Let's Return to Playing Sports for Fun and Honor

Articles like Refused urine test ignites chess doping scandal show how broad the issue is of using inappropriate aids. I also recall hearing about a doping scandal in a rifle competition last year. News stories like these disappoint me and surprise me at the lengths some people will go to win.

In my youth, I played sports for enjoyment. It was a chance to be with friends, get exercise, and compete to win. In baseball and football, I played on championship teams and last place teams. In some years, I was the bench warmer and in other years, I was one of the top starters. However, in all cases, I played hard and had lots of fun. I never took inappropriate measures to win.

A story I like to tell is the high school football state championship team on which I was the starting fullback. Although we were a competitive team, the starters treated football as a extra curricular activity, not the only focus of high school. Almost all of us played two sports and some played three sports. Very few of us did a weight training program, even during the football season. Only a couple of players were recruited by colleges, but many others like me did not receive any attention from college scouts. For us, sports was fun, as I think it was meant to be.

Another story I like is about an early 1900's US Olympic swimmer. About a week before the Olympics, he took a vacation from his job and travelled to the event. He swam and won a gold medal. After the Olympics, he returned home and went back to work, with little fanfare.

Nowadays, there seems to be much more pressure to excel in sports. As expected, people are doing things like strength training and off season camps to improve and gain an edge. However, since athletes are taking steroids, prescription drugs, and using doping to increase performance, it seems the pressure has become too much, causing people to forget what I consider the original purpose of sports - play hard, do one's best, and win with honor.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Inverse (Short) ETF Portfolio Update - 1/31/09

The stock market is continues to be strange in the days after President Obama has assumed office. The market continues to be volatile at unexpected times and surprisingly calm in the face of bad news. I believe the market action indicates that it is nearing a bottom.

To hedge against the market falling in November to December, 2008, I had purchased small positions of Ultrashort Real Estate Proshares (SRS), Ultrashort Financial Proshares (SKF) and Ultrashort Oil & Gas Proshares (DUG). These are inverse market index ETFs, meaning they rise when the market falls and vice versa.

In mid January, 2009, I was able to sell the Ultrashort Financial Proshares and one lot of the Ultrashort Real Estate Proshares at a profit. The Ultrashort Financial Proshares continued to rise in mid Janauary, going as high as $200 before falling back to $158.78 at the end of Janaury. Last week, the other two inverse ETFs were flat, changing $0.10 or less.

	Hedging in a Volatile Market
Inverse ETF [purchase date]	Shares	Purchase Price	Price on 1/30/09
Ultrashort Oil & Gas Proshares (DUG). [11/21/08]	100	$38.21	$24.72
Ultrashort Financial Proshares (SKF) [12/11/08]	20	$118.99	sold 10 shares at $140.33 on 1/14/09 sold 10 shares at $165.95 on 1/16/09
Ultrashort Real Estate Proshares (SRS) [12/11/08]	20	$81.64	$59.32
Ultrashort Real Estate Proshares (SRS) [12/17/08]	20	$62.62	sold all shares at $66.82 on 1/14/09

I purchased these ETF because I believed they would provide some protection if the market should fall. However, upon further investigation, I learned that these ETFs can fall even if the market index declines over time, due to the ETFs being based on the daily return of the index, which Proshares customer service confirmed when I asked them about my observation. The Motley Fool has a great explanation, with an example, of how these 2X inverse ETFs may not protect against a long term decline in the index.

Based on my new learnings, I will not buy any other inverse ETFs and continue to unwind these positions, hopefully at a profit, but at a loss if needed. However, if the Ultrashort Financial Proshares ETF drops below $100, I may consider buying a new 20 share position, especially if I no longer own the Ultrashort Real Estate and the Ultrashort Oil & Gas ETFs.

Lesson learned: Don't buy derivative investments when I don't fully understand how they work, as in the case of 2X inverse ETFs.

Disclosure: At the time of publication, I own shares of the Ultrashort Real Estate Proshares (SRS) , and Ultrashort Oil & Gas Proshares (DUG).

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

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

Copyright © 2009 Achievement Catalyst, LLC

Retiring on the Cheap - Part II

In Retiring on the Cheap - Part I, I reported one solution to saving on expenses when retired -- get a roommate. By sharing expenses such as housing and transportation, one could reduce living expenses.

Part II offers another approach - Move to a state with lower taxes. Here are some tax related information for states obtained from Retirement Living Information Center.

No sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon, have no sales tax. States with the highest sales tax (including county and city rates) are: Tennessee (9.4%), Louisiana (8.7%), Washington (8.5%), New York (8.25%), Arkansas (8.15%), Alabama (8.05%), Oklahoma (8.05%), and California (8.0%).

No income tax Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) do not tax personal income.

Don't tax retirement accounts. Among states with broad income taxes, Pennsylvania, Illinois and Mississippi exclude all retirement payouts (public, private and IRAs) from state taxes. Seven other states exclude payouts from federal, state or local pensions: Alabama, Hawaii, Kansas, Louisiana, Massachusetts, Mississippi, and New York.

The states that do not tax retired military pay are: Alabama, Alaska, Florida, Hawaii, Illinois, Kansas, Kentucky*, Louisiana, Massachusetts, Michigan, Mississippi*, Missouri*, Nevada, New Hampshire, New Jersey, New York, North Carolina*, Ohio (tax year 2008), Oregon*, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming.(*With conditions)

Don't tax social security. The District of Columbia and 26 states with income taxes provide a full exclusion for Social Security benefits -- Alabama, Arizona, Arkansas, California, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, and Virginia

Have low property taxes. The five states with lowest real estate taxes based on median real estate taxes paid are: Arkansas ($469), Mississippi ($437), West Virginia ($422), Alabama ($328), and Louisiana ($179). The top five states are: New Jersey ($5,772), New Hampshire ($4,136), Connecticut ($4,049), New York ($3,031), and Massachusetts ($3,195).

Of course, while a lower tax state is financially appealing, there are other reasons for choosing a retirement location. As a story on retirement relocation by Nightly Business Report points out, other considerations, such as being close to family, will sometimes be more important than the financial aspects.

Related article: 10 Great Low-Tax Places to Retire in US News & World Report.

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

Lessons from my Dad - Reduce Taxable Income by Contributing To IRAs

My dad was always a proponent of reducing the amount of tax liability. To achieve that goal, he would save money in tax exempt accounts, such as IRAs. I learned this lesson when my dad did my first income tax return for me. During the summer before my senior year in college, I found a summer job as intern engineer, which paid very well. As a result, I was required to file an income tax return for the first time.

My dad did the tax return for me. When it was completed, I had a small tax liability. My dad encouraged me to make a deductible contribution to an IRA. Since all of the earnings were being used for college, Dad gave me $1000 to put into the IRA, which was a large amount back then. The contribution reduced my taxes by only $50, but it started a habit of contributing regularly to an IRA.

