Tag: investing

early retirement or meaningful work?

endlich himmelblau


For years I have dreamed of early retirement. The idea that someday I would be free to pursue leisure, and have time to do what I wanted, haunted me. It was the driving goal of my investing and saving plan. That was after I read Rich Dad, Poor Dad (yes, I know, but it gave me a new perspective) - but before I left my last employer to become a consultant.

What I’ve realized since then is that I don’t want early retirement. I don’t want to stop working at all. What I do want is to find work I enjoy, or at least tolerate. There are a lot of advantages to work. I’m not talking about 9-to-5 corporate work, but just work in general; freelancing, public service work, contract consulting, whatever you like. If you like 9-to-5 corporate work, fine.

Work gives you a structure and meaning - if it’s good work. Work provides you income, of course, which isn’t a small factor. Work gives you a sense of self - again, if it’s work that you can identify with. Work can sometimes provide colleagues, or challenging opportunities.

Work can also drag you down. If you don’t like what you do, early retirement is the best escape. Getting away as soon as possible is the only exit. I don’t think this applies just to people who work in white-collar jobs, either. Some people work at heavy labor or in non-white collar jobs who love it. My father-in-law is happiest doing manual work, for example - gardening or building things. I think he would detest a desk job now, although he worked at one for most of his life. Work doesn’t have to be high-tech or “cool” - just something that makes you happy.

For me, meaningful work is something that you enjoy. I know people who love accounting, for example. They like the complexity, the challenge of figuring out the interplay of accounts and the theology of GAAP. I don’t. I know people who love making things, and corporate politics, and writing, and teaching, and a myriad of occupations. I also know people who do work they hate, and people who do work they love. Most of my life I’ve been someone who worked at something I hate while seeking something I love. I think - but don’t know - I’ve found something I love in writing, but it comes and goes in spurts. I started writing this blog to practice writing, then morphed into a personal finance blog. Putting myself in that box has hampered my writing a bit, so I’m going to try to write on a broader range of topics in the future - because I still want to find work that means something to me.

If you can find something that makes sense to you, as a person, early retirement is pointless. I honestly believe that if I ever find my groove as a writer - I haven’t yet - I could be happy writing up until the day I die. Early retirement would be pointless. I’m not a good enough writer to earn a living writing yet, so I have to supplement with other work. I suck as a writer. I have a long way to go to be - by my own measure - creative, although I tickle my own ego by thinking I’m technically proficient. But I have realized that my real dream is not early retirement, as I often thought it was. I dreamed of days of leisure. I’ve had those days now, as I’ve been unemployed. I don’t want leisure. I want work with meaning. My real dream is finding meaningful work, and it should be everyone’s dream.

photo credit: extranoise

linklings, three things for Friday edition

Bonsai Moon


I have had some real trouble staying organized lately. I’d attribute some of that to the move, but I’d also continue to attribute some of it to lacking structure to my days. When you don’t have a 9-to-5 schedule it’s easy to think that you’ll get around to something “a bit later” - when in fact the day becomes filled up with a million mundane 30-second tasks. Take out the garbage, for example.

I’m going to try a new “to-do” list methodology, based in part on Zen To Done‘s “Most Important Things” concept: I’m going to pick out 3 things from my “to do” list each evening. Two will be things I need to get done in the short term, and 1 will be something related to long term goals. So for Friday I have “order more boxes from uline.com; clear email inbox; and get information for a Florida teaching certificate.” I won’t even think about doing anything else on my to-do list unless all 3 of these are done. Wish me luck. If I get organized enough I’ll put this all into GTDAgenda, which is a cool service I need to write about at some point soon.

I had a conference call with ING and a few other bloggers yesterday, and hopefully I’ll have a bit more information about that in the near future, as well as an interesting book I read and some other products (like GTDAgenda and a few others).

Links from the Money Writers and others:

One of the best articles I’ve read in a while: Ramit Sethi (of iwillteachyoutoberich.com) has a guest post on Free Money Finance titled “Trying to Earn More Money? Stop Wasting Your Time“. I need to print this and nail it somewhere I’ll see it all the time - like on my PC monitor.

A Wall Street Journal Subscription is Cheaper Than You Think - Get a Discount on the WSJ: Me, personally, I don’t subscribe to anything that I have to pay for anymore. I like the WSJ’s business news, but I dislike their politics.

Index Mutual Funds Are Still Not Popular, But: I’m surprised at this stat, but I shouldn’t be, I guess.

My Million Dollar Journey - Some Lessons Learned: Good points; if you set an ambitious goal and don’t meet it (or think you will) it’s important to learn from that experience.

