Tuesday, September 29, 2009

Links To Carnivals From September 22 to 28, 2009

Here are the links to the Carnivals in which My Wealth Builder participated from September 22 to 28, 2009:

Carnival of Financial Planning #108

Festival of Stocks #160

Carnival of Money Stories

Carnival of Twenty-Something Finances

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Sunday, September 27, 2009

Feels Like a Correction is Coming

To me, it feels like a market correction is coming soon. Here are some of the factors that may lead to a correction:
  • Market has rallied significantly in the past seven months. The Dow, Nasdaq and S&P500 indices have advanced over 50%, close to or at 1 year highs, since the March 9, 2009 lows before pulling back last week. There have been no corrections (pullbacks of 10% or more) in that time.

  • Government stimulus ability is lessening. The Cash for Clunkers program is over. The first time home buyer credit will finish at the end of November.

  • Unemployment continues to be high. The economic recovery has been slow and new jobs are not being created. As unemployment rises, more foreclosures occur which then slows the housing recovery.

  • Superstition. Historically, September and October seem to have more big market corrections than other months. Also, I just recently turned cautiously bullish and put some funds in stocks last week, which probably means a top has occurred :-)
  • I've been wrong before about a correction, since I first expected one in May, 2009. There still seems to be a large amount of cash on the sidelines waiting for a pull back before being invested in stocks. Perhaps, the reinvestment of these funds is preventing the market from declining significantly, preventing a correction from happening, which allows the market to continue advancing, for now.

    For more on New Beginnings, check back every Sunday for a new segment.

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

    Copyright © 2009 Achievement Catalyst, LLC

    Saturday, September 26, 2009

    Adjusting for Things not Going the Way I Planned

    "In preparing for battle I have always found that plans are useless, but planning is indispensable." Dwight D. Eisenhower

    When I took early retirement in October, 2007, the Dow and S&P 500 were at all time highs. Our liquid assets were equal to 23 times my annual salary before taxes and we had over 50% equity in our home. A Monte Carlo analysis by our financial advisor showed that savings had a 96% confidence factor of being able to last into our 90s, assuming a 7% return on investments.

    In 2007, we were pretty comfortable with the decision to retire in my forties. We planned to maintain our lifestyle, live primarily on investment income, pay for our daughter's college education, and even leave an inheritance. After all, the analysis had a 96% confidence factor that my retirement would be successful.

    Then the financial crisis of 2008 happened, and the remaining 4% probability took effect. Needless to say, the situation changed since our liquid assets have declined significantly. As the stock market went, so did our retirement accounts. Instead of growing 3% (7% gain minus 4% withdrawal) per year as projected, the accounts fell by 41% in 1.5 years, from 23 times salary to 13.7 times salary at the market bottom in March, 2009. As a result, our initial retirement plans became useless.

    However, because we did the planning and understood the factors affecting retirement, we have been able to make some critical adjustments to account for the economic situation.
  • Spending has been cut back. Our original projection was to spend at 90% of our pre-rearmament expenses, which included a mortgage. We have cut our expenses by 30%, mainly by paying off the remainder of our home mortgage.

  • Having some wage income is now important. In 2007, I didn't think I would need work to cover living expenses. However, until our portfolios recover, I'm targeting to earn about 20% of annual expenses to reduce our retirement account withdrawal rate.
  • Implementing both of these adjustments boosts the probability of retirement success to over 92%, based on Monte Carlo analysis. At this point, the spending reduction has been completed and I earned about 10% of our annual expenses this year through part time jobs. Hopefully, these adjustments will enable our savings accounts to partially recover and, once again, cover current and future retirement expenses.

    For more on Reflections and Musings, check back every Saturday for a new segment.

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

    Copyright © 2009 Achievement Catalyst, LLC

    Wednesday, September 23, 2009

    A Successful Recovery from the Market Decline

    In How to Survive a Market Decline, FMF at Free Money Finance writes how he is within 5% of his all time net worth high. His strategy was to continue investing in index funds throughout 2008 and 2009, and even increasing his monthly contribution in some cases.

