Retirement Saving Challenge - Three Month Status

Those who joined the Retirement Saving Challenge on July 1, 2007 have almost completed three months. For today, Sunday, September 30, 2007, one should have three months of saving, either at a rate to create 12 times income at age 65, or at a rate of 12% of salary. Here's what one's savings should be at this time:

	Three Month Amount by Age To Achieve Savings Equal To 12 Times Salary
Salary	20	30	40	50	60*	12% of Salary
$20,000	136	313	758	2,086	9,841	600
$30,000	204	470	1136	3,129	14,762	900
$40,000	272	627	1515	4,173	19,682	1200
$50,000	340	784	1894	5,216	24,603	1,500
$60,000	408	940	2273	6,259	29,523	1,800
$70,000	476	1097	2652	7,302	34,444	2,100
$80,000	544	1254	3031	8,345	39,364	2.400
$90,000	612	1410	3409	9,388	44,285	2,700
$100,000	680	1567	3788	10,431	49,205	3,000
$110,000	748	1724	4167	11,474	54,126	3,300
$120,000	816	1881	4546	12,518	59,047	3,600
$130,000	596	2037	4925	13,561	63,967	3,900
$140,000	952	2194	5304	14,604	68,888	4,200

* Mathematically not possible. Shown only for reference

One can choose the lower of the 12 Times Number or the 12% Number. For example, if 20 and making $50,000 per year, one should have saved $340 by September 30, 2007. If more aggressive, one can choose to have saved $1,500.

Since this is an honor system challenge, there is no need to report one's results. I hope everyone is make progress towards their retirement savings target. The next update will be around October 28, 2007. Good luck until then.

Here are the related posts (in date order) for The Retirement Saving Challenge:

Retirement Saving Challenge

Set A Goal

Create Environments and Behaviors

Daily Savings Targets

Preparation - Timeless Personal Finance Recommendations

Finding Money To Save

The Power of Compounding

Get Started

One Month Update - July, 2007

Two Month Update - August, 2007

For more on New Beginnings, check back every Sunday for the next segment.

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

Copyright © 2007 Achievement Catalyst, LLC

Financial Risk With Innovative Investments - Buyer Beware

For many years, the majority of financial risk for lending money was owned by banks and the government. Loans to businesses and individuals were made by banks, and it was in their best interest to find good customers who were able to make payments. Individual depositors at banks were relatively well protected through the government via FDIC insurance.

Recently, the risk has been shifting from banks and the government to individuals, via innovative financial instruments. This has been most evident in the sub prime mortgage crisis. It appears that mortgage brokers are now "investment bankers" for individual investors by packaging loans into collateralized debt obligations (CDO) that are sold. If the mortgagee defaults on the loan, the investors in the CDOs will bear the brunt of the loss of payments. While CDOs were sold as "safe" investments (i.e. AAA rated bonds), recent events have shown that it was was mostly safe for those that issued them.

Prosper.com is another example of an innovative investment where risk has been transferred from banks and government to individuals. In the past, experienced bank loan officers would evaluate applicants before loaning the banks money. In Prosper.com transactions, many inexperienced individuals are now evaluating applicants and make loans. The early results have shown this transferal of risk hasn't been an issue. However, should there be a significant increase in defaults, lenders in Prosper.com will experience similar liquidity and valuation issues as the investors in CDOs.

As always, higher returns generally are not a free lunch. While CDOs and Prosper.com loans provide higher returns, they are also subject to a higher default rate. In boom times, the true default rate may masked by economic prosperity and appear attractively low. However, should there be a leveling out or decline in the economy, an increase in the default rates will show the unexpectedly high risk individual investors took on for these types of investments.

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

Photo Credit: morgueFile.com, Stuart Whitmore

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

Copyright © 2007 Achievement Catalyst, LLC

Business Week - Retiring Early Strategies: The Fifties

Business Week's 2007 Annual Retirement Guide is dedicated to retiring early. The issue covers recommendations for what to one's 20s through 50s. My Wealth Builder will be discussing these strategies on Fridays during September, 2007.

Business Week recommended the following strategies for one's fifties and I included my brief comments in blue:

1. Review your real estate. I will keep a primary residence. That's why I don't count my home in my retirement savings.



2. Stay with stocks. Agree. I would add moving three to five years income into CDs or money markets to protect against short term drop in stocks. To me, nothing is worse that having to sell a stock during a decline because one needs the income.



3. Do a benefits check. For me, the most important benefit is comprehensive health care coverage.



4. Cut the cord. For me, whether to cut the cord would depend on my financial situation in my fifties. If we are doing well, I would rather help my kids with a home down payment than to leave them a large inheritance.



5. Devise a good tax strategy. Fully agree. My financial advisor has identified several ways I can minimize taxes when I retire.

Overall, I would summarize the fifties as "confirm readiness and tie up loose ends." This is the time to have a good financial advisor giving a independent third party assessement of readiness.

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 © 2007 Achievement Catalyst, LLC

The Education of Our Daughter

While I am not a certified teacher or educator, I sometimes think about the type of education that would best prepare my daughter for the working world. I believe that the work of her generation will be about "creating a new future" and will require a different set of skills than many jobs of today.

Our traditional education focuses on skills appropriate for doing today's jobs. These skills include: memorization and pattern recognition, following instructions, analysis of problems with known solutions and effective execution of physical and mental tasks. While these skills are necessary, having only these skills will not be sufficient to be successful in the future.

Skills related to "creating a new future" are ones that I think will be important for my daughter. They include:

1. Setting a goal for something important that has not yet been done.



2. Gathering potentially relevant information.



3. Analyzing the data and choosing the pertinent results.



4. Making decisions on what efforts are needed to achieve the goal.



5. Collaborating with others to achieve the goal.

These are the important skills that I will want to teach our daughter to augment the excellent traditional education she will receive.

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

Photo Credit: morgueFile.com, Jose

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

Copyright © 2007 Achievement Catalyst, LLC

Links To Carnivals from September 23 -27, 2007

Here are links to select Carnivals from September 23-27, 2007:

Festival of Stocks #55 - Apple, Inc. Edition: Buy, Sell or Hold

Carnival of Family Life

Canrival of Personal Finance #119

Festival of Under 30 Finances

93rd Festival of Frugality

Cavalcade of Risk #35

Carnival of Twenty Something Finances

Give these hosts some recognition for their hard work by visiting their Carnivals.

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

Copyright © 2007 Achievement Catalyst, LLC

Time To Plan for 2007 IRA Contributions

While the deadline is April 15, 2008, it’s not too soon to start setting aside money for your 2007 IRA contributions. As I wrote in a previous post, IRAs are one way to use “other people’s money” to save.