Save Money on Moving: A few good tips, and so far I can attest that hiring a mover is a difficult (and nerve-wracking) experience.

And a few more links:

And yikes on this article: I hate David Dellifield. The one from Ada, Ohio. But I do have to say I agree with a lot of what she’s saying, although not the tone she’s saying it in.

photo credit: h.koppdelaney

The Real Meaning of Risk

By Curmudgeon - Curmudgeon’s a long-time friend of brip blap and I always appreciate his contributions; here’s his latest:

free


I’m afraid that I mentally hit the ceiling earlier when I read a comment on one of Steve’s posts. The comment was:

In real estate, the quicker you can go into massive debt, the quicker you can become massively wealthy. (Link)

It’s true, but in a very misleading way. The operative word here is “can.” It is easy to miss, and many people will automatically interpret this as “will” or even worse, “probably will.” That is precisely incorrect.

If you go massively into debt, what you do is you take on a massive amount of risk. Risk isn’t necessarily a bad thing; we take risks many times every day – getting on the highway, crossing the street, eating that Big Mac (well, a bunch of Big Macs, over time).

But in general, the odds of us succeeding in getting on the highway without an accident are pretty good. Most of the day-to-day decisions we make regarding risk turn out just fine, because our chances of being successful are pretty good.

Going massively into debt, with the expectation of making a massive amount of money? Well, the odds there are not so good. It’s not strictly a crapshoot, because it depends on your timing. If you get in early, it has a better chance of paying off. If you get in later, your chances decrease significantly. Guess what? The timing part is the crapshoot. There is no timing the bubble.

If you take on more risk, you have a chance of making more money. But that chance is smaller. In fact, sometimes it’s downright nonexistent. How can you tell when it’s tiny or nonexistent? Well, you can’t. You have to assess it with incomplete information and no clear vision of the future, and that’s not the easiest thing in the world. But if you are taking a lot of risk, you need to understand that a big return, or even any return, is by no means a sure thing.

That doesn’t mean that you shouldn’t consider leverage in your investments. Risk isn’t a bad thing. But you have to understand your tolerance for risk, and to understand how much risk you are taking. These are inexact concepts, and people assess them imperfectly. We make mistakes. If you bet the house, you may lose thehouse.

So yes, you can do real estate, or even any variety of other investments, and go massively into debt. But you might prefer to buy a lottery ticket instead. You’ll lose less, but you may be able to sleep at night.

photo credit: jonrawlinson

linklings, too old for the factory edition


Another week goes by and another spate of bad job news. I’m beginning to suspect that I may be in the “old enough to be difficult to hire” category - many of the manager positions I’ve looked at quickly turn me down. I doubt it can be my qualifications or me personally - since many of my applications don’t even make it to the phone interview stage - but perhaps they think “senior manager guy’s gonna want big money.” Or maybe my last five years consulting on Wall Street don’t look as nifty as they did a year ago - hah. I’m casting about for direction, and still hoping that one of the consulting contracts I’ve got very strong leads on will work out, so I can avoid reentering job world. I don’t feel that I want to do it, and of course that mindset doesn’t help, either.

When you are moving, life drifts into a bit of stasis. A lot of ideas about starting this or doing that get paused and filed away with “I’ll get that done after we move.” I’ve been meaning to start an LLC - but now I think I’ll wait until I’m closer to moving to Florida. I’m going to pursue some sort of certificate education (teaching? financial planning?) at one of the local colleges… down there. I’m going to start a small business, hopefully, doing some kid’s party entertainment - but now I’m just researching and won’t get started.

Of course this is just procrastination. I could start all of these things today if I felt pressure to do so. But with so many things to organize for the move these ideas seem destined for the shelf for the time being. I doubt it’s a characteristic of a successful person, but then again maybe I’m just being organized and prudent. Time will tell.

Some links for weekend reading:

My Tenant: “I’ve Lost My Job and I Can’t Pay You…”: Words that would give any landlord a sinking feeling.

Can One Choose Not To Participate In A Recession?: This is an interesting idea from the always-interesting (if not, in my opinion, always correct) Dave Ramsey.

Your Home Office: Ideas To Set Up Your Place of Work: Oh, to have a home office. I know, I am wishing for more space and a bigger home, and I know that’s verboten in the personal finance blogosphere. I sincerely hope that sometime in the future I’ll have a place with a room that can be devoted solely to work (and by work I mean blogging, writing and consulting). With a door. The door is key. Having a computer in a corner of the open-floor-plan living area is in no way conducive to getting work done during the day or putting yourself in a work mindset. My office, however, would not need to look like Gore’s. Yikes.