    Given that that the Dow and S&P 500 are still down 30% from their all time highs, FMF has had a pretty good rebound in his net worth. His post shows how continuing to save and then dollar cost averaging while the market is falling can be very beneficial when the market starts advancing again.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Tuesday, September 22, 2009

    Links To Carnivals From September 15 to 21, 2009

    Here are the links to the Carnivals in which My Wealth Builder participated from September 15 to 21, 2009:

    Festival of Frugality #195

    Money Hacks Carnival #82

    Carnival of Personal Finance #223

    For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

    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 © 2009 Achievement Catalyst, LLC

    Sunday, September 20, 2009

    Becoming Cautiously Bullish

    This weekend I turned bullish based on a several factors I have been tracking. However, given the volatilityof the past year, I will still be cautious about putting money back into the stock market and, therefore, be doing it slowly. Here are the factors that I consider favorable for a bullish stock market.
  • Values above the 10 month EMA. Over the summer, I read an article, A Simple Money Management Idea for Stock Traders at The Time and Money Report blog, that reported when the value of the S&P was above it's 10 month exponential moving average, the market advanced, and when the price was below, the market fell. The S&P value is now above the 10 month EMA again, as are the price of many individual stocks that I track.

  • Dow value is near a trigger. In January, 2009, when I thought that the bottom had happened or was near, I set triggers for putting more cash in the market at a Dow 6000 or Dow 10,000. At 6000, I thought there would be no confidence in the market and at 10,000, I thought confidence would be relatively good again. Last Friday, the Dow closed at 9820.

  • Interest rates will be low for a while. In the 1990s, low interest rates created a rapid advance in tech stock prices. In the 2000s, low interest rates caused a significant advance in housing prices. The current low interest rates will create another boom somewhere in the economy.
  • Finally, there is still much skepticism about the current market rally, which has caused significant amount of cash to remain out of the market. As the market continues to advance, I expect this money will come back into the market as investors become concerned about potentially missing the next bull market.

    For more on New Beginnings, check back every Sunday for a new segment.

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

    Copyright © 2009 Achievement Catalyst, LLC

    Friday, September 18, 2009

    Part Time Job Progress

    Earlier this year, I posted about reducing our savings withdrawal rate by generating income and lowering expenses. We were able to quickly reduce expenses by 17%, mainly by paying off our mortgage. Generating income equal to 20% of our expenses has been more challenging, mainly because my rejection rate for part time jobs has been very high. However recently, I've made some good progress for generating income for 2010.

    This month I am starting a new part time job. I originally applied for this job in early 2009, but assumed I was rejected when I didn't hear back after the initial contact. This is a seasonal job with potential of about $100 per week. However, I get to choose my work schedule and the base pay is $25 per hour. A side bonus is the business is a franchise, which enables me to learn about the pros and cons of owning a franchise.

    I did get an offer for a special event part time job during the summer. Unfortunately, the event dates overlapped with a family vacation and I was unable to accept this year. Since one of the perks is being able to attend a premier event for free, I plan to reapply in 2010.

    Finally, I plan to continue with the seasonal part time job that I have done the past two winters. While the pay is only $8/hour, there is the potential to achieve $10 -$12/hour with bonuses. In addition, the schedule is very flexible and I find the work very interesting. This year I will try to work more during peak hours, to increase the number of customers served. A nice perk is that I can use the service and get expert training for free.

    I expect these jobs have the potential generate about 10% of our annual expenses for 2010. I will continue to look for opportunities to earn 20% of our annual expenses during 2010.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Wednesday, September 16, 2009

    Lessons From the Crash

    The article Survival Stories and Lessons from the Crash got me thinking about my own lessons from the financial crisis. Here were the three insights I had from the recent financial crisis:
  • Don't underestimate downside risks. Housing prices falling significantly. Blue chip stock prices losing up to 90%, e.g. GE. A lost decade for equities. GM and Lehman going bankrupt. A financial crisis bringing us to the brink of a depression. Who would have ever predicted these occurrences in 2007? Few, if any, thought these events would never happen. My learning is to never say never :-)

    For us, our major downside risk is the percentage we have invested in my company stock. Although we have made some reductions, it still represents about 50% of our liquid net worth. As the market recovers, we will definitely sell some shares.

