Timeless Articles from the Archives #7

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I have started a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2007, I wrote The Education of Our Daughter in which I shared the additional training I believe our daughter should have to be successful in the future. In Business Week - Retiring Early Strategies: The Fifties , I evaluated the strategies shared and added perspective based on my experience.

For the week in 2008, I wrote Joined A Health Club which gave the reasons for doing something I thought we would never do.

To me, the content of these posts are still relevant today and were worth reading again.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From September 21 to 27, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from September 20 to 27, 2010:

The Wealth Builder Carnival #7

Baby Boomers Blog Carnival #58

Carnival of Financial Planning #158

Carnival of Money Stories #73

Carnival of Personal Finance #276

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

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

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

Copyright © 2010 Achievement Catalyst, LLC

The Wealth Builder Carnival #8

Welcome to eighth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 9/28/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments related to the post topic.

And now onto the Carnival:

Earning

Martin presents Starting an Online Business posted at Impact Your Money, saying, "Join me as I take you with me on my journey to start an eCommerce/online business." The author provides an excellent explantion of how to keep business and personal elements separated for legal, financial and tax purposes.

Investing

Walter W. Fouse presents Top Ten S&P 500 Index Funds: Large Cap Core Mutual Funds with Lowest Costs posted at Best No Load Funds, saying, "This table of low cost top 10 S&P 500 mutual funds has been organized with the lowest cost index fund first. Nevertheless, each of these S & P 500 index funds is among the least costly on the market."

Dividends4Life presents 12 Stocks Raising Their Dividends posted at Dividends Value, saying, "When it comes to selecting dividend stocks, one of the most important items to look for is consistency in raising dividends. Sure it is easy to increase dividends when the economy is booming and business is good, but to be consistent a company has to persevere and continue to increase dividends even during the tough times."

MoneyThinking presents Why Should I Care about Gold? posted at Money Thinking.

FMF (#20) presents Avoiding the 10 Most Common Investor Mistakes, Mistakes 1-3 posted at Free Money Finance, saying, "Mistakes to avoid if you want to make the most of your investments."

Mitch Archuleta presents What Investments Can I Hold in a Roth IRA? posted at RothIRA.com's Retirement Planning Blog.

Living Frugally

Tash Hughes presents Top 10 business saving tips posted at Word Constructions. Being frugal also applies to businesses.

PT presents The Best Cash Back Sites posted at Prime Time Money, saying, "I rank some of the best places to make cash back online. Get a kickback for your shopping."

Arjun Rudra presents Practical Tips To Best Utilize RESP Savings And Control Student Debt With Aurele Courcelles, Director of Tax and Estate Planning at Investors Group posted at Investing Thesis, saying, "According to Statistics Canada, university tuition fees in 2009/10 were up 3.6 per cent to an average of $4,917 and compulsory fees (such as student services fees, administrative charges, athletic and recreation fees) for Canadian students increased 6.8 per cent from the year before to $749. On top of this, student living costs for rent, transportation, food etc. can range from $500 to over $30,000 depending on where they go to school. This past year student debt hit an all time high exceeding $13 billion in Canada. We sit down with Investors Group financial planning expert Aurele Courcelles to find out how current students can take steps to limit their student debt and accomplish their financial goals." Living frugally is also important for students especially with respect to education loans.

Freefrombroke (#2) presents Why We Chose A 30 Year Mortgage When We Bought Our Home posted at Free From Broke, saying, "When we bought out home we realized a fixed rate, 30-year mortgage loan was the best for us. Here is why." We chose a 30 fixed mortgage over a 15 year fixed mortgage for the very same reason - knowing we could always cover the payment and pay down principal with extra funds.

Leave Debt Behind.com presents How to Handle Lifestyle Inflation posted at Leave Debt Behind, saying, "The first step is understanding how to live within or below your means, regardless of your income level."

Silicon Valley Blogger (#1) presents Taking Out A Loan? Questions To Ask First posted at The Digerati Life, saying, "When you need the money, you should ask yourself a few questions: should you get a loan in the first place? And if you do, which one should you get? " In the past, we only answered yes for college, home and car loans.

Khaleef @ KNS Financial (#32) presents How to Create a Budget – Celebrate Small Victories! posted at Faithful With A Few, saying, "Some of us respond better to rewards and incentives then we do to calls for discipline. Because of this, it is wise to budget rewards and incentives to motivate us to achieve our goals!"

Retiring

Super Saver (#18) presents Early Retirement can be Expensive posted at My Wealth Builder, saying, "In terms of the financials, retiring early is usually not a good choice unless one is within a few years of the normal retirement age. Even so, the lifestyle changes made early retirement worth the cost for us."

Taxes

Mike Piper (#13) presents Deducting an IRA Loss (Roth or Traditional) posted at The Oblivious Investor, saying, "Under what circumstances can an investor deduct a loss in an IRA?"

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

Technorati tags: the wealth builder carnival, blog carnival.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Turn Down Offers, Not Opportunities

A career counselor once told me, "Turn down offers, not opportunities." His point was not to be too choosy by only applying to and interviewing for jobs that are an exact match, high enough salary, in the right location or whatever. His advice was to apply broadly, and after receiving an interview/offer, then make the decision to accept or decline.

With an offer in hand, the candidate often has leverage to negotiate on responsibilities, pay and sometimes, even location before making a decision. However, if one never applies, there is zero chance to get an offer and do those negotiations.

Overall, I think "Turn down offers, not opportunities," is a great piece of advice, especially in today's economy. Of course, it doesn't mean to apply to jobs one would never accept. However, if the job description is close enough scope, salary and location, it's probably worth trying to get an offer and then deciding.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Investing - How Timing and Luck can Play a Role

According to The One Missing Investing Ingredient: Luck, chance plays a significant role in the returns of an investment portfolio. For example, the article reports that the difference between 1964 and 1965 in investing a lump sum would have resulted in a 20% higher return over 30 years.