For 2007 the IRA contribution limits are the same as for 2006. The maximum IRA contribution is $4000 per person with a $1000 catch-up contribution for people 50 or older. However, the income limits that qualify for IRA deductibility and Roth IRAs have been increased.

IRA owner participates in a company sponsored retirement program

The tables show the deductibility for regular IRA contributions at different Modified Adjusted Gross Incomes (MAGI).

	IRA Deductibility
Single Taxpayer		the IRA contribution is
From $0	up to $52,000	100% deductible
Over $52,000	and less than $62,000	partially deductible
From $62,000	__	not deductible

	IRA Deductibility
Married Filing Jointly		the IRA contribution is
From $0	Up to $83,000	100% deductible
Over $83,000	and less than $156,000	partially deductible
From $156,000	__	not deductible

Roth IRA contributions are not deductible and the maximum contribution can be made for MAGI up to $99,000 (single) and $156,000 (married filing jointly). People with MAGI over $114,000 (single) and $166,000 (married filing jointly) cannot make Roth IRA contributions. For MAGIs between the limits, the maximum amount of the Roth IRA contribution is phased out to zero.

IRA owner does not participate in company sponsored retirement program

No income limits for deductibility of IRA for both single and married filing jointly. If the spouse participates in a company sponsored retirement plan, then the IRA owner can deduct 100% of the contribution up to $156,000 MAGI. No deduction is allowed after $166,000 MAGI.

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 © 2007 Achievement Catalyst, LLC

2007 Free Night of Theater

For your enjoyment, this year's free night of theater opens on October 18, 2007.

"The 2007 campaign is being produced in Atlanta, Austin, Boise, Cincinnati, Cleveland, the state of Connecticut, Indianapolis, Kansas City, Lexington, Los Angeles, the state of New Jersey, the state of North Carolina, Oregon (in Ashland and Eugene), Philadelphia, Sacramento, San Diego, San Francisco, Seattle/Greater Puget Sound, South Carolina/Charleston, states represented by Southeastern Theatre Conference (Alabama, Louisiana and Florida), Washington D.C. and the state of Wisconsin."

Tickets for two can be reserved beginning in early October. For details on shows, times and ticket availability see the list of participating regions and cities.

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

Photo Credit: morgueFile.com, Clara Natoli

9/24/07 Stock Purchase Update - Benefiting From The Fed Rate Cut

In my 9/17/07 stock purchase update, I wrote about how my stock buy selections of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT) were performing. In that update, the portfolio was up $1,053 for a 6.0 % gain, down from a peak gain of $2310 and 13.2% on 7/23/07. As of 9/24/07, the portfolio benefited significantly from last week's Fed rate cut and stands at a $2,290 profit for a 13.1% gain. Also, I have sold the rest of my position in Avnet (for a $204 gain) since my system dropped it off the buy list in the week ending 9/7/07 . Here's the current status on the positions in the three remaining stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 9/24/07
Terex (TEX)	50	$82.36	$84.45
Potash (POT)	50	$71.39	$100.69
Shaw Communications B (SJR)	100*	$21.755	$25.08

* 2 for 1 split on 8/3/07

Overall, I am still happy with the performance of these four stocks, given that the overall decline of the market. Since the last update, TEX and POT were up significantly, and SJR and AVT were up slightly. Thus, the overall portfolio gain doubled from the last update. Also, I have sold the remaining 100 shares in AVT during the rally last week.

I continue to be impressed with my commitment to stay invested in these stocks, in spite of the market volatility. In the past, I would have closed out the entire position with this level of volatility. Given the performance of the portfolio, I am glad I held my positions instead of allowing myself to be whipsawed by the market each week.

The recent events (credit crunch, central bank interventions) originally had convinced me that the bull market is in its last stage, and I was considering closing out these positions during the next significant rally. However, the Fed rate cuts of 0.5% for the discount and Fed funds rate of September 18, 2007 lead me to believe the bull market will last about another year. So I will be updating my stock picks from the modified Unemotional Investor Growth system and add new purchases in the coming weeks.

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

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

Copyright © 2007 Achievement Catalyst, LLC

Festival of Stocks #55 - Apple, Inc. Edition: Buy, Sell or Hold?

Welcome to the Apple, Inc. (AAPL) Edition of the Festival of Stocks. This special edition is focused entirely on Apple, Inc., the company that gave us the Mac, iPod and iPhone. Before proceeding, I would like to thank George at Fat Pitch Financials for giving me the opportunity to host this venerable Festival a second time and for allowing a special single stock edition.

The return of Steve Jobs in 1997 has brought about an upswing in Apple's fortunes. Since Mr. Jobs' return, Apple has introduced the iMac, iPod, iTunes and most recently the iPhone. The iPod and iTunes has been the main driver of Apple's growth in recent years. The combination of the iPod with iTunes has been a magnificent business innovation by Apple. Neither were new technology, but Apple combined the two in a way that made recording music downloads easy and legal to do. In the past four years, an investment in Apple, Inc. has returned 201% (2004), 123% (2005), 18% (2006), and 69% (2007 YTD). And since January 2, 2003, an investment in AAPL has returned about 2000%.

So what should an investor do now? We have four submissions this week that recommend either Buy, Sell and Hold.

Buy Side

AAPL: I Pare Apple Arguments and Give the Edge to the Bulls is submittted by Bill Trent at Stock Market Beat. "Few stocks boil the blood of both bull and bear as much as Apple (AAPL), and for good reason. The company, richly valued though it is, has come out with more cool products than the rest of the tech industry combined. That helps excite the bulls, and as for the bears, there’s a good chance many of them are jealous for having missed out on the stock’s run. They have sour grapes they hope will someday be pressed into wine... If the company can grow at even half the current rate over the next five years, investors are likely to be well compensated for the added risk."

Sell Side

Time To Sell Apple? is posted by Babak at Trader's Narrative. "I don’t think it is an automatic short here since it could very well go into a protracted range and work out its overbought condition. But if you’re long, I’d be very careful here."

Glamorous Apple is written by George at Fat Pitch Financials. "You’d be hard pressed find someone that has negative feelings towards Apple. However, Apple’s stock is just too loved. It does not provide any real margin of safety. It’s fun to keep up with the lastest developments at Apple, but I’m leaving the following of this stock’s price to the traders."

