenses or accounts for multiple individuals (such as a spouse)
  16. Ability to define income as ‘tax-exempt’
  17. Automatic draw-down of funds, as needed, based on individual tax-treatments of an account
  18. Enforcement of ‘early withdrawal penalties’ for tax-deferred accounts (such as IRAs and 401Ks)
  19. Ability to auto-save data changes
  20. Ability to save notes for individual Scenarios
  21. There really was more, but you’re probably bored by now…

Stay-tuned in the next couple weeks as we lay out our plans for 2017!

How Much Is this $hit Costing Me: Part 1

What’s the full financial impact of your coffee habit? This is the explainer for Part 1 of our video series: “How Much is this $hit Costing Me?”

Let’s say you’re a fresh college grad with a mild macchiato addiction. Of course this could alternately be replaced by a weakness for lattes, mochas  or any of a number of delicious coffee concoctions. We’ll assume the habit remains more-or-less consistent over the course of your life.

Now, to the numbers…

Three macchiatos per week, that’s $15. Over the course of one’s life (3,536 weeks * $15), that’s $53,040. Assuming 3% inflation, you’re looking at $115,054. Ouch.

costs

By brewing at home, however, and purchasing one macchiato per week  you could save about $500/yr. What if that $500 was invested in a moderate risk, tax-deferred account? Let’s use OnTrajectory to see the full financial impact.

OnTrajectory takes your unique mix of Income, Expenses, Investments and maps a path into your financial future each are discussed below.

macchiatt_income

Income:  It looks like our college grad landed a pretty decent job – probably an entry-level computer programmer or something sexy like that. This example assumes an average 5% raise per year until the age of 40 (as shown in the ‘Growth Override’ column). Thereafter, the salary merely keeps up with inflation.

macchiatt_expense

Expenses: This example includes “grouped” expenses (indicated by the orange ‘G’) defined in three unique age ranges: 22-29 includes rent, 30-67 includes the purchase of a home, and 68-90 shows basic expenses dropping during retirement years.

In addition, we see a boat purchase at 45, and a semi-extravagant vacation later in life. Finally, we see the coffee expense broken out separately at $780/year.

macchiatt_accounts

Accounts & Taxes: Not much to see here, just a Deposit Account with effective tax-rates based on income level. There doesn’t seem to be any tax-deferred/retirement account or any other types of investments defined.

Subsequently, the financial Trajectory looks like this (in tomorrow’s dollars):

before

We can clearly see various rates of saving based on income and expenses. The steep increase at 60 is a result of the mortgage being paid-off  but as you can see it wasn’t quite enough, and this individual runs out of cash at the age of 88 and is $139,713 in hole by age 90.

Let’s reduce the coffee expense to $280/year and invest the savings into an account with an average rate of return of 5.04% How did we come up with 5.04%? We took a handful of highly-rated moderate-risk mutual funds (entirely at random) and averaged their 20-year returns. It may not be scientific, but it’s fairly reflective of how a lot of folks invest.

Here’s the result:

after

Notice that not only do you stay financially afloat throughout life, there’s  a tidy $320k surplus at the end (again, in tomorrow’s dollars).

math

It’s MATH, and it’s power stuff. The truth is, small lifestyle changes CAN have half-million dollar impacts over the course of one’s life. OnTrajectory helps you identify and visualize those impacts. So don’t wait any longer, get OnTrajectory today.

 


 

DISCLAIMER: Please be aware that no information contained in this communication should not be considered investing advice. All financial information is solely for educational purposes. Please see your own professional for personal investment advice.

 

Beware the Easy-to-Find Tools

Type “Retirement Calculator” into Google and look at the top 5 results – you’ll see tools from:

  • CNN Money
  • BankRate.com
  • Charles Schwab
  • Bloomberg Business
  • Vanguard

They all look something like this:

Retirement_Calculator_Bankrate

And here’s what they all have in common:

  1. You must forecast saving the exact same every year until you retire.
    Can you factor in a few lean years – like when the kids are off at college?Or can you just plan on taking a big vacation one year? Absolutely not.
  2. You have to spend the exact same amount each year after you retire.
    Can you factor in things like paying off your mortgage or planning for a Wedding? Nope, forget it.
  3. All savings/investments earn the same growth.
    But we all have multiple accounts, right? Can we at least split out tax-deferred from taxable investments? Not with these tools.
  4. What if we want to “partially” retire during our early 50s and then fully retire a bit later on?
    Can we see the effects on my overall financial plan? No way.
  5. How about saving your data?
    Can you save the current situation and come back later to see how your’re doing against your assumptions? Nope, not even close.

So what are these tools good for? We would argue, nothing – and they might even be worse than nothing in the sense they tease you with the promise of knowledge, but end up making you feeling nervous and vulnerable.