How Long Does It Take Your Broker to Answer Your Call?: I only have experience with three brokerage firms in the last 5-6 years. TD Ameritrade (where I keep my retirement and brokerage accounts) is terrific. They answer the phone almost immediately, and I have yet to have any trouble with my account (I say that while furiously knocking on wood).

Did You Miss the Stock Market Rally?: I don’t think March was a real rally, to be honest. I think we’ll see another dip, and I need to see one more strong runup before I’ll believe the market troubles are over. And I have to vent on a pet peeve: the market and the economy are NOT the same thing. The economy’s going to be in the dumper for a while. The market may come back long before the economy does - and by the economy I mean jobs, productivity, real estate and so on.

The 80/20 Rule and How it Applies to You: The Pareto Principle is a great way of looking at almost everything in life - if you don’t know what it is (but if you read this blog, I am sure you do), check it out.

Taking Control of Your Life By Finding Balance: I probably worry far more about balance than I should.

Poll: Generation X Feels Unprepared for Long-Term Care Costs. Are You Prepared?: I’m not. I’m one of those people who’s buried his head in the sand a bit on long-term care.

How to Save on Digital Services: We drop a LOT on digital services, although much less than we did. Probably the biggest waste? A landline, which we need because of (a) a security system and (b) we use DSL, so it’s cheaper when bundled. I’d love to have nothing but high speed internet and a Roku Digital Video Player.

How To Become An Expert: It’s true that 10,000 hours of practice will make you an expert, I suppose, although I’d argue that you may not need to be an expert to be successful - these are two different things. Practice does work, though. I’ve been learning to juggle and after spending one hour mastering the basics, I’ve been doing it every day when I have a few free minutes. 10,000 hours will be a long time in the future, but the 5-10 hours I’ve put into practice have already made me a decent three-ball juggler.

And so it begins …: Jacob is doing what a lot of us aspire to and “retiring” early. Extremely early, hence the name of his blog. Jacob’s blog is thoughtful and doesn’t focus solely on any one aspect of his life. Although he takes a different approach than I would in many areas, I’ve found his blog thought-provoking, which is the best reason to read any blog.

Why Achieving an MBA is No Longer My Goal: What? Don’t let too many people hear this - someone else decided that going into debt for a degree he didn’t really want or need wasn’t worth it because his real-life experience in building a company was - gasp - more interesting and more profitable. My master’s degree in accounting is nothing more than a resume padder at this point - think that corporate income tax course I took in 1994 is worth anything now? The code’s changed so many times since then it’s ridiculous. I didn’t mind getting my master’s since I got a free ride (graduate scholarship and a teaching assistant stipend), but would I go $40,000+ into debt to get one now? No way. MBA’s aren’t worth what they were 20 years ago.

I Am Just A Blogger, Damn It!: Amen.

4 FREE Videos for INO TV!: If you have any interest in trading actively - which I wouldn’t for retirement savings or the bulk of my investment accounts, but do engage in with smaller amounts - here are some free technical videos.

photo credit: TheeErin (great photo! — Steve)

how to have no debt


First of all, rent, because a mortgage is a big debt. I don’t know if most people qualify renting a home as debt, but I’m going to say that renting is not debt. I can walk away from a rental home with no future obligation (except canceling the lease) and other than the obvious problem of needing a place to live it’s not necessary that I pay THAT rent next month. I have to admit that as we prepare for our move - having sold our house and having rented a house in Florida - I feel a tremendous sense of relief now that we have no debt.

Saying that I have no debt would not have been possible without these four other basic financial planning steps:

  1. Despite what Bubelah might say - because she detests the frugality mindset as the cheap mindset - we are frugal people.
  2. We do not incur debt for anything, worthwhile or not.
  3. We spend money when necessary.
  4. We watch our money.

Frugality

We don’t clip coupons. We don’t darn socks. We do air dry clothes, and we do buy store brand goods (i.e. store brand sugar versus name brand). We’ve never thought of ourselves as penny-pinching people, but we do reuse ziplocs and we do make careful use of bits and pieces around the house. It’s never been a conscious effort to squeeze every last penny out of our lives. We simply looked for good spending habits and stuck to them. We shopped at Marshall’s instead of Saks, and bought generic items instead of name brand.

Debt

A simple rule, which I know is hard for so many people: do not go into debt. Incur debt for nothing. Nothing. Nothing. I’d repeat it again but you’d quit reading. Not for a car, not for a college education (if you can afford a less expensive one, that is), not for home improvements - never. Don’t ever think that THIS time you can get away with a few dollars of debt. Other than a mortgage (and that’s debatable) if you avoid debt you’ll always be better off. There are a few times when it’s more understandable (for medical expenses, or for an education), but by and large you’ll seldom be sorry if you steer clear of debt.

