Changing My Retirement Sleeping Schedule

"Early to bed and early to rise." ~ Benjamin Franklin

When I was working, I would go to bed at midnight and get up at 5AM.   After retiring, I slowly evolved to going to sleep at midnight and getting up at 8PM.   I'm consciously thinking about gettng up earlier (about 5-6AM) and going to bed earlier (9-10 PM).    Even on weekends and holidays.

This may be challenging since I am more of a night person.  However, getting up early may allow me quiet time to put significant effort against some projects, before the family is awake.  Also, I've learned that even though I'm retired, there are still some things I need to do only during normal business hours.

So tonight, I'll be to bed by 10PM.  Tomorrow, I'll be up by 6AM.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Returning to Periodic Posting

With this post,  the number of 2017 posts (77) is equal to all the posts from 2014 through 2016.  I guess I had a lot of pent up posts ready to go.  It's been fun.  However, I think I used up all my material ready to post in the near term.

So I am moving back to periodic posting of at least once a month, which is what I did for most of  2015 and 2016, after taking a sabbatical in 2014 .  

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

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

Copyright © 2017 Achievement Catalyst, LLC

Places I Like to Shop

First, I admit I am an technology Neanderthal.  I don't have a cell phone, I don't have a Facebook account, and I don't shop online.

I still prefer to shop at brick and mortar stores, where I can still touch and feel the item(s) I am buying.   Still I have a preference of stores where I make purchases.  Here is my top stores list:

• Costco -  First, I know Costco is charging a minimum markup price.  So I know I am getting a good deal.  Second, I like the items the Costco buyers choose.  There selection is not wide, but it is good.   Third, Costco has a lifetime satisfaction and return policy, except for computers, cameras, and TVs.  So I can try something out for a while and decide.   The downside is the emphasis on bulk purchases, leading me to buy a several months worth of some items.
  
  I like buying specialty clothing, seasonal gear, and staples (like batteries) at Costco.   Occasionally, I find something that I really wasn't considering, but thought it would be fun to try (e.g. a gazebo kit, which took me a couple weeks to assemble).


• Lowe's -  This is my go to store for household maintenance items.  I can usually find what I need or they will direct me to a place that my carry the item.  Also, several of the associates are long time employees and are very knowledgeable.  The prices are also very good.  I applied for the Lowe's credit card, since it gives an automatic 5% discount.  Lately, Lowe's has been giving out an 11% coupon randomly when I make a purchase.
  
  We purchased our last two kitchen appliances there.  We found new handles to upgrade our cabinet look.   We just purchased electrical plate covers to replace the brass ones.  Our next purchase will be to replace the faucets and sinks as needed.


• Whole Foods - Yeah, they're expensive.  However, often they are the only grocery store that carry some of the prepared vegan, no oil added foods that are part of my diet.  Fortunately, these products go on sales sometimes and I stock up.


• Trader Joe's -  Good healthy food and great prices.  An excellent opportunity to try new foods.   Also, it has a great selection of staples that help me maintain my vegan, no added oil diet.


• Kroger's -  This is our local grocery store.  They have been expanding into the organic foods market with their own private label brand, which is very cost competitive.  Also, we buy a lot of our produce here.

These stores are where I probably spend 80% of my funds.   So I really don't need the online purchasing capability.

Disclosure:  We own Kroger in our personal accounts.  One of our managed accounts owns Costco.  Also, I received no compensation for writing this post.

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

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

Copyright © 2017 Achievement Catalyst, LLC

A Lesson from Crashes I've Lived Through

I've lived through four major stock market crashes, and I was invested in three of them.

1973 - 74  -   I wasn't old enough to invest, but I do remember this crash.  This was the same time as oil embargo/gasoline crisis.   The stock market lost 45% of its value.

1987 -  On October 19, 1987, the stock market lost 22.6% of its value in a single day.  This was the first crash during which I was invested.

2000 - 02 -  From the September 11, 2001, the date of the WTC terrorist attacks, the markets declined then recovered in early 2002 and then fell sharply again.  The Dow declined 35% from its peak and the Nasdaq declined 44%.  This happened after the Internet bubble in stocks that occurred up to 2000.

2008 - 09 -  This was the latest stock market crash due to the financial crisis of 2008.   The stock market fell 54% from October 2007 to March 2009.

Subsequently after each crash the stock market rose to new highs.  It's hard to remember that fact while in the depths of a downturn.  But it's one worth remembering since I expect to live through at least three more market crashes.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Not Feeling the Love of New Highs

Yesterday, the Dow had sixth day of setting a record high.  Wednesday marked the fifth day in a row tht all the major indices closed at a record high at the same time.    This has not happened since 1992.

I should be ecstatic, but I'm not.    Although our accounts are at or near all time highs, individual stock performance is very mixed.   Some stocks are near 52 week highs, while other are near 52 week lows. It's very discomforting to have this bimodal performance.  I don't feel this market advance is sustainable.

So I am selling some investments and raising cash.    We will put the funds back into the economy by spending them on home improvements and a vacation.  For now, I feel these options feel will get a better return on our retirement savings than being invested in the stock market :-)

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

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

Copyright © 2017 Achievement Catalyst, LLC

Eating Out is Now an Expensive Norm

CNBC highlighted the high expense of extreme eating out an article on how one couple spent $30,000 last year on away from home meals.  That's $82 a day for their three person family.

When I was growing up, eating out, even at McDonald's was a rare event.   My mom cooked most of our meals from scratch.  TV dinners, as frozen prepared meals were called back then, were also a special occasional treat.  

From college forward, I became used to eating out.  There was the company cafeteria, quick meals in the evening, and entertainment with friends.  I don't know how much I spent since I didn't keep track of the amount.

We don't eat out as much anymore since I am on a strict vegan no added oil diet.   Still, we do go out occasionally as a family for special celebrations, such as birthdays, at an average cost of $120. Also, we'll go to a fast food restaurant if we are out a while with the kids, which costs $10-$20.  So, we might spend $80 average a month eating out.   Even then, that adds up to about a $1000 per year.  But we would probably easily spend at least $600 a month  (or $20 a day) eating out if we both working and I didn't have a dietary restriction.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Appliances Don't Last as Long Anymore

When I was growing up, household appliances seemed to last forever, or at least I don't ever remember replacing them.  While growing up, we had the same refrigerator, dishwasher, oven, range the entire time.   Also, my mom had the same vacuum cleaner until it became too heavy to use after 40 years.

Nowadays, household appliances seem to have a much shorter life.  Recently, we replaced a 25 year old dishwasher and double oven.  The sales representative told us the life of the new dishwasher was about 8-10 years.  The working life of the double oven was also 8-10 years.  The quoted lives are based on standard usage.  Since we use our dishwasher three times more than the standard, we may get a shorter useful life.  We use our oven less than the standard, so it will probably last longer.

So even though we just replaced our kitchen appliances, we'll probably need to replace them 1-3 more times during our retirement years.   There is silver lining benefit to the short replacement cycle.   Although I'd prefer to keep the same appliance, I must admit the newer appliance are function much better, and in the case of our dishwasher, much quieter.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Don't Forget Maintenance Costs

I used to just look at the purchase price before deciding to buy something.  Over time, I learned that maintenance cost is also an important component in the decision making process.   Sometimes, since maintenance is an ongoing cost, it can be a major factor in determining the financial feasibility of a purchase,

Here are some rules of thumb that I have learned about maintenance costs:

• Everything has a maintenance cost.   From clothing to a house, everything requires periodic cleaning and repair.  We may choose to defer maintenance to reduce costs, but the lack of maintenance with eventually cause an issue.
• Higher complexity = higher maintenance cost.    A motorcycle costs more to maintain than a bike.  A car costs more to maintain than a motorcycle.   A luxury car costs more to maintain than a standard car.
• More stuff = more maintenance cost and effort.  I used to think that owning things was cost efficient.  Having our own pool would save membership fees.  Having a vacation home would save rental costs.  That is true, but then the hidden cost and time of maintenance needs to be considered.   Nowadays, I think it's sometimes more cost efficient to rent when needed and let someone us handle the maintenance.  

Not only does maintenance incur costs, it also takes time to get it done, even if someone else is paid to do the maintenance.  Nowadays, I think less (complexity, cost, stuff) is better.  So that we can spend our time and money on more important things.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Looking for Signs of a Correction

Someday this bull market will take a substantial pause.  Unfortunately, I don't know when that will be.   In the meantime, it is prudent to anticipate this inevitable correction of unknown timing and duration.  Here are some signs I'll be looking for:

• Exuberance - This is when everybody is excited and talking about how well they are doing in the stock market.  I don't see much of this happening yet.
• FOMO investing -  This is when people start investing more in stocks because they're afraid of missing out on what everybody is exuberant about.   It seems to me there is still a lot of cash on the sidelines.
• All stocks advance -  This is when good, as well as bad stocks keep going up.   There is no differentiation as investors put money into index funds/ETFs, driving up the valuation of all stocks.  Not happening yet, since there are a number of stocks still near or at the 52 week lows.

Net,  the current administration has not yet taken any concrete actions that would justify the optimism of the stock market.  If we seen part of all of the three above points in the next few months, I will start expecting a correction to be coming soon.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Renting Skis Makes Economic Sense for Us

My daughter and I have a season pass at the local ski resort.   We also rent ski equipment instead of purchasing our own.  I didn't do the economic calculation when we first decided, because I didn't know if we would ski more than a couple years.  But now that we've been skiing 3 years, it may be worth considering purchasing skis.

On the internet, current late season sale price for  a ski package (skis, bindings and boots) is about $800 for adults,  and $350 for kids.   Assuming my daughter will need 5 sets of skis before she is an adult, that would be $1750.  

Renting for the past three years has been $100/year for the entire season.    An additional benefit is that we don't need to store or maintain the skis.   Also, our rental package allows us to use skis or snowboards, and we can change our ski length at any time.

As I see it, it's probably a better financial decision to rent, instead of purchase.  First, I don't know how long I or my daughter will be skiing.   Second, we don't need more stuff to store at our house.  Third, I like the flexibility of being able to ski or snowboard.  Finally, $100 seems awfully cheap for a season of use since a day rental is $25.   In past seasons, we would ski about 12 times, which works out to a cost of $8.50 per rental.

This year, we've already skied 15 times and expect to get out 20 time, for an average of $5.00 per rental, which seems like a great deal.  The downside is if we ever try skiing at a resort out west.  Since ski rental could run up to $100/day, owning skis may make sense for multiple vacations to distant ski resorts

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

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

Copyright © 2017 Achievement Catalyst, LLC

Changing Financial Behavior

“You cannot change what you are, only what you do.” ~ Philip Pullman, The Golden Compass

While I am not a particular fan of the movie, I do like this quote by the author.

To me, it means self improvement is about changing behavior, not changing me, i.e. my internal essence.   For example, if I want to improve my financial situation, I should be working on behavior changes that help, and not on changing my personal characteristics.  My epiphany is improvement is not about me, it's about what I do.

So how should I decide the behavior change that is needed?

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” ~ R. Buckminster Fuller

As a engineer, I like this quote.   Making the right behavior change requires a little bit of experimentation.   Try an idea, if it works use it.  If it doesn't, then try another idea.  I try to use ideas that have some reasonable basis for being successful.

For me, I found two simple behavior changes that helped me grow our wealth.  The first was to pay ourselves first, i.e. deposit funds into our savings accounts before paying any other bills.  The second was live below our means, which naturally occurred since we paid ourselves first.   This two behavior changes were much simpler and therefore worked better for me than other approaches, such as detailed budgeting.

What I realize now is that retirement requires further changes in financial behavior.  Now that I've internalized that it's not about me, it will be easier to move forward.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Using Options to Mitigate Risks

With the market at all time highs, I'm getting a bit more cautious.  As I have posted before, I am selling some of my positions with gains.  Another way I am reducing risks is through the using options, such as puts and calls.

• Puts - I like to sell puts on stocks that I'm willing to own, but wouldn't mind owning at a lower price.  If the stock goes up, I get the premium for selling the put.   If the stock falls below the put strike price, I end up buying the stock, but at a lower price.  Occasionally, I will buy a put on a stock that I think will decline significantly.
  
  I'm selling puts on a couple energy stocks that I feel have been beaten down, but have a chance to rebound.
  
• Calls - I like to sell calls on stocks that I own when I feel the market is near a top.  That way if the stock declines, I keep the call premium.  If the stock rises above the call strike price, I end up selling the stock but at a slightly higher price.   Occasionally, I will buy a call to speculate on a stock price spiking upward.
  
  I'm selling calls on my company stock, which I hope will go up and let me sell at a higher price.  But if it doesn't, I will make a small profit on the call.  I purchased calls on couple energy stocks, in case they rise significantly but it appears unlikely now.

Usually, I don't trade puts and calls since the cost of commissions generally offset the profits of small positions.  However, for a short time I qualified for commission free trades, so I can trade a single contract of a low value option and still make a profit even on a small change in price.  This gives me a low cost opportunity to test my option trading ability.

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

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

Copyright © 2017 Achievement Catalyst, LLC

RMD Management

RMD stands for "Required Minimum Distribution" from traditional IRAs,  401Ks and other retirement plans (except Roth IRAs) after one turns 70-1/2.

The typical advice is to spend taxable account funds and let retirement accounts continue to grow tax free.  I've been told by several post 70 -1/2 retirees that they should have withdrawn retirement funds earlier to reduce their RMD, contrary to their financial advisors' recommendation.   In their case, they do not need the funds from their retirement accounts, but are forced to make withdrawals, which results in a greater tax burden.

One option we are considering to reduce our RMD is to do Roth conversions in the years prior to receiving Social Security.   During this time, we can keep the marginal tax rate at 15% or less.   Since we still have itemized deductions and non-refundable tax credits, we can further minimize the tax consequences of a conversion.

A second option is to do a Net Unrealized Appreciation (NUA) withdrawal from my company retirement plan after I turn 59 -1/2,  This will also help significantly reduce my RMD requirements.

I plan to use both options over the next few years.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Fighting Complacency

"Change is the only constant." ~ adage

Success is the enemy of change.  Success and happiness makes it easy to be satisfied, which leads to complacency.  But the reality is complacency may keep me from making changes that may be needed.

One choice is to disrupt complacency, accept changes may be needed despite current satisfaction, and allow a chance for greater success and happiness.

It's a choice worth considering.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Posting A Lot Recently

In the first two months of 2017, I've already exceeded the number of posts for 2016.   With another 15 posts, I will exceed the total for 2014 - 2016.  Why the big surge?

No real reason. My short explanation is it's the Forrest Gump running phenomenon, where he started running and just kept doing it.   I just started writing last month, and just kept writing almost everyday.  

I don't know how long I will keep doing this.   Like Forrest, I will probably just stop one day and go back to posting once a  month.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Crunch Time

I have a few employee stock options expiring in a couple weeks.    I've only executed 5% of the options, so I will be actively working to exercise the rest.  Usually, I start exercising the options a year before expiration and complete doing so a month before expiration.   But this year has been different for several reasons:

1. 2015 and 2016 had an unusually large amount of options expiring.  So I generally only exercised options that expired in those years, to reduce the amount of taxes paid.
2. Since my company is a defensive stock, its price has not risen much during the past few years.  So I am waiting as long as I can for the stock price to increase.  This has worked out somewhat, since the stock price has risen slightly in the past month.  But still it is not higher than in early 2015.
3. This year is my last year of having employee stock options.   So I don't have many shares left, meaning that a change in the stock price has less incremental impact on our investment value.

 Although I have several limit orders at higher prices, it is likely I will need to convert to market orders and take whatever price is available at the moment.

Hopefully, there isn't a big drop in the stock price in the next couple weeks.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Stock Market is Too Good to Be True

"It's hard to walk away from a winning streak..." ~  Cara Bertoia
"It's hard to defend a danger which you never thought existed." ~ John Christopher

I'm not complaining about recent market rally.  I've been pleasantly surprised by rise in our accounts. However, I'm starting to worry about it's sustainability.  It seems that everyone is expecting the administration to do great things for the economy, despite having done nothing concrete yet.

As I have often found in the past, when things are too good to be true, it probably is.   Our personal accounts are at or nearly at all time highs; 2 out of 3 of our manage accounts are at all time highs; and recent stock purchases are already higher.  I know I'm not this smart.

So instead riding this market to more new highs, it's time for me to do a bit of the opposite and take the opportunity to sell a little.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Time is Flying By

When I was young, it seemed like forever to reach major school milestones, e.g. junior high, high school and college.  Our daughter, who is in sixth grade, feels that college is still a long ways away. On the other hand, I can't believe that our daughter will be in college in only 6 1/2 years.   It's going by so fast.

The problem for me was that when I was young I thought had all the time in the world to get my things done in life.  So I had no sense urgency to get moving. I took life as it came.   I didn't worry about whether things would work out.  I figured that I would just take the next step when the opportunity presented itself.

Little did I realize that wouldn't work as I got older.   There needed to be a sense of urgency to make things happen.  Things needed to be actively managed.  Letting events unfold wasn't good enough.  Luckily, I figured that out about a third into my career, early enough to make a material difference.

I figure I got about 20 (30 if I'm lucky) good years remaining,   However, I know the next 10 years will be the best ones.  So it would be good to start packing in all that I want to do, instead of waiting for life to happen.

For more on Reflection and Musings, check back Saturdays for a new segment.

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

Copyright © 2017 Achievement Catalyst, LLC

A Financial Weakness

"I despise the Lottery. There's less chance of you becoming a millionaire than there is of getting hit on the head by a passing asteroid." ~ Brian May

I like to play the lottery when the jackpot is over $200 million.  As a financial geek, I know this is a bad financial decision.   Even with a $200 million jackpot, it's still a negative statistical return to play.

However, I justify my payment to play as a cost of entertainment.  For a moment, I engage in choosing the numbers that are lucky or relevant in my life.   I do it for fun since I usually buy one ticket.   Just like I don't expect financial gain from seeing a play, eating out, nor playing a sport, I don't expect a financial return from a lottery ticket

When I win, it's usually the lowest prize.  I consider that a bonus since I got entertained for free.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Keeping Up on Maintenance in Retirement

As I get older, I will have less motivation to invest in maintenance and replacement costs of our possessions.    However, maintenance and replacement will be just as important to do.  So we are trying to get some major replacement done now, so that we can enjoy the improvements before getting much older.  Also, we are trying to build a reliable group of long term service providers for the future.

Since moving here, we've replaced most all our kitchen appliances, one by one.   Our refrigerator was ten years ago.  The microwave was five years ago.  The dishwasher and oven were in the last two years.  All that is remaining is the stove top, which I've been able to make repairs myself.  We've used a couple of different stores for our appliances.

We've replaced our furnace and air conditioning about ten years ago, and we have identified a company for routine maintenance and repair if needed.   We replaced our roof about nine years ago, and we continue to use the same roofer for repairs.  We have a plumber that we've used once for a major job and liked.  Finally, we hired a company to do our painting, which we will continue to use.

In the next couple weeks, we'll be replacing some of the window treatments.   We are on our fourth company and haven't found one yet to stay with.

We use a lawn service to cut our grass, which we will expand to include leaf removal this year.

One challenge is that companies and individual change or go out of business over time.   For example, twenty-five years ago I found a family owned furnace company I liked, but they were bought out by a national chain and the quality, in my opinion, declined.  So we had to find a new company.

Another challenge is we have is the occasional one time project to do, e.g. new kitchen countertops, which will require finding a new provider each time to do the work.   But I'll save that for a different blog post next week.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Reasons Early Retirees Should Use Lower Withdrawal Rates

An article titled That '4 percent rule' could spell trouble for early retirees on CNBC reports that early retirees may need to have lower withdrawal rates since their retirement may be much longer than the standard 20-30 years of normal retirees.  Early retirees may need retirement funds to last  40-60 years depending on how early they retire.  More years in retirement means lower withdrawal rates.

Another reason is that average returns are now lower than the 7% that was the norm when the 4% rule was developed.  A more conservative return might be the 10 year treasury yield which is about 2.4%.   Lower returns mean lower withdrawal rates.

 Finally, the investment returns are lumpy.  While the average is positive, there will be some negative return years.  If those years occur early in the retirement, the impact could be devastating.   Negative return years mean lower withdrawal rates.

A good approach may be to start with a lower than 4% withdrawal rate and increase the number to 4% as one gets closer to normal retirement age and/or returns become closer to 7%.

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 © 2017 Achievement Catalyst, LLC

Keep Learning and Expanding Skills

"Those who improve with age embrace the power of personal growth and personal achievement and begin to replace youth with wisdom, innocence with understanding, and lack of purpose with self-actualization." ~ Bo Bennett

When I was young, I couldn't wait to finish school.   I wanted to complete my learning portion of my life and move on.  Little did I know back then that learning is a lifelong process.  There just isn't a formal process past college and graduate school.

My dad was a great learner.   He was always trying to get better at what he did. I remember him joining Toastmasters to improve his public speaking skills. He was always learning to be a better investor.   After he died, I found a some DVD courses that he had subscribed to in order to get better at using his computer.  I was impressed since he was a very smart man.

When I retired , I took courses at a local vocational school in plumbing, electrical, masonry, and landscaping work.   I also took a real estate agent course.  Finally, I took courses in taxes which helped me get a part time job as a preparer.    All these courses have helped me with my personal activities, as they have enabled me to do some of the work instead of hiring someone.

Lately, I've been borrowing courses on interesting topics from the library.  Next year, I will qualify to audit courses for free from public universities.  I am looking forward to opportunity.

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

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

Copyright © 2017 Achievement Catalyst, LLC

I'm Not Co-Signing Loans for My Children

A friend of mine recently co-signed a loan for a child.   He did it so that his child would get a better interest rate on a car.  I know his intentions were good.  Even so, he probably sensed the disapproval in my voice when I commented.

In my case, I wouldn't co-sign a loan for my children, not even a college loan.   Here's a general article on 10 reasons not to co-sign a loan.

Rather than be a co-signer for my children, I'd lend them the money (provided I agree with the reason for the loan) and have them pay me back.  That way if they default, it won't affect my credit rating.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Recurring Retirement Income

"Nothing can be said to be certain, except death and taxes." ~ Benjamin Franklin

I've come to the conclusion that reliable recurring income increase with time should become my main financial focus in retirement.  Up until 2014, I had been planning on using the capital gains from our investments for fund our expense needs.  However, the volatility of a capital gains approach will likely cause significant financial stress in bear market years.

Retirees with public pensions and Social Security recipients probably already appreciate my conclusion.  Unfortunately, we do not have a public pension nor are we old enough to qualify for Social Security.   So I will need to create recurring income streams for us on my own.

My current thinking is to use a combination of dividend stocks, CDs and rental income to create our own pension.   We will combine these amounts with future Social Security payments to create a sustainable, recurring source of retirement income.

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

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

Copyright © 2017 Achievement Catalyst, LLC

A Good Time to Sell A Little

"Buy low and sell high." ~ Wall Street Adage

With market indices at or near all time highs, I'm considering selling parts of some profitable positions, to lock in some profits.  Besides I believe the market is due for at least a small pullback, allowing me to buy back at a lower price.

My methodology is to sell peripheral positions or peripheral parts of positions that have been acquired at lower prices.  I will continue to hold the core positions, i.e. those that I plan to keep for more than a year.   So I will be staying invested.

However, I will be slightly reducing our exposure by selling stocks which have risen sharply recently, or those that have significant gains.

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

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

Copyright © 2017 Achievement Catalyst, LLC

2016 IRA Contribution Deadline Is In 2017

The deadline for making 2016 IRA contributions is the due date of the 2016 tax return, which is April 17, 2017 this year.  It is one of a couple items for the 2016 tax year than can be done after 2016.   It gives the taxpayer an opportunity reduce the tax owed if they choose to do so.

The contribution limits for 2016 are $5,500 for under 50, ad $6,500 for 50 and older.  If 2016 wage earnings are less then that is the maximum for 2016..

A traditional IRA allows the contribution to be deducted from income for taxes, a Roth IRA does not all a deduction, but withdrawals in the future are tax free.

Even though we are retired, we earned a small amount of wage income.   We will put those funds in a a traditional IRA to get the benefit for a tax deduction and the benefit of tax free growth.  

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

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

Copyright © 2017 Achievement Catalyst, LLC

DIY Refrigerator Maintenance

Our refrigerator has been cycling more frequently than normal for the past month.   The last time this happened, I vacuumed out the coils and the issue was corrected.  However, this time vacuuming reduced the problem but did not solve the issue.

Unfortunately, our coils aren't designed to be easily brushed out.   Checking the Internet, I learned of a compressed air option to blow out the dust on the coils.  My first thought was to use the reverse blowing option on our vacuum cleaner, but we were missing an attachment.  I then decided use our leaf blower as an alternative, although with caution as to not damage the wiring or other parts. With short bursts to prevent damage, I was able to blow out a significant amount of dust.

Initially, our refrigerator has stopped the constant cycling.   I'll see how the maintenance works over the next few days.   If the issue still occurs, I will call in repair technician to replace the defective part.

For more on Ideas You Can, check back Tuesdays  for a new segment.

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

Copyright © 2017 Achievement Catalyst, LLC

Our Net Worth Change Since Retiring

A reader asked, "Has your net worth increased or decreased since you retired? I am curious because you have gone through an entire economic cycle since retirement."

The short answer is my net worth has decreased slightly since I retired in 2007..

Here is the long answer;

I retired in early October 2007, and had a liquid net worth summary from the end of September 2007.  I compared the September 2007 value to the December 2016 value.  For reference, I don't include our house in the liquid net worth calculations.  Also, I adjusted the number to exclude any one time windfalls, such as an inheritance.

In December 2016, our liquid net worth was 94% of what is was in September 2007, representing a decline of  6%.  This compares to a bottom of 64% which occurred in June 2009. For reference, this calculation also includes 9 years of living expense withdrawals from our retirement savings.

What does this mean for our future retirement finances?  Here are my thoughts:

Overall, even with a conservative strategy, the investment return was close to matching our living expenses for the past 9 years. This is a pretty good result.  For this situation, our retirement savings will never run out in our lifetime.  For a hypothetical case where investment returns and withdrawal growth match inflation (i.e. real return is zero), our savings will last 26 years for a 4% withdrawal and 35 years for a 3% withdrawal. (This analysis is conservative since I have not included Social Security payments in the calculation because we have not reached the minimum age to qualify.)

So, I believe we should continue our investment strategy to preserve capital with returns modestly beating inflation.  This strategy may help avoid a significant decline in funds like the one that happened in 08/09.  In addition, if needed, we can lower our withdrawal rate in poor return years to extend the longevity of our retirement savings.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Moving REITs to Non-Taxable Accounts

After reviewing the tax consequences of REITs for 2016, I've decided to move my REIT investments REIT investments to our IRAs and Roth IRAs, non-taxable  accounts.

Here are my reasons:

1.  REIT dividends are taxed as ordinary income.   There is no tax benefit to earning REIT dividends in a taxable account.
2. Part of REIT dividends are a non-taxable return of capital, which requires are reduction of cost basis.  This adjustment can be tedious to keep the records and isn't required for non-taxable accounts.

I started making the move last week and will continue to do so in the upcoming weeks

or more on Strategies and Plans, check back  Mondays  for a new segment.

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

Copyright © 2017 Achievement Catalyst, LLC

Anecdotal Evidence of Investors Returning to the Market

Recently, I borrow two investment books from the library. The first book is Common Stocks and Uncommon Profits and Other Writings by Phillip Fisher.   Warren Buffet claims to have used the principles in this book for his investing.  The second book is The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham.   This is the classic textbook for value investing.

Normally, I would be able to keep the book for several months through renewals.  However, this time I was only able to keep the books for one cycle, due other patrons putting a hold on the book.

I guess interest in investing is growing again, which should lead the a further market advance.

Disclosure:  No compensation was received for writing this post.  If  purchases are made through the above Amazon.com link, I may receive compensation as an Amazon affiliate member.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Longer Skis and Steeper Slopes

"The key to life is accepting challenges. Once someone stops doing this, he’s dead." ~ Bette Davis

My goal this year was to ski down the steepest slope without falling at our local resort.   Three weeks ago, I accomplished that goal, but on shorter than normal skis, which makes it easier.  Then I decided to increase my ski length and do it again.  I met the challenge last week and repeated it this week again.

The great news is my daughter also skied down the same slope, after only 2.5 years of skiing.

There is one trail, which has lots of moguls, that we haven't tried yet.  However, I think we will first ski the steepest slope consistently well before moving to that trail.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Real Tax Reform - Please

I still do my own taxes, by hand, and file a paper return.  I do it primarily because I want to understand the basis for the taxes I owe.  Second, I don't want to pay the cost of a tax payer or tax preparation software.  Third, I'm pretty good at doing taxes. Full disclosure:  I worked as tax preparer for five years after retiring.

I look forward to real tax reform.

Here's my input;

• I think doing a tax return is another example of the government wasting people's time. The government uses the tax return to accomplish too many things, including subsidizing housing, health care, education, and providing welfare.  In my opinion, the government should limit tax returns to be only about collecting taxes and use some other complicated system to administer government programs.
  
• Next, I think the government ought to implement a alternative simplified tax system with perhaps three brackets and no deductions.    And let the taxpayer choose which system to use.   For reference, Hong Kong did this a while back and close to 99% of taxpayers converted to the simplified system, because there wasn't a great enough tax benefit to do the extra work.
  
• Finally, the government ought to do the simplified tax return for people and let them decide if they want file their own return or just use the government issued return.

While I doubt any of my ideas will be used, now is the time to make real changes that will improve government.    Let's start good tax reform.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Real Estate Investing Thoughts

I've been thinking a lot about investing real estate investing over the past year.  Here are some of my thoughts:

• Real estate has carrying costs.   It takes effort to find, evaluate and acquire real estate.   Then there is a carrying cost of property taxes, insurance and mortgage interest. There are maintenance costs which often require personal involvement.  Finally, it takes effort to prepare and sell real estate.
  
• Real estate is not very liquid.  Most property takes a while to sell, unless one sells at a below market price.  Even then, it make take several months to finally cash out.
  
• Real estate generally requires personal attention to manage it, unless it is vacant land.
  
• Real estate requires a significant commitment of funds that may be tied up for a long period.
  
• Real estate can provide significant returns and recurring streams of income for the proper investment.

After much consideration, I've decide that I won't be buying actual real property, unless I come across a very good deal.   Real estate is probably better for a young investor than for a retired investor like us.

 My alternative to actual real estate is to invest in REITs.   I get many of the benefits of owning real estate without some of the negatives.  REITs are liquid, professionally managed, and allow for lower investments and greater diversification.   However, REITs probably won't provide a fast doubling or tripling of value, nor will I be able to touch and feel the property.

Overall, I think REITs will be the vehicle for real estate diversification in our retirement investment portfolios.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Outsourcing Time Consuming Tasks

"Less money, but more time." ~ my comment when I retired early

We are typically do-it-yourselfers for most work around the house.  Before retirement, it was one of the ways we were able to save more money.  However, it does take time.

In the past decade, the one exception was cutting the grass, which we had a lawn company do.   It freed up a lot of time, since it took 2-3 hours for me to mow and edge our lawn.  It was worth the cost.

This year, we hired a company paint the interior of our house.  We also had the same company do the exterior of our house, and the return to paint more of the interior.  The cost was well worth it.

Although I still do a lot of simple maintenance work around the house, e.g. replacing light switches or shoveling snow, we are starting to outsource work that takes significant time to do.  For example, this year had had the lawn company do one leaf removal, which would have taken us several hours over several days to do.  We will probably have them do the leaf removal again next year.

We still don't mind doing household cleaning and laundry work yet.  Often, we can multitask and get this work done.   So it is not an issue yet.  However, if that work becomes too time consuming in the future, we may consider outsourcing, so that we can free up time to enjoy retirement and get our household tasks completed.

Less money saved, but more time for us.

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

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

Copyright © 2017 Achievement Catalyst, LLC

States that Don't Tax Retirement Income

Income taxes are one of several factors for determining a retirement location. I compiled this list from various sources, but have not verified the current accuracy.  If there are corrections needed, please leave a comment.

Here are the states that don't tax retirement income.

No Income Tax -  Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming

Only Tax Dividends and Interest -  New Hampshire, Tennessee

No Tax on Federal, Military, In-State Pensions and Social Security -  Alabama, Hawaii, Illinois, Louisiana, Massachusetts, Michigan, Mississippi, New York, and Pennsylvania.  Alabama, Hawaii, and Illinois also exempt income from certain types of private pensions.  Mississippi and Pennsylvania also do not tax IRA and 401K withdrawals.

No Tax on Military Pensions and Social Security - Ohio

No Tax on Social Security -  Arizona, Arkansas, California, Delaware, Georgia, Idaho, Iowa, Kentucky, Maine, Maryland, New Jersey, New York, North Carolina, Oklahoma, Oregon, South Carolina, Virginia, Wisconsin.  Kentucky also exempts pension and IRA income up to a certain level.

Here are states that tax all retirement income.

Tax All Retirement Income - Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia

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

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

Copyright © 2017 Achievement Catalyst, LLC

Diet Changes Over Time

When I was a child, we ate very health. My mom made all our meals from scratch, with a large variety of vegetables.  We hardly had any processed foods.  Eating out, even at McDonald's, was a special changes.

In high school, fast food became a larger part of my diet.   And I ate a lot as a growing athletic boy.  I recall eating a Big Mac, 2 Quarter Pounders, French Fries, Apple Pie and Milkshake at one post football game meal.

As I grew older, eating out became more frequent, in the company cafeteria and at pizza/fast food restaurants.   I thought eating cheese and chips was relatively healthy, but I still ate a lot of meat and relatively few vegetables and fruits.

Then four years ago, four blockages were found in my heart arteries.

After that, I made a significant change in my diet.   Upon finding I had several arterial blockages in my heart, I converted to a vegan, no added fats/oils diet.  Dr. Ornish's book, Program for Reversing Heart Disease and  Caldwell Esselstyn's book, Prevent and Reverse Heart Disease: The Revolutionary, Scientifically Proven, Nutrition-Based Cure were the basis for my diets.  I made the change because I realize that eating well is important for my heart health.

So far, I've rigorously adhered to this diet for four years and have experience zero heart incidents during that time.








Disclosure:  No compensation was received for this post.  If a purchase is made through the above Amazon.com link, I may receive compensation as an Amazon affiliate member.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Investment Options for Our Children

I've been thinking about two different investing options for our children's account.   Once is a conservative approach and one would be an aggressive risky approach.

The conservative approach is to have a diversified portfolio of stock and bonds.  I will use this for our college savings accounts, which we will need in 6 to 12 years.   The conservative approach will preserve capital and deliver growth, allowing our children to have funding for college.  We have already put this investment in place through a 529 college savings plan.

The aggressive risky approach is to have a concentrated portfolio of 4-5 stocks.    The goal is to have these stocks grow at least 20X by time they retire.  So a $25,000 investment would grow to over $500,000. This option is good in theory but difficult to execute.  Of course, the challenge is to avoid having $25,000 go to zero because of poor stock picks.

However, I think it would be worth the effort to try two different concentrated portfolios to benefit our children in the future.  After all, if it fails, our children will still have the rest of their lives to more than make up for the loss.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Diversification versus Concentration

To me, diversification and concentration of investment portfolios both have their place.   Concentration, while much higher in risk and volatility, provides greater opportunity to significantly increase wealth.  Diversification is likely more stable, which is good for providing a source of income.  However, diversification and concentration both have their place.

Concentration - For me, this is best done for younger investors who do not have a short term need for the money being invested.   Thus, if the investment doesn't work out, it is not catastrophic.  If it does work out,  the excess returns will help achieve one's financial goals faster.   It may be a good idea to start a concentrated portfolio for our children so they have an early start for wealth building.

Diversification -  Now that we are retired, it may be best for us to be invested in a diversified portfolio or a broad market index ETF.  That way our retirement income does not depend on the fortunes of a just a few stocks or even just one equity class.  So it may be a good idea to be invested in variety of stocks, bonds and real estate in our retirement to keep a more stable recurring income stream.

So to me, whether diversification, concentration or a blend is an appropriate option depends on one's stage of life.

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

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

Copyright © 2017 Achievement Catalyst, LLC

Fifteen Characteristics to Look for in a Stock

From Common Stocks and Uncommon Profits by Philip A. Fisher:  Here are fifteen questions to answer about a company before buying its stock.:

1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2. Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive produce lines have largely been exploited?
3. How effective are the company's research and development efforts in relation to its size?
4. Does the company have an above average sales organization?
5. Does the company have a worthwhile profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10. How good are the company's cost analysis and accounting controls?
11. Are there other aspects to the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competitors?
12. Does the company have a short-range or long-range  outlook with regard to profits?
13. In the foreseeable future will the growth of the company require sufficient equity financing so that the large number of shares outstanding will largely cancel existing stockholders' benefit from this anticipated growth.
14. Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
15. Does the company have a management of unquestionable authority?

These are great questions about a company.  (Warren Buffet says he sought out the author after reading this book.) The challenge is being able to answer them well.  I could only accurately answer these questions in great detail for the company from which I retired, after working there 27 years.   I would be hard pressed to have the same due diligence on every company I am considering.

So my modified approach for choosing stocks is to use qualitative relative assessments of the questions based on my experience in the business world.  Stocks that pass this test will be considered for a long term holding.  Another approach I am using is to find a professional manager that uses these types assessments, and invest with them.

Disclosure:  No compensation was received for writing this post.  If  purchases are made through the above Amazon.com link, I may receive compensation as an Amazon affiliate member.

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

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

Copyright © 2017 Achievement Catalyst, LLC