Tag Archives: personal finance

Preparing for the Storms

Are you saving money to help you through life’s storms? With the fragility of the workplace, the fickleness of the employers and even the restlessness of the employees, having steady, long term work is no longer the norm. My father, who was born in 1922 and lived through the depression, was told to get with a good company and stay there until you retire. Not bad advice for today, but usually, employees change jobs often. A Forbes article last summer stated that the average worker stayed at a job for 4.4 years with youngest employees about half that.

The economy is slowly healing. I am still very much worried about the national debt and its long term effects. But with fewer jobs and even fewer benefits available, I would strongly urge anyone with a job to save aside a little for life’s continued storms. Even if you don’t have a job but you have some type of income, even a little saved away is best.

At my own employer, we have had several restructuring in the last two years and a new one was just announced. I know professionals who have not worked at all or in their own field in over a year. This reminds me every day how fragile the workplace is.

Can you save? I hope so. Even a small amount like $50 per month will accumulate to $600 per year. This could be handy in an emergency, such as new tires or car repairs. Of course $100 a month would be better. Unscheduled repairs can be expensive.

If you are eligible, open a Roth IRA. There are several companies that allow you to open accounts with minimum deposits from $0 to $1000. Be careful when investing small amounts as your funds can be eaten up by transaction fees. Save until the investment move makes sense.

Even if you have a 401K or retirement plan through work, still save money aside for emergencies. The purpose of these funds is to help you weather the storms that life inevitably brews for us. It is better to be prepared. It is akin to buying extra water and canned goods when a severe weather event is coming your way.

Wishing you well and many blessings.

Retiring Overseas?

I am very blessed to still be working. Even though the company I work for is still doing well, I have still seen cost cutting, job consolidation and restructuring. I hear reports about many companies making profits, but are these top line profits or cost cutting that improves the bottom line? I hope both and wonder how much more cutting and consolidation can be had.

My investments are in mutual funds and ETFs. I even played commodities a bit but have since gotten away from them. My savings have taken a hit but are recovering somewhat. I love my work but the sense of permanence, which probably was never wise to have, is not as strong as it once was.

I have been exploring the possibilities of retiring overseas as a way to garner more from my savings. I have read some very interesting articles about Brazil, Argentina, Ecuador, Thailand, India, Northern Spain, Ireland and some others. I have been most intrigued by Thailand because of its low cost of living and reportedly friendly citizens. I have actually been thinking about India for a while, as I would like to help the widows that are there in some way, but that is another story.

As much as the cost of living is an important aspect of all of this, I still wonder about the political stability, religious tolerance or lack thereof, language barriers, and learning the etiquette of a different culture. What seems almost natural here could be insulting somewhere else. For instance, pointing with your finger in Thailand can cause offense, whereas here it is hardly noticed. I am willing to learn another language and culture. I think that would be part of the fun and adventure. But what about leaving behind my friends and family? What about my grandchildren (when I have them)?

But there is also food and medicine to consider. Is the water safe? Are there adequate medical facilities? Are my maintenance medications available? Is there a good infrastructure of roads and transportation? There is so much to consider. I believe I would visit the area first for a few months just to make sure it is suitable before arranging for hard ties to another country. Or maybe my retirement home isn’t overseas but just over the next hill. Anyway, it definitely has me thinking.

Have you ever dreamed of living overseas?

New Year, New Budget

As the new year quickly approaches, it presents a good opportunity to look back at the previous year and examine the actual spending. Depending on your record keeping, this could be an easy task or a daunting one.

Take a look at what worked and what didn’t. If it didn’t work, why not? We are all faced with increased food and fuel prices. How did rising prices effect your overall budget? Did the rising prices lower your discretionary spending or like many, cut into the heart of the budget? In my family budget, we were hit with a dramatic increase in medical insurance costs. I am sure that we are not alone in this. These increases have left very little wiggle room.

My family will have to look for more ways to stretch our dollar. This will include shopping at the “selective item” stores such as Aldi, Save-A-Lot and Price Rite, prior to going to the bigger supermarkets to get specialty items. We will also have to think twice about driving out of town to the stores for items that can wait to reduce fuel costs.  Many of these things we are already doing, we are just going to have to look harder at how we can do more.

With busy work lives and hectic schedules, it is easy to fall back on restaurant meals. This is an area that can easily be reduced. For a family of 4, a restaurant meal can easily cost $40 to $70, so it is easy to see how that can interfere with the budget. Frozen pizza and generic soft drinks can easily reduce the expense of a pizza night.