Prior to the recent economic crisis, many articles focused on historical average returns of the stock market. Not many articles acknowledged how much the luck of timing could impact investment returns. However, while the luck of timing can significantly affect one's investment returns, it is not a controllable factor. No investor can predict the best time to invest when the results of the following 30 years are unknowable.

The article's solution? Manage those areas that are controllable. Save early, save as much as possible, diversify investments, keep expenses low and recognize that historical averages are no guarantee of future returns.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Recession Over? - Yes and No

The National Bureau of Economic Research announced Monday (September 20, 2010) that the recession, which had begun in December 2007, was over in June 2009. The 18-month recession was the longest economic downturn since the Great Depression. The announcement has been met with great skepticism since the economic recovery has been very unbalanced. Here's how I see the breakout:

Recession is over

Businesses - If a business has survived, the recession is likely over. During the recession, businesses have been eliminating marginal work and aggressively reducing costs. Many surviving businesses are earning record profits despite the recession.

Recession hasn't ended

Unemployed - Businesses are not hiring yet. Many companies are holding onto record amounts of cash since confidence in the economy is still low.

Homeowners - While housing values are no longer in free fall, they haven't recovered to pre-recession levels.

Retirees - Many investments accounts are still significantly below the values of late 2007. Interest rates on fixed income investments are extremely low. Some people are working longer or returning to work.

State and local governments - With high unemployment and significantly lower property values, tax receipts are lower and still going lower. Many of the tax levies in our area will likely fail.

The economic recovery seems to have been mainly in the area of business so far. As the recovery expands dimensionally, more will view the recession as truly over.

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

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

Copyright © 2010 Achievement Catalyst, LLC

My Best Ever Volunteer Job Yet

I recently started doing a volunteer job in which part of my role is to play golf. My specific job is to assist golfers with disabilities to play at an executive 9-hole course. If the golfer is interested, I can play along with him.

This is my best ever volunteer job for the following reasons:

Enjoyable - Although I am poor golfer, I do enjoy playing the game, mainly for the company and to be outdoors. The golfer whom I assist and I are very compatible. Since volunteering, my golf game has improved. This summer, my big achievement was scoring my first eagle.

Convenient time - We play on a weekday morning once every couple weeks on a day that is good for both of us. Since we only play 9 holes, the total time committed is about four hours when my travel time is included.

Freebies - The course does not charge me for playing when assisting golfers with disabilities.

Volunteer credits - For each round of golf, four hours are credited against my volunteer time. When I reach 100 hours, I am able to use park services, including golf, in the system at no charge.

At this point, I can't think of any downsides for this volunteer job. Hopefully, the golfer will continue to ask me to assist him.

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 © 2010 Achievement Catalyst, LLC

Combining Work with Bonding Time

One of my part time jobs is teaching science in an after-school program. A job perk is that my daughter can attend to for free. Last year, I brought her to most of my K-2 classes since she was attending half day pre-kindergarten. She enjoyed learning and being with the older students at school. Since our daughter is in full day kindergarten this year, attending my classes at other schools would not be an option. My solution was to teach a program at her school.

Based on my first class, the idea is working out well.

• Time together. I get to spend an hour with my daughter and teach her about science. Best of all, she considers it a fun time with me.



• Already know some students. Usually, I don't know any of the students on the first day of class. In this class, 25% of the kids are our daughter's friends.



• Teach about working. Last year, I paid my daughter 50 cents per class to help clean up the room. I am continuing to do this so that my daughter can learn about earning money for work.

For now, our daughter is still delighted that she is in a class that I am teaching. I think it's great that I can spend time with her and get paid for doing so :-)

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 © 2010 Achievement Catalyst, LLC

Timeless Articles from the Archives #6

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I am starting a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2006, I wrote To Budget or Not to Budget ... in which I shared our budget strategy of saving first and then spending the rest. I also wrote about Frugal or Stingy? which shared theoretical examples of both characteristics. In Avoiding an Expensive Mortgage Mistake, I wrote about my concern with adjustable rate mortgages and our preference for conservative fixed rates mortgages. Finally, I wrote how I like Using Other People's Money to Save.

For the week in 2007, I wrote a number of great timeless articles. ForTime or Money - Which Is More Important To Me?, I concluded time was the answer. In Reduce 2007 Taxes: Accelerate Deductions or Delay Income, I wrote how being able to time deductions or income could reduce tax liability. Some Money Rules of Thumb I Use shared ones from an MSN.com that I used. Financial Lessons From My Parents shared my top five lessons that I learned. Finally, in Business Week - Retiring Early Strategies: The Forties, I evaluated the strategies shared and added perspective based on my experience.

For the week in 2008, I wrote Will this Financial Crisis become a Panic? I thought the answer was no, but it turned out to be yes.

For the week of 2009, I wrote Lessons From the Crash which we are still following in 2010.

To me, the content of these posts are still relevant today and were worth reading again.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From September 14 to 20, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from September 7 to 13, 2010:

The Wealth Builder Carnival #6

Carnival of Financial Planning #158

Carnival of Money Stories #72

Total Mind and Body Fitness Blog Carnival #172

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

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

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

Copyright © 2010 Achievement Catalyst, LLC

The Wealth Builder Carnival #7

Welcome to seventh edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 9/21/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments relative to the post topic.

And now onto the Carnival:

Earning

My Journey (#43) presents Starting your own business costs less than ever before posted at My Journey to Millions, saying, "Starting a business is cheaper than ever - time to build wealth!" I agree that the Internet offers a good low cost way to try a business idea without investing large sums of money.