Spending

If you need to spend money, spend. When we first married, cleaning our townhouse took forever. We were both working, and cleaning the house took what little free time we had on the weekends away from us. We paid to have someone clean the house, and it was worth it. It freed up time for us to do more productive activities, ranging from having more time to cook to having more time to interact with other people. We’ve also spent money here and there on other services and goods to free up time. You can generate more money; you can’t generate more time.

Budgeting

We watch our money. Early on in our marriage we turned money management over to Bubelah, who had never had budgeting responsibility for a household before. I had (although only as a bachelor), but we thought it was important for both of us to have a full picture of the inflow and outflow of cash. Since we’ve been married, both of us have had a good understanding of where our money is (brokerages, retirement accounts, checking, savings, etc.) and a good understanding of where it’s going (bills). I don’t think anyone can be on the road to riches if they don’t understand where the money’s coming from, and where it’s going to.

~~

How to have no debt? First of all, incur none. It’s easier said than done, I know, and many people don’t hear that advice until it’s too late. Some debt may be reasonable - for investing in real estate, for a college education, for purchasing a home. You can argue each, although I can just as quickly argue against each. But being debt free is one of the foundations of wealth, and if you can’t focus intently on that goal first, it may be a long time until you achieve financial freedom.

photo credit: TheTruthAbout…

linklings, other plans edition


Life is what happens to you while you’re busy making other plans. - John Lennon

If you can’t tell from what I’m writing, things are in a constant state of flux for me right now. I’m increasingly convinced that I’m going to have a very tough time finding employment in my current field, auditing, and I’m likewise convinced that I’m going to have a better (but much scarier) time of it parceling together a mixture of contract consulting, hourly consulting and completely-non-related-to-auditing work. “Real” jobs just don’t seem to be coming my way so far. In the meantime, I’m always a-twitterin‘ and worrying about a few other social sites. Not really productive, but as I mentioned this week, it seems to help more than sending off credentials to monster.com for the 76th time.

I’m planning to work on teaching again (if you’re late to the blog, I was a substitute teacher for years and a graduate assistant for a few years, so I do know teaching) but that won’t happen for at least 2 years from - almost exactly - today. That’s my own self-imposed timeline, but until I get back into teaching I am thinking of doing something completely different: financial planning, being a professional clown (seriously, I’m good with kids and I’m learning to make balloon animals and juggle) or something even weirder. Why not? I’m not convinced that my profession has much going for it - read re: The Auditors for a bit and you’ll see what I mean. I can’t really imagine working as an auditor (at least a full-time employee) at this point - it seems like it wouldn’t (a) make much money compared to the number of hours per week it would require and (b) let me live a sane life, which is more important than point (a).

On to the links…

Poll: Have You or Do Use Peer-to-Peer Lending Like Lending Club? and Lending Club Introduces Self-Directed IRA in Peer-to-Peer Lending: A couple of articles about one of my favorite P2P lending sites, Lending Club.

Leaving Full-Time Blogging and Changes That Come With It: One of my fellow probloggers gave it a rest and headed back to employee world. Can’t say I blame him, but I also can’t say I’d be thrilled going back to the 9-to-5 myself.

Tax Deductions for the Self Employed: A few tips for the self-employed… I still consider myself unemployed but I could put a positive spin on it and call myself self-employed, I guess.

All CEO’s are Crooks: What do you think? I don’t think CEOs are crooks - but the boards that determine CEO compensation are.

Hire Me! Will Work For Minimum Wage: From Wall Street To Pizza Delivery: Some clever tips on finding work in a workless economy.

The Purpose of Money: FT opines on the purpose of money. Here’s my take: money is an instrument to achieving comfort. How’s that for a brief definition?

Self Employed Health Insurance Options: I’ll tell you one thing: COBRA may be an option, but it requires huge excess funds. Mine is staggeringly expensive, and we’ll be switching to new insurance as soon as we move.

From Russia with Drive: A grim story of a Russian immigrant who achieved the American dream - an up-and-coming career at a premier Wall Street firm, Bear Stearns. And then: oops. It’s a heartbreaking story, because I see so much of what’s good about America being pumped through the system that is strangling America. People are dying to come here, and then when they break their backs to succeed - a crippled, corrupt system drags them down. It’s like The Firm, only real and without the kindly Hal Holbrook character.