If you are doing better or expecting more income in 2011, consider paying down debt or saving the extra cash or both. If you are already comfortable at your spending level, it would be a great time to put some aside for your future. As witnessed these past couple of years, the future is an unknowable creature, so it is prudent to plan.

I hope that you had a wonderful holiday season. I pray that your coming year is a prosperous one for you and your family, filled with love and attention. Take care, stay well and be safe.



Can Marriage Jeopardize Your Future?

Today’s article is provided by a guest blogger. It was written by Theresa Fischette, the principal of White Light Communications and author of three blogs: Aponi the Butterfly, Doing it the Little Way, and Visions of Holley; all three can be reached from my blogroll on my main page. I thought this deserved publication in my blog.

If you wish to be a guest blogger, please send me your article and if I think it fits with my blog, I will publish it.

Can Marriage Jeopardize Your Future?

After embracing singlehood for many years, I am now “over the moon” about sharing my life with the most incredible man. Justin is everything I ever hoped for in a mate and more. Together we share a level of intimacy most cannot imagine. What’s more, as our relationship has evolved, we have redefined and expanded the meaning of family. While not yet legally married, we feel more married than either of us felt with our former mates. Asked from time to time, “why not marry?” the answer is always the same, “what incentive do we have to do so?” While we love each other very much and do wish to marry, reality has a way of taking a bite out of personal preference as we find ourselves deferring our wedding plans until age 60 by circumstance rather than choice. To marry sooner would actually jeopardize our future. This reality is particularly difficult as we truly believe in marriage, feel more married in every possible way except on paper, and from time to time face the scrutiny and disapproval of friends, family, and the spiritual community at large for this decision. As difficult as this decision is for us to make, we are not alone. In fact, according to Bowling Green State University Demographer Susan Brown, a 2006 study indicates that 1.8 million Americans aged 50 and above live in heterosexual “unmarried-partner households.” This is a 50% increase from 2000 figures. More recent census data results are more staggering, indicating that between 2000 and 2008, the number of cohabiting persons aged 50 and older almost doubled, from 1.2 million to 2.2 million!

How is this possible, you ask? The answer is quite simple. It’s not practical financially or personally to do so. What’s more, current government policies fail us morally and socially by discouraging marriage and encouraging cohabitation! First off… the financial reasons, which include tax penalties, loss of military and pension benefits, loss of alimony, fear of incurring liability for partner’s medical expenses, credit rating protection, separation of current debt, increase in health insurance costs, and asset protection. Then there’s the personal reasons such as lack of concern over what others think, love and friendship over romance, concerns over children’s inheritance, and anti-marriage attitude carried over from a previous relationship. The final “nail in the coffin” is found in the government policies including social security benefits, Medicaid, and health care reform that all favor cohabitation over marriage. For example, did you know that widows who stayed home while their husbands worked must remain unmarried to keep their deceased husbands’ Social Security checks? This is also true in the case of divorce. If your former spouse earned more than your current partner, then you may lose significant Social Security benefits if you remarry before the age of 60 (50 if disabled). The incentives to cohabit rather than marry should love blossom again are huge. Then there’s the infamous “Medicaid divorce.” In this scenario, a loving couple divorce to make an ill spouse poor enough to qualify for Medicaid. This allows the other spouse to preserve what’s left of the family’s assets. Finally, there’s our recent health care reform. Thanks to this so-called “reform, unmarried couples actually receive “cohabitation bonuses.” Case in point… if two 60-year-olds earn $30,000 per year, cohabitating couples are entitled to $10,425 in health care subsidies, while the same couple would not be entitled to them if married.

As absurd as all this sounds, there are little if any incentives for couples young or old to marry anymore. And we haven’t even talked about today’s divorce rates!. What incentive do you have to marry when you are actually rewarded financially in a big way to defer, or actually forgo your wedding plans altogether? Once again, as baby boomers, we are testing our social institutions along with current social policies as we age. Hopefully, common sense will eventually prevail, with the necessary adjustments being made to social policies so couples like Justin and myself who truly believe in and want to marry can do so without being penalized.

Stock Market Elevator

   We all know that the stock markets go up and down. Of course, we only want them to go up. This last slump has been very interesting. I have several aggressive overseas investments that have fallen deeply, but that is what aggressive investments do – they go way up and they can fall way down. So, I am not surprised that I took such a big hit. My Roth is heavily laden with foreign ETFs that follow developing and emerging markets. My 401k is slightly less aggressive.

