My Wealth Builder

Part Time Job Situation is Improving

2009-11-06T08:06:00.001-05:00

In the past two months, I've gone from no part time jobs to having three part time jobs concurrently for November through January. If all goes well with the third part time job, it may last through April or even become a regular part time job. The best news is that if the third part time job were permanent, it would cover almost 25% of our annual expenses for 20 hours work per month.

The job is with a supplier to the company from which I retired. They have hired me as a advisor to help them generate more business with my former company. For me, this part time assignment is a perfect fit. When I was working, I would give the supplier advice on how they could be more help to my company. Now, I am going to be paid to implement the advice I was giving while I was working :-)

While the offer was for up to 6 months, I asked for a 3 month contract with option to renew. I did this for two reasons:

I wanted only a short term commitment, giving the supplier and me a gracious way (non-renewal) to end the arrangement, if things didn't work out. Since taking early retirement in October, 2007, I've enjoyed working part time for a maximum of 3 to 4 months and then taking a break until the following year. I wasn't looking forward to committing to more than 4 months yet.

I wanted to create a sense of urgency to do the project. I really believe the assignment can be done in three months or less. With only a three month assignment, I can motivate both companies to make decisions or take actions on the proposal that has been made. I didn't want the work to expand to fill the time, if the assignment was 6 months.

Overall, this should be a very enjoyable part time job. I get to reconnect with colleagues from my last assignment before retiring. I get to leverage my skills and experience in my areas of expertise. Finally, I get to start and successfully complete the project in only three months, which would be very satisfying to me.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or job advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Asset Allocation Investing Based on Time

2009-11-04T09:18:00.000-05:00

Increase Your Retirement Income by Mary Beth Franklin of Kiplinger offers a new twist on how to think about withdrawing from retirement savings. Historically, advisors have used a withdrawal rate of about 4%. The article describes an approach of laddering investment risk by the time segment needed, with the least risky being short term and the most risky being long term.

In this model, near term income needs would be invested in money market funds and CDs. The next time segment would be bonds. Longer time frames would be invested in stocks, covering income and growth, growth and aggressive equity investments depending on the time frame.

Overall, I like this style of asset allocation based on time. While we weren't aware of this specific retirement investing method , we found the approach of keeping short term expense needs (3-4 years) in money market funds and CDs very helpful during the 2008 - 2009 bear market. Thus, when the market turned down, we did not liquidate equity investments at low prices to generate cash for living needs.

At the moment, this type of approach is working for us. However, for this approach to work, the economy and stock market will need to recover over the next few years, which I think is a reasonable assumption for now.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From October 27 to November 2, 2009

2009-11-03T07:35:00.000-05:00

Here are the links to the Carnivals in which My Wealth Builder participated from October 27 to November 2, 2009:

Boomers and Seniors: News You Can Use

Carnival of Financial Planning

Festival of Stocks

Tax Carnival #59

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or economic advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Ready for a Correction or No Correction

2009-11-02T07:48:00.000-05:00

Based on the market action on Friday, October 30, 2009, and the bankruptcy filing of CIT over the weekend, it appears the much anticipated stock market correction may be beginning, again. If the correction should finally happen, I will be ready to buy after about a 10-15% drop. My plan is to invest a no more than 20% of my funds at each buy point, in case the market keeps declining, as it did in October, 2008 through March, 2009.

On the other hand, I've been expecting a correction since May, 2009. I wouldn't be surprised if I'm wrong again, and a correction does not occur. If the last week's market decline is another in a series of correction "head fakes," I have enough funds invested to participate in a continued advance.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Reducing Clutter - Shed and Shred Approach

2009-11-01T23:46:00.001-05:00

I am giving up the ways of the pack rat. In the next few months, I will be making the effort to reduce clutter my life. I am convinced less clutter will make my life better, because I will have less things to think about, maintain and keep in storage. In the first phase, I am taking a shed and shred approach.

Shed - I am giving away items which aren't not being used. My initial criteria is at least once per year, to account for seasonal usage. If it hasn't been used in that time frame, then it will likely be giving away. The main exceptions are books and board games.

Using this criteria, we've identified numerous items for giving to charity. Items include old stereo systems, furniture from our childhood, various auto and yard tools, and, of course, clothes. In addition, we will probably start giving away some of the baby clothing since we have waited three years for a second adoption, and the chances are looking close to zero.

A benefit is that we will be able to deduct the fair market value of items donated to charities. Since we plan to itemize for 2009 and take the standard deduction for 2010, we are targeting to have all the donations made in 2009. Thus, we are on a mission to get rid of unnecessary items by December 31 of this year.

Shred - After my father passed away, I went through his saved paperwork to determine what was useful and what could be discarded. I soon determined that over 95% of the papers he kept were not of any use, which made it hard to find the 5% of valuable paperwork (e.g. deeds, recent tax returns, property tax bills, etc.).

It didn't take to long for me to realize that this acorn didn't fall too far from the tree. I routinely keep one to two years of paid utility and credit card bills, three years of brokerage financial statements, two years of health insurance statements, employer benefit statements, interesting articles and so on. While the papers are somewhat organized in file cabinets and binders, I had to question the value and effort of keeping and maintain these records. After all, I knew that over 95% would not be of use anytime in the future. Besides, based on recent experience, it seems I can call many of the institutions for the information, at no charge.

Thus, we made the decision to shred all statements and bills that could be accessed electronically. From now on we only plan to keep those records related to doing taxes, and only for three years. In addition, we still plan to keep our tax return copies indefinitely. To expedite the process, we purchased a 12 sheet power shredder, which has made getting rid of sensitive documents in an efficient way.

After a spending the past week down cluttering, I feel like we have made great progress. We've eliminated several things that we don't use any more, created more space in our house, and freed up binders and file space. Best of all, we now have less stuff to maintain and repair in the next year :-)

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

How Bear Markets Can Help Grow Savings

2009-10-29T08:03:00.001-04:00

Bear Markets Do Wonders for Retirement reports that people who begin investing during bear markets get better returns than those that begin investing during bull markets. Those that start investing in bear markets benefit from being able to buy at low prices at the beginning. The early investments then rise significantly when the next bull market occurs. In fact, those that began investing during bear markets do about twice as well as those that started during bull markets.

Thus, people who don't need the money for many years are in a great position to benefit by contributing to their retirement savings now. In our family, our five year old daughter is in the best position to benefit from this bear market, since both my spouse and I are retired. However, for her, we are focusing on her college account instead of retirement savings. Thus, in spite of market losses in the past year, we continue contributing to college savings accounts and kept them invested in stocks. Hopefully, we will benefit from this disciplined savings and investing, when she attends college 13 years from now.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, investing or saving advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Dollar Cost Averaging Helps Retirement Plans Recover

2009-10-28T07:32:00.004-04:00

Surprise! That 401(k) Account Is Looking Good by Karen Blumenthal reports that the median 401K account at Vanguard Group is up 7% versus two years ago, when the market was at an all time high. The article further notes that the gains are due primarily to people continuing to invest as the market was falling, since the subsequent market advance has given those contributions significant gains. However, those that stopped adding to their accounts were still showing significant losses, especially if they were heavily invested in stocks.

This result is consistent with the experience of the author of Free Money Finance, who had recovered from the market decline and was within 5% of his all time net worth high. On the other hand, since becoming early retirees in October, 2007, our investment accounts are still down about 30% versus the 2007 peak, since we stopped contributing, been withdrawing 4% a year and used another 7% to pay off our mortgage.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial, investment or retirement advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From October 20 to 26, 2009

2009-10-27T08:06:00.000-04:00

Here are the links to the Carnivals in which My Wealth Builder participated from October 20 to October 26, 2009:

Festival of Frugality #200

Money Hacks Carnival #87

Carnival of Financial Planning #112

Carnival of Twenty-Something Finances

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or economic advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

My Concern about Government Run Health Insurance

2009-10-24T09:07:00.000-04:00

When evaluating an individual or organization, I believe past performance is often a good indicator of the expected results in the future. Hence, when the government claims they will give everyone better health care at a lower cost, I look to see how government has performed in other areas for which they have responsibility.

Let's take a look at Medicare. If the government can give everyone better health care at a lower cost, they should have already been able to deliver that result in Medicare. Medicare is already a single payer option run by the government, which is similar to some of the proposals being made. Hmm...I haven't seen anybody hold up Medicare as a model of universal health care that is better and more cost effective. I wonder why not :-)

A recent example is the first time home buyer's credit, which expires on November 30, 2009. An article in Yahoo! news reports that the eligibility for 100,000 out of 1.5 million that have claimed the credit is being questioned. For example, 580 people under the age of 18 claimed the tax credit, with the youngest being 4 years old. Also, 74,000 people appeared to have prior ownership of a home, excluding them as a first time home buyer.

My favorite example is the income tax system the government has created. Every year, I am amazed at the wasted effort and time the tax system creates. The complexity of my tax return seems to increase every year, many times for things that may have little impact on taxes owed or my refund. I wouldn't want my health insurance claims to have the same complexity in the future.

Also, it is estimated that there is a $350 billion tax gap (i.e. the difference between taxes owed and taxes paid) annually on about $2.2 trillion dollars collected net of refunds. That is about a 15% loss on an annual basis.

While I haven't exhausted all possibilities, the performance of the government in the above examples do not give me confidence they can provide a better, more effective, and less costly health care system. If the government could deliver what they claim for health care, why have they demonstrated the capability in other programs for which they have responsibility? To me, this is a case where past performance likely predicts future results.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial, policy or health insurance advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

The Ages of Being Carded

2009-10-23T21:24:00.002-04:00

When I was a teenager, I couldn't wait to be older. At 16 I could drive, at 18 I could drink, and at 21 I was considered an adult everywhere. Even though I was an adult, I was still carded for many years because of my youthful appearance. I was 30 the last time I was carded and found it a little annoying.

Nowadays, I wish someone would flatter me and ask for my ID :-) I never get carded anymore, even at places that claim to card everyone. When I go through the grocery self checkout lines, the attendant authorizes my wine purchase after barely looking at me. The same is true whenever I go to a bar or nightclub, the bouncer waves me in with barely a glance.

However, I am definitely not looking forward to the next phase of being carded again, the Senior Citizen Discount. Although I have retired, I am still many years away from qualifying age for the discount. I am not psychologically ready to be a "Senior," especially since we have a five year old daughter. For now, I guess I should just be happy that I am at an age of no longer being carded :-)

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Our Daughter Aces her First Test and Places in a Competition

2009-10-22T08:48:00.000-04:00

Our five year old daughter took her very first test in a Chinese class. I very proud to report that she received a grade of 100%. In addition, she placed second in a poem reciting contest. This was particularly exciting since neither of us speak or read Mandarin, while many of the other parents are native speakers.

In the week preceding the test, I remarked that the grade would determine her college options in the future and that passing was very important :-) Of course I wasn't serious, but my spouse and daughter did work hard studying for the test and practicing for the poem recital. Here are the elements that led to our daughter's success.

Preparation - In the week prior to the test, the teacher reviewed the material and provided a sample test for the children to practice. My spouse and our daughter spent three sessions reviewing and taking the practice test. As it turned out, the teacher used the same test at the practice test. Since my daughter has a very good memory, she answered all the questions, which were written Chinese, correctly.

For the poem, we used one that she had learned in an earlier class and practiced several times so that she remembered all the lines.

Desire - The teacher opened the poem recital contest by saying there would be a prize for the top three students. The prize was a spinning light, which is our daughter's favorite toy. Her eyes lit up immediately and she said, " I want to win one."

Execution - In the past, our daughter would sometimes shy away from speaking up in a group. However, this time she eagerly volunteered to do her poem. She stood in front of about 25 people (about 15 students and 10 parents) and recited her poem in a clearly and slowly with a voice that everyone could hear.

While the test was graded by the teacher, the poem recital was graded by the parents on a scale of 0 to 100. Our daughter received an average score of 95, which was just slightly below the first place child at 97 and just ahead of third place at 94. She was so excited to win second place and get a prize. I'm hoping this taste of success will cause her to want more and lead to developing the skills and habits to consistently be successful.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or parenting advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

The Benefit of not Including Bonuses in our Budget

2009-10-21T21:33:00.000-04:00

When I was working, we lived only on my base salary, even though I received bonuses and stock options during my the last 10 years of employment. For budgeting purposes, we considered my bonuses and stock option grants windfalls, since I wasn't guaranteed to get one every year. The benefit of doing this was as follows:

Lived well below our means. Just before retiring, we were saving 20% of my before tax salary. Thus, we never needed the bonus to cover expenses. Since my bonus was typically 10-25% of salary, we were living significantly below means, at about 60% of my income on average.

We treated the stock options in a similar manner. While working, I never exercised any options.

Accelerated savings growth. By saving my bonus, we were contributing the equivalent of 40% of my base salary to our retirement savings every year. Also, since we didn't exercise any stock options, the value of the options was equal to 6X my base salary when I retired.

Prepared us for early retirement. Since we were only living on 80% of my base salary, we required less funds in retirement than many of my peers, who had grown accustomed to living on both their bonus and stock options. For us, living more frugally while working was worth the benefit of retiring 10 to 15 years earlier than my peers.

I was fortunate that our company was able to pay a bonus for every year that I was eligible. However, since we never counted on getting a bonus, the payment was put into our saving account when it was received. Another benefit of saving the bonus was that it helped to make it through this recession, since our expenses were lower and our savings were high than if we had spent the money.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From October 13 to 19, 2009

2009-10-20T07:47:00.000-04:00

Here are the links to the Carnivals in which My Wealth Builder participated from October 13 to October 19, 2009:

Carnival of Personal Finance #226

Money Hacks Carnival #86

Carnival of Financial Planning #111

Festival of Stocks #163

Carnival of Personal Finance #227

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or economic advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Dow 10,000 3.0 - What's Next?

2009-10-19T07:44:00.000-04:00

After the Dow crossed 10,000 this week, the big question is where next . . . up, down or sideways? First, let me say that I really don't know. I feel like I've been wrong 90% of the time since this financial crisis started in 2008. However, I am happy to share my opinion.

Here are the three scenarios:

Dow 10,000 is a peak. Many experts expect a correction soon, because the market indices have risen too far and too fast. After all, the market bottomed on March 9, 2009 and the Dow is up 52.7% as of October, 16, 2009. In addition, these experts believe the stock market has advance far ahead of the economic recovery, meaning there will soon be disappointments with the corporate earnings. Some even expect the market to go below the March, 2009 lows.

Dow 10,000 is the center point. Since the economy is expected the to recover slowly, the stock market could oscillate around the 10,000 mark for years. This would similar to the 70s, when the Dow traded close to 1000, but not crossing it permanently until the 80s.

In this type of market, investors in individual stocks will have a better chance of investment gains than those that invest in index funds.

Dow 10,000 becomes a springboard. In this one, investors begin believing in the economy again, and worry about missing out on stock market gains. 10,000 becomes the new floor for the index and stock continue to advance, leading to the second bull market of this century.

Unfortunately, this scenario will likely lead to another bubble and subsequent crash.

At this point, I think Scenario 3 is the most likely, and we are continuing to invest in individual stocks that I believe will benefit from an economic recovery. The worst case, I believe, will be Scenario 2, where the economy and the stock market is choppy for the next few years. In this case, I also believe certain individual stocks will benefit. However, it will be a market where trading may be a better strategy than buy and hold.

For more on Strategies and Plans check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

How some Early Retirees are doing in this Recession

2009-10-16T14:18:00.000-04:00

Retired by Fifty - Where are they now? by Liz Pulliam Weston is a follow-up story on five couples that had retired before 50 in the past couple years. Three couples had retired from corporate jobs, lived off investments and kept working part time. One couple sold their businesses and lived on the investment income and part time work. One couple had government jobs, with one retiring after 20 years with a pension and one quitting after 14 years, both to start their own businesses.

The three couples who retired from corporate jobs seemed to have best weathered the recession. They continue to live off their investments and get supplemental income from their part time jobs. So far none have had to undo early retirement. However, one person is considering that it may be necessary to return to a corporate job.

The couple, who sold three restaurants, has started a new restaurant because their investment income wasn't sufficient to cover their expenses. However, the new restaurant is only open 4 hours per night and is much less effort than the three full time restaurants they previously owned.

Finally, the couple with the government jobs appears to be doing well living on the wife's pension, the husband's part time consulting job, while the wife continues to explore retirement career options.

For all these couples, early retirement didn't go the way they had planned. However, while the financial crisis of 2008 has been challenging, it seems to me that these early retirees have stayed retired through having enough saved, living within their means, and having the ability to work part time for supplemental income.

For more on Reaping the Rewards, check back every Friday Saturday Sunday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

College 529 Savings Account - Recovered Significantly in 2009

2009-10-15T13:54:00.000-04:00

In preparation for our year end financial review, I looked at the college 529 savings accounts for our family. We originally opened the accounts in December, 2005 and have made the maximum state tax deductible contribution for each year. Through 2008, we invested the contributions with in the Aggressive Growth, 500 Index, Extended Market, and International funds with Vanguard. In 2009, we changed our contribution mixed and added to the Aggressive Growth, Extended Market and Morgan Growth (new for 2009) funds.

The first column shows how the bear market of 2008 significantly reduced our college savings accounts. Not only were all the gains from 2006 and 2007 eliminated, the losses also reduced the principal from the contributions. However, the recovery since March 9, 2009 has enabled the accounts to almost reach break even. Here are the results as of 10/14/09:

	Returns
Fund	Total Return on 11/5/08	Total Return on 10/14/09
Vanguard Aggressive Growth Index Portfolio	-25.08%	-0.08%
Vanguard 500 Index	-27.74%	-15.15%
Vanguard Extended Market Index	-29.89%	-1.63%
Vanguard Developed Markets International Stock Index	-31.25%	-11.09%
Vanguard Morgan Growth	-	27.22%
Total	- 28.74	-3.61%

This analysis has shown me the high volatility of equity investments in our 529 plans. When it gets closer to needing the funds, I will definitely want to avoid this level of fluctuation. Thus, I will definitely move a significant portion to interest bearing accounts within 2-4 years of needing the money for college.

We will continue to make the maximum state tax deductible contribution for 2010.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial, saving or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Top 100 Recognition by Technorati

2009-10-14T13:31:00.001-04:00

In Technorati's new blog ranking system, My Wealth Builder was included in the Top 100 Finance (#38) and the Top 100 Business (#93) categories. For a complete list, see Technorati's directories for Finance Blogs and Business Blogs. Overall, My Wealth Builder was ranked 2,356 by Technorati among all blogs.

I recognize many of the fellow blogs and bloggers in both the Finance and Business directories, and feel honored to be in the top 100 of both.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Eat Out for Less - Off Peak Dinner Deals

2009-10-14T07:33:00.000-04:00

Increasingly, casual dining restaurants are offering 33 to 50% discounts on certain menu times at non-peak dinner times, e.g. 4-6 PM on Sunday to Thursday. In many cases, the deals are on appetizers and drinks, but occasionally, entrees are included. Based my experience, the appetizers, entrees and drinks are the same portion size as the full priced ones offered during other times.

For us, this is a great deal. When it's just our family dining, it is an acceptable trade off to eat at the restaurant's specified time to get a much lower price. In fact, we prefer to eat earlier because we have a five year old daughter, who we try to get to bed by 8PM. Also, since we have a young child, we like going to restaurants at times when they are less crowded. Now we get the additional benefit of lower prices.

I believe many of these meal deals are a direct result of the current recession and expect that most will be eliminated once the economy improves. In the meantime, we will be making a conscious effort to dine out early and take advantage of the available off peak meal savings.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From October 6 to 12, 2009

2009-10-13T07:58:00.004-04:00

Here are the links to the Carnivals in which My Wealth Builder participated from October 6 to October 12, 2009:

Carnival of Financial Planning

Carnival of Twenty-Something Finances

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or economic advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Thinking about Scenarios for the Next Bubble

2009-10-12T08:18:00.002-04:00

To me, the next bubble is a question of when and what, not if. Articles are already speculating what on the next bubble will be, as in Ten Bubbles in the Making on Tech Ticker on Yahoo! Finance. I've also been having conversations with my father-in-law, my financial advisor, and others on the bubble possibilities. For now, I think there are two likely bubble possibilities in the next five years.

In one of my scenarios, panic buying of investments will be the catalyst. I believe the stock market will be the main area affected, for the following reasons:

Lots of cash available. Investors have taken a lot of money out of the market, that are in accounts with very low interest. These funds have not participated in the rally since March, 2009, and people are waiting for the inevitable correction before reinvesting.

The pullback keeps delaying. Every time a correction seems to start, it appears traders are buying on the dip and preventing a correction from occurring. If this phenomenon continues, there may not be a correction for several months, while the indices advance another 10, 20 or maybe, even 50%.

Investors won't want to miss the rally. It was painful for investors to see their investment lose half their value, and it was even more painful to watch market bounce after withdrawal of funds. Psychologically, I don't believe people will want to watch another significant market advance without being invested. The inflow of funds will cause the market to gain, more funds will be invested and the cycle will continue...until the funds are depleted.

With the current skepticism in the market, I don't think this bubble has started yet. If the Dow crosses 10,000 and then 11,000, in the next few months, I expect this bubble will occur during 2010 to 2012.

In my second scenario, I believe inflation will be the catalyst, creating a bubble in hard assets. Here are the reasons:

Dollar devaluation. Low interest rates and Fed monetary policy will continue to weaken the dollar versus other currencies. As a result, the price of oil, natural gas, metals, mineral and other commodities will increase in dollar terms.

Accelerating inflation. The enormous amount of liquid injected into the economy by the Fed will lead to high inflation in a few years. This will lead to hard assets appreciating faster than other investments.

Fed actions will be late. In the financial crisis of 2008, Fed Chair Ben Bernanke admitted waiting until Congress had no choice before making his recommendations. I expect that Mr. Bernanke will not have the political fortitude to raise interest rates enough to effectively fight inflation. It is more likely Mr. Bernanke will not raise rates until politicians have no other choice, which will be too late.

Investors will flock to assets that appreciate with inflation. The assets may include commodities, especially precious metals, or collectibles, such as art and antiques.

For now, I see stock investments as being the more likely next bubble, especially if the anticipated pullback continues to be delayed. As a result, I'm planning to slowly add more funds to stocks over the next year, with the expectation of taking some profits if a bubble happens. Although I think inflation will occur, I don't expect it to be an issue for at least a year or two, given the severity of the recession. At this point, I have bought some TIPS (Treasury Inflation Protected Securities) as an inflation hedge, but will wait before taking any more action.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Looking for Great Part Time Retiree Jobs

2009-10-09T10:15:00.000-04:00

With the economic crisis of 2008 significantly reducing our portfolio of savings, I've been looking at part time job opportunities to earn wage income that will reduce our withdrawal rate from our retirement investments. Currently, I'm targeting to earn 20% of our annual expenses, and have achieved about 10%.

After looking for and working a few part time jobs over the past two years, I've developed a set of criteria for the part time jobs that I like best as a retiree:

Flexible hours that I can choose. I'm no longer interested in a regularly scheduled job for certain days each week, even if it is only part time. I like to choose which hours and which days to work.

Seasonal or short term. Even though I like my part time jobs, I grow tired of them after about three months, and look forward to them ending. Often, by the following year, I look forward to starting them again.

Free training, product or service use. Since the pay is not very much, I like the employers who have policies that provide free/low cost training or give limited free use of products or services to employees.

Enjoyable, most of the time. Now that I'm retired, I want to enjoy the work and the people with whom I work. If I don't enjoy either, it's time to change.

So far I have found four jobs that meet all the criteria for me and match my skills and interests. Here they are:

Part time teaching. This can include substitute teaching, tutoring, or special activities. While the class time is usually determined, I have flexibility to accept or decline. Generally, the assignment is short term. For special activities, I can sometimes have my daughter take the class for free. Finally, I enjoy helping young children learn about science and math topics.

Tax preparation. There are a number of tax preparation companies that hire people for each tax season of January 1 to April 15. The hours are flexible, the work is seasonal and employees can prepare and file their own taxes for free. Generally, I enjoy working with numbers and figuring how to achieve the lowest tax liability.

Seasonal park staff. Our local parks have seasonal jobs with flexible hours during the busy months of the year. A employee benefit is use of many services (e.g. boat rental , golf greens fees) for free. In addition, I enjoy outdoor work.

Special events. In our area, there are several sports tournaments and theme shows that last from one or two weeks. Although the hours can be long, there is flexibility to choose shifts and days to meet one's schedule. A nice benefit is being able to attend the event during outside of one's shift.

For now, I will focus on finding part time jobs in these four areas. Most of the jobs pay about $8/hour. Part time teaching can range from $9 to $15/hour, after factoring in preparation time. However, because of the flexiblity and perks, I consider these part time jobs better options than ones that may pay more. .

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or work advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Potential Tax Credits Related to Children - 2009 Update

2009-10-08T08:16:00.002-04:00

There are many tax credits that are potentially available to taxpayers with children. Here are the ones that I have identified so far. I've included the updated numbers I found for the 2009 tax year for Married Filing Joint (MFJ) status.

	Credits for 2009 Tax year*
Type	Maximum Benefit	MFJ Phaseout Begins at	MFJ 100% Phaseout at
Child Care Credit	$1,050 per child $2,100 maximum	$15,000	43% phaseout at $43,000
Adoption Credit	$12,150	$182,180	$222,180
Child Tax Credit	$1000 per child	$110,000	$110,000 + $20,000 for each child
Additional Child Tax Credit	up to $1000 per child	n/a	earned income below $3,000
Hope Education Credit	$2500 per child up to four years	$160,000	$180,000
Lifetime Learning Credit	$2000 per family	$100,000	$120,000
Earned Income Credit	$2853 - one child $5028- 2 children $5657 - 3 or more	$16,420	$35,463 for one child $40,295 for 2 children $43,279 for 3 or more

*While the sources are believed to be good, My Wealth Builder cannot guarantee the accuracy, timeliness or completeness of the information in the table.

Since the 2007 update, the credits have either stayed the same (child dependent care, and child tax credits) or have become more generous, with either larger credits or allowing higher income levels to qualify. Currently, we are only eligible for the child tax credit. Hopefully, the education credits (Hope and Lifetime Learning) will still be available when our daughter attends college.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Why Stocks Still Make Sense to Me

2009-10-07T22:31:00.000-04:00

Even with the recent decline in the stock market, I believe that stocks are a great investment. Here are the reasons:

U.S. and global economies are still resilient. Although the financial crisis was devastating, the economies didn't go into depression and are now in (slow) recovery. China, India and Brazil are still growing. Other emerging markets are also still strong. Also, I believe the U.S. economy will be strong enough to rebound from the current recession.

Historical long term mean returns are the best benchmark. I am often guilty of extrapolating recent investment returns into the future. In October, 2007, I thought the market would keep going up at least 8% a year. In March, 2009, it seemed the market would only go down and I stopped buying stocks. Statistically, a good strategy is to assume that the long term returns will be close to the mean.

Haven't found better alternatives. We already have enough fixed income investments and own a home. With interest rates being low and real estate being illiquid, I don't want to add more funds into these areas. Since I feel commodities are very speculative, I am reluctant, at this time, to transfer significant funds from stocks into these investments.

Although the experts keep predicting a 10% pull back, the stock market has not corrected since the March, 2009 bottom. It appears that traders buying on every dip, which may be preventing a significant correction. We started adding funds back into stocks in September, 2009. For now, I plan to increase the amount of our equity investments by 10-20% over the next six months.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

Links To Carnivals From September 29 to October 5, 2009

2009-10-06T16:17:00.003-04:00

Here are the links to the Carnivals in which My Wealth Builder participated from September 29 to October 5, 2009:

Festival of Stocks #161

Carnival of Taxes #58

Carnival of Family Life

For some interesting articles from the blogosphere, check out these Carnivals and give the hosts some recognition for their hard work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or economic advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC

End of Year Tax Planning - Deductions

2009-10-06T07:54:00.000-04:00

For me, October is a good time to review my 2009 financial status for tax return filing purposes. It gives me a few months to make any changes that can lower my taxes. With the exception of IRAs, there is little that can be done to change one's tax situation after the calendar year is over. The first area I review are the deductions I can take on Schedule A.

Here are the specific categories I check for itemized deductions:

Medical - Medical expenses that exceed 7.5% of adjusted gross income are deductible. Before retiring, our medical expenses were not close to the limit. However, now that I pay for retiree health insurance with post tax dollars, I can count my premiums in this deduction. If we're close to the 7.5% limit, we can make some more medical related purchases (e.g. over the counter medicines) and become eligible for the deduction.

Taxes - Our deductions include property taxes, and state/local income taxes. Since property taxes are paid 6 months in arrears for our county, we can choose to pay our 2009 property taxes early in December, 2009. This would increase our itemized deductions.

For state taxes, we are currently making quarterly estimated tax payments. The final payment for 2009 is due on January 15, 2010. By making the final payment in December, 2009, I can take the deduction this year.

A major caution is the Alternative Minimum Tax (AMT) sometimes negates the deduction benefit of accelerating tax payments into the earlier tax year.

Charitable Contributions - I always check if we have any goods that can be given to Goodwill or Vietnam Veterans. In addition, we decide whether to make some of our 2010 contribution pledges in 2009.

Miscellaneous Deductions - These deductions need to exceed 2% of AGI before they can be taken. Our primary deduction for this category is investment expense, which includes the managed account fees we pay our financial advisor.

Other expenses, such as union dues, unreimbursed employee expenses, and tax preparation costs, can also be deducted in this section.

With the exception of accelerating property taxes and charitable contributions, most of the deductions changes are usually less than $100. However, since every additional $100 deduction is typically results in a $15 to $25 additional refund, I think it's worth a couple hours of planning to maximize deductions and increase our tax refund.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or tax advice. Please consult a professional advisor.

Copyright © 2009 Achievement Catalyst, LLC