Over the years, I have tried to contribute the maximum amount to my deductible IRA every year. When my company added a non-matching 401K option, I also started contributing to it. This has resulted in tax savings of about $250 per $1000 contributed. In addition, the earnings have grown tax free for over 25 years. As I've written before, IRAs and 401Ks are a great way to use other people's money to save . It's a habit I hope to pass to our daughter when she is old enough and starts earning income.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Reduce Spending without Sacrificing Lifestyle #1 - Eliminate Waste

We've started tightening our belts in the My Wealth Builder household. Our target is to reduce our annual expenditures by 5%. However, we've decided to be creative in how we do it. Our goal is to save the money without any reduction in our current lifestyle. Our initial approach is to immediately reduce waste, i.e. money that's spent on goods and services but not effectively used. Here are some of our areas of focus:

Food. We seem to throw away a lot of food for a few reasons. First, we buy fresh vegetables and fruit in bulk to reduce grocery trips. Often we don't finish the entire amount before it goes bad. Second, we cook in bulk, resulting in leftovers that sometimes get lost in our refrigerator. Third, we have child who consistently doesn't finish her meals, resulting in more food saved. Finally, I wasn't very diligent at checking the leftovers before making something new to eat.

Our solutions: I will eat leftovers and fresh fruit/vegetables first before anything else. This should cut down significantly on food going bad. Second, we will reduce the amount of fresh foods purchased until there is only a minimal amount thrown away. Finally, we will only give our daughter portions she can finish in one sitting.

I expect these changes to save 10% of our food cost with no change in quality or quantity.

Energy. We were routinely leaving lights on in rooms that weren't occupied. In addition, I put the exterior lights on a timer that kept them on about 4 hours per night. Being an engineer, I could easily calculate the cost of a light being on. Based on our electric bill, we were being charged about 10 cents per kilowatt hour. Specifically, a 100 watt light bulb left on for 10 hours would cost 10 cents. Since our outdoor lights are 500 watts, four hours of being on is equal to 2 kilowatt hours and is costing 20 cents a night or $6 per month.

Our solution: Turn off lights when leaving a room and leave outdoor lights off. We decided not to address phantom energy usage (e.g. electronics on stand-by) since the amount saved was much lower.

Since we regularly use 1000 kilowatts of electricity a month (about $100), I expect to save about $15 per month just by turning off lights when not needed.

Gasoline. In the past, I would routinely drive my car as needed to do errands. This resulted in a lot of trips for a single reason. However, since taking early retirement, I had already significantly reduced gas usages since the daily commute was eliminated.

My solution: I now group my errands by location and try to accomplish at least two to three tasks with each trip.

This will be in addition to cost saving measures we have already done such as electronic bill paying, and a new energy efficient furnace and air conditioning unit that we installed in 2008. Our plan is to reduce waste for a couple months to determine if the impact is sufficient. We'll know by March if it is working.

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

Links To Carnivals From January 20 - 26, 2009

Here are the Carnivals in which My Wealth Builder participated from January 20 - 26, 2009:

Money Hacks Carnival

Carnival of Financial Planning

Carnival of Family Life

Carnival of Personal Finance #189

Carnival of Twenty-Something Finances

Boomer & Senior News You Can Use

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, family, or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Recovery Rebate Credit - Getting 2008 Tax Rebate Information

For 2008 tax returns, it is necessary to know the amount of the tax rebate received in 2008. While the amount received is not taxable, it will be used to determine if any additional rebate money is due. This is because the money received in 2008 was actually an advance of the 2008 tax return rebate. Thus, if a taxpayer qualifies for a higher rebate based on his 2008 tax return, the additional amount will be given. For reference, one common reason for a higher rebate will be a child being born in 2008.

The amount already received is used to calculate the recovery rebate credit (1040 line 70, 1040A line 42, 1040EZ line 9) on the 2008 tax return. If you have Notice 1378 from the IRS, it will have the 2008 rebate already received. If you have misplaced the notice, the IRS has provided a helpful website How Much Was My Stimulus Payment? that will retrieve the information, by entering the taxpayers social security number, filing status and number of exemptions for the 2007 return.

With the correct information entered, the website will provide the appropriate rebate amount to be used in the Recovery Rebate Credit Worksheet. According to Questions and Answers about the Recovery Rebate Credit, the IRS will also calculate the credit for taxpayers who enter "recovery rebate credit" next to line 70 on form 1040, line 42 on from 1040A, and line 9 on form 1040EZ.

For more ons 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 © 2009 Achievement Catalyst, LLC

Making our Financial Plans Stronger

"What doesn't kill us makes us stronger." ~ Friedrich Nietzsche

Financially speaking, 2008 was a year that could have killed our financial plans. With the stock market down 30 to 40%, the value of our investment savings declined significantly. As bad as it was, our finances survived. I count us among the lucky survivors - no foreclosure, no credit card debt, and no bankruptcy in 2008.

While there are no guarantees that 2009 won't be as bad, I have made some changes to our financial plans to make them stronger. Here's what I learned from 2008 and the changes we are making.

If it's too good to be true, then it probably is. Actually, I learned this much before 2008 and the events of 2008 reinforced it. Here are a few examples from 2008: Bernie Madoff's consistent hedge fund returns, the higher returns of the Reserve Money Market Fund, and aggregating poor risk can create lower risks (e.g. CDOs.)

Change: Continue to be skeptical of investments that promote consistent returns better than the average or excessively high returns. Don't be lured into such investments to recover 2008 losses faster.

Keep a significant proportion in cash and bonds. It was assumed diversifying across uncorrelated assets would lower overall volatility and risk. In some cases, diversification was a simple as among domestic, international, and emerging market equities, because the economies were thought to be no longer correlated. In other cases, diversification was across asset classes, such as real estate, collectibles and other hard assets. However, in 2008, everything fell in concert, except for cash.

In spite of all the perceived risks of inflation and devaluation, cash turned out to be among the best asset classes of 2008. While cash earned as little as 0.5% in some accounts, that yield was much better than the 30-40% losses in other areas.Bonds also held up well since recovering, although they did decline significantly for a short period in late 2008.

Change: Divide savings between investable funds and cash equivalent/bond funds, e.g. 50% invested and 50% cash/bonds. Rigorously manage the proportions.

Reduce withdrawal rate. The 2008 decline in our retirement investments increased our withdrawal rate from 2.6% to 3.6%. Most financial advisors consider a 4% withdrawal rate safe and a 10% decline in our retirement savings will put us over 4%.

Change: Reduce our withdrawal rate in the short term by increasing wage income and reducing expenses. See Reducing Withdrawal Rate from Retirement Savings for more details.