   Europe is worried about the value of the Euro and whether the Euro can withstand the weaker nations pulling down the stronger economies. Most of Europe already has many of the same type of entitlement programs and tax spending pressures that we have and for much longer. So, their troubles are a little more complicated; much more than this mind can decipher.

   I think the effect of European economies on our domestic markets is overstated. I agree that there exists a real global economy, but I think that the US recovery is continuing, as slow as it may be. Orders for durable goods are up, unemployment in some areas is down, growth estimates for the US economy is 3.2%, higher than previously forecasted. Home sales were up, but I am guessing the stimulus credit probably helped there with the next few months probably showing a drop in sales rates. We are such an impatient lot. I believe in the entrepreneurial spirit. Capitalism, with all its detractors, still finds a way to create wealth, which leads to opportunities. However, I know there is a lot of pain and suffering out there as the economy works its way to find a new sense of normalcy.

   Many are afraid to invest now. If you have a long time horizon, more than 10 years, I would stay in the market. By putting in money month after month and diversifying your investments, you take advantage of today’s low prices. If I had less than 10 years until retirement, I would still stay in the market, but with more conservative investment choices. We have had many downturns in our economic history and are bound to have more.

   So join me on the Stock Market Elevator as it goes up and down. Let’s just hope that when we step in together, the operator says, “Going up.”


The Butterfly Budget

   This is the fifth article in the My Second Million series.

   You’ve tracked your spending. You have categorized your expenses so that you have an idea of where you spend your money. Hopefully, you also have an inkling as to how you spend your money and maybe even why. The more you understand your own habits and are honest about those habits, the easier it will be to make plans that work.

   My vision of a butterfly is a creature that changes into something free and beautiful. The metamorphosis from a caterpillar into a winged beauty. The cocoon is made by the caterpillar to protect it while it goes through its transformation. The cocoon that we often find ourselves in is usually a cage of our own making. It is cage that is locked from the inside. I know that I buy too much food and snacks. I attribute that to an existence of lack when I was young. My mother did a wonderful job of making sure we had enough, but I knew that we could have more. My father severely restricted my mother’s budget for food. So that is why I like to have lots of food and snacks around, it is a comfort to me. Sounds like an excuse, and it is. I know I do this and it is up to me to be honest and logical about it. Do I always win? Not at all, but I am trying.

   There is no perfect budget. Life will happen! The car will break down. A child will be sick. You have an emergency home repair. The budget is a spending plan. It should reflect your goals and your values. How do you expect to emerge a butterfly if you are not working towards your goals?

   If you are with someone special, it is important, vitally important, that they are part of the budgeting process. What are your dreams? Not just yours alone, but what is the goal that the two of you have together? Is it to be debt free? Is it to have a bigger home? Is it a safe and comfortable retirement? Do you want to travel? Your goals as a couple will determine the important aspects of the budget. It is, however, important that your goals be realistic. Make several smaller benchmarks that lead to your ultimate goal, that way you will know that you are gaining ground and succeeding.

   One of you may be better with finances or figures, the other more aloof or even uninterested. But it is important to at least know the direction you both want to move in. Money and arguments about money can bring incredible strife to a relationship, but working together with your partner in respectful and thoughtful discussion can move couples closer. If you live alone, do not dismiss your future. Where do you want to be in the future? How do you want to get there and what do you want for that someone special that may come into your life?

   The mechanics are simple but the implementation takes conviction. Begin with your income, your net income. If you tithe, that should come off the top, if not automatic. Know what you owe. Know when your bills are due. This simple information will create the basic structure of your budget. Define bills that are stable, such as mortgage and car payments. These are fixed amounts.

    Then define your bills that are variable, the ones that change each month, such as energy bills, grocery bills, etc. These bills are usually somewhat controllable. You can find some savings here.

   Then decide what your discretionary spending looks like. Much of your savings can occur here. Subtract your bills from your income. This is your discretionary funds. Your savings and goals come from here, as well as bills that can be cut or reduced. Don’t be afraid to set up multiple savings accounts. Maybe one for vacation, another for gift giving, but the priority should be a well maintained emergency fund. Or maybe some of the discretionary funds become extra principle payments on other bills. The choice is up to you. It won’t work if you don’t decide and follow through.

   You should be able to take these amounts and decide how much you can save. Once you decide a reasonable amount for saving, then mark that amount a fixed liability. Pay yourself first! Your first goal should be to have an emergency fund. It is best to have an amount automatically withdrawn from your checking to an online savings account that pays higher interest. Once your emergency fund is fully established, you can concentrate on other goals. Knowing that your emergency fund is there for life’s little surprises will relieve a great deal of stress and worry.