The Big Takeover: This guy was writing for the local English-language rag when I lived in Moscow, and I’ve always liked his work. Read this and weep. America

More Giveaways — Announcing the FMF Newsletter and Reminder: Benefits are a Significant Portion of Your Pay: A new newsletter from FMF and a good reminder that benefits are nothing to be sneezed at - at least until we have some sort of health care in America that doesn’t involved signing over your kidney to get treated for a bladder problem.

photo credit: stoneflower

linklings, the stimulus effect on the job market edition

World Class Traffic Jam


An unscientific observation here: it seems to me that the job market is perking up. I don’t know if the activity is picking up because I’m trying harder (doubt it), the seeds I planted months ago are finally sprouting or whether external factors (like the stimulus) are kicking in. I am getting more calls and more leads and finally starting to talk directly to some companies, rather than just headhunters (and recruiters are starting to call me rather than the other way around). Signing up for TheLadders may have helped a lot.

One of the things that I’ve hoped for that hasn’t seemed to materialize is a pickup in the consulting market. I’m resigned to the fact that if we want to move to Florida and buy a home I’m going to have a far easier time securing a mortgage and building our somewhat-depleted cash reserves back up with regular job. In addition, finding consulting work is tough in a new town. Taking a job would be a lifestyle shift, but since my alternative income remains stuck at about 10-15% of my “real income” I think it may be necessary. Of course, in a lower cost of living town my alternative income (which will travel with me, being mostly web- or investment-based) might be more like 20% of my necessary level of income. It will be interesting to see.

Save Money on Television: Bubelah has started rolling her eyes when I mention this, but between Netflix’s Watch Instantly feature (and the Roku Digital Video Player, the nifty device that plays both Netflix videos and Video On Demand), hulu, youtube, and digital TV (get a coupon if you don’t have one already) I am wondering how much longer we need cable or satellite at all.

Investing in Your Most Valuable Asset - Invest in Yourself: At this point it seems to me that money “invested” (i.e. spent) on anything other than improving yourself is a risky venture. Education and health will always be good bets, though.

A Frugal Diet, Or A Frugal Lifestyle: I never thought of frugality in exactly this way, but it’s a good metaphor: making little tweaks here and there that can be reversed once times are better is more like dieting. Deciding to live a more frugal lifestyle is a lifestyle change, not something you do until you have a little bit more free cash flow.

Preparing My Income Tax Return: How I Organize My Tax Documents: Some good tips for next year, although if you aren’t organized for this year it’s probably too late to get started now.

Credit Karma Free Credit Score Service Can Help You in This Economic Environment: An Interview with CEO Ken Lin: It’s good to see a new player in the credit score market. Watch the only movie that ever featured the credit score companies as villains here.

Save Money by Not Flushing the Toilet?: Our common bathroom is right next to our kids’ rooms, and we got in the habit of not flushing overnight once they are sleeping (at least as long as it’s, ah, #1). I don’t know how much difference it really makes in terms of savings on the cost of water, but it can’t hurt. Skipping a flush here and there - as long as it doesn’t stink up the bathroom - is no big deal.

The Great Homeowner Bailout: A few highlights of what’s coming up in bailout world. CNBC must be frothing.

Getting Started in Real Estate Investing: Now is probably the time to do this, but I think people will enter this world much more soberly and cautiously this time around.

Six Places to Spend More Money: Similar to the point about investing in yourself above, there are times - even now - when it’s OK to spend a little bit of money.

And here’s a disturbing article:

…Jefferson Duarte of Rice University in Houston, Texas, and his colleagues are suggesting that one of a person’s most telling moral features, his creditworthiness, can also be seen in his face.

photo credit: joiseyshowaa

middle age is realising you’ll never realise your dreams?: Having just crossed over the halfway hump myself, I certainly don’t think that I’ve given up on my dreams, but I do realize that at some point I’ll have to quit dawdling on some of them. Riding horseback through the Gobi, drinking mare’s milk and sleeping in a yurt is something I would rather do when I’m a bit younger than, say, 75.

we feel like fools


Here’s a piece I wrote for Prosper’s blog about six months ago. The Crisis ™ was already underway, but it’s interesting to see how nervous I was writing this piece before the worst hit.

from August 2008:

I came across this sad piece while looking through CNN Money:

“My wife and I have been saving our money for many years in hopes of buying a retirement home and living off our investments. No matter how much we saved, it seemed that housing prices continued to escalate beyond any reasonable bounds. We feel like fools for saving our money, which only gets eaten by inflation.”