PT presents Mystery Shopper Jobs: Deciphering the Mystery posted at Prime Time Money, saying, "Find out the truth about mystery shopper jobs." Mystery shopping can be a good side income. I recall reading about someone who made over $80,000 per year treating it as a job. For me, I found the pay to be too low for the effort at the entry level assignments.

Insuring and Protecting

FMF (#18) presents What Is Life Insurance, Where Did It Come From, and Why Should I Care? posted at Free Money Finance, saying, "All the details you need to know about life insurance." I agree life insurance is important to have, especially for those that are still working. For those with minor children, Social Security also provides survivor payments, which is a form of life insurance.

Investing

Dividends4Life presents 5 Dividend Stocks Providing Positive Feedback posted at Dividends Value, saying, "It seems that ever so many years the market turns down and someone declares the death of buy-and-hold. Some even go as far to say that Warren Buffett has lost his touch. With time on their side, the buy-and-hold investors and Mr. Buffett always seem to make a spectacular rebound. As long-term dividend investors our focus should be on acquiring fundamentally sound dividend growth stocks at a reasonable valuation and maintaining our asset allocation."

Arjun Rudra (#69) presents Be Mindful Of The Risk Of Inflation Says Norman Raschkowan, North American Strategist For Mackenzie Investments posted at Investing Thesis, saying, "This past summer has taken investors on a roller coaster of a ride with capital markets rising and falling so much, it’s no wonder investors are feeling queasy. Mixed economic data may be stoking fears of a “double dip” recession, but one North American strategist, says that while there will be an extended period of moderate economic growth, the chances are slim we’ll see another actual recession hit." To protect against inflation, we have purchased TIPS and are purchasing stocks of companies with pricing power if inflation occurs.

Freefrombroke (#2) presents What is Asset Allocation? posted at Free From Broke, saying, "Asset allocation is an important concept for an investor to know."

Madison DuPaix presents Are Municipal Bonds the Next Bubble? posted at My Dollar Plan, saying, "This is a thought-provoking article on municipal bonds - a must-read if you have them in your portfolio or have been thinking about adding them." I agree that bonds are in a bubble. I have already sold some of our bonds at a significant profit and do not plan to buy any new bonds.

Dividend Growth Investor presents Has the time for Tech Dividends arrived? posted at Dividend Growth Investor, saying, "Most large cap tech stocks have hoarded billions of dollars in cash on the balance sheets, which sits idly or is used to overpay for companies with strategic patents in bidding wars for tech dominance." I recently purchased Intel for the 3.30% dividend which is higher than I can get from a CD.

Living Frugally

Sun (#20) presents New Overdraft Law: Is It Good? posted at The Sun’s Financial Diary. Another good reason not to spend more that one has.

FIRE Getters presents 12 Tips To Lower Your Heating Bill posted at FIRE Finance, saying, "The cost of energy is rising everyday. Whether it be electricity, gas, water or sewage, our utility bills are becoming higher with each passing month. Consequently most of us are looking for ways to trim our energy expenses and boost our savings. As winter sets in, the cost of heating our houses will be a major concern ..." Here's another tip. Recently, we just signed on with an alternate electric energy supplier which could save us up to 35% off our current total electric generation cost.

Mick presents Cheapest Method to Move, posted at PadBlog, comparing the cost of different ways to move one's household.

Wenchypoo (#88) presents The 50% Solution posted at Wisdom From Wenchypoo's Mental Wastebasket, saying, "How to hang onto your money--either while you're making it, or after you've made it."

One Family presents Goodbye Alameda, Hello Kochi! posted at One Family's Blog. The author has moved to a lower cost of living area to start his freelance career.

Retiring

Hussein Sumar presents How to Better Understand Roth IRA Conversions posted at Roth IRA, saying, "Roth IRAs and their sister retirement plans Roth 403b and Roth 401k offer outstanding retirement investing choices for American workers & savers. While most people have heard of these plans, they do not exactly know how to take advantage of them, or yet better understand them. This becomes even more difficult when an employee transitions from one job to another company while leaving behind his retirement plan with the old company, not knowing of the choices available." Overall, the first 6 points were a good summary on converting to Roth IRAs with perhaps one exception. For #7, my understanding is different in that I am allowed to convert specific assets, including ones with losses, from an IRA to a Roth IRA. Just another example of how complex IRS rules can lead to different interpretations :-)

Mike Piper (#6) presents The Best Places to Retire posted at The Oblivious Investor, saying, "For those considering retiring abroad, what countries should be at the top of the list for consideration?"

Saving

Brian Cull presents How-to graphical budgeting posted at Living at the Top of the Bell-Shaped Curve, saying, "Simple, easy-to-use how-to budget using graphs"

Khaleef @ KNS Financial presents How to Create a Budget – Evaluate Expenses posted at Faithful With A Few, saying, "Establishing goals and setting up a budget is not the end. You must now evaluate your spending to be sure that your money is working toward your goals!"

Taxes

Super Saver (#19) presents Roth IRA: To Convert or Not to Convert posted at My Wealth Builder, saying, "Significant tax benefits were the reasons we decided to convert."

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

Technorati tags: the wealth builder carnival, blog carnival.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Asked For and Got a Raise

I decided to ask for a raise for one of my part-time jobs. It was a very easy decision. I was compensated at a lower rate since I am not a state certified teacher. After teaching for one year, I felt I had demonstrated skills and successes comparable to the certified teachers in the organization. Also, a raise would confirm my belief that I was doing an excellent job.

Although I had planned to make the request in person, I ended up doing it over e-mail since I don't see the owner regularly. It was a short three sentence request. I asked what was needed to be compensated as a certified teacher. I summarized my direct contributions for the past year. I shared how I helped grow the business.

The next day, the owner responded with a 20% increase in my hourly rate to match that of certified teachers. For reference, the absolute pay increase will be small since I only taught 40 hours last year. However, it was still exciting to ask for and get a raise, especially given the current economic situation.