Hold

Stock Revisited - Apple Inc (NASDAQ:AAPL) is offered by Average Joe at Investment Jungle. "At the current price of $138.41, Mr. Market is demanding a premium of 15.05%. Now, considering that I have erred on the side of caution with both my growth rate and PE, 15% does not seem so far off...Rule #1 methodology is fairly strict. It looks for consistency over a 10 year period which Apple just does not deliver. Apple is more of a momentum stock and it has definitely been on a sweet run over the last couple of years. "

Reader Opinions

So there you have it. One buy, two sell and one hold recommendation. Who do you think is right? What's your opinion of Apple, Inc. stock? Let us know what you think in the poll below:

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

Copyright © 2007 Achievement Catalyst, LLC

Fed Rate Cut Signal - Time To Be Invested In The Stock Market

If history repeats itself, the Fed interest rates cuts on September 18, 2007 signal the beginning of market run up and significantly higher values one year from now. According to the Wisconsin Rapids Tribune article Rate cut could skew investing path toward stocks, gold:

"A recent study by the CFA Institute found that tweaking your investments according to the Fed's monetary policy can be highly beneficial. The stock market averaged a 12 percent annual return from 1973 through 2005. When the Fed has pursued an expansive monetary policy and lowered short-term interest rates, the stock market gained an average 17.41 percent a year. When the Fed was raising rates, the stock market gained an average of only 5.34 percent a year."

Sensei over at Stock Rake also points out a signal first identified Norman Fosback in the 1973 book Stock Market Logic called "two tumbles and a jump." According to The Most Telegraphed Big Money Signal Ever?:

"Twenty calendar days after the signal, the S&P 500 is usually up an average of 4%. According to Fosback, the average S&P gain after three months is 11%; after six months, 15.9%, and after one year, 29.7%. Fosback says the two-tumbles signal is most effective in the six-month and yearly intervals. In 18 of 19 times, returns have been positive."

Over the next two weeks, I plan to be making investments in:

1. An updated stock pick list from a modified Unemotional Investor Growth system.


2. Domestic and Foreign diversified stock ETFs. VWO, EFA and SPY are some that I am considering.


3. Select country and sector ETFs. I have already purchased the Brazil ETF, EWZ, and the China ETF, FXI.

I will publish my specific equity purchases as they are made.

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

Photo Credit: morgueFile.com, Kees Huyser

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

Copyright © 2007 Achievement Catalyst, LLC

Retiring Before Fifty - Stories of People Who Did It

Retired by 50: Real Life Stories is an article by Liz Pulliam Weston on MSN.com. I like "we've done it" articles because it shows the trials and tribulations people who actually have followed a personal finance plan and achieved their goals.

The article describes three couples who retired before their fifties. It is interesting that all these people appeared to be middle class, indicating that retiring early is well within many people's reach. Here are some the key things they did:

Make retiring early one's top financial priority. All their financial decisions were made with respect to their goal of retiring early.

Significantly reduce expenses. In all three cases, the couples took a good look at their expense and then cut them. They eliminated cable TV, cut food expenses, changed to memorable and inexpensive vacations, and drove used cars. In essence, the stopped trying the "keep up with the Joneses" and tried to only buy what they needed.

Save ruthlessly. Two of the couples saved as much as 50% of their gross salary toward their goal of a nest egg that would provide necessary income in retirement.

Work for money or love AND money. The three couples realized money was a major factor for success. So they either took jobs for money or found a job they loved which paid enough money. No one took a job they loved for not enough money.

Acquire assets to sell later. All three couples acquired real estate or small businesses which were later were sold to fund their early retirement.

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 © 2007 Achievement Catalyst, LLC

Links To Carnivals From September 18-21, 2007

Here are links to select Carnivals form September 18-21, 2007:

26th Carnival of Money Stories

Festival of Frugality #92

Carnival of Financial Planning - September 20, 2007 Edition

#3 Edition: Carnival of Everything Finance

Please give these hosts some recognition for their excellent work and visit their Carnivals.

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

Copyright © 2007 Achievement Catalyst, LLC

Business Week - Retiring Early Strategies: The Forties

Business Week's 2007 Annual Retirement Guide is dedicated to retiring early. The issue covers recommendations for what to one's 20s through 50s. My Wealth Builder will be discussing these strategies on Fridays during September, 2007.

Business Week recommended the following strategies for one's Forties and I included my brief comments in blue:

1. Feed your escape fund. Continue to save ruthlessly at 20% or more of one's salary. I like the recommendation of putting the amounts from paid off loans into savings.



2. Monitor your investments. Check that the one's investments are growing at least 10% per year. Although not technically correct, I include the amounts I save in the "return" calculation.



3. Refine your retirement plan. I fully agree that most people should plan on needing 100% of one's final take home pay. Also, I plan to target on the low side of withdrawals (i.e. 4%) for the first couple years.



4. Buy one's retirement home and use it as a vacation home. At this time, we are planning to continue living in our current house after retirement. To me, it makes more sense to buy a retirement home after selling one's current home.



5. Start transitioning to post retirement work style. I would add to be choiceful on what one does. There will be ample opportunities and ample requests once people realize a person is retiring.

Overall, I would summarize the forties as "maximize income to get maximum savings and investment growth." I also would include having the right additional insurance - i.e. disability, auto, and renters/homeowners.

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 © 2007 Achievement Catalyst, LLC

Financial Lessons From My Parents

I am my parents' child, especially with respect personal finance. Many of the lessons were imprinted in me from childhood. Although I didn't know it when I was younger, these lessons have enabled me to manage my personal finances well. Here are the top five lessons from my parents:

1. Save, and then save some more. My mother is a big saver. She always managed to put part of her household allowance into a savings account. Her savings paid for the down payment of on each of their house, 5 new cars over 40 years and the down payments on investment properties.
   
   I currently save about 20% of my salary income to hopefully fund a retirement in our forties.



2. Minimize taxes. My dad would consider strategies that would reduce or defer his taxes. His main tax deferment strategies was to invest in real estate and contribute to tax deductible retirement plans.
   
   The earnings from my first summer job were used to open an IRA, resulting in no federal or state income tax liability. I also partnered with my dad on two real estate investments, which showed me the tax benefits (e.g. depreciation) of owning rental property.



3. Choose a college major that leads to a well paying and high demand job. My father had degrees in Chemical and Nuclear engineering. While he worked for different companies, he was always able to get good jobs with commensurate compensation. My mom always encouraged me to be a doctor, which I strongly considered.
   
   I followed in my father's footsteps and majored in Chemical Engineering. The year I graduated, Chemical Engineers were in high demand by oil and chemical companies, resulting in the highest paying starting salaries.



4. Invest in stocks. My dad believed the stock market was one way to achieve financial independence. He also believe good stock pickers could beat the market.
   
