Minding My Own Business

Clicking My Way To Increased Personal Finance

Jeff — Mon, 05 Jan 2009 16:47:08 +0000

[This is a post I wrote as part of Adrian Cartwood's Seven Millionaires in Training experiment...I hope you enjoy it...Jeff].

Making Money 201 is all about focusing efforts on increasing your income so that you can build wealth and make some headway on achieving your Number.

Being in the military affords me a nice and steady income (which I’m thankful for these days) but it doesn’t give me much of a chance to earn more by working harder or smarter so that I can earn that big promotion at work. Nor can I focus on growth opportunities for the organization to improve profitability and earn more through profit sharing or bonuses. This means I need to find an alternative, separate from the military to pursue new profits for my family.

But what should that be?

My required annual compound growth rate is approximately 38% to reach my Number ($10M in 10 years). I expect to use stock and real estate investments as well as some type of small business to make that happen. I have more detailed plans for stocks and real estate that I’ll share another time, but today I’m going to focus on my options for a small business.

Ideally, whatever I pursue should be as passive as possible. I’m not afraid of hard work, but my time is my most precious asset. The more income streams I can generate that require little or no time/effort to maintain, the more wealth I can produce as an individual. I think of this as leveraging my time.

Another reason I’m chasing passive income streams at this point in my life is that being in the military is a full time job that doesn’t leave me much room to head off in my own direction. If I find the perfect business opportunity, I’m not at liberty to “quit” when I decide. Therefore, my efforts need to fit with my present situation and service obligation.

My final reason for chasing passive income is that I have some big dreams I want to pursue on a full time basis as soon as possible. Yes, I understand the point of our exercise is to achieve the Number so we can retire and fulfill our life purpose stuff. But I think I can get on with it sooner than 10 years from now if I can generate sustainable passive income streams to live off of.

Currently my passive income efforts revolve around:

- Real Estate investment - One of my 2008 goals was to begin investing in real estate other than my primary home. However, the Navy changed my real estate investment efforts and that goal with orders to Boston, MA. I’m going to be managing the Navy’s recruiting efforts in New England. Drop me a line if you want to join up. Because of this change in plans I’ve had to defer my goal just a bit, but will still be a real estate investor very soon, I’m just going in through the back door. I have renters lined up for my VA Beach home and am closing on a house in Boston at the end of January. The Va Beach home is renting with positive (and passive) cash flow and the Boston house is a foreclosure that I’m picking up for $200K below market.

- An Internet approach - As I mentioned above, I need a business that I can fit into my military career. The Internet is everywhere. It never sleeps and my online activities can be tailored to my schedule. I can devote some time over lunch, during my commute on the train, or even while on travel and in the evenings at home. Thus the title of this post, I’m trying to click my way into increasing my income.

I think of the internet as a big river money just waiting for me to dip a bucket into. I am using several approaches to try and scoop my bucket into that river. Mostly centered around advertising and internet marketing, I’m using several blogs (I have ten right now) to target specific niche markets. The idea is to drive highly targeted traffic to the niche blogs which contain Google advertisements and related affiliate products. Traffic = Clicks = Advertising and Sales Revenue. So far the websites are paying for themselves, and I continue to build content and generate traffic via back links and search engine optimization.

I’m also dabbling in running targeted Pay Per Click ads (they are at the top and right side of Google’s Search results) to sell affiliate products. I paid for an online course to learn some of the in’s and out’s of PPC, but have only lost money so far in this area of Internet Marketing. I’ve suspended my PPC activities for now because I need all the cash flow I can muster to finalize my real estate deals in the end of January.

For now I’ll just focus on my niche blogs since I’ve got that breaking even. I’ve heard “stories” of folks on the internet using this approach to make several thousand dollars per month. I’ve only been at it for three months now and am making whopping $45/month from my ten blogs. It’s not much, but I see the potential.

The idea is passive income from military retirement (someday), real estate rentals, and internet income so that I can really begin to focus on what I view as my true business calling…building an Air Taxi business.

You knew it had to come back to flying at some point didn’t you.

In the mean time…Click Baby Click!

-Jeff

Learn about a leadership approach to money management and personal finance.

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Happy New Year Personal Finance

Jeff — Thu, 01 Jan 2009 22:30:03 +0000

December was a hectic month for me and I have pretty much neglected discussing money management and personal finance in lieu of other activities. I’m sure most of you probably think I’m referring to the normal holiday craziness that comes between Thanksgiving and New Years. While that certainly added to my busy-ness this month, I had several other balls in the air that have demanded my time.

I think when I look back on December 2008, I’ll remember it as one of my most financially rewarding months.

You may not know that I have been following and performing the “Millionaire in Training” series of exercises hosted by Adrian Cartwood over at 7m7y.com. Adrian (a multi-millionaire in his own right) has a goal to mentor seven people to multi millionaire status. My participation has been to merely follow along doing the same exercises he gives his millionaire trainees. It’s been a introspective series of exercises and I’ve spent a healthy amount of time determining my life’s purpose and how much money I need in order to fulfill my reason for being here on Earth.

In early December Adrian had a spot open up as one of the millionaires in training bowed out of the program to enter into a business arrangement with Adrian (that’s against the rules of the mentoring arrangement). I was completely caught off guard when I received an email from Adrian asking me to join his mentorship experiment. It took all of about 10 seconds to accept the offer. How often does a multi-millionaire offer to mentor you? Exactly.

So I’m officially a “Millionaire in Training” and you can check out my first post on 7m7y.com where I elaborate on my life purpose, net worth and most importantly my Number. Aside from the potential financial upside of this development, I’m excited to see how my leadership approach to money management and personal finance fits in with Adrian’s methods. I think there is going to be some great lessons here for my Money Leader and Money Manager.

If that wasn’t enough, my wife and I threw our annual “Old Fashioned Christmas Party” which has over 50 years of history and tradition spanning three generations in her family. In the aftermath of dirty dishes, stale beer and wine, we found a foreclosure home in the Boston area, made an offer over the Christmas holiday and found out it was accepted just before the New Year.

At the same time we showed our home in Virginia to prospective tenants and it looks like we’ll be signing a long-term lease in the next couple weeks.

It’s been a hectic flurry of decision making, income and expense projections, mortgage calculations, break-even rental analysis, negotiating and poker playing.

Success is becoming more of a reality everyday. The tenants references are checking out with flying colors, and the deal in Boston is coming together nicely. When it’s all done I’ll have a home rented, a profitable real estate transaction complete and a new home in Boston to move into.

I wish you all continued success in 2009.

-Jeff

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Money Management and Personal Finance Round Up

Jeff — Mon, 08 Dec 2008 14:34:53 +0000

Just a quick post today linking back to this week’s Carnival of Personal Finance. Edition #182 is being hosted by Free From Broke and features several articles from around the Personal Finance and Money Management blogging community.

My article on selecting a credit card for your Money Handler is featured as well.

Normally I go through the Carnival with a keen eye for posts that align with my leadership approach to money management and pertain specifically to either the Money Leader, the Money Manager or the Money Handler. However, this week I’m off to Europe on business, so I don’t have time to review the carnival.

Instead I’ll remind you of our definitions of the roles in personal finance as a primer before you head off to the carnival.

The Money Leader decides where you are going, when you need to get there and why you’re on this journey.

The Money Manager develops financial plans and monitors our performance executing the plan. He seeks to improve the efficiency of the processes the Money Handler operates within.

The Money Handler accomplishes the tasks necessary to implement financial plans.

Happy Reading

-Jeff

Learn about Money Management and Personal Finance.

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Money Management - Selecting A Credit Card For Your Money Handler

Jeff — Mon, 01 Dec 2008 15:52:39 +0000

[Note: The role of the Money Handler as well as those of the Money Manager and Money Leader are defined in my post on financial roles and responsibilities. In short the Money Handler does the necessary daily grunt work to keep your personal finance business running.]

The Money Handler is a key ingredient to making your personal finance and money management business successful. As such it is important to ensure he or she is equipped with the best tools and resources with which to accomplish the job.

One tool you should equip your Money Handler with is a good credit card to handle as much of your daily living expenses as possible. This technique alone will go a long way to enabling the outsourcing of your personal finance tasks.

The benefits of transitioning to credit card enabled personal finance are many:

Never be late paying a bill - Many of your monthly service providers will accept credit card payments and offer convenient automatic bill payment. If the power company is charging your credit card directly, you can be sure they won’t be late paying the bill. Another benefit will be that you no longer write checks for your bills and your need for postage stamps will decrease dramatically.
Never balance your checking account again - As your credit card use increases, your check book use will decrease. With few check transactions and a handful of electronic transfers, it becomes pretty easy to review your accounts online and determine whether anything is amiss.
Purchasing power is always at your finger tips - Pretty much every place you go you can use a credit card to pay your way. Occasionally I find myself in need of cash, but that’s only because the baby sitter doesn’t have a merchant account and my kids want cold hard cash for their allowance.
Build credit worthiness quickly - I don’t have specific data charting changes to my credit score by employing a credit card in this manner. But in my experience, it doesn’t take long for the bank to begin raising your credit limit dramatically. I’ve used two different cards over the course of the last four years and watched my credit limits jump from $7,000 on one and $12,000 on the other to over $25K on each card in less than a year. That $50,000 credit line has another side benefit. It’s a huge cushion that I can access in an emergency eliminating my concern for a 3-6 month stash of cash “just in case.”

My wife and I perform almost all of our Money Handler “spending tasks” with a joint credit card. In fact we use it so much that we usually write less than five checks per month, hardly ever carry cash and earn in excess of $500 in cash back rewards each year. That’s more than I collected in interest on my money market account last year.

Before we go any further discussing this Money Handler tool, I have to share one extremely important caveat that is critical to success. You need to pay off the balance in full each and every month. When you use a credit card in this manner, you will be moving several thousands of dollars through the card during each each billing cycle. As an example, my family averages between $3500-$4000 in monthly credit card purchases. The large volume of transactions coupled with the typical high interest rates that many cards have (you should choose low interest credit cards) can quickly snowball on you if you don’t pay the balance in full.

I don’t want anyone asking for an article about money management debt counseling.

If you are committed to paying off the balance each month, you can successfully employ this money management tactic. I haven’t carried over a balance on my cards since I started using this technique four years ago and its use has simplified my life significantly.

There are myriad credit cards available with a wide variety of perks, bonuses, rewards, interest rates and features. When you select a card, make sure you take time to review several credit card offers before making a selection and look for cards with these features:

Electronic bill payment features - You want to be able to pay your credit card electronically from your bank account and you want to be able to PUSH money to merchants. Most monthly bills can be paid with your credit card by having the merchant run the transaction and PULL money from the card. However, there will be some companies that either don’t offer this service or charge a fee for it. You can circumvent the hassle and fees by PUSHING money from the credit card side. This is done through your card’s website by identifying the merchant and then telling the card when and how much to pay.
A low interest rate - This is nice to have but not critical feature. You are going to pay off the balance monthly so the interest rate shouldn’t affect you. However, in case of an emergency where you use the card for a major purchase that you’ll have to pay off over time, a low interest rate would be very helpful.
No annual fee - With your credit card powered money management system, you’ll be generating plenty of merchant fees for the bank to collect. You shouldn’t pay the bank for the privilege to use the card. Either ask to have the fee waived, or select a different card.
Rewards program - Find one that works for your. Some are flexible letting you switch back and forth between airline miles, points and cash back. I’m pretty simple….Cash is King.
Responsive customer service - Bottom-line, you need a company that appreciates your business. Not all of them do.
A credit limit greater than your anticipated monthly expenses - The whole point of this technique is to put all your monthly expenses on the card. Your credit history will be a key determinant, but I think most of us should be able to get by with a $5,000 - $10,000 limit to start with.

After you’ve selected your card there’s not much left to do other than to start using it. Use it at the gas station, use it at the grocery store and use it anywhere else you can think of. Also be sure to contact each of your monthly bill providers to arrange for automatic bill payment via your new credit card. This alone will be a huge step towards outsourcing your Money Handler tasks.

Your new credit card powered money management approach will feel a bit strange at first. I remember in my early twenties my father lecturing me about the numerous pitfalls of credit usage. So the tactic I’m advocating here was way outside of my comfort zone when I started using it in 2004. However, after a couple cautious months under your belt where you’ve paid off the balance each time, you’ll find your comfort zone and you’ll begin to reap the benefits and simplicity I outlined above.

As for me, I use a Chase Freedom Rewards MasterCard and a Bank of America World Points MasterCard. I use two cards because of two simple reasons: customer service and the ability to PUSH money with the card. The BOA card was my only credit card until a phone conversation concerning my billing date when one of their customer service representatives said to me…”Mr. Wilcox, you’re not that good of a customer.”

The only reason I keep the BOA card is because I haven’t found another one that allows me to PUSH money. Chase has been great, now if only they would allow me to PUSH money…

Good luck. Let me know what card you choose and the features you like the best.

-Jeff

Learn about money management strategies and personal finance.

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Real Estate Investing - Find Desirable Properties

Jeff — Wed, 05 Nov 2008 17:04:31 +0000

According to an old saying, the only three things that matter in real estate are “location, location and location.” It is clear that a ten bedroom, eight bath home with cathedral ceilings and a swimming pool that is located next to a garbage dump is not desirable to many people.

On the other hand a little one bedroom, one bath shack sitting in the middle of downtown Boston might be worth a small fortune. Location is of the utmost importance when you are considering a piece of real estate to purchase whether it be for an investment or a personal residence.

As I plan my move to Boston this spring (which redefined my real estate investment strategy), you can bet there is a lot of “location, location, location” talk going on in my home.

We’re asking questions like, “what makes the location of a piece of real estate valuable?” The answer keeps coming back to the concept of desirability. Unfortunately, desirability is intangible and subjective and can be challenging to define.

Property that is totally undesirable to one person might be just the next person’s dream-come-true. This phenomenon is true for real estate investors, home buyers and renters. It is true for all aspects of the real estate market.

What qualities should we be looking for? What should be immediate disqualifiers? I will caveat our situation with the fact that we’re looking at a new property from the perspective of actually occupying the property. I think this perspective is still relevant to the broader scope of residential real estate investing because value is dependent upon someone actually wanting to live in the property. The more desirable that property, the more occupants (renters, buyers or investors) you’ll have competing for the property, increasing both price and rent.

I like to start by looking for areas with good public schools. Great schools support real estate values because it means nearby home owners can choose to avoid the increasing costs of private schools for their children’s primary education. An online search will yield a wealth of resources to evaluate school districts. In addition to reviews, I look for standardized state-test scores and schools that outperformed their peers.

With a list of good schools you can usually find district zoning maps that should give you an understanding of what neighborhoods and homes attend the schools on your list. From this pool of properties I’ll begin searching for a home that meets more of my personal needs.

Convenient access to major traffic arteries: close is good, but I don’t want to SEE it or HEAR it.
Convenient access to shopping and activities: again, close is good, but I don’t want to SEE it or HEAR it.
Street or cul-de-sac: either is fine, but I want low traffic volume. This makes the home a better kid-friendly play zone.
Lot size: in my view, larger is generally better. It gives my kids a place to play out of the street, ensures homes aren’t built on top of one another and gives you opportunity to improve upon the property over time (expansion, swimming pool, landscaping etc). Larger lot sizes can also reduce traffic flow by lowering the home density on any given street.
Surrounding homes: do the other homes in the neighborhood look desirable? Are they well cared for? Is the home you’re considering the big fish or little fish in the pond? I like to be the little fish because their is more room for growth and price support.

Those are points I look for when I seek desirable property for long term investing. What do you look for?

-Jeff

Learn about money management and personal finance.

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Carnival of Personal Finance at The Sun’s Financial Diary

Jeff — Mon, 03 Nov 2008 17:49:25 +0000

Manage money and learn about personal finance at the 176th edition of The Carnival of Personal Finance hosted at The Sun’s Financial Diary.

This week’s edition features my recent article on the myriad ways you can outsource your Money Handler tasks so you can make the transition to money management.

While you peruse the carnival, take some time to check out some of the articles from other personal finance bloggers. I really enjoy learning more about a subject by looking at it from through the eyes of another person.

Here are several that I found interesting and that compliment my leadership approach to personal finance. I’ve added a few comments about each article to give you a flavor of the discussion.

Money Leader:

Leaders have a responsiblity to train their followers. Mary from Simply Forties discusses ways Talk to Your Kids About Money.

Leaders can’t lead if they aren’t physically and mentally healthy. Your health could be a significant threat to your financial strategy and success. Chief Family Officer from Chief Family Officer argues why Your best financial investment may be your good health (but you should also practice sound money management). One more good reason to hit the gym. I love it.

Is the current market drop good, bad or irrelevant? Four Pillars from Four Pillars gives his take. Leadership requires a steady pair of hands and the ability to see the bigger picture.

Lisa Spinelli from Greener Pastures has an educational series on Economic Indicators. It’s a good primer to help you understand the bigger economic environment that your personal finance business operates within.

Money Manager:

The Dividend Guy says “I invest according to a code that guides the decisions I make” and he shares his strategy in My Main Investment Objective: To Generate a Reliable, Growing Stream of Income from Stocks.

Money Handler:

Jim from Blueprint for Financial Prosperity lists 50 Financial Skills Every Person Needs To Know. This is a pretty comprehensive list of skills that your Money Handler should be good at. I try to automate, outsource and streamline as many of these activities as possible.

Enjoy…

-Jeff

Learn to manage money and take control of your personal finance.

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Real Estate Investing - Have a Money Making Strategy

Jeff — Sun, 02 Nov 2008 14:46:42 +0000

The main point for real estate investors to consider first is what their strategy will be for making money from the investment. Buying is only half of the equation and whether the property is good or bad depends upon that crucial profit strategy.

If an investor is going to invest in a property with the intention of just waiting for the market to go up, prime real estate is a great choice. Locations that are near entertainment centers or developing areas can be best because the likelihood that the property will increase in value over time is a pretty good bet.

On the other hand, if an investor is going to invest in a property with the intention of renting it and making a monthly income from it, he might be better off to look into urban properties. Urban properties may not necessarily be considered prime real estate but they can be great cash flow rental properties.

And we can’t forget the real estate investors who are handy with their hands. These people are like to purchase properties below market value and fix them up. They can make repairs and renovations to rundown properties themselves, sell it for a great deal more than their purchase price and make a very nice profit. The location that these kinds of real estate investors often find the best is in neighborhoods that are made up of mid-priced homes in working neighborhoods.

What’s your strategy and why?

-Jeff

Manage money and learn to Mind Your Own Business.

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Money Management - Outsource Your Money Handling Tasks

Jeff — Wed, 15 Oct 2008 13:23:54 +0000

I advocate a leadership approach to money management and personal finance. That means I want to spend my valuable time as a Money Leader defining my financial strategy and setting financial goals and as a Money Manager designing the necessary financial plans to achieve my definition of success and monitoring my progress/success along the way. That requires a lot of critical thinking, research and analysis.

I am not interested in spending any of my time in the mundane details of handling my money. I’m going to say that again, just for emphasis. I am not interested in spending any of my time in the mundane details of handling my money.

Let’s say it together. I am not going to be a Money Handler.

That means we need to find ways to accomplish Money Handler tasks without monopolizing our time so we can focus on real success leading and managing. If your spouse is willing to help, you can divide the responsibilities between the two of you. If you’re single, you don’t get much of a choice in the matter, you’re stuck with figuring out another solution.

In today’s world of the Internet, e-commerce and e-banking there exists another viable option. You can outsource the tedious tasks. I don’t mean hire an employee to pay your bills, but rather take advantage of modern day conveniences to automate routine Money Handler tasks. Doing so will enable you to spend your valuable time being a Money Leader and a Money Manger instead.

Ways to Automate

Sign up for direct deposit. Your paycheck will be deposited automatically into the bank account of your choice. I’d be surprised if your employer doesn’t offer this service and shocked if your bank couldn’t handle its receipt.

Sign up for online access to all your banking and investment accounts. One of best ways I’ve found to automate my Money Handler tasks has been to take advantage of on-line banking and investing. It only takes a small leap of faith to begin dealing with your financial institutions via the Internet. Security and convenience is important and they know it. You’ll have a hard time finding any financial institution that doesn’t offer online access with both features. Instant access to my accounts 24/7 means I can manage money when it’s convenient for me.

Set up automatic transfers, if required. Each month I automatically transfer a certain amount of my paycheck from my primary bank account to higher interest bearing money market fund at a separate financial institution. It’s the same amount, every pay period and it happens whether I remember to do it or not.

Set up automatic bill payments. Talk about convenience. You never have to worry about being late or forgetting a bill. No more stamps, no more checks and no more envelopes. Save that for your Christmas card list.

Set up automatic investments. This is a great way to make regular investments and take advantage of dollar cost averaging. For many years I enjoyed making investments manually (albeit electronically). I liked the feeling of empowerment I had each time I invested in my future. I’m disciplined, but I admit to being tempted at times to spend that money on some extravagance instead. Putting your investments on autopilot removes the temptation and frees up valuable time.

Use a credit card to pay for everything. Your automatic bills can be on the credit card. Your monthly expenses can be on the credit card. What’s the advantage you ask? No more check writing, no more cash carrying and no more tedious balancing of your checkbook. I truly cannot remember the last time I wrote a check and I haven’t reconciled my checking account in a couple years. By maximizing credit card use, you dramatically decrease the number of transactions in your traditional checking account, making reconciliation almost not necessary. A quick glance online and I can usually spot anything that might be amiss. At the end of the month you pay your credit card automatically and electronically as well to complete the circle. One final advantage of adopting this method is the rapid accrual of credit card rewards. Points, miles or cash back, the choice is yours. I personally like cash back.

DISCLAIMER - You have to be responsible with the credit card technique. I recommend taking advantage of it, but you need to be in the habit of paying off the balance each and every month. Carry nothing over; otherwise you can get yourself in trouble fast.

There you have it, tips to automate and simplify your finances so you can focus on leading and managing money rather than handling it. Becoming a Money Leader and a Money Manager is vital to ensuring your long-term financial success.

How do you handle your money? Is it automatic?

-Jeff

Learn how about money management and mind your own business.

For another approach to outsourcing your Money Handler tasks, checkout a similiar article at the Digerati life: Managing All My Money is Futile: Outsourcing My Finances.

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Manage Money at The Carnival of Personal Finance

Jeff — Mon, 13 Oct 2008 14:03:08 +0000

Manage money and learn about personal finance at the 174th edition of The Carnival of Personal Finance hosted by Lisa Spinelli over at Greener Pastures.

This week’s edition features my recent article on the various roles and responsibilities that exist in the world of personal finance.

While you peruse the carnival, take some time to check out some of the individual articles from other personal finance bloggers. I really enjoy expanding my knowledge on a subject by looking at it from the perspective of another person.

Here are several that I found interesting and that compliment my leadership approach to personal finance. I’ve added a few comments about each article to give you a flavor of the discussion.

Money Leader:

Steve from brip blap presents 7 mistakes not to make in a crisis. Leadership sometimes means staying the course and being a bastion of strength and consistency when chaos is everywhere.

Money Answer Guy from Money Answer Guy presents How to Ensure my Loved Ones Know What to do In Case of the Unexpected. This post is similar to one I wrote not long ago about preparing your personal finances for your unexpected death.

Super Saver from My Wealth Builder presents Bear Market Survival Skills. Encouragement for your Money Leader to not have fast hands.

AJC from How to make $7 million in 7 years … no scams, no schemes! presents Show me the money! This article will show you how to select a lifestyle that you want and decide how much income you will need to support it. If you’ve followed any of my blog roll links down the right side you’ll notice two of AJC’s blogs at the top of the roll. His 7 Millionaires in Training web site is a great one to visit if you really want to develop your Money Leader skills. AJC is self-made, very knowledgeable and eager to help others achieve success. Head on over and find your life purpose so you can really begin to Lead your Money.

Money Manager:

Debt Freedom Fighter from Discover Debt Freedom presents Want to Get Your Credit Report for Free. I consider this one of many great ways to monitor your financial health.

A little hope here from nickel at FiveCentNickel, who presents Recovering From a Stock Market Decline. Here’s an investing plan during the down turn. Keep investing!

Ron from The Wisdom Journal presents 3 Different Debt Payoff Strategies. If paying off debt is one of your Money Leader goals, here are several approaches your Money Manger could use to accomplish that objective.

Money Handler:
Dave from Money Under 30 presents Pay Yourself First: How to Do It and Why It Works. Some good techniques here for everyone, not just the under 30 crowd.

Make sure you come back to MMOB on Wednesday 15 October 2008 when I will address several ways to outsource and automate your Money Handling tasks.

Enjoy…

-Jeff

Join me at Minding My Own Business where we learn to manage money.

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Personal Finance Roles and Responsibilities Defined

Jeff — Wed, 08 Oct 2008 13:38:29 +0000

I’d like to offer a warm welcome to readers joining us from the Carnival of Personal Finance #174 - The Columbus Day Edition, graciously hosted by Greener Pastures. Here at Minding My Own Business we approach personal finance and money management from a leadership and business perspective. Take some time to look around and check out the site. If you like what you see, I encourage you to subscribe via RSS and add a link to us on your website. I’ll gladly reciprocate on the blog roll. Thanks for stopping by, I hope you enjoy your visit.

Back in August, I wrote a guest post for Free Money Finance that highlighted my perspective on how I handle and manage my money. The concepts outlined in the article are important so I wanted to make sure they were covered here on Minding My Own Business as well. I’ve updated the article since the FMF post to reflect some refinements of my views on managing money and to add more detail.

Minding your own business requires leadership, management and work. Ultimately the leadership and management roles are where I’m striving to be when I deal with my money.

I hope you enjoy the article and that it provokes some thought and discussion about how you spend your time leading, managing and handling your own business.

Handling your finances comes with myriad tasks. You earn, you pay bills, you invest, you write checks, you plan, you, you, you…. I think you get the idea. Handing the finances is a lot of work for you.

I view the tasks involved with handling finances as being divided into three distinct and different roles that are similar to what you find at work where you have worker bees/followers, managers and leaders. I like to call these roles the Money Handler, the Money Manager and the Money Leader.

The Roles

Normally I like to think of and explain concepts from a top-down mentality. However, when it comes to finances, so many of us are mired in the details of handling money, I think it will be easier to explain my perspectives starting at the bottom and working our way up.

The Money Handler gets his hands dirty doing the bits and pieces necessary to keep your financial vehicle running. He changes the oil, adds wiper fluid, puts air in the tires, replaces light bulbs etc. To quote an English friend of mine, the Money Handler “works at the coalface.”

From a personal finance perspective, Money Handler tasks include:

Paying bills - writing checks, stuffing envelopes and licking stamps.
Making investments - filling out paperwork, writing checks or making e-transfers.
Moving money - between accounts as necessary (e.g. on payday, etc.)
Reconciling accounts - balancing checking, savings, etc.

The Money Handler accomplishes the tasks necessary to implement financial plans.

Middle management is the responsibility of the Money Manager who helps develop financial plans and ensures the processes of money handling are running smoothly. He has a broader view than the Handler and focuses on the route our financial vehicle will take when we drive it and monitors the systems within it along the way.

The Money Manger is thinking about which highway or streets can I take to avoid traffic? How fast am I going? Do I have enough fuel to get there? How’s the car running? When is the next scheduled engine maintenance? Is there anything wrong with the car that needs to be fixed right now? What kind of gas mileage are we getting? Does the motor need a tune up?

From a personal finance perspective, Money Manger tasks include:

Developing financial plans to achieve your goals - Choosing investments, selecting insurance policies.
Guiding, monitoring and assessing the execution of financial plans - Things like monitoring earnings and expenses so you can create and maintain positive cash flow.

The Money Manager develops financial plans and monitors our performance executing the plan. He seeks to improve the efficiency of the processes the Money Handler operates within.

The Money Leader is our business’ chief executive officer. He provides the strategic leadership, vision, purpose and goals for our financial operations. Continuing with our financial vehicle analogy, the Money Leader decides: Where are you going? What stops along the way should we make? When will we start our journey?

From a personal finance perspective, Money Leader tasks include:

Establishing vision - What is the end state we are trying to achieve? Where are we going?
Developing financial strategy - How do we link our Financial Ends, Ways (plans) and Means (resources)?
Setting Goals that enable the strategy– This will drive many of the plans that are developed.
Provide guidance and direction to the Money Manager has he develops the financial plans – necessary to ensure the plans achieve vision.

The Money Leader decides where you are going, when you need to get there and why you’re on this journey.

Each role is necessary in order to properly handle your finances. However, the Management and Leadership roles are most important as they determine what success means and how you plan to achieve it. I’ve often said that a “failure to plan is a sure fire plan for failure.”

Many of us get mired in the details of being the Money Handler and miss or fail to accomplish the bigger picture tasks of the Money Leader and the Money Manager.

Which roles are you performing? Have you outsourced any? Which are you missing?

-Jeff

I’m Leading and Managing My Money, are you leading money, managing money or handling money?

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Indiscriminate Selling in Commodities

admin — Wed, 01 Oct 2008 10:38:48 +0000

The following is a guest post by Charles Rotblut of Zacks Investment Research. Charles raises some interesting discussion on trading in the commodities markets and offers his opinion on the potential longevity of the current financial crisis.

I’m surprised by the indiscriminate selling in commodities and commodity-related stocks.

Were there bubbles? Yes, but demand remains high and product shortages continue to exist.

For example, erratic deliveries of steel have caused an acquaintance of mine to put his employees on flexible work schedules. According to him, steel mills are not sticking to regular production schedules of the type of metal used for the packaging products that his company manufactures.

Not surprisingly, his customers are unhappy. But, because they lack a cost-effective alternative, they have no choice but to accept the higher prices and irregular production schedules.

Then there is fertilizer. Employees of fertilizer company Potash (POT) are on strike at a time when there continues to be a shortage of potash - a key ingredient for fertilizer. The company told Standard & Poor’s that the strike should only affect non-agricultural customers. That may not sound like a big deal, until one considers that there is no room for supply disruptions across the entire industry.

Still, shares of CF Industries (CF) and other fertilizer stocks are getting knocked around because of the overall weakness in commodity stocks. For demand destruction to occur, one would have to assume that people are going to stop eating, ethanol is no longer going to be subsidized or a replacement for fertilizer has been found. I just don’t see this happening.

Another example is natural gas. Natural gas prices have plunged by nearly 50% since early July. Yet, worldwide energy usage is growing. Plus, the Farmer’s Almanac is predicting a “numbing” winter.
Perhaps traders think that the NOAA’s forecast for above normal temperatures will be the correct one. My best guess is that those of us living in the northern states will be bundling up and complaining about our heating bills.

Of course, it is important to realize that even with the pullback, just about all commodities are still expensive. Here in the Chicago area, gas stations charge around $4 for a gallon of unleaded. Lake County, where I live, is coping with a dramatic increase in the price of road salt. Local officials say that this problem affecting many municipalities across the country.

Given the slowing economies of the Western World, some weakness in the commodity prices is logical, but we are a long way from the perceived demand destruction that seems be influencing some traders. This is why I am looking for the opportunity to add more commodity stocks to the Zack’s Focus List.

The Financial Crisis
On Wednesday, I discussed the ongoing financial crisis in my Industry Rank column. In the second half of a podcast published on Thursday, I further discussed the banking industry’s problems with Chuck Jaffe of Marketwatch.

In summary, I believe the financial crisis, and the housing slump, will continue into next year. Here are some reasons why:

• The FDIC’s insurance fund’s reserve ratio dropped so low, 1.01%, that it is being forced to develop a plan for replenishing the safety net for depositors.
• Banks will likely have to pay higher fees to the FDIC, at the same time they are coping with tighter net interest margins.
• Nearly 1 million petitions for bankruptcy have been filed during the past 12 months; personal bankruptcies are up 28%.
• Net charge-off rates for Capital One (COF), and probably many other credit issuers, have been rising for several quarters.

Staying on the subject of banks, I want to mention the creativity shown by National City (NCC).
NCC is offering customers $200 to close their home-equity lines of credit. The bank is also waiving the $350 early termination fee. It is an interesting attempt to avoid further charge-offs, but my guess is that it won’t have any positive impact. Those who have the cash to pay off their home equity loans are not likely to default. And those who are at a risk of default probably don’t have the cash to pay off their loans.
The more likely scenario is that NCC is trying to engage in a game of hot potato, by which its borrowers move their home equity lines to another lender. For someone who is cash strapped, $200 helps, but not enough to keep them from falling behind on their payments.

The Markets
Volume picked up this week, as was expected.
Rather than focusing on weakening inflationary pressures, traders instead viewed the falling commodity prices as another sign that the economy is having problems.

The Fed’s observation that “economic activity has been slow” didn’t help matters. Selling intensified on Thursday in response to lousy retail sales numbers and fears about Friday’s employment numbers.
Last week, I called for choppy markets and this is what we are seeing.

My expectation is that the economic news won’t be very good, on balance, for a while. But, also I think we are closer to a recovery than many other developed nations. It’s a good market for long-term investors.
Remember, those who try to time the markets are often the ones who take large losses and miss out on the big gains. Conversely, the most successful investors never stop researching stocks.

Charles Rotblut is the Vice President of Web Content for Zacks Investment Research and the Senior Market Analyst for Zacks.com. He oversees the editorial staff, manages the market-beating Focus List, Timely Buys and Top 10 portfolios, and plays an instrumental role in the development of new products. For more information, visit http://www.zacks.com.

Learn to manage money at Minding My Own Business.

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Interview With “Spend ‘Til the End” Author Scott Burns - Part Two

Jeff — Mon, 29 Sep 2008 14:16:39 +0000

This is second of two posts covering my recent interview with nationally syndicated financial columnist and author Scott Burns Scott is the chief investment strategist for AssetBuilder where he advocates a low fee approach to investment management and has co-authored the new book “Spend Til the End” with economist Larry Kotlikoff.

Check out part one of my interview with “Spend ‘Til the End” author Scott Burns.

Jeff: Scott, “Spend ‘Til the End” makes the point that financial education in America is severely lacking. I’m a classic example of this lack of education. Everything I know I’ve picked up along the way from family, friends and experience as I’ve managed my own finances. Fortunately, I’ve been successful despite lacking a formal personal finance education. What’s the solution to this dilemma? Mandatory education in our schools? Do you have any recommendations for how parents can ensure their children are adequately prepared and educated to handle their personal finances?

Scott: Personal finance needs to be a curriculum item starting in middle-school, and it needs to be a requirement for a high school diploma. It should not be that difficult to educate everyone, for instance, about the idea that paying 18 percent on credit cards is silly and financially suicidal.

Jeff: In “Spend ‘Til the End” you make the point that going to college doesn’t make economic sense. I believe our country needs to be highly educated in order to maintain our competitive edge. How does the nation balance this need versus the economic disadvantages the book highlights?

Scott: We need to change the economic model for education. We can have traditional and highly inefficient education for enrichment and social function. And we can have certification education for functional competencies.

Jeff: In my personal situation I tend toward being what you call an “over saver.” I know my father influenced my behavior and attitudes toward money. What can the “over savers” and “over spenders” do to break free from these early influences? What can they do to help their progeny have a better financial balance than they have been able to achieve?

Scott: Breaking free from parental financial influences should be easier than breaking away from all the other parental influences. There comes a time when all of us have to own up to being responsible for our lives regardless of our family of origin. It isn’t easy, but it’s the only way we ever become self-realizing adults.

Jeff: You emphasize in the book the importance of financial communication between spouses. What advice would have for new couples that would help them to have open communication about their finances?

Scott: Spend the time to set goals and talk through how you intend to reach them. Understand that you are a team. Understand that winning will require that both of you do your part. This means working out a spending plan so that you spend your money where you intend to spend it rather than discovering where it has been misspent.

Jeff: There seems to be systemic problems with our Government and how it’s benefits programs encourages people to not participate in the work force. What changes would you propose we make to our benefits programs so they keep people employed and don’t provide incentives to just sit around?

Scott: That’s a really long topic. I’d start by abolishing the income tax, employment tax and corporate income tax. I would replace them with a national sales tax. That would take envy out of the politician’s hands and put spending decisions back in the hands of people. The same tax system would prebate cash back to all households, providing an income floor. This would eliminate the buying of legislators, end the massive amount of time wasted on tax conniving and reduce the posturing about all the wonderful things they are going to do for the nation by taking money from one person and giving it to another.

Simplifying the tax system to a sales tax/prebate system would eliminate the snake nest of overlapping rules and programs that makes it possible for a low income household to experience an effective tax rate of 100 percent while a high income household can pay taxes at 15 percent.

Jeff: “Spend ‘Til the End” paints a complicated financial planning landscape. Do you think individuals can do their own planning alone, or do most people require professional help? Why?

Scott: Larry is more optimistic than I am on this point. He believes most people can do it on their own if they just exercise patience enough to learn the software (Jeff’s note: Scott is referring to ESPlanner software developed by Larry’s firm to do living standard financial analysis.) I’ve been getting letters and email from a broad reading public for more than 30 years. That experience has led me to believe that many people would prefer advice and guidance from someone who has faced the same issues with hundreds of other people. My expectation is that we will soon see an un-bundling of asset management and financial planning. This will make it possible to have major reductions in the cost of asset management on the one hand, while it engenders growing consulting practices in fee-only financial planning on the other.

Jeff: Speaking of fees, in the book you and Larry take a swing at financial institutions and the fees they charge for mutual fund investments. What do you think is necessary to provide clarity concerning the fees consumers are charged for these financial products? Should the Government regulate fees? What do you think about a establishing a standard labeling scheme much like you find on the shelves of every food product in the grocery store?

Scott: I love the idea of a standard labeling system, one that would show what percentage of the return and potential accumulation was likely to be absorbed by the institution selling the product. Wall Street may finally have gone to enough excess to solve the problem, even without government regulation. I find it difficult to believe that anyone would take anything said by a Merrill, a Citibank, etc. seriously. These jokers have wrecked their own businesses with risk and we’re going to be paying the bill for years. We’re just starting to see the revulsion the public feels toward these grasping bozos and the grief they have brought us.

At AssetBuilder, the registered investment advisor firm Kennon Grose and I started when I retired from the Dallas Morning News, our assets under management have been doubling every six months or so with no advertising or marketing. I think billions of dollars are moving from what I call the Legacy Distribution System (the expensive, managed risk portfolios and financial products) to inexpensive, index-based portfolios such as the ones we offer at AssetBuilder.

Jeff: Fees can certainly eat your returns alive. Here at “Minding My Own Business” we advocate a low fee approach to investing and I have much of my own personal investments in low cost index funds. I find it comforting that you advocate a similar low fee approach.

Turning back to the book, you reference results from ESPlanner calculations frequently. Several times today the software has come up in our discussion as an analysis tool. What do you say to those who would criticize you and Larry that the book is merely an effort to market ESPlanner?

Scott: That would make me pretty dumb, since I have no financial interest in ESPlanner. Larry and I are interested in advancing an idea. We want to improve financial planning. As noted in the book, ESPlanner may well be the Visi-Calc of the genre (the first to market), but eventually displaced by the equivalent of Lotus or Excel. It might also be the equivalent of Alta Vista, soon to be displaced by the Google of consumption smoothing.

The software is an instrument for writing the message. It is not the message.

Jeff: After finishing the book, if a reader wants to implement consumption smoothing, how do you suggest they begin?

Scott: Those at ease with personal computers should buy the program and use it to explore the impact of personal and investment decisions. They can get very specific information/answers that way. Many people in their 50s will discover that they are over-insured for life insurance. Once they know that, the savings on the premiums alone, will recover the cost of the program several times over.

Others can benefit simply by recognizing situations in the book that are similar to their own. Very young workers, for instance, could invest less than the financial services industry would tell them to and invest it to take less risk. They would feel free to buy houses in areas where prices aren’t a major multiple of the cost of renting. All workers would get out of the manager picking game and into index investing. This would materially increase their retirement assets. They would also feel free to avoid expensive 401(k) and 403(b) programs and substitute IRA accounts. They would also be more inclined to use a Roth IRA rather than a traditional IRA.

As a matter of fact, we spell out the “take-aways” in a simple table in the epilogue of the book.

That concludes my two part interview with “Spend ‘Til the End” author Scott Burns. I hope you enjoyed reading this interview as much I did conducting it and learning more about Scott and his views on personal finance.

-Jeff

I’m managing my money, are you managing yours?

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Personal Finances And Money Management: Planning For Retirement

Jeff — Sun, 28 Sep 2008 13:32:02 +0000

When it comes to personal finances and money management, many people aim to be able to retire comfortably when the time is right. It’s at that time of your life when you can finally do what you enjoy most on a full time basis. For some that may be nothing more than just relaxing from a long life of hectic routines and scheduled work; for others it may be a time to actually fulfill their dreams and life purpose by doing what they enjoy most. Just because your working career may be over, doesn’t mean your investing career is. With increasing life expectancies, the need to invest smartly during retirement is just as important as it was before you quit your day job.

Just like pre-retirement investing, you can easily manage your retirement investment portfolio. In fact, this is likely the road I will go down. However, if you are like many people and have not taken time to learn this skill before retirement, you may want to enlist some expert help. There are many retirement planning companies that can assist you in developing a retirement investment plan that fits your individual needs. These professionals can help you invest your savings in a manner that not only produces the income you need now, but may possibly increase your assets which you can leave behind for your family or charity. Retirement investing plans are extremely helpful but there are a few points you should keep in mind before you risk your life savings navigating your way around the personal finances and money management front.

Choosing financial companies to do retirement investing and planning with requires you to do your homework first and not rush in with your hard earned money. Ensure that the companies with whom you are investing and planning your retirement with are stable and reliable. Many fraud companies take advantage of seniors and their money by promising “too good to be true” returns only to disappear with their money.

Avoid investing with the same company where you have your retirement plan drawn. This can avoid a conflict of interest where the planning company steers you into high cost investments that earn them a commission. Also, working with more than one company will ensure you get a second opinion on your retirement diagnosis and keeps you from placing all your eggs in one basket. Working with a single firm for both planning and investing could put your retirement at risk if this one company is ever faced with economic hardships. Sage advice during this time of economic weakness where once strong financial institutions are disappearing with greater frequency.

If you plan to invest your retirement money into an individual business then you should not invest more then you are prepared to lose because most businesses have only a 50-50 chance of succeeding. You should also ask yourself “WHY am I pursuing such risky investments?” You should always be prepared for the worst.

Retirement investing is not always easy but it’s a job you are doing for yourself…and not an employer, so be thankful. Take your time and only choose those options that meet with your level of risk tolerance. In the mean time, enjoy your days not working for anyone but yourself, pursue your life’s purpose with a passion and with a bit of luck (and likely a fair amount of sweat) you may turn millionaire in your golden age doing what you’ve always loved.

The personal finances and money management planning that you do today will make your retirement more enjoyable. Time flies and your money can too. Start planning today for retirement so you can become your own boss as early as possible. The planning effort is worth your time and will bring feelings of empowerment and satisfaction as you build a future that does not depend on anyone but rather positions you to enjoy life as you always wanted.

-Jeff

I’m planning for my retirement and my life’s purpose, are you planning for yours?

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How to Protect Assets in Excess of $100,000

Jeff — Sat, 27 Sep 2008 14:42:29 +0000

Not long ago I posted about the failure at IndyMac bank. In that article I referred to both FDIC and NCUA insurance that protects depositors up to $100,000. I’m doing OK with my investments, but I’m not sitting on cash that is greater than $100K, so FDIC/NCUA insurance easily covers my cash assets.

While that may be my situation, I know there are many investors out there with cash reserves that far exceed the $100K limits of these insurance programs. You don’t have to look much past WAMU bank to see the effects of investors flight to quality and protection. WAMU’s failure was partially influenced by a account holders withdrawing assets that exceeded the FDIC insurance limits.

I can’t blame the account holders for moving their money around to ensure their assets are protected. But I am shocked at the large numbers of individuals and companies that have assets that are exposed above the FDIC insurance limits.

I have a relative that falls into this category of investors. Assets well in excess of $100K and much of it parked in a bank as cash. Just yesterday I learned this family member decided to spread their money across numerous banks to take advantage of the FDIC’s insurance program. That may not seem like a daunting task, but imagine if you had two million dollars you were trying to protect with the insurance program. That would require at a minimum more than 20 different accounts/banks.

I wish I’d have known about my relative’s intentions before they began spreading their assets across so many banks. There is an alternative that will protect your assets, spread it around for you and allow you to easily keep track of it through one account rather than numerous accounts and banking institutions.

That alternative is the Certificate of Deposit Account Registry Service (CDARS). CDARS makes use of a network of banks to spread your high value deposits around several institutions to take advantage of the FDIC insurance program without the hassle of working directly with numerous banks. In fact, CDARS claims to be able to easily handle and protect up to $50 million through their networks of banks.

If you have a significant amount of cash reserves you desire to protect with insurance (and I think you’re wise to seek such protection) check out the CDARS program.

-Jeff

I’m protecting my assets, are you protecting yours?

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Interview With “Spend ‘Til the End” Author Scott Burns

Jeff — Mon, 22 Sep 2008 17:14:59 +0000

Recently I was given the opportunity to review the new book “Spend Til the End” by nationally syndicated financial columnist and author Scott Burns. In addition to being an accomplished writer, Scott is also the chief investment strategist for AssetBuilder where he advocates a low fee approach to investment management. As part of my review, I had a chance to interview Scott, find out more about him and his financial views as well as pose several questions that I had after reading the book.

In “Spend Til the End” authors Scott Burns and Larry Kotlikoff offer a unique approach to financial planning that focuses on maintaining a smooth living standard throughout your life. This is different than the approach used across much of the financial planning community that relies on accurately determining your spending targets for the future. Scott and Larry are of the opinion that the spending targets we choose are often fraught with error and lead to over or under saving behaviors that miss the mark.

Living standard based planning requires analysis of a wide variety of factors that can make for a complicated planning situation. With advances in computers over the years, Larry has been able to develop a software program called ESPlanner that offers to help you do these living standard based calculations in the comfort of your own home on your own computer. The theories that they support in their book are the product of ESPlanner and their experience putting them into practice themselves and with clients.

I hope you enjoy this series of two articles that will share the interview with you and the subsequent book review which will follow thereafter.

——————————-

Jeff: Why did you decide to write this book?

Scott Burns: We thought it was time to introduce the idea of consumption smoothing and true financial planning to a broad public. As a journalist I’m tired of the self-serving ideas the financial services industry passes off as planning. As an economist, Larry Kotlikoff was, too. More important, he had developed the software to actually do it rather than theorize about it.

Jeff: Tell me a little about your relationship with Larry Kotlikoff. Have you worked together before? If so, on what projects?

Scott Burns: In the mid-90s I read some of his research papers to prepare for interviewing him. I was impressed by how completely his research showed a concern for families and how public policy could gather votes today and give the bill to the next generation. I had been writing about the unfunded liabilities of Social Security and Medicare for more than 20 years and saw that his generational accounting provided the best tool for examining the issue.

He was starting to write “The Coming Generational Storm” for MIT Press and asked if I’d like to co-author it with him. I was delighted and intimidated at the same time, but quickly found that we made a good team. He’s Dr. Johnson. I’m Boswell.

Jeff: “Spend ‘Til the End” poses several counter financial culture ideas and emphasizes the importance of managing your living standard rather than focusing on spending targets. How did you come to these conclusions that are detailed in the book? Are these ideas you had before ESPlanner or are they borne out of experience using ESPlanner?

Scott Burns: I had a clue about some of the major ideas in “Spend ‘Til the End,” but using ESPlanner confirms them with very coherent output.

The most powerful single idea in the book is that most of us don’t need to replace the conventional 70-85 percent of our pre-retirement income. We actually need less, that has a lot of very positive ramifications.

Jeff: Why is the replacement rate lower than what has become conventional wisdom?

Scott Burns: Because much of that income has always been spent on things we did for our children or debts we assumed and paid off, like a home mortgage. Since we never had this income to spend on ourselves, it is income we don’t have to replace. This is not a minor observation.

Another is that public policy risk, in the form of Social Security and Medicare financing, is the biggest risk faced by more than 90 percent of the population. Investment risk is relatively minor. Sadly, the financial services community doesn’t address this because their work is generally focused on financial assets and the other 10 percent of the population.

Jeff: What is the central message you intended to convey to those who read “Spend ‘Til the End?”

Scott Burns: Personal decisions are as important for financial planning as saving and investment decisions. Often, they are more important.

It is possible to materially improve your lifetime standard of living by taking the consumption smoothing approach. And this is something anyone can do. It doesn’t require Wall Street brainpower (now known to be an oxymoron) or deep insight into the workings of the Federal Reserve.

Jeff: Why do you think that’s an important message?

Scott Burns: It’s important because most people are intimidated or terrified by the task of financial planning as it is currently done. In fact, they can use this tool to reassume control of their lives. We can manage our lives with less risk, more control, and vastly more satisfaction.

Jeff: If consumption smoothing is as important as you make it out to be, how come this concept hasn’t been addressed in the mainstream media before now?

Scott Burns: First, this is a “slow” idea. Back in 1996 I wrote a simple column showing that Peter Lynch was wrong when he said you could be 100 percent invested in common stocks and withdraw 7 percent a year forever. Many in the financial planning community used the same deterministic methods for their planning. In fact, stochastic analysis was called for.

Well, it took ten years but stochastic analysis is now the standard. Any financial planner or financial services person who still uses deterministic methods now faces ridicule from both his professional peers and from many potential customers.

I expect much the same with consumption smoothing software. We all have habits to give up. But we’ll give them up to use a better tool. And that’s what consumption smoothing is, a better tool. In medical terms, this is a treatment that changes the standard of care.

A second reason might be called “the butcher’s thumb factor.” The sloppy tools currently used for determining life insurance needs, saving needs, etc. often conclude that people need more insurance and more savings and that they need them now. All of these conclusion benefit the industry using the tool.

That’s a pretty powerful reason to be slow about adopting better tools.

Ultimately, however, failure to adapt is bad for business. The financial services firms that fail to adapt will be in the position of GM and Ford, offering the same old and inefficient stuff while other firms grow.

In fact, the idea is starting to move mainstream right now. It emerged from deep academia with a CFA publication last year. It has also been referenced in one of the personal finance books written by Ben Stein and Phil DeMuth. Another consumption smoothing book, “Are You a Stock or a Bond?” will be published in September.

“Spend ‘til the End” is at the front of a change wave.

Jeff: The book provokes critical thought on many of the financial issues I’ve taken for granted as fact in the past…e.g. life insurance requirements. You make use of many example scenarios throughout the book to support your points but don’t take the opportunity to give the reader a chance to closely examine the logic and the math behind the conclusions. What do you suggest for those readers who aren’t ready to press the “I believe” button regarding these ideas? Is there another resource they can study to learn more about the rationale, logic and math that produced the results?

Scott Burns: It’s difficult to show because the computation is so complex. I think ESPlanner is several orders of magnitude greater than conventional software in the complexity of its computations. I’d love to be able to demonstrate the answers with, say, an HP financial calculator, but we’re talking about a different creature.

If you spend a few minutes just checking the internal consistency of ESPlanner output and note that it handles projections of every aspect of your finances, including tax payments for every year of the rest of your life, you start to reach for the “I believe” button.

——————————-

This concludes part one of my discussion with nationally syndicated financial columnist and author Scott Burns on his new book “Spend ‘Til the End.” I will share more of this discussion in a future post and a subsequent review of the book.

-Jeff

I’m managing my money, are you managing yours

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Jumbo Mortgage Limits Increase

Jeff — Thu, 28 Aug 2008 14:58:05 +0000

I think I’m a little late to the party on this one, but I’ve heard twice in the last week that the jumbo mortgage limits were increased as part of the recent housing reform bill. My understanding is that the jumbo limit has increased from $417K to a range of $625K-$729K dependent upon where you live. Some higher cost areas have higher limits…imagine that.

The funny thing is, I didn’t get this piece of information from the mainstream media. I heard it from a mortgage broker that I was talking to concerning my impending move to Boston and the resultant changes in my real estate investment strategy. He was the first one. The second was a buddy of mine who just bought a new home.

Increases in the jumbo limit is important because keeping your mortgage below the limit (i.e. it’s conforming) can make you a more attractive borrower to the banks. Being an attractive borrower (with a conforming loan) means that more banks will be willing to:

give you a loan
give you better terms
give you lower interest rates

Important points if you intend to be a buyer and wish the banks to compete for your business.

I’ve heard (again from my two sources above) that the limit increase expires in Dec 08, so use it now or possibly lose it. You might actually HAVE TO ASK for the increased limits. My buddy who just bought his home was unable to make use of the jumbo increase because his loan originator wasn’t willing to honor the increase. Unfortunately for him, he found out about the changes and asked AFTER his loan closed.

I have my fingers crossed that the government will either extend the increase or make it permanent. I won’t be in a position to buy until Spring/Summer 09.

-Jeff

I’m Minding My Own Real Estate, are you minding yours?

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Transfer to HostGator

Jeff — Thu, 28 Aug 2008 01:57:39 +0000

Just a quick note to let you know that I am still here on the web. Hopefully faster now. The last two weeks have been internet hell! I have watched MMOB grind to a near stand still and could not do a damn thing to prevent it. Page loads were averaging in excess of 30 seconds…sometimes more than a minute. So much for high speed interent. After a couple days straight with Globat’s Tech Help, I gave up. Supposedly my server was being overwhelmed by something and there seemed to be little they could do about it.

Needless to say I’m pretty disappointed with Globat. 45 days on board with them and failures that have brought MMOB to it’s knees on two separate occasions. Now I’m a newbie at web-hosting so I figured the failures had to be from me messing with the Wordpress code. NOT!! Imagine my surprise when the techs finally admitted that both problems were on there end. I’m not sure what the norm is in web hosting, but I have to believe two body blows in a month and a half is a bit on the ridiculous side.

First time shame on you…second time shame on me. Well there won’t be a third time, I switched hosts last night. I couldn’t take it anymore and if I stopped waiting for page loads, I’m certain you did too.

I’m at Hostgator now. So far so good. Fingers crossed. The site feels snappy, responds quick, the admin panel doesn’t drag….bottomline, I feel like I can breath again. Please let me know if you have any issues with the site. Thanks.

-Jeff

I’m Minding My Own Business, are you minding yours?

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Welcome Home…

Becoming a Money Manager (MMOB Style) on Free Money Finance

Jeff — Wed, 13 Aug 2008 22:08:21 +0000

Free Money Finance covers a wide variety of financial topics ranging from advice and tips to discussion of current financial news. FMF was kind enough to lend me their audience and offered the opportunity to write a guest article for their site.

The post highlights the importance of making the transition from Money Handling to Money Managing. In that discussion it identifies several steps you can take to lift yourself up out of the weeds of dealing with money transactions so you can begin to focus your time on the more important matters of determining your personal finance strategy, putting plans into place and monitoring your progress.

Businesses have people that work details and people that work vision and strategy. Both are important, but your manpower resources are limited. You can either divide your time, focus on one role at the expense of the other or leverage technology and automation to enable you to make best use of your time.

Head on over to FMF and participate in the discussion on this important step to Minding Your Own Business.

-Jeff

I’m Minding My Own Business, are you minding yours?

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How Long Do You Plan to Live?

Jeff — Tue, 12 Aug 2008 19:44:54 +0000

Forever!!! At least that is what I tell my children. They don’t need to be worrying at the tender ages of nine and seven about the life expectancy of their mom and dad. I plan to continue this charade as they age so that I can make them nervous that I’ll be nagging and telling them what to do for just as long.

Why am I asking this question you wonder?

Because I don’t want you to run out of money in retirement. With continuing advances in medicine, health awareness and improvements in lifestyle habits, US life expectancy appears to be on the increase. The latest data I was able to find comes from the 2004 National Vital Statistics Report produced by the Centers for Disease Control (CDC). You can play with the data in different display formats here.

Click on the thumbnail to see a graph of the data that I find most beneficial. Ages shown on this chart are life expectancy remaining in years. For example, those of you born in 2004 have an average remaining life expectancy of 78 years or so. If you were 65 you have about 19 years left. 85 year olds have an average remaining time of approximately six years. These aren’t absolute numbers, just my interpretation of the graph.

Remember, these are average years remaining, so some of you may have more or less time left. I’m hoping for more myself.

Another graph in the report showed that approximately 10% of the population can expect to make it to age 90. Yes 90. Now 10% may not seem like that big of a deal to you. Heck 90% of us will be dead by then, right. But if you make it that far, your family will appreciate your ability to pay your own way. I personally have done my retirement planning to provide income for my wife and I into our 90’s. I’m planning to kick the bucket at 92 with her following me two years later at 94.

That may seem like a long shot, but I have a great-grandmother who made it several years past 100, a grandfather who died in his 90’s, a grandmother who left at 89 and another grandmother who is still alive in her late 80’s. Incidentally, she is the daughter of the great-grandmother who surpassed the century mark.

Planning for almost 30 years of income without working is no small feat. Obviously the earlier you plan and begin execution the better chance you’ll have of being able to take care of yourself in the out years.

What happens if I die early? Well the obvious, my kids stick me in a hole in the ground. But they also will have a nice tidy inheritance as well.

Now all we need to worry about is the cost of health care in our old age and what to do about it.

How many years are you planning for in retirement?

-Jeff

I’m Minding My Own Business, are you minding yours?

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Let’s Go to the Carnival of Real Estate

Jeff — Mon, 04 Aug 2008 17:13:35 +0000

I recently discovered Blog Carnivals reading a post over at Free Money Finance. These are not the carnivals we went to as a kids You know the ones with the strong man, the bearded lady and where you secretly plotted running away to when your parents didn’t let you have your way. Rather they are a summary of postings related to a specific topic and are contributed to by a wide sampling of bloggers. The carnivals are hosted by different blogs each time so they also travel just like the real thing.

This week’s Carnival of Real Estate features a Minding My Own Business article about the recent changes to my real estate strategy. The carnival is being hosted by Searching Solutions (SS) which is an internet marketing firm that focuses on small to mid-size companies. In addition to being a business, SS has a great blog that identifies several ways to optimize your web site for search engines. I’ve found several of their tips beneficial and will be implementing them here at MMOB as I improve my efforts to become noticed in the blogosphere.

The Carnival of Real Estate showcases the best of recent bloggings about real estate and real estate investing. In addition to the MMOB contribution, there are several great articles in the carnival that I think MMOB readers might enjoy.

Head on over to Searching Solutions and check it out!

-Jeff
I’m Minding My Own Real Estate Investments, are you minding yours?

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Carnival of Personal Finance

Jeff — Mon, 04 Aug 2008 16:13:02 +0000

SquawkFox is hosting this week’s Carnival of Personal Finance. SF has a fun approach to personal finance that I think you’ll find refreshing. While you’re reviewing the carnival, be sure to spend some time in the sections that equate directly to minding your finances like a business. The categories I enjoyed include:

Money Mangement - This is the leadership level. Think Strategy and Plans for your business as your review these posts.

Frugality and Budgeting - These sections are about the details of running your business. Its basic blocking and tackling stuff, but absolutely essential to the successfully putting your plans in action.

Investing and Real Estate - These sections are all about growing your business for the future.

Don’t forget to poke around SF’s site while you’re there. I won’t get jealous, I promise.

-Jeff

I’m Minding My Own Business, are you minding yours?

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My Real Estate Investment Strategy Changes Again

Jeff — Tue, 29 Jul 2008 00:13:32 +0000

Welcome to the readers of the 102nd Carnival of Real Estate | Farming For New Real Estate Blogger Talent graciously hosted by Searching Solutions. If you’re new to Minding My Own Business, I’d like to extend a hearty Welcome Aboard! I hope you enjoy your visit. You can find more real estate experiences here. And don’t forget, you can get regular updates by subscribing by RSS or email.

Recently I shared my impressions of some potential real estate investments located in Kansas City. That trip to KC made me realize that my REI goals were not necessarily in alignment with my financial standing and my idea of the types of property I desire to own. The result…revised goals and revised property criteria, but still a fighting chance to buy my first investment property before the end of 2008. I can live with that.

Enter stage right… the US Navy and an unexpected career opportunity. The result, another major modification to my REI strategy.

While unexpected, the opportunity the Navy presented me is too good to pass up. But like all opportunities it requires sacrifice, flexibility and an open mind to new possibilities. The details of the job are not important for now, but it will require my family and me to move to Boston, MA just before next summer.

I’ve visited Boston in the past and found it to be a nice city, with lots of history, arts, theater, sports and fun things to do, but the cost of housing is a bit more than I’m used to here in Virginia Beach. So this is where the flexibility and being open new possibilities comes into play. Can I still buy an investment property this year? Should I? What about a house in Boston? Do I need to sell my home in Virginia Beach?

Wait a minute. This has got to be the WORST time to sell. Chris over at KC REI has similar views about timing the current real estate market. Bottom line…I have to figure out a way to keep my house here in Va Beach. I’m no where near taking a loss on this property. I could sell it today and clear $200K over what I purchased it for, but Millionaires work for profits, and I think there are more profits in this house yet to come. Besides, current rents in my neighborhood are $500-$700 MORE than my mortgage payment.

Decision #1: Keep the Beach house and rent it out (disclaimer: it’s not actually located on the beach).

OK, I have one major decision under my belt. So what’s left? I still want to get started investing in real estate and I need a place to live in the Boston area. Let’s look at housing options in Boston.

A quick run through the MLS shows a lot of nice homes, but at first glance my housing dollar doesn’t appear that it will go as far in New England as it has here in the mid-Atlantic.

I suppose I could rent, but that just doesn’t feel like a wealth-building strategy to me. Rents in the Boston area appear to be running between $2500-$3500/month for places on par with my current home. That much per month could float a loan in excess of $500K. I have a hard time stomaching giving up $30K-$40K per year to help someone else build equity by paying down debt and bide time in today’s market so they can benefit from future appreciation. Additionally, I’m not keen on giving someone else positive cash flow and tax deductability. I want those benefits. And if this a bad time to sell, it must be a GREAT time to buy!

Decision #2: Buy a house in Boston.

Decision number two made….whew! So what about my goals. I wanted to buy an investment property in 2008. Regrettably this goal will have to be deferred a bit. The good news is that if I can execute the decisions I’ve made here with you on MMOB, I’ll be a real estate investor by the summer of 2009. A six-month delay, but one that will put me in a position to have close to $1 Million in real estate rather than $600K or so had I not received the job opportunity in Massachusetts and executed my previous REI strategy.

I’m going to still be a real estate investor, I’m just gonna sneak in the back door to get started.

I’ll cover more as this strategy unfolds over the next ten months. But I can already see many benefits to getting started in real estate investing in this manner over my original plan. Some include a larger and greater quality property portfolio, owner occupied financing and the possibility to forgo paying for property management here at the Virginia Beach property.

Thanks Uncle Sam!!

-Jeff

I’m Minding My Own Real Estate Investments, are you minding yours?

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Is It Possible to “Spend ‘Til the End?”

Jeff — Sat, 19 Jul 2008 18:30:34 +0000

I was recently contacted by a representative from the company AssetBuilder about profiling the nationally syndicated personal finance columnist Scott Burns. Simon & Schuster recently released a book that Scott coauthored with Boston University Professor of Economics Larry Kotlikoff entitled “Spend ‘Til the End.”

After picking up my jaw off the floor I Googled the book, read an excerpt or two and learned a little bit more about Scott Burns.

In addition to being a personal finance columnist, Scott is the Chief Investment Strategist/Co-Founder of AssetBuilder, a financial advising firm that believes in a simple low fee approach to helping individuals build wealth.

Over the course of his career, Scott has covered the world of personal finance and investments for nearly 40 years. He began as a newspaper columnist at the Boston Herald in 1977 and was picked up for national syndication in 1981. In 1985 he joined the Dallas Morning News where his column quickly became one of the most widely read features in the paper. After 20 years in Dallas he left the paper in 2006 to become one of the founders of AssetBuilder and its Chief Investment Strategist. Scott still writes syndicated columns and remains one of the country’s five most widely read personal finance columnists.

Scott has written four books, including “Spend ‘Til The End.” His business experience includes working as a staffer for a major consulting company and service as a director and audit chairman of a NASDAQ listed manufacturing company.

Scott and Larry pose some unconventional wisdom and challenge the typical advice offered by the established financial planning community. Everything from retirement savings and investing needs to life insurance is addressed with the aim at insulating your living standard from significant ups or downs. Hmm, sounds interesting.

I tend to think of myself a contrarian, both financially and technologically. I’ve been using Apple Macs since long before the iPhone and iPod were twinkles in Steve Jobs‘ eyes. So challenging the financial community is right up my alley. I go it alone. I set my own plan. I determine my own investment strategy. I Mind My Own Business. I might enjoy this book.

Naturally I jumped at the opportunity. In my most authoritative and confident email tone, I accepted the offer and stated that I would be happy to profile Scott and would like to review his new book, conduct some Q&A with Scott and then post the results on Minding My Own Business. Two days later the FedEx guy was standing on my front porch with a fresh copy of “Spend ‘Til the End”.

Now here is where you come in. I’m reading the book right now and am almost halfway through it. I’m compiling a list of great questions and notes but I’d like to get your perspective as well. If you have a question or a point you’d like made, please send your ideas to me and I’ll include them when I interview Scott.

-Jeff

I’m Minding My Own Business, are you minding yours?

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Are Your Assets Protected?

Jeff — Sun, 13 Jul 2008 21:29:36 +0000

If you haven’t heard by now, the Federal Government closed down IndyMac Bank late last week. Most (dare I say all?) banks and credit unions insure depositors up to $100K with either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) and IndyMac was no exception. Regardless of my confidence, you should do your due diligence and check with your financial institution to determine the specifics of any deposit insurance you may have.

But who’s getting their money back? Drumroll please…………..

The answer is everyone who’s accounts were fully covered by the FDIC.

IndyMac’s depositors with less than $100K in their accounts need not fear the bank’s closure. They WILL get their deposits back. According to the FDIC’s information page, principle and interest through July 11th, 2008 is fully insured and will be paid to to depositors. Additionally, IRAs are insured separately and are covered up to $250K. So in theory you should be safe if you have less than $100K in general accounts (savings, checkings, CDs etc.) and less than $250K in IRA accounts at IndyMac.

That situation may be a bit more complicated for those individuals whose accounts were worth more than the insurance limits mentioned above. According to the FDIC press release on July 11th, “At the time of closing, IndyMac Bank, F.S.B. had about $1 billion of potentially uninsured deposits held by approximately 10,000 depositors.”

DOOH!!!!

The math is pretty simple to determine how much that averages out to per person, but does involve determing how many zeros to lop off the end of that $1 Billion. By my math the answer is an even $100,000 per affected individual. I don’t know about you, but $100K is a lot of money to me.

I consider myself fortunate to not be one of the 10,000 people affected. I’m sure there will be many sleepless nights for them until this is resolved. For now it appears “business as usual” for those customers who are fully insured by the FDIC. The Feds have made them customers of a new institution (”IndyMac Federal Bank”) which will operate out of 33 branches starting Monday July 14th. I would assume you’ll see many of the same employees in working in the same branch offices of the former IndyMac Bank.

As for its broader affect on the financial markets, it will be interesting to watch this situation unfold. This is the fifth FDIC-insured failure this year, one of the largest FDIC failures ever, and it’s occurring at the same time as the two of the biggest mortgage backers are having troubles (both Fannie Mae and Freddy Mac had a wild ride last week). Sounds like Mr. Market is going start discounting stocks even more.

I take advantage of both the NCUA and FDIC insurance and am fully covered for all my accounts. Are you fully insured?

Take some time and mind your own business, by reading more about both the FDIC and NCUA insurance plans to ensure you are adequately protected.

-Jeff

I’m Minding My Own Investments, are you minding yours?

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Welcome Home…

Jeff — Fri, 11 Jul 2008 19:30:35 +0000

Welcome to the new home of Minding My Own Business. The blog that focuses on topics related to financial and personal success. I decided to make the move from Wordpress.com so that I could maintain greater control of the website and pursue some money making opportunities through Google and Amazon that are not allowed through Wordpress’ free service. I’m sure there are several great choices for web hosting. In the end, I chose to go with Globat based upon some good reviews I found on the internet. I got a package deal for $4.99 per month that included my domain name registration (mindingmyownbusiness.net of course) and healthy amounts of storage and bandwidth. So far I’ve been very pleased with their performance. You can learn more about Globat and a special web-hosting package that’s available through your affiliation with MMOB.

So what are the big changes? There are several. Certainly the look and feel of the site is a bit different. One of the necessary evil’s in the transition to a three column format has been moving to the Cutline them. Pressrow (which is my favorite theme) isn’t available in a split three column variety. I think there’s probably a whiz bang way to do some simple HTML coding to bring one together, but until my HTML ability improves we’ll be working with Cutline. In the meantime, if you know of someone who has modified Pressrow into a split three column widget-aware theme, please let me know.

There will be some ongoing changes over the next week or so as I tidy up Cutline to meet my needs. I still have to fix the page links at the top of the page and find a better header picture to convey MMOB’s message.

I’ve also started to incorporate advertisements that are related to the content we discuss here at MMOB and will soon add the ability to purchase books off my recommended reading list through Amazon.

The intent is not to inundate you with advertisements, but rather provide opportunities that are related to the reasons you visit MMOB.

Also down the left side of the page you’ll find a series of video links. I discovered these on YouTube and think they provide some great foundational understanding for many of the financial topics I cover here.

They’ll be much more to come in the future. Stick with me and enjoy the ride.

-Jeff

I’m Minding My Own Business, are you minding yours?

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Semper Finance!

Jeff — Wed, 09 Jul 2008 03:35:44 +0000

From the Halls of Montezuma,
To the Shores of Tripoli;
We fight our country’s battles
In the air, on land, and sea;
First to fight for right and freedom
And to keep our honor clean;
We are proud to claim the title
Of UNITED STATES MARINES.

Now that every US Marine presently surfing the internet is standing at attention, I’d like to draw yours to Semper Finance, a blog I recently happened upon that has a lot of great information.

Semper Finance is authored by Ryan Delany who is a former Marine…well, once a Marine always a Marine as my sister service likes to say. He writes about a wide variety of topics ranging from managing personal finances (Ryan knows how to Mind His Own Business ) to great pieces on the basics of the Stock Market and how it operates. He’s even put together an interesting read on the history of the Stock Market.

I have a special place in my heart for the Marine Corps. I spent the better part of five months at Naval Air Station Pensacola, Florida as an Aviation Officer Candidate with my face in the dirt, soaked in sweat while the drill instructor, Staff Sergeant Wilson, United States Marine Corps yelled at me to quit messing up his dirt and get back into the push-up position. Just like my DI, Ryan knows his stuff! He’s written several guest posts for a variety of finance blogs and is quickly growing his site as well.

Check it out and let Ryan know what you think.

-Jeff

I’m Minding My Own Business, are you minding yours?

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My Real Estate Investment Efforts

Jeff — Mon, 07 Jul 2008 17:37:16 +0000

One of my goals for 2008 is to purchase my first investment property. I view real estate investment (REI) as one way to help me break free from my traditional methods of saving (401K, IRA’s etc.) and establish a retirement worth having. The more I dwell on my life’s purpose and what I want and don’t want in my life, the more I realize that I want my retirement sooner rather than later so that I can take time to actually enjoy life.

I’ve also come to the conclusion that the best ways for me to achieve an early retirement is to pursue individual business ownership and start a REI portfolio. This blog is a small step on the business front (I’ll be making some changes here soon to further that effort) and recently I started to execute my REI plan.

Initially, I had intended to invest in my backyard here Virginia Beach, Virginia. However, after several months of searching the MLS and foreclosures, I’ve come to the conclusion that Eastern Virginia is too expensive an area for me to start out investing in. After some brainstorming on how I could become a real estate investor in an affordable market I settled upon the Kansas City area. There are many reasons why KC has great real estate potential, several are outlined here. Bottom line, KC is affordable, familiar (I grew up in the suburbs of KC), an easy market to enter, has solid potential, and is a place I might reside someday (post-military, of course). So for now I’m going to try and hang my real estate investment hat there.

In June my family and I spent two weeks in KC on vacation to spend time with family and friends (my wife grew up in KC too). Being an opportunist, I spent some time with my Realtor, Chris Lengquist looking at potential investment properties that he felt would meet my stated goals, which have been to maximize monthly cash flow income. If you want to live an active lifestyle on passive income….you’ll need a decent amount of passive income, so I figured that is what I needed to place my emphasis on.

Let’s just say that I was underwhelmed with the investment properties we looked at. Yes, underwhelmed. The properties weren’t in the nicest areas of town and wouldn’t be at the top of my list of things I’d be proud to show my parents that I own. This wasn’t my Chris’ fault, not in the slightest. He showed me what the combination of my goals and investment capital enabled. In past conversations I told him I want to prioritize and maximize positive cash flow with about 15K of investment capital. The result, we were looking at Section 8 (government subsidized) housing. Don’t get me wrong, I’m sure Section 8 is lucrative and serves the greater good, but I’m not ready to jump into this niche area of REI as my first endeavor.

I felt bad that I had wasted valuable time (both mine and Chris’). But the experience was worthwhile. I learned some more about REI, my goals, my desired property criteria and how much capital investment would be required to pull them all together.

The major lesson I learned is that if I want to maximize cash flow and have a nice property I need to bring a fairly large amount of capital to the table. The corollary is that with limited capital you can get cash flow if you lower your property criteria.

I prefer to have a nicer property so one of two things needs to happen, either my goals need to be adjusted a bit (less emphasis on maximum cash flow) or I need to save more capital to invest. Since goals are easier and quicker to adjust, I’ll be modifying those first. Basically this means trading monthly cash flow for a higher quality property in a better neighborhood with greater long-term appreciation potential. I don’t normally sacrifice my goals, but I think it’s important to have the highest quality investment properties in my portfolio that I can afford. I don’t need the cash flow today, so I can practice some delayed gratification on this one.

With a new goal in hand, I continue to stash away cash for a down payment, peruse the MLS for that perfect property and continue to mind my own business.

-Jeff

I’m Minding My Own Real Estate Investments, are you minding yours?

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Do You Manage Your Investment Portfolio?

Jeff — Fri, 04 Jul 2008 04:26:39 +0000

I came across a question on NetworthIQ that asked about people’s experiences with investment advisers. This individual has been paying a former colleague to manage his investments but is not happy with the results. In one account he’s lost 15% over the last two years and in another he’s basically at break even over four years. As a comparison, the S&P 500 is up ~ 1.8% over the last two years and ~12.2% over the last four years. Given that comparison, I agree with his concern about his investment adviser’s performance. If he had chosen to simply invest his money in an S&P 500 Index fund he would have crushed his “friend’s” performance and avoided any adviser/manager fees he paid.

Managing your own investments is neither as glamorous nor as difficult as many think, but being your own money manager is certainly doable if you have the drive to accomplish this goal. I have successfully managed my own investments for almost 16 years now.

While I am an advocate of the DIY approach, I do believe that investment advisers have a place in the business. They provide valuable services (albeit at a price) for many people that might not invest/save/plan for retirement otherwise. My father has an adviser that he pays fees to (no it’s not me) and is quite pleased with his results. While he may be happy, I desire much greater wealth than he has amassed and am doing it on my own without paying exorbitant fees. I must be honest, however, and admit that I do get a little help here and there from an investment expert but at a significant discount compared to most investment advisers.

My professional help comes in the form of a weekly, nationally syndicated talk radio show on the subject of personal finance and investing called Money Talk by Bob Brinker. Bob is all about helping those who want to help themselves. His program mixes politics, finance and education in a manner that lends itself to the layman who desires to take control of his investments.

Managing your own investments, while not difficult, is not for everyone, but I think that if you value your hard earned money and have a dedicated drive for success, you’ll be able to learn what you need to in order take control of your investments and mind your own business.

Good Luck,

-Jeff

I’m Managing My Own Investments, are you managing yours?

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Are You a Millionaire in the Making?

Jeff — Sun, 22 Jun 2008 16:44:05 +0000

Adrian over at 7 Million in 7 Years is putting his money where his mouth is. He’s embarking on a journey of training seven people in the methods and mindset that enabled his success as a multi-millionaire.

It will be an interesting road ahead as this unfolds. Check it out at 7m7y.com. Now just because you’re not one of the seven, doesn’t mean you can’t reap the same rewards. Adrian has promised to post every task and exercise he has planned for his seven grasshoppers on the 7m7y website. I’ll be following their progress closely and plan to participate in as many activities Adrian suggests as possible.

Who knows, maybe I’ll have seven million in seven years too. You’ll never know if you don’t try.

-Jeff

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Prosperity and Poverty

Jeff — Wed, 04 Jun 2008 16:07:37 +0000

Keith Cameron Smith is the author of the book “The Top 10 Distinctions Between Millionaires and the Middle Class” which addresses the mindset successful people possess that sets them apart from the masses. I subscribe to Keith’s “Wise Distinctions Newsletter,” which has given me the opportunity to learn more about his views on success, as well as read one of his draft manuscripts for a soon to be released book and an outline of another that he is planning. One book idea he shared with me is about the distinctions between Prosperity and Poverty.

Keith was gracious enough to allow me to share his outline with you. I hope you enjoy these distinctions as much as I did.

10. Prosperity flows from your heart - Poverty grows in your mind
9. Prosperity breeds generosity - Poverty breeds selfishness
8. Prosperity promotes peace - Poverty promotes violence
7. Prosperity has a wide perspective - Poverty has a narrow mind
6. Prosperity congratulates others successes - Poverty criticizes others successes
5. Prosperity is the result of patience and perseverance - Poverty is the result of impatience and giving up
4. Prosperity seeks and finds opportunities - Poverty seeks and finds problems
3. Prosperity is being rich in every area of life - Poverty is being out of balance in life
2. Prosperity is the blessing of knowledge - Poverty is the curse of ignorance
1. Prosperity comes through faith in life - Poverty comes through fear of death

-Jeff

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Are You a Real Winner?

Jeff — Sat, 24 May 2008 15:03:09 +0000

If so, where are your finish lines? Ahead of you or behind you? I came across a great article by Harvey Mackay today that I want to share. Harvey has written several books on being successful in business and writes a nationally syndicated column on the same topic. I recently read his book about networking which you can check out on My Reading List.

Harvey’s article is about how winners use goals.

Harvey asks the question… “What’s really more important, goal-setting or goal-getting?”

My reaction was they’re both equally important. I blogged a while back about goal-setting and how important it is, but what’s the point of setting a goal if you’re not going to try and get it. They both must be important.

Harvey continues… “We all know companies that were household names, the bluest of the blue chips, that are fading memories today. W.T. Grant. Woolworth. Zenith. Studebaker. Montgomery Wards. Every salesperson knows an ace who was on top of the sales charts for years and all of a sudden lost his stroke. He didn’t go from first to second, he went all the way to the bottom.

In each of these cases, the goal was the same, to get on top. But once they got there, they started to lose their way.

They lost the hunger, the ability to innovate, to listen to their customers, to adopt to change, to be humble.

They had achieved their goals. Now was the time to reap the rewards. About 20 years ago, a fellow named Parkinson, wrote a series of books in which he cleverly framed his observations into “Parkinson’s Laws.” Most are just as valid today, because these rules of human nature are timeless. One was, and yes, I’m paraphrasing a bit, “Whenever a company proudly announces the establishment of their beautiful, new, modern, efficient corporate headquarters, you can be sure they’re heading downhill.”

Why? Because instead of focusing on their business, the company’s managers are focusing on themselves.”

The lesson I learn from these examples is that we need to be careful once we reach our goals. Without a goal in front of us to guide the way and keep our focus on Minding Our Own Business, we’re teetering on the edge. Will it all come crashing down? Let’s not find out. Let’s set another goal.

Harvey advises… “As success piles upon success, the goal changes.

If you ever achieve your goal, be like Curt Carlson, the billionaire founder of the Carlson Companies, the parent of the Radisson Hotels.

It’s not goal-getting that matters. It’s goal setting. You never want to reach your goal.”

As a young soap salesman, Curt used to set yearly sales goals for himself, write them down and stick them in his wallet. About halfway through the year, when he reached his annual target, Curt would tear up the slip of paper, toss it, and set another goal.

Great advice Harvey. While I agree with most of his last line above, I would change it just a bit. I’d have it read…

“It’s not goal-getting that matters the most. It’s goal setting. Once you REACH a goal, immediately SET new one.”

I think it’s important that we actually achieve the goal’s we set, then set new ones. Be like the runner who is constantly looking for that next race. Cross that finish line, then move it back out in front of you.

You can read this column by Harvey Mackay in its entirety here.

- Jeff

Learn about personal finance be successful minding your own business.

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Are You Prepared for an Unexpected Death?

Jeff — Wed, 21 May 2008 01:07:01 +0000

What would happen to your family and your finances if you were to fall over dead right now? No time for a phone call, no last minute instructions, you just died.

Do you think this couldn’t happen to you? It almost happened to me several years ago. I had an unexpected brush with death where I came extremely close to cashing it all in, leaving my wife and two kids on their own. Fortunately for me (and my family) I escaped with nary a scratch. I was too dense at the time to realize the mess I almost left behind. So what, you ask, has made me finally realize the ignorance of my early thirties? In mid-April my father-in-law passed away unexpectedly, leaving his wife a puzzle of finances and life-insurance to sort through.

My father-in-law was a very nice person and very astute entrepreneur and business man, but his personal record-keeping and organization methods took a fair bit of effort to sort through. I was out of the country at the time, so I was not able to help much. Rather, my wife and one of my mother-in-law’s friends did most of the work organizing the financial records after his death. Their time wasn’t spent so much organizing records as much as it was spent searching for records.

By the time I arrived, most of the tedious work was done. Insurance policies had been found and bank records had been located. But it took several days of ups and downs before it was all sorted out. Hopefully they found everything.

I learned several financial success lessons from this experience. Some my father-in-law did well, like provide enough insurance to allow his wife to live comfortably. Others, I think he could have done better, like invest in things other than just his business and make it easy on his loved ones to pick up the financial pieces after his death.

After this experience, I made a list of several things I need to improve in my own financial plan that I think are extremely important. I’ll share them with you in future posts. My point here today is that I think you need to first focus on organizing all your information so that it can be easily found, accessed and used.

The first thing is to determine what type of information your loved ones might need in your absence. Think about what things you do almost exclusively for your family. Are you the Money Earner/Saver like I am? If so then you likely have the organizational structure of your family’s banking, investments, taxes, insurance and other similar items tucked away in the corners of your brain. Unfortunately your brain will not be around after your death. You need to get this info out of your brain and on paper or the computer where those you trust can find it. Better yet, tell them where it is! You need to organize your affairs in a manner that is clear, understandable and easily accessed.

For me this means ALL the financial and money related information needs to hit a computer screen.

Personal information is equally important. While making some phone calls on behalf of my mother-in-law I was asked several times for dates of birth, dates of marriage, social security numbers etc. Trust me, it’s not fun to have to ask a grieving widow what her husband’s social security number is. Do you know your spouse’s number off the top of your head?

I’ve begun the process of organizing this type of information. Here are the pieces I’m bringing together in a “one stop shop” document on the computer:

1. Personal Information - I’m including information on my immediate family (me, my wife and our two kids). While some pieces might seem trivial, your significant other may not be the one using the information.

Names
Dates of birth
Social Security numbers
Dates of marriage
Location of birth and marriage certificates

2. Banking and Investment Information - For each institution where I have a bank account (checking, savings, money market, credit cards, loans, mortgages etc), investment or brokerage accounts, I’m including the following:

Institution name - including a phone number and web address
Internet banking log on information - User IDs and passwords
Account numbers - including a description of its use/purpose and any “automatic transfers”, beneficiaries and ownership information (joint, individual etc.)

3. Insurance Information - For each insurance policy I have (home, auto, life, boat, etc.)

Institution name - including a phone number and web address
Internet access log on information - User IDs and passwords
Account numbers
Life insurance pay off amounts and beneficiary
Policy documents location

4. Vehicle Information

Title and maintenance records location

5. Professional Advisors - Names and phone numbers of:

Realtor
Attorney
Accountant
Financial Advisor

As you bring all this information together, you’ll need to make sure you safeguard it appropriately. It’s not something you’ll want to leave lying around the house or on an unsecure home network. In today’s world of internet access, letting the wrong person have access to it could cost you everything….while you’re still alive. I’ve password protected and encrypted my records to keep them safe. I’ll be adding instructions in my Will on where the file is located and how to access it.

It’s no small task and it’s not much fun planning for your exit from this world, but it’s absolutely essential work. What preparations have you made? What have I missed in my organization effort?

- Jeff

Learn to manage money and mind your own business.

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I’ve Been Stimulated…So to Speak

Jeff — Tue, 20 May 2008 01:20:55 +0000

On May 9th, 2008 my stimulus check arrived, right on time, just as forecast. There was no fan fare, there was no congratulations. Just the quiet whir of my computer’s fan. There it was, staring at me in my money market account, $1800 that wasn’t there the morning before. Should I tell the money spender? Communication is one of our strong suits and a key to our personal success as a couple, so I have no choice in the matter, I have to tell her. She’s happy we’ve received it and has allowed me to save it for now.

The Government is obviously looking for us to put the money back into circulation for the economy’s sake, and for theirs as well (almost every transaction will be taxed). I love it…go out and do your patriotic duty to the United States and spend money. I guess that explains why so many Americans have so little savings. Not only has our society become one of instant gratification, but now our Government is encouraging the same thing wrapped in the cloth of Economic Patriotism. Good or bad, you decide, but my parents didn’t raise me that way. My money will be spent when the time is right for me. But it will be carefully planned and on something that will help me create enduring wealth.

I’m sure there will be some folks who will use the check just to make ends meet. For them, I hope it helps make their life a bit easier. However, for most of the rest, I have to believe that this payment will merely be money burning a hole in their pocket. It’ll be used for that flat screen TV they’ve wanted or maybe a down payment on a new car (and 5 years of debt payments). I’m not criticizing those choices, but this is a blog about Financial Success, and I don’t see them as measured steps toward that goal.

So what would a person seeking financial success do with the money? Here are the best ideas I can think of:

1. Pay down debt and make the decision to not incur more unless it’s necessary or it’s good debt.

2. Save it for a rainy day. An emergency fund of cash is a great cushion to have, especially in volatile economic times such as we appear to be in right now. Typical recommendations range from three to six months of cash reserves.

3. Invest it. Put it towards your annual IRA contribution or add it to your taxable investment strategy.

4. Spend it…on something that will yield a return. That sounds like investing, I know. But I was thinking more along the lines of an improvement project that could add or restore value to your home.

Those are the best choices I can think of for someone who is interested in Minding Their Own Business. For me, I’ll be investing it. I’ve already added it to my real estate down payment savings. Hopefully I’ll be spending it by the Summer.

- Jeff

Learn about personal finance and be successful minding your own business.

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It All Adds Up

Jeff — Wed, 14 May 2008 20:51:09 +0000

It’s been a while since I’ve posted anything. I apologize for being so lazy, but I was out of the country for week in mid-April and then we had a family emergency right on the heels of that. Needless to say, my priorities have been elsewhere and not focused on MMOB.

I came across an article on Motley Fool that I wanted to share with you. If you’ve ever read David Bach’s books the concepts will look familiar. I find it truly amazing how many people fail to save for their future when it takes only a small amount per day.

Fully funding your Roth IRA can be done for $13.70 a day. In today’s world, it doesn’t take much in the way of cutting expenses to yield that much savings. Sharing a ride to work or even brown bagging your lunch could easily free up that much cash. I’m sure you’ve heard it all before, but the earlier you start the more wealth you’ll build.

As a point of reference that I’m practicing what I preach, my family is saving $99 per day. Yes, each and every day. Now, not all of that is for retirement, but it covers two 529 plans, two maxed out Roth IRA’s, an emergency fund/real estate investment account and one 401K plan with the government.

How much are you saving each day?

- Jeff

Learn to manage money and mind your own business.

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Are You Educating Your Kids? The US Jobs Report Says You Should!

Jeff — Wed, 09 Apr 2008 01:15:45 +0000

Yesterday I blogged about US Unemployment and whether it was as bad an issue as I believe it’s being made out to be in the media. Today I’d like to take a closer look at the Jobs Report for March 2008 and focus on a breakdown of the data that is available on the Bureau of Labor Statistics (BLS) Employment Situation page.

I first heard about the availability of the breakdowns and the tale they tell after listening to a podcast of Bob Brinker’s Money Talk program during my morning workout on Monday. During that podcast, Bob talked briefly about the Jobs Report data and focused on how the numbers point to the importance of education. I liked the points he made so I thought I’d share them here with you. You can find the latest jobs report data consolidated with information from previous months at the BLS website linked above.

The link to Table A4 breaks down the employment data for the civilian population over 25 years of age by education attainment.

For our discussion, I’ve cherry picked the unemployment rates that interest me from March 2008. As a reference point, the overall national unemployment rate is listed as well:

National Unemployment Rate - 5.1%

Less than a high school diploma - 9.5%

High school graduates, no college - 5.6%

Some college or associate degree - 4.1%

Bachelor’s degree and higher - 2.0%

The conclusion Bob made, and that the data clearly points out, is that getting a college degree is an important goal that is worthy of attaining. Unemployment rates that are less than one-half the national average certainly supports this conclusion and that a degree puts you in a statistical segment of the population that faces very low unemployment rates. If you ask me, that helps set the stage for success.

For that matter, even attending some college or earning an associates degree helps put you in a category that has lower than average unemployment rates.

A high school diploma gets you real close to the national average, while failure to complete high school puts you in a category of workers that face unemployment rates almost reaching 10%.

I made my choice 20 years ago and decided to go to college not because I knew I’d face low unemployment rates but rather because my parents expected me to go. Not attending probably wasn’t an option. I’m thankful that I was able to afford to earn my degree with help of a partial academic scholarship and my parents hard work to make up the difference.

Looking at this data today as a father of two, 20+ years after I started college, it reinforces the importance of a quality education and what a great gift it would be for me to provide the same opportunity (and expectation ) for my children.

So do you have a college savings plan for your children?

- Jeff

Learn to about personal finance to successfully mind your own business.

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Unemployment…How Bad Is It?

Jeff — Tue, 08 Apr 2008 04:42:37 +0000

This morning I went to work via the gym. I try to head there before work on Mon, Wed and Fri to take care of my physical well being. I’ve been getting a bit bored with the same run of country music on my iPod Shuffle so lately I’ve taken to loading podcasts on topics ranging from real estate and investing to self-improvement. It’s a buy one get one free sale at the gym now, a mental workout for the same low price of punishing my body.

Enough about my workout, except to say that while I was on my back at the bench press, trying to not let the barbell land on my face, I was listening to a discussion on the recent jobs report that came out Friday, April 4th. I found that discussion interesting and it got me thinking about unemployment and whether things were really as bad as the media portrays. So I decided I’d dig a little deeper into the jobs report and unemployment data and share what I learn with you here on Minding My Own Business. I read some of the articles on the internet including this one at the NY Times, and spent some time routing through the Bureau of Labor Statistics (BLS) website.

Let’s hit the headlines just to make sure everyone is up to speed…80K jobs down and 5.1% unemployment. And the news folks of course throw in the “Worst unemployment rate since September 2005″ just to sell a few extra copies and add to all the negativity. The news media hype both positive and negative gets to me. It’s more the flip-floppiness (is that a word?) of it all that I dislike. Lately I’ve heard them trumpeting the bottom of the market correction one day, only to roll back into the dolldrums of recession and bear market fears the next day. I’m beginning to think there was probably a lot less market volatility in the days before the internet and mass media. But I digress…

So is 5.1% unemployment all of a sudden such an outrageous number?

I found the following data on the Bureau of Labor Statistics (BLS) web site:

Data extracted on: April 7, 2008 (9:33:26 PM) (Yes, I did this while watching the NCAA Championship, Rock Chalk Jayhawk!!)

Labor Force Statistics from the Current Population Survey

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
1998	5.2	5.0	5.0	4.1	4.2	4.7	4.7	4.5	4.4	4.2	4.1	4.0	4.5
1999	4.8	4.7	4.4	4.1	4.0	4.5	4.5	4.2	4.1	3.8	3.8	3.7	4.2
2000	4.5	4.4	4.3	3.7	3.8	4.1	4.2	4.1	3.8	3.6	3.7	3.7	4.0
2001	4.7	4.6	4.5	4.2	4.1	4.7	4.7	4.9	4.7	5.0	5.3	5.4	4.7
2002	6.3	6.1	6.1	5.7	5.5	6.0	5.9	5.7	5.4	5.3	5.6	5.7	5.8
2003	6.5	6.4	6.2	5.8	5.8	6.5	6.3	6.0	5.8	5.6	5.6	5.4	6.0
2004	6.3	6.0	6.0	5.4	5.3	5.8	5.7	5.4	5.1	5.1	5.2	5.1	5.5
2005	5.7	5.8	5.4	4.9	4.9	5.2	5.2	4.9	4.8	4.6	4.8	4.6	5.1
2006	5.1	5.1	4.8	4.5	4.4	4.8	5.0	4.6	4.4	4.1	4.3	4.3	4.6
2007	5.0	4.9	4.5	4.3	4.3	4.7	4.9	4.6	4.5	4.4	4.5	4.8	4.6
2008	5.4	5.2	5.2

To set up the graph, the vertical axis shows unemployment in percent while the horizontal axis displays time in months. In the table, you’ll find yearly data broken down by month with annual averages shown at the end of each row. You can find this data at the BLS. This data is “unadjusted” rather than “seasonal.” I’m not sure of the difference in definition between the two. But when comparing the two flavors of data there are only minor differences between the data, on the order of 0.1-0.2 percent. I don’t consider that significant. I chose a time span of ten years initially to start reviewing the data.

Look over the data above yourself, but I don’t believe the “Worst since September 2005″ statement. Maybe the worst since last month or since January. Maybe we’re working in the fine lines between “unadjusted” and “seasonal” data, but I doubt it.

So how bad is 5.1% relative to previous years. Looking at the graph we are still below the unemployment levels of the early 2000’s. So while we may be on an uptick in unemployment relative to the last couple years, we’re better off than the 2002-2004 and on par with what is shown for 2005. This doesn’t seem like a large cause for alarm to me. But then again, I have a job.

After reviewing the last decade, I decided to take an even longer view on the data. I selected all the years BLS had available which takes us back to 1948. I’ll spare you the table and just go to the graph which is shown below.

So what do you conclude about our current unemployment level after reviewing this graph? My conclusion: It’s too early to say “we are on the cusp of an upward trend,” and current unemployment rates are still below the average unemployment rate of 5.6% over this time period.

Oh by the way, the European Union is currently running at about 6.7% unemployment, Spain at 9.0%, Germany at 7.6% and Canada at 5.1%. All this data is available on the BLS website. Things could be worse if you ask me.

What do you think about the unemployment rate?

- Jeff

Learn about personal finance to succeed at minding your own business.

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Iran Wants OPEC to Stop Valuing Oil in US Dollars

Jeff — Mon, 07 Apr 2008 02:00:22 +0000

I’m not clairvoyant, I swear. A couple days ago I shared my thoughts about the US Dollar. In the middle of that post I got off on a tangent about the price of oil, the fact that it is traded in US Dollars and that I believe the preservation of foreign wealth in a declining dollar environment is a contributing factor to the continuing run up in oil prices.

Well guess what I just stumbled across in the news? Of course, the title of this post gives it away.

I don’t expect this to happen, at least not in the near term. I don’t believe Iran has enough influence in the OPEC community to pull this off. However, if the Dollar continues to decline, I could see Iran gaining support with this idea as more of the oil producing nations might become more worried about preserving their wealth and income.

I hope someone who can protect our Dollar is paying attention before its too late.

What do you think?

- Jeff

Learn to manage money and mind your own business.

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The US Dollar

Jeff — Sat, 05 Apr 2008 04:32:32 +0000

The strength of the US Dollar, or rather the lack there of, is certainly not a new story, but rather one that has been gather steam for quite some time. I can remember when I bought my first Euro while on deployment in the Mediterranean in late 2002.

The Dollar and the Euro were at parity. Nearly 1 to 1. Even Steven.

That’s a far cry from today’s exchange rate which is approximately $1.57 per Euro (at the time of this writing). That’s a total return of 57%. Not too shabby in my book.

In the Spring of 2003, during that same deployment, we made a stop in England before coming home to the US. At that time you had to pay an average of $1.55 for each British Pound. Today’s rate is $1.99. That’s a 28% return on your money in 5 years. I’ve got investments doing better than this, but even so, you would have made money investing in the Pound.

In hindsight, I should have invested in some foreign currency (the Euro). Instead, during those port calls I invested in foreign wheat, barley and hops…in a liquid state.

So how does the dollar’s performance affect me? On a daily basis gut check, I have to say, not much that I actually notice. I mean, I know that everything that is imported (and what isn’t these days) should begin to increase in cost, but if it has recently, it’s lost on me. I guess I need to check with my Money Spender.

Warning, I’m heading off on a tangent.

The Dollar’s poor performance has certainly been part of the run up in the cost of a barrel of oil recently, but my gas prices haven’t changed appreciably since all the Dollar hype has hit the media. The price of oil is traded in Dollars, if you weren’t aware, so a decreasing Dollar can mean losses for foreign oil producers if the Dollar cost of that barrel does not rise.

Let’s use an example to illustrate. Assume that the Dollar and the Euro are at parity and that a barrel of oil costs $1 (ie. 1 EUR). If we hold the price of that barrel constant at $1, and then the value of that Dollar drops like it has to today’s exchange rate, that same $1 barrel of oil is only worth 0.63 EUR. That’s a hefty drop in value.

Now if we were foreign oil producers, what’s more important to us in our daily life, Dollars or a Foreign currency? That’s right…probably the Foreign currency. So what do you want to have happen if you’re that foreign producer who is trying to preserve his wealth with a commodity that trades in a falling currency? You want to have the price of that barrel cost more in US Dollars, so you can at a minimum preserve your wealth.

So reverse the example now. Let’s stick with Euro for our foreign currency and hold the value of that barrel of oil constant at 1 EUR. Just to keep the Euro value stable at 1 EUR would require increasing the Dollar cost from $1 to $1.57 per barrel.

I’m not claiming that the price of this commodity solely hinges on the weakness of the Dollar, but I believe it is part of the equation that is driving oil prices.

Ok, I’m back on track now.

So I haven’t noticed much price change with all the Dollar hype. I just checked with the Money Spender and she feels the same way. But my European colleagues at NATO talk about it all the time. When I’m checking stocks during my lunch, they’re checking the currencies. If anything, I feel a little embarrassed about the whole thing. Great big mighty USA, itty bitty Dollar. Not like I had much of a hand in causing the declining value, but my countrymen did.

The Europeans love it. Their friends and family love it. The US is like a K-mart with a ”blue light special” on EVERYTHING! For those of you under 30 who have never heard of K-Mart and are probably wondering what a ”blue light special” is/was, go ask your parents.

They’ve told me stories about their friends and family who come over here on travel vacations, buy an extra suit case (after they get here of course because its

cheaper), and then load it up with as much stuff as will fit. I mean we’re talking 5-10 iPods, several cameras, tons of clothes, laptops, you name it. It’s all a bargain for them and the suit case full of Dollars they get in return for a wallet full of Euros.

I know, I know, I should be happy they are dumping money into our economy. I’m sure I’m just jealous that they get to come over and paint the town red. I want to do some painting too.

My British friend is laughing at all of us (including the Euro spenders). He just bought an