  • Take some money off the table when the going is good. It never hurts to take profits. In some cases, this is done through rebalancing. In hindsight, October, 2007 would have been a good time to sell some equities.

    I did end up cashing out of some company stock, close to the 2007 high, in 2008. Just not enough :-)

  • Build a margin of safety. Call it an emergency fund, cash equivalents or whatever. Having some funds in cash, even though at low yields, to cover job loss, market declines or a major expense. In the past, I would have been satisfied with about a year. Now I think two to three years is a good target. Personally, we are consciously maintain an amount to cover four years.

    Also, target for more savings than the minimum needed for early retirement. If I had retired at the minimum, our retirement would have failed in early 2008.

  • Hopefully, the final lesson from the crash will be "this too shall pass." With an economic recession, there will come a recovery and a new bull market. At this point, we plan to stay sufficiently invested to benefit when the next bull market starts.

    Disclosure: At time of publication, I own shares of GE.

    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 © 2009 Achievement Catalyst, LLC

    Tuesday, September 15, 2009

    Early Retirement Forum

    Last week, a reader introduced me to Early Retirement.org, which is a forum whose members have retired early or are planning to retire early. The forum was started in 2002 and is free to join.

    I thought the forum would be a good opportunity read about other people in early retirement, since there are only a few bloggers who have retired early. In addition, I also learned about how people were thinking about achieving their own early retirement.

    Here's what I picked up from reading a few threads:

  • Above average understanding of financial matters. The posts showed that members have a very good understanding of financial and economic topics. While people did not necessary agree, the discussions were based on facts, data, and analysis. There was good independent thinking.

  • Regular people and regular jobs. Most of the people were part of the working middle class. I didn't read any stories of people taking early retirement due to windfalls, e.g. inheritance, successful business venture, etc. There was one person whose early retirement was helped by stock options from their previous company.

  • Frugality is a main theme. There seemed to be a number of people choosing to work at a job, live below one's means, save a lot, retire early and live frugally. That's not to say members aren't using other approaches. This just seems to be a popular way.

  • DIY investing is the norm. The majority managed their investments themselves, using low fee mutual funds. Many seemed to distrust financial advisors and thought asset based management fees were not worth the cost.
  • Overall, I found it was a good forum. There were some excellent points, good discussions and interesting ideas. For me, it will be a good resource to check periodically.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Links To Carnivals From September 8 to 14, 2009

    Here are the links to the Carnivals in which My Wealth Builder participated from September 8 to 14, 2009:

    Carnival of Financial Planning #106

    Festival of Stocks #158

    For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Monday, September 14, 2009

    Stress Testing our Retirement Savings

    When I retired in my forties in October, 2007, I didn't think I would need to seriously consider returning to work. However, after the current financial crisis reduced our savings accounts by 44% through mid 2009, I began to think that a Plan B of going back to work would be a prudent option.

    This week, I will be meeting with our financial advisor to evaluate stress test scenarios and their impact on a successful retirement. Specifically, we will look at:
    1. No social security payments. This assumes the worst that social security will not be available when we are qualified to make withdrawals.
    2. Stock options are worthless. In October, 2007, the value of stock options were about 1/3 of our liquid assets. Currently, the stock options represent about 5% of our savings.
    3. Low portfolio growth rates. Historically, we've assumed a 7% annual growth rate. We'll look at 5% and 3% also.

    In the past, with assumed portfolio growth rates of 7% (including stock options) and social security being available, the Monte Carlo estimation showed a high probability of our savings covering retirement at a 4% to 5% withdrawal rate.

    The stress test scenarios will help us determine if our retirement savings have any margins of safety and whether we should seriously consider returning to work.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Saturday, September 12, 2009

    Carnival of Financial Planning #106 - September 12, 2009

    Welcome to the September 12, 2009 Edition #106 of the Carnival of Financial Planning. My thanks to the editor of The Skilled Investor for having My Wealth Builder host this week.

    As background, the Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. It focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

    This edition is arranged by subject heading, so that you can browse efficiently.