   Your first few budget months will probably not seem to work as you like, but this is normal. It takes time for the budget to be made reasonable, and it takes hard work on your part to make it work. Soon, there should be a balance between the needs and wants of today and the responsible planning for tomorrow. Some people like others to create the spending plan and provide structure. If that is what you need, then find someone you trust that you know is already financially responsible. If you have the courage to do it yourself, then establish an accountability partner, whether that be your partner, your kids, your parents, your friend or even a professional to keep you on track and hopefully give you lots of guidance and encouragement along the way.

   I hope that at least in this area of your life, you emerge a beautiful butterfly from a restrictive cocoon into a comfortable nest from which to take flight.


How are you spending?

This is the fourth article in the My Second Million series.

 So, how are you spending your money? Where are you spending your money? And finally – how much are you spending? This is the next step after you take your net worth snapshot. You know where you are, now its time to seek direction.

 Money slips out of our hands so easily: a dollar in the vending machine; a cappuccino on the way to work; the $6 value meal; and pizza night or two or three. Sometimes we don’t realize where the money goes.

This exercise is to show you how you are spending your money. How you track this is up to you. You can carry a small notebook and record every transaction like a check register. You can simply note the category and the amount. You can track it in a hand held computer, or even use an online service. The important thing is that you track every spending transaction for 30 days and I mean every transaction. Yep, even that 75 cent bag of chips from the vending machine.

 Fast forward; 30 days have gone by and you have your notations. Now we find out where you spent your money and how much. How much did you spend on vending machine snacks? How many times did you eat out? How much did you spend of lunches? How much did you spend on gas? Did any of this surprise you? I bed it did. Isn’t it surprising how quickly these expenditures add up? A ten here, a twenty there, a dollar over there, soon it adds up to hundreds of dollars.

OK, now that you know where you are spending your money, you can now change how you spend your money. Don’t put yourself on austerity budget right away. You will end up feeling deprived and go on a spending binge. Kinda sounds like dieting doesn’t it. In a way it is like dieting. Dieting is usually not successful unless you change the way you eat as a life change. Financial fitness requires the same kind of commitment. You want the changes to last for a lifetime. So change incrementally and develop new spending habits, positive habits that will grow your net worth and give you financial freedom.

 Look for simple ways to cut back expenses, such as: bag lunches, ride sharing, reduce energy usage, seek lower interest transfers of credit debt, combining errands to save gas, buy non-perishables in bulk, seek value as well as price, etc.

Knowing these things gives you control. This gives you power. Now you know where and how you spend your money. How you continue to choose to spend your money is up to you. You might even ask yourself why you spend money in a certain way. Is t to impress your coworkers? Are you buying friendship? If so, then understand that these are false relationship builders. Do you buy comfort foods? I do, but I also look for other ways to relax. You can too.

 Where are you financially? How are you spending? These questions are the beginning of your financial fitness journey. Your answers will determine your success.

I wish you much love and abundance. Take care, stay well and be safe.


Where are you financially?

This is the third installment  in My Second Million series.

   Before you can get where you want to go, you first need to know where you are. One quick way to do that is to determine your net worth. I recommend that you do a rough and simple net worth calculation.

   Write down and add up your assets: home, vehicles, retirement accounts, checking, savings, etc. You can even add the value of antiques and jewelry if the item is valued at $500 or more. I do not add values of life insurance policies or accounts dedicated to college funding, as this is not my money. Life insurance is for your heirs, and school savings is for your children.

   Then write down and add up your liabilities: mortgage, car loans, credit card balances, student loans, etc. Now, subtract your liabilities from your assets. The result is your net worth. It can be large, small or even a negative number. The larger the number the better but don’t worry too much if it’s negative. Persons just starting out will usually have a negative net worth. They have had little time to build assets and could be settled with mortgage and student loan debt.

   OK, so now you know your net worth – now what? Now you know where you are. You can begin tracking your progress. I recommend you recalculate your net worth at the end of each month. This will show you your progress. You want this number to grow. Guess what? Life happens. Your car might break down, your furnace quits, the stock market dives, or some other emergency occurs. Your net worth will be impacted, so don’t get too upset if it doesn’t grow every month. How does your net worth grow? Simple, when debts go down and assets go up.

