Tuesday, August 30, 2011

The Wealth Builder Carnival #47

Welcome to the forty-seventh edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized them into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

And now onto the Carnival:


Earning


Kyle Taylor presents Does BP Oil Owe us $6,000? posted at The Penny Hoarder, saying, "I recently found out that I might be owed a ton of money from three different class action settlements. The experience made me realize that I should be on the lookout for others. Here's how I found them and submitted my claim form..."

JBY presents How to Become a Freelance Writer posted at Blogging Your Passion, saying, "A lot of people have been turning to freelance writing as a way to earn some extra income. This is a look at a few things you need to get started!"


Insuring and Protecting


My Journey presents Make Sure Your IRA Beneficiary Is Correct posted at My Journey to Millions, saying, "Two cases have shown that it is imperative to check your IRA beneficiary. Don't make the mistake these two men have!"

Matt presents Winning With Money Part 3: Self Insure Against Emergencies posted at Living In Financial Excellence, saying, "When you’ve built up a good emergency fund equal to 3-6 months of your household expenses,you’re effectively self-insuring against a variety of financial emergencies."


Investing


John Border presents How to buy gold in the stock market posted at Stock Market Basics, saying, "Gold is the best hedge against the shaky economy and easiest way to buy gold is via stock market."

Kevin presents Gold Versus Fiat and the Mother of All Bubbles posted at Invest It Wisely, saying, "If the government continues on its current path then times will get harder, however, humans are great at adapting, especially in response to pain. I believe that the outcome of the mother of all bubbles will be a healthier economic and monetary order."

Dividends4Life presents 13 Dividend Stocks With A Quick Payback posted at Dividend Growth Stocks, saying, "Payback is the amount of time needed for an investment to earn its cost, undiscounted. Once you earn back your investment, some might say you are in a no-lose situation. I wouldn’t go quite that far, but you have found an investment that that has provided you a good historical revenue stream, and hopefully it will continue to do so in the future."


Living Frugally


Jonathan from Debt Loans presents Which is Better – The Credit or the Debit Card? posted at Wallet Watcher, saying, "Much to-do is made about the benefits of one type of card or another. In fact, you would not be hard-pressed to find experts and consumers commonly contradicting which card is best – the credit or debit card."

Suba presents Frugality vs earning more : Which is better posted at Wealth Informatics, saying, "Frugality vs earning more, which is better for building wealth?"

Jason@LiveRealNow presents Money Problems: Day 12 – Paying for College by Doing Without posted at Live Real, Now, saying, "College isn’t for everybody.Read that again. Not everyone should go to college. Not everyone can thrive in college."

Jon Elder presents Credit Card Mistakes To Avoid at All Costs posted at Free Money Wisdom, saying, "Here are a few of the most common – and not to mention expensive – credit card blunders that are best avoided."

Jonathan Milligan presents Get Me Out of Debt! posted at Simple Life Habits, saying, "Here are 5 tips that you can use starting today to get out of debt."

Tim Fraticelli presents 3 Ways To Stretch The Life of Your Car posted at Faith and Finance, saying, "Your car is one of the largest purchases you'll make. Keep it running with these tips. One might just surprise you because it's a change to the standard rule of thumb for oil changes."

Roger, the Amateur Financier presents Frugal Friday – Automobiles posted at The Amateur Financier, saying, "A short guide to the best ways to keep your automobile in good shape, while minimizing its cost to you."


Retiring


David Leeman presents Cheapest Places to Retire Overseas - 7 Cheap Retirement Places posted at Financial Freedom Advantage, saying, "For frugal retirement living at its best, consider relocating to one of the cheapest places to retire. Here are seven cheap retirement places where you can live in financial freedom on an average retirement income."

DJ presents Retirement: Don’t Let Your Money Retire posted at The Family Wallet, saying, "If you have adequate retirement savings, you’ll only be using a portion of your money each year. There’s no reason that the rest of your money shouldn’t be earning a return for you."

Mike Piper presents Does It Still Make Sense to Max Out Your 401k? posted at The Oblivious Investor, saying, "In light of the recent craziness in the stock market, does it still make sense for people to max out their retirement accounts?"


Saving


Marie presents Set Up Automatic Money Transfers and Save posted at Money Spending Mommy, saying, "Saving money isn’t always easy. But when you make it automatic, there is less room for unnecessary spending."

John presents Money Market Accounts vs. Savings Accounts posted at Wallet Blog, saying, "Hey, I hope all is well! In my submission this week I examine what separates a money market account from a traditional savings account. After all, if we’re to make responsible banking decisions and effectively manage our money, we must understand the options available to us."


