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Lottery winners make the front page and star money managers make the business page. Winning seems easy—because the losers aren’t mentioned.

Check Again

THE TWO-MINUTE CHECKUP is, I like to think, a unique financial tool: It aims to offer feedback across someone’s entire financial life based on no more than nine pieces of information. That’s an ambitious goal and—perhaps no surprise—some users have found the calculator wanting.
Meet Checkup 2.0.
Sanjib Saha, who writes for HumbleDollar when he isn’t busy writing software, and I went through all the comments that the calculator had received and made a host of changes.

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Bah Humbug

MY LEAST FAVORITE time of the year is fast approaching—the holidays. The curmudgeonly part of me will be on full display.

Don’t get me wrong, there are many aspects that I like. I enjoy the spirit of Christmas, the music, getting together with friends and family, and eating. But let’s face it, there’s a lot of stress, aggravation—and money to be spent.

My DVR stores A Christmas Story, which is my favorite holiday movie and which I watch every December.

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Recent Writing

Lucky Fools

I FLUNKED MY FIRST two interviews for an academic job. Fifty years ago, I didn’t make the grade at the University of California, Los Angeles, or the University of California, Berkeley, either of which would have made a fitting classroom for an unseasoned but game New Yorker.
Instead, I prevailed at the University of California, Davis, the agricultural mecca of the statewide system. I was sold when I looked at one of those old gas station maps and saw that I’d be close to San Francisco.

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It’s Just a Tool

MY WIFE AND I ARE expecting our first baby in March. In preparation, we’re converting what used to be an office into a nursery. We’ve bought a crib, glider chair, curtains and dresser for the new room. But we also needed to find a place to put the desk and furniture that was in the office. We decided to move the office into what is currently a quasi-sunroom.
When we bought the home, our inspector disclosed that the sunroom was likely built by the homeowner and wasn’t up to code.

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November’s Hits

IF THERE’S ANYTHING to be learned from our monthly list of the most popular articles and blog posts, it’s this: Among HumbleDollar’s readers, the two most enduring interests are retirement and the financial markets. Here are November’s 10 best-read pieces:

Planning to move to a retirement community when you quit the workforce? Ron Wayne takes a look at one of the most famous—The Villages in Central Florida.
As we age, our capacity to make sound financial decisions often wanes.

Read more »

Through the Ages

WHEN I WAS IN MY 20s, I was lucky to work for a company that offered a pension plan—and that put me on the road to retirement. Today, unfortunately, company pensions are rare. How can you ensure a comfortable retirement? Try shooting for these age-related milestones:
Age 25. Start saving at least 15% of your gross income. As I mentioned in an earlier article, a Fidelity Investments study found that if you save 15% of your gross income every year from age 25 through 67,

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Home Call to Action

Rates Up Lumps Down

WE HAVE ALL BEEN affected by rising interest rates in 2022, from skyrocketing mortgage rates to plunging bond prices. A less-publicized casualty: Higher interest rates are having a big effect on those approaching retirement who are eligible for a pension.
How so? Many pension plans offer a choice between a lifetime stream of monthly income and a onetime lump sum payment. Rising rates could reduce the lump sum payment that many employees would receive next year by 25% or 30%.

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Guessing Game

ALL THIS MARKET turmoil has me thinking about my portfolio—and the things I’m a little hazy about.

One of my stock mutual funds just paid me a capital gains distribution of more than $5,000. I sure wasn’t expecting that. In fact, I wasn’t expecting any capital gains this year. It seems the net gain on the sale of individual stocks within a mutual fund are distributed to shareholders, no matter how the overall fund has performed.

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What Do You Want?

AT A VULNERABLE time in my life, I went to a “quantum healer” who said my deceased mother was trying to ask me, “What do you want?”
I kept saying “I don’t know” to the healer and she kept repeating the question, until the answer popped out unexpectedly, “I just want to be alone right now.” The healer said my mother was clapping. That was exactly what I needed to hear to help me clarify my thinking.