Which brings me to one more feature they nearly all have in common – they exist to be funnels for connecting you to money professionals or brokerage accounts.

forex-trader1

Therefore, the feeling of vulnerability is no accident. These are not tools to answer your questions, but rather to spur you into action – and we find it somewhat defeating that these are the top search results.

Of course, there are other, far better tools for planning your financial future. We think OnTrajectory is the best of them, of course – and we hope you’ll find our combination of ease-of-use and power to be just the right mix to get to usable answers regarding your path to a financially secure future.

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Reading money tips not enough: How can you incorporate good financial habits to save more?

This is contributed by Patricia Sanders.

According to a recent survey conducted by gobankingrates in 2015, almost 62% of Americans’ savings account is not fattened enough. They have less than $1,000 in the savings account that is not enough for securing financial future. The survey reveals that most of the Americans save a very little amount of money in their savings account. Cameron Huddleston, a personal finance expert said it’s an alarming report and it seems that “most of the American’s don’t have cash reserves to cover an emergency and will have to rely on credit, friends, and family, or even their retirement accounts to cover unexpected expenses.”

The survey result shows two-thirds of Americans don’t have enough savings

For most of the Americans, budgeting is challenging. As a result, they fail to save enough money in their savings account.

survey

Why do people read several personal finance tips, but never become rich?

While the people who’re struggling with credit card debt often embrace personal finance tips. But the question is do they get good results?

Well, people tend to forget all the tips within a week and go back to their same old bad financial habits that exacerbate their financial woes. Everyone’s busy and they don’t have enough time to follow the tips  after reading. People rarely take down the points so that they can’t follow it later on in life and this is the reason why they can’t become rich despite reading the personal finance tips.

There are some others who go through the personal finance strategies, practice them for a week and then suddenly feel that these tips are not made for them. Remember, no one is unlucky and unless you adopt the positive personal finance habits, it’s not possible for you to get enough results. If you think that you have no time to practice the tips in real life, then you’re just reminding yourself that you have no time to become rich. Only reading through the passive income blogs will not help you earn enough and save more unless you practice it.

Habits that can make you financially disciplined and help you save money

Following are some personal finance habits that you should adopt to become financially well off:

  1. Craft a frugal budget and follow it

Most of the Americans hate to follow the B-word ‘budgeting’, but this is probably the only way that can lead to a secure financial future. Yes, the basic rule of personal finance management is crafting a budget and following to it throughout the month. Most of the financial experts think the increasing consumer debt level is the result of people’s hatred towards budgeting. They said, following a budget is important to track monthly expenses and income. Thus, people can boost savings. Having extra money helps in repaying debt obligations as well.

  1. Spend less than what you earn in a month

When it comes to good financial habits, you always have to keep your expenses within your means. Remember, your financial health is just like your physical health. You have to maintain balance to remain healthy and wealthy. You need to maintain the balance between energy that you consume to remain healthy. Similarly, you need to maintain a balance between your earning and spending to remain financially secure. You need to struggle to defend against the temptations. Thus, you’ll be able to resist the temptation of spending more money than you earn.

  1. Prioritize to an emergency fund

No one can predict about the financial fiasco, if you want to stay safe, then you have to focus on building an emergency fund. There is no other option instead of saving at least 10% of what you earn, irrespective of the gross monthly amount that you make from your job. This is a valuable advice by the personal financial experts, but very few are into following it.

  1. Cut down extra expenses

Buying only the things that you need is one personal finance habit that most frugal people follow. But are you confused about the items that you can cut off  to save your hard earned money? Well, you can save money on food bills by ditching expensive restaurants, save on groceries by using coupons and ditching branded items, and you must avoid getting things that are not on the list. Make sure you switch off lights when not using the room so as to save energy and electricity costs.

  1. Reduce using your credit cards as much as possible

Using credit cards gives you a chance to establish a good credit history, but misusing them can lead to a financial disaster. Stop whipping your plastics for purchasing the things that you can’t afford with cash. Because this is the reason most of the people fell into a credit card debt trap. Reduce the usage of credit cards so that you don’t require paying interest rates on the money that you owe.

  1. Start college savings plan (529 plan) for the kid’s education

Starting a college savings plan is an essential part of planning kid’s higher education. So, you must start the 529 plan to secure your child’s education future. Remember, 529 plans vary from state to state. You should be aware of your own State’s 529 plan to successfully save money for your kid’s education purpose. This way you’ll be able to minimize the risk of student loan debt as well.

Adding It All Up

By following the few simple tips outlined here, I estimate you can save about $100/month. To help you visualize what those sorts of savings represent, below are 2 scenarios created in OnTrajectory. The first shows someone who is 30-years-old making $45k per year. With their current spending level (and 3% inflation) they’re projected to run out of funds when they are 88.