Taxes


Jessica Bird presents 3 Car Tax Rules You Should Follow posted at CarTaxBands.org, saying, "This article highlights three rules that you should follow if you want to avoid being fined or losing your car."

Robert Moore presents 2011 Tax Cautions Delivered By The Internal Revenue Service Concerning Fraudulent Tax Returns posted at 2011 Taxes, saying, "Scams are being reported where tax payers are encouraged to pay fees and provide identification to receive a tax credit that they missed during the tax season."

That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

Copyright © 2011 Achievement Catalyst, LLC

Thursday, August 25, 2011

Enjoy Working with Students

It's refreshing to work with students.  Due to my various retirement jobs, I do a lot of work with students.  I teach science to K-2 in after school programs, tutor high school students for college prep tests, and help college students and young employees on professional and career development.  Here are the reasons I like it:


  • Great attitudes.  Most of my students are very positive and interested in learning.  Perhaps it's self selection since students are taking the courses voluntarily.   Most of the time :-)

  • Making a difference.  I pretty good one-to-one with students and young professionals.  I do a good job of evaluating their situation, identify an outstanding solution, and providing an outstanding solution.  I love seeing the light bulb go off in their head.  I've learned the skill of being positive and patient.

  • Appreciation.   Students are generally appreciative of the help provided.   Tonight, I wished my student good luck on the test, since I won't always be her teach.  She said, "I hope you are my teacher again."    It's great immediate positive reinforcement that I did my job well.

  • However, I know I am not great full time teacher material.  I wouldn't want to teach the same class in a structured setting for nine months. I'm much better at the once a week intervention.  I'm happy, the students are happy, and my employer is happy. 

    Best of all, I'm paid 2-3 times minimum wage for doing a job that's still seems fun :-)

    Hopefully, I will have the opportunity to continue working with students for many more years.


    For more on Crossing Generations, check back every Thursday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, August 24, 2011

    When Cash is a Good Idea

    Most of my friends, relatives and colleagues think my strategy of holding cash is a bad one.  They remind me that inflation will reduce the value of cash while equities will keep up with inflation.   They also remind me that I can't successfully time the market.  Statistically, they are correct.  Cash will be worth less due to inflation and unlike stocks, cash won't appreciate. However, if I have sufficient cash, inflation and lack of appreciation don't matter.

    Let's talk first about inflation.  If I assume inflation of 2%, then my cash will decline 2% in value per year.  What does that mean?  In 5 years, my cash will lose 10% of its value, 10 years, 18%; 20 years , 33%; and 35 years, 50%.  OK, 35 years sounds pretty bad for cash, especially if I a need the money in retirement.  However, let's assume I have a good pension and Social Security.  Also, I only need $20,000 a year of supplemental funds.  If I had $1.5 million in cash, I probably wouldn't care about only keeping it in cash.   That's because even after 35 years, it would still be worth $750,000, which still cover 37.5 years of $20,000
    a year payments.

    What about appreciation?  Well in the example above I don't need appreciation either.  Appreciation is nice to have but it's not necessary.

    So cash is good when you have enough funds, despite inflation and no appreciation.   At that point, there is not need to take any unknown downside risks, such as investing in the stock market.
     
    For more on The Practice of Personal Finance, check back every Wednesday for a new segment

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, August 23, 2011

    Baking Soda - Safe, All-Purpose Chemical

    We use baking soda a lot around our house.   It's cheap, natural and has multiple uses.  Here are some of the ways we use it.


  • Non-abrasive cleaner.   We use baking soda on burnt pans, counter tops, sinks, shower stalls.  The powder removes most stains without scratching the surface.  I especially like using baking soda to polish sink fixtures.

  • Odor remover.  We put baking soda on carpet spills such a sauces, beer and wines.  Generally, it will reduce or remove the odor from these spills.  I once spilled a sauce from a fish meal on my truck seat.  My spouse threw bunch of baking soda on the spill and left it on for three days.  Residual smell, none.

  • pH adjuster.  The pH of a hot tub should be slightly basic, about 7.2.  Since the water is usually a little acidic, baking soda can be used to raise the pH.  However, I've learned that baking soda, sodium bicarbonate, also raises the alkalinity a little too much.  I now use washing soda, sodium carbonate, to raise pH since it has less effect on alkalinity.


  • Baking soda is great.  It's a lot cheaper than commercial products and it can do multiple tasks.  Best of all there are no precautions, e.g. gloves, goggles etc, that are needed  So we always buy the large 13.5 pound bag at Costco to make sure that baking soda is always available when  needed.