I learned a lot from the bear market of 2008. Fortunately for us, it occurred early in our retirement, allowing us to make changes and (hopefully) to recover for the remaining retirement years.

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

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

Copyright © 2009 Achievement Catalyst, LLC

1/26/09 Stock Position Update - Up During a Down Week

I continue to take no further action based on my buy list and short list of 7/7/08. I have taken four long and one short position, which has been closed. Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list. I have also not taken any action on the 10/20/08 Buy List, which has received sell signals for 5 out of 5 of the stocks by 11/2/08.

However, some of the metrics in the modified Unemotional Growth System indicate there may be a rally in the near term. I finalized a new buy list on 1/12/09.

The portfolio was up even though the market indices were down for the week. The holdings are up 6.7% from the previous week. Commodities and energy stocks seem to hold steady after declining significantly the previous week . The overall portfolio is down 29.8% and the remaining holdings are down 45.9%. The previous bottoms occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM). Southwestern Energy was the only stock identified for the 1/12/09 buy list.

	From My Wealth Builder 7/7/08 and 1/12/09 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 1/23/09
Range Resources(RRC) [7/10/08]*	50	$58.17	$35.25
Potash (POT) [7/18/08]*	10	$215.09	$74.60
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$31.74
Potash (POT) [7/24/08]*	10	$192.02	$74.60

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock, except for Southwestern Energy, which appears on the new 1/12/09 buy list.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

At first, I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling again to $3.23 on 11/21/08. It closed at $5.96 on 1/23/09. It's too bad I didn't hold the short position until now :-)

The market continues to be choppy. All three indices are in bear market territory. As of the close on 1/23/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8077.56, 1477.29, 831.95, above the 2008 closing lows of 7552.29, 1316.12, and 752.44 , respectively. The Dow, Nasdaq and S&P 500 are down 7.77%, 6.32% and 7.77% respectively year to date

Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. Also, we will not be adding any new money, until the Dow crosses either 6000 or 10,000.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Hess, Potash, Range Resources, and Sears Holdings.

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 © 2009 Achievement Catalyst, LLC

Reducing Withdrawal Rate from Retirement Savings

Due to the decline of our investments in 2008, our calculated withdrawal rate from savings has increased from 2.6% to 3.6%. While most financial advisors consider a 4% or less withdrawal rate to be acceptable, I feel we need a bigger margin of safety that just 0.4%. If the our retirement savings should fall another 10% in 2009, we'll be over a 4% withdrawal rate, which I feel would be risky since we may outlive our savings.

As I see it, there are three ways to reduce our withdrawal rate: 1) Deliver investment returns greater than 4%; 2) Generate income outside of investments; and 3) Reduce expenses. To me, I can't guarantee that #1 will happen, but I have a much better chance of controlling and delivering #2 and #3. Here are the specific actions I plan to take in each area:

Generate income. I calculate that I would need to generate pre-tax earnings equal to 20% of our expenses to reduce our withdrawal rate to below 3%. I believe it is possible to earn sufficient through part time jobs. In 2008, I was able to earn 6% of our expenses with two part time jobs.

By increasing income from the current part time jobs and adding a third one, I think I can guarantee earning at least 7% of our expenses, with 10% being probable.

Reduce expenses. I would divide our 2008 expenses into three major categories: living expenses (42%), taxes (22%) and mortgage (19%). I calculate that we would need to reduce expenses by 17% (post tax) to take our withdrawal rate below 3%.

Even though we are already frugal, I believe we can lower living expense by 3% through eliminating waste and using job perks to eliminate some entertainment costs (subject of future post). Since most of our 2008 federal and state income taxes were due to Roth IRA conversions, we could eliminate about 10%, by foregoing doing Roth conversions in 2009. Finally, if we can refinance from our current 5.375% mortgage to a 4.75% mortgage, we would reduce mortgage expenses by 7%.

Out of the 20% possible reduction, I expect we can guarantee a 7% reduction, with a 10% reduction being highly likely.

Overall, I think we have a good chance to reduce our withdrawal rate to account for the poor investment returns of 2008. Of course, these calculations assume investment returns of 4% for 2009 which is not a guarantee in this volatile market. If the market continues to decline, I will need to seriously consider generating more income via options such as a full time job.

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

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

Copyright © 2009 Achievement Catalyst, LLC

1/25/09 Bottom Fishing Portfolio - Changing Strategy to Buying and Selling Options

On Friday, October 3, 2008, I couldn't resist the temptation of buying some stocks before the bailout vote. I bought shares of Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC) and Monsanto (MON). I believed that these three banks will not only survive this financial crisis, but will be one the four major banking powers in the next year. Monsanto was down over 50% from its high and its seed and agricultural businesses are still very strong.

As part of this portfolio, I have also been selling put contracts to open on specific stocks. I have been selling put contracts at one to two months from expiration on Monsanto and Energy Conversion Devices (ENER). I am currently short one option for Energy Conversion Devices.

In December, 2008, I decided to buy some Ford (F) call options, to capitalize on a possibility of a rebound if Congress supports an auto industry bailout. Since the automaker bailout did not cause a large bounce for Ford, all the calls have expired worthless.

I began thinking about buying some high dividend paying stocks, such as DuPont (DD), Pfizer (PFE) and Alcoa (AA), which are paying 6-7% dividends and are picks in the Dogs of the Dow system. These are pretty high dividends, and I need to evaluate if the companies will be able to maintain them during this recession. For reference, Bank of America, which was the top percentage dividend payer in the 2009 Dogs of the Dow selections, cut its dividend from $1.28 per year to $0.01 per year.

In hindsight, I bought the financial stocks way too early. I've learned my lesson. I will not purchase any more financial company stocks, until there is a more clear turnaround in the financial crisis of 2008. Of the three financial stocks, Bank of America has been the worst pick, being down 83.58%. I now believe there is a high probability Bank of America will not survive the financial crisis and economic downturn.

My new strategy with financial stocks is to purchase 4 - 12 month out of the money call options. If financial stocks should recover significantly in the next year, I could make several hundred dollars. If there is no recovery, my losses are limited to the call purchase, which will be less than $200.

