Challenges to Becoming Wealthy

IMHO, here are some challenges to creating personal wealth:

More Time Needed - Time is one of the major factors in creating wealth. Saving and investing over a long period of time always works. Some people just haven't had the time they need for their plans to work. Some are in the 20s and 30s and some started later in their 40s. However, if they continue with their plans they will become wealthy. Many people are in this category I wish them good fortune on their personal finance journey to success. Remember, for most of us, wealth building is a marathon, not a sprint.

Lack Discipline/Commitment - Many people understand what needs to be done. However, only some are willing to , able to or committed to do it. For example, an activity that is guaranteed to work is to save 10% of one's income. It is guaranteed to work, whether one makes $10,000 or $100,000 per year. Saving only $1 per day can create over $500,000 in 50 years at a 10% return (average yearly return of the stock market since 1926). Imagine what saving 10% of one's income can do.

However, there are many reasons people give for not being able to save 10% of one's income. The reasons include:

Would require too much sacrifice.

Can't afford 10% after all "necessary" expenses.

Too much debt.

Don't make enough money.

We really "need" to drive a new car or live in a more expensive house.

Can't get a higher paying job.

Yes and ..... I submit it's a choice. Decide yes, and one will likely become wealthy. Give in to the "reasons", and one may never become wealthy.

Need a Better Strategy - Having a good plan to build wealth is important. Good plans have a higher probability of success than poor plans. As example of a good plan is to pay oneself first. In my opinion, a poor plan is one a former colleague used - increase one's standard of living by maxing out credit cards, and then make the minimum payment forever. The majority of plans and tactics shared are good ones. However, it is important to know that some plans won't work.

Here is my own personal wealth building strategy which I believe is a good one:-).

Had a Disastrous Event - Even the best plans can be derailed by outside influences. Job loss and health issues can be major negative impacts to wealth building. Even a temporary job loss or temporary illness can significantly reduce one's wealth. I know some people have had this happen to them. Getting back on track is generally a difficult and long task.

We have been fortunate so far and have avoided any disastrous events. While I can't prevent a disastrous event, I make contingency plans in case such an event happens. My contingency plans include an emergency fund of a year's income and comprehensive insurance coverage.

That's my personal assessment of why we're not all wealthy yet. In my opinion, many of the "more time" group will likely succeed and become wealthy someday. Most of other three groups will try valiantly ... and only a few will succeed.

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

This is not financial nor wealth building advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Sale and Coupon Fatigue

For most of my life, I was a coupon and sale seeker.  Before I would purchase an item, I would wait for it to go on sale or have a coupon, even for small purchases.  Many times, I would organize my purchases around sales and coupons.   However, this caused more planning and complexity, which I managed easily when I was younger.

Even after retirement, I was still a coupon and sale seeker for most items.  As I'm getting older, the planning and complexity is becoming more difficult and I am choosing to simplify.   Now I just buy my smaller items whenever I need them.  If they happen to be on sale, great I might buy a few extra.  

I will use my sale and coupon efforts for larger purchases, for example appliances and automobile, where the effort yield large savings, and are done infrequently.   

Doing this should create more simplicity for my retirement lifestyle.

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

This is not financial nor advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Use Custodial Accounts to Make Dividends/Interest Tax Free

Here's a hack to reduce taxes on interest and dividends earned for the family.   Put the assets in a custodial account for a minor dependent.  In 2025, the first $1350 of a minor dependent's unearned income in 0%.   Unearned income includes dividends, interest, and capital gains.  There are other ones, like IRA distributions, rents and royalties, but probably not relevant for most dependents.

$27,000 earning 5% interest is $1350 annually, which is tax free if earned in a dependent's custodial account.   No tax return needs to filed if unearned income is less that $1350.

The only requirement is all the funds in a custodial account must be used for the benefit of the dependent.  However, that is easily done.  Funds withdrawn can be used for the dependent's allowance or the fractional part of their rent, food, clothing, education expenses.  Therefore, the interest/dividends earned can be easily withdrawn and spent on an annual basis to comply with IRS regulations regarding custodial accounts.

