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Save money. Don’t multi-task.

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The barista had to ask three times for her order before the woman finally responded. She’d been so busy nattering away to her friend in line that she didn’t notice she was now at the front.

And the fun wasn’t over. When it was time to pay, the woman pulled out her wallet and dug fruitlessly inside, opening the same compartments over and over, all the while keeping up the nonstop chatter.

As the seconds ticked passed and the line grew, what started out as vaguely annoying became absolutely absurd. The barista looked at me, the next person in line, and widened her eyes in exasperation.

I shrugged. I was just grateful I’d encountered this person in a coffee shop rather than on the road, where she probably thinks she can drive while talking on the phone just fine.

Obviously, she can’t. None of us can. Multi-tasking is a myth, and only works when both the things you’re trying to do are brain-dead simple–like folding laundry and watching TV. Anything more complicated, and you’re likely to do one or both things far worse than if you’d concentrated on a single task.

But multi-tasking isn’t just stupid. It can be expensive. Consider:

  • Talking on a cell phone while driving is as dangerous as driving drunk. You’re four times as likely to be in an accident.
  • Texting while driving raises your chances of an accident by 20 times.
  • Not only are you risking injury and death–and the injury and death of others–but you’re just begging for a nice juicy lawsuit. As Nolo Press puts it, “plaintiffs have argued (and some courts have agreed) that a driver was legally at fault for the accident (“negligent,” in legalese) because the driver used a cell phone immediately before or during the collision.”
  • If a plaintiff’s attorney can successfully argue that a phone call is distracting, think how much easier his or her case will be if you were texting–which any idiot knows you shouldn’t do in a car.
  • Even if everybody walks away without stunning medical bills, you can bet your life your auto insurance rates will skyrocket.

It’s not that hard to turn off the phone and put it away when you drive. You’ll drive better, and you could save yourself a fortune.

Young and broke? Open a Roth

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You young’uns, listen up. Roth IRAs are the best thing since sliced bread. And the best time to contribute is when you’re young and broke, since you won’t always be that way.

Here’s the deal: contributions to a Roth don’t give you a tax break up front. But when you aren’t making much money, you aren’t paying much in taxes, so that’s an easy sacrifice to make.

The beauty of the Roth is when you take the money out. You can always withdraw your contributions without paying income taxes or penalty on the cash. But I recommend you don’t, because if you leave your Roth alone, those contributions—and all the lovely gains they’ll earn over the years—can be withdrawn entirely tax free.

Chances are, your tax rate will be higher in the future than it is now. The future you will be blessing the current you for tucking aside all that tax-free wealth. Every $1,000 you contribute in your 20s could grow to $20,000 or more by the time you’re ready to retire. If you’re so rich by then that you don’t need the money, you can pass the account on to your kids, and THEY can pull out money tax free.

That doesn’t mean you should ignore your workplace retirement plan—your 401(k) or 403(b)—especially if it has a match. But if you can possibly tuck some money away in a Roth, you probably should.

Starting one is easy—just about any bank, brokerage firm or mutual fund company under the sun will be happy to take your money. I like Vanguard’s target date retirement funds, since they do all the asset allocation and rebalancing for you, their expenses are dead cheap and you only have to have a $1,000 minimum investment to start a Roth there. (Don’t have $1,000 yet? Start a Roth at a credit union, save up and then transfer the account to Vanguard.)

Even if you aren’t so young anymore, the tax benefits of a Roth make sense if you’re likely to be in the same or higher tax bracket in retirement.

The ability to contribute to a Roth starts to phase out once your modified adjusted gross income exceeds $110,000 if you’re single and $173,000 if you’re married filing jointly.

Making money is a good thing. But I’ll admit to some sadness when hubby and I stopped being able to contribute to our Roths. These accounts really are a great deal.

 

Spreading the wealth: the number of millionaires grows

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More people have achieved a net worth of at least $1 million, not including their primary residences. The Spectrum Group, which keeps track of these things, said the number of millionaires climbed for the third straight year to 8.6 million in 2011 (or 7.5% of all U.S. households). The growth in millionaires follows a 27% decline in 2008. But we’re still not back to the 2007 peak of 9.2 million.

Spectrum said the ranks of all affluent investors increased in 2011:

  • Those with $100,000 or more in net worth sans primary residence reached 36.7 million from 36.2 million in 2010 (about 32% of U.S. households)
  • Those with $500,000 or more in net worth climbed to 13.8 million from 13.5 million in 2010 (about 12% of U.S. households)
  • Those with $5 million or more in net worth rose to 1.078 million from 1.061 million in 2010 (slightly less than 1% of U.S. households)
  • Those with $25 million or more in net worth grew to 107,000 from 105,000 in 2010 (slightly less than .1% of households)

Retire in style: What you need to know

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Reuters has a nice package of retirement stories that are worth checking out:

Ecuador seen as new retirement hot spot
I mentioned Ecuador in my column “Retire overseas on $1,200 a month,” and now it’s been named a top spot for bargain-seeking retirees, according to International Living magazine’s 2012 Global Retirement Index.

What retirees wish they’d done differently
Reuters asked several retirees what they would tell their 40-year-old selves if they could go back in time. Interestingly, the answers aren’t all about money–they’re about quality of life. (A great book on this topic is Ralph Warner’s “Get a Life: You Don’t Need $1 Million to Retire Well.”)

How low must retirement withdrawals go?
Linda Stern tackles the tricky math of how much you can afford to take from your retirement savings to have a reasonable chance of making your money last as long as you do.

Growing numbers work into retirement
I’ve written about “When only one of you can retire” and the huge numbers of people forced into early retirement by layoffs, but this article picks up the flip side: people who keep working because they want to. If that’s you, you might also want to read “Retire without quitting your job.”

Is an annuity in your future?
One solution to the risk of outliving your money is the income annuity (also known as the fixed annuity). Learn more about it here.

When to start tapping Social Security
Some people have little choice but to take Social Security benefits early. But if you can wait, you probably should.

Moonjar winners: check your email!

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All 12 winners of the Moonjar Money Boxes have been notified, but I’ve only heard back from 8 of you. If I don’t hear back from the other four, the prizes will be awarded to other entrants. So: SUZY, JENNIFER S., EMILY B. and KATHY L., check your email (and your spam filter) and get back to me soonest!

Friday Follows: What’s interesting out there

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Here are some recent, thought-provoking articles that are worth a look:

“Get ready: inflation may hit 15%” from Kathy Kristof on MoneyWatch. Alarmist? Maybe, but there’s a lot of cheap money sloshing around in the economy right now. Once the economy heats up, that fuel could catch fire. If you don’t remember the 1970s, this is a good primer in what to do when prices skyrocket.

“Daily coupon deals may not work for buyers, sellers” from USA Today. I’ve gotten some great deals–and some real stinkers. Some businesses benefit, others don’t. What do you think?

“Bouncing back” from another friend, Melissa Balmain, on Success. How people find the strength to go on in tough times, and how to develop your own “resistance muscle.”

“Bulls, bears and bailouts” from ProPublica captures the highlights of a Reddit chat with Wall Street reporter Jesse Eisinger. Jesse’s answer to why more of the architects of the financial collapse aren’t in jail? “Prosecutors have been overly risk-averse.”