    Banker Saver presents 4 Financial Tips To Weather The Mortgage Crisis posted at Banker Saver, saying, "We can survive the mortgage crisis with careful planning, spending less and budgeting."

    Dorian Wales presents Budget vs. Net Worth posted at The Personal Financier, saying, "While it may be recommended to manage both a budget and net-worth sometimes focus leads to better results."

    Susan Savering presents Personal Budget Expenses posted at Family Financial Planners, saying, "When you don't understand how much you spend and how much you save and invest, you do not have a financial plan. This dramatically increases your family’s long-term financial risk."

    The Smarter Wallet presents Internet Banking: Compare Online Banks For Your Savings Needs posted at The Smarter Wallet, saying, "Thanks!"


    BWL presents Government redistribution of wealth: posted at Christian Personal Finance, saying, "Should the government be taking from the rich to give to the poor? When the government takes from a rich person to give to a poor person. The rich person isn't giving, but rather they are being taken from."

    Roshawn Watson presents The Rich Get Poorer posted at Watson Inc, saying, "The implications of this recent recession have been far-reaching enough to put a big dent in American and world wealth. Both the magnitude of wealth and the number of millionaires decreased profoundly in 2008."

    Super Saver presents Expecting Another Bubble posted at My Wealth Builder, saying, "Low interest rates are bound to create another bubble. Hopefully, by expecting one, I can protect our savings better that during the housing and financial crash."

    The Smarter Wallet presents Online Business Guide posted at The Smarter Wallet, saying, "Here's how to manage your small business."

    Dorian Wales presents On Causality and Correlation in Economics posted at The Personal Financier, saying, "Causality is perhaps the most fundamental element of empirical evidence available to economists. However, it is also the source of many misconceptions due to its elusive nature."

    Marc Ryan presents Excess banking profits and pay amidst a financial crisis posted at IndependentInvestor.info, saying, "Increased competition and cost reductions resulting from economies of scale normally reduce prices. For reasons difficult to understand this has not occurred in the mutual fund industry. In comparison, commission rates for brokerage transactions paid by individual investors have diminished since the phenomenon of the big bang and especially since the advent of discount brokers. Overall, before the recent financial crisis there was, not a decrease, but a dramatic increase in overall profits of the financial services industry. What happened? We do a short overview of some articles published in 2009."

    Estate Planning

    Jeff Rose presents Taking Care of an Elderly Parent posted at Jeff Rose, saying, "Find of what you need to do when you have to become the parent of your parents."

    DIY Financial Planning presents Roth Account Estate Planning Strategy posted at Do It Yourself Financial Planning, saying, "There are trade-offs in deciding how to set the proportion to contribute into Roth retirement savings accounts versus making contributions to traditional retirement accounts with tax deferral advantages. An optimal Roth retirement account contribution strategy also becomes an estate planning question. In the majority of personal finance situations, making 100% of allowable Roth contributions may not yield the greatest total estate at age 80, 90, or 100."

    Financial Planning

    20smoney presents 5 Types Of Diversification Your Financial Advisor Won’t Mention posted at 20s Money, saying, "This article discusses five types of diversification that aren't discussed very often, yet are still very important to consider when financial planning."

    Intelligent Speculator presents How Your Advisor Is Compensated posted at The Financial Blogger, saying, "When you meet with a financial advisor, the first question you should ask is how he is compensated."

    Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, "whether it is running a business or individuals’ investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time."

    KCLau presents I achieved financial freedom at 38 posted at KCLau's Money Tips, saying, "This post is contributed by WaiYin, a reader whom I admire very much because she achieved financial freedom at age 38! Here, she shares how she did it."

    Four Pillars presents Affordable Refinance Program posted at Quest For Four Pillars, saying, "Making Home Affordable refinance program eases requirements."

    Patrick @ Military Money presents How Much Life Insurance Do Military Members Need? posted at Military Finance Network, saying, "Military members may have different life insurance needs than civilians. Here is information regarding how much life insurance military members should buy, and some resources for finding the best life insurance deals."

