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Trying to beat the market is a game for the rich. Only they can afford the inevitable disappointing results.

Where to Begin

WHEN I STARTED working fulltime in 1980, there were very few retirement savings vehicles available to the average worker. I remember setting up my IRA and contributing the $2,000 annual maximum—at the time the only retirement account I could fund.
Today, by contrast, there’s a slew of retirement choices on offer. Where should those new to the workforce focus their dollars? If you have access to a 401(k) or similar retirement plan with an employer matching contribution,

Read more »

Creeping Costs

WE ARE ALL victims of continually rising costs. Here’s the oft-repeated drill: The service provider sends the yearly renewal bill by mail or email, or the new annual cost is simply posted to our credit card account or deducted from our bank account.
Assuming we even notice the charge, the head-scratching starts. What the heck was the cost last year anyway? The new fee may have increased just 3% or 5%, which doesn’t seem like a lot.

Read more »

Need to Know

A DOZEN YEARS ago, on my first day of business school, the professor stood at the board and illustrated a concept called “present value.” Truth be told, over my remaining time in school, I don’t think I learned anything more important than I learned in that first hour. It is, in my view, the single most useful tool in all of personal finance. Below, I’ll walk you through the concept and then illustrate some ways it can help you make better financial decisions.

Read more »

Declaring Victory

I OFTEN FEEL like the Grinch, who “puzzled and puzzled ‘till his puzzler was sore.” One question I’ve puzzled over endlessly: If what I do barely matters in the greater scheme of things, why in the world do I keep doing it?
Here are four related thoughts that often crop up in my writing:

One of life’s great pleasures is working hard at something we care deeply about.
While striving toward our goals can bring great satisfaction,

Read more »

Right Turn

MY HUSBAND is the consumer every company should fear. In my last post, I detailed his multi-month research that preceded our recent car purchase. This time, he decided to investigate auto insurance.
The Gecko’s promise to save 15% had hit a nerve. A savings of 15% on a $2,500 annual insurance bill for two cars would be worth the effort. But, of course, being the thorough person that he is, my husband had to check out every other insurance company on the planet.

Read more »

Are We There Yet?

PREPARING for retirement is like running a marathon. It requires dedication, discipline and endurance.
But there’s also a crucial difference.
When you cross the finish line in a marathon, you know the race is over. But when you quit the workforce, it’s much harder to figure out whether you’ve successfully reached retirement. Why? A happy and prosperous retirement is about money, but it’s also about so much more than money. Here are 15 signs that a wonderful retirement likely lies ahead:

You don’t need an online calculator to tell you that you have enough money,

Read more »

Money Guide

Medicare Part D

MEDICARE prescription drug plans are offered through insurance companies. While most seniors will want to enroll, it isn’t mandatory. You pay a premium, plus there’s often an annual deductible and a co-payment on each prescription that’s filled.
 

Read more »

Archive

Growing Up (Part I)

I RECENTLY RECEIVED an email from a friend asking, “What financial advice would you give to your younger self, now that you’re older?” I had to think for a while. But once I sat down to reply, I realized my attitudes about personal finance were already well-developed by the time I was in my 20s. I also realized my financial beliefs had been shaped, in part, by growing up in a family where money wasn’t exactly plentiful. As a child, I don’t remember ever having a formal discussion about personal finance with my parents. The lessons I learned about spending and saving came from real life. My family lived in rural Oregon. The modest allowance my parents provided each week was earned doing chores around our small farm. Returning bottles to the grocery store, to redeem the nickel deposit, served as supplemental income. The back-to-school supplies I purchased in the fall were financed with the proceeds from selling an animal each summer at our local 4-H livestock auction. We rarely ate out, but if we did, it was almost always at McDonald’s. We didn’t have cable television and we didn’t take expensive vacations to exotic locations. Instead, we went on camping trips. I spent a good portion of my summer vacations exhibiting our animals at county fairs throughout the state. The budgeting skills I have as an adult can easily be traced back to my youth, when I earned multiple awards for my 4-H record books, filled with the profit-and-loss statements for each of my projects. When I decided to go to college, my parents were supportive of my decision, but they were unable to help me financially. Instead, I applied for, and received, several needs-based grants. I also won thousands of dollars in merit-based scholarship money. I worked part-time while taking classes and lived such a frugal lifestyle that, when I graduated with my bachelor’s degree, I was not only debt-free, but also I’d managed to amass $5,000 in a savings account to help pay for graduate school. The financial lessons I learned growing up are still with me as an adult. I grew up not only appreciating the value of a dollar, but also learning that the memories from life experiences are far more valuable than any item that can be bought. To this day, I carefully pick and choose what I’ll spend my hard-earned money on. A day with friends at a pistol shooting competition is more highly valued than any possession I might purchase. This is the first in a series. Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Ore. Her previous blogs include To Buy or Not to Buy and Quitting Early.
Read more »