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

This is not financial nor tax advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Maximize Taxable Retiree Income in 12% Bracket

IMHO, the 12% tax bracket is a sweet spot for taxable retiree income.  As a retiree, I could partially manage whether to receive taxable income or not.

Here was my thinking:

• 12% is a terrifically low tax bracket. For reference, I was in the 30% tax bracket at an entry level salary when I first started working in the early 80s.  This tax bracket will be available at least until 2030.
  
  
• The next bracket is 22% which means almost a 100% increase in one's marginal tax rate. If future income can be pulled forward  to the 12% tax bracket and avoid being in the 22% tax bracket in the future, that is a tremendous savings.
  
  

Here are some examples to take advantage for this "tax bracket arbitrage:"

• Do a Roth conversion, especially if one has traditional IRA accounts that will have current or future RMDs that may put one in the 22% tax bracket.  This will allow retirement investments to continue to grow tax free and pay 0% taxes when withdrawn in the future.
  
  
• Realizing long term capital gains that will be taxed at 0% instead of 15% or higher in the future.


• Invest in ETFs or stocks that pay qualified dividends that will be taxed at 0% instead of 15% or higher in the future.
  

Paying 0% or 12% tax on income now is definitely better than paying 15% or 22% in the future on the same income.

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

This is not financial nor tax advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Benefit of Paying Credit Card Balance Every Week

I've started to pay several of our credit cards every week, before the bill is sent.   I do this because I share 3-4 credit cards with family members.   Since I don't know what they are spending, I check periodically to see the balance on the card, so that I will have enough funds to pay the monthly bill.

Since I check the bill, I decided I might as well pay the balance, even though it is not due yet.  That way I don't forget or miss paying a large bill when it comes.  In addition, I am effectively spending on a cash basis, since I pay the balance every week.

Paying the balance weekly may also increase one's credit score since the percent utilization is lower when the monthly bill is issued.  Bonus!

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

This is not financial nor credit card advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

My New Strategy for Investing During Market Declines

I read an article that stated since 1950, the market has had 35 declines of 10% or more.  In all 35 instances, the market passed the previous highs.  Sometimes within a few weeks, other times a few months, and in a couple cases a few years.  But the recovery happened 100% of the time.  I would include a link to the article, but I can no longer find it.

Of course, one issue is timing.  If it takes 5 or 10 years to recover, it may be challenging for those who have no other source of income.   A second issue is stock risk.   Inevitably, some stocks keep going down after a 10% decline and don't recover to new highs. A third issue is the decline may continue past 10% to 20-40% as it has in the past.   It seems to be a no brainer decision to invest something, if one has time and other sources of income.

Here's my plan for the next 10% decline:

• In retirement accounts, invest up to 50% of cash available.  These funds won't be needed for the next 5 years of living expenses.
• Scale in the investments.  For example, 10% of funds at 10% decline, additional 20% at 15% decline, 25% at 20% decline (bear market).
• Invest in market index ETFs instead of individual stocks.  My current choices are VOO (S&P 500 index) and MGK (Large Cap Growth Stock index.)
• Buy and mostly hold.  I will evaluate some options for scaling out gains in the future.

For reference, I feel the market is extremely high and a correction is inevitable, but who knows when.  However, I do know that it will be difficult to invest new money when the market declines.   Hopefully, I will be disciplined and follow this plan.

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

This is not financial nor investing advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Financial Strategies that Helped Me

Here are some simple financial strategies that have worked for us and I'm sharing with my kids.

• Pay yourself first.   Put 5, 10, 15% or whatever into a savings account.  When I first started working, I would pay all my bills and expenses first and whatever was left at the end of the month was my savings.   Except for my first month of working, I was pretty good at having something left at the end of the month.   Later, I realized a better approach would be to take out my savings first, and then pay my bills and spend on expenses afterwards.
• Buy only what we need.  Marketers are adept at getting consumer to buy stuff.  The challenge to sort the needs from the wants.   Do I really need the best smart phone, cable TV, a large screen TV or a luxury car?  The answer is probably not.  Not buying these can reduce spending by hundreds of dollars one time or every month.  A related rule to this is to live below our means.
• Spend cash for everyday expenses. Using only cash is an easy way to limit spending.  Once the cash runs out, the spending stops.  A corollary to this is pay off entire credit card bill due every month.