    Susan Savering presents Personal Investing Strategy posted at Family Financial Planner, saying, "When pursuing optimal financial planning and investing strategies and controlling your costs and capital gains taxes, you also need to establish a time-efficient system to monitor, adjust, and adhere to your financial plan."

    Financing a Home

    Tallahassee Real Estate presents Housing Market Bottom Reached In Tallahassee posted at Tallahassee Real Estate Blog, saying, "It is obviously premature to call the bottom of the market, as we only have a 10 day up-trend. If this ends up being the true real estate market bottom in Tallahassee, you can record August 23rd, 2009 as the day the market turned! I really suspect that we are closing in on the bottom if we have not hit it already. My earlier predictions were for this to occur in November, but I’ll certainly take an earlier result if we can find it."

    Alex Fotopoulos presents When to Refinance a Mortgage? posted at My Trader's Journal, saying, "Some key points to consider when refinancing your home."

    Financing Education

    Emma Taylor presents 100 Useful College Planning Tools for Conscientious Parents posted at Online College.org.

    Praveen presents Will Education Follow the Housing Bust? posted at My Simple Trading System, saying, "Tips for students to avoid excessive loans and debt"

    Health Care

    KCLau presents Withdraw EPF Fund to Pay Insurance Premium? posted at KCLau's Money Tips, saying, "Vincent Lee from Penang generously shares an idea to use your EPF"


    The Financial Blogger presents What I Don’t Like About Mary Kay and other Multi Level Marketing (MLM) Companies posted at Gather Little By Little, saying, "someone you know, a good friend, gives you a call and his voice appears as a ray of light over your head; he has found a solution, an easy way to make more money!"

    nissim ziv presents How to Negotiate a Job Offer: Salary Negotiations tips posted at Job Interview Guide, saying, "One of the major aspects of a job interview is the job salary. With the changing times and attitudes, discussing job salaries are sometimes overlooked or even ignored."
    FMF presents My Jobs, An Interesting Transition posted at Free Money Finance, saying, "Experience is often the best teacher. This post details a real workplace experience and what all of us can learn from it in order to grow our careers."

    Zach Scheidt presents Under Armour – Fourth and Long posted at ZachStocks, saying, "Under Armour (UA) has a strong athletic brand, and an expensive stock. The third quarter is the most important period for the company and with consumers spending less it could be a disappointing time for investors. Consider shorting or at least avoiding long positions."


    Dividends4Life presents Dividend Stocks Offer Continuous Feedback posted at Dividends Value, saying, "One of the many reasons I like dividend stocks is because they provide continuous feedback. As time passes, dividend investors see their income grow steadily. Each dividend and dividend increase provides reassurance that the strategy is working."

    ABC presents Stock Market Indexes posted at ABCs of Investing, saying, "How different types of stock market indexes work."

    jim presents Cheap Stock Trades at Discount Stock Brokers posted at Blueprint for Financial Prosperity.

    puneetkapoor2000 presents Indian Stock Fundamental Analysis posted at KuberKhana -Indian Stock Fundamental Analysis, saying, "It is an analysis of the holding company, Network 18 running the popular TV channel CNBC TV 18. Besides fundamentals and valuations, it also touches on corporate governance issues."

    Manshu presents China ETF List posted at OneMint, saying, "A list of ETFs that gives investors exposure to China."

    SVB presents ETrade Online Brokerage Account: Top Broker Review posted at The Digerati Life, saying, "Thanks!"

    Madison presents Ohio 529 College Advantage $25 – $100 Bonus posted at My Dollar Plan, saying, "Have you been planning to start a college savings account for your kids? It's the perfect time to do so with the Ohio 529, rated one of the top 529 plans. They're offering sign up bonuses this fall to open an account."

    Alex Fotopoulos presents 9 Stock Picks - September 2009 posted at My Trader's Journal, saying, "Alex put together a list of nine picks he thinks are worth checking out."

    Zach Scheidt presents Education Breakdown – An Expensive Short Opportunity posted at ZachStocks, saying, "China Education and Technology Company (EDU) is primed for a sharp decline. Investors have been programmed to expect the company to beat quarterly guidance, but competitive pressure could catch up to EDU."