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Just Say Noël

MY FAMILY IS FRUGAL all year long, even during the Christmas season. We’re modest with our gifts and sparing with our decorations. Each year, our sprucing up consists of one cut-your-own Christmas tree trimmed with the same ornaments we used the year before. I can’t say the same for our neighbors. They pull out all the stops to create a seasonal spectacle.
There’s no need to take a long, cold sleigh ride to the North Pole to scope out Santa and his companions frolicking in snowy splendor.

Read more »

Get Educated

Truths

NO. 99: A REAL ESTATE agent’s greatest financial incentive isn’t to get us the best price, but to get us to act quickly. If we spend an extra month hunting for the right house to buy—or holding out for a higher price if we’re looking to sell—the real estate agent might make little or no additional commission, but he or she will have to put in substantially more work.

Act

CONSIDER A ROTH conversion. Is your taxable income for the current year less than normal, so you’ll end up in a lower income tax bracket? To take advantage, you might convert part of your traditional IRA to a Roth IRA, where the money will grow tax-free thereafter. One warning: Make sure you have the necessary cash set aside to pay the resulting tax bill.

Think

FAT TAILS. We imagine investment returns will look like the standard humped-back normal distribution curve, with annual results mostly clustering around the average, while extremely good and bad years are relatively rare. But in reality, great and terrible years occur with surprising frequency, causing the performance distribution curve to have “fat tails.”

Money Guide

10 Key Decisions

WHAT DOES IT TAKE to succeed financially? Here are the 10 most important choices you’ll ever make: 1. How much you borrow for college. Planning to become a journalist or a social worker? The lower your likely lifetime earnings, the less sense it makes to take on a heap of education loans. 2. What career you pursue. Obviously, the more you earn, the easier things should be financially—though this advantage is often frittered away through excessive spending. 3. How early in life you start saving—and how much you save each month. 4. How big a house you buy relative to your income. One way to waste a handsome salary: Purchase a home you can barely afford, leaving you starved of cash for other goals. 5. Whether you marry the right person. A quick way to lose half your wealth: Get divorced. The slower route: Marry someone with bad financial habits. 6. How often you replace your car. For the typical American family, cars are a huge financial drain, second only to housing. Is your sense of self-worth riding on the fanciness of your car, the size of your home and other possessions? You’re sunk. 7. Whether you make a lifetime commitment to stocks. Every year, there’s another terrifying reason to abandon the stock market. But if you look back at the market’s performance over your lifetime, you’ll likely wonder why anybody would invest in anything else. 8. Whether you have children. They’re more fun than guinea pigs, but a tad more expensive. 9. Whether you waste time and money on the foolish pursuit of market-beating gains. The reality: Your chances of beating the market over a lifetime of investing are so small as to be hardly worth considering. 10. When you claim Social Security. Remember, the big financial risk isn’t dying early in retirement. Rather, the big risk is living longer than you ever imagined—which is why most folks should delay Social Security until at least age 66 and perhaps age 70, so they receive a larger monthly check. As you might have noticed, pure investment decisions don’t figure prominently on the list. One implication: If you’re grappling with the 10 decisions above, you will likely receive a fair amount of help from a good financial planner—but very little help from the typical stockbroker. Previous: Lists
Read more »

Manifesto

NO. 57: WE FAVOR possessions for their lasting value, but often we get greater happiness when we spend money on experiences. Forget the new car. Instead, take the family to Paris.

Voices

Do you favor Roth or traditional retirement accounts?

"There is a school of thought out there that Roth’s are not a true cure-all for everyone."
- Boomerst3
Read more »

How much of a stock portfolio should be invested abroad?

"I don’t think it’s necessary for any to be invested abroad. US companies get a lot of international exposure."
- Boomerst3
Read more »

What should be the top priorities for those in their 20s?

"Ben Franklin, advice that is enduring, secure and lifelong: "An investment in knowledge pays the best interest.""
- BenefitJack
Read more »

Second Look

Retirement

An Odd Argument

IT’S ONE OF THE stranger arguments for claiming Social Security retirement benefits at age 62—but I’m hearing it with increasing frequency. The contention: We should claim benefits early because we’ll enjoy the money more in our 60s, when we’re traveling and spending more, than in our 80s, when we’ll likely be sticking closer to home.
It isn’t clear to me that we should expect to spend less in our 80s, when we may have significant medical expenses.