OK, not everyone can follow these strategies.  But if one can, it is one path to a successful future retirement.

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

This is not financial, saving, spending nor retirement advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Reducing Financial Complexity - Starting the Journey

In the past, I typically had funds at several banks and brokerages.   I also had multiple accounts at each bank and brokerage.  Each brokerage account used different strategies and had numerous different stocks, both long term and for trading.  Part of the reason for the higher complexity was  the elimination of brokerage commissions, which allowed me to increase diversity with smaller lots without incurring a cost penalty.  Complexity didn't cost more.

Even though it was a lot, I was able to keep track of our savings, investments and trading without much effort.   I also enjoyed managing the many accounts, thinking I was adding value.     Recently, I evaluated my results and discovered (no surprise) that I would have done better if I had simply invested in the S&P 500 index and didn't ever sell.  Ah, the benefit of 20/20 hindsight.

So here is my plan for simplifying:

• Have a maximum of  two banks, which has been accomplished.  One is our checking account and bill paying service, but pays very low interest rates.   The other is a credit union for our bank savings since it pays the highest local CD rates.  We no longer consider opening a new bank account to earn the bonus.
  
  
• Minimize the number of single stock positions and replace with ETFs and CDs/Bonds. Our brokerage accounts have way too many small lots individual stocks in too many separate accounts. I'm not sure what the endpoint will look like.  At this point, I am selectively selling off many individual stocks and rotating in money market funds or bonds/CDs for now.   I will reinvest in MGK and VOO when there is market pull back or correction.
  
  
• Create regular streams of consistent annual income.  In the past, we put more emphasis on investment capital gains for our income.  However, that can be volatile to highly volatility.  I'm trying to use Dividend and Bond/CD income to create more consistency.  The challenge with this approach is reinvestment at maturity.   I'm stable until 2028.  We'll see how it goes after that.

Thanks for following my journey.  In the next couple week, I will be attend financial advisor presentations that claim to achieve this.  I do not want insurance or annuity solutions so I am interested in their options.

This is not financial nor retirement advice. Please consult a professional advisor.

Copyright © 2025 Achievement Catalyst, LLC

Like Father, Like Daughter - DIY Skills

I a big DIY and Fixit Dad.  It's part of my DNA as an engineer.   Before my daughter was in kindergarten, I used to have her help me assemble or repair things.   I also advised, but did not do, some of her physics and engineering projects.

My daughter is in college now, majoring in Biochemistry and Music Performance.   This year she is living off campus.  On move-in day, one of her roommates had the tension rod on her shower caddy come apart.  Her dad tried to fix it but could not. My daughter took over and repaired it.   He asked how did she know how do it.  Her reply, "My dad is an engineer and I watched him do things."   Made me proud.

I'm also including her in the financial aspects of paying for college education.  Ranging from how we invested to make it debt free to the paying for the cost each semester.  Hopefully, that rubs off on her in the future for financial skills.

Recently, I started showing her the DIY car maintenance that I do, since we will be lending her a car for this year.

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 © 2025 Achievement Catalyst, LLC

Retirement Income - Are they really passive?

There is a lot of discussion on the Internet about Passive Income.   IMHO, there is not such thing as completely passive (zero effort) income. Rather, there a sliding scale of effort or initial investment versus zero.

Here's how I rank them on a scale of 1-10, where 10 is full time work and 1 is no effort at all.

Social Security:   After retiring and collecting:  1.   While working:  10, it takes 35 years to get maximize benefits.

Pension:   After retiring and collecting: 1-2.  While working:  10 it takes 30+ years to maximize one's pension.

Rental.  After retiring and collecting: 3-7 because one still needs to deal with tenants..  While working:  3-7.

Dividend and Interest: After retiring and collecting:   3-7 because need to monitor investments.   While working:  3-7 because need to monitor investments.   

Side Hustles:  After retiring and collecting:  3-10,  since a side hustle is really a job. While working:  5-12 since there is no "no effort" side hustle.

I don't believe in "passive" or zero effort income.   Yes, there are lower effort income, but YMMV.

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

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

Copyright © 2025 Achievement Catalyst, LLC