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 © 2010 Achievement Catalyst, LLC

Qualifying for Money Giveaways from the Government

Since retiring in October 2007, our taxable income is much lower. We now qualify for a number of tax credits that we weren't eligible for in the past. In 2010, our plan is to take advantage of as many possible tax credits as we can. If the government is going to give money away, I want to be in line :-) Here are tax credits for which we expect to qualify:

Child tax credit. This is a $1000 refundable tax credit for each qualifying child that is under 17. We have one daughter and she meets the criteria. For reference, $500 of this tax credit is part of the Bush tax cuts. If the tax cuts are allowed to expire, the child tax credit would revert back to $500.

We've always considered ourselves fortunate to have our daughter. We're now better off because the government pays us for having her in our family.

Saver's credit. This is a credit for up to $1000 single and $2000 married filing joint on the first $2000 each person contributed to a retirement savings account. Even when we weren't eligible for the credit, we put the maximum contributions in our retirement accounts.

In 2010, the government will pay us for saving.

Making work pay credit. The government will refund up $400 single and $800 married filing joint of the Social Security taxes (FICA) that have been paid. This credit is part of American Recovery and Reinvestment Act (ARRA) stimulus bill and covers the 2009 and 2010 tax years.

This credit is similar to getting a 7% raise on the first $6000 to $12000 of earned income. We qualified for part of this credit in 2009 and will receive the full credit in 2010.

The maximum payment we can receive from these three credits is $2600. We plan to take advantage of as much as possible by keeping our adjusted gross income under the thresholds needed to qualify. In the future, we will evaluate the benefits of qualifying for energy or educational tax credits which we will not use in 2010.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Early Retirement can be Expensive

Early retirement is sometimes considered the holy grail of personal finance. However, early retirement also has its disadvantages in the form of opportunity costs. In terms of the financials, retiring early is usually not a good choice unless one is within a few years of the normal retirement age. Here are some of the opportunity costs I've experienced:

Wages. A year's compensation is lost for every year prior to 65. For many people, the early retirement time will be among the highest paying salary years. At the median household income of $52,000, retiring at 55 would mean forgoing over half a million dollars in income.

Retirement income or savings. My retirement savings has been reduced at least the contribution amount to the defined contribution plan. In my case, the company's contribution was approximately 25% of salary. Those with pension plans will receive reduced monthly payments. In addition, Social Security retiree payments will be reduced.

Job training. In the three years since retirement, I'm sure my experience and skills need to be updated. At five years, I would expect to be significantly out of date. The cost of maintain skills on my own can be costly.

Based on the financials, I should not have taken early retirement. The opportunity cost of retirement in my forties was extremely high. Fortunately, retiring early is more than a pure financial decision. In our case, lifestyle also was a major factor. So while the loss in compensation was high, the lifestyle changes made early retirement worth the cost for us.

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 © 2010 Achievement Catalyst, LLC

College 529 Account Returns are Flat for 2010

Although we typically make our college saving account contributions in January, I decided to wait in 2010 in case the market dipped again. In preparation for the 2010 contributions, I reviewed the current status of our college 529 savings accounts. We originally opened the accounts in December 2005 and have made the maximum state tax deductible contribution for each year. Through 2008, we invested the contributions evenly in the Aggressive Growth, 500 Index, Extended Market, and International funds with Vanguard. In 2009, we changed our contribution mix and added to the Aggressive Growth, Extended Market and Morgan Growth (new for 2009) funds.

The table below shows the total return for the contributions that have been made to date. The first column shows how the bear market of 2008 significantly reduced our college savings accounts. Not only were all the gains from 2006 and 2007 eliminated, the losses also reduced the principal from the contributions. However, the recovery since March 9, 2009 has enabled the accounts to break even. Most of the improvement in the 529 accounts had occurred by 10/14/09. For 2010, the return has essentially been flat. Here are the results as of 9/14/10:

	Returns
Fund	Total Return 11/5/08	Total Return 10/14/09	Total Return 1/6/10	Total Return 9/14/10
Vanguard Aggressive Growth Index Portfolio	-25.08%	-0.51%	3.39%	3.13%
Vanguard 500 Index	-27.74%	-15.15%	-11.24%	-11.32%
Vanguard Extended Market Index	-29.89%	-1.63%	5.98%	10.17%
Vanguard Developed Markets International Stock Index	-31.25%	-11.09%	-9.91%	-12.72%
Vanguard Morgan Growth	-	27.22%	34.50%	34.06%
Total	- 28.74	-3.61%	0.04%	0.06%

This analysis had shown me the high volatility of equity investments in our 529 plans. Since our daughter is 13 years away from attending college, we will continue to invest the funds in the stock market. When it gets closer to needing the funds, we will definitely want to avoid this level of fluctuation. Thus, we plan to move a significant portion to interest bearing accounts within 2-4 years of needing the money for college.

In addition, this analysis shows the benefit of continuing to make contributions as the market declines, i.e. dollar cost averaging downward. The 2009 contributions, made in January 2009, were distributed among the Aggressive Growth Index, Extended Market Index and Morgan Growth Index funds. Those funds are now above the amount principal contributed. The other two funds, which did not receive any contributions in 2009, are still below the original principal, being down 11.32% and 12.72%

Our plan is to make the maximum state tax deductible contribution for 2010.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Timeless Articles from the Archives #5

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I am starting a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2006, I wrote How Much to Save - THE NUMBER . In this post, I concluded 16 to 18 times salary. Fortunately, I retired after saving 23 times my salary which provided a buffer when the stock market crashed. I also wrote about Getting Motivated to Save. My best reason is "Always having money for what I need."

For the week in 2007, I wrote Business Week - Retiring Early Strategies: The Thirties. In this post, I evaluated the strategies shared and added perspective based on my experience.