Read more »

Family Finance

Basket Case

UPON RETIREMENT, I picked up additional duties at home. One was cooking and the other was grocery shopping, both of which I enjoy. The shopping part furthers my ability to observe people, a favorite pastime.
I have concluded that you can tell a great deal about people’s spending and lifestyle habits simply by what’s in their shopping cart. And you can tell quite a bit about individual responsibility and personal behavior by what people do with their empty shopping cart.

Read more »

Investing

Artfully Dodged

I HAD THE OPPORTUNITY to view Gustav Klimt’s most famous work of art, The Kiss, while visiting Vienna a few years back. It depicts a couple locked in an intimate embrace. It’s an oil painting with a significant amount of gold leaf—quite distinctive.
A few weeks later, I had an opportunity to buy a Klimt. I was in a gallery in Salzburg and came across a drawing of his which was titled Stehender Rückenakt –

Read more »

Lists

Brain Candy

IT SEEMS QUAINT NOW, but a quarter century ago conversations would often degenerate into arguments over facts. How much do homes typically appreciate? How much does the average American have saved by retirement? What does a nursing home cost? Such questions would trigger tedious debates built on anecdotal evidence and half-remembered newspaper articles.
But as my father—who died in 2009—often remarked during the final decade of his life, there’s no point anymore in arguing over facts.

Read more »
Home Call to Action

Mindset

Making Your Case

MRS. J. LIVED IN southeast Virginia and had purchased an eight-year-old truck at auction for her college-bound child. It turns out that the truck had spent its entire life in and around Rochester, New York, in the heart of the Rust Belt. Mrs. J. had been advised by her local garage that many of the exposed chassis components on her truck were covered in rust. Her neighbors’ cars did not exhibit this condition. She felt the truck was unsafe and that the vehicle’s manufacturer—my employer—owed her a solution.

Read more »

Free Newsletter

Get Educated

Manifesto

NO. 57: WE FAVOR possessions for their lasting value, but often we get greater happiness when we spend money on experiences. Forget the new car. Instead, take the family to Paris.

Act

CONSIDER A ROTH conversion. Is your taxable income for the current year less than normal, so you’ll end up in a lower income tax bracket? To take advantage, you might convert part of your traditional IRA to a Roth IRA, where the money will grow tax-free thereafter. One warning: Make sure you have the necessary cash set aside to pay the resulting tax bill.

Truths

NO. 99: A REAL ESTATE agent’s greatest financial incentive isn’t to get us the best price, but to get us to act quickly. If we spend an extra month hunting for the right house to buy—or holding out for a higher price if we’re looking to sell—the real estate agent might make little or no additional commission, but he or she will have to put in substantially more work.

Think

FAT TAILS. We imagine investment returns will look like the standard humped-back normal distribution curve, with annual results mostly clustering around the average, while extremely good and bad years are relatively rare. But in reality, great and terrible years occur with surprising frequency, causing the performance distribution curve to have “fat tails.”

