A Seriously Busy Sunday

Before taking early retirement in October, 2007, I would use Sundays to relax and prepare for the upcoming work week. I tried not to do too much, so as to not stress myself during the weekend. Now that we're retired, I have the flexibility to be very busy on a Sunday. Today was an example of what Sundays may be like in the future:

7:00 AM - Doubles tennis in a casual tennis league of neighbors and friends. 7:00 AM on Sundays was a time most people could commit to being available, barring vacation or being out of town for business.

10:30 AM - Church

12:00 PM - Family picnic for church members.

2:00 PM - Volunteer work at local park for a naturalist presentation. Our daughter and her friends participated also.

5:00 PM - Soccer lessons.

7:00 PM - Post season soccer team party.

8:30 PM - Put daughter to bed and free time for parents.

Prior to retirement, I would only firmly commit to going to church on Sundays. Now I wonder how I had time to work before I retired :-)

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

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

Copyright © 2009 Achievement Catalyst, LLC

Government Ownership is the New Welfare

According to Wikipedia, welfare is "financial assistance paid by taxpayers to people who are unable or unwilling to support themselves." Call me cynical, but it sure looks like the government take over Chrysler and GM is a new form of welfare. Here's my case using the definition:

1. Financial assistance paid by taxpayers. If it weren't for taxpayer funds, many automaker employees would no longer have a job. Essentially, the taxpayer is covering the salaries of automaker employees.



2. Unable to support themselves. Each company is losing billions of dollars each quarter. They build cars that are losing market share. Every car produced loses money for the company.

I don't believe the new GM or new Chrysler will ever be profitable as free standing companies, and thus, will require long term direct government assistance to continue. To me, welfare by any other name is still welfare.

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

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

Copyright © 2009 Achievement Catalyst, LLC

The Future GM - Government Motors Corporation

On June 1, 2009, it is highly likely GM will file for bankruptcy, resulting in the US government owning over 70% of the new automobile company. While the government denies that they will be running the auto company, I can't help but to speculate what a US government run car company might do. Here are some possibilities:

Offer one car model. I know the current plan is to keep four brands. However, the government should only offer only one brand and one model, the GMC Obamamobile. The Obamamobile is the car that is all things to all people, sporty, all terrain, green, nuclear powered, and seats up to eight.

If the average person can't afford one, they will receive an auto stimulus tax rebate that is financed by tax that takes the remaining income of the top 2% of earners.

GMIC insurance. The FDIC can run Government Motors Insurance Corporation, which will guarantee that a GM vehicle won't lose any value for the first 100,000 miles, or 250,000 miles until December, 2009.

TAFP financing. The Treasury will use the remaining TARP moneys to fund the Troubled Auto Financing Program (TAFP). Senator Chris Dodd (D, CT) can be in line to get "friend of TAFP" special financing and Rep. Barney Frank (D, MA) can to introduce legislation making everyone automatically qualified for TAFP funding.

Of course, the Obama administration could present the changes with the spin of, "What's worked for financial institutions should work for the automobile companies." :-)

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 © 2009 Achievement Catalyst, LLC

Our Recipe for Early Retirement

In October, 2007, I was able to retired in my forties and joined my spouse who had stopped working 8 years earlier.

1. Commitment to saving. No matter how large or small the salary, it was what we saved that made early retirement feasible. We saved early, often and a lot. I started putting money into an IRA just after college. Also, we generally saved a significant portion of our salaries, typically about 10-20% on a yearly basis. Typically, a large portion of my raises also went to savings.



2. A margin of safety. Based on Taking the Mystery Out of Saving for Retirement and Personal Financial Ratios: An Elegant Road Map to Financial Health and Retirement, I believed that the minimum savings I needed to retire was equal to 12 times my salary. Since we were retiring in our forties, I raised the target to 20 times my salary. When I retired, we had 23 times my salary saved, not including the equity in our house. The bear market of 2008 has wiped out over 40% of savings, taking us to 13 times my pre-retirement salary.
   
   If we had retired with only 12 times my salary, I'd probably would have been looking to go back to work since late 2008. Living on the edge is great for entertainment but not for early retirement.



3. Interests outside work. Both my spouse and I have always had interests outside of work. In my twenties and thirties, I volunteered for and chaired several charitable organizations and also ran for political office. I've also been a participant in many sports, including running a marathon, softball, volleyball, and tennis. Finally, I've always been a personal finance junkie, with passionate interest in investing. My spouse is an avid gardener and gourmet cook. She also very interested in nature and enjoys traveling. We both love doing activities with our four year old daughter.
   
   
4. Good health insurance. Fortunately, I was qualified for retiree insurance coverage from my company. Although expensive, it provides the exact same coverage that I had as an employee. In addition, it will automatically cover new additions to our family. Also, I know early retirees, from other companies, that chose independent high deductible insurance coverage, and are also happy with their situation.



5. A partner with compatible financial philosophies. My spouse is frugal, a saver, and a good manager of money. In addition, she dislikes debt as much as I do. During the time we've been married, there have been few disagreements about how to handle our money.

Of course, there were no guarantees that this recipe will always work. However, for us, I believe these were some of the key factors that enabled us to consider early retirement when the opportunity presented itself.

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 © 2009 Achievement Catalyst, LLC

Our Principles for Saving

To me, saving is the primary skill that enabled us to build wealth. As they say, it's not what you make, it's what you keep that makes a person wealthy. While I didn't realize it at the time, we lived by a set of principles to guide how we saved. Here are the three key elements:

Start early. I remember saving my allowance, which was in coins, for future purchases when I was a child. I opened my first IRA while in college. When I started my first job, I also made sure that I saved part of my monthly income.

Saving early has two benefits. First, it makes saving a habit. Second, it allows the magic of compounding to work.

Save often. There are lots of opportunities to save and we tried to use them. 401Ks, IRAs, stock accounts, CDs, and other investments. Another opportunity is to save part of or all of a raise. Also, we saved prior to making a large purchase, since we believe in paying with cash, instead of using credit.

Save a lot. I realize now that my target should have been 20% of my income, which we achieved just before taking early retirement. For most, a target of 12% of income is more manageable, which we were doing most of the time. Using these 12% and starting before 35 will enable a person to save 12 times their salary by 65 years of age.

I've followed these savings principles through good times (the 1983 to 2000 bull market) and bad times (three recessions) when we were working. Even though in early retirement, we continue to save by putting money in Roth IRAs up to the maximum limit or 100% of our income, which ever is lower.

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

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

Copyright © 2009 Achievement Catalyst, LLC

Links to Carnivals from May 19 - 25, 2009

Here are the links to the Carnivals in which My Wealth Builder participated from May 19 to May 25, 2009:

Carnival of Financial Planning

Carnival of Personal Finance #206

Carnival of Twenty-Something Finances

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

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

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

Copyright © 2009 Achievement Catalyst, LLC

Free Summer Activities for our Four Year Old

Since we are trying to cut back on expenses this year, we are looking for more free activities in which our 4-1/2 year old daughter can participate during the summer. Of course, there are always the local playgrounds and play dates with friends. However, we are also looking for additional organized activities and programs. Here are the options that I have found in our area:

Matinee movies. Regal Theatres are once again offering their Free Family Film Festival, at 10AM on Tuesday and Wednesday from June 9, 2009 to August 5, 2009. For locations and listings see the Free Family Film Festival site.

Public library. Our county library system offers story time, educational, and entertainment programs for children during the summer. The closest branch mainly has story time programs with an occasional educational presentation.

Parks. Our county park system offers a number of free programs related to nature, such as hikes, naturalist talks, and craft activities. Each park has at least one free children's program each week, offering a lot of options from which to choose.

In addition, I have become a volunteer which has the perk making programs with charges free once I reach a target number of work hours. Since I just started volunteering, I hope to reach the target hours by the end of June. Also, if I volunteer as a campground assistant, the family gets to camp free with me during that week.

Banks. Our bank has an annual summer festival, movie nights, and story telling programs. As a regular customer, I often get a personal reminder about the upcoming events.

Church. Our church offers bible school that is free. Our daughter is now old enough to attend for this summer. The session is a morning class for one week.

Last year, we put our daughter in day camps, such as art, music, and nature. This year, we will continue to do the day camps in which she had the most interest and fun. The free activities will offer some great options for the times she isn't registered for camps.

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

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

Copyright © 2009 Achievement Catalyst, LLC

5/25/09 Stock Position Update - Commodity stocks continue to advance

Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list, the 10/20/08 Buy List, or the buy list of 1/12/09. I updated the stock picks for the modified Unemotional Investor Growth system with a 5/4/09 buy list that only had one stock, Cognizant Technology (CTSH). I plan to buy Cognizant Technology only if the stock market corrects and the stock falls to $20.

To me, it appears that the current rally is weakening. If any position gets close to breaking even, I will consider selling the stock.

The portfolio rose 15.1 % this week versus 0.2 to 0.7% advances for the market indices. Potash gained about 7% as commodity stocks continued to show strength. The overall portfolio is down 14.7% and the remaining holdings are down 37.1%. The portfolio is now way above the previous bottoms that occurred October 10, 2008 at -35.0% and -53.0% respectively. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October through November decline.

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

	From My Wealth Builder 7/7/08 and 1/12/09 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 5/22/09
Range Resources(RRC) [7/10/08]*	50	$58.17	$41.94
Potash (POT) [7/18/08]*	10	$215.09	$114.50
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	sold on 5/8/09 at $40.90
Potash (POT) [7/24/08]*	10	$192.02	$114.50
Southwestern Energy (SWN) [3/5/09]*	50	$29.44	sold on 3/18/09 @ $30.52

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. After received a buy signal on 1/12/09, Southwestern Energy received a second sell signal on 3/6/09. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks and make no more purchase since sell signals have been give for every stock.

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

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

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

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08, rebounded to $14.19 on 10/31/08 before falling a weekending low of $1.77 on 3/6/09. It closed at $10.50 on 5/8/09, and has pulled back to $8.96 as of 5/22/09. The massive rebound and now pullback of Las Vegas Sands and other poor quality stocks continues to support that the current advance is likely a bear market rally.

The market continues to be choppy. The Dow and S&P have reached 12-year lows. As of the close on 5/22/09, the Dow, Nasdaq and S&P 500 indices were respectively at 8277.32, 1692.01, 887.00. All three indices have risen significantly from lows in March 9, 2009. The Dow has declined -4.19 % year to date. The S&P 500 continues to also be in negative territory with a -0.68% decline for the year. Again, only the Nasdaq is up at 7.29% in 2009.

Economists acknowledge that the economy has been in recession since December, 2007. I expect the market will likely continue to be choppy with a correction in the near future. Last week, we cashed out of all the taxable managed funds and will use the proceeds to pay off our mortgage. If the market should correct, we will trickle some funds back into individual stocks.

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

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

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

Copyright © 2009 Achievement Catalyst, LLC

We've Achieved Zero Debt

On May 20, 2009, we paid off our mortgage and became 100% debt free. Here are some the consequences of our decision:

Savings reduction. It cost almost 1-1/2 years of my pre-retirement, pre-tax salary to pay off the loan. Most of the funds came from selling stock in our investment accounts. I finally came to the conclusion that paying off a 5 3/8% loan was likely a better return than investing in stocks.

Unfortunately, I should have listened to my spouse who wanted to pay off the mortgage a year earlier.

Monthly expense reduction. Our monthly expense will be reduced by 24%, extending the longevity of our savings by that amount. Fortunately, we only expended about 10% of our savings to pay off the mortgage, thus making the choice a good trade off, i.e. 10% savings loss for a 24% gain in time savings will last.

Stock market losses. It's no surprise that selling out the investment accounts resulted in a high number of capital losses. Combined with the loss carryover from 2008, it will take many years to write off the amount on our tax return.

Peace of mind. We no longer can lose our home due to missing mortgage payments. Not paying property taxes is now the only reason for which our house can be foreclosed.

Overall, we're glad the mortgage is paid off. It's one less thing to worry about as we navigate our choice of early retirement through these treacherous economic times.

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

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

Copyright © 2009 Achievement Catalyst, LLC

A Secret to Saving for Retirement - Ask the Right Questions

As I was growing up, my parents asked what I consider a right question. For them, it was: Should they take a vacation or save for college and retirement? "Take a vacation" could be replaced by "buy a new car," buy a bigger house, " or any number of discretionary purchases. More often, than not, the answer was save for college and retirement. As a result, my parents had enough funds saved for both our college and their retirement.

Should You Save for College or Retirement? is a great example of what I consider asking a poor question. In the article, a financial advisor advocates that retirement savings should be first priority and college savings should be second. While her logic makes sense, I think the opportunity for a good lesson in personal finance was missed.

To me, a good question chooses between spending or saving for retirement and college. Food or save? Food. Replace five year old car or save? Save. Wide screen TV or save? Save.

For me, the answers are much easier when the right question is asked.

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

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

Copyright © 2009 Achievement Catalyst, LLC