   Although we each had different approaches, I started investing in individual stocks soon after graduating from college. About 50% of my stock picks for the first 5 years declined significantly in value. I soon learned not losing money was as important as making money:-)



5. Always take care of oneself, because no one else will. While my dad worked hard and was loyal to his company, he also invested effort in other financial ventures such as the stock market and commercial real estate. Although he never needed it, he made sure that his property an disability insurance would cover potential damages. Finally, while he did benefit from Social Security, he believed one should bear the bulk of the responsibility for one's own retirement.
   
   I've dabbled in real estate and been moderately successful in the stock market, which has provided additional sources of income. Also, I have also made sure I have had sufficient health, disability and liability insurance coverage, which has served me well at least 2 times. Finally, I've been saving consistently since I was a teenager, and have amassed six times my salary.
   

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

Photo Credit: morgueFile.com, Meg Donohue

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

Copyright © 2007 Achievement Catalyst, LLC

Some Money Rules of Thumb I Use

MSN.com recently published 16 favorite money rules of thumb by Liz Pulliam Weston. While rules are thumb (e.g. rule of 72s) are not as precise as doing the detailed analysis, they are often easy to remember and easy to use, especially when doing a quick assessment. Here were the ones from the article that I personally use:

1. Retirement, Part I: "Save 10% for basics, 15% for comfort, 20% to escape." While the numbers may vary for different individuals, I think this a a great starting point. After getting started, one can do the more detailed analysis and make refinements. However, I do know that 0% won't cut it. For our goal of retiring early, we have been saving over 20% of my gross salary.



2. Retirement, Part II: "Retirement money is for retirement; until then, keep your mitts off it." Fully agree. I would add don't think of borrowing as an acceptable way to use retirement money for very good needs (e.g. education or first home).



3. Student loans: "Your total borrowing shouldn't exceed what you expect to make your first year out of school." My student loans equaled 40% of my starting salary and I recall feeling that amount of debt was burdensome. I couldn't imagine starting with student loans equal to my starting salary. However, I guess that is the nature of higher educational costs today.



4. Cars, Part I: "Buy used and drive it for at least 10 years." I prefer keeping a car even longer, if mechanically possible. Also, I don't mind buying new if I keep it for at least 10 years. However, I tend to buy basic models (example base truck models) or brands that hold value (e.g. Toyota) when buying new.



5. Mortgages, Part I. "If you can't afford to buy the house using a 30-year fixed-rate mortgage, you can't afford the house." Fully agree. I've written about this before in Avoiding an Expensive Mortgage Mistake.

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

Photo Credit: morgueFile.com, Grtguru

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

Copyright © 2007 Achievement Catalyst, LLC

Reduce 2007 Taxes: Accelerate Deductions or Delay Income

To reduce one's 2007 taxes, a good strategy may be to accelerate deductions or delay income. This can be an especially good strategy when one's expected income is significantly higher in the current year than in the upcoming year. Also, it's a great benefit when the actions result in a moving one to a lower tax bracket. Here are some ideas that one can use.

Accelerate Deductions

1. Charitable donations. Donations to churches, universities or charities (e.g. Salvation Army or Goodwill) can easily be accelerated into the current tax year. In some cases, the organization can give one credit against a future pledge.



2. Property taxes. In my county, one can choose to pay next year's property tax in the current tax year. When one does this, two times the property tax can be used for itemized deductions. However, if one has triggered the AMT tax, additional property tax deductions will reduce one's tax liability.



3. Supplies. For the self-employed, one can purchase additional supplies or pay other legitimate expenses. Purchases should be done within reason. Three extra months of stationery supplies may be reasonable. 10 years of supplies would not.

Delay Income

1. Retirement account. Contributing to a tax exempt retirement account is the easiest way for a wage earner or a self-employed person to defer income. If one is not already maxed out, increase 401K or deductible IRA contributions.



2. Bonuses. While one cannot delay taking wage income, sometimes a bonus can be taken in the following tax year. Check with your employer.



3. Billing. If one operates on a cash basis, one can sometimes delay billing to the following tax year for services provided this year. This makes sense to do if the following year is not expected to generate as much business as this year.

Since I have been employed by a company for all of my working career, I have only used #1 and #2 for accelerating deductions and #1 and #2 for delaying income. If I should create self-employment income in the future, I will consider using #3 for each approach.

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

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

Copyright © 2007 Achievement Catalyst, LLC

Links To Carnivals From September 17, 2007

Here are links to select Carnivals from September 17, 2007:

Carnival of Personal Finance #118: Fun Money Facts Edition

Carnival of Debt Reduction - Emmy Awards Edition

54th Festival of Stocks

Carnival of Family Life

The Stock Market Carnival - Sep 17, 2007 Edition

Carnival of the Capitalists with a Brain - September 17, 2007

Please give the hosts some well deserved recognition and visit their Carnivals.

Time or Money - Which Is More Important To Me?

"I saw a bank that said '24 Hour Banking,' but I don’t have that much time." - Stephen Wright

Time is one's most valuable resource. We all get the same amount - 24 hours a day, 168 hours a week, 8760 hours per year. Rich people, poor people, famous people, important people and the masses all have the same amount of time. I can't get any more time, no matter how much I pay. Once time has passed, I can't get it back. Missed events, anniversaries, and "firsts"are gone forever once the event is past.

Money is another valuable resource. However, it is a "renewable" resource and has no limits. When I run out of money, I can earn more money via my job, business or investments. If needed, I can also ask others (e.g. banks, family, friends, etc.) for money. Also, as wealthy people know, having money has it's privileges, such as paying other's to do task to free up time.

So when I am asked, "Do I want more time or money?", I answer it differently. I think about how I want to spend time that I have. Do I want to spend time with family and friends or do I want to spend time making money?

The Evolution of My Answer

When I was younger, the answer was more money. During that time, I shifted my time from family and friends to work. I began to put long hours, invested personal time to improve work skills, and gave social elements second priority. My career and financial situation significantly improved during this time. Multiple promotions, significant raises, and qualifying for bonuses and other compensation.

Recently, the answer became more family and friends. My parents who have been very healthy all their lives, began to experience a significant decline. My dad caught pneumonia and passed away after fighting to recover from the illness for six months. Soon after, my mom had two hip fractures which put her in a nursing home. I began to realize that time with those important to me won't last forever. So now I want to spend more time with my family and friends.