    Super Saver presents Investment Plans for the Rest of 2009 posted at My Wealth Builder, saying, "I'm starting to think that the economic recovery will be slower and longer than current expectations. I believe the next couple months will be telling. Here are my plans."

    Mike Piper presents Discount Brokerage IRA Comparison posted at The Oblivious Investor, saying, "A comparison of all the major discount brokerage firms, intended to help you determine the lowest cost place to open an IRA."

    ABC presents Investment Real Return posted at ABCs of Investing, saying, "A simple explanation of investment real return."

    Larry Russell presents Top No Load Mutual Fund posted at No Load Mutual Funds, saying, "Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work."

    Frank Vertin presents Best Stock Index Fund posted at Best Index Fund, saying, "Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds."

    Tushar Mathur presents Can't Control the Markets? Try controlling the Costs posted at Everything Finance, saying, "As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You're not alone."

    Tomas Escent presents Quant Investing posted at Nerds on Wall Street, saying, "Think of this book as sort of a Hitchhiker’s Guide to Wired Markets. There are no robots parking cars for six million years, but there are robots trading millions of shares in six milliseconds, so maybe that’s close enough."

    Praveen presents India Fund (IFN) Trade Example posted at My Simple Trading System, saying, "An example of how having a trading system gives you an edge, and let's you take advantage of market moves outside of your control."

    Dividend Tree presents What is your preference – Aristocrats or Achievers? Dividend Tree posted at Dividend Tree, saying, "The key question here is; are we willing to invest in companies that have still not completed 25 years of dividend growth? All dividend aristocrats were at that stage at some point in time."

    The Skilled Investor presents Personal Investment Management posted at Personal Investment Manager, saying, "Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees."

    Managing Debt

    Patrick @ Cash Money Life presents Best Student Credit Cards posted at Cash Money Life, saying, "Tips on how students can use credit cards wisely and avoid the trappings of getting into credit card debt. Also includes a list of the top student credit cards."

    MoneyNing presents Free Credit Reports posted at Money Ning, saying, "AnnualCreditReport.com should be the only way to get a free credit report."

    PT presents How to Effectively Use 0% Balance Transfer Credit Cards posted at Prime Time Money, saying, "Thanks!"

    Jeff Rose presents New Credit Card Rules 2009 posted at Jeff Rose.

    Eric J. Nisall presents Good Credit Is Important Now More Than Ever posted at Let's Blog Money, saying, "The new credit card laws have already started to take effect, and the credit issuers are also taking steps to protect themselves. This means trouble for consumers."


    MoneyNing presents How to Break Bad Habits posted at Money Ning, saying, "How many bad habits would you like to break?"

    Tom Drake presents Recommended Personal Finance Books posted at The Canadian Finance Blog, saying, "My top 25 personal finance books, anything from investing and portfolio allocation to taxes and saving money."

    No Load Bonds presents Bond Index Fund posted at Bond Index Fund, saying, "Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. The best bond fund buying strategy is to pick only very low-cost no load bond funds."

    FIRE Getters presents Credit Cards In Ireland and Associated Stamp Duties posted at FIRE Finance - A Top Personal Finance and Investing Blog for Early Retirement and Money Management!, saying, "Ireland had the unenviable title of being the only country in the world to impose a credit card stamp duty. And this country earns a lot of revenues by levying this duty on its citizens ....."

    Roshawn Watson presents Should You Buy A House Outright? posted at Watson Inc, saying, "Suppose you find yourself in the somewhat unique predicament of having the resources to purchase your house outright without a mortgage. Is it then financially-wise to make the purchase?"

    FMF presents When Work and Money Collide posted at Free Money Finance, saying, "What do you do when money issues enter the workplace?"

    Retirement Planning

    Karen Chan, CFP, University of IL Extension presents Pension Plans At Risk: Employer Bankruptcies, Frozen Plans, Suspended Matching posted at Plan Well, Retire Well, saying, "What happens to your pension benefits if the plan is frozen or your employer goes bankrupt? This post explains guarantees from the Pension Benefits Guarantee Corporation, and how to revise your retirement plan. Five educators in Consumer & Family Economics with University of IL Extension contribute to this blog. Our goal is to provide unbiased, sensible perspectives on investing, retirement planning, and managing your money."