Save 100 per month_before

The second image is the same person, but with spending reduced by $100/month. As you can see, they are fully funded to age 90 and have almost $150k remaining in savings at that age.

Save 100 per month_after

This demonstrates the huge benefits of saving small amounts over time, and why following advice such as offered here can be so critical to your financial future.

How to Have a Better Mid-Life Crisis

(Note: All calculations and charts rendered with OnTrajectory.com)

It doesn’t matter if you’re happily married or in the throes of a brutal, debilitating divorce. You may have been a conscientious saver, you may have formed wise money-habits – able to navigate narrow budgets with ease. But one morning you’ll wake up and feel the need to buy something – something stupidly significant and attention-getting, and in mid-life that can be expensive.

So, how do you choose which silly thing to buy?

boat

Since we’re talking about stupidity, simply opening your wallet for whatever flashy car/boat/jewel/timeshare catches your eye might seem proper, but there’s a better way to make such a massive and financially burdensome mistake. Because the question is not, can I afford it, right now, in this moment? Rather, the questions are these: What are the long-term effects of this bad decision? How much damage am I really doing? And most importantly, how can I minimize the damage while sating my urge to spend good money on what I don’t need (and will likely under-use)?

Now the tricky thing about a mid-live crisis is that it’s happening mid-life. These are your prime salary years and also when you have the most demands and commitments laid upon you. So even if you can afford the extra payment for whatever ludicrous purchase you’re itching to make – you should judge the impact not only against your 5-10 year plan, but also against the far future of your final years.

We’ll look at 2 scenarios which compare the impact of purchasing a 2016 Convertible Corvette versus a 2011 29′ Sea Ray Sundancer. Our individual has a previous baseline Trajectory concluding at age 90 with approximately $65,000 in assets. As you’ll see, he currently has a spouse, two children, two cars, a mortgage and various other expenses typical of “mid-life”.

The screenshot below illustrates the financial effects of purchasing the Corvette:

Midlife_Corvette

As you can see, the result is a $40,000 decrease in overall Trajectory to about $26,000. Note that we assumed use of the Corvette as a regular car, if a different “daily driver” was required, the financial impact would be considerably greater.

Now let’s look at the “boat scenario”:

Midlife_Boat

Although the monthly payment is lower (because one can finance a boat over a longer period of time) the financial impact is far greater. The first problem is that boats can’t be driven to work, so we’re including a car purchase at age 55. And since a 29 foot water craft doesn’t fit in most driveways, we have marina fees that continue until age 70.

In addition, our individual is projected to run out of cash around age 86, creating a shortfall > $90,000 by age 90. OnTrajectory calculates that to make up this shortfall about $100/month additional savings is required.

Of course these illustrations confirm the obvious – buying more expensive toys has greater financial impact. What OnTrajectory let’s us do is more easily quantify the destructive power we’re releasing on our “retirement years” – and, one hopes, help us make poor decisions slightly less poor, whether in a mid-life crisis or during any other period of our lives.

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The Complicated Mess of Your Financial Life

(Note: All calculations and charts rendered with OnTrajectory.com)

Let’s say you’re 25 (pretending is fun, right?)…

If you place a quarter a day into a tax-deferred, moderate-risk-jar and because you’re awesome, you give that jar to your favorite great-grand-nephew upon your eternal “rest”: How much is in the jar?

About $43,000, here’s the chart…

quarterPerDay

Or how about something a little trickier to calculate. Let’s say you replace your car about every 10 years (until you turn 70), how many extra years of retirement can you afford if you pay $400 per month versus $500?

About 6 years — here are the charts…

carPayment_400 carPayment_500

Or a latte per week? About $100k of inheritance.

Or a bachelor/bachelorette party in Vegas? About a semester of college for your unborn daughter.

Or not taking the 401k match at your job? You don’t even want to know.

And we’re not saying you shouldn’t do these things (except the 401k thing, please do that). Not only because financial models are built on assumptions and assumptions are uncertain, but because lattes are delicious. Wouldn’t it be nice, though, to see the information – to easily adjust various criteria, and display the results all in the context of your own situation?

Consider this scenario:

You’re a middle-aged adult with 2 young kids. Your house/apartment is too small and maybe the schools aren’t so hot. You’ve got a decent job and a growing 401k. But now you also have to think about 529 Plans and maybe an IRA for your spouse who only works part-time – perhaps an HSA too, maybe? How do you know ‘how much house’ to buy, or whether you should buy one at all? Is it better to put the cash in the HSA, the 401k, the IRA, or the 529?

How can anyone do serious planning with so many variables to consider? How can you map the interplay of these choices and run scenarios to clearly see the results?

Well, that’s why we exist – so give us a try at OnTrajectory.com.