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

Photo Credit: morgueFile.com, Iván Melenchón

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

Copyright © 2007 Achievement Catalyst, LLC

9/17/07 Stock Purchase Update - Bracing For The Wild Ride This Week

In my 9/10/07 stock purchase update, I wrote about how my stock buy recommendations of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT) were performing. In that update, the portfolio was up $959 for a 5.5 % gain, down from a peak gain of $2310 and 13.2% on 7/23/07. As of 9/14/07, the portfolio is up slightly from last week at a $1,053 profit for a 6.0% gain. Also, I have sold half my position in Avnet (at $40.17 for a $184 gain) since my system dropped it off the buy list in the week ending 9/7/07 . Here's the current status on the positions in these four stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 9/14/07
Terex (TEX)	50	$82.36	$76.19
Potash (POT)	50	$71.39	$89.01
Shaw Communications B (SJR)	100*	$21.755	$24.15
Avnet (AVT) (dropped 9/7/07)	100	$38.11	$38.68

* 2 for 1 split on 8/3/07

Overall, I am still happy with the performance of these four stocks, given that the overall decline of the market. Since the last update, POT and SJR were up slightly, TEX and AVT were down slightly. Thus, the overall portfolio was relatively unchanged. I plan to sell the remaining 100 shares in AVT during the next rally.

I continue to be impressed with my commitment to stay invested in these stocks, in spite of the market volatility. In the past, I would have closed out the entire position with this level of volatility. Given the performance of the portfolio, I am glad I held my positions instead of allowing myself to be whipsawed by the market each week. However, the recent events (credit crunch, central bank interventions) have convinced me that the bull market is in its last stage, and I will consider closing out these positions during the next significant rally.

This week will be quite an exciting one, as the Fed will make an interest rate decision on Tuesday. Depending on whether a rate cut occurs and the magnitude, the market will either swing way up or way down. It will be a wild ride.

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

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

Copyright © 2007 Achievement Catalyst, LLC

Insurance Update Saves Money

As matter of practice, I review my insurance policies periodically to make sure I am properly insured or not overpaying for unnecessary coverage. I check our home owners, auto, and umbrella policies for any changes in situation or revisions we may want to make to our coverage or deductibles. In some cases the change results in lower premiums, and in other cases it increases our premiums.

Next month, I'll start driving much less than I currently do. So I checked with my insurance agent if it would have any affect on our automobile insurance premiums. It turns out the my mileage change crosses a mileage threshold and my truck insurance premium will go down about 5%. What a deal, I reduce my time in rush hour traffic and my insurance premium is cheaper.

At this time, we won't be making any other changes to our policies. Our cars still have sufficient value to maintain collision coverage and collision and comprehensive deductibles are already reasonable for the cost.

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

Photo Credit: morgueFile.com, Donny Harder, Jr.

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

Copyright © 2007 Achievement Catalyst, LLC

Why I Don't Publish My Financial Values

Although I publish My Wealth Builder under a pseudonym, I have not shared any absolute financial numbers, except for my Stock Purchase Updates on the modified Unemotional Investor system. Here are the reasons I don't share the actual numbers:

It's consistent with my normal behavior. I don't share personal financial values (savings, retirement account, etc.) with friends, colleagues or acquaintances. However, I will talk about my stock investment system and results. I don't see any reason to change that principal in writing My Wealth Builder, even if it's done anonymously.

My identity may be discovered. Someday when this blog is read by millions, a colleague or neighbor may be able to piece together enough details to guess my identity. A very low probability, but still worth protecting against :-)

Absolute numbers are interesting but not meaningful. Saving enough to be wealthy or retiring is relative. Someone that makes $25,000 will need a different amount than someone who makes $150,000 per year. For me, ratios (e.g. savings and debt) are the relevant values to manage.

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

Photo Credit: morgueFile.com, Kathy Bishop

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

Copyright © 2007 Achievement Catalyst, LLC

Business Week - Retiring Early Strategies: The Thirties

Business Week's 2007 Annual Retirement Guide is dedicated to retiring early. The issue covers recommendations for what to one's 20s through 50s. My Wealth Builder will be discussing these strategies on Fridays during September, 2007.

Business Week recommended the following strategies for one's Thirties and I included my brief comments in blue:

1. Concentrate on your career. This the time to demonstrate leadership, which will lead to higher responsibility and higher pay.



2. Start a family. Hopefully, one's twenties has created some financial stability. This is probably the latest most folks (for physical and financial reasons) should wait to have kids.



3. Set goals. Having goals is a must to help keep focus.



4. Stash your cash. Keep putting money away for early retirement. Saving around 20% o income is a good target.



5. Enroll in high deductible health insurance plan. I think high deductible plans are great for people in great health. We prefer a good co-pay plan, since it provides more flexibility.

Overall, I would summarize the thirties as "grow and protect one's wealth." Again, the recommendations were good for someone in their thirties. I also would include having the right additional insurance - i.e. disability, auto, and renters/homeowners.

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 © 2007 Achievement Catalyst, LLC

Special Consideration For Our Three Year Old

Since having our daughter, I have noticed that we get special services at restaurants, some stores and banks. The staff seems to help us more, offer us quicker service, and, sometimes also provide crayons or some snacks.

At casual and upscale dining restaurants, I am particularly thankful for the extra service since children can get restless when sitting for long periods. Our daughter will be well behaved for about 45 minutes in these establishments. I will typically give a 25% tip for the extra service when we are with our three year old daughter, even though she is usually very well behaved. For us, a good tip is well worth it since our alternative would have been to leave her at home with babysitter when we go out to eat. I prefer to have her join us since it helps develop social skills, both hers and ours :-)

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

Photo Credit: morgueFile.com, Mary Thorman

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

Copyright © 2007 Achievement Catalyst, LLC

Preserve or Create Wealth - A Balancing Act

Everyone should include diversification and concentration of investments in one's wealth building strategies. Diversification preserves wealth, concentration creates wealth. The right balance will depend on one's risk tolerance.

Diversification

Modern Portfolio Theory shows that one can generate excellent returns that exceed inflation through diversification. Since 1926, the stock market (e.g. a diversified stock portfolio) has averaged a 10% annual return. Over a twenty year period, one's investment would grow 6.7 times at 10% annual returns. While any one year may be negative, there have been very few extended periods of decline in the U.S. stock market. First Investor notes that from 1926 to 2005, there the market was up in 57 out of 80 years. However during rolling 10 year periods, the large caps were up in 69 out of 71 periods and in all 15 and 20 year rolling periods.

Concentration

According to Yahoo! Finance, 80% of people with over $5 million in net worth did it via their own business or working for a small company that grew quickly. They earned the majority of their net worth through focus and commitment to one company or business. 10% inherited their wealth. I guess the last 10% do it by working and saving or winning the lottery :-)

Similarly, the average person investing in an index fund won't make $5 million. Getting excess returns on stocks requires concentration in one or two stocks. While a diversified portfolio will average 10% returns, single stocks can return over 30% per year. For example, this May, 2007 Motley Fool article shows $1000 invested in Microsoft in 1986 was worth $386,250 and $1000 invested in Dell in 1988 was worth $246,700. Over 20 years, this was a 32.8% and 33.6% annual return for Microsoft and Dell, respectively.