To me, the content of these posts are still relevant today and were worth reading again.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From September 7 to 13, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from September 7 to 13, 2010:

The Wealth Builder Carnival #5

Carnival of Wealth #2

Baby Boomers Blog Carnival #56

Carnival of Financial Planning #157

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

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

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

Copyright © 2010 Achievement Catalyst, LLC

The Wealth Builder Carnival #6

Welcome to sixth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 9/13/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments relative to the post topic.

And now onto the Carnival:

Earning

Silicon Valley Blogger (#3) presents How To Get Hired & Get The Job You Want By Volunteering posted at The Digerati Life. The author shares her approach to finding a paying job, an important element of building wealth. Another approach that I've seen work is taking an available paying position and transferring later to the desired job.

Super Saver (#13) presents Signs of Being Considered for a Promotion posted at My Wealth Builder, saying, "Getting promoted is a great way to increase earnings. " Based on my experience, there are usually indications a promotion is coming.

Investing

Mike Piper (#4) presents Do You Have an Investment Backup Plan? posted at The Oblivious Investor, saying, "What's your plan in case your investments don't perform as well as you'd hoped?" Due to the decline in our retirement savings, we are using a Plan B, reduce expenses, and a Plan C, part time work to reduce withdrawal rate. Plan D, if needed, is to return to full time work.

Darwin presents Dividends = 43% of Total Stock Market Returns [Graphic] posted at Darwin's Money, saying, "Dividends are a HUGE portion of overall market returns - you'll be shocked by the data, and see why you should own strong dividend stocks." In today's sideways markets, dividends may even be a higher proportion of a stock's total return.

Dividends4Life presents 7 Dividend Stocks Sending More Cash To Shareholders posted at Dividends Value, saying, "If your goal is to accumulate wealth for a comfortable retirement, then there is no risk-free path. Throughout time every angle has been tried and failed. What appears to be a safe investment in a federally insured CD or money market , may not even be covering inflation. Growth stocks don’t always grow. The astute conservative investor turns to solid dividend paying stocks with a track record of growing their dividends each year." Currently, companies with good dividends are our starting point for choosing stock investments. However, we base our investment decision on more than just the dividend.

Living Frugally

FMF (#19) presents The Ten Rules Great CFOs Live By posted at Free Money Finance, saying, "10 steps you can take to grow your wealth." These are ten great rules by which to live financially. Now, if we could only get the government to follow these rules. :-)

Andrea presents 6 Tips to Find Out How Smart are you about Money? posted at Savings Scoop. Here's a convert from spending to building wealth. I wish Andrea luck in her journey.

Retiring

Rob presents Best IRA Rates posted at Stock Tips, saying, "Learning how to get the best IRA rates available can help protect and grow your retirement investments. Learn how here." With CD rates being so low, there is greater interest in high return investments for retirement accounts. The author recommends using a self-directed IRA to invest in real estate. To me, using an IRA to invest in a single property is too risky for our retirement savings. For some real estate exposure in my IRA, I would choose to use a REIT instead.

MoneyNing presents Will You Ever Be Able To Retire? posted at Money Ning, saying, "The economy may not be doing so well but don't fret, you can do it. You can retire!" The author recommends to invest early, allocate according to risk tolerance and reallocate nearer to retirement.

Saving

Khaleef @ KNS Financial presents Do You Really Need An Emergency Fund? posted at Faithful With A Few, saying, "Setting up an emergency fund has become standard personal financial advice, but does that make it wise? Would we be better off investing the money, and using the increased earnings to help in an emergency?"

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

Technorati tags: the wealth builder carnival, blog carnival.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Still Working on 2008 New Year's Resolutions

At the end of 2009, I realized I had not met my 2008 New Year's resolutions. Instead of making new resolutions for 2010, I decided to continue working on the 2008 resolutions and track my progress. Here's my latest report card on how I'm doing on the 2008 resolutions.

	2008 New Year's Resolutions and Status
Category	Category Activities	Status	Grade
Healthier Lifestyle	Lose 10% of weight	Have achieved a 10% weight loss and am at the weight of my freshman year in college. If I lose an additional 5%, I will be at my sophomore year high school weight.	A
	Better diet	Achieved a target of 5 servings of vegetables/fruit per day in July, 2009, but have regressed back to 2-3 per day.	C-
	More exercise	In July, 2009, I had exceeded my target of 3 times per week by regularly exercising 6 times per week. Have fallen back to 2 time per week.	B
Tax Strategies	Identify five strategies to minimize taxes	Used Roth IRA contribution, Child tax credit, Roth IRA conversion , and 0% long term capital gains in 2008. Continued to benefit from these four tax strategies in 2009, and added a fifth of using accelerated itemized deductions and standard deductions in alternating tax years. In 2010, we will benefit from two additional tax strategies involving the saver's and making work pay credits.	A
Contingency income	Earn 20-40% of retirement income needs in first 3 years	Achieved 27% in 2008 due to deferred compensation. In 2009, 16% was achieved because our monthly expenses declined when we paid off our mortgage. To date, we have earned 34% of our projected 2010 expenses.	A
Have Fun	Family activities and vacations	Have attended 100% of our daughter's pre-school activities for parents. We do an annual vacation with in-laws, and an annual family camping trip. We increased the number day trips this summer. We are planning a trip to either Yellowstone or the Grand Canyon	A-
	Hobbies	Playing tennis, and some golf.	A-

This report card is a significant improvement over the January 2010 report card which had a B average. My main opportunity areas are eating fruits and vegetables and exercise. I won't consider my 2008 resolutions successful, until I give myself an A in every category :-)

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

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

Copyright © 2010 Achievement Catalyst, LLC

Finding a Sweet Spot for Part-Time Jobs

In 2010, I worked at seven part time jobs, six of which are seasonal. Based on this experience, I am discovering my sweet spot for characteristics of retirement part-time jobs. Here are some elements of the sweet spot:

Low time commitment. For me, fewer than 10 hours per week and fewer than 4 hours per day is the best match. More hours would meaningfully reduce personal time. Three of the part time jobs meet this criteria and four don't.