Money Guide

Start Here

10 Key Decisions

WHAT DOES IT TAKE to succeed financially? Here are the 10 most important choices you’ll ever make: 1. How much you borrow for college. Planning to become a journalist or a social worker? The lower your likely lifetime earnings, the less sense it makes to take on a heap of education loans. 2. What career you pursue. Obviously, the more you earn, the easier things should be financially—though this advantage is often frittered away through excessive spending. 3. How early in life you start saving—and how much you save each month. 4. How big a house you buy relative to your income. One way to waste a handsome salary: Purchase a home you can barely afford, leaving you starved of cash for other goals. 5. Whether you marry the right person. A quick way to lose half your wealth: Get divorced. The slower route: Marry someone with bad financial habits. 6. How often you replace your car. For the typical American family, cars are a huge financial drain, second only to housing. Is your sense of self-worth riding on the fanciness of your car, the size of your home and other possessions? You’re sunk. 7. Whether you make a lifetime commitment to stocks. Every year, there’s another terrifying reason to abandon the stock market. But if you look back at the market’s performance over your lifetime, you’ll likely wonder why anybody would invest in anything else. 8. Whether you have children. They’re more fun than guinea pigs, but a tad more expensive. 9. Whether you waste time and money on the foolish pursuit of market-beating gains. The reality: Your chances of beating the market over a lifetime of investing are so small as to be hardly worth considering. 10. When you claim Social Security. Remember, the big financial risk isn’t dying early in retirement. Rather, the big risk is living longer than you ever imagined—which is why most folks should delay Social Security until at least age 66 and perhaps age 70, so they receive a larger monthly check. As you might have noticed, pure investment decisions don’t figure prominently on the list. One implication: If you’re grappling with the 10 decisions above, you will likely receive a fair amount of help from a good financial planner—but very little help from the typical stockbroker. Previous: Lists
Read more »

Voices

What do you wish your younger self knew?

"when i married my wife of 30 years i wished i knew she was a manic depressive spind thrift with control issues. after 20 years of marriage she became house bound from a work accident. i knew i would never leave her to a "facility". i worked, she spent, and no amount of placating was ever enough. she died in her sleep on christmas day 4 years ago."
- alex scott
Read more »

What’s the best strategy for getting a good deal on a car?

"Low mileage, one owner 2 to 3 year old used cars. I check Consumer Reports for the most reliable vehicle in my category (SUV) and start there."
- Mike Wyant
Read more »

What’s the best strategy for generating retirement income?

"Depreciation-protected rents cover 75% of expenses and individual dividend growth stocks the rest."
- TechnoPeasantx
Read more »

Second Look

Retirement

An Odd Argument

IT’S ONE OF THE stranger arguments for claiming Social Security retirement benefits at age 62—but I’m hearing it with increasing frequency. The contention: We should claim benefits early because we’ll enjoy the money more in our 60s, when we’re traveling and spending more, than in our 80s, when we’ll likely be sticking closer to home.
It isn’t clear to me that we should expect to spend less in our 80s, when we may have significant medical expenses.

Read more »

Family Finance

Basket Case

UPON RETIREMENT, I picked up additional duties at home. One was cooking and the other was grocery shopping, both of which I enjoy. The shopping part furthers my ability to observe people, a favorite pastime.
I have concluded that you can tell a great deal about people’s spending and lifestyle habits simply by what’s in their shopping cart. And you can tell quite a bit about individual responsibility and personal behavior by what people do with their empty shopping cart.

Read more »

Investing

Artfully Dodged

I HAD THE OPPORTUNITY to view Gustav Klimt’s most famous work of art, The Kiss, while visiting Vienna a few years back. It depicts a couple locked in an intimate embrace. It’s an oil painting with a significant amount of gold leaf—quite distinctive.
A few weeks later, I had an opportunity to buy a Klimt. I was in a gallery in Salzburg and came across a drawing of his which was titled Stehender Rückenakt –

Read more »
Home Call to Action

Lists

Brain Candy

IT SEEMS QUAINT NOW, but a quarter century ago conversations would often degenerate into arguments over facts. How much do homes typically appreciate? How much does the average American have saved by retirement? What does a nursing home cost? Such questions would trigger tedious debates built on anecdotal evidence and half-remembered newspaper articles.
But as my father—who died in 2009—often remarked during the final decade of his life, there’s no point anymore in arguing over facts.

Read more »

Mindset

Making Your Case

MRS. J. LIVED IN southeast Virginia and had purchased an eight-year-old truck at auction for her college-bound child. It turns out that the truck had spent its entire life in and around Rochester, New York, in the heart of the Rust Belt. Mrs. J. had been advised by her local garage that many of the exposed chassis components on her truck were covered in rust. Her neighbors’ cars did not exhibit this condition. She felt the truck was unsafe and that the vehicle’s manufacturer—my employer—owed her a solution.

Read more »