Press Release: Financial Technology Startup OnTrajectory Launches

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PRESS RELEASE

Contact: Founder & CEO, Tyson Koska

410-530-3646 – Questions@OnTrajectory.com

Financial Technology Startup OnTrajectory Launches

 

By Carl Potak – New York – OnTrajectory.com is a financial technology startup offering an easy-to-use, high-fidelity financial planner that maps users’ income, investments, and expenses in an interactive graphical display.  Users can easily aggregate their financial data to visualize a simulation of their financial future.  The free option is suitable for most users, however, the Power Plan offers users the ability to define their plan more ‘granularly’ and is also free until July 1, 2016.

Sign-up is easy and requires users to answer only four quick questions to get started.  From there, users can continue entering monthly and yearly data.  The more data they enter, the more accurate their future trajectory will be.  

Most investment and retirement calculators are standalone and  focus on a specific data point, however OnTrajectory allows dozens of different data points to be calculated together for a more inclusive view of how these aspects can affect your finances.  For example, OnTrajectory can help people with college payment calculations, retirement planning, or mortgage planning, and see how they affect their overall financial standing.  Of OnTrajectory’s largest competitors that are focused on multiple data points, a large proportion of them are complex to use,  don’t offer a free option, and/or require time-consuming signup processes. OnTrajectory differentiates itself from these competitors and addressed those key issues by providing an easy-to-use, high-fidelity, free option with a quick and simple signup process.

The software is friendly to folks with families and allows for the additions of spouses and/or dependents to their trajectory. Additional features allow people to create savings plans, goals for future purchases, designate unexpected emergency funds, and run different financial simulations for any “what if” financial questions they think of. For more advanced simulations, OnTrajectory also has Monte Carlo and Historical analyses.

OnTrajectory encourages people to become financially knowledgeable and successful so they can retire on time or even have an early retirement.  This is promoted through their blog Money Matters by OnTrajectory.

Since launching in November 2015, OnTrajectory has grown to over 1,100 users and is catching on quickly.  In fact, OnTrajectory was just featured in a February 9th 2016 article called “These Are The Best Retirement Calculators” in Time.com’s Money Magazine.

OnTrajectory‘s team currently consists six people. Of the six, CEO Tyson Koska and two other technical co-founders from the financial industry are the software engineers working behind-the-scenes.  The team also has a serial entrepreneur, Director of Marketing Carl Potak, Director of Community Relations Daniel Kahn, and Video Producer Christopher Yeiser.

Financial journalist Darrow Kirkpatrick from CanIRetireYet.com had this to say: “The initial setup was simple. The user interface is very attractive and intuitive. It feels like they’ve achieved a low barrier to entry… OnTrajectory is in the sweet spot that appeals to me. The site has a slick look and many nice touches.”  Barbara Friedberg, another financial journalist, is the founder of Barbara Friedberg Personal Finance and author of “Invest and Beat the Pros.” She endorsed OnTrajectory saying: “[It’s a] very consumer friendly and useful tool… Concept is great… I like that it’s not necessarily just a retirement tool… graphs, charts easy to interpret.”

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OnTrajectory: Features and Functions

See Where Your Money Is Taking You

moneyEyeOnTrajectory does not seek answers to questions like, “How much do I need to retire?” or “How much do my kids need for college?” It addresses a simple, central concern: “What’s my financial trajectory?” i.e. Are you on course for economic independence – or will you financially crash and burn? Here’s how we do that:

 

  1. Enter your unique Income, Expense, and Savings/Investment Items
  2. Set Age Ranges for each item, as necessary
  3. Enter unique criteria, including Tax and Growth Rates, for each individual Item or Range
  4. Create Expense Groups for budget tracking

Interactive Modeling & Simulations

mindChangePeople are visual, and they like to change their minds. OnTrajectory supports both of these very human traits – here’s how:

  1. Visually-engaging and interactive graphs
  2. Plot your Goals on future dates or for hypothetical rates-of-return
  3. “Exclude” items instantly for easy “what-if” analysis
  4. Visualize the effects of Inflation while working in “Today’s Dollars”
  5. Compare Average Growth, ‘Monte Carlo’, and Historical analyses all at one time

Start Simple & Refine Over Time

refineOther financial tools (online Retirement Calculators, Investment Simulators, etc.) love to set your goals for you. What’s more, they lack a way to track your progress toward achieving them. OnTrajectory provides a persistent, historical view that adds value to your data the more you come back. Yes, it’s super-simple to get started, but as your situation becomes increasingly complex, so does the information OnTrajectory can provide – here’s how:

  1. Track and save a History of your total progress and project it against your Trajectory
  2. Calculate individual Savings/Investment balances for any future-date
  3. View and analyze all underlying data
  4. Store your unique scenario through a secure connection to our server

More to Come

We are constantly adding new features and fine-tuning existing modules. We hope that OnTrajectory will become an indispensible part of your financial planning and that as we grow, so will you!