Remember Risk

While there are many examples of concentration creating great wealth, concentration can also significantly reduce wealth. Investing in a single stock, starting a business, working for a small growing company is relatively high risk and will fail more often that returning great wealth. There tends to be a survival bias in the reporting of results, i.e. successes are highlighted more often than failures.

My personal preference is to preserve wealth via diversification for the majority of my financial assets and to risk only a small part (e.g. less than 10%) on creating wealth via concentration. However, due to the majority of my retirement fund being invested in my company's stock, I am currently closer to 40% concentration at this time. Since our company stock has done well in the past decade, this concentration has helped create wealth for me. However, over time I plan to transition the concentration in my company's stock to a more diversified portfolio.

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

Photo Credit: morgueFile.com, Jim Mason

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

Copyright © 2007 Achievement Catalyst, LLC

Links to Carnivals from September 10 - 11, 2007

Here are links to select Carnivals from September 10 - 11, 2007:

Carnival of Family Life @ My Two Boys

Carnival of Personal Finance #117 @ KMull

Festival of Stocks #53 @ College Analysts

Carnival of the Capitalists @ About.com: Entrepreneurs

25th Carnival of Money Stories @ Tight Fisted Miser

Festival of Frugality #91 @ Stop The Ride

Please give the hosts some recognition for their hard work and visit their Carnivals.

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

Copyright © 2007 Achievement Catalyst, LLC

Find The Lowest Gasoline Price in Your Area

MSN. com has created a daily gas price by station locator which is searchable by zip code. The data is based on previous night submissions and may not reflect fast changing markets.

For me the locator has been helpful in pinpointing were the lowest price gas is versus guessing and hoping I'm right :-) I have been using it to determine whether to buy gas at stations near my house or near work. In the couple times I've used it, the locator has been correct in identifying where the lowest price gas is between those two places.


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

Photo Credit: morgueFile.com, Michelle Kwajafa

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

Copyright © 2007 Achievement Catalyst, LLC

My Core Long Term Stock Holdings

On August 7, 2007, I wrote about the how the value of $1000 invested in Dell, in 1988, and in MSFT, in 1986, would have been worth $246,700 and $386,250 respectively in May, 2007. I also mentioned that I picked Google (GOOG), Amazon (AMZN) and General Electric (GE) and great investments for $1000 today. Of note, several commenters correctly pointed out that that the capitalizations for GOOG, AMZN, and GE were already at $156B, $31B and $394B respectively. Therefore, they would be unlikely to return 20,000 to 40,000%.

The commenters are correct. It is highly unlikely GOOG, AMZN, or GE will increase by those percentages. However, if one accepts that trillion dollar capitalizations will be likely in the next 5-10 years, then 2000% to 10,000% may be possible in twenty years :-) Not as high as Dell and MSFT, but still pretty good, if it happens. So I will invest in GOOG, AMZN and GE as I continue to look for the $1 - $5 billion companies that may increase $500B to $2 trillion in the future
Here are the criteria I have for big winner stocks:

1. A business model that has significant growth potential.



2. A product that is future focused.



3. A passionate business leader with staying power.

Business Model

GOOG - What a great business. Contextual advertising placements. Millions of individuals partner with Google to create the content sites for the ads. Google's business increases every time a new website is created that wants to advertise. If Google can continue to leverage this partnership with Internet users, they will continue to increase revenues and grow.

AMZN - Amazon's business model is evolving from an Internet sales company to running the backroom supply chain operations for any company. AMZN believes they can run warehouse and shipping operations better and for a lower cost than most companies. If they can, this business model could create significant revenue for them. To me, that seems like limitless opportunity, somewhat like the Google business model.

GE - Green and infrastructure rebuilding is the bet GE is making. The environment and decaying infrastructure are major topics that have been in the news recently. Both elements will be important in the future economy and GE is taking the lead.

Future Focused Product

GOOG - While many think Google as an Internet or search company, I see Google as a major enabler of personal development via social networking. They do this by leveraging the Internet: Search, G-Mail, Docs, Maps, YouTube, and perhaps free high speed access, in the future. And it's free to use because Google monetizes their products via advertising.

AMZN - I believe the future of business will be more distributed and involve collaboration of multiple small businesses. Low cost warehousing and shipping will enable a new generation of entrepreneurs, who previously didn't have the skills or resources to run a product oriented business.

GE - Reduction of carbon emissions, new sources of environment friendly power, and renovating our roads, bridges, and facilities will be major areas of focus over the next few decades.

Passionate Business Leader

GOOG - Founders Serge Brin and Larry Page are still heavily involved with setting the direction for Google. Eric Schmidt, CEO, is an experienced technology executive with stints at Sun Microsystems and Novell prior to Google.

AMZN - When Jeff Bezos created Amazon.com in 1995, I thought both Jeff and Amazon would a flash in the pan. Twelve years later, both Mr. Bezos and Amazon are still here, evolving the business and running strong.

GE - Jeff Immelt has shown he can more than fill the shoes of the legendary Jack Welch with a new vision for GE. Mr. Imhelt is focused on innovation for the environment and infrastructure, both critical elements for economic success.

For me, each of these companies is worth an investment of $1000 minimum. I also plan to hold these stocks for the long term unless there is a major change in one of my three criteria.

Disclosure: I own shares of GOOG, AMZN and GE.

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

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

Copyright © 2007 Achievement Catalyst, LLC

9/10/07 Stock Purchase Update - Still Holding On To Gains

In my 9/03/07 stock purchase update, I wrote about how my stock buy selections of Terex (TEX), Potash (POT), Shaw Communications (SJR) and Avnet (AVT) were performing. In that update, the portfolio was up $1123 for a 6.4 % gain, down from a peak gain of $2310 and 13.2% on 7/23/07. As of 9/7/07, the portfolio is down slightly from last week at a $959 profit for a 5.5% gain. Also, I have sold half my position in Avnet (at $40.17 for a $184 gain) since my system dropped it off the buy list this week. Here's the current status on the positions in these four stocks:

	My Wealth Builder Buy List
Stock	Shares	Purchase Price	Current Price 9/7/07
Terex (TEX)	50	$82.36	$77.80
Potash (POT)	50	$71.39	$87.42
Shaw Communications B (SJR)	100*	$21.755	$22.42
Avnet (AVT) (dropped 9/7/07)	100	$38.11	$39.46

* 2 for 1 split on 8/3/07

Overall, I am still happy with the performance of these four stocks, given that the overall decline of the market. Since the last update, TEX, POT, AVT and SJR had relatively little change. However, the portfolio did lose 2.8% with the 250 point drop in the Dow on Friday, September 7, 2007. I plan to sell the remaining 100 shares in AVT during the next rally.