The portfolio was down 2.9% in the past week, vs a market decline of about 2.1-3.4% due to the selling pressure on financial stocks. The overall portfolio is still down 44.51%, very near its low of -45.30% in December, 2008.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 1/23/09
Bank of America(BAC) [10/3/08]	100	$38.00	$6.24
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$24.28
Wells Fargo (WFC) [10/3/08]	100	$37.07	$15.87
Monsanto (MON) [10/3/08]	50	$88.97	$78.91
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	expired 12/20/08 at $0
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	expired 1/16/09 at $0
PNC May 45 call (PNCEI) [1/20/09]	100	$1.51	$1.30
PNC Jan 55 call (WYLAK) [1/20/09]	100	$1.71	$1.60

Currently, I have profited from all four put contracts which have been closed or allowed to expired. Last week, I sold a February put contract short for Energy Conversion Devices and will consider doing the same for Monsanto if the market continues to decline.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 1/23/09
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91
Energy Conversion Nov 20 put (EQIWD) [11/12/08]	100	$0.69	expired 11/21/08 at $0
Monsanto Dec 40 put (MONXI) [11/20/08]	100	$1.19	expired 12/20/08 at $0
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	expired 12/20/08 at $0
Energy Conversion Feb 15 put (EQINC) [1/14/09]	100	$0.44	$0.35

Perhaps, these stocks may still participate in a January effect rally which some experts predict is very likely this year. If these stocks should rally significantly, I will look to close out the long positions in the financial stocks.

Disclosure: At time of publication, I own shares of Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares. I am short an Energy Conversion Devices put contract and long PNC call contracts in our trading account. Alcoa and Pfizer shares are owned in our managed accounts.

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

My Dislike of Tax Organizers

I routinely do my taxes on my own, by hand with the help of a computer spreadsheet. However, when I was on an international assignment, my taxes were done by accounting firms hired by my company. Although, I appreciated having my taxes done, I did not appreciate the process used.

The major accounting firms which have done my taxes use a information collection system called a tax organizer to obtain data about the client. It is designed to request information on every possible aspect of the client's financial life that could affect a tax return. The tax organizer is very comprehensive, often asking questions that are not related to my situation.

In addition, a complete tax organizer is sent to every client, even if the information needed is relatively simple. For example, I recently received a tax organizer because I need to file a 2008 foreign tax return due to deferred compensation I received in 2008. After spending a couple hours using the program and filling out 90% of the information, I e-mailed the contact for clarification on several items I could no longer answer with extensive effort. It turns out that I didn't need to submit the specific information requested. In addition, they already had all the compensation information from my company, which saved me from working on another section.

After several more e-mails, I figured out that they really only needed me to confirm the dates I lived in the foreign country, my current address and the names of my dependents. The rest of the information was unnecessary or already provided by my company. To save time and effort, I think they could have asked me directly for three pieces of information instead of having me complete a multi-page tax organizer.

I don't know if my experience is common with accounting firms. However, tax organizers are one reason that I will continue to do my own taxes. In the time it takes to get all the information and complete one , I probably can get most of my tax return done :-)

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

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

Copyright © 2009 Achievement Catalyst, LLC

Inverse (Short) ETF Portfolio Update - 1/24/09

The stock market is continues to be strange nowadays, with little reaction to all major bad news such as the Madoff $50 billion investment scam, the auto bailout bill failure, and subsequent TARP bailout of GM and Chrysler. Now in the days after President Obama assumed office, the market continues to be volatile. I believe the market action indicates that it is nearing a bottom.

To hedge against the market falling, I purchased small positions of Ultrashort Real Estate Proshares (SRS), Ultrashort Financial Proshares (SKF) and Ultrashort Oil & Gas Proshares (DUG). These are inverse market index ETFs, meaning they rise when the market falls and vice versa.

Two weeks ago, I was able to sell the Ultrashort Financial Proshares and one lot of the Ultrashort Real Estate Proshares at a profit. The Ultrashort Financial Proshares continued to rise last week, going as high as $200 before falling back to $158.78 at the end of the week.

	Hedging in a Volatile Market
Inverse ETF [purchase date]	Shares	Purchase Price	Price on 1/23/09
Ultrashort Oil & Gas Proshares (DUG). [11/21/08]	100	$38.21	$24.62
Ultrashort Financial Proshares (SKF) [12/11/08]	20	$118.99	sold 10 shares at $140.33 on 1/14/09 sold 10 shares at $165.95 on 1/16/09
Ultrashort Real Estate Proshares (SRS) [12/11/08]	20	$81.64	$59.32
Ultrashort Real Estate Proshares (SRS) [12/17/08]	20	$62.62	sold all shares at $66.82 on 1/14/09

I purchased these ETF because I believed they would provide some protection if the market should fall. However, upon further investigation, I learned that these ETFs can fall even if the market index declines over time, due to the ETFs being based on the daily return of the index, which Proshares customer service confirmed when I asked them about my observation. The Motley Fool has a great explanation, with an example, of how these 2X inverse ETFs may not protect against a long term decline in the index.

Based on my new learnings, I will not buy any additional inverse ETFs and continue to unwind these positions, hopefully at a profit, but at a loss if needed. However, if the Ultrashort Financial Proshares ETF drops below $100, I may consider buying a new 20 share position, especially if I no longer own the Ultrashort Real Estate and the Ultrashort Oil & Gas ETFs.

Lesson learned: Don't buy derivative investments when I don't fully understand how they work, as in the case of 2X inverse ETFs.

Disclosure: At the time of publication, I own shares of the Ultrashort Real Estate Proshares (SRS) , and Ultrashort Oil & Gas Proshares (DUG).

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

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

Copyright © 2009 Achievement Catalyst, LLC

Remembering Names - Plan B

When I was working, I was proud of my ability to remember peoples names after a single introduction. I would almost always be able call someone by their first name even if I hadn't seen them for several months. My secret to great recall? Whenever I was introduced to someone new, I would look them in the eyes and mentally repeat their name as they introduced themselves. This was Plan A and has worked 95+% of the time for me.

However, since taking early retirement, I've noticed my skill at remembering names has declined. I have forgotten many names of the people I worked with, especially if I only interacted with them a couple times a month or less. In addition, people who hired into my first organization 10-15 years ago still remember me, since I was in charge of recruiting, but I have not seen many of them for 8-10 years.

Forgetting names is only an issue because we decided to continue living in the same area after retiring. In addition, retirees are invited to annual family events and are allowed to use the company health facility. Thus, I sometimes run into people who call me by name, but I am no longer quite sure of their name. Often, I will remember their name correctly some time into the conversation, but occasionally I do not.

In college, my roommate and I developed a Plan B, because he knew a lot of people, but wasn't particularly good at remembering names. Whenever we met an acquaintance of his, he would introduce the person immediately if he remembered their name. If he didn't introduce the person, it was my cue to say, "Sorry my roommate hasn't introduced us yet, my name is .....," which would also provide the other person an opening to say their name and my roommate would give his apologies for forgetting to introduce us.

I may need to also develop a Plan B if my memory of names declines further. Of course, my college roommate no longer lives near me. However, my spouse is often with me when we see former company colleagues at events, while shopping or dining out, which offers the opportunity to use Plan B.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Teaching Delayed Gratification Skills

I believe that delayed gratification is an important life skill. This week I began working on developing this skill with our four year old daughter. However, my daughter is still not old enough to really understand the concept of money. So I'm using a substitute for money.