High personal development. Jobs that enable personal growth and learning are a great match. Four of the jobs meet this criteria and three don't.

Good perks. Jobs that have non compensation benefits such as free or signficantly discounted products and services are desirable. Four of the jobs meet this criteria and three don't.

Good wage. Initially, it didn't matter that some of my jobs were paying slightly above minimum wage. However, in the future, jobs that pay at least two times minimum wage will be a good match. Three of jobs meet this criteria and four don't.

My two teaching jobs meet all four criteria. My technical advisor job meets three of the four criteria, missing only in the perks category. My financial services job meets two criteria, missing in the hourly commitment and wage categories. Of the remaining three jobs, two meet non of the criteria and one satisfies one criterion.

For now, I plan to continue the two teaching and the technical advisor jobs. The time commitment is reasonable. One teaching job requires two hours a week, 12 times a year. The other teaching job varies from four to eight hours every two weeks. The technical advisor role averages about five hours a week. The teaching jobs pay two to three times minimum wage and the technical advisor job pays significantly above minimum wage . I am learning a lot from these jobs. Also, the teaching jobs have free or significantly discounted service for children of employees.

I also plan to keep the seasonal financial services job one to two more years. The access to virtually free, unlimited educational training makes this job worth it. However, if I can't reduce the hours or increase the pay, I probably will drop this job in two years.

Finally, I plan to drop the other three jobs that meet one or zero criteria. Also, in the future, I will only apply to part time jobs that satisfy at least two, preferably three, of the criteria.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Why to Not Work in Retirement

Last week, I wrote Why Work in Retirement. This week I offer some reasons on why to not work in retirement.

Earnings not needed. In retirement, living expenses are covered by income from pensions, savings or Social Security. Income from work isn't required. Why do something that is not needed?

More personal time. Work interferes with personal time. Work requires commitment to deadlines, schedules and work shifts. Days off need to be requested. Time flexibility is reduced. Working hours become the priority in the retiree's schedule.

Less stress. Work can create unwanted stress. Poor supervisors, demanding schedules, incompatible colleagues, and poor working conditions can create higher stress. These types of stress can be avoided by not work.

For me, the most compelling reason not to work during retirement is the increase in personal time which I can invest in personal development and more family activities.

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 © 2010 Achievement Catalyst, LLC

Timeless Articles from the Archives #4

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I am starting a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2006, I wrote How Much is Needed to Be Wealthy - THE NUMBER . In this post, I determined that 20 times my salary was the number.

For the week in 2007, I wrote about Business Week - Retiring Early Strategies: The Twenties. In this post, I evaluated the strategies shared and added perspective based on my experience.

For the week in 2009, in Successfully Reduced Property Taxes , I wrote how I took advantage of the real estate crash to reduce our property taxes by over 16%. Given the slow recovery of the housing market, there is still time to use the lower housing values to reduce property taxes.

To me, the content of these posts are still relevant today and were worth reading again.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Links To Carnivals From August 31 to September 6, 2010

Here are the links to the Carnivals in which My Wealth Builder participated from August 31 to September 6, 2010:

The Wealth Builder Carnival #4

Baby Boomers Blog Carnival #55

Carnival of Financial Planning #156

Tax Carnival #74

Real Estate Investing Carnival

Carnival of Money Stories

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

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

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

Copyright © 2010 Achievement Catalyst, LLC

The Wealth Builder Carnival #5

Welcome to fifth edition of The Wealth Builder Carnival. The purpose of this carnival is to collect articles from the blogosphere on building, preserving and keeping enough wealth for a comfortable retirement. For reference, I have tried to keep the carnival content tightly focused on wealth building. As a result, this carnival did not include submissions that were off topic, e.g. those about debt, debt management, debt reduction, credit scores, credit monitoring, credit card evaluations, or account opening bonuses.

For this carnival, I have organized the posts into seven categories: Earning, Investing, Insuring and Protecting, Living Frugally, Retiring, Saving and Taxes. I have acknowledged bloggers who are in Technorati's Top 100 Finance blogs by showing their 9/7/2010 rank in parentheses. Finally, for some submissions, I have added my perspective and comments relative to the post topic.

And now onto the Carnival:

Earning

Kai S. presents Make Residual Income, posted at Internet Business Tactics, saying, "Earning residual income should be one of your main focuses if you ever wish to retire any time soon." However, this approach also has disadvantages which the author points out in the article.

Super Saver (#13) presents Our Journey to Financial Freedom #3 -Making The Most Of My Job, posted at My Wealth Builder, saying, "Exceptional work was needed to be compensated above average." For us, my job was our main source of income. Focusing on significantly increasing my salary turned out to be a good wealth building strategy for us.

Investing

Mike Piper (#5) presents Hedge Fund Expenses: They’re Not Cheap, posted at The Oblivious Investor, saying, "Even relatively low-cost hedge funds have expenses several times those of a good index fund." High fees are a good reason to avoid using hedge funds. The poor returns in 2010 are another reason.

FMF (#17) presents Understanding Investment Risks, posted at Free Money Finance, saying, "One key to successful investing is understanding the various risks you take when you make a particular investment." A great summary on the risks involved with investing.

Dividends4Life presents 9 Stocks Raising The Dividend Growth Bar posted at Dividends Value, saying, "Have you ever noticed those that most vehemently attack a buy-and-hold strategy really don’t understand how the strategy works? They confuse a buy-and-hold strategy with day-trading with a longer duration. A true implementation of buy-and-hold includes a focus on blue-chip stocks with a sustainable advantage, along with a reasonable asset allocation framework."

