THEY SAY OPPOSITES attract. In many ways, this is true of my husband and me. When we met, I was very frugal. My husband was on the other end of the spending spectrum. But we’re still together 21 years later—and we have managed to make this work in a way that’s been good for both of us.
We both well remember that first visit to the grocery store. Before we moved in together, I would go down the aisles with coupons in hand,
IMAGINE AN IDEALIZED chart that summarizes our finances over the course of our lives. What would the chart look like? Picture these five lines:
Our nest egg grows, slowly at first and then ever faster, hitting a peak of around 12 times our final salary when we retire.
Our portfolio in our 20s stands at perhaps 90% or even 100% stocks. We dial down our allocation in the years that follow, especially during our final decade in the workforce,
WITH LOWER TAX rates in the offing, many of my clients tell me they’ve heard it pays for them to accelerate deductions for 2018 into 2017. How, they ask, does that tactic benefit them?
They beam when I alert them to two breaks. First, they qualify for deductions one year sooner. Second, they lose less to the IRS when they apply their deductions against higher-taxed 2017 income, instead of lower-taxed 2018 income.
I decide to prolong our chat and caution them not to take their eyes off the calendar when they write checks at year’s end.
I AM AMAZED our schools don’t require kids to learn three important life skills: the basics of nutrition, a thing or two about parenting, and how to handle money. I’m no expert on nutrition and my parenting is a work in progress. But I do have a background in personal finance: When folks ask me what to read to deepen their financial knowledge, I have a ready list of titles.
Recently, however, someone asked me for a more advanced list—a “201”
SELF-DETERMINATION theory posits that we have three basic psychological needs: the need for competence, relatedness and autonomy. When these needs are satisfied, we’re more motivated and experience a greater sense of well-being.
To this, you might reasonably respond, “What the heck are you talking about?”
As I see it, self-determination theory provides a useful framework for thinking about the connection between money and happiness. We tend to be happier and more enthused about our daily lives if we’re engaged in activities we feel we’re good at (competence),
ADAM RORABAUGH left the shores of his German homeland at age 36, together with his wife Maria and five children, and landed in America in 1831. Two brothers also accompanied him on a stormy, 77-day sailboat voyage across the Atlantic. Driven off course during the trip, they landed at Havre de Grace, Maryland, in the Chesapeake Bay. After making their way to New York City, it is presumed the three brothers parted, never to meet or hear from each other again.
WHILE SITTING at my desk a few months ago, I received a text message from Citibank notifying me of “suspicious activity” on my primary credit card. I immediately logged onto my account and discovered someone that morning had attempted to use my credit card number at a luxury resort—one located several hundred miles from where I work. The charge had been denied, but the damage was done. I immediately cancelled the card. I also began notifying the companies I have automated payments with,
WHAT’S A GOOD reason to dial down your stock market exposure? A year after Donald Trump was elected president, many folks are still smarting from their decision to bail out of stocks. Clearly, we shouldn’t lighten up on shares just because we don’t like the guy in the White House.
We also shouldn’t bail out just because stocks sport high price-earnings ratios and skimpy dividend yields. No doubt about it, stocks today are expensive.
I RECEIVE MANY queries about taxes. Most of the questions people send are pretty much the same: They want my advice on how to lose less to the IRS.
Most of the answers I send back are pretty much the same: I advise them to plan ahead and stay on top of tax-law changes, especially whether they will be hurt or helped by the Republicans’ proposals for the most sweeping revisions in more than 30 years.
I RECENTLY LEARNED a new expression, TL;DR, which stands for “too long; didn’t read.” Twitter users and bloggers use it when they want to summarize an idea for readers who are short on time. It’s the modern equivalent of saying, “Here’s the executive summary.”
Coincidentally, this week, two people separately asked me what I see as the most important principles in personal finance. In other words, they wanted the TL;DR version, without too much commentary.
I BOUGHT MY HOUSE in Silicon Valley by launching a Kickstarter campaign. Together, the team blew past our target and disrupted an entire industry—all while driving for Lyft (not Uber) and Airbnb-ing our couches, of course.
First, what is a house in Silicon Valley? In the lauded land of garages-turned-unicorns, owning a house means any number of things: A wall, if one’s lucky. A floor. Perhaps a couch.
Not so for the wise who live elsewhere—like my Phoenix-based high school best friend.
IF THERE’S ONE number that drives our financial lives, it’s our fixed living costs. We’re talking here about regularly recurring expenses that are pretty much unavoidable, such as mortgage or rent, car payments, property taxes, utilities, insurance premiums and groceries.
Why are fixed living costs so important? There are five reasons:
1. The lower our fixed living costs, the easier it is to save. I believe many Americans would love to save more, but simply can’t,
IN NOVEMBER 2015, I got a notice from Amazon advising me that its security had been breached by some clever hacker and that my password may have been compromised. I was locked out of my account and instructed to set a new password.
In typical mindless fashion, I immediately set out to do just that. But then my inner contrarian stepped up and shouted some questions. I love this guy, even though most everyone around me thinks he’s a truculent moron.
HAVING RECENTLY lost several people, I was in a bit of a daze. Grief stopped me from doing some of the things that brought me incredible joy, like downhill skiing and whitewater kayaking.
Being the Swede I am, I fell in love with Sheila—my gently used Volvo AWD V60 sedan. My attraction to Volvos included family nostalgia, safety and longevity. The dealer was a friend of my aunt, so I was able to negotiate a very reasonable price,
TO IMPROVE OUR behavior, we first need to realize we’re on the wrong path and then figure out the right way forward. Often, this isn’t especially difficult. If we have no savings, obviously we need to sock away some money. If we’re overweight, we should cut back on the calories. If we’re out of shape, we need to hit the gym.
Instead, the real problem is getting ourselves to act.
The contemplative side of our brain is fully aware we ought to eat and spend less,