Numbers

WHO DO WE TIP? A CreditCards.com survey found that 77% say they always tip their server at a sit-down restaurant. We’re less likely to tip hairdressers (63%), food delivery folks (63%), taxi drivers (49%) and hotel housekeepers (27%).

Home Call to Action

Manifesto

NO. 42: WE SHOULD never take investment advice from brokers and insurance agents—because they have an incentive to sell high-commission products and get us to trade excessively.

Truths

NO. 93: PAYING down a mortgage is often the best bond we can buy. We earn a return equal to the mortgage’s interest rate, which will typically be above the yield on high-quality bonds. True, if we pay down a mortgage, we’ll have less mortgage interest to deduct—but that deduction is now less valuable, thanks to 2017’s tax law.

Act

TRY THE BACKDOOR. Is your income too high to fund a Roth IRA? Consider making nondeductible contributions to a traditional IRA and then converting it to a Roth. This can allow you to get money into a Roth at little or no tax cost—provided your nondeductible IRA is your only IRA. If not, the so-called backdoor Roth could trigger a big tax bill.

Think

OPPORTUNITY COST. Whenever we make a financial choice, we give up something else, which may be a better use for the money. If we buy one item, we can’t spend the dollars on other items, either now or in the future. When we devote money to one goal, we have less for other goals. When we buy one investment, we’re effectively choosing not to buy other investments.

Where to Begin

WHEN I STARTED working fulltime in 1980, there were very few retirement savings vehicles available to the average worker. I remember setting up my IRA and contributing the $2,000 annual maximum—at the time the only retirement account I could fund.
Today, by contrast, there’s a slew of retirement choices on offer. Where should those new to the workforce focus their dollars? If you have access to a 401(k) or similar retirement plan with an employer matching contribution,

Read more »

Creeping Costs

WE ARE ALL victims of continually rising costs. Here’s the oft-repeated drill: The service provider sends the yearly renewal bill by mail or email, or the new annual cost is simply posted to our credit card account or deducted from our bank account.
Assuming we even notice the charge, the head-scratching starts. What the heck was the cost last year anyway? The new fee may have increased just 3% or 5%, which doesn’t seem like a lot.

Read more »

Need to Know

A DOZEN YEARS ago, on my first day of business school, the professor stood at the board and illustrated a concept called “present value.” Truth be told, over my remaining time in school, I don’t think I learned anything more important than I learned in that first hour. It is, in my view, the single most useful tool in all of personal finance. Below, I’ll walk you through the concept and then illustrate some ways it can help you make better financial decisions.

Read more »

Declaring Victory

I OFTEN FEEL like the Grinch, who “puzzled and puzzled ‘till his puzzler was sore.” One question I’ve puzzled over endlessly: If what I do barely matters in the greater scheme of things, why in the world do I keep doing it?
Here are four related thoughts that often crop up in my writing:

One of life’s great pleasures is working hard at something we care deeply about.
While striving toward our goals can bring great satisfaction,

Read more »

Right Turn

MY HUSBAND is the consumer every company should fear. In my last post, I detailed his multi-month research that preceded our recent car purchase. This time, he decided to investigate auto insurance.
The Gecko’s promise to save 15% had hit a nerve. A savings of 15% on a $2,500 annual insurance bill for two cars would be worth the effort. But, of course, being the thorough person that he is, my husband had to check out every other insurance company on the planet.

Read more »

Are We There Yet?

