Wednesday, June 29, 2011

Timeless Articles from the Archives #46

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" which highlights posts from the same week in 2007-2010.


2007

Preparation for The Retirement Saving Challenge - Timeless Personal Finance Recommendations - Here are my timeless personal finance principles.

Retirement Saving Challenge - Finding Money To Save - Here's how we found the money we needed to save.

Lessons From My Mom - Save For Big Ticket Items - My mom's savings enable my parents to pay cash for their cars and make down payments on their home.


2008

Figure Out The "One Thing"   -  Ours was living  below our means.

2009

Easy DIY Car Repair - $250 Savings   - Sometimes it is worth doing it myself :-)

Rethinking Retirement - Perhaps retirements should be short sabbaticals..

Why Chrysler and GM are Doomed to Fail  - I still believe they will fail.   Maybe I should short their stocks :-)

2010

None

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

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

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

Copyright © 2011 Achievement Catalyst, LLC

Tuesday, June 28, 2011

Maximizing a Gas Discount

Our grocery store offers a $0.10/gallon savings on gas for every $100 spent in a month.  The savings expire every month, i.e. they are not cumulative.   For reference, we don't make any special effort to shop at the grocery store.  We just accumulate savings with our normal grocery shopping.
 
Not long ago, we accumulated an $0.80/gallon savings due to a bonus for using the store's clinic.  This was a significant savings that I wanted to maximize. Typically, I use the savings for filling up my truck when it is near empty since it has a 22 gallon tank.   However, for an $0.80/gallon savings I got creative.  I decided to try filling up my truck and my spouse's car at the same time.
 
So my spouse and I met at the gas station and parked our vehicles such that hose from the gas pump could reach both cars. After filling up my truck, I transferred the hose to my spouse's car.   We were able to fill up both cars for $3.00/gallon.   That was a savings of over $24 since both cars needed over 33 gallons.
 
We definitely don't plan on doing this on a regular basis.  It's not worth the effort for the typical $0.10 to $0.20 savings we get.  However, it was definitely worth it for the one time we had $0.80 reduction in the price of a gallon of gas :-)
 
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 © 2011 Achievement Catalyst, LLC

Monday, June 27, 2011

The Way to Prosperity

In President Obama's weekly radio address, he said the U.S. can't simply "cut our way to prosperity."  I must admit that I fully agree with President Obama on this point.   In my 27 years of business experience, I have never found cutting costs the solution to turning around a declining business.
 
However, President Obama should also include the other ways I've learned that won't turn around a declining business:


  • You can't price your way to prosperity.   Raising prices to improve business results doesn't work.  If the business is declining, raises prices will only accelerate the decline since fewer products will be sold.   The equivalent for government is raising taxes in a declining economy.   So, the U.S. can't simply tax our way to prosperity either.

  • You can't spend you way to prosperity.  In the short term, spending money can help.  More advertising and more coupons will increase sales.  However, this type of spending is unsustainable.  Once it stops, the inevitable business decline continues.  So, the U.S. can't simply "invest" our way to prosperity either.

  • The solution I've found to work the most often is to change the product so that more customers want to pay for the product.   For the U.S. that would mean businesses generate more profits, which then results in more taxes being paid.   So, the U.S. needs to enable all private enterprises to grow and increase profits. 


    Unfortunately, I don't think the government will listen to me :-)    So, I think we can expect more tax and government spending coming as solutions.  
     
    For more on Strategies and Plans, check back every Monday for a new segment.
    This is not financial or policy advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Sunday, June 26, 2011

    Trying to Profit from Economic Disaster

    A couple weeks ago, I was getting depressed about the high probability of another economic disaster.  Given government spending/stimulus is unsustainable, the likelihood of a Greek default, the looming debt ceiling issue and the lack of business growth, I expect another financial crisis and significant stock market decline.  To me, it feels a lot like 2008, although many pundits claim it won't be.

    To me, even if actions are taken against the issues I've identified, I don't see any benefit to the economy in the short term.  In fact, I think the market has already priced in most of the possible solutions, making a market drop likely once the event happens.

    Here's our situation.  I've already sold out of the majority (95%)  of our stock holdings, except for stock in my company's retirement account.    However, I still have a significant amount of equity in employee stock options, which I am hesitant to sell at this time because there is still one to six years before expiration. The value is equal to about 25% of our retirement and savings accounts. This decision may prove to a major error if the market declines significantly and doesn't recover by 2014.   Hence, the reason for my worry and depression.

    However, this time, unlike in 2008, I will attempt to profit from an economic disaster.   (I know, it sounds like I'm advertising for a doom and gloom book :-)    I've started to short stocks, in particular those that I feel will be the weakest in a declining economy.  In addition, I will make a list of stock I plan to buy if the market should drop 20-30%. 
     
    For more on New Beginnings, check back every Sunday for a new segment.

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


    Copyright © 2011 Achievement Catalyst, LLC

    Saturday, June 25, 2011

    Unsustainable Intervention

    Here's one key lesson I got  from the Great Recession.  If the government is going to intervene, then it should do it in a manner that is sustainable.   Said differently, the results from the intervention should correct the problem, requiring no intervention in the future.

    Here are some of the excellent examples of unsustainable intervention since the start of the recession:
  • Cash from Clunkers. Let's have a $4500 subsidy for everything (subscription may be required) in The Wall Street Journal asks the question that should have been answered.   If it's such a good idea, why not have a $4500 subsidy for everything?   The answer is simply, "it's unsustainable"  Two years later, the economy is still poor, unemployment is still high and used car prices (since there fewer used cars for sale) are at record highs.


  • Are Home Buyer Tax Credits a Mistake (subscription may be required) in The Wall Street Journal points out the housing sales fell sharply after the expiration of the credit.  Now ten months after this article was published, there is serious concern the economy will experience a housing double dip. 

  • These are two examples, and there are others.  The $800 billion stimulus package that went primarily to state and local governments for "shovel ready projects."   The mortgage modification programs.  In addition, I think the TARP bailout of banks, while it appears to be sustainable because of the Fed keeping interest rates low (unsustainable), should have be implemented much differently to enable a more robust economic recovery.

    Finally, for those that think taxing the rich is a sustainable intervention, consider Teeing up the middle class (subscription may be required) in The Wall Street Journal which reports that it is impossible for only the rich to pay the taxes needed to solve the deficit issues.

    As the CEO of my company once said, "If what we're doing won't change the decline of our business, then DO SOMETHING THAT WILL."    Great advice which our government should heed.

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Thursday, June 23, 2011

    Great Youthful Progress

    Our six year old daughter made great progress this school year.   At the beginning of the school year, she could only read a few words, write only her name  and count.  After a year of kindergarten, she can read, write and do simple math.  In addition, she scored her first goal in soccer and she just starting riding a bike without training wheels.  It's been a terrific year for our daughter.
     
    Now that I'm older, it seems to take several years before an noticeable advancement occurs. (For example, it's taken me almost four years to lose 10% of my weight versus a year in my youth.)    In the worst case, there may be no change or even a decline after years of effort. 
     
    I sure miss those times when there was clear advancement every year in school, skills, finances or other area. 
     
    For more on Crossing Generations, check back every Thursday  for a new segment.
    This is not financial advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, June 22, 2011

    Timeless Articles from the Archives #45

    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" which highlights posts from the same week in 2007-2010.


    2007

    None
     

    2008

    Driving Less? Check On Lower Insurance Premiums     -  I lowered my premium by 18.6% after retiring and elminating commuting miles.

    Relocating To Reduce Retirement Costs    -   Some states have lower taxes and lower costs of living.  For now, we're not planning to move for these reasons.


    2009

    Living within our Means - Paying with Cash  - An easy strategy to to get to living within our means.

    How Much is Needed to Retire? - Our number was 20 times my salary.  Fortunately, that gave us a margin of safety with the great recession occurred.

    Perilous Times have Returned  - The silver lining is that I expect a great economic times to follow :-)


    2010

    A Promise Kept    -  My parents were able to raise us to adulthood.

    Daddy Improvement Areas      -  I'm happy to report improvement in all three areas.

    What I Did When Working for Not-So-Great Bosses - Here were my three strategies.


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

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, June 21, 2011

    The Wealth Builder Carnival #42

    Welcome to the forty-second 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 and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized them into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

    And now onto the Carnival:


    Earning


    BIFS presents Craigslist - Garage Sale Leftovers posted at Budgeting In the Fun Stuff, saying, "Craigslist is a great medium to earn some extra cash."

    misst presents Passive Income With a Pinball Machine posted at Prairie Eco-Thrifter, saying, "Do you realize that with a small initial investment, you could start your own passive income stream as soon as tomorrow?"


    Insuring and Protecting


    Mike Ross presents The $30,000 dog: How a biting pooch costs you posted at Insurance, saying, "The cost of dog bites is soaring in America. Insurance.com tells you why owners should be concerned."


    Investing


    Dividends4Life presents 8 Stocks Providing Positive Feedback With Higher Dividends posted at Dividend Growth Stocks, saying, "Dividend growth investing is not about exit points, momentum swings, relative strength, sector rotation; instead it is about studying fundamentals, selecting superior stocks and building a portfolio with a long-term horizon. When we buy a dividend stock, we hope to hold it forever."

    Boomer presents Mutual Funds vs. ETF’s posted at Boomer & Echo, saying, "Both mutual funds and exchange-traded funds (ETF’s) are investments in which shareholders pool their money with the intent of investing in diversified portfolios of securities."

    Maxim Kazawy presents Stocks that Pay High Dividends - June 2011 Edition posted at Best Dividend Stocks, saying, "Stocks that pay high dividends can be an effective way of building long term wealth by re-investing dividends to buy more shares of stock of the underlying companies. Investors should particularly invest in those stocks that are growing their dividends year over year"

    MoneyCone presents 15 Stocks To Survive Another Lost Decade posted at Money Cone, saying, "The period from January 1, 2000 to December 31, 2009, the country suffered one of the worst market downturns reeling from one crisis after another. During that period, both the NASDAQ and the Dow saw all-time highs and devastating lows. The S&P 500 returned negative 0.99%. Was it possible to stay invested during that period and still come out smiling? I decided to do a little experiment in stock picking."

    Teacher Man presents Investing Series ? Compound Interest Magic posted at My University Money, saying, "We go over how compound interest works, and how you should start earlier rather than later in order to retire early and live happily ever after."

    Dividends4Life presents 10 Dividend Growth Stocks With A Single Digit P/E posted at Dividend Growth Stocks, saying, "We all want to find the best value when we buy a stock. One of the oldest metrics used is the price earnings (P/E) ratio. It is calculated as the market value per share divided by earnings per share (EPS). A high P/E ratio infers that investors expect strong future earnings growth. Conversely, a low P/E suggests limited future growth."

    Dan presents Pandora IPO Is Coming – RUN!!!! posted at ETF Base, saying, "The Pandora IPO bombed completely this past week. Here's what we can learn from these tech IPOs - there will be more."


    Living Frugally


    presents Investments VS. Mortgage Payments posted at The 2nd Wind, saying, "Ideas about debt reduction and if you should pay off mortgage faster or invest."


    Retiring


    John Border presents Best Index Funds for IRA posted at Stock Market Basics, saying, "Investing for a good retirement life is a must and the best way to do that is to take your current income and use a part of it to invest. For those who do not want to be active investors in the stock market, index funds are the best way to invest and get returns similar to market returns."

    Odysseas presents Roth IRA posted at Wallet Blog, saying, "In this article I explain the difference between a Roth IRA and a Traditional IRA, so you can more easily make a decision on how to invest. Choosing how you're going to save for retirement can seem overwhelming, especially when you don't understand the many options available to you."

    Carlos Sera presents An Inflationary Tale posted at Financial Tales, saying, "This tale will be particularly important to those that are no longer working and must live off of their capital for the rest of their lives."


    Saving


    Kevin presents Three Reasons Why I Squirrel Away My Money posted at Invest It Wisely, saying, "Here are the three main reasons why I squirrel away my money"


    Taxes


    My Journey presents What is the Difference Between Marginal and Effective Tax Rate? posted at My Journey to Millions, saying, "I am often surprised how many people don’t understand how the United States Income Tax system actually works, but on the surface it is a really simple system. However, when someone says, 'I don’t want to make more money than $X because my tax rate will go up' you can be assured that they don’t really understand The United States Federal Income Tax System."

    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: , .

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

    This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Monday, June 20, 2011

    Doing What's Needed

    My simple strategy for success is to do what is needed.  Well, simple may be an over statement, because the strategy is not easy to execute.   There are often other tempting options such as doing what's be done before, doing what's easy, doing what's popular or, worst of all, doing nothing.  However, these other options may not be what's needed for success.

    With the goverment monetary stimulus ending soon, the Greek crisis likely ending poorly, and the negative impact of government policies on business growth, it doesn't seem like anyone has the courage to do what's needed.   I can't see how the stock market can do anything but decline.

    So, I'm going to do what's needed.  In my case, I believe it is time to be short in the stock market.  For reference, I am not a big fan of shorting stocks even though I have shorted in the past.   However, I'm sure shorting is what's needed now to do well in the stock market.

    I have taken initial short positions in Akamai, Ford and Citibank.   At this time, I am breaking even, after commissions, even though the overall market is slightly up.   This has given me more confidence to continue shorting.

    Disclosure:  I am short Akamai, Ford and Citibank at the time of publication.

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

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

    © 2011 Achievement Catalyst, LLC

    Friday, June 17, 2011

    No Uncertainty in the Short Term

    Uncertainty Is Not The Problem  (subscription may be required) by Clifford S. Asness in The Wall Street Journal writes "...our main problem is not the uncertainty surrounding new policies. It is the policies. "  His point is that the businesses' beliefs that the policies are bad is stifling the economy.   The uncertainty of how bad is not having an additional effect.

    The same is true for how I'm managing our retirement and savings accounts.  I've have sold the majority of our equity investments not because of uncertainty.   I'm out because it's pretty clear to me the stock market is getting worse and possible actions by the government will make it worse it worse in the short term.   The main uncertainty is how bad, which wouldn't change our actions.

    Of course, there is still significant uncertainty about the longer term future, i.e. whether the markets will be continue to be bad.  For now, I'm planning on an improved market in 2012, since the likelihood of reversing existing bad government policies increases as the 2012 elections nears.
    For more on  Reflections and Musings, check back every Friday for a new segment.

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

    Copyright © 2011 Achievement Catalyst, LLC

    Thursday, June 16, 2011

    Graduation 2011

    This month our nephew graduated from high school, our niece graduated from middle school, and our daughter "graduated" from kindergarten.  They were all excited to be moving to their next level of education.  
     
    I am excited for all of them.  Their entire lives are ahead of them and each graduation brings them a step closer to achieving their potential.
     
    Congratulations on your 2011 graduation!
     
    For more on Crossing Generations, check back every Thursday  for a new segment.

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

    Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, June 15, 2011

    Timeless Articles from the Archives #44

    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" which highlights posts from the same week in 2007-2010.


    2007

    My Reasons For Taking An Expat Assignment    -  Promotion (more pay), experience and the location.
     

    2008

    Being A Good Father     -  Here are my criteria for being a good father.
    Is $1 Million Needed To Retire?   -    It depends :-)

    2009

    More Free Summer Activities for Kids   - In this economy, free is good.

    Unexpected Medical Expenses - Another Good Reason for an Emergency Fund      -  Medical costs are generally a part of the reason for insolvency.

    Ready for Retirement? - Some Questions Worth Considering - Here are questions a colleague and I considered.

    How Taxes are Increasing for the Not-So-Rich  - Surprise! Taxes have increased.

    2010

    Is $1 Million enough for Retirement?  - Two years later, experts say "no."

    Taxing Thoughts - Another unfair way to tax the haves for the have nots :-)


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

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, June 14, 2011

    Challenging My Home Valuation Again

    In 2008 assessment, the county increased my property value by 3%.  I called the county office and complained.  I asked them cynically if anyone read a newspaper.  If they had, they might have noticed there was a real estate crash in progress.  I told them to send me the paper work to challenge the valuation .  I successfully reduced our property taxes by 16.4%.

    For the 2011 assessment, the county kept my property value the same.   I guess there still isn't anyone that reads a newspaper at the county office.  Otherwise, they might have noticed there is a double dip in housing prices.  Using comparable sales information from my neighborhood, I estimate our home market value has dropped another 10%.

    I'll definitely be challenging our property valuation again. 

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Monday, June 13, 2011

    Getting Ready to Short

    "Things are going to get a lot worse before they get worse." ~ Lily Tomlin
     
    I've come to the conclusion that the I need to start shorting stocks to protect our retirement and savings accounts.  In the past, I shorted some stocks while keeping my long positions. So our portfolio was still net long. This time, I plan to short stocks with 95% of our portfolio in cash.  So our portfolio may be net short this time.

    I plan to short stocks with the following characteristics:
    • Already in a downward trend.  Some stocks have been declining since the beginning of 2011. Unfortunately,  I know they exist since I previously owned two stocks that have declined since January :  Ford and Citibank.  I know there are others that have been declining for six months.  Other stocks have been declining since April.   Both types are worth considering for shorting. 

      I have learned not to short a stock that is still rise or near its peak, even if I believe it's overpriced.   Such a stock can keep rising for a while before it declines, resulting in significant losses for someone shorting the stock.
    • High short interest.  Generally, people who short stocks do extensive research.   High short interest means a large number of knowledgeable people believe the stock is going down and have invested as such.  The threshold level I use for high short interest is 5%.
    These stocks are already weak, and will get weaker in a downward market.  If the overall market continues to decline, stocks that meet these criteria will be my prime candidates for shorting.
     
    For more on Strategies and Plans, check back every Monday for a new segment.

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

    Copyright © 2011 Achievement Catalyst, LLC

    Sunday, June 12, 2011

    Expecting Fear and Panic to Prevail

    "Insanity is doing the same thing over and over again but expecting different results." ~ Rita Mae Brown

    I'm not normally one to completely exit the market.   I may go 50 to 60% into cash, but I always keep a significant amount invested in stocks.  This time, I'm bracing myself and our portfolios for a major decline in the stock market.  I've sold the majority of stocks in our IRA and taxable accounts and have less that 5% still invested.  I still have a major holding of stocks in my company's profit sharing plan, which I am not counting in the 5% and am keeping to hopefully do an  Net Unrealized Appreciation withdrawal six years from now. 
     
    Here are my reasons for my giving in to fear:


  • The stimulus is a failure.  After 2-1/2 years,  the results from stimulus are abysmal.  Yes, I've heard all the excuses:  it took 8 years for the Republicans to create the issues, the stimulus didn't go far enough, can't expect a turnaround in such a short time, etc.   It doesn't matter why the situation exists.   What matters is the current situation is bad and not trending better. 



  • Obama and Bernanke deny seeing the issues.  Both have publicly stated that the economy is still recovering and nothing different needs to be done.  The current decline is only a "bump" or "soft patch."  They expect to continue the existing economic policy.  In my opinion, no change means no hope for improvement.

  • I remember the pain of staying in the market during 2008 - 2009 even though the economic situation looked bad and experts were telling me there were not any catastrophic issues.  I suspect there will be many others that remember the same pain, especially if the stock market declines for the seventh straight week.

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Saturday, June 11, 2011

    I Don't Believe Ben Bernanke

    In 2007,  Fed Chairman Ben Bernanke predicted that the housing bubble and sub prime crisis would not cause a recession. We know now how very wrong he was.   My mistake was not to act on my belief that the issues were significant.

    Now, Mr. Bernanke wants me to believe that the anemic economic growth merely a bump versus a systemic failure of economic policy.  In his mind, the bad economy is to be blamed on other uncontrollable factors, e.g. the Japan Tsunami or Europe, instead of on the policies of  Federal Reserve and the Obama administration.  His only course of action is to wait and hope for things to get better.

    While Mr. Bernanke hasn't learned from his mistake of 2007, I've definitely learned from my mistake.  This time, I'm assuming Ben Bernanke is likely wrong.   So, I am preparing myself for another significant economic decline, despite Mr. Benanke telling me the economy is still fine.

    For more on  Reflections and Musings, check back every Saturday for a new segment.
    This is not financial or policy advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Friday, June 10, 2011

    I'm Sleeping Good Tonight

    Two weeks ago, I started reducing our stock investments in our retirement accounts to pre November 2010 levels.  Then I became very worried and decided to sell all our managed accounts.  In addition, I have sold some of our holdings in taxable accounts and some of my employee stock options that expire in late 2012.
     
    Yesterday's 75 point advance in the Dow caused me to have second thoughts, but today's 172 point drop in the Dow gave me more confidence that I had made the right decision.  Reducing our stock investments to reduce short term risk has been a good decision. 
     
    Currently, I plan to get back in when the market drops at least 10%  (below 11,500).    At that point, I will reinvest 10-20% of our account and will continue to do so for every additional 10% drop in the market.  In addition, I will start looking for stocks to short.
     
    Best of all, I am less worried and will sleep better at night.   For now :-)
     
    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 © 2011 Achievement Catalyst, LLC

    Wednesday, June 08, 2011

    Timeless Articles from the Archives #43

    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" which highlights posts from the same week in 2007-2010.


    2007

    My House Payment As A Percent of Salary   - We were typically in the  20-25% range.
     

    2008

    How We Think About Our House Financially     -  We do not take any financial risks with our house. Here's our financial do's and don'ts for our house

    Manage Retirement Withdrawals Carefully  -  A good approach is to withdraw less in down markets and more in up markets.  Needless to say, we have been withdrawing less for the since 2007.

    Redistribution Of Wealth    -  Here's why government programs to redistribute wealth won't deliver the desired effect.


    2009

    Who's to Blame for Losses in our Retirement Savings?   - The majority of the blame rests with us, because we, and we alone, are responsible for our financial well being.

    Next Generation Bailout Acronyms     -  Here's what I really think about the bailout and stimulus programs :-)


    2010

    None


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

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Tuesday, June 07, 2011

    The Wealth Builder Carnival #41

    Welcome to the forty-first 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 and did not include submissions that were off topic. For reading convenience, the posts are listed with a brief summary or comment by the submitter and organized them into seven categories: Earning, Insuring and Protecting, Investing, Living Frugally, Retiring, Saving and Taxes.

    And now onto the Carnival:


    Earning


    Tarik presents Get your guts together and start your 1st part-time business now posted at Success starts today, saying, "If you are an employee and have been thinking of improving your life or aiming for independence, then this article is for you. Starting a business for the first time can be scary. Read along to learn the three ingredients that will help you in starting a business from scratch and how to use them through the early phases of growth."

    BIFS presents How to Develop Passive Income posted at Budgeting In the Fun Stuff, saying, "Passive income is your most stable and dependable income in or out of retirement."

    JBY presents What is Affiliate Marketing and Should You Try it? posted at Blogging Your Passion, saying, "A look at what affiliate marketing is and whether or not it may be a way to generate a side income..."

    Usefulman presents How to be a Warren Buffett (Part I) posted at Usefulman.com, saying, "This is the first in a multi-part blog (II and III are up), starting with an unusual viewpoint, eventually entering into technical details in later posts. Thank you."

    Mike presents How profitable is your business, or return on invested capital posted at Planned Freedom, saying, "Return on Invested Capital quantifies how well a company generates cash flow relative to the capital it has invested in its business. Learn how to calculate it relatively quickly."


    Insuring and Protecting


    Joe Morgan presents Notice of Mortgage Protection Insurance, a Scam. posted at Simple Debt-Free Finance, saying, "Mortgage Protection Insurance is sometimes marketed in a way that makes it look like a mortgage scam. But even the legitimate offers are often not worth the money. Here's why."

    My Personal Finance Journey - Personal Finance and Investing Tips presents Home Insurance For First-Time Buyers posted at My Money Blog - Personal Finance and Investing, saying, "Insurance is a crucial thing to get when you are buying and investing in a home for the first time. This post lists several important considerations to enable you to have the best insurance shopping experience possible."

    Boomer presents Interview With George Small, Co-Founder Of Kanetix Ltd. posted at Boomer & Echo, saying, "I had the pleasure of speaking with George Small, co-founder of Kanetix, about how consumers can save money on their auto insurance."


    Investing


    Mike presents How to minimize your investment expenses posted at Planned Freedom, saying, "If you are not careful, your investment expenses can take a bite out of your returns. Here's how to minimize your investment expenses..."

    Teacher Man presents Investing Basics – RRSPs, TFSAs and RESPs posted at My University Money, saying, "A basic overview for different investments young adults can make. Included are advantages and disadvantages for each."

    Dividends4Life presents D4L-Data: 10 Highest Yielding Dividend Stocks posted at Dividend Growth Stocks, saying, "Information is powerful, but its sheer volume can be overwhelming. Screens and filters allow us to condense vast amounts of data into the targeted information we are looking for. It seems that yield is always on the mind of income investors, so I decided to screen first on yield and present the 10 highest yielding stocks in my database:"

    Maxim Kazawy presents 5 Best Dividend Paying Mutual Funds with High Income posted at Best Dividend Mutual Funds, saying, "Dividends provide an instant cash flow return on your investment and also act as a downside protector in bear markets. Also, the US stock markets have lost 2% annualized over the last 10 years. If you were invested in dividend paying mutual funds during this time, you would probably have made 5% compounded annual gains. In this article, we will go over 10 best mutual funds that pay dividends."


    Living Frugally


    Jessica Bosari presents Is Extreme Couponing Just another Form of Hoarding?   posted at Billeater, saying, "Are you going too far with your couponing?"

    Tim Fraticelli presents Negotiating Anything posted at Faith and Finance, saying, "Negotiating doesn't have to be scary. These tips will help you in almost any negotiation - from salary, to car purchases and garage sales. Negotiation is a skill that can be improved IF you practice."

    The Amateur Financier presents Frugal Friday – Medicine posted at The Amateur Financier, saying, "A guide to getting the medicine you need for the least amount of money possible."

    Nathan Richardson presents What is a Good Credit Score: 2011 Range, Credit Score Scale & Chart posted at Deals & Tips, saying, "Saving thousands, maybe tens of thousands or even hundreds of thousands of dollars in your lifetime by obtaining an excellent credit score. Learn what one is and how you can get one today."

    Jennifer Martin presents 5 Tips to Negotiating to Buy a House posted at The Negotiation Board, saying, "Take advantage of this extreme home buyer's market and learn how to expertly negotiate the purchase of your next home with these five strategic tips."


    Retiring


    None


    Saving


    Zach Lloyd presents “Productive Labour”: What Adam Smith Can Teach Us All About Building Wealth posted at MD, JD So What?!, saying, "Earning alone will never build wealth. The key to acquiring wealth is our abilty to convert earnings into income-earning assets through proper saving and investing. And that process is "productive labour.""

    Barb Friedberg presents 3 TIPS TO GET RICHER AND THINNER posted at Barbara Friedberg Personal Finance, saying, "Get 3 basic strategies for spending, investing, and life to up wealth and lower weight."


    Taxes


    None


    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.

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

    This is not financial, earning, insuring, investing, living, retiring, saving, tax, or wealth building advice. Please consult a professional advisor.

    Copyright © 2011 Achievement Catalyst, LLC

    Monday, June 06, 2011

    Sell in May?

    After reading a several articles, I've decided the best strategy is for us to "sell in May," even though it's already early June.  Here are some of the articles I read:

    Not Too Late To Sell in May and Go Away

    You Can Still Sell in May and Go Away

    US Economy Hits Soft Patch But Some See It as 'Temporary'

    In addition, I believe most goverment actions (e.g. QE3, mortgage modifications, etc.) have a higher probability of a negative impact on economy which will result in a stock market decline. 

    I just hope I'm not too late when I exit the market this week.

    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 © 2011 Achievement Catalyst, LLC

    Sunday, June 05, 2011

    A Simple Solution to Create Jobs

    There is one easy and sure fire way to create jobs: give businesses a reason to have a positive economic outlook for the next 2-3 years. If businesses believe the future is positive, they will prepare for an upturn.  Woe to the company that misses the opportunity to participate in a growing economy.

    On the other hand, businesses will hunker down by minimizing expenses and hoarding cash if they believe future economic outlook is negative for the next 2-3 years.   No business wants to have high expenses and high debt when the economy turns negative.  

    So far, the actions of the U.S. government have created the perception of a negative economic future for many businesses.  Therefore, businesses are minimizing expenses by not hiring and generating record profits.  If the goal is to create jobs rapidly, government will need to quickly change the perceptions businesses have about their economic future.

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Saturday, June 04, 2011

    Where's My Bailout?

    Delinquent Homeowners to Get Mortgage Aid from Government posted at CNBC.com is another example of how the current administration is clueless about how to help the economy.   Call me cynical :-)  I don't understand how reducing the mortgage principal for someone who is unemployed and can't pay any expenses and debts really helps the economy.

    If the administration is looking some more useless bailout ideas,  I'm happy to provide a couple that could help me::


  • Restore retirement accounts to pre-2008 levels.   I lost a lot of money in my retirement accounts due to the great recession through no fault of my own.   My misfortune was clearly due to the other factors, such as the previous administration and the poor policies choices of the other party.  In addition, the recovery of my retirement accounts has been hampered by the events in Japan and Europe.



  • Restore my lost housing equity.  We too purchased my house during the housing boom, but we chose to pay a down payment of 40%.   We have since paid off our mortgage, but we have lost significant equity in our home.  Again through no fault of my own, our house is worth much less that we paid for it. 



  • I think my situation merits as much consideration as should be given to principal reduction.   About zero.  But since the administration is seriously considerng principal reduction, I thought I make a case for my own personal bailout :-)

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

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

    Copyright © 2011 Achievement Catalyst, LLC

    Friday, June 03, 2011

    I'm Worried

    The last two weeks have significantly eroded my confidence in the economy and our stock investments.  Next week, my plan is to sell the remaining investments in our managed accounts, which will reduce our stock investments to below pre-November 2010 levels.   Then, I will wait for the inevitable decline in the stock market.  I'm prepared for at least a 20% decline.

    Why the drastic measures?  It seems to me that the government is as clueless now as it was in 2007 - 2008 with the sub-prime mortgage crisis.  Based on the past 2-1/2 years, I have no confidence that the government will take the right steps to  grow the economy.  For the next few months,  I believe the downside risk is 2-3 times higher than the upside potential.   I can't afford to continue to hold stocks, as I did in 2008, and allow our retirement and savings accounts decline precipitously.

    The pain of the market decline of 2008-2009 is still a fresh memory.  By being primarily in cash, I will be less worried and better able to sleep at nights :-)
     
    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 © 2011 Achievement Catalyst, LLC

    Thursday, June 02, 2011

    A Pivotal Childhood Event

    When I look back on my life, I remember pivotal events that changed the course of my future.  Here's the earliest one I remember from childhood.

    When I was 10, I tried out for our neighborhood football teams.  One coach offered a quarter to any player who could knock him over from a three point stance.  I had been MVP lineman of the year in the previous year, so it seemed natural for me to try.  I must have caught the coach off guard, and knocked him over.  He kept his promise and gave me a quarter.

    Later, he drafted me onto his football team to "recover his quarter investment."   He put me on the front line of the kickoff return team.  In one of the early games, I picked up a short kickoff and ran it back for a touchdown.  Later that season, the coach made me a running back.

    Although that was my only year of playing running back, it gave me confidence to try out for the position on my high school team.   Not only did I make the varsity squad as a freshman, I ended up starting by the third game.   In my junior year, I was the starting fullback on a state runner up team. In my senior year, I was the starting fullback on a state championship team.

    All because I knocked over a coach during tryouts when I was 10 years old :-) 
     
    For more on  Crossing Generations, check back every  Thursday  for a new segment.

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

    Copyright © 2011 Achievement Catalyst, LLC

    Wednesday, June 01, 2011

    Timeless Articles from the Archives #42

    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" which highlights posts from the same week in 2007-2010.


    2007

    Quit Today   - Quit chasing the unattainable goal of a career that is rewarding emotionally and financially and one that fulfills a personal life mission.

    Personal Finance Tips - Country & Western Style  - My entertaining look at personal finance tips.

    Wealth Building Dilemma - The Rich Do Not Save - For people that think higher incomes with help them save, think again.

     
    2008

    How To Profit From Bubbles    -  No bubble for stocks yet.   Maybe for precious metals, but it's too late for me to profit for a precious metal bubble.

    Create Habits To Get The Desired Result   -  For me, a good financial habit works better than micromanaging.

    When Past Results Often Guarantee Future Performance    - When dealing with companies and people, past results often predict future performance.


    2009

    Free Summer Activities for our Four Year Old     - The movies are $1 this year, but the other ideas are still free.

    Our Principles for Saving    -  Start early, save often and save a lot.

    Our Recipe for Early Retirement  - These elements worked for us.  YMMV.


    2010

    Our Three Financial Measures  - In our household, we measure three values to determine our financial health: investment income, total savings, and total debt.

    Childhood Money Misperceptions - After writing this, I realized that some children do not grow out these beliefs :-)


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

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

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

    Copyright © 2011 Achievement Catalyst, LLC