   Now where are you going? That is a question best answered by you, but at least you have a starting point. You also have an overall picture of what your financial state looks like. It is easy to lose track of where you’re going without this picture. Knowing where you are also gives you a sense of control. Regardless of the value of your net worth, you have the power to determine your future. You do this now without even thinking about it, use this knowledge to improve your financial fitness.

   If you don’t have an emergency fund, start one now. Put away just $40 every paycheck, if paid every two weeks. It is best to set up recurring automatic transfers into a separate savings account. Your emergency fund account will have $1,000 in one year. This is for emergencies, such as car repairs and home repair emergencies. Redecorating the kitchen is not an emergency. Vacationing is not an emergency. Birthdays and Christmas are not emergencies.

   Great online places to save your money are listed below. This is not an all inclusive list and rates change quickly. These online banks are FDIC insured, which protects up to $250,000 per depositor per individual account until Dec 31, 2013. If no federal intervention occurs, the extension expires and the coverage reverts back to $100,000 on Jan 1, 2014.

Ally Bank 1.44% APY
FNBO Direct 1.40 APY
HSBC Direct 1.35% APY
ING Direct 1.20% APY
Emigrant Direct 1.10% APY

    May your net worth grow throughout the year. Take care, stay well and be safe. 


My Second Million – Part Two

You can find Part 1 here: My Second Million – Part One

   When should you start saving?  NOW!  It is never a bad time to start.  If you already started, then great, if not, why not start now.  Of course, the younger you are, the greater impact your savings will have since time allows for the magic of compounding interest.

    The first priority is to save $1000 as a starter emergency fund.  Then accelerate your debt payments (except for your mortgage, which comes later).  You can use some of your savings to continue to build your emergency fund to a level that is equal to three months expenses or more.  Then concentrate on retirement savings and mortgage reduction.  If your employer offers a 401k with a match, then fund your 401k enough to get the full match.  That is free money – take it.

 Spending Tomorrow’s Money Today

   I am going to use myself as an example.  I am very nearly 50 years old.  That is five decades on the planet, five decades of experience and still learning each day.  According to the latest Social Security retirement tables, I will be eligible for full benefits at age 67, just 17 years from now.  Normally that would seem like a long time, but since the last 50 years flew by, I suspect that my retirement date will soon be upon me.

    TVM (Time Value of Money) says that for every dollar that I invest today at an assumed earnings rate of 8.5% per year, that dollar would grow to be $4.  My savings factor is four.  Therefore, if I buy that burger meal for $6 then I have forfeited $24 of my future savings.  Now, I am not saying that you should never buy a burger meal.  However, if I really love burgers and bought that meal five days per week for a year (250x$6), I would be spending $6000 of my future dollars.  Those burgers just aren’t that good and certainly not good for me!

    We each can find ways to save money, whether it is to save for our future or pay off debt.  The younger you are, and its never too late, the greater your savings factor is going to be.  If you are 25 and retire at 67, your savings factor is 30.76 @ 8.5%.  Now there is an expensive burger meal.  Time allows the magic of compounding interest to grow your dollars.

    Keep in mind that as your money grows so does the cost of living.  If we assume an average inflation rate of 3%, the cost of living would double every 24 years.  That means our 25 year old would have to spend $3.46 for every dollar spent today.  Therefore, you can see where savings is vitally important.

    My favorite investment site for people just starting out is http://www.sharebuilder.com/ because it demands no minimum deposits; allows you to automate your investments; and allows you to buy incremental shares.  It is one among many great sites.

 Take care, stay well, and be safe.


My Second Million – Part One

I don’t think many people have thought about this, but it is amazing how much money you make during your career. Sure, they talk about sports players and movie stars, but what about you?  I am very near my big Five-Zero birthday. I have been delving in investments for the last 10 to 15 years.  When I added up my household income for the last 35 years, it exceeded $1M. Wow, where did that money go.  It went to living expenses, entertainment, energy and everything else that we do every day.

So, I am now working on my second million.  I wish I still had my first million, but taking care of my family was well worth every penny. I really don’t have much of my second million.  I am saving for retirement and hoping to build up value through wise investing.

I’ve signed up with Twitter. I am following some investment sites to help me keep in tune with the investment world.

My sons are in their early twenties and I hope they can someday say that they are working on their third or fourth million. If you are young and working, open a Roth IRA, take advantage of your employer’s 401k plan or otherwise save for your retirement. It may seem like a time that is far off, but it will come faster than you realize.

Take care, stay well, and be safe.

 Go to My Second Million – Part Two