Frank Knight presents Asset Allocation Strategy posted at Best Personal Financial Planning Software, saying, "When you are already there and invested in an asset class, you are following a passive asset allocation strategy. Tactical asset allocation strategy advocates suggest that you can anticipate the crowd, but flow-of-funds studies show that almost all tactical asset allocation fund flows are late money flows that chase performance after valuations have already moved."

Arjun Rudra presents Investing In The Markets With The Threat Of A Double Dip Recession posted at Investing Thesis, saying, "Is the economy going to fall back into a recession or not? Not, at least not in the near term says Lee W. Appleton, portfolio manager at Matco Financial. Lee points to the steepness of the U.S. yield curve as having been a historically accurate precursor of recessions, with nine yield curve inversions followed by nine recessions. With the current yield curve being as steep as it’s been in 45 years, if one were to make an inference it would be that a recession is not on the horizon." This argument was made at different financial presentation I attended. To me, the data was very compelling that the economy will continue to recover.

freefrombroke (#1) presents Why Invest In Mutual Funds, posted at Free From Broke, saying, "Mutual funds are a great way to invest in a great number of stocks at once and can be an integral piece of a portfolio." Mutual funds are a great way to broad exposure to the stock market. No fee ETFs are another option I like. The main drawback for no-fee ETFs is there are fewer choices and having an account at a particular brokerage is usually required.

Ken presents How Money Works: The Magic of Compound Interest, posted at Spruce Up Your Finances, saying, "Understand how your money can grow faster because of the magic of compound interest." To me, compound interest is one good reason to save early and often.

MoneyNing presents Second Recession: Don’t Let Fear Take Over, posted at Money Ning, saying, "Whatever the circumstances, allowing fear to creep in will only make the situation worst." In my opinion, fear is causing many investors to buy treasuries, meaning this may be a good time to invest in stocks.

Insuring and Protecting

Miranda Marquit presents 5 insurance policies you shouldn't be caught without at Insure.com saying, "Insurance is a necessary expense if you want to protect your assets in the event of an unexpected catastrophe. "

Living Frugally

Silicon Valley Blogger (#11) presents No Fee Money Market Funds, Savings and Cash Accounts, posted at The Digerati Life, saying "Here is a list of no fee cash accounts and best high yield savings accounts."

PT presents Free Online Checking Accounts, posted at Prime Time Money, saying, "Don't pay for fees that aren't necessary. Find a free checking account!"

Free is good:-) Many of the banks in my area also offer no fee accounts which is the option I like to use. I still prefer a local bricks and mortar bank over an online one.

Taxes

David de Souza presents Landlords: 3 Ways To Reduce Your Tax Bill posted at UK Tax Blog, saying, "If you are a landlord, you may be paying too much tax on your rental income. Our guide explains how to pay less property tax." For us, reducing taxes and keeping more of our money is always a good strategy.

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

Technorati tags: the wealth builder carnival, blog carnival.

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

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

Copyright © 2010 Achievement Catalyst, LLC

My Rewards from Teaching

Two of my part time jobs involve teaching. For one, I teach an after school science program to K-2 students. For the other, I tutor high schools students for the SAT/ACT college entrance tests. Although coaching was not one of my strengths as a manager, I have enjoyed being a teacher. Here are some reasons:

Personal Learning - Although I am knowledgeable about the topics I teach, I find there are elements that are new to me. Some of the elements I've forgotten, or may have never learned. Others elements are new since I've finished my formal education. What ever the reason, the new found knowledge is helping me improve my skills, both in teaching and in other areas.

When I was coaching others at work, I didn't feel that I learned anything new that would directly help me.

Making a Difference - I'm helping students. For K-2, I have a lot of students interested in becoming a scientist. I help make learning science fun and keep them interested. For the high school students, I enjoy helping them understand concepts which have been difficult for them to learn in class. In addition, I find great satisfaction is identifying opportunities that help them improve their test scores.

At work, I found many employees were unwilling to use and benefit from the coaching tips that I provided.

While I have no interest in becoming a certified teacher, I plan to continue doing these teaching jobs for personal development and personal satisfaction reasons. In addition, I've volunteered to teach a personal finance seminar at my church this fall.

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

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

Copyright © 2010 Achievement Catalyst, LLC

How Managers Differentiate Employee Performance

During my career, I had the responsibility of rating and ranking employee performance for 30 to 50 person organizations. In my role, I felt it was important to clearly explain how managers recognized various levels of performance even when the outcome appeared to be similar. Over time, I developed the following analogy to help employees visualize the differences.

First, I put the employee in the position of a homeowner hiring someone to care for their lawn. Then, I then provided three example employees and asked them which they would like to hire. Here were the examples:

Employee #1. This employee works hard on maintaining the lawn. However, he requires a high level of supervision by the homeowner. The homeowner gives specific direction every time the employee works on the lawn. Occasionally, this employee works on other landscaping projects without the authorization of the homeowner. At the end of the season, the lawn is in very good condition.

Employee #2. This employee also works hard on maintaining the lawn. Periodically, the employee needs direction from the homeowner, but most of the time he works independently. He focuses primarily on the lawn. He gets the homeowner's permission before working on other landscape elements. At the end of the season, the lawn is in very good condition.

Employee #3. This employee reviews with the homeowner what needs to be done to lawn. The plan includes good ideas that hadn't been considered by the homeowner. The homeowner approves of the plan with a some changes. The employees modifies his plan and the works hard on the agreed plan. He requires little supervision from the homeowner. After starting work on the lawn, the employee proposes a plan for improving the rest of the landscaping, which the homeowner approves. At the end of the season, the lawn is in very good condition and the other landscaped areas are improving.