Inflation is not the only problem. In the article above, another woman mentions she has to declare bankruptcy for a lack of health care. Another couple is about to lose their home for lack of health care. A health care disaster is the main cause of severe financial difficulties in America today. Entitlements are teetering and the impending demand from retiring Baby Boomers may push these programs over the edge into insolvency (although I’m sure we’ll tax our way out of it). The government bails out investment banks, rescuing the bonuses of top management (which would have been reclaimed in bankruptcy) but refuses to do the same for homeowners swamped by overwhelming mortgages. The Federal Reserve (and other central banks) continue to pump paper money into the system, creating a long slow death for the US dollar. Ridiculous measurements are used to gauge inflation while we all know that the price of living soars past any reasonable measure of inflation when you consider the cost of gas, heat, milk and even basic foodstuffs. A war in Iraq - whether you support it or not - will suck trillions of dollars out of the budget for a generation to come (don’t believe anyone who says they are withdrawing the troops - the troops will still be there in 2012; we can’t even withdraw our troops from Germany yet). People are whispering the “D” word.

My fear is that too many people (including me) buy into the aphorisms: the market always goes up over time. Index funds are a great way to invest. Real estate always goes up. The US can’t just collapse - we aren’t the Soviet Union, or the Weimar Republic. Banks are safe. The US dollar is the best currency in the world.

Let me tell you what IS true: Your greatest asset is, now and always,yourself. Educate yourself and don’t sell yourself short. Don’t be cheap, be frugal. Buy high quality goods that last a long time, because they will always have value. Do not ever believe that someone will be there to help you when times get bad: not the government, not your employer, not your neighbors or even your family or friends (because they may have troubles of their own). Expect times to be good, but prepare for times to be bad. Stay healthy; the single greatest risk to your wealth in America is to GET SICK.

That may seem overly pessimistic, but it is true. Don’t assume that dropping 15% into a 401K, having $1000 in an emergency fund and having a “steady job” are enough to protect you and your family. True protection comes from staying healthy, diversifying your income streams and investing nonstop in your greatest asset - yourself. You have to keep investing and saving and buying houses and paying down your debt, but never forget that even the most brutally frugal lifestyle is absolutely no guarantee of financial safety - or even stability.

photo credit: plain_jane53177

lazy winter days linklings



Winter continues. We passed attorney review on our house so the clock is now ticking on making a move. Yet at the same time the weather, the passing of time since I had a schedule imposed by a commute and the exhaustion of dealing with two young kids all day long make the days blur into each other to the point where not much gets accomplished some days. It’s amazing how the lack of external forces pushing you along makes getting things done more difficult. It’s also amazing how recognizing that it’s amazing doesn’t help you get off the couch and do anything about it.

A few links:

Should We Downsize?: Downsizing is probably going to be the hot new trend for the next few years - if it’s voluntary, cool. If not, ouch.

Find Investment Opportunities In Any Business Market Environment! Ride The Economic Recovery: I’ve said before that more (long-term, not just paper) millionaires will be made in these tough years than during the boom years, and I believe it.

Job Search - Find a Freelance Job: Some good sites to start with if you’re looking for freelance work.

Three Investing Lessons Learned the Hard Way: Investing has an ugly side to it, and in my experience the ugly side is ALWAYS learned the hard way.

The Frugal Dog - The Cost of Dog Ownership: For me - not a pet person - the cost of dog ownership is a lifetime of getting up at 6 am and going outside to pick up someone’s poop with a plastic bag. I don’t need much more to convince me the cost is too high for me to bear, frankly.

Backwoods Home: My New Favorite Magazine: An interesting magazine - that I hadn’t heard of before.

Consumer Reports 2009 Best New Car Picks: Interesting how only one of the best new cars was American…

COBRA Changes - Premium Reduction Under the American Recovery and Reinvestment Act of 2009: Good news for those of us who are struggling with COBRA payments.

What Have You Given Up During This Recession?: A good question; so far we haven’t given up that much, but I suspect that will change before too much longer.

Don’t Donate Money To Charity: Not an unconvincing argument, in many ways.

How to Start a Blog for Fun or Profit - Choosing a Web Host: Sounds like LunarPages is a good deal if you’re toying with the idea of starting a blog (and I’ve had good luck with godaddy as well).

How To Deal With A Job Loss: If you’re about to deal with a job loss, here are some helpful tips, although I’ll add one more: don’t worry too much; life will go on.

You, Me, And Citi Make Three - US Increases Stake In Citigroup: Ugh.

photo credit: glangille

10 ways to stop worrying so much about money

Man of concern


With a recession underway and a constant bombardment of bad news, everyone is worried about one thing: money. You don’t need money to be happy, but having money and watching it disappear doesn’t help your mood one bit.

