My Retirement Transitions

Doing a temporary full time job for the past nine months helped me realize that I've been experiencing a transition to retirement since October 2007.   I didn't realize the transition was until I went back to work.   However, now that the temporary full job is nearly over, I am better able to articulate the changes.

Growing savings to spending savings.  Most of my adult life, I've been paying myself first and living below my means.  While I was working, our savings and retirement accounts have received regular contributions over time.   As are result, the accounts have typically grown annually with the exception of a few "crash" years.  Despite the significant market declines, our accounts  still have achieve our targets.

Since my retirement in October 2007, we've been living primarily off our savings.   Since I retired at 49, I've been concerned about the impact of the Great Recession on our savings and retirement accounts. I became concerned about depleting our accounts and consciously took part time jobs to reduce the withdrawal rates.  From 2008 to 2011, I worked enough to cover 6%, 15%, 43% and 86% of our annual expenses.  If I had continued working, I could have covered 116% of our annual expenses.

However, over the past few months, I came to realize that a part of retirement is spending down savings.  It was time to get over it and get used to a declining savings and retirements accounts.  Of course, I wistfully long for the old days of a booming economy and stock market.  But I'm definitely not holding my breath.

Working a career to working a job.  During the most successful part of my working time, I bought into the idea of work being a career.   I probably was officially working 60-80 hours week at the office and then thinking about work during my personal time. I benefited from treating work as a career.  I was compensated well, saved a lot of money, and was able to retire in my forties.

In retirement, I think of work as being a job to earn some money.  I still strive to do my work with excellence, but I no longer am trying to exceed expectations, nor trying to advance in the company.  Also, I don't worry about performance appraisals or doing professional development.  If I tire of the work, the management or my colleagues, I can quit the job and get another one that I consider more fun.

Moving from the outer circle to the inner circle. While I was working, I was spending most of my time with people in my outer circle as result of working 60-80 hours a week.   Because it was work, I was required collaborate and work effectively with people in my outer circle.   As a result, I was spending lots of quality time with people in the outer circle and investing a lot of energy to coach and develop those in the outer circle.

Since retiring, I'm moving  focusing on my inner circle of family and friends.  I am working to  give my inner circle priority for my quality time, energy and personal development, which the outer circle seemed to mostly get in my working years.  In addition,  other than to comply with social norms, I plan to spend no effort developing relationships with people in the outer circle.   

So that's my epiphany from unretiring and taking a temporary full time job.   However, I look forward to returning to my retirement transition since the temporary full time job will be ending soon.
 
For more on Reaping the Rewards, check back every Friday for a new segment.

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

Copyright © 2011 Achievement Catalyst, LLC

Good Personal Finance is Hard Work

"A good idea is about ten percent and implementation and hard work, and luck is 90 percent." ~ Guy Kawasaki

Doing anything well usually requires hard work.  That's also true for using good personal finance techniques. 

Here are some good strategies for building wealth, but take hard work to do:

• Pay yourself first.   Most people pay their bills first and spend what's left over.  This strategy requires putting money in savings first and then spending the rest.   To me, this is an important element of building wealth.  Yet, many people won't or can't take this step.
• Start saving early.   The younger one starts the easier it is to build a bigger savings account.  For example, saving $1/day for 30 years  at 6% interest is worth $30,713.  Saving $1/day for 50 years at 6% interest is worth $116,074.  At 10% interest, the value is $69,632 and $537,687 for 30 and 50 years, respectively.
• Live below one's means.  Living on 90 or 80% of one's salary helps builds savings and also helps reduce the impact of an economic downturn.  In addition, it helps make the transition to retirement easier.

While I believe this are great strategies for building wealth, I don't seem many people doing them.   I guess if these were easy to do, we'd all be wealthy:-)
 
For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

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

Copyright © 2011 Achievement Catalyst, LLC

Links to Carnivals from to November 1 - 7, 2011

Here are the links to the Carnivals in which My Wealth Builder participated from November 1 - 7, 2011:

Top Personal Finance Posts of the Week

Carnival of Financial Planning #209

Baby Boomers Blog Carnival One Hundred-sixteenth Edition

Cavalcade of Risk #143: The Mister Rogers' Neighborhood Edition

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

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

Copyright © 2011 Achievement Catalyst, LLC

The Wealth Builder Carnival #52

Welcome to the fifty-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

vinman presents How To Choose A Profitable Business Niche? posted at Internet Home Business Opportunities, saying, "Your online business success depends on selecting the right niche to start your blog. Get tips on how to select a profitable niche which has less competition, but more demand."

Sunil presents Developing a Corporate Entrepreneurship Mindset posted at The Extra Money Blog, saying, "Who said cube farmers are not entrepreneurs? They can be. They just choose not to be. Nor do companies train employees in corporate entrepreneurship."

BIFS presents October 2011 Blog Statistics and Income Update posted at Budgeting In the Fun Stuff, saying, "It has been a heck of a month! Long story short, I now have more than 90 client sites for my advertising business and had a record month."

Jonathan from Debt Loans presents How To Excel In This Economy: Tips for Career Advancement and Success posted at Wallet Watcher, saying, "Assess your career options once a year and determine what you want out of your career and life. This will help you decide if you are satisfied in your current position or if it is time to move forward."

Nick Thacker presents How to Generate More Business In A Struggling Economy posted at Nick Thacker, saying, "Using online bartering sites can help with living frugally; a great idea for the current economic situation!"

Insuring and Protecting

Jason@LiveRealNow presents Living Wills: How to Die Well posted at Live Real, Now, saying, "Do you have a living will? Does your family know what you want to have happen if the worst happens?"

Investing

My Journey presents What are Preferred Shares? Do You Invest in Preferred Shares? posted at My Journey to Millions, saying, "I have dabbled in a lot of different types of investments, my most recent kick being my dividend investment portfolio, however, I have never really given thought to investing in preferred shares of stock."

Mike Piper presents ETFs vs. Index Funds (revisited) posted at The Oblivious Investor, saying, "As recently as last year, the ETF vs index fund question was about commissions and expense ratios. Now that those are (mostly) moot points, how should investors choose?"

Daniela presents 7 Smart Ways To Invest $100 posted at Go Banking Rates, saying, "If you and your friend Benjamin Franklin want to start building a fortune together, keep reading to learn 7 ways to invest $100, including a few off-beat options."

Carlos Sera presents A Preservation Tale posted at Financial Tales, saying, "This tale is specifically written for those that are looking for ways to deal with periods of high inflation with a secondary consideration for dealing with high inflation and receiving periodic income from your portfolio. It is why I call it A Preservation Tale, because the objective during periods of high inflation is to preserve purchasing power."

Jim Tolley (aka Kidgas) presents Investing in the Dogs of the Dow posted at Cash Flow Mantra, saying, "There is an investing technique that attempts to take advantage of the highest yielding dividend stocks in the Dow as a means of buying low and selling high. It was popular in the 1990″s but I hadn’t heard much about it recently although in the current environment, I am wondering if it is worth a look."

Dividends4Life presents 18 Dividend Stocks With A Good Yield And Growth Balance posted at Dividend Growth Stocks, saying, "Growth or yield? In a perfect world, income investors would want both from their investments and are not interested in investments that offer neither. This is where the common ground ends, and the debate begins. Without the benefit of a perfect world, we are left with the middle ground which is a balancing act between growth and yield."

Investor Junkie presents Are Those Long Term Capital Gains, or Short Term Gains? posted at Investor Junkie, saying, "How long you have been holding an investment matters. If you haven’t held it long enough, you could end up paying more in capital gains taxes. As you prepare your portfolio for the end of the year, don’t forget to consider the length of time you have had a stock."

Jim R. presents What You Should Know about Financial Gurus posted at Free By 50, saying, "More often than not financial gurus are just voicing their own opinion and in the worst case they may be biased and trying to pitch a product they themselves have a vested interest in selling."

Living Frugally

Jon Elder presents Controlling Expenses From the Top Down posted at Free Money Wisdom, saying, "If we’re serious about controlling our finances—and I mean really serious–nothing will have greater impact than lowering expenses from the top down, meaning the Big Stuff. I’m talking about four expenses in particular—housing, cars, health insurance and entertainment."

SavingMentor presents 4 Ways to Kick Your Mortgage in the Butt and Pay it Off Faster posted at HowToSaveMoney.ca, saying, "This article is dedicated to anyone else who wants to adopt great money practices to pay off their mortgage faster. (And just to be clear – that should be anyone WITH a mortgage.)"

John presents iPhone 4S: Verizon, AT&T or Sprint? posted at Wallet Blog, saying, "With the new iPhone 4S having just hit stores, many of you have a tough choice to make in terms of which network to get it on. So, how are you supposed to decide?"

Clint Cora presents Joy Of Not Paying Credit Cards Any Interest posted at Motivation Diversity Success Blog, saying, "How to never pay credit card interest"

Retiring

Roger White presents 401k Contribution Limits in 2011 and 2012 posted at 401k Calculator, saying, "This posts lets you know about your 401k contribution limits for 2011 and 2012."

MoneyCone presents HOWTO Do A 401K Rollover Correctly posted at Money Cone, saying, "When you leave behind your old job for a better opportunity, in your excitement, don’t forget your 401K! Consolidation will make your life a lot easier."

Peter presents 2012 Roth IRA Rule Changes posted at Bible Money Matters, saying, "What are the 2012 Roth IRA rule changes? It’s important to pay attention to any upcoming changes in the rules, because modifications in the maximum contribution limits, annual income limits, or other factors can throw a wrench right in the middle of your retirement plans"

Saving

CUZen presents The time has come to join a Credit Union posted at Credit Union Revolution, saying, "Avoiding banking fees by choosing to be a member of a Credit Union."

Jason Price presents How Dads Can Teach Children About Saving Money posted at Comments for Childrens Savings Accounts HQ, saying, "Dads can teach kids about money in everyday situations."

Taxes

Gemma Flannery presents Your Tax Code For 2011 posted at Tax Codes, saying, "Your tax code is used by your employer to calculate the amount of tax to deduct. Each year this changes with as tax brackets change. This posts explains the tax code for 2011."

Al Peters presents 4 Things You Should Know About Your Self Assessment Tax Return 2011 posted at TaxFix Feed Update, saying, "There are many things that you should know about completing your tax return but this post highlights 4 of the top things to remember."

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

Technorati tags: the wealth builder carnival, blog carnival.  

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

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

Copyright © 2011 Achievement Catalyst, LLC

A Strategy for a Successful Business

During my working days, I read about how companies such as Ford and McDonald's became great.  I noticed there was a pattern to how these companies became extremely successful.  Here is my summary:

Start with a great product.  Great means that it has broad appeal to consumers: right product and right price. 

Systematize production. Develop a process or system that enables repeatability of production or service.  Thus, consumers get the same great product or service every time.

Make the process scalable.  Enable the fast growth of the business through fast sales growth.

Expand.    This is the toughest and the most intensive part.    This involves doing the work to build the capability for fast growth:  facilities, employees, knowledge transfer and finances.

Many startups do well with great products.   To me, many busoness failures happen at the second and third steps which then prevents or leads to a poor expansion.  Both Ford and McDonald's were able to make it through all four steps and become tremendous business successes.
 
For more on Strategies and Plans, check back every Monday  for a new segment.

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

Copyright © 2011 Achievement Catalyst, LLC

Am I Better Off Than I Was Four Years Ago?

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

As I get ready for the 2011 and 2012 elections, I find myself asking the question that Ronald Reagan asked, "Are you better off than you were four years ago?"  It's a simple question.   If I am better off, I will vote for the incumbent.  If I am worse off, I will vote for change.

For the Tuesday, November 8, 2011, I will be voting for change.   With the way things are going, I expect to be voting for change in 2012 also.

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

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

Copyright © 2011 Achievement Catalyst, LLC

Broke My Minimalist Clothing Rule

Three years ago,  I decided to cut way back on clothing purchases since I'm older and retired.   I figured I could use my existing clothing stock for at least 10 years and would probably only need athletic socks.  (After three years, I now  would add underwear to the likely list of needed items before 10 years. :-)
 
For the past three years, I've been pretty good at not making "unnecessary" clothing purchases.  So far, I've only purchased athletic socks and a couple sports shoes.   However, some clothing is wearing out faster than I expected.   In particular, wrinkle free khaki pants seem to only last a couple years before becoming "yard work" clothing.  Otherwise, I haven't even purchased underwear.

However, last week, I was at a end of season golf apparel sale.  I found a pair of golf shoes that were a perfect fit, which almost never happens for me.  Then I found a shirt with my spouse's college emblem on it.  The shoes were 25% off,  the shirt was 66% off and I received an additional 10% off.    So I was able to purchase everything for 20% less than the original cost of the shoes.

So I broke my boycott of buying unnecessary clothes since my current golf shoes should last a couple more years and I don't need another shirt, even with a college logo.  I guess I shouldn't feel too bad.  After all, I did hold back for three full years and actually, it feels good to have a new shirt in my wardrobe.  However, I still have the receipt and can return the purchases if I'm overcome by buyer's remorse.
 
For more on Reaping the Rewards, check back every Friday  for a new segment.
This is not financial or wardrobe advice. Please consult a professional advisor.

 Copyright © 2011 Achievement Catalyst, LLC

Learning to Ride a Bike

A childhood rite of passage was learning to ride a bike.  I only remember a very small snippet of my experience.   My mom was teaching me to ride in our backyard but pushing me from the house to the back fence.   The yard was on a slight downhill slope.   I would pedal downhill.  My mom would steady me and help me stop.   
 
I remember one time going downhill and getting close to the back fence.   I yelled, "Stop!"  My mom yelled from a distance, " Use your brakes!"   I didn't remember if I did or if I crashed.   Either way, it wasn't fatal because I'm still her.
 
This summer, I decided to teach our six year old daughter how to ride a bike without training wheels.   Like my mom, I tried to have her ride on the slope in our yard.   Although she didn't crash, it didn't work.  Then I read a bike riding lesson on the Internet which recommended separating the two parts:  balancing and pedaling.
 
So I took our daughter out on the street which had a slight slope.  She worked on coasting and balancing without pedaling.   That took about a week for her to master.   Once she mastered balancing, the pedaling   part was very easy.  In fact, our daughter surprised herself (and everyone else) by pedaling uphill for a picture my spouse was taking.
 
It took about a week to learn riding a bike using the balance first then pedal method.  I highly recommend using this method for teach a child to ride a bike.
 
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

How the Greeks Stole Christmas

Three of the best four months for the stock market are November, December and January.  Hence, there is a common belief in a Santa Claus rally and a January effect.  In 2011, I don't think investors will see the historical Christmas rally with the upcoming Greek referendum.   The uncertainty created by the referendum will increase volatility and likely eliminate the positive sentiment that leads to a Santa Claus rally.
 
Here are the two reasons that I think there will be no year end rally:

Misery loves company.  The Greeks have maintained their standard of living by continually borrowing without the ability to repay the loans.   Now that it's time to deal with the debt, the Greeks are reluctant to reduce their lifestyle.   It seems that Greeks would rather everyone else pay for the lifestyle to which they have become accustomed.  In essence, everyone should share the pain of their mistakes.

Not a bluff.  The Greeks realize that any scenario will be bad for them.  Why not negotiate to offload a greater portion of the pain in order to prevent a major financial meltdown for the entire world.   The Greeks don't have much more to lose, and therefore not much more to risk.

For now, the EU debt crisis and the likely Greek default will continue to be damper on the stock market.   I don't expect much upward potential until early next year when there is greater visibility of how the EU debt crisis and Greek default will be resolved.

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

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

Copyright © 2011 Achievement Catalyst, LLC

Looks Like a Sucker Rally

According to Investopedia, "a sucker rally occurs with little fundamental information to back the movement in price."  To me the definition seems to apply to the October 2011 rally, one of the best ever.   I couldn't figure out what had changed from September 2011.  The U.S. economy was still poor.  The situation in Europe still looked bad.  The catalysts for the rally were the beliefs that the Greek debt crisis would be resolved and the U.S. would not have a double dip recession. 

Today, the Greek debt crisis is back.  With a Greek default looming, a double dip recession in the U.S.  has become a concern again.  Unfortunately, nothing has changed and the stock market will likely fall back to previous levels.
 
For more on Ideas You Can Use, check back every Tuesday for a new segment.

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

 Copyright © 2011 Achievement Catalyst, LLC