As background, my daughter has a big sweet tooth. To her, the four major food groups are: Cookies, Candy, Cake and Chocolate Milk. However, since my spouse majored in food science, we invest a lot of effort in healthier meals.

Although our daughter does trick or treat for Halloween, we're not big fans of letting her have all the candy. Most of it has been put away with our stored foods, since we prefer her to eat more healthy foods. Our daughter knows her candy does exist in the house and, at times, can be overly focused on getting some sweets.

Although I think it's good to manage children's healthy eating habits, I also believe that our daughter needs to develop her own capability to limit eating sweets. Last weekend with the agreement of my spouse, I told our daughter that she was old enough to begin managing some of her own candy. She was very excited and got to pick 4 pieces of candy to eat for the week, which was stored in a container she keeps. There are also a few rules, e.g. candy can only be eaten after a meal, and after completing must do tasks such as getting dressed in the morning. I'm also participating in the process by selecting a couple of pieces that I'm allowed to eat during the same period, which I store where our daughter can see them.

For this week, she made it through Wednesday lunch before finishing all the candy and gum. Our daughter understands that she needs to wait until Sunday, before the next allotment of candy. It will be interesting to see how she acts today, now that her candy has all been eaten. My hope is that she won't be asking for more candy and start learning to ration what she has received, especially with the example that I've been able to make my allotment last longer.

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 © 2009 Achievement Catalyst, LLC

Choosing Between Taxable and Tax Deferred Saving Accounts

Whether to use a tax deferred or taxable savings account isn't a clear decision. There are advantages and disadvantages for both types of accounts. In the table below, I've summarized my view of the tax treatment for tax deferred and taxable saving accounts. Green signifies what I consider an advantage and red indicates what I consider a disadvantage of the account.

	Tax Treatment
Category	Tax Deferred	Taxable
Contribution	Reduces taxable income in current year, except for Roth contributions	After tax money
Earnings	Grows tax free and is not taxed until withdrawal	Taxable each year as earnings occurs
Capital Gains	Ordinary income tax rate at withdrawal, except for Roth and college saving accounts.	Lower tax rate
Dividends	Ordinary income tax rate, except for Roth and college saving accounts.	Lower tax rate
Withdrawal	Retirement accounts are taxed as ordinary income with penalty for withdrawals prior to 59 1/2. College savings account withdrawals are tax free when used for qualified education expenses and taxable otherwise.	No taxes on principal and can be withdrawn anytime and used for any reason
Inheritance	Taxed as ordinary income	Cost basis steps up

Key - Green = advantage ; Red = disadvantage

To me, the best type account will depend on the financial situation of the individual saver and the expected timing of needing the money. Deferring taxes or avoiding taxes is an attractive option for those in higher tax brackets. However, the benefit does come with restrictions, which, if not met, can be costly to the saver. Taxable accounts offer the greatest flexibility, since the money can be accessed anytime for any reason.

From our experience, we found it best to put money in tax deferred accounts that we were very sure we didn't need until retirement. If we thought we might need the money in the next five years (e.g. emergency fund, car purchase, down payment for house, etc.) we put money in a taxable savings account.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Price Match Guarantees

In a recent conversation, someone told me how she just got a price match from Wal-Mart on an item she was purchasing. She had seen a good price for a frozen food item at another store and wanted to purchase the same item at Wal-Mart, which was right next to where she worked.

At first, the people she talked with wouldn't give the price match to her. Although she showed them the information on the Internet, Wal-Mart claimed it wasn't from advertising. However, she was able to point out that the Internet information was taken from a store circular, showing the same brand and weight. Eventually, a Wal-Mart manager did allow the price match.

I've never tried to use a price match guarantee. We live in an area where all the stores are close enough to make the trip. So it's not worth the effort for me to go to a specific store to ask for a price match. For example, when I was much younger, in my twenties, I used to shop at three grocery stores, all within a mile of my house. I would read the circulars each week, make my grocery list, and shop the sales at each store. Interestingly, the sales of major brands were sometime staggered, letting me get the sale price for a couple weeks

Although I don't ask for price matches, I will sometimes take advantage of offers to honor competitor's coupons. I've done this with Home Depot and Lowe's because in some cases the other store didn't offer the exact item I wanted to purchase.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From January 13 - 19, 2009

Here are the Carnivals in which My Wealth Builder participated from January 13 - 19, 2009:

Festival of Frugality #160

Carnival of Financial Planning

Carnival of Family Life

Festival of Stocks

Carnival of Personal Finance #188

Total Mind and Body Fitness Carnival #85

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

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

This is not financial, investment, health or family advice. Please consult a professional advisor.
Copyright © 2009 Achievement Catalyst, LLC

The Fork in the Road for Investing

"When you get to a fork in the road, take it." ~ Yogi Berra

2009 may be fork in the road year for investing, with the decision being to invest or not to invest in the stock market.

After a horrific 2008, many people, including me, aren't excited about stock market results. The challenge is that most of us naturally extrapolate the recent past into the future. When stocks and housing were gaining 20% or more a year, people included 20% returns in financial plans. Now that stocks and housing have 20-40% negative returns, people reluctant to invest in them.

For me, the solution is to examine historic returns, with the assumption that over a longer period of time, the total return will be closer to the average. The concept is known is known as "regression to the mean," and is remarkably predictive, unless there is a fundamental change which alters the mean.

So the real question is not, "Should I put money in the stock market or keep it in safe investments?" The question should be, "Do I believe their is a fundamental shift in the U.S. economy, or is this recession part of the normal correction process?"

Although I agree this recession will be among the worst, I still believe it is still within the range of a normal correction process. Therefore, I will stay invested in the stock market and look for opportunities to add new money when appropriate.

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

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

Copyright © 2009 Achievement Catalyst, LLC

1/19/09 Stock Position Update - Getting close to previous bottom

I continue to take no further action based on my buy list and short list of 7/7/08. I have taken four long and one short position, which has been closed. Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list. I have also not taken any action on the 10/20/08 Buy List, which has received sell signals for 5 out of 5 of the stocks by 11/2/08.

However, some of the metrics in the modified Unemotional Growth System indicate there may be a rally in the near term. Three weeks ago, I did a preliminary update for the buy list based on the system. Last week, I finalized the new buy list on 1/12/09.

The portfolio was down about two to three times as much as the market indices for the week. The holdings are down 9.9% from the previous week. Commodities and energy stocks all seem to decline more than the market after advancing significantly last week. . The overall portfolio is down 32.3% and the remaining holdings are down 49.3%. The previous bottoms occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM). Southwestern Energy was the only stock identified for the 1/12/09 buy list.