    Jeff Rose presents In Service Distribution- 401k Rollover While You’re Still Working posted at Jeff Rose, saying, "If your 401k has you down at work, the in service distribution might be exactly what you need."

    Curt presents Here Is Why Inflation and Socialism Will Eventually Fail and Capitalism Will Regain Its Worthy Support posted at PennyJobs.com

    Top Stock Index Funds presents Top Stock Index Funds posted at Top 10 Index Fund, saying, "Buy these top 10 very low cost no load S&P 500 index mutual funds directly. You do not have to pay the heavy added expenses of buying through a stock broker, financial adviser, investment adviser, or investment counselor."

    Retirement Savior presents Passive Investing Overkill posted at Retirement Savior, saying, "Most investors leave risk-adjusted returns on the table. Learn simple ways for you to improve your portfolio."

    Risk Management and Insurance

    Patrick @ Military Money presents COBRA Benefits 2009 Economic Stimulus Recovery Act posted at Military Finance Network, saying, "The 2009 Economic Stimulus Plan includes additional COBRA and unemployment benefits."


    Paul Kamp presents More Savings Help posted at Don't Quit Your Day Job - Personal Finance, Economics and Investing, saying, "I wrote this article based upon some coming changes to savings plans in the United States. I like what's coming in 401(k)s, but savings bonds from tax returns feels like a gimmick."

    Four Pillars presents Back To School Cell Phone Deals posted at Quest For Four Pillars, saying, "Comparison of the best cell phone deals for students heading back to school."


    Patrick @ Cash Money Life presents Self Employment Tax Guide posted at Cash Money Life, saying, "Do you know if you owe self employment taxes or not? Use this guide to learn more about self employment taxes – who, when, and how much."

    Jeff Rose presents American Opportunity Tax Credit For College posted at Jeff Rose, saying, "The American Opportunity tax credit is a nice step up for parents with kids in college."

    DIY Financial Planning presents Tax-Advantaged Retirement Investment Planning posted at Do It Yourself Financial Planning, saying, "In general, if your retirement saving planning allows sufficient annual retirement savings from your earnings, most retirement investment advisers would recommend that you make the full contributions each year into these various plans through out your employment up to when your retire. Even when you find that you cannot deduct from your income taxes your annual contributions to retirement plans, very often it still makes long-term retirement financial planning sense to make those IRA and 401k contributions, since future appreciation of these assets would be sheltered from ongoing taxation."

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Tuesday, September 08, 2009

    Successfully Reduced Property Taxes

    In December, 2008, we had received a notice that our property assessment had increased 3% from the 2005 assessment. Given the recent crash of the housing market, I decided to contest the assessed value of our home and lower our property tax. Based on my appraisal, I estimated our home had actually fallen 16.4% in value since 2005.

    Last month, we received great news from the county accepting our estimate of our home value, without attending the usual hearing. Thus, the assessed value of our home will be lowered by 16.4% and the property tax will be lowered by the same percentage also.

    Since I was expecting some debate on the value, I called the county administrator to confirm the news. They explained that the data I had submitted provided sufficient support for the revised value requested. Based on the large volume of appeals submitted, the county decided to quickly accept all appeals with adequate supporting data, and only have a formal hearing for those where little or no supporting evidence was offered.

    For more details on the process I followed, see Lowering our Property Tax - Doing it myself. Based on subsequent conversations with the county appraisers, I did make one substantial change to the process outlined in February, 2008. Instead of doing one comparison to the average of several home sales, I did three different comparisons to sales of three individual homes that were most similar to our house.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Friday, September 04, 2009

    Bursting of a Wealth Bubble

    The article Rise of the Super-Rich Hits a Sobering Wall offers an interesting hypothesis that the period of 1987 to 2007 was the creation of a Wealth Bubble, which began bursting in late 2007. Until then, money invested in the stock market and real estate on average provide great returns. For example, in the past it was very common to advocate investing in index funds as a path to become wealthy.