I continue to be impressed with my commitment to stay invested in these stocks, in spite of the market volatility. In the past, I would have closed out the entire position with this level of volatility. Given the performance of the portfolio, I am glad I held my positions instead of allowing myself to be whipsawed by the market each week. However, the recent events (credit crunch, central bank interventions) have convinced me that the bull market is in its last stage, and I will consider closing out these positions during the next significant rally.

Unfortunately, it doesn't appear that the rally will happen this week prior to the Fed meeting on September 18 :-(

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

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

Copyright © 2007 Achievement Catalyst, LLC

Finding Made In USA Products

In July, I wondered what my options were if I chose to Buy American for my products. I had intended to track my purchases for a month to determine if doing so was a possibility. I didn't track the purchases rigorously by writing them down. Here's what I recall about my purchases during July and August.

Toilet repair. In July, there appeared to be water leaking from underneath the toilet. From previous experience, I suspected that the wax ring seal needed to be replaced. Two of the parts for the repair, the wax ring and flange reinforcement, were made in the U.S. For the third part, I wanted to use brass bolts, and the thicker/sturdier ones were made in China.

Tools. While I have just about every tool needed for home repair, I recently need to purchase a screwdriver that was shaped like an allen wrench (or hex key wrench) to access a screw in a limited access region. The tool I found was made in China. It seems many tools are now produced in China.

Food. While my wife usually does the grocery shopping, in the past two months I did about 5 trips. In the fruit section, I noticed that strawberry, blue berry and raspberry packages now specifically say, "Grown in U.S.A." on them. However, many other foods, e.g. bread, sausages, and chips, show a U.S. address for the manufacturer, but do not specify if the product was made in the U.S. or if the components were from the U.S. While I did not purchase them, some packages of frozen vegetables showed the origin of the components, e.g. U.S. , China, Spain, Mexico, etc.

Deck maintenance products. We are currently doing routine maintenance on our outdoor deck by cleaning and resealing it. Virtually all the products were Made in the U.S.A. The Chlorox bleach, the Elmer's Epoxy Wood Repair, and the Olympic Maximum Semi-Transparent sealer were all made in the U.S. The Loctite Sumo glue was made in Germany. The Elmer's Bottled Wood Stabilizer was manfactured in Canada and packaged in the U.S. None of the products specifically mentioned the country of origin for the components used in manufacture.

While not rigorous, it appears non-durable home repair products are still mostly made in the U.S. Also, it appears a number of food products that are made in the U.S. can be found. However, it is not clear whether the components used in manufacture are also made in the U.S. On the other hand, durable products, such as tools, seem to be mostly made in China nowadays.

At this point, I don't plan to make any changes to my purchase decisions. However, I will continue to monitor location of manufacture.

For more on New Beginnings, check back every Sunday for the next segment.

Photo Credit: morgueFile.com, Ray Forester

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

Copyright © 2007 Achievement Catalyst, LLC

Copyright © 2007 Achievement Catalyst, LLC

Is The Housing Crisis and Stock Market Decline Bad Enough Yet?

It is pretty bad... Home prices are dropping, jobs are declining, and the stock market continues to have big negative days. But it's not bad enough yet... A large number of people, including me, are still relatively confident the market will recover soon. Here's what may need to happen before returning to a consistently rising market:

More fear. Yes, that's right MORE fear. Overall, people are still relatively calm about the market issues. Many mortgages won't reset until next two years and the mortgagees believe there will be a government bailout. Not enough people believe that there may be further decline of stocks or that it may be an extended (e.g. one year) decline. Many folks are still cautiously buying on dips and dollar cost averaging. A number PF bloggers are still talking about the current market being a "buying opportunity." In addition, the Fed still doesn't think the economy is bad enough to telegraph a possible rate decrease.

Shortage of liquidity. There is still too much cash on the sidelines, which is being pumped in on the dips. This keeps the market from declining too far. However, once this money is gone, the market will experience larger and consistent declines.

Capitulation. Once there is sufficient fear and insufficient liquidity, people will want to get out of the market, no matter how low the price. There will be a massive sell off and general disgust with the investing, as there was in 2002.

Currently, many think they have the ability to stay in the market. I like to think I can too. But with losses of 20, 30 or 50% or more, it is often difficult maintain one's convictions. Can a decline of 50% happen today, especially to an index? One only has to go back to 2000 to 2002 to find a 78% NASDAQ decline from 5132 in March, 2000 to a low of 1135 in September, 2002 or the 49% S&P 500 decline from 1553 in March, 2000 to 794 in September, 2002. Some individual stocks even took a bigger hit. For example, Amazon declined 95% from a high of $113 in Dec 1999 to $5.67 in Sept 2001, on a split adjusted basis.

To note, I am not hoping for the market to get worse. I just know it will, because that is the nature of market cycles. Currently, I am considering only defensive stocks or international ETFs until the market has clearly turned upward. I will also begin to consider possibilities for shorting, should the the stock market turn significantly worse.

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

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

Copyright © 2007 Achievement Catalyst, LLC

Links To Carnivals From September 4 - 8, 2007

Here are links to select Carnivals from September 4-8, 2007. With the Labor Day holiday on Monday, several Carnivals delayed publication until Tuesday, making this week's back segment list a bit longer than usual.

Carnival of Personal Finance #116 - NSA Edition @ Advanced Personal Finance

Carnival of Twenty Something Finances @ Money Under 30

Carnival of Everything Finance @ Everything Finance

Carnival of the Capitalists @ Welcome to Help

90th Festival of Frugality @ Bean Sprouts

Carnival of Financial Planning @ The Skilled Investor Blog

Reach for Magnificence Wealth Creation Carnival @ Reach for Magnificence

Personal Finance Money Tips @ KC Lau's Money Tips

Please give these hosts some recognition for their hard work by visiting their Carnivals.

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

Copyright © 2007 Achievement Catalyst, LLC

Business Week - Retiring Early Strategies: The Twenties

Busness Week's 2007 Annual Retirement Guide is dedicated to retiring early. The issue covers recommendations for what to one's 20s through 50s. My Wealth Builder will be discussing these strategies over the next few Fridays.