	From My Wealth Builder 7/7/08 and 1/12/09 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 1/16/09
Range Resources(RRC) [7/10/08]*	50	$58.17	$33.21
Potash (POT) [7/18/08]*	10	$215.09	$72.34
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$28.60
Potash (POT) [7/24/08]*	10	$192.02	$72.34

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock, except for Southwestern Energy, which appears on the new 1/12/09 buy list.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

At first, I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling again to $3.23 on 11/21/08. It closed at $6.28 on 1/16/09. It's too bad I didn't hold the short position until now :-)

The market continues to be choppy, . All three indices are in bear market territory. As of the close on 1/16/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8281.22, 1529.33, 850.12, above the 2008 closing lows of 7552.29, 1316.12, and 752.44 , respectively. The Dow, Nasdaq and S&P 500 are down 5.48%, 3.02% and 5.79% respectively year to date

Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. Also, we will not be adding any new money, until the Dow crosses either 6000 or 10,000.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Hess, Potash, Range Resources, and Sears Holdings.

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 © 2009 Achievement Catalyst, LLC

Focus on the Future (Not on the Past)

"It's tough to make predictions, especially about the future." ~ Yogi Berra

The key to investing success for 2009 is not knowing what happened in 2008. It's being right about what will happen in 2009. A lot of new factors could change the expected outcome in 2009. For me, these include:

New President. Barack Obama has been surprising centrist based on his Cabinet selections and comments leading up to his inauguration on Tuesday. In fact, many of his economic positions, since being elected, don't seem that different from where McCain and Bush have been.

Democrat majority in Congress. The Democatic leadership is very liberal, and seems to working towards excluding the Republican minority. Harry Reid and Nancy Pelosi will be working hard to deliver their liberal agendas.

More government intervention. As more financial institutions fail, the level of government involvement will increase significantly. I would not be surprised if the Bank of America and Citibank are government entities by the end of 2009.

In addition, the government will be pumping money into the economy and significantly increasing spending. I expect that this action will lead to higher inflation in the longer term.

Very low interest rates. I expect the Fed to keep interest rates low throughout 2009. This will bring 30 year fixed mortgage rates below 4%, but also keep fixed income investment yields low.

Economic bottom will occur. 2009 will continue to be a tough year for business, with many more failing. However, the companies that survive will emerge stronger, leading to a robust economic recovery.

OK, I don't really know if any of these predictions will happen. However, I sure am hoping mortgage rates to drop below 4%, since it would reduce our mortgage payments up to 37% ;-)

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

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

Copyright © 2009 Achievement Catalyst, LLC

1/18/09 Bottom Fishing Portfolio - Financials Have a very Foul Stench

On Friday, October 3, 2008, I couldn't resist the temptation of buying some stocks before the bailout vote. I bought shares of Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC) and Monsanto (MON). I believed that these three banks will not only survive this financial crisis, but will be one the four major banking powers in the next year. Monsanto was down over 50% from its high and its seed and agricultural businesses are still very strong.

As part of this portfolio, I have also been selling put contracts to open on specific stocks. I have been selling put contracts at one to two months from expiration on Monsanto and Energy Conversion Devices (ENER). With the drop in the market of the last two weeks, I have started selling put options on these stocks again.

In December, 2008, I decided to buy some Ford (F) call options, to capitalize on a possibility of a rebound if Congress supports an auto industry bailout. On December 2, 2008, I bought the December 5 call and on December 3, 2008, I bought the January 7.5 call. Since the automaker bailout did not cause a large bounce for Ford, all the calls have expired worthless.

This week, I began thinking about buying some high dividend paying stocks, such as DuPont (DD), Pfizer (PFE) and Alcoa (AA), which are paying 6-7% dividends and are picks in the Dogs of the Dow system. These are pretty high dividends, and I need to evaluate if the companies will be able to maintain them during this recession. For reference, Bank of America, which was the top percentage dividend payer in the 2009 Dogs of the Dow selections, cut its dividend from $1.28 per year to $0.01 per year.

In hindsight, I bought the financial stocks way too early. I've learned my lesson. I will not purchase any more financial company stocks, until there is a more clear turnaround in the financial crisis of 2008. Of the three financial stocks, Bank of America has been the worst pick, being down 81.1%. I now believe there is a high probability Bank of America will not survive the financial crisis and economic downturn.

It also appears that I had been overly optimistic about the market impact of the automaker bailout.

The portfolio was down 15.1% in the past week, vs a market decline of about 3-5.5% due to the selling pressure on financial stocks. The overall portfolio is still down 43.89%, very near its low of -45.30% four weeks ago.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 1/16/09
Bank of America(BAC) [10/3/08]	100	$38.00	$7.18
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$22.82
Wells Fargo (WFC) [10/3/08]	50	$37.07	$18.68
Monsanto (MON) [10/3/08]	50	$88.97	$79.61
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	expired 12/20/08 at $0
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	expired 1/16/09 at $0

Currently, I have profited from all four put contracts which have been closed or allowed to expired. Last week, I sold a February put contract short for Energy Conversion Devices and will consider doing the same for Monsanto if the market continues to decline.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 1/16/09
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91
Energy Conversion Nov 20 put (EQIWD) [11/12/08]	100	$0.69	expired 11/21/08 at $0
Monsanto Dec 40 put (MONXI) [11/20/08]	100	$1.19	expired 12/20/08 at $0
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	expired 12/20/08 at $0
Energy Conversion Feb 15 put (EQINC) [1/14/09]	100	$0.44	$0.45

Perhaps, these stocks may still participate in a January effect rally which some experts predict is very likely this year. If these stocks should rally significantly, I will look to close out the long positions in the financial stocks.

Disclosure: At time of publication, I own shares of Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares and am short a put contract on Energy Conversion Devices in our trading account. Alcoa and Pfizer shares are owned in our managed accounts.

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

Organic Food Marketing

My spouse is a proponent of healthy eating. She makes most of our meals from scratch, when possible, using organically produced fresh vegetables and low fat organic options of meats and milk. Our belief is that healthy eating begins with real food and is helped by avoiding pesticides, anti-biotics and growth hormones.

I expect I may now live 20 years longer, since I usually didn't make healthy food choices prior to being married. Before, I would eat high carbohydrate processed foods, e.g. breads, chips, pizzas, etc., and higher fat meats such a bacon, or 85% hamburger.

However, even though I have no training in food science , I realize that healthy eating starts with good food choices, with the organic option being next. Therefore, I get a chuckle when I see foods which I wouldn't consider healthy for me displaying an organic designation.

Here are some interesting organic products which I have recently seen when shopping:

Organic toaster pastries. Ok, I guess if I were eating toaster pastries I would want them to be organic. However, I don't think toaster pastries meet my healthy criteria of fresh unprocessed food. Therefore, being organic wouldn't give me an incentive to consider them.

Organic candy canes. These were a seasonal offering. However, since I eat candy canes infrequently, I'm not too worried about whether they are organic or not.

