I GREW UP IN a lower-middle-class family. We lived in a small apartment where I slept on the living room couch. My father sold cars for a living.
Today, my living standard is quite different. On average, 97% of retirees my age have less income and assets than my wife and me. Our friends are in similar economic circumstances. If they weren’t, they couldn’t live where we do.
The minimum needed to live in our condo community is $24,000 a year.
WHEN I ASKED MY college class this spring how many had been taught personal finance before, just a single hand went up. That’s why I teach Franco Modigliani’s lifecycle hypothesis of savings to my behavioral economics class.
A brilliant student born to a Jewish family in Rome, Modigliani was awarded first prize in a national economics contest by Mussolini himself. Warned to flee Italy while he still could, Modigliani soon after booked a zig-zagging trip through Switzerland and France before landing in New York in 1939.
A FEW WEEKS AGO, my net worth hit the $1 million mark. It was a milestone I’d been looking forward to for years.
Almost a decade ago, I performed my first net worth calculation. Back then, I was recently divorced and living on my own for the first time in my life. My only assets were three retirement accounts and a seven-year-old car, plus half the proceeds from the sale of a house my ex and I had owned.
WARNING: WHAT YOU read next may be interpreted as a rant—because it is.
I’m tired of hearing about how Americans are unprepared for retirement or even minor financial emergencies. A few years back, it was the inability of 40% to 50% of us to come up with $400 for an emergency. The $400 figure has been used to prove everything from the extent of inequality to how Americans struggle to manage money.
Other studies set the hurdle at $1,000.
I LEARNED A LOT about finance and life from my uncle. He was an early investment advisor and published a book on wealth management. Even though he was not a registered investment advisor or a Certified Financial Planner, our family proudly extolled his ideas when I was growing up.
My family first introduced me to my uncle’s doctrines when I was a child of five or six. I had been given a small piggybank to store my life’s savings.
AS I PULLED UP IN my used Subaru wagon to the high school drop-off line with two grumpy teenagers on the first day of school, I noticed something was different.
Because of the pandemic, our sleepy, semi-rural town in upstate New York had seen an influx of Manhattanites and Brooklyners over the past year. My Subaru was now bracketed by a shiny Tesla sedan and a polished Mercedes SUV. The usual collection of less flashy cars and trucks seemed to be missing.
I’VE BEEN REVIEWING my past writing on HumbleDollar, my own blog and social media. I notice I often throw out personal details, such as the second home we own, paying for our children’s college and our spending on travel. My intention isn’t to boast.
In fact, I don’t even think of myself as wealthy, though the statistics say my wife and I are above average. Perhaps that’s because what we have today was accumulated over 60 years,
A FEW YEARS AGO, I searched a government database of unclaimed assets—and was surprised to discover the state of Oregon owed me money. I submitted a claim and waited a few weeks.
A check for $86 arrived. The funds were from royalties I’d earned from a YouTube channel that I’d long since forgotten about.
It’s estimated that one out of 10 Americans has unclaimed property waiting for them. A variety of websites allow anyone to search databases filled with unclaimed property,
I’VE BEEN TRAINING dogs for nearly 30 years. I’ve won enough awards in dog competitions to wallpaper my office with rosette ribbons. My 15 minutes of fame also involved dogs. Almost 20 years ago, I appeared on an episode of The Tonight Show with Jay Leno, where one of my corgis happily demonstrated his ability to ride a skateboard.
Just as there are many ways to skin a cat, there are also many ways to train a dog.
MY 28-YEAR-OLD wanted to know how much to contribute to her retirement plan at work. As a father, this was a text that I loved to get.
In May 2020, we toasted Genevieve over Zoom when she graduated with a master’s degree in social work. Within a week, she’d landed a job helping children in foster care and their families. Now, nearly a year later, she was invited to join the retirement savings plan at work,
FRUGALITY GETS A BAD rap these days. It seems today’s standard advice is to “go ahead and buy your darn daily latte.” Instead, we’re told to worry about bigger financial issues.
That’s probably good advice. Small purchases here and there will likely boost our mood, while clipping coupons probably won’t move the net worth needle. Still, I’ve adopted a cheapskate practice that can be lucrative: brokerage firm retention bonuses.
To snag these bonuses, you typically need a sizable IRA or taxable account.
IT’S A TOPIC WHERE I always seem to be in the minority. The controversy: Should you save first and then spend what remains—or, instead, prepare a budget which then determines how much you can “afford” to save?
Budgets are scary and stressful. Go ahead, make a budget if you like. But if you conclude that you can’t afford to save, there’s no progress in that.
A Northwestern Mutual survey found that 49% of U.S.
THERE’S A LITERARY rite of passage that requires every financial blogger to write at least one article about free money. Far be it for me to break with this tradition.
Titling an article “free money” will catch most readers’ attention. After all, we all want something for nothing. You know what they say: “Money found is twice as sweet as money earned.” It’s also a topic that’s a bottomless well of ideas limited only by the creativity of the writer.
SAVE 30% OF INCOME? No way.
That’s been my reaction whenever I’ve read about people saving 30% or more. I look back and think about making monthly mortgage payments, raising four children, paying for college and trying to save something to supplement my pension. For my wife and me, a 30% savings rate simply wasn’t possible. Nevertheless, people do it.
To find out more, I asked folks on a Facebook retirement planning group, “How do you save 30%?” The responses boiled down to nine key factors.
EARLY IN MY CAREER, one of my mentors at work used to talk about “excess paychecks.” He was a single, senior engineer who lived frugally. Back then, the concept seemed ridiculous to me. But I’ve come to realize he was right: Most of us don’t need every dollar we’re paid for living expenses, so we should think carefully about where to stash the excess.
That notion came to mind recently when taking to a friend.