I am a worrier. I have found that there are a few simple things that allow me to sleep a lot easier at night, though. Most of them are simple, and none of them require a tremendous amount of work - just a change in attitude or habits.

1. Set up an emergency fund.

Everyone should have an emergency fund. Even if you don’t think you need one, make sure you have at least a month or two of cash on hand at the bank. I recommend using HSBC or ING high-yield savings accounts for an emergency fund, because it takes a couple of days to withdraw money from each. Having money that’s easy to get to - but not TOO easy - will relieve a lot of short term stress. Don’t have an emergency fund? Even if you can only add another $10 to your fund, do it.

2. Pay down your debt.

I’ve seen a lot of complicated ways to go about this, but Robert Kiyosaki (of all people) has the best tip I’ve seen. If you have consumer debt, pick out an amount you can afford each month and apply it to your highest-rate debt using some sort of autopay if you have it. Repeat every month until it’s gone, but this way you can forget about it and get about the business of your career or your business.

3. Put as many bills on autopay as possible.

Almost every bank has an online presence now. Mine lets you “pull” your credit card information straight into your bank account, so you can see all the bills lined up in one place. Paying them can be as easy as setting the autopay up to be a certain amount each month - and then forgetting about it! If you’re still writing checks and mailing them in, you’re creating a lot of worry that you don’t need!

4. Consolidate your accounts.

I wrote a guest post about this a long time ago, but it’s still true. I used to have a dozen credit cards, checking accounts at multiple banks and IRAs and other investment accounts scattered everywhere. Don’t use an account more than once a month? Consolidate! Most banks and brokerages will be happy to help you consolidate your accounts, so pick the ones that offer the most benefits to you and get started consolidating.

5. Consolidate your financial information in one place.

With free services like Quicken Online, Mint, Geezeo and others all over the internet these days you can easily set up an account that gives you a quick “snapshot” of your financial health without logging in to 15 different sites. My bank uses Yodlee, which pulls in everything from my home’s value in Zillow to my retirement accounts to my credit cards. I don’t worry too much about net worth, but it’s still nice to be able to see it when I want to see it.

6. Get insurance for everything that needs insurance, and don’t for anything else.

I had rental car insurance built into my auto insurance for a couple of years after I bought a second car. The chance I would need insurance for a rental was minimal. Money down the drain! Review your insurance policies and make sure you aren’t paying for things you don’t need.

7. Stop checking your retirement plan information.

If you have a reasonable plan set up, and you’re confident about the long-term prospects of your plan then there’s no reason - none at all - to check the value of your retirement plan more than 3-4 times per year. The money in an IRA or 401(k) is meant to be used when you’ll be in your 60s or later.

8. Set up targeted accounts.

Even though I advocated consolidating accounts above, having separate-purpose or targeted “sub-accounts” within a single account can be helpful. Many of the high-yield savings accounts are good for this purpose. For example, we have a separate “vacation account” that we put a small amount into each month, simply so we can forget about that money.

9. Overwithhold on taxes.

This strategy’s been debated for years - is it better to give the government a loan or not have the shock of an additional payment at the end of the year? Good tax planning can probably get you closer to zero, but overwithholding a bit can help you avoid nasty surprises.

10. Consider alternatives, but after considering - forget.

Study alternatives, investigate, consider, but then decide and once you’ve decided, forget about the alternatives you didn’t choose. Once you’ve chosen one path, sitting around worrying about what might have been is pointless and unproductive. Don’t fight yesterday’s battles - move forward to the next challenge!

photo credit: Lisa Brewster

linklings, “this is the worst ever” edition

Here’s a quote for you. I wouldn’t say I respect this guy, but I always find him worth listening to:

No, this is the worst ever. This is the worst I’ve ever seen. 1990 was a bad period of time, but this is far worse, and this is worse on a really global basis. I’m looking at different countries. Every country is bad. Now they’re blaming us because of what happened. You know, why not blame the United States? But every country is in trouble.

Who said it? Don’t know? You’re fired!

What Republican Leaders Deem Wasteful in the Proposed Stimulus Plan - Do You Agree?: The only people I trust less in terms of economic good sense than the Democrats are the Republicans - hard to say that they had the least bit of good sense over the last eight years. Give the Democrats a chance to screw it up, guys.

Financial Football Teaches Students about Personal Finance: Hey, it’s nice to see football players involved in something as dull and boring as personal finance, because at least then kids will sit up and take notice.

Free Business & Finance Courses Online: I have to admit that the open courseware concept excites me, but I haven’t done much with it yet. I did work my way through a few lessons of MIT open courseware, but I didn’t really push myself. One of these days I’m going to push myself, though.