In all three examples, the lawn care was done well. However, the level of supervisor involvement needed and the approval process for additional work were also factors in determining performance level. While these examples were not perfect, everyone with whom I had the discussion understood that the performance levels of these three employees were different even though each delivered the same good result.

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

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

Copyright © 2010 Achievement Catalyst, LLC

Why Work in Retirement

Since retiring in October 2007, I've worked at seven different part time jobs. Four of the jobs were seasonal. Three jobs were year round, but intermittent. While working in retirement may sound like a contradiction of terms, I have found it beneficial to do so. Here are some of the reasons that I will continue to do part time work while in retirement.

To learn. All my part time jobs are in fields outside of the career from which I retired. In most of my part time jobs, I'm learning a lot and getting paid while doing it. For two of the part time jobs, the learning curve plateaued quickly. I will not be reapplying for these seasonal positions again in the future.

For perks. Most of my part time jobs offer free or discounted use of company services or products. Over the course of a year, the savings can add up to a few hundred dollars.

To earn. Of course, earning a little extra money is nice, especially since our investments are not growing as fast anymore. To note, most of my part time jobs pay slightly above minimum wage with a few paying significantly higher.

For social diversity. Across my part time jobs, I work with a wide range of people across different ages, socioeconomic classes, and levels of education. I regularly interact with 5 to 80 year olds, poor and wealthy, and kindergartners to PhD's.

To broaden my network. Having contacts can be helpful. When I requested donations for a silent auction, almost every business for which I worked contributed. If I need to return to full time work, I'm sure I can leverage my contacts at these businesses.

Overall, I've found enough benefits to continue working at four of the part time jobs. For me, the most important benefits are learning and getting perks, in that order. As the level of learning declines, I will consider dropping that part time job. Finally, I will plan my workload better to avoid being over committed as I was in June 2010.

Next Friday: Reasons not to work in retirement.

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 © 2010 Achievement Catalyst, LLC

Remembering Dad's Generosity

Even though we were far from wealthy, Dad always seemed to have enough money for activities and education for the kids.

While browsing in a sporting goods store for our daughter's soccer equipment, I had a flashback to when my Dad was outfitting me to play little league football. Based on today's equipment, I estimate it costs between $200 to $300 for the basic equipment (pants/pads, shoulder pads, helmet, and shoes). That's before the extras such as gloves, arm pads, and undergarments. My dad never seemed to worry about cost when choosing equipment. I still recall him evaluating shoulder pads and helmets for sturdiness instead of price. He always wanted to get the best protection for me. So while it cost much less forty years ago, it was still a financial sacrifice for my parents purchase sports equipment and enroll me in sports teams.

Thinking back, I don't remember not being able to do an activity or sport because of insufficient funds.

Dad had the same attitude when it came to college. He wanted me to attend the best school that accepted me. He didn't ask me to apply to the state college as a lower cost option. When I was offered admission to Harvard, Princeton, Duke, Johns Hopkins and Northwestern, there was no concern about costs. Dad planned to finance attending the college that I chose, which helped me minimize the amount of student loans needed.

Dad has been gone for almost four years, but I haven't forgotten the value of his generosity. Even during this recession, we've maintained the spending level for our daughter's activities. We also have continued making contributions to college savings accounts which will hopefully cover all the expenses of higher education when needed.

Hopefully, our daughter will have the same appreciation for us when she reaches adulthood.

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 © 2010 Achievement Catalyst, LLC

Choosing Data Analysis over Emotion

Recently, I attended a presentation in which the speaker showed about two dozen different graphs and charts that indicated the economy was coming out of recession. Being an engineer, I appreciated the level of rigor that was evident in each analysis. He analysis included treasury spreads, housing starts, housing inventory, non-farm payrolls and many other common used indicators. From an objective point of view, the evidence was compelling that investing in stocks was good idea.

However, having experienced significant investment losses in 2008, many of the attendees were skeptical of the conclusion. On participant asked, " Could it be different this time?" The speaker answered that yes, there was no guarantee they would be right and they could be wrong. However, that would be going against years of data that showed otherwise.

So what's an investor to do? Data or gut?

Generally I like discipline of relying on the data which shows a high probability of a continued economic recovery. That can be difficult when the conclusion is contrary to my gut. However, this time the data agrees with personal perception of how businesses and the economy is doing.

Over the next few months, I plan to significantly increase our investments in the stock market in anticipation of a continued recovery. However, we won't make the entire addition at once, just in case there are still some market declines on the way to recovery :-)


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

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

Copyright © 2010 Achievement Catalyst, LLC

Timeless Articles from the Archives #3

It's been over four years since I started My Wealth Builder. As I think about topics to write , I often remember, "I've written about that before," and decide to find a new topic. However, since many principles of personal finance are timeless, I want to include them in a recent post on My Wealth Builder. Therefore, I am starting a series called "Timeless Articles from the Archives" that will highlight posts from the same week in 2006-2009.

For the week in 2006, I wrote Building Wealth on Only $1 per Day. This post shared how compound interest can make even small amounts become large over time. In Cash or Credit, I wrote about why we choose to pay cash even for large purchases.

For the week in 2007, I wrote about Net Unrealized Appreciation - A Great Tax Benefit for Retirees. Net Unrealized Appreciate (NUA) is a way to significantly reduce the tax owed from a employer retirement account. In Renting versus Owning, I explain why we choose to rent low use items such as vacation homes or recreation vehicles.

For the week in 2008, I wrote about Non-Financial Events that Could Negatively Affect my Retirement. Death covered most of the events and living past 100 covered the last one.

For the week in 2009, How Much to Pay for a Business, I revisited how to value a small business. I concluded I would be better off financially to work for someone than to make the same amount after buying a business.

To me, the content of these posts are still relevant today and were worth reading again.

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

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

Copyright © 2010 Achievement Catalyst, LLC