What will marketers think of next -- organic chips and crackers, organic soft drinks or organic candy? When this happens, I'll probably be chuckling the entire time I shop for food.

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 © 2009 Achievement Catalyst, LLC

Inverse (Short) ETF Portfolio Update - 1/17/09

The stock market is continues to be strange nowadays, with little reaction to all major bad news such as the Madoff $50 billion investment scam, the auto bailout bill failure, and subsequent TARP bailout of GM and Chrysler. Now in the days leading up to Mr. Obama's inauguration, the market is falling, instead of rallying as I expected.

To hedge against the market falling, I purchased small positions of Ultrashort Real Estate Proshares (SRS), Ultrashort Financial Proshares (SKF) and Ultrashort Oil & Gas Proshares (DUG). These are inverse market index ETFs, meaning they rise when the market falls and vice versa.

This past week, I was able to sell the Ultrashort Financial Proshares and one lot of the Ultrashort Real Estate Proshares at a profit.

	Hedging in a Volatile Market
Inverse ETF [purchase date]	Shares	Purchase Price	Price on 1/16/09
Ultrashort Oil & Gas Proshares (DUG). [11/21/08]	100	$38.21	$25.42
Ultrashort Financial Proshares (SKF) [12/11/08]	20	$118.99	sold 10 shares at $140.33 on 1/14/09 sold 10 shares at $165.95 on 1/16/09
Ultrashort Real Estate Proshares (SRS) [12/11/08]	20	$81.64	$59.44
Ultrashort Real Estate Proshares (SRS) [12/17/08]	20	$62.62	sold all shares at $66.82 on 1/14/09

I purchased these ETF because I believed they would provide some protection if the market should fall. However, upon further investigation, I learned that these ETFs can fall even if the market index declines over time, due to the ETFs being base on the daily return of the index, which Proshares customer service confirmed when I asked them about my observation. The Motley Fool has a great explanation, with an example, of how these 2X inverse ETFs may not protect against a long term decline in the index.

Based on my new learnings, I will not buy any additional inverse ETFs and continue to unwind these positions, hopefully at a profit, but at a loss if needed. However, if the Ultrashort Financial Proshares ETF drops below $100, I may consider buying a new 20 share position, especially if I no longer own the Ultrashort Real Estate and the Ultrashort Oil & Gas ETFs.

Lesson learned: Don't buy derivative investments when I don't fully understand how they work, as in the case of 2X inverse ETFs.

Disclosure: At the time of publication, I own shares of the Ultrashort Real Estate Proshares (SRS) , and Ultrashort Oil & Gas Proshares (DUG).

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

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

Copyright © 2009 Achievement Catalyst, LLC

My Life Improvements from Retiring Early

After taking early retirement in October, 2007, I spent the following year transitioning into this new phase of life. Although the 2008 economic decline has caused me to be overly focused on the financial elements, I've been working on other important life areas in early retirement. Here are some of the ones that have been improving for me:

Health and fitness. Just prior to retiring early, I was sleeping about 6 hours a night, drinking eight cups of caffeinated coffee a day, getting almost no exercise, was overweight by about 15-20% and had pain in my feet and ankles. In addition, my exit physical showed an irregular heart beat.

Sixteen months later, I'm now sleeping 8-9 hours per night, drinking an occasional cup of decaffeinated coffee, doing strength exercise three times a week, lost 7% of my weight, and almost eliminated the pain in my feet and ankles. In a stress test, it was determined the irregular heartbeat was not a health risk and probably due to drinking too much caffeine.

For me, the biggest surprise was how rapidly my sleeping hours increase. For years, I had been only sleeping 5-6 hours a night and waking up at 5 AM, without an alarm. Now I need to set an alarm if I want to wake up before 8 AM.

Personal growth and development opportunities. While working, my educational activities were primarily related to my career or business, either technical or organizational.

In the past year, I've taken the time to learn more about topics in which I have a personal interest, which I may want to expand to an income producing opportunity. The courses I've taken are related to home repair and landscaping, which I may expand to real estate investment. I've also taken a gourmet cooking class to experiment with the idea of a restaurant business. I plan to take a travel and tourism course in the spring to also explore my income producing interest in that area.

Social. Using a set a concentric circles to represent my personal contacts, I would put them in the following order from the inner most circle to the outer most:

1. Family
2. Close Friends
3. Neighbors, and good friends
4. Immediate work colleagues
5. Other company employees and external work contacts
6. The rest of the world.

Looking back, I was spending the majority of time during my work years in circles 4 and 5, which was important to do for my career. Now I'm spending much more time in circle 1 and increasing the time spent in circles 2 and 3.

Overall, I am still glad I retired early due to these improvements in my life. And hopefully, 2009 will be a better year financially :-)

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

Driving Like Worms

I have little tolerance for poor driving by others which affects me, especially if it causes me to use my brakes. Before our daughter, I would regularly grumble out loud about the ineptitude of the driver, often including a couple profanities. However, after our daughter started talking, I quickly learned that such actions might become a training guide for her. Although I still grumble, I now use much less colorful language.

A while ago, I was driving behind an excessively slow driver, who was consistently 10 miles per hour below the speed limit. Unable to pass on the two lane road, I grumbled, "Come on, let's get moving." My daughter asked what was wrong. I replied, "They're just driving like worms," which I thought was an appropriate description.

I had forgotten about the worm statement until yesterday, when I was driving our daughter to pre-school. We were stopped at a light, with a left turn lead, behind an expensive sports car. When the left turn signal turned green, the sports car jerked forward and stopped. After a short period, the driver restarted the car, shifted properly and made the left turn, just before the oncoming traffic got a green light. As a result, I was unable to turn left and had to wait another cycle.

Big sigh from me.

"What's wrong?" asked my daughter.

"People with expensive sport cars ought be able to drive a stick shift without stalling," I said. After all, I thought, a manual shift is a conscious choice and not a standard option for most high end sports cars.

"They're driving like worms, " my daughter exclaimed.

I laughed and agreed, "Yes, they are driving like worms." It's good that I have consciously modified my language when commenting on poor driving incidents :-)

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

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

Copyright © 2009 Achievement Catalyst, LLC

How Saving has Enabled Us

“Save your money, and one day it will save you” -old African proverb

Moneymonk shared the above in her Friday quote post last week. I liked the quote and considered how it might apply to our experience. While we have not been "saved", our savings has enabled a lot of what we like to do. It's one of the reasons that I made paying myself first a part of our financial strategies. To me, it's the only saving strategy you'll ever need.

Here are some of the ways that I feel savings has enabled us:

Accepted early retirement opportunity. I have always been a believer in having a liquid emergency fund, e.g. cash, money market fund or laddered CDs. The amount grew from one month, to six months and then to several years. When an opportunity to retire early occurred, our emergency fund was able to cover about seven years of expenses. Having this much made early retirement an easier decision.