    For more on  Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial or chemical use advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Sunday, August 21, 2011

    Dealing with Volatility

    "Get use to disappointment." ~ Man in Black from The Princess Bride
     
    I expect extreme volatility will be the norm for the rest of 2011.  Also, I think the overall trend will be downward.  For example, if I had kept the shorts that I closed on August 8, 2011, I would have made more money shorting.
     
    I will try to take advantage of the volatility.  My solution is to stay mostly in cash.  I will buy on the dips and sell into rallies.  Then, I will short during rallies and close my shorts during dips.  I will keep positions small, less than 5% of our portfolio.  That way if I'm wrong, losses will be capped.
     
    I will follow this strategy until early 2012 or when the market stabilizes, which every comes first.
     
    For more on New Beginnings, check back every Sunday for a new segment.
    This is not financial or investing advice. Please consult a professional advisor.

     Copyright © 2011 Achievement Catalyst, LLC

    Saturday, August 20, 2011

    Stock Market Pricing in Four More Years

    To me, the stock market is now pricing in an Obama re-election.  The Republican party has not put up a viable candidate yet.  While Rick Perry is interesting, I don't think he has shown he can win.
    So investors believe it's likely the economy will be essentially the same until 2016 since the Obama administration believes "no changes" are needed for their economic policy.
     
    In addition, the situation in Europe feels a lot like 2008.  I also expect Obama's jobs proposal to be too little, too late and too much government, i.e. a big disappointment to the market.
     
    I guess it's time to start shorting again.  
     
    For more on Reflections and Musings, check back every Saturday  for a new segment.

    This is not financial  or investment advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Friday, August 19, 2011

    Got My "A" Game Again

    When I took on the executive director position at a non profit, I had been retired 3.5 years and had not worked at a executive or management position during that time. During that time, I was happy doing worker jobs in teaching, tutoring and financial services, leaving the mangement responsibilities to others.  I enjoyed the focus on doing a excellent job while working and then leaving the job, both physically and mentally.  However, I still felt I was very good at making decisions and evaluating performance.

    After 5-1/2 months on the job, I now know my executive/management skills were a little rusty in the beginning. But it's just like riding a bike: it just takes a little practice get back to the 100% level.  It took me about two months to get back into the groove a managing an organization.  My analysis and decision skills have resharpened.  I make quick evaluations. My assessments of peoples strengths is excellent again.  Best of all, my percentage of being correct has increased.  I playing my "A" game again.

    Although, I'm very good at doing this job, I've decided not to renew my contract.  I'm very glad for my last hurrah,  but it's not what I love doing.   However, it has helped me refine my thinking  about what I want to do.  And I think I will try to make that happen while I still got my "A" game.
     
    For more on  Reaping the Rewards, check back every Friday  for a new segment.
    This is not financial advice. Please consult a professional advisor.

     Copyright © 2011 Achievement Catalyst, LLC

    Thursday, August 18, 2011

    On Loving One's Work

    "There's a reason it's called work" ~ me

    It's interesting how the view of work and life has evolved over the past hundred years. 

    I don't think my dad's generation worried about loving their work.   My dad liked to be working.  He worked until he was 72, and he didn't need to financially.  I don't think he loved his work, but I don't think there was something else he wanted to do.  I think my dad loved earning money.

    During my generation's working life, the concept of career and loving one's work emerged.  We were supposed make our career a major part of our life and devote significant personal resources to it.  I tried to buy into this.  I convinced myself I was doing something that made difference, which was true in a macro sense. I dedicated myself to my job.  My projects became more successful.  I was promoted and paid more. I was promoted again and paid a lot more.  I was committed 24/7 to my job.   However, I didn't love my job.  I liked many parts of it, I was very good at it, but I didn't love it.  But I realized that I didn't have to love my job :-)

    The current generation strongly believes they need a career they love and have passion for doing their work.   They want a job they love going to every day.  To me, they are searching for the unattainable holy grail.  Recently, I was asked by an intern whether I loved the job from which I retired.  My answer was, "No, there's a reason its called work.   There were parts of the job that I liked, but there were also parts I didn't like.   But I didn't dislike my job. "   I think he was disappointed in my answer, but appreciated my candidness. 

    As I've written before, doing what I love wouldn't pay much.   So the idea of working a career that I love for 27 years seems foreign to me.  I'm still a big fan of getting a good college education that enables getting a higher paying job and then taking the hire paying job.  Work a job for love in retirement, when the amount of income earned is not as important.

    For more on Crossing Generations, check back every Thursday  for a new segment.

    This is not financial, career or retirement advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, August 17, 2011

    Be a CFO

    "If you don't know where you're going, you might not get there." ~ Yogi Berra
     
    To me a CFO has two responsibilities: 1) Help set the financial goals for the corporation; and 2) Develop and ensure strategies enable the corporation to achieve the goals. Individuals should be the CFO of their own or their family's finances. In our case, I set the financial goals for our family, and our family works together to achieve those goals. 
     