Business Week recommended the following strategies for one's twenties and I included my brief comments in blue:

1. Tighten up spending; ratchet up savings. Target to save 12 to 20% of one's income.



2. Put savings on autopilot. I would add to pay oneself first.



3. Live beneath your means. This is a must.



4. Start an "escape" fund to be used before retirement accounts become available at 59 1/2. This can also serve as one's emergency fund initally.



5. Revel in the Roth because withdrawals are tax free. I would max out the matching amount of a 401K first.
   
   
6. Watch the investment fees and keep them low. I would add invest in a good domestic and foreign diversified equity fund.

Overall, I would summarize the twenties as "Build a good foundation of habits." The recommendations were a good starting point for someone in their twenties. I also would include having the right insurance - i.e. health, disability, auto, and renters/homeowners.

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

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

Copyright © 2007 Achievement Catalyst, LLC

Vacations That Work With The Extended Family

My spouse's parents recently took their children and their families on a three day vacation. It was a wonderful time, with three generations together. I'm amazed that the trip had something for everyone, which made the trip fun for everyone. In addition, our daughter was able to spend time with her grandparents, aunt, uncle and cousins. Here's what made the vacation a great event for me:

1. Something for everyone. We attended three major attractions: a zoo and conservatory, a children's museum and an antique/classic car museum. Most everybody was interested in at least two of the attractions and everyone enjoyed all three.



2. One major attraction each day. This worked well for the children and those that preferred to start later. In addition, this approach provided some down time to enjoy other activities such as the hotel pool.



3. Meals were eaten together. While we often started out together at an attraction, each family sometimes went their separate ways. However, we always had lunch and dinner together, which enabled us to reconnect and spend time together.



4. Each family decided on one discretionary activity. Each family got to pick at least one of the planned discretionary activities such as the restaurant for dinner or extra activities for the kids.

Overall, it was an excellent vacation with lots of great memories for everyone.

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

Photo Credit: morgueFile.com, Michael Connors

Getting The Monkeys Off My Back

In my experience, there are several major problems that can prevent one from building wealth. These problems are like monkeys on one's back. Here are the monkeys I have carried and how I got these monkeys off my back.

Consumerism Monkey. This monkey requires one to have the latest and greatest or the most and the best. This monkey is never satisfied. Once it gets the newest purchase, it can't wait for the next acquisition. More, more, more is its mantra. It causes one to live above one's means. Here's how I got rid of this monkey.

Buy only what I need. Want and need are two different emotions. Learning the difference will help one get rid of this monkey.

Take pride in myself and not my possessions. I focus on what I am able to do and accomplish over what I own.

Debt Monkey. This monkey works with the Consumerism Monkey to cause issues. To satisfy wants, one creates a Debt Monkey. It starts in college, when incomes are low. At first it's just a little bit, and before long using debt becomes a lifestyle. Here's how I got rid of this monkey:

Think of debt as paying more than sticker price. How many of us would see an item for $100 and offer the sales person $120 to buy it? I would venture not many of us. However, that is exactly what one is doing when purchasing something on credit at 20% interest and paying if off in one year.

Limit use of debt to a few necessary items. For me, it was education, first car, and my home. However, even for these items, debt should be used judiciously. For example, one should make sure educational debt will result is a good paying job.

No Savings Monkey. This Monkey encourages living for today, because who knows if there will be a tomorrow. In addition, that life cannot be enjoyed as much when one is older. However, for most of us, saving is our path to wealth. I got rid of this monkey by:

Paying myself first. It is the only saving strategy you'll ever need. Target to have 12 to 20% automatically deducted from every paycheck. Invest it and then forget about it. Saving as little a $1 per day can have big returns.

Not Enough Income Monkey. The only way to know if one has this monkey is to get rid of the above three monkeys first. Most people who think they have the income monkey are really carrying a combination of the first three. So they work on increasing their income only to find the first three monkeys eat up the gains. Here's how I addressed this monkey:

Get an education that leads to a high(er) paying job. It's important to gain skills and knowledge that enable access to a higher paying job. Then take the highest paying job which one is offered.

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

Photo Credit: morgueFile.com, Daniel T. Yara

Wood Deck Maintenance - A Do-It-Yourself (DIY) Project

Over the Labor Day Weekend, we cleaned our deck and stained about half of it, with the rest to be stained this coming weekend.

Outdoor spaces are nice, but it seems to me that they require more maintenance that I prefer. Perhaps it's because I don't expect outdoor areas to need much maintenance. Our house has a wood deck off the kitchen. We also have a concrete patio off the basement family room, but that story will be for another post :-)

When we bought the house, our realtor mentioned that our deck needed some attention. While the deck only four years old, it was very gray, and didn't appear to have any sealant remaining on it. In our first year, we did the minimum of cleaning off the leaf debris and trimming back trees to reduce future leaves on the deck.

After one year of residence, we proceeded with major maintenance - deck cleaner, pressure wash and sealant. After getting a couple estimates (around $500), we decided to make it a do-it-yourself project. We bought Olympic Deck Cleaner, borrowed a friend's pressure washer, and used semi-transparent stain, which was supposed to last of for 7 years. We learned that we probably didn't need deck cleaner and used slightly too high of pressure. We also soon learned that 7 years would really be about 2-3 years.

After three more years, the estimates for cleaning and staining our deck were now $1000 to $1300. At that price, it was another DIY project. However, this time, we got a little more expert advice. While our house was being painted, we asked the carpenter to replace a couple of boards that had become scaly. Instead, he recommend sanding and using a filler. We were very pleased with the result the board was renewed at a much lower cost. He also recommend filling in some knot holes, since those areas collected water and caused wood rot.

While his procedures and recommendations made sense, I had not considered sanding rough spots or using filler. Checking a couple of web sites, I found that both How Stuff Works and Bob Villa.com had detailed instructions and recommended using a bleach solution and pressure washing to clean the deck. Bob Villa recommended sanding the rough boards and How Stuff Works recommended filling the holes.

We decided to go with a bleach solution (which basically has the same active as commercial deck cleaners), pressure washing, belt sanding of rough spots, Elmer's epoxy wood filler (because it's water proof), and Olympic Maximum semi transparent stain with a 5 year guarantee. As with any painting or staining project, the cleaning and preparation will be over 50% of the effort.

Overall, we are happy with the results so far. We have done a bit more repair work than was included in our estimates. So we have saved at least $1000. We would only make one change to our procedure three years from now. While I followed the Bob Villa recommendation and hammered in protruding nails, I think will use the How Stuff Works method in the future and replace protruding nails with coated screws.

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

Photo Credit: morgueFile.com, Stuart Whitmore

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

Copyright © 2007 Achievement Catalyst, LLC