How Hard Would You Work to Find Your Perfect Job?: So far I have to admit - not very hard. I wonder, to be honest, if I’d rather stumble into another vaguely unpleasant middle-management job if the hours aren’t too taxing, than to work long hard hours to achieve something I found meaningful to myself. It’s a question I struggle with.

Can You Invest Solely in ETF’s?: Maybe not so much with ETFs, but I wonder whether the index-fund investing strategy is a good one long term - and I come to the same conclusion that this post does. If you don’t have a substantial amount to invest, indexing will work just fine. Once you have more than a million, start considering other options.

How Much Does It Cost In Life Energy?: One of the best lessons learned by people who are “wise” to personal finance is that money does not represent wealth, exactly, but time - if you’re an income earner and not someone who earns from passive income. If you work for a living and buy a CD, those tunes represent a chunk of your life. If you have passive income, a CD’s simply a way to convert wealth to enjoyment. Big difference. Earned income versus passive income - which is better?

Are You Earning More or Spending Less? Plus Helpful Financial Guides: I always think of earning more - even now that I’m not earning more. Spending less will only take you so far - after that, earning more is the only possible solution.

$15,000 Home Buyer Tax Credit Possible!: As someone who wants to move this year, this tax credit would inspire me to commit seriously. This credit might actually be the stimulus the economy needs.

How to Waste Money on an MBA: It’s an overrated degree, but there is some value to it still. Companies do know the difference between a forceful, high-pressure MBA program and a second-rate one. Real MBAs challenge students to change their thinking. A lot of second-rate MBA programs exist just to drop a few letters onto a resume. Don’t be fooled into thinking that employers will be fooled.

BrightScope: Check out YOUR company’s 401(k) plan. You might be surprised (but hopefully not irritated).

WWII vet frozen to death leaves estate to hospital: This is stupid frugality at an extreme. It’s clear that this country has to do something to protect its aged against themselves when things like this happen. Nobody should freeze to death with more than a half million in the bank.


linklings, march madness edition

What? March Madness? It’s only January! No - I’m talking about Free Money Finance’s March Madness round 1. My article, Spend Less than You Earn - the Wrong Way to Think, is battling it out - jump over to FMF and vote in the comments (just say “Game 12: Wrong” in the comments to vote for me). The winner of the tournament gets a donation made in their name to the charity of their choice. My charity is the Russian Children’s Welfare Society - help me help them.

Links from The Money Writers and others:

Where You Shop Could Hurt Your Credit Score and Credit Limits: If you shop at the same place as people with bad credit, your credit score might be hurt - unbelievably stupid logic by the credit card companies.

6 Free E-File Options: It’s that time again - the dreaded “T” word.

Teach Your Children About Money: Lessons Your Kids Should Learn: Kids can’t start learning about money too early - I’m already putting some effort into teaching my son about how money works by letting him pay when we go to the store, and seeing how the change comes back.

Vampire Power Sucking Money From Your Wallet: Buffy? No, a different kind of vampire power. I try to be vigilant about leaving things plugged in but somehow every morning I see a computer left on, or a DVD player, or a cell phone charger dangling from an outlet… not good, for the environment OR my electric bill.

No Hype - The Straight Goods on Investing Your Money: Book Review and Giveaway: I still believe now is a good time to invest, so it’s worth entering giveaways for books on investing if you’re just starting out (although this book might be a little advanced for beginners).

Economic Stimulus Package - What Does It Mean To You?: I was excited about parts of the package and appalled by others - which is par for the course, I suppose. I am nervous about how easy it’s become to toss about 12-digit spending bills these days.

How Worried Are You About Being Laid-Off?: Me? Not at all, since I already am, for all intents and purposes. But I know a lot of people are, and I’m pessimistic that I’ll be returning to my “real” line of work anytime soon.

New Jersey Bill to Require Personal Finance 101 for High School Seniors: I guess falls in the “better late than never” category, but it’s hard to believe this hasn’t been there for the last 30 years (or more).

Image by Getty Images via Daylife

Ino.com takes a look at Jim Cramer‘s “top 5 picks to get you through recessionary times.” It’s not pretty.

A Recession Is The Worst Time To Start A Location Independent Business. Right? Wrong.: I’ve written about a location independent life a few times, and if I were going to do it, now wouldn’t be a bad time - neither Bubelah nor I are working and the kids are still not school-age. It’s something we consider when we’re snowed in and shuddering with cabin fever late at night, at least!

What’s Your Resume Worth?: Good question. Mine is updated but I do worry about the format.

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