    Many baby boomers and retirees, including me, benefited from this wealth bubble over the past two decades, as retirement accounts and home values rose. Unfortunately, many of the same people have seen significant declines in their net worth with the recent bubble burst.

    How fast people will reaccumulate wealth is not evident yet. At this time, many experts believe that recovery from this bubble will be very slow. However, there are some that believe another bubble will occur, due to low interest rates, and another group believe a major crash is imminent.

    Whatever scenario plays out, it doesn't appear growing one's wealth will be as "easy" or "certain" as it was in the past two decades. This may become an important issue for those that have retired or are considering retirement in the next few years.

    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 © 2009 Achievement Catalyst, LLC

    Thursday, September 03, 2009

    Need Replacement Parts

    After getting a couple cavities within a year, I asked my dentist if I needed to change anything. New toothpaste, more flossing, or more checkups? He laughed and said that it was just a sign of aging, my parts were just getting worn out.

    Another major change that I've noticed from getting older is the longer recovery times from injury. As a kid, I remember only take a few days, perhaps a week maximum, to recover from most injuries. Nowadays, it seems injuries linger for weeks, even months, before getting better.

    In addition, I now seem to get injuries from doing regular activities. Last week, my knee hurt a little bit after jogging for a couple miles. Then I played tennis and aggravated the injury. After doing essentially nothing for a week, I think I'm well enough to try playing tennis again. We'll see how I feel after playing tonight.

    On the other hand, our daughter, who will soon be five, bounces back up after falling off a swing and shows no sign of a fall the next day. How I wish I were still that resilient. It's too bad body parts can't be replaced with better elements as I get older :-)

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Wednesday, September 02, 2009

    How Much to Pay for a Business

    Soon after taking early retirement, I attended a seminar by a business broker. To me, the most interesting part of the presentation was his methodology for valuing a small business. Basically, he shared that a good price for buying a small business was two to three times cash flow. As I understand it, cash flow = profit + depreciation +amortization + loan interest + owner's compensation. (I believe owner's compensation is added back only for corporations).

    Thus, if a business has $50,000 free cash flow, a good price would be $100,000 to $150,000. For a business with $200,000 free cash flow, a price from $400,000 to $600,000 would be a good price. I would expect to pay a higher price for a cash flow of high certainty and a lower price for a cash flow of lower certainty.

    I came to the conclusion that a business valued at $100,000 to $150,000 would not be worth owning for us. $50,000 of free cash flow for working 40-60 hours a week as a owner would not be sufficient return. To me, I would be as well or better off finding a job that paid $40,000 a year, since it wouldn't require any upfront investment on my part.

    On the other hand, I would consider a business that generated $150,000 of cash flow as worth the effort. However, at this time, I'm not ready to invest $300,000 to $450,000, which is the minimum needed to purchase such a business.

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

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

    Copyright © 2009 Achievement Catalyst, LLC

    Tuesday, September 01, 2009

    Small Business Ventures - More Challenging than Expected

    With this recession lingering on, more people are probably thinking about starting a business on their own. The 7 Most Overrated Businesses at Yahoo! Small Business shares businesses that sound attractive, and easy, but are fairly challenging once people start them. The list includes:
    1. Restaurants

    2. Direct Sales

    3. Online Retail

    4. High-End Retail

    5. Independent Consulting

    6. Franchise Ownership

    7. Traffic-Driven Websites

    Overall, I agree with six of the seven on the list. To me, all these businesses require great marketing and success is highly dependent the owner's ability to continually find and keep new customers.

    I was surprised at the article's choice of franchise ownership as a challenging business, since the marketing is done by a parent company, the brand is usually well known and the successful procedures are well documented. In presentations, I have been told that franchisees mainly fail because they do not follow the proven procedures. Interestingly, the article pointed out that only 62% of franchise businesses stay open five years, compared with 68% for independent businesses.

    Finally, the article points out that most new owners also make the mistake of starting businesses that they like, or an easy/cheap one versus starting one in which they have professional expertise.

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

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

    Copyright © 2009 Achievement Catalyst, LLC