Debt free lifestyle. We lived pretty much debt free, with the exception of our home mortgage and credit card balances, which are paid off every month. Not having any debt has helped us maintain our lifestyle during this economic recession. In hindsight, I wished we had paid off our mortgage :-)

Funds for major expenses. We have been able to pay for large purchases with cash, enabling us to often negotiate additional discounts. We have paid for our last two cars, our furniture and major home repairs with cash. In addition, when we adopted, we were able to cover all the expenses from our savings.

At this point, we have been fortunate not to have any major unexpected expenses. However, our plan is still to keep 3-5 years in liquid investments, in case an emergency should ever happen.

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

Links To Carnivals From January 6 - 12, 2009

Here are the Carnivals in which My Wealth Builder participated from January 6 - 12, 2009:

Carnival of Money Stories # 92

Money Hacks Carnival

Carnival of Financial Planning

Carnival of Family Life

Carnival of Personal Finances

Carnival of Twenty-Something Finances

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

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

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

Copyright © 2009 Achievement Catalyst, LLC

Get Higher Interest for Saving - Up to 6%

While the Fed interest rate cut to nearly 0% is good for borrowers, it has also reduced the interest rate that savers can get. Very quickly, the interest rate for 5 year CDs dropped from 5% to 3.5%. However, some banks are marketing aggressively during this time and it's possible to good interest rates, e.g. 3.5% on a savings account, if one searches.

Earn Close to 4% on Your Cash by Smart Money at Yahoo! Finance shares savings accounts with yields for 3.15% to 3.55% with minimum deposits of $100 or less. In addition, the article reports 1 to 2 year CDs that pay up to 3.75%.

Here are two sites which can help find higher interest rates.

The blog Bank Deals - Best Rates and Deals does a daily reporting of high interest savings accounts and CDs, including a weekly summary of the best rates. The best deal? A reward checking account in Iowa that paying 6.01%.

Bankrate.com provides the capability to search by location for the best rates for savings, CDs and mortgages.

Our bank recently offered a six month promotion for a 3.5% savings account with a minimum balance. I took advantage of it and moved almost all all our cash and money market fund to this account. When the promotion expires, I'll be checking the above site to determine what other higher interest options are available at the time.

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

Part Time Job Opportunity - Census Bureau

The Census Bureau is preparing for the 2010 by hiring thousands of temporary employees across the country. Here's what I learned from the website and by calling our local Census Bureau office.

There are full-time and part-time temporary positions, lasting up to two years, that pay $11.50-$19.50/hr depending on the specific job and the location in the U.S.

The full time positions are 40 hours per week, Monday through Friday, at an office with regular work hours.

The part time positions are up to 30 hours per week, at the convenience of the employee.

No benefits.

A qualifying test is required for all applicants.

Based on the job descriptions and pay level, I've decided to apply and have scheduled taking the qualifying test.

For more details on Census Bureau job opportunities by area, check the Census Bureau site. Call the Census Bureau at 1-866-861-2010 or your local Census Bureau to find out where the qualifying test is offered. Here's a 30 minute practice test, with answers to try before applying.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Free Download of Suze Orman's New Book

Suze Orman's new book, 2009 Action Plan, can be downloaded for free at Oprah Winfrey's web site. The offer expires at 11:59 PM CT on this Thursday, January 15, 2009. I'm not a fan of Suze's nor have I read any of her books. However, I thought a free downlowdable book was worth sharing.

I happened to be watching Suze's segment on Oprah when she asked the audience to:

Not spend money for one day

Not use credit cards for a week

Not eat at restaurants for a month.

I thought I might try it to see how hard it would be to follow. I think I routinely do the first two, but I'd have to consciously try not eating at restaurants. I occasionally buy 1-2 items from the dollar menu at a Wendy's or McDonald's drive through, which I've been told should count :-(.

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

Stock Buy List Update - 1/12/09

With the beginning of a new year, I've decided to update my buy list, in anticipation of a good buying opportunity in the future. For background, see My Stock Picks for Q1 2007 for a description of the Modified Unemotional Investor Growth system. The Top 5 system is a direct application of the Unemotional Investor Growth system described in the book The Unemotional Investor by Robert Sheard.

I was disappointed that the system yielded only one stock for my buy list. In this update, no stocks passed all the Modified criteria and only one of the Top 5 picks appealed to me. Since I expect a market bottom is near, I will start reviewing the list at least every two weeks, in case the system identifies additional buys.

	My Wealth Builder Buy List - 1/12/09
Stock	System Used	Target Price	Target Shares
Southwestern Energy (SWN)	Top 5	less than $23	50

At this time, I plan to sell out of the money puts (strike price 17.5 to 22.5) on Southwestern Energy. Since I already own 50 shares, this approach will let me profit if the stock moves up or buy at a lower price if the stock moves down. My other option is to buy the stock outright if there is a market correction.

Disclosure: At time of publication, I own shares Southwestern Energy in our trading account.

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 © 2009 Achievement Catalyst, LLC

1/12/09 Stock Position Update - Flat during a down week

I continue to take no further action based on my buy list and short list of 7/7/08. I have taken four long and one short position, which has been closed. Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list. I have also not taken any action on the 10/20/08 Buy List, which has received sell signals for 5 out of 5 of the stocks by 11/2/08.

However, some of the metrics in the modified Unemotional Growth System indicate there may be a rally in the near term. Three weeks ago, I did a preliminary update for the buy list based on the system. I finalized the list over the weekend and will publish it later today.

The portfolio was flat even though the market was down for the week. The holdings are up 1.6% from the previous week. Potash and Southwestern Energy seem to be recovering, but still have a long way to go to make up all the losses. The overall portfolio is down 28.2% and the remaining holdings are down 43.8%. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

	From My Wealth Builder 7/7/08 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 1/9/09
Range Resources(RRC) [7/10/08]*	50	$58.17	$36.84
Potash (POT) [7/18/08]*	10	$215.09	$84.02
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$30.23
Potash (POT) [7/24/08]*	10	$192.02	$84.02

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock, except for Southwestern Energy, which appears on the new buy list.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I didn't short Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted.

I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling again to $3.23 on 11/21/08. It closed at $6.99 on 1/7/09. It's too bad I didn't hold the short position until now :-)

The market continues to be choppy. All three indices are in bear market territory. As of the close on 1/9/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8599.18, 1571.59, 850.12, above the 2008 closing lows of 7552.29, 1316.12, and 752.44 , respectively.

Economists now acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy. For now, I am looking reinvest the cash that was raised at the end of 2008 and I will no longer be trying to short stocks. For now, we will not be adding any new money.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Hess, Potash, Range Resources, and Sears Holdings.

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 © 2009 Achievement Catalyst, LLC