FREE NEWSLETTER

Most of us will need more than one career—not just because the world changes, but because we want to.

Every Bit Helps

IN NEW ORLEANS, a lagniappe refers to a small gift or bonus—like receiving 13 items for the price of 12, or a so-called baker’s dozen. Today, credit card points are a popular form of lagniappe, delivering a modest bonus every time you spend. But many other lagniappes are also readily available:
Banking. If you’ve ever paid a fee to use an ATM, Charles Schwab Bank’s checking account is worth a look. You can use any bank’s ATMs and,

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What Lies Beneath

MONEY IS A TOOL. But a tool for what? We might imagine it’s simply a way to purchase the goods and services we need or want. But in truth, there are all kinds of things that money can do for us—some worthy, some not so much.
Want to use your wealth more wisely? I think all of us should spend time pondering what money represents to us, how we use it and why we like to have it.

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Recent Writing

Details Matter

FOR THE PAST FOUR years, I’ve been dealing with both a revocable and irrevocable trust that my parents created decades ago. In 2020, I knew little about trusts, and my elderly parents weren’t willing or able to share much information with me. In retrospect, I don’t think they fully understood the details of either trust, instead relying on attorneys and financial advisors.
Since then, I’ve learned a lot about trusts. I’ve come to feel they’re unnecessarily complicated and allow unscrupulous advisors to take advantage of well-intentioned,

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Money Matters

DURING THE PANDEMIC, I started devoting more time to retirement planning. But I had more questions than answers. I called a friend who was a financial planner.
“Retirement planning is confusing,” I told him. “I have a lot of questions.”
He laughed and said, “The answer is money. What’s the question?”
While his answer was humorous, it reflected what most retirees already know: Money is crucial for a good retirement. While it isn’t the only thing you need for a happy retirement,

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Give Early and Often

KEY PROVISIONS IN 2017’s Tax Cuts and Jobs Act (TCJA) will expire in 2026 unless Congress steps in. That means folks have a two-year window to prepare.
What’s at stake? Income-tax rates will increase for many taxpayers. This creates an incentive to boost income over the next few years by, say, undertaking Roth conversions to shrink traditional retirement accounts and thereby lowering future required minimum distributions.
The sunsetting of key TCJA provisions would also cut the threshold for federal estate taxes in half,

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Losers Weepers

MY SON AND I WALK the streets of our town, so my son can pick up trash and recyclables. He’s obsessive-compulsive about trash. He impulsively picks it up even if he isn’t wearing gloves or doesn’t have his grabber available. To reduce this behavior, he and I go out daily looking for trash, so he feels there’s less trash out there.
We do find trash, but we also find things that I wouldn’t classify as trash.

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Home Call to Action

For the Fun of It

THIS IS MY FIRST contribution to HumbleDollar. It may well be my last, for I am no longer old. Rather, I’m ancient and on my way to being archaic.
The vicissitudes of investing are behind me. I now invest for fun, for the data analysis, for following the impact of macro world events on economies, for the thrill of the market rollercoaster, for the intellectual challenge, for the exercise of discipline,

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Measuring My Money

I KNOW FOLKS WHO consider their income to be the best measure of their wealth. Income, however, doesn’t gauge whether you’re making headway toward financial independence.
What does? My financial statement provides everything I need to measure my progress. At the end of each December, I gather the dollar amounts for my assets and liabilities, and assemble the details on a spreadsheet that compares my current standing with prior years. If you’re inspired to do the same,

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Retirement Dreams

THIS ISN’T ANOTHER article about dreaming of retirement. Rather, it’s about dreaming in retirement.
I retired in 2017 after practicing criminal law in central Texas for almost four decades. It could be stressful at times. Before that, there were long years in college and law school.
College was relatively easygoing and enjoyable in the laid-back Austin of the 1970s, plus my major was sociology—a world apart from those in pre-med,

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If I Were a Rich Man

FIDDLER ON THE ROOF is the timeless tale of a poor Jewish dairy farmer in Russia during the early 20th century. What makes the musical timeless? It tells the story of a worker, husband, father and religious believer who’s trying to succeed in all these facets of his life.
One of the show’s most famous songs is, “If I Were a Rich Man.” As the title implies, the farmer dreams of a life of wealth and how wonderful that would be.

