FREE NEWSLETTER

Don’t cut the lawn, and you’re the local disgrace. Let your children drown in student debt, and you’re the nice family with college kids.

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 »

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 »

Short Stuff

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. 

Read more »

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 »

Retirement Is Coming

AM I ALLOWED another rant?

I have a tip for anyone under age 50. Someday—if you’re lucky—you’ll stop working and still need income to live. Most of us call that retirement.

How in the world do people reach their 50s and suddenly have a revelation that retirement is somewhere in their future?

I get it. If you’re in your 20s or even early 30s, it’s time to have fun. But there’s the trap. Fun for too long,

Read more »

Ask Around

AH, SUMMER. Over the July 4 weekend, we spent time relaxing at our neighbor’s house. A three-year-old jumped into the pool from the diving board for the first time. He had a big smile and many supporters.
It’s always fun to chat with neighbors we haven’t seen for a while, and also meet new visitors. One man swimming with his kids turned out to be an investigative reporter for a local news station. We didn’t talk for long,

Read more »

Taking the Plunge

WHEN I WAS LEARNING about investing, dollar-cost averaging was one of the first strategies I read about. Over the years, I’ve come across a number of articles debating the strategy’s virtues, usually comparing it to a onetime lump-sum investment.
Dollar-cost averaging consists of making a series of periodic investments rather than buying all at once. These purchases occur at regular intervals, regardless of the investment’s price that day. Using this strategy, you can purchase more shares when prices are lower.

Read more »

July’s Hits

WHAT INTRIGUED readers during the steamy days of July? Here are last month’s most popular articles:

Many retirees resist taking out a reverse mortgage because of the stigma involved. Get over it, advises Mike Drak.
“One clear takeaway: Only collect things for enjoyment rather than as an investment,” says John Yeigh. “Another is that the sale of a long-term collection can be annoyingly time-consuming.”
If you just received a financial windfall or you’re planning to leave one to your heirs,

Read more »

Longer Reads

About Those Bonds

AT THE MUTUAL FUND company where I once worked, the stock and bond teams liked to poke fun at one another. Bond managers viewed the stock-pickers as overpaid storytellers. Meanwhile, the stock-pickers saw the world of bonds as stultifying. “Playing for nickels and dimes” is how one of them put it.
For better or worse, bonds do indeed represent the slow lane. But this year, with bond prices depressed by rising interest rates, investors are wanting to learn more.

Read more »

Rates Up Fed Down

THE FEDERAL RESERVE has been the biggest buyer of Treasury and mortgage-backed bonds for the past decade. In that time, it expanded its balance sheet from about $800 million to more than $8 trillion.
As long as inflation remained low, its bond purchases helped produce a slowly growing economy by keeping interest rates and unemployment low. Now that inflation is at its highest level in 40 years, the Federal Reserve is starting to raise interest rates in response.

Read more »

Twelve Travel Tips

I RECENTLY VISITED Eastern Europe, where I volunteered to teach English in Poland through an organization called Angloville. I received free room and board at a resort in exchange for conversing from breakfast through dinner with Polish adults who wanted to improve their English.
In addition to meeting Poles and being immersed in Polish culture, I used my free time to explore nearby countries. Planning a vacation abroad? Based on my recent trips to Poland,

Read more »

Bad Guy on Line One

GOOD PARENTS WARN their children about predators who look to take advantage of them. By the same token, good adults should warn and safeguard their elderly parents, as well as the other seniors they care for.
We all use our electronics for accessing information. We sometimes forget the information highway is two-way, and nefarious people use those lines of communication to get to the vulnerable. And it isn’t just about hacking online accounts. Often,

Read more »

My $6,100 Surgery

DICK QUINN RECENTLY wrote about his $233 surgery. I wasn’t so lucky.
When marketplace health plans first became available in 2012 as a result of the Affordable Care Act, my wife and I bought coverage. After my wife signed up for Medicare in 2020, I switched to a solo policy. I’d been counting down the days until I, too, qualified for Medicare at age 65. With a $7,000 deductible on my policy, I was crossing my fingers that my health would remain good.

Read more »

When Debt Is Left

WHAT HAPPENS WHEN a person dies without a will and there isn’t enough money to pay all of his or her debts? Who gets paid and who gets shorted?
I’d always heard that funeral expenses were the first priority, and then unsecured creditors got everything else. I’ve recently learned from personal experience that the rules are more complex—and more generous to widows and widowers.
A 60-year-old friend of mine recently died. He hadn’t written a will.

Read more »

Voices

Do we talk too little about our personal finances—or too much?

"Those who don't need to talk about it do so way too much, and those who do need to talk about it (and listen) do so way too little"
- Jack McHugh
Read more »

When is it okay to go into debt?

"Avoid auto loans, if possible. If you need to borrow to buy a new car, you may not need to buy a new car. It is a rapidly depreciating asset."
- Carl Book
Read more »

Should political views influence how we invest?

"I agree with all the other answers. All have truth to them. However, we are ultimately bound to have a world view. I can think of one critical time I thought the market would tank based on an election result, and I couldn’t have been more wrong. Fortunately, a financial advisor convinced me not to trim my stocks. So, a huge dose of humility is required when reacting to any world event. Having said that, sometimes we need to make values-based decisions. I won’t touch China or Russia with a 10-foot pole, partly on values but partly in recognition that foreign investors thrive at the discretion of autocratic leaders, and I can’t risk my money to their whims. I don’t know if China or Russia will do well from here or not. But just count me out. If I miss out on big gains, so be it."
- William Ehart
Read more »

Money Guide

Saving More

HOW CAN WE GET ourselves to spend less and save more? The money guide’s chapter on saving money includes a host of tips. Those tips fall into three broad categories. 1. Make spending painful. Some of us find it easy to control our spending—but many folks don’t. If you’re in the latter camp, what steps should you take? You could try creating and following a monthly budget. But like our efforts to eat less and exercise more, we often end up cheating on our budget—and soon we’re back to our old, unfortunate habits. What’s the alternative? We might resort to sterner measures. Those could include leaving the credit and debit cards at home, and instead only paying with cash. We might also carry a notebook and write down every purchase we make, so we’re more conscious of our spending. Like the diets that exclude entire food categories, we might forbid ourselves from certain expenditures, such as restaurant meals or online purchases. We tend to do better with blanket prohibitions than with rules aimed at getting us to spend, say, 50% less on shoes and clothes, because it’s easier to break such rules. We could also tell others about our goal for monthly spending—and encourage them to ask us how we’re doing—so fear of their disapproval pushes us to spend less. Finally, we might constrain our spending by minimizing the sum we keep in our checking account. We tend to engage in mental accounting, happily spending from our checking account but considering our savings and investment accounts untouchable. To the extent we get money into these other accounts, we’re less likely to spend it—though there’s a risk we might compensate by racking up the credit cards instead. 2. Make saving painless. The most popular strategy is to automate regular savings. That includes making contributions from our paycheck to our employer’s 401(k) or 403(b) plan, so the money is gone before we get a chance to spend it. We might also sign up for automatic savings plans, where money is pulled each month from our checking account and placed in the savings account, brokerage account or mutual funds we choose. We should also strive to keep our fixed living costs—mortgage or rent, car payments, utilities and so on—at a modest level, so not only is it easy to save, but also we’ll still have money left over for discretionary expenses. That discretionary spending—things like vacations, concerts and eating out—should help ensure we don’t feel deprived. 3. Make future spending more desirable. If we’re to resist today’s many consumer temptations and instead sock away the money for goals that may be decades away, we need to somehow make those goals super-alluring. To that end, we might visualize our goals, imagining in detail how great it will be to, say, own a home or never again have to go to the office. We might also think about how spending $100 less today might allow us to spend $300 or $400 in future, thanks to investment compounding. In addition, we might ponder how good it’ll feel to escape the anxiety of living paycheck to paycheck that accompanies today’s constant spending. In its stead, we’ll have the long-term happiness that comes with knowing that our finances today are on a solid footing and that the future is getting taken care of. Next: Investing Better Previous: We Hate Losing
Read more »

Manifesto

NO. 4: GOOD SAVINGS habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Think

MIMETIC DESIRE. While our needs may be driven by hardwired instincts to avoid, say, hunger and cold, our wants are often heavily influenced by others. According to mimetic theory, those we look up to show us what’s worth wanting. For instance, the boss or a celebrity discusses the joys of jogging—and suddenly we find ourselves buying running shoes.

Second Look

Retirement

403 Beware

PUBLIC SCHOOL teachers’ biggest problem isn’t rowdy students. Instead, it’s their retirement plans that should be sent to the dean’s office.
After leaving my job as a foreign currency trader for an international bank, I became a middle school history teacher. My teaching career lasted more than 20 years. One of the worst things I encountered was the state of public school teachers’ non-ERISA 403(b) plans.
Having a front-row seat to the carnage was not pretty.

Read more »

Family Finance

The Dreaded Letter

WHEN I CHAT with clients about the IRS and mention audits, many turn white with fright. To alleviate angst, I explain that years of underfunding have forced an understaffed IRS to significantly scale back its enforcement efforts. But my reassurances are insufficient to assuage the fears of some clients, so I alert them to tactics that can make audits less traumatic and expensive.
Let’s start with the bad news: Audits are basically adversarial proceedings.

Read more »

Investing

Taking Us for Fools

IF THE STOCK MARKET decline resumes, we’ll soon be reading articles about remorseful everyday investors bemoaning their earlier foolishness.
No doubt some folks have been foolish. Perhaps they’ve belatedly discovered that Amazon and Apple aren’t one-way tickets to wealth, that they aren’t the investment geniuses they imagined, or that they misjudged their courageousness and shouldn’t be 100% in stocks.
But mostly, I view these articles as patronizing garbage that propagate the myth that all amateur investors are clueless and all professionals are super-savvy.

Read more »

Lists

Improving With Age

WHEN IT COMES to retirement planning, many Americans focus primarily on their portfolio’s size. That’s understandable. But there are other issues you should also think about, so you get your retirement on the right track and keep it there. Here are 11 steps to a better retirement:

Housing. As you get older, you become less mobile. Climbing stairs and getting up from a chair become more difficult. Keep this in mind when thinking about what house you’ll live in during retirement.

Read more »
Home Call to Action

Mindset

Eye of the Beholder

ARE JUNK BONDS risky? That was the question from a friend in his late 20s, whom I’ll call Josh. I answered that they were probably risky for him, but quite safe for me. Josh looked puzzled—until I explained that risk is in the eye of the beholder.
Josh has a stable career that pays well, but he doesn’t plan to stick with it forever. Instead, he wants a job that relates to his passion for outdoor activities.

Read more »

Longer Reads

About Those Bonds

AT THE MUTUAL FUND company where I once worked, the stock and bond teams liked to poke fun at one another. Bond managers viewed the stock-pickers as overpaid storytellers. Meanwhile, the stock-pickers saw the world of bonds as stultifying. “Playing for nickels and dimes” is how one of them put it.
For better or worse, bonds do indeed represent the slow lane. But this year, with bond prices depressed by rising interest rates, investors are wanting to learn more.

Read more »

Rates Up Fed Down

THE FEDERAL RESERVE has been the biggest buyer of Treasury and mortgage-backed bonds for the past decade. In that time, it expanded its balance sheet from about $800 million to more than $8 trillion.
As long as inflation remained low, its bond purchases helped produce a slowly growing economy by keeping interest rates and unemployment low. Now that inflation is at its highest level in 40 years, the Federal Reserve is starting to raise interest rates in response.

Read more »

Twelve Travel Tips

I RECENTLY VISITED Eastern Europe, where I volunteered to teach English in Poland through an organization called Angloville. I received free room and board at a resort in exchange for conversing from breakfast through dinner with Polish adults who wanted to improve their English.
In addition to meeting Poles and being immersed in Polish culture, I used my free time to explore nearby countries. Planning a vacation abroad? Based on my recent trips to Poland,

Read more »

Bad Guy on Line One

GOOD PARENTS WARN their children about predators who look to take advantage of them. By the same token, good adults should warn and safeguard their elderly parents, as well as the other seniors they care for.
We all use our electronics for accessing information. We sometimes forget the information highway is two-way, and nefarious people use those lines of communication to get to the vulnerable. And it isn’t just about hacking online accounts. Often,

Read more »

My $6,100 Surgery

DICK QUINN RECENTLY wrote about his $233 surgery. I wasn’t so lucky.
When marketplace health plans first became available in 2012 as a result of the Affordable Care Act, my wife and I bought coverage. After my wife signed up for Medicare in 2020, I switched to a solo policy. I’d been counting down the days until I, too, qualified for Medicare at age 65. With a $7,000 deductible on my policy, I was crossing my fingers that my health would remain good.

Read more »

When Debt Is Left

WHAT HAPPENS WHEN a person dies without a will and there isn’t enough money to pay all of his or her debts? Who gets paid and who gets shorted?
I’d always heard that funeral expenses were the first priority, and then unsecured creditors got everything else. I’ve recently learned from personal experience that the rules are more complex—and more generous to widows and widowers.
A 60-year-old friend of mine recently died. He hadn’t written a will.

Read more »

Free Newsletter

Voices

What do you do that’s financially foolish?

"
  • Vacations. My wife is always right when she suggests another one.
  • Eating out.
  • I don't budget. I hate budgeting; makes me feel restricted rather than in control. I do make forecasts though, and they tend to be very accurate.
  • I don't have a spending limit for books. If I want a book, I buy it.
  • Move our car loans into the Heloc. The old cash flow was very thin for several years there, and this eased the pressure a lot. Then rolled the heloc into our new mortage. At least the rate is super low. And we intend to recharacterize the mortgage when we get some lump sums in the future.
  • I tip well. I try to tip 25% or more consistently. The annual cost is a few hundred dollars, and it makes a much bigger difference to them than it does to me.
"
- Roboticus Aquarius
Read more »

When does it make sense to buy a home?

"When you can AFFORD it!"
- hguh davis
Read more »

If you lived your financial life again, what would you change?

"Rent my house in California and not sell it."
- Don Southworth
Read more »
Home Call to Action

Manifesto

NO. 4: GOOD SAVINGS habits are the greatest of the financial virtues. If we aren’t good savers, it’s all but impossible to grow wealthy. What if we are? We’ll likely prosper, even if we’re mediocre investors.

Act

CHECK YOUR Social Security statement to get an estimate of benefits and make sure your earnings record is correct. The easiest way to do this: Set up a “my Social Security” account, preferably adding two-factor authentication. This will also preempt scammers, who might otherwise try to set up an account in your name—and claim your benefits.

Truths

NO. 15: WE FAVOR the familiar. We suffer from home bias, meaning we’re drawn to our employer’s shares, local corporations and stocks of companies whose products we use. We also favor U.S. stocks and shy away from foreign shares. These familiar investments create a portfolio we’re comfortable with—but maybe not one that’s well diversified.

Think

MIMETIC DESIRE. While our needs may be driven by hardwired instincts to avoid, say, hunger and cold, our wants are often heavily influenced by others. According to mimetic theory, those we look up to show us what’s worth wanting. For instance, the boss or a celebrity discusses the joys of jogging—and suddenly we find ourselves buying running shoes.

Money Guide

Start Here

Saving More

HOW CAN WE GET ourselves to spend less and save more? The money guide’s chapter on saving money includes a host of tips. Those tips fall into three broad categories. 1. Make spending painful. Some of us find it easy to control our spending—but many folks don’t. If you’re in the latter camp, what steps should you take? You could try creating and following a monthly budget. But like our efforts to eat less and exercise more, we often end up cheating on our budget—and soon we’re back to our old, unfortunate habits. What’s the alternative? We might resort to sterner measures. Those could include leaving the credit and debit cards at home, and instead only paying with cash. We might also carry a notebook and write down every purchase we make, so we’re more conscious of our spending. Like the diets that exclude entire food categories, we might forbid ourselves from certain expenditures, such as restaurant meals or online purchases. We tend to do better with blanket prohibitions than with rules aimed at getting us to spend, say, 50% less on shoes and clothes, because it’s easier to break such rules. We could also tell others about our goal for monthly spending—and encourage them to ask us how we’re doing—so fear of their disapproval pushes us to spend less. Finally, we might constrain our spending by minimizing the sum we keep in our checking account. We tend to engage in mental accounting, happily spending from our checking account but considering our savings and investment accounts untouchable. To the extent we get money into these other accounts, we’re less likely to spend it—though there’s a risk we might compensate by racking up the credit cards instead. 2. Make saving painless. The most popular strategy is to automate regular savings. That includes making contributions from our paycheck to our employer’s 401(k) or 403(b) plan, so the money is gone before we get a chance to spend it. We might also sign up for automatic savings plans, where money is pulled each month from our checking account and placed in the savings account, brokerage account or mutual funds we choose. We should also strive to keep our fixed living costs—mortgage or rent, car payments, utilities and so on—at a modest level, so not only is it easy to save, but also we’ll still have money left over for discretionary expenses. That discretionary spending—things like vacations, concerts and eating out—should help ensure we don’t feel deprived. 3. Make future spending more desirable. If we’re to resist today’s many consumer temptations and instead sock away the money for goals that may be decades away, we need to somehow make those goals super-alluring. To that end, we might visualize our goals, imagining in detail how great it will be to, say, own a home or never again have to go to the office. We might also think about how spending $100 less today might allow us to spend $300 or $400 in future, thanks to investment compounding. In addition, we might ponder how good it’ll feel to escape the anxiety of living paycheck to paycheck that accompanies today’s constant spending. In its stead, we’ll have the long-term happiness that comes with knowing that our finances today are on a solid footing and that the future is getting taken care of. Next: Investing Better Previous: We Hate Losing
Read more »

Second Look

Retirement

403 Beware

PUBLIC SCHOOL teachers’ biggest problem isn’t rowdy students. Instead, it’s their retirement plans that should be sent to the dean’s office.
After leaving my job as a foreign currency trader for an international bank, I became a middle school history teacher. My teaching career lasted more than 20 years. One of the worst things I encountered was the state of public school teachers’ non-ERISA 403(b) plans.
Having a front-row seat to the carnage was not pretty.

Read more »

Family Finance

The Dreaded Letter

WHEN I CHAT with clients about the IRS and mention audits, many turn white with fright. To alleviate angst, I explain that years of underfunding have forced an understaffed IRS to significantly scale back its enforcement efforts. But my reassurances are insufficient to assuage the fears of some clients, so I alert them to tactics that can make audits less traumatic and expensive.
Let’s start with the bad news: Audits are basically adversarial proceedings.

Read more »

Investing

Taking Us for Fools

IF THE STOCK MARKET decline resumes, we’ll soon be reading articles about remorseful everyday investors bemoaning their earlier foolishness.
No doubt some folks have been foolish. Perhaps they’ve belatedly discovered that Amazon and Apple aren’t one-way tickets to wealth, that they aren’t the investment geniuses they imagined, or that they misjudged their courageousness and shouldn’t be 100% in stocks.
But mostly, I view these articles as patronizing garbage that propagate the myth that all amateur investors are clueless and all professionals are super-savvy.

Read more »

Lists

Improving With Age

WHEN IT COMES to retirement planning, many Americans focus primarily on their portfolio’s size. That’s understandable. But there are other issues you should also think about, so you get your retirement on the right track and keep it there. Here are 11 steps to a better retirement:

Housing. As you get older, you become less mobile. Climbing stairs and getting up from a chair become more difficult. Keep this in mind when thinking about what house you’ll live in during retirement.

Read more »

Mindset

Eye of the Beholder

ARE JUNK BONDS risky? That was the question from a friend in his late 20s, whom I’ll call Josh. I answered that they were probably risky for him, but quite safe for me. Josh looked puzzled—until I explained that risk is in the eye of the beholder.
Josh has a stable career that pays well, but he doesn’t plan to stick with it forever. Instead, he wants a job that relates to his passion for outdoor activities.

Read more »