PREPARING for retirement is like running a marathon. It requires dedication, discipline and endurance.
But there’s also a crucial difference.
When you cross the finish line in a marathon, you know the race is over. But when you quit the workforce, it’s much harder to figure out whether you’ve successfully reached retirement. Why? A happy and prosperous retirement is about money, but it’s also about so much more than money. Here are 15 signs that a wonderful retirement likely lies ahead:

You don’t need an online calculator to tell you that you have enough money,

Read more »

Free Newsletter

Numbers

WHO DO WE TIP? A CreditCards.com survey found that 77% say they always tip their server at a sit-down restaurant. We’re less likely to tip hairdressers (63%), food delivery folks (63%), taxi drivers (49%) and hotel housekeepers (27%).

Manifesto

NO. 42: WE SHOULD never take investment advice from brokers and insurance agents—because they have an incentive to sell high-commission products and get us to trade excessively.

Home Call to Action

Act

TRY THE BACKDOOR. Is your income too high to fund a Roth IRA? Consider making nondeductible contributions to a traditional IRA and then converting it to a Roth. This can allow you to get money into a Roth at little or no tax cost—provided your nondeductible IRA is your only IRA. If not, the so-called backdoor Roth could trigger a big tax bill.

Truths

NO. 93: PAYING down a mortgage is often the best bond we can buy. We earn a return equal to the mortgage’s interest rate, which will typically be above the yield on high-quality bonds. True, if we pay down a mortgage, we’ll have less mortgage interest to deduct—but that deduction is now less valuable, thanks to 2017’s tax law.

Think

OPPORTUNITY COST. Whenever we make a financial choice, we give up something else, which may be a better use for the money. If we buy one item, we can’t spend the dollars on other items, either now or in the future. When we devote money to one goal, we have less for other goals. When we buy one investment, we’re effectively choosing not to buy other investments.

Money Guide

Start Here

Medicare Part D

MEDICARE prescription drug plans are offered through insurance companies. While most seniors will want to enroll, it isn’t mandatory. You pay a premium, plus there’s often an annual deductible and a co-payment on each prescription that’s filled.
 

Read more »

Archive

Growing Up (Part I)

I RECENTLY RECEIVED an email from a friend asking, “What financial advice would you give to your younger self, now that you’re older?” I had to think for a while. But once I sat down to reply, I realized my attitudes about personal finance were already well-developed by the time I was in my 20s. I also realized my financial beliefs had been shaped, in part, by growing up in a family where money wasn’t exactly plentiful. As a child, I don’t remember ever having a formal discussion about personal finance with my parents. The lessons I learned about spending and saving came from real life. My family lived in rural Oregon. The modest allowance my parents provided each week was earned doing chores around our small farm. Returning bottles to the grocery store, to redeem the nickel deposit, served as supplemental income. The back-to-school supplies I purchased in the fall were financed with the proceeds from selling an animal each summer at our local 4-H livestock auction. We rarely ate out, but if we did, it was almost always at McDonald’s. We didn’t have cable television and we didn’t take expensive vacations to exotic locations. Instead, we went on camping trips. I spent a good portion of my summer vacations exhibiting our animals at county fairs throughout the state. The budgeting skills I have as an adult can easily be traced back to my youth, when I earned multiple awards for my 4-H record books, filled with the profit-and-loss statements for each of my projects. When I decided to go to college, my parents were supportive of my decision, but they were unable to help me financially. Instead, I applied for, and received, several needs-based grants. I also won thousands of dollars in merit-based scholarship money. I worked part-time while taking classes and lived such a frugal lifestyle that, when I graduated with my bachelor’s degree, I was not only debt-free, but also I’d managed to amass $5,000 in a savings account to help pay for graduate school. The financial lessons I learned growing up are still with me as an adult. I grew up not only appreciating the value of a dollar, but also learning that the memories from life experiences are far more valuable than any item that can be bought. To this day, I carefully pick and choose what I’ll spend my hard-earned money on. A day with friends at a pistol shooting competition is more highly valued than any possession I might purchase. This is the first in a series. Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Ore. Her previous blogs include To Buy or Not to Buy and Quitting Early.
Read more »