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Get Educated

Truths

NO. 8: DILIGENT savers need smaller nest eggs. Let’s say you save 10% of income. To retire in comfort, you might need portfolio withdrawals, Social Security and any pension income to replace 80% of your salary. But if you’ve been saving 25%, you’re used to spending far less—and you might be comfortable retiring with just 65% of your preretirement income.

Act

FUND YOUR IRA—for 2024. This time of year, folks are exhorted to get their IRAs funded for 2023 before the mid-April tax-filing deadline. That’s a good idea. But if you want the most out of your IRA, you should also make your 2024 contribution. That way, your money will be invested for longer—and there’s the potential for even more tax-advantaged growth.

Think

VALUE AVERAGING. This variation on dollar-cost averaging involves adjusting the sum you invest each month, depending on market performance. You set a target growth rate for your stock portfolio. If you don’t achieve that target in any given month, you increase the sum you save next month—a contrarian approach that could bolster long-run results.

Money Guide

Today's Family Debt

TOO MUCH DEBT HELPED trigger the 2008 financial crisis. Some 16 years later, the picture is much brighter. Here’s what the latest statistics tell us:
  • Every three months, the Federal Reserve Bank of New York puts out a report on household debt. Borrowing had soared ahead of 2008's financial crisis, only for American families to shed debt in the years that followed, as they paid back the money they borrowed and also defaulted on loans. Recent data are more reassuring. Today, families are carrying 52% more debt than a decade ago, outpacing the 32% inflation rate for the same period, but not to an alarming degree.
  • According to the New York Fed, Americans have an average of $61,040 of loans outstanding, including mortgage debt, home equity loans, car loans, credit card debt and student loans. That might seem modest given the large mortgages often needed to buy homes in major East and West Coast cities. But remember, homes are substantially cheaper in many parts of the country, plus the average is influenced by retirees with little or no debt and by the third of American households that don’t own a home and hence have no mortgage.
  • For years, student loans were the big worry. But the past decade paints a more comforting picture, with student loans outstanding up 48%, versus 52% for all household debt.
  • As of 2022, 77.4% of American families were in debt, according to the Federal Reserve’s Survey of Consumer Finances. The most common types of borrowing are mortgage debt, installment loans like car and student loans, and credit card balances.
  • The Federal Reserve's 2022 survey found that 45.2% of families had a credit card balance, up from 38.1% nine years earlier. Among those carrying card debt, the mean amount owed was $6,120, while the median was $2,700.
  • Where do the most financially responsible Americans live? According to WalletHub, the three states with the highest credit scores are Minnesota, New Hampshire and Vermont, while the three lowest-scoring states are Mississippi, Louisiana and Alabama.
  • Margin borrowing is often viewed as an indicator of investors’ appetite for risk. As of December 2023,  there was $701 billion of margin debt outstanding, up from $607 billion a year earlier.
Next: Inflation and Debt Previous: Borrowing Articles: Debtor's Dozen and Debt: 10 Questions to Ask
Read more »

Manifesto

NO. 16: IT TAKES years to achieve full financial freedom. But we can quickly escape much financial worry—if we live beneath our means, pay off credit card debt and build a cash cushion.

Voices

Is it okay to retire with debt?

"Everyone who “retires” (whatever that means) without any further earned income is, by definition, retiring with debt. Everyone. Why? Because tomorrow you’re going to have to eat. Unless you live self-sufficiently in a cabin and can live off the land and off the grid by growing or catching your own food, collecting your water, possibly generating your own power, and not needing to ever buy a single other thing, you automatically have debt. Sure, this is a slightly semantic argument. On the other hand, responsible financial preparation for retirement means understanding how much money you’ve saved and how long it is likely to last given the amount you spend each year (aka your burn rate). Financial debt is just another line item expense that goes into your burn rate, along with groceries, utilities and car insurance. Whether it’s paying off a mortgage at a low interest rate, or paying down credit card balances at a usurious interest rate, having debt is fine as far as it goes if you’ve factored that into your monthly burn rate and your overall retirement plan. Now whether this is the best use of money as part of an overall investment portfolio, that’s an entirely separate question. And probably the real question being asked here."
- tshort
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What’s the most important financial concept?

"that compound interest can rule your lifestyle, either for the better or the worse!"
- Captain FI
Read more »

Second Look

Retirement

Everyone’s an Expert

DOES ANYONE DOUBT that planning for retirement is unique for each individual?

The way we manage money, how we handle debt, our desired lifestyle and our family status are all important variables to consider. From what I observe, however, many people ignore these differences and seek a one-size-fits-all answer.

I’m addicted to YouTube. In addition to history, archeology and general education videos, I watch many retirement planning shows. I also follow retirement groups on Facebook and bloggers who embrace the FIRE (financial independence-retire early) lifestyle.

Read more »

Family Finance

Hitting Home

WHEN IT COMES TO your home, ignorance about taxes isn’t bliss—and it could be disastrous. I often field tax questions from homeowners. Most don’t understand how they’re affected by continuously changing tax rules. Even worse, they’re totally unaware that the rules have changed.
Want to save thousands of dollars? What follows are reminders of how to sidestep tax pitfalls and take maximum advantage of frequently missed—but perfectly legal—opportunities:
Mortgage points. Do you plan to purchase a new dwelling around year-end?

Read more »

Investing

What to Expect

IMAGINE A MARKET genie offered you the choice between knowing the stock market’s return next year or the stock market’s average return over the next 10 to 15 years. Which would you choose?
I’m guessing that most people would prefer to know how the stock market will do next year. After all, that seems like more actionable information, plus who has the patience to wait a decade or longer? But for those with an investing time horizon of more than 10 years—the vast majority of us—knowing the stock market’s return over the next decade or longer is far more valuable information.

Read more »

Lists

The Morning After

WHEN MARKETS GO crazy, financial writers feel compelled to dust off the keyboard and cook up profound insights. But I am writing this at 5 a.m., while still ingesting my first cup of coffee, so I’m setting the bar a little lower. Here are 12 modest observations following yesterday’s 4.1% plunge by the S&P 500:
1.  I don’t know. You don’t know. Nobody knows. The market turmoil of the past six trading days feels like a sea change after 2017’s remarkable calm.

Read more »
Home Call to Action

Mindset

A Rich Life

I’M FRUGAL AND FEEL fortunate to be so. Indeed, among all the financial skills I’ve learned, frugality stands out as the most powerful. But at the same time, I also feel affluent. This might seem like a contradiction, but the mindset of frugality and the feeling of affluence strike me as two sides of the same coin.
Frugality is often associated with being cheap. Frequently, “affluent” is used interchangeably with “wealthy.” I beg to differ.

Read more »

Free Newsletter

Get Educated

Manifesto

NO. 16: IT TAKES years to achieve full financial freedom. But we can quickly escape much financial worry—if we live beneath our means, pay off credit card debt and build a cash cushion.

Act

FUND YOUR IRA—for 2024. This time of year, folks are exhorted to get their IRAs funded for 2023 before the mid-April tax-filing deadline. That’s a good idea. But if you want the most out of your IRA, you should also make your 2024 contribution. That way, your money will be invested for longer—and there’s the potential for even more tax-advantaged growth.

Truths

NO. 8: DILIGENT savers need smaller nest eggs. Let’s say you save 10% of income. To retire in comfort, you might need portfolio withdrawals, Social Security and any pension income to replace 80% of your salary. But if you’ve been saving 25%, you’re used to spending far less—and you might be comfortable retiring with just 65% of your preretirement income.

Think

VALUE AVERAGING. This variation on dollar-cost averaging involves adjusting the sum you invest each month, depending on market performance. You set a target growth rate for your stock portfolio. If you don’t achieve that target in any given month, you increase the sum you save next month—a contrarian approach that could bolster long-run results.

Money Guide

Begin Here

Today's Family Debt

TOO MUCH DEBT HELPED trigger the 2008 financial crisis. Some 16 years later, the picture is much brighter. Here’s what the latest statistics tell us:
  • Every three months, the Federal Reserve Bank of New York puts out a report on household debt. Borrowing had soared ahead of 2008's financial crisis, only for American families to shed debt in the years that followed, as they paid back the money they borrowed and also defaulted on loans. Recent data are more reassuring. Today, families are carrying 52% more debt than a decade ago, outpacing the 32% inflation rate for the same period, but not to an alarming degree.
  • According to the New York Fed, Americans have an average of $61,040 of loans outstanding, including mortgage debt, home equity loans, car loans, credit card debt and student loans. That might seem modest given the large mortgages often needed to buy homes in major East and West Coast cities. But remember, homes are substantially cheaper in many parts of the country, plus the average is influenced by retirees with little or no debt and by the third of American households that don’t own a home and hence have no mortgage.
  • For years, student loans were the big worry. But the past decade paints a more comforting picture, with student loans outstanding up 48%, versus 52% for all household debt.
  • As of 2022, 77.4% of American families were in debt, according to the Federal Reserve’s Survey of Consumer Finances. The most common types of borrowing are mortgage debt, installment loans like car and student loans, and credit card balances.
  • The Federal Reserve's 2022 survey found that 45.2% of families had a credit card balance, up from 38.1% nine years earlier. Among those carrying card debt, the mean amount owed was $6,120, while the median was $2,700.
  • Where do the most financially responsible Americans live? According to WalletHub, the three states with the highest credit scores are Minnesota, New Hampshire and Vermont, while the three lowest-scoring states are Mississippi, Louisiana and Alabama.
  • Margin borrowing is often viewed as an indicator of investors’ appetite for risk. As of December 2023,  there was $701 billion of margin debt outstanding, up from $607 billion a year earlier.
Next: Inflation and Debt Previous: Borrowing Articles: Debtor's Dozen and Debt: 10 Questions to Ask
Read more »

Voices

If you couldn’t buy index funds, how would you invest?

"I would be investing in the old school Listed Investment Companies such as AFIC, Brickworks etc "
- Captain FI
Read more »

When does leasing a car make financial sense?

"For the owner? Never."
- Bruce Keller
Read more »

Is it better to give away money now or upon death?

"Another option would be to help your grandkids to start saving. Suggest that they take some of their earnings from their after school job and open a Roth IRA in a zero finance charge Index Fund (such as at Fidelity) and offer to gift them that amount after they make the deposit (their parent(s) will need to help them set up the account). Maybe for the next $1000 you could give them 50% or so. It will teach them the importance of long term investing and watching their investments and will be a lifelong lesson and be one of the best gifts they will ever receive."
- John Van’t Land
Read more »

Second Look

Retirement

Everyone’s an Expert

DOES ANYONE DOUBT that planning for retirement is unique for each individual?

The way we manage money, how we handle debt, our desired lifestyle and our family status are all important variables to consider. From what I observe, however, many people ignore these differences and seek a one-size-fits-all answer.

I’m addicted to YouTube. In addition to history, archeology and general education videos, I watch many retirement planning shows. I also follow retirement groups on Facebook and bloggers who embrace the FIRE (financial independence-retire early) lifestyle.

Read more »

Family Finance

Hitting Home

WHEN IT COMES TO your home, ignorance about taxes isn’t bliss—and it could be disastrous. I often field tax questions from homeowners. Most don’t understand how they’re affected by continuously changing tax rules. Even worse, they’re totally unaware that the rules have changed.
Want to save thousands of dollars? What follows are reminders of how to sidestep tax pitfalls and take maximum advantage of frequently missed—but perfectly legal—opportunities:
Mortgage points. Do you plan to purchase a new dwelling around year-end?

Read more »

Investing

What to Expect

IMAGINE A MARKET genie offered you the choice between knowing the stock market’s return next year or the stock market’s average return over the next 10 to 15 years. Which would you choose?
I’m guessing that most people would prefer to know how the stock market will do next year. After all, that seems like more actionable information, plus who has the patience to wait a decade or longer? But for those with an investing time horizon of more than 10 years—the vast majority of us—knowing the stock market’s return over the next decade or longer is far more valuable information.

Read more »
Home Call to Action

Lists

The Morning After

WHEN MARKETS GO crazy, financial writers feel compelled to dust off the keyboard and cook up profound insights. But I am writing this at 5 a.m., while still ingesting my first cup of coffee, so I’m setting the bar a little lower. Here are 12 modest observations following yesterday’s 4.1% plunge by the S&P 500:
1.  I don’t know. You don’t know. Nobody knows. The market turmoil of the past six trading days feels like a sea change after 2017’s remarkable calm.

Read more »

Mindset

A Rich Life

I’M FRUGAL AND FEEL fortunate to be so. Indeed, among all the financial skills I’ve learned, frugality stands out as the most powerful. But at the same time, I also feel affluent. This might seem like a contradiction, but the mindset of frugality and the feeling of affluence strike me as two sides of the same coin.
Frugality is often associated with being cheap. Frequently, “affluent” is used interchangeably with “wealthy.” I beg to differ.

Read more »