    So here's my simple process for being a family CFO:
  • Estimate one's lifespan.   OK, not easy to do.  To be safe, I chose 95.   For me that's about 40 more years.


  • Estimate annual expense needs.   A little easier.   If I did the calculation myself, I would cheat and ignore inflation.  However, my financial advisor can do the calculation for me:-)


  • Divide savings by annual withdrawal needed.  A number equal to or greater than the lifespan is good.


  • A CFO doesn't need to do all the technical analysis work.  However, a CFO needs to ask the one question, "Is what's being done going to enable achievement of the financial goal?"

    In our case, we've done the Monte Carlo analysis and I'm satisfied with the confidence level being above 85%.  However, I haven't asked for an analysis with a fixed return, which is equivalent to being mostly in cash.  Given that I've sold most of our equities in the past two months, I plan to ask for a fixed return analysis from my financial advisor.

    For more on  The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, August 16, 2011

    The Wealth Builder Carnival #46

    Welcome to the forty-sixth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized them into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

    And now onto the Carnival:


    Earning


    None


    Insuring and Protecting


    None


    Investing


    Dividend Growth Investor presents Four Dividend Stocks safer than US Treasuries posted at Dividend Growth Investor, saying, "I did a little research and found several dividend growth stocks, which have global operations that currently spot AAA ratings, the same as US Government."
    Mike Piper presents Asset Allocation: Maximum Tolerable Loss posted at The Oblivious Investor, saying, "Just a quick rule of thumb for investors trying to put together a portfolio."

    Roger Wohlner presents The Dow Dropped 512 Points, Time to Panic? posted at Chicago Financial Planner, saying, "Thursday August 4th was one of those frightening days when virtually everything fell. On this day many normally un-correlated asset classes moved in the same direction, lower. Further, the markets have been heading almost straight down for the past couple of weeks. What should you do now?"

    David Leeman presents Investment in Mutual Funds posted at Financial Freedom Advantage, saying, "An investment in mutual funds is a one of the best ways to invest money, especially if you don’t have the time or interest to keep up-to-date on specific companies and investments."

    Dividends4Life presents 10 Dividend Stocks With A 10% Yield In 10 Years posted at Dividend Growth Stocks, saying, "This week week, I screened my dividend growth stocks database for stocks that will be yielding 10% in 10 years at current yield and dividend growth rate (based on Monday's close). The results are presented below:"

    Carlos Sera presents A 500 Point Tale | Financial Tales posted at Financial Tales, saying, "As the market closed down today, August 10, 2011, roughly 520 points I was somehow transported to a different place and time. I was transported to October 19, 1987."

    John presents Money Market Funds vs. Money Market Accounts posted at Wallet Blog, saying, "Despite their similar names, money market accounts and money market funds are most certainly not the same thing, so here's a guide to help clear up whatever confusion might exist and provide insight into which will best suit your particular needs."


    Living Frugally


    Jon Elder presents 25 Money Saving Tips For The Holidays posted at Free Money Wisdom, saying, "Everybody the world over is feeling the pinch, making it more important than ever to find ways to save money. Holidays really can be expensive, so here are 25 tried and tested money saving tips to ensure you have a great break without emptying your wallet."

    Jonathan from Debt Loans presents How To Cut Back On Entertainment Expenditure and Still Have a Good Time posted at Wallet Watcher, saying, "If you think outside the box, you can still have a good time by participating in many forms of entertainment that cost you next to nothing."

    Everydaytipsandthoughts presents Changing Financial Habits Is Hard Work. Don't Just Talk About It, Open Your Mind and Do It posted at Everyday Tips and Thoughts..., saying, "So often, people ask me the same questions over and over about why they are in the bad financial situation they are in. I give the same advice time and time again, yet people don't really want to hear it. If people want to change their spending or savings habits, they can't just say it. This change requires an open mind and a true desire to change their financial situation."

    Scott Bartlett presents You Can't Go Home Again posted at BATSHITE, saying, "An article about the financial advantages of renting a living space over buying one."


    Retiring


    DJ presents Health Care and Early Retirement posted at The Family Wallet, saying, "Today, early retirement has become a less viable option for many. One of the most prevalent concerns of those who consider early retirement is health care. What many would-be early retirees don’t realize is that they do have some health care options."

    Marie presents Retirement – Money Advice in Your 40s posted at Money Spending Mommy, saying, "Even though most people don’t retire in their forties, most of them are beginning to seriously think about whether they’re saving enough for retirement. Money advice in your forties may be similar to what you received in your thirties; however, you probably have fewer years to be planning and saving."


    Saving


    Judy Blackburn presents Keep an Analysis of Your Current Financial Situation posted at Debt Consolidation, saying, "Staying within budget and paying down debt requires staying on top of your money and watching your expenses."


    Taxes


    John Harrison presents Working Tax Credit and Claiming the Costs of Childcare posted at Tax Credit Calculator, saying, "Not everyone knows that if you work and pay for childcare that you can often claim back money from the government. This article explains more about it."

    Steve presents Do I Really Need to Hire a Tax Consultant? posted at 2008 Taxes, saying, "If you operate a small business and would like your tax situation to be presented to the IRS is the best possible way, hiring a tax consultant is very important."

    That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

    Technorati tags: , .

    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Monday, August 15, 2011

    It's Time to Buy and Sell

    Now that the turmoil in politics and economic appears over, the stock market has been has been recovering well.  So the question is whether to buy or sell.  The answer is both:-)
     
    Overall, I don't think the economic landscape has changed much. The U.S. is still spending too much and depending too much on debt.  The European sovereign debt crisis still looms.   The housing market is still poor.  The economic outlook is still negative and not getting better.The main disconnect is that global multinational companies continue to do well.  The earnings for the S&P 500 companies will be at a record despite the high level of unemployment.  It's still not clear to me the economy will get better or the S&P can match projected earnings
     
    For now,  I believe the stock market will probably still be down at the end of the year because nothing has changed.  However, in the short term, it appears the market is heading up.  In fact, I've briefly thought about reinvesting 10% of my cash back into stocks.  But I am going to resist and limit my buying.
     
    At this point, I plan to buy a few dividend paying stocks since we are mostly cash. I've already purchased 30 shares of Boeing and 50 shares of Century Link.  Other stocks I am considering include Johnson & Johnson, United Technologies, Abbott Labs, Pfizer and Intel.  On the other hand, I plan to take advantage of rising stock prices and lock in profits by selling into the rally.   I will sell some more stock options I own in the company from which I retired.
     
    Hopefully, I will win by buying a little now and then benefit from the short term rally by selling the purchased shares or my stock options.  If I'm wrong, I won't have risked  very much.
     
    Disclosure:  At time of publication, we own shares of Boeing and Century Link.

    For more on Strategies and Plans, check back every Monday for a new segment.
    This is not financial or investing advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Saturday, August 13, 2011

    Playing to Win

    In sports, I generally played for the enjoyment.   I played hard in both practice in games.   I played my position well.  However, I also played to win.  Fortunately, I was lucky to play for coaches who played to win and knew how to win.  As a result, I played on several championship teams, including a state championship football team.
     
    Nowadays, I play sports primarily for exercise. Today, I was watching a professional sports tournament.  All the participants were all playing to win.   I realized one thing I missed in retirement is the excitement of winning a championship: the thrill of victory. 
     
    So I'm going to start challenging myself again by playing to win.  First in sports and then I'll see what's next :-)
     
    For more on  Reflections and Musings, check back every Saturday for a new segment.
    This is not financial, health or retirement advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Friday, August 12, 2011

    Right About the Stock Market - But for a Different Reason

    In June 2011, I decided to liquidate virtual all the equities in the accounts I manage.  As the events of the last two weeks proved, liquidation was the right decision.   However, the reason I decided to liquidate apparently isn't the cause of the decline and volatility.  I thought that the debt crisis solution would be a disappointment and lead to a market decline, much like what happened when TARP was passed.  It turns out that the main cause of the market decline is the European financial crisis, in particular the issues with French banks and Italy's sovereign debt.

    Anyway, this week was a good week to be in cash.  I actually even made some money.  I covered my shorts on Monday for a profit.  I bought some beaten down shares on Wednesday and those are making some money as of the close on Friday.  I made the decision to cover my shorts and make some small purchases base on the article Historic Returns Following a Market Selloff.

    In this case,  I guess it's better to be lucky than smart  :-)
     
    For more on  Reaping the Rewards, check back every Friday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Thursday, August 11, 2011

    Asked a Great Question

    Last week our six year old daughter asked me, "What can I do to earn some money?"  I think that is a great question.    For reference, I already pay our daughter for helping me clean up after an after school teaching assignment.  Here are some reasons I'm impressed:

  • She's starting to understand that people work to get money.   While she still depends on the parents for funds, she realizes that we needed to work to get the money we have. 


  • She is motivated by money.   That's not such a bad thing.  The college roommate that was most motivated by money ended up with the highest paying job.


  • She wants to earn money to buy things she wants.  Our daughter knows that her current purchases are limited by what we allow her to buy.  If she earns money, she can buy more of what she wants.  I think gum is tops on her list :-)

  • For now, we're not sending her to work just yet.  However, I will continue to look for ways to give our daughter the opportunity to earn money.

    For more on Crossing Generations, check back every Thursday for a new segment.

    This is not financial or parenting advice. Please consult a professional advisor.

     Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, August 10, 2011

    Timeless Articles from the Archives #52

    It's been almost five years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" which highlights posts from the same week in 2007-2010. 

    This will be the final edition for now since I have covered all the articles written in the first four years.


    2007

    Die Broke - Mercantile Ethic - A job should be just a job :-)


     2008 

    Wealth Creation and Accumulation    -   My thoughts on how it happens.

    A 60/40 Approach to Budgeting Money  - Live on 60% and save 40%.



    2009

    Was Early Retirement a Good (or Bad) Idea?  -  While challenging, I still think early retirement was a good idea. 

    Why this Recession will be Different       -  Looks like this was a correct call.


    2010

    Selling our Bonds    -  We still keep most of our bonds in tax advantaged accounts.  However, we did sell most of our stock holdings in June 2011 due to expecting a stock market decline.


    To me, the content of these posts are still relevant today and worth reading again.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial, retirement, parenting, tax, investing, career or saving advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, August 09, 2011

    Expect a Short Term Rally

    In Historic Returns Following a Market Selloff, I saw a report that showed the stock market was usually up 1 day and 1 week after a 6% drop.   So I closed out my shorts.  I will look at buying some large cap dividend stocks in the short term. If the market continues to rally, I will sell into strength.  
     
    For more on Ideas You Can Use, check back every  Tuesday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Monday, August 08, 2011

    Less Talk, More Action

    Insanity is doing the same thing over and over again but expecting different results. ~ Rita Mae Brown

    When I was a new employee, our company's product was the leading brand, but losing share precipitously.  However, the research group was conservative and only working on a safe upgrade.  The research group did not want to risk a major change that would cause a problem.

    At the annual reviews, the CEO patiently listened to the research team's presentation.   At its conclusion, he asked one question, "Will this upgrade reverse product's share decline?"   The group hesitated and answered, " Probably not."  The CEO then responded, "Then work on something that will."

    To me, the recent stock market decline is the result of the government continuing to do what doesn't work:  talking about the issue.  For example, I'm tired of politicians telling me that the other party caused the problem.  Today, the constant patter was that the S&P downgrade was a mistake and that it was the other party's mistake.   The current administration seems to think that just talking about the issue will improve the situation.  (For reference, the market dropped further after Obama's speech claiming the S&P rating was a mistake.)

    It's time to stop talking and do something that will improve the situation.  Here's my recommended action to improve the situation.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial or policy advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Sunday, August 07, 2011

    Tomorrow is a New Beginning

    On Friday, after the market close, the S&P downgraded the U.S. credit rating to AA+.  This is the first downgrade for U.S. debt.  The Asian markets are falling precipitously.  Monday is likely to be the beginning of another significant downturn in the market in the U.S. The U.S. markets will probably be ugly for the next couple weeks and maybe all of August.

    So far it looks like "sell in May" was a good strategy in 2011.
     
    For more on New Beginnings, check back every Sunday for a new segment.
    This is not financial investing advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Saturday, August 06, 2011

    Only One Bullet Left

    In June 2011, I came to the realization that Keynesian economic policies had failed miserably even though the stock market was doing relatively well. I also realized that the Fed and the Obama administration had almost no options left to improve the economy.  So I sold just about every stock in the retirement and savings accounts I control.   At this time, it appears I made the right decision :-)
     
    I expect a buying opportunity soon when the market declines 20% (about Dow 10200).   I know this sounds unlikely to many readers.   But I can't see any trajectory other than downward given that Fed and the Obama administration only know to continue what they're already doing.
     
    I do see one opportunity to reverse the bear market and economic decline: the repeal of Obamacare.  To me, this is the only bullet that's left.  This would give business a positive outlook for 2-3 years and lead to job creation. However, I think it is an action the administration will take only if Obama's re-election is in jeopardy, which it is not at this time.  
     
    So for now, I'm waiting for a Dow 10200 before putting money back into stocks.   By then, Obama may need  to consider his final option to improve the economy and protect his re-election.
     
    For more on Reflections and Musings, check back every Saturday for a new segment.

    This is not financial or investment advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Friday, August 05, 2011

    Glad to Be in Cash

    Two months ago, I started to worry and  began selling out our stock investments.  Through July 2011, it wasn't clear that I had made a good decision since the market recovered and nearly achieved the 2011 highs.   However, this week I feel my decision was vindicated especially since  I slept well  this week.

    So while indices fell 6-8% this week, the retirement accounts I manage only fell 0.4% since I still kept a very small amount of stock.

    For more on Reaping the Rewards, check back every Friday  for a new segment.

    This is not financial or investing advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Thursday, August 04, 2011

    Two Tips for Job Applicants

    I spent the weekend reading through 50 job applications for two job openings in our organization.  I identified five good candidates.    For the other 45 applications, I have the following two recommendations:
  • Stop spamming job applications.   I can't believe the number of applications that were a complete non-match for the job.  It was almost as if they had not read the job description before applying.  Their experience was in unrelated fields, their education didn't meet the minimum requirements, or they didn't have any management experience.  Multiple applicants submitted for both jobs, implying that I was to decide the one for which they were most qualified.  (In all cases, the answer was "neither.")


  • Pay attention to details.    Many applicants had a different college major than specified in the job description.  In addition, their job experience was completely unrelated to our role description. One applicant even misspelled his own name.  At first, I thought it was a unique name, until I checked the Internet and noticed the person's name was spelled differently on Facebook.  In my opinion, if an applicant can't pay attention to details when applying for a job, I'm not likely to get better results after they become an employee.

  • Maybe applying for a job is different now.  In my case, I generally try to figure out why a hiring manager might be interested in me.  Then I try to customize my application for the hiring manager.  However, based on the recent applications I have reviewed, customization of a resume/application doesn't appear to be the approach any more.

    For more on Crossing Generations, check back every Thursday  for a new segment.

    This is not financial, job application, or career advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, August 03, 2011

    Timeless Articles from the Archives #51

    It's been almost five years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" which highlights posts from the same week in 2007-2010.


    2007

    How Will I Know I Have Saved Enough? - I still consider this a good rule of thumb.

    Three Questions To Determine If One Will Be Affluent - Answering yes is good.

    Top Ten Reasons We Will Become Wealthy  - It worked for us.  YMMV.

    From Where Does Money Come? - I guess a new answer would be " The Fed" or "Uncle Ben." :-)


     2008 

    Preparing for Others to Handle One's Financial Tasks      -   Planning ahead is good.  Hopefully, I won't need help for a while.

    Managing Wealth is a Skill - Here are three important elements.



    2009

    The Great Knowledge Portal     -  The Internet usually has all the information I need. 

    Expecting Another Bubble      -  Looks like precious metals will be the next bubble :-)



    2010

    Faith in our Long Term Future      -  What a difference a year makes.  I've completely lost faith in our near term future and am now questioning the long term future.

    To me, the content of these posts are still relevant today and worth reading again.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

    This is not financial, retirement, parenting, tax, investing, career or saving advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, August 02, 2011

    The Wealth Builder Carnival #45

    Welcome to the forty-fifth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized them into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

    And now onto the Carnival:


    Earning


    Edward Webber presents How To Become A Self Employed DJ posted at Being Self Employed Feed Update, saying, "If you have a passion for music why not earn some extra money in your spare time by becoming a self employed DJ."


    Insuring and Protecting


    Darwin presents Is Cord Blood Worth It? How Parents Should Weigh Blood Banking Costs posted at Darwin's Money, saying, "New parents will inevitably be propositioned to have a company store umbilical cord blood from their child's delivery. Here's how to assess whether cord blood banking is worth it."


    Investing


    Joe Morgan presents How (and Why) I Added Gold to my IRA. posted at Simple Debt-Free Finance, saying, "Is it too late to buy gold? Is there a bubble at play? This blogger doesn't think so. He's added gold to his IRA and tells you why and how."

    Dividends4Life presents 8 High-Yielding Dividend Aristocrats Not Afraid to Raise Their Dividends posted at Dividend Growth Stocks, saying, "Make no mistake, Dividend Aristocrats are the blue-blood of dividend growth stocks. When building your core portfolio, this list is where you want to start your evaluation. If you want dividend growth, these stocks have been there, and done that - for decades."

    Boomer presents Should You Buy A Dividend ETF? posted at Boomer & Echo, saying, "Why spend all of that time researching individual dividend stocks when you can just buy a dividend ETF like CDZ or XDV?"

    MikeAhi presents What's the Best Bond Index ETF - BND, AGG or LAG? posted at After Hours Investing, saying, "Fixed income investors often invest in bond index funds, and ETFs have certain tax advantages so they've become popular over the past decade. Here's a post that compares 3 big bond index ETFs on a variety of factors and helps determine the "best"."

    Maxim Kazawy presents Highest Dividend Paying Stocks in Professional Services Industry in the S&P 500 posted at Highest Dividend Paying Stocks, saying, "In this article, we will go over 4 highest dividend paying companies in the S&P 500 that are related to providing professional services to other businesses, consumers & customers worldwide."


    Living Frugally


    Sara Lorre presents The Cheapest Property in the UK posted at How Much is Your Property Worth, saying, "If you are looking to reduce your expenses you could lots by moving to a cheaper part of the country. This article highlights some of the cheapest area of the UK."

    David Leeman presents Living On One Income - How to Succeed as a One-Income Family posted at Financial Freedom Advantage, saying, "Is financial freedom possible for a family living on one income? Absolutely! Here are some great tips to help you thrive on a single income."

    J.B. presents Should I Live Alone? Or Live With A Roommate? posted at My University Money, saying, "Moving out and into the city for school can be a great experience, one of things to consider is who you are going to live with."

    Jon Elder presents Use These Tips to Save on Your Next Prescription posted at Free Money Wisdom, saying, "Don't pay full price for your next medicine prescription. Instead use these five tips to save a truckload on your next prescription!"


    Retiring


    Carlos Sera presents A Distributive Tale | Financial Tales posted at Financial Tales, saying, "This tale examines the relationship between the inflation rate and the distribution rate. It is not meant to give you a complete understanding about what other factors should be taken into consideration when planning for the “Distribution” or “In-Retirement” phase of your life. It is just intended on teaching the relationship between these two factors."


    Saving


    Gen Y Capitalist presents Evolving Past Paying Yourself First and Taking Ownership of Your Life posted at Gen Y Capitalist, saying, "Why paying yourself first may be holding you back"


    Taxes


    Richard Walker presents Your Tax Code and Your State Pension posted at Tax Codes, saying, "Learn how your tax code is affected by your pension and other benefits."

    Mike Piper presents Types of Income Tax Deductions posted at The Oblivious Investor, saying, "Many taxpayers are unaware that some types of deductions are more valuable than others."

    That concludes this edition. Submit your blog article to the next edition of The Wealth Builder Carnival using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

    Technorati tags: , .

    For more on Ideas You Can Use, check back every Tuesday for a new segment.

    This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Monday, August 01, 2011

    Wealth Builder Ratios - Q2 2011 Update

    Here is our Q2 2011 Wealth Builder Ratios update. During the second quarter of 2011, the Dow, Nasdaq and S&P500 indices were flat at 0.0%, 0.0% and 0.0% respectively. Our investment portfolio returns improved from -4.3% to -0.9% due my company stock having a  3.1% return during Q2.

    For more details on the relevance of these ratios, please see this How Much Is Needed To Be Wealthy - The NUMBER. 

    Ratio and Target
    Q1 2011
    Q2 2011




    Comments
    Investment
    Income to Salary
    Target=0.8 2007=3.41
    2008=-5.47 2009=-1.38
    2010 =1.29




    -0.71




    -0.29
    2011 has started out poorly due to a slight negative return for my company stock. As my company stock (hopefully) advances, we plan to continue selling  shares and increasing diversification, primarily in large cap dividend paying stocks.
    Savings to Salary
    Target>20
    2007=23 2008=16.7 2009=15.3
    2010=16.6




    15.9




    16.3
    Although it feels like our retirement savings have stabilized, I think the second half of 2011 may be weak.  I have sold most of our stock investments, but still have my company stock and stock options.
    Debt to Salary
    Target=0
    2007=1.51 2008=1.46 2009=0
    2010=0




    0




    0
    We said bye-bye to our mortgage on May 20, 2009. Eliminating a mortgage payment has reduced our expenses by 24%.

    My financial goals for 2011 are:

    1. Continue to maintain an Investment Income to Salary ratio > 0.8. (off track)

    2. Maintain a Savings to Salary ratio of 20. (off track)

    3. Maintain Debt to Salary Ratio at 0. (met final goal of 0)

    (For reference, Salary refers to gross salary just prior to early retirement in October, 2007.)

    Both #1 and #2 were directly correlated with how well our stock, bond, and CD investments returns. With the good performance of my company stock and the high proportion of cash, our portfolio returned more than the indices in Q2.

    It has been very challenging retiring at the beginning of a bear market. Our short term expenses (next 3-5 years) are invested in CDs, bonds and money markets. So we can wait for the stock market to continue an upward trend, hopefully through 2012. I continue to be concerned about volatility of our investment portfolio, but believe there is more upside than downside potential going forward.

    I continue to have the same financial goals for 2011. At this point, I am pessimistic about the economy and the stock market.

    For more on Strategies and Plans, check back every Monday for a new segment.

    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC