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Lavish spending is a sign not of wealth, but of wealth departed.

What They Believed

I MOVED FROM LONDON to New York in 1986. For the next three-plus years, I worked as a lowly reporter (read: fact checker) and then staff writer at Forbes magazine, before I was hired away by The Wall Street Journal. During those three years, I set out to educate myself on U.S.-style personal finance.
Forbes was a great place to do that. The magazine’s Greenwich Village offices had a well-stocked library of financial books and company reports,

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Chips With Everything

I EXPERIENCED a traumatic event recently: 24 hours without an iPhone. When I left the house, I felt out of touch, incommunicado. What if someone needed me or I needed them? What if I missed the latest Tweet? It was horrible.

My iPhone X was just about kaput, with a cracked screen and a weak battery. On a trip to the mall, I walked into an AT&T store “just to look.” I ended up with an iPhone 13 Pro,

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Short Stuff

Eyeing the Cake

I JUST REACHED my full Social Security retirement age of 66 and four months. Funny, I don’t feel a bit older. Still, I am now entitled to 100% of the benefit that I’ve earned since I started working.
Conventional wisdom says to delay filing. Each month that I wait will add 2/3rds of 1% to my eventual benefit. That adds up to a risk-free 8% a year. If I were to wait until I turn 70,

Read more »

Don’t Be Like Joe

I HAD SOME GOOD bosses and some bad ones over my 35-year career. The worst was Joe. He tried to intimidate you. I once overheard him tell another manager that he likes to ride his employees and dig his spurs into them.
What was so terrible about Joe? It wasn’t that he was tough on employees. It was that he was unfair. You incurred his wrath whether you deserved it or not.
I remember the first time I attended a meeting held by Joe.

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Moaning About Money

I’M SPENDING MONEY like water, even though I’m a tightwad, or so says my wife.

We’re on vacation—well, sort of. Since we’re retirees, “vacation” has less meaning. Still, we are away from our principal residence in New Jersey, instead spending the summer at our house on Cape Cod.

At various points, some of our four children and 13 grandchildren arrive—but, fortunately, not all at once. The house goes from quiet to pandemonium. Even so,

Read more »

Going Strong

RECESSION FEARS are fading. Second-quarter corporate profits have been better than expected. Some recent economic data show key barometers in growth mode, even as the latest GDP report confirmed a second consecutive quarter of economic contraction. Indeed, this past Friday’s hot employment report cooled the debate over whether we’re in a recession.
The pandemic upended so many facets of life and business, and we’re still feeling the effects today, as evidenced by odd swings in what are often stable economic numbers.

Read more »

Check on Yourself

MEET THE LATEST feature added to HumbleDollar—as well as the website’s first calculator: the Two-Minute Checkup.
How does it work? All you need to do is input up to nine pieces of information, the sort of stuff most of us know off the top of our head. There’s no need to create an account or link to your brokerage firm or bank, and none of your information is saved on HumbleDollar or anywhere else. 

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Earning a Roth

HAVE YOU GOT children or grandchildren with summer jobs? That means you could put them on the path to financial success—by helping them open a Roth IRA.
My brothers and I always had jobs, including delivering newspapers, bussing tables, mowing lawns and valet parking. My sons also had jobs at an early age, including shucking thousands of ears of corn at our local swim club. Later on, they were lifeguards, along with many of their friends from the swim team.

Read more »

Longer Reads

A Narrow Escape

I ENVY THOSE WHO can remain patient and calm in almost any situation. Thanks to my neurotic personality, I find it hard to wait for an outcome over which I have little control. This year, I narrowly escaped that sort of agonizing experience. What happened? We found ourselves selling our home during 2022’s suddenly cooling real estate market.
I was surprised last year when the red-hot property market pushed our modest home past the $1 million mark.

Read more »

Less Is Better

I CONTINUE TO LOOK for ways to simplify my life. At age 71, I want fewer things to deal with and to worry about. To that end, here are five steps that my wife and I are taking:
1. Consolidating finances. I mentioned in an article last year that my wife and I have consolidated our investments at Vanguard Group, while our savings and checking accounts are at a local credit union.

Read more »

Don’t Sweat It

BEING MECHANICAL and unemotional is a poor way to live life. But when investing, it just might make you richer.
Through this year’s stock market turbulence, I’ve been even keeled. My reaction to the plunging bond market has been more agitated, as I wrote about here and here. The fact is, while I’m convinced the stock market will rebound, I don’t have the same belief in bonds.
Armed with my faith in stocks, I’ve adopted a mechanical approach to investing,

Read more »

We All Want an A

IN THE WEEKS BEFORE my annual physical, I made a concerted effort to lose a few pounds, drink more water, skip my evening glass of wine, eat more fiber, and avoid red meat, French fries and cheese. The happy result: My blood pressure was low. My weight was down slightly from my previous checkup. My cholesterol count was good. My A1C level suggests my prediabetic condition hasn’t got any worse. All in all, last month’s physical found that I had little reason to worry.

Read more »

Brain Teasers

I CAN’T CALL THE BOOKS I buy “beach reads” because, honestly, they can get dense. Still, if—like me—you enjoy learning about investing, economics or even the religious overtones of capitalism, here are five books that might make for insightful summer reading or, perhaps, induce napping in the hammock.
The Physics of Wall Street by James Owen Weatherall. This book begins with the assertion that “Warren Buffett isn’t the best money manager in the world” and then spends the next 224 pages introducing us to genius PhDs who’ve whipped the S&P 500 by anticipating the prices of securities.

Read more »

What to Worry About

BOSTON COLLEGE’S Center for Retirement Research just published a study that explores what Americans think are the biggest risks to their retirement—as opposed to what they objectively are. The center found “a big disconnect between how actual and perceived risks are ranked.” That disconnect could be hurting people’s retirement planning.
The study says the biggest risk to retirement is longevity—living so long that we run out of money. But the survey found that the biggest perceived threat is a market drop that cuts into savings,

Read more »

Voices

Is “die broke” a smart retirement strategy?

"Here is how I read the question and why I say Yes. My wife and I will have at least 6K/month in SS and almost certainly have the house paid off, so chance of being on the streets is close to 0. So if we live well at the youngest point in our retirement where and when we are also statistically the most healthy vs. limit ourselves to some 4% and then things go off the tracks while we are in 80's (of course if we make it that far) I think that is a reasonable risk to take."
- rayanmiller6303
Read more »

What purchase do you most regret?

"I bought a very large John Deere snowblower. Actually it was a John Deere tractor with a heated cab, overhead lights, and a huge rotating snow thrower on the front. 100% overkill. I bought this because my little Honda snowblower was overwhelmed given a big driveway and I ended up shoveling so much. Now I’m much smarter and I hire a reliable snow blowing service to clear my driveway and walks."
- Bob Wilmes
Read more »

What criteria should you use to pick a retirement location?

"Ability to visit family/friends easily, healthcare, local transportation options for when I’m no longer able/willing to drive, affordable housing, and inexpensive entertainment. For me, that means a small city in the Carolinas or northern Georgia, one with a good public library and maybe a college with a theatre program. I have friends looking for places with good public golf courses, small towns with large lots for gardening, or near major airports for easy travel."
- Ginger Williams
Read more »

Money Guide

Trusts

WHEN FOLKS HEAR THAT someone has set up a trust or is the beneficiary of a trust, one thought often comes to mind: We’re talking about serious money. In the lexicon of wealth, the term “trust” is as evocative as “hedge fund,” “private equity” and “overseas bank account.” In truth, a trust is just an estate planning tool, one that sometimes makes sense even for families with relatively limited wealth. Why would you use this tool? There are four reasons:
  • Assets held in a trust can avoid probate. This is the reason some people set up revocable living trusts.
  • A trust can allow you to control how the assets you bequeath are used after your death. For instance, folks will often use trusts when leaving money to children, including those with special needs, or to family members who are financially irresponsible. They might also use trusts if they’re remarried and trying to provide for both a new spouse and children from an earlier marriage.
  • Trusts can help if you fear you might be subject to estate taxes. Two popular tax-cutting strategies include using bypass trusts and setting up irrevocable life insurance trusts.
  • For those worried about lawsuits, trusts can help with asset protection.
Depending on the type of trust, hefty costs can be involved. This shouldn’t be an issue with, say, a revocable living trust used simply to avoid probate. But let’s say you bequeath money to your children in a trust. The trust could pay substantial annual fees for administration and money management, and also need to file its own tax return. Next: Living Trusts Previous: What to Bequeath Article: Trust Issues
Read more »

Manifesto

NO. 8: RETIREMENT may be our final financial goal, but we should always put it first. Why? It’s easily our most expensive goal, so it takes decades of savings and investment gains to amass enough.

Truths

NO. 33: MOST INVESTORS trail the market averages. That’s true whether a market is considered efficient or inefficient. Before investment costs, we collectively earn the results of the market averages. After costs, we must inevitably earn less. In fact, investors—as a group—will trail the market by a sum equal to the investment costs they incur.

Act

GET YOUR CHILDREN age 18 and older to draw up a health care power of attorney, specifying that you can make decisions on their behalf if they become incapacitated. If they have an accident—and you have no power of attorney—you may be unable to make medical decisions for them or even learn basic information about the state of their health.

Think

DIVERSIFICATION. While diversifying is important with bonds, it’s crucial with stocks—and involves investing in hundreds and perhaps thousands of companies from a host of market sectors and countries. If we don’t diversify, and instead buy a handful of stocks or a single sector, there’s a danger we’ll take the risk of stock investing—without getting the reward.

Second Look

Retirement

About That 4%

IT’S SCARY TO RETIRE with a pool of money, knowing how you handle it determines your financial security for the next 25 years or so. It must seem even scarier to everyday Americans who don’t think they can count on Social Security.
A recent Tweet caught my eye. It linked to an article about the problems with the so-called 4% rule. As you might recall, the 4% rule states that, if you withdraw 4% of your portfolio’s value in the first year of retirement and thereafter step up the dollar amount withdrawn with inflation,

Read more »

Family Finance

Losing Interest

“ONLY BORROW TO BUY things that’ll appreciate in value.” This was a popular piece of financial wisdom in the 1980s, when I started writing about personal finance. But I can’t recall anyone saying it in recent years. Does that mean this wisdom is no longer wise?
Financial habits have obviously changed. I might make just a single cash machine withdrawal each month, because I put almost every expenditure on my two credit cards, which I use to buy groceries,

Read more »

Investing

What We’ve Learned

WHEN I THINK BACK on 2020—and I know we aren’t quite done with it yet—I’m reminded of the movie Alexander and the Terrible, Horrible, No Good, Very Bad Day. But to paraphrase Nietzsche, chaos isn’t all bad—if something positive ultimately emerges from it.
Below are five financial lessons that, in my mind, are worth carrying beyond this year:
1. Stock prices respond to news—but never in a predictable way. Leading up to the election,

Read more »

Lists

Minimizing Regret

LAST WEEK, I LEARNED the disappointing news that our next-door neighbors—possibly the nicest people in the world—have put their house on the market.
While I’m sorry to see them go, I understand their decision. With a growing family, they’re looking for more room. During the pandemic, in fact, many people are making changes of one sort or another. Will they be happy with their choices?
That brings me to a new project, developed by author Daniel Pink,

Read more »
Home Call to Action

Mindset

All Too Human

THE STOCK MARKET this year reminds me of one of those Rorschach inkblot tests. The broad U.S. market has gained more than 4%, including dividends, but it’s difficult to know what to make of it. Bulls point to this year’s tax cuts and believe that the market’s gain makes complete sense. Bears, on the other hand, note that the market has quadrupled in less than 10 years and conclude that it’s at an unsustainably high level.

Read more »

Longer Reads

A Narrow Escape

I ENVY THOSE WHO can remain patient and calm in almost any situation. Thanks to my neurotic personality, I find it hard to wait for an outcome over which I have little control. This year, I narrowly escaped that sort of agonizing experience. What happened? We found ourselves selling our home during 2022’s suddenly cooling real estate market.
I was surprised last year when the red-hot property market pushed our modest home past the $1 million mark.

Read more »

Less Is Better

I CONTINUE TO LOOK for ways to simplify my life. At age 71, I want fewer things to deal with and to worry about. To that end, here are five steps that my wife and I are taking:
1. Consolidating finances. I mentioned in an article last year that my wife and I have consolidated our investments at Vanguard Group, while our savings and checking accounts are at a local credit union.

Read more »

Don’t Sweat It

BEING MECHANICAL and unemotional is a poor way to live life. But when investing, it just might make you richer.
Through this year’s stock market turbulence, I’ve been even keeled. My reaction to the plunging bond market has been more agitated, as I wrote about here and here. The fact is, while I’m convinced the stock market will rebound, I don’t have the same belief in bonds.
Armed with my faith in stocks, I’ve adopted a mechanical approach to investing,

Read more »

We All Want an A

IN THE WEEKS BEFORE my annual physical, I made a concerted effort to lose a few pounds, drink more water, skip my evening glass of wine, eat more fiber, and avoid red meat, French fries and cheese. The happy result: My blood pressure was low. My weight was down slightly from my previous checkup. My cholesterol count was good. My A1C level suggests my prediabetic condition hasn’t got any worse. All in all, last month’s physical found that I had little reason to worry.

Read more »

Brain Teasers

I CAN’T CALL THE BOOKS I buy “beach reads” because, honestly, they can get dense. Still, if—like me—you enjoy learning about investing, economics or even the religious overtones of capitalism, here are five books that might make for insightful summer reading or, perhaps, induce napping in the hammock.
The Physics of Wall Street by James Owen Weatherall. This book begins with the assertion that “Warren Buffett isn’t the best money manager in the world” and then spends the next 224 pages introducing us to genius PhDs who’ve whipped the S&P 500 by anticipating the prices of securities.

Read more »

What to Worry About

BOSTON COLLEGE’S Center for Retirement Research just published a study that explores what Americans think are the biggest risks to their retirement—as opposed to what they objectively are. The center found “a big disconnect between how actual and perceived risks are ranked.” That disconnect could be hurting people’s retirement planning.
The study says the biggest risk to retirement is longevity—living so long that we run out of money. But the survey found that the biggest perceived threat is a market drop that cuts into savings,

Read more »

Free Newsletter

Voices

Is a home a good investment?

"Like most things, it depends. Our home is a black hole for money. I live in the failed state of Illinois and property taxes are insane. I pay much more for property tax than I do for P and I. Even after we pay off the mortgage, the taxes will remain. I live in an affluent area, so services like landscaping and home improvements are quite expensive since vendors sense that if we live here, we can afford it. That said, we live in a beautiful neighbor hood with great amenities that is a short drive to the beach and the city. There are many 100-year old trees and brick streets. The schools are excellent. Many people move out soon after their last kid graduates; we may consider that option. I definitely have mixed feelings - I like it here, but my financial soul is horrified that I live here."
- Jackie
Read more »

Is term life insurance always better than cash value?

"For sophisticated money managers like the Humble Dollar crowd, Universal Life insurance (UL) might prove a valuable "protection asset" (not to be confused with an investment asset). With UL, you can essentially pay the premiums whenever you want (provided you have enough cash value in the policy to provide this flexibility), and in whatever amount you want (even treating it as a term policy by paying only the "Cost of Insurance" each year), and can think of it as a "life insurance bank account", where you have the full death benefit protection as long as there is some cash (value) in the policy. In my younger years, with high child-raising expenses and mortgage payments, I paid only the term costs on my UL policies -- or even skipped payments in some years, when expenses were particularly high -- and kept a low amount of cash value in the policy. Now, as I approach my 60's, I'm building up the policies' cash balances to pay for the higher premium costs that will come due in my retirement years. I've owned these policies for over 30 years, and they saved my bacon, because I became uninsurable in my 40's, and would have lost my life insurance coverage if I had "bought term and invested the difference". For the Humble Dollar crowd, who would manage their "protection asset" as they do their investement assets, Universal Life could prove to be a beneficial option."
- John Wood
Read more »

What’s the best strategy for selling a house?

"I'm thinking of trying a discount real estate broker if the market remains strong. Top full-service discount real estate brokerages in 2022: https://listwithclever.com/discount-real-estate-brokers/"
- booch221
Read more »
Home Call to Action

Manifesto

NO. 8: RETIREMENT may be our final financial goal, but we should always put it first. Why? It’s easily our most expensive goal, so it takes decades of savings and investment gains to amass enough.

Act

GET YOUR CHILDREN age 18 and older to draw up a health care power of attorney, specifying that you can make decisions on their behalf if they become incapacitated. If they have an accident—and you have no power of attorney—you may be unable to make medical decisions for them or even learn basic information about the state of their health.

Truths

NO. 33: MOST INVESTORS trail the market averages. That’s true whether a market is considered efficient or inefficient. Before investment costs, we collectively earn the results of the market averages. After costs, we must inevitably earn less. In fact, investors—as a group—will trail the market by a sum equal to the investment costs they incur.

Think

DIVERSIFICATION. While diversifying is important with bonds, it’s crucial with stocks—and involves investing in hundreds and perhaps thousands of companies from a host of market sectors and countries. If we don’t diversify, and instead buy a handful of stocks or a single sector, there’s a danger we’ll take the risk of stock investing—without getting the reward.

Money Guide

Start Here

Trusts

WHEN FOLKS HEAR THAT someone has set up a trust or is the beneficiary of a trust, one thought often comes to mind: We’re talking about serious money. In the lexicon of wealth, the term “trust” is as evocative as “hedge fund,” “private equity” and “overseas bank account.” In truth, a trust is just an estate planning tool, one that sometimes makes sense even for families with relatively limited wealth. Why would you use this tool? There are four reasons:
  • Assets held in a trust can avoid probate. This is the reason some people set up revocable living trusts.
  • A trust can allow you to control how the assets you bequeath are used after your death. For instance, folks will often use trusts when leaving money to children, including those with special needs, or to family members who are financially irresponsible. They might also use trusts if they’re remarried and trying to provide for both a new spouse and children from an earlier marriage.
  • Trusts can help if you fear you might be subject to estate taxes. Two popular tax-cutting strategies include using bypass trusts and setting up irrevocable life insurance trusts.
  • For those worried about lawsuits, trusts can help with asset protection.
Depending on the type of trust, hefty costs can be involved. This shouldn’t be an issue with, say, a revocable living trust used simply to avoid probate. But let’s say you bequeath money to your children in a trust. The trust could pay substantial annual fees for administration and money management, and also need to file its own tax return. Next: Living Trusts Previous: What to Bequeath Article: Trust Issues
Read more »

Second Look

Retirement

About That 4%

IT’S SCARY TO RETIRE with a pool of money, knowing how you handle it determines your financial security for the next 25 years or so. It must seem even scarier to everyday Americans who don’t think they can count on Social Security.
A recent Tweet caught my eye. It linked to an article about the problems with the so-called 4% rule. As you might recall, the 4% rule states that, if you withdraw 4% of your portfolio’s value in the first year of retirement and thereafter step up the dollar amount withdrawn with inflation,

Read more »

Family Finance

Losing Interest

“ONLY BORROW TO BUY things that’ll appreciate in value.” This was a popular piece of financial wisdom in the 1980s, when I started writing about personal finance. But I can’t recall anyone saying it in recent years. Does that mean this wisdom is no longer wise?
Financial habits have obviously changed. I might make just a single cash machine withdrawal each month, because I put almost every expenditure on my two credit cards, which I use to buy groceries,

Read more »

Investing

What We’ve Learned

WHEN I THINK BACK on 2020—and I know we aren’t quite done with it yet—I’m reminded of the movie Alexander and the Terrible, Horrible, No Good, Very Bad Day. But to paraphrase Nietzsche, chaos isn’t all bad—if something positive ultimately emerges from it.
Below are five financial lessons that, in my mind, are worth carrying beyond this year:
1. Stock prices respond to news—but never in a predictable way. Leading up to the election,

Read more »

Lists

Minimizing Regret

LAST WEEK, I LEARNED the disappointing news that our next-door neighbors—possibly the nicest people in the world—have put their house on the market.
While I’m sorry to see them go, I understand their decision. With a growing family, they’re looking for more room. During the pandemic, in fact, many people are making changes of one sort or another. Will they be happy with their choices?
That brings me to a new project, developed by author Daniel Pink,

Read more »

Mindset

All Too Human

THE STOCK MARKET this year reminds me of one of those Rorschach inkblot tests. The broad U.S. market has gained more than 4%, including dividends, but it’s difficult to know what to make of it. Bulls point to this year’s tax cuts and believe that the market’s gain makes complete sense. Bears, on the other hand, note that the market has quadrupled in less than 10 years and conclude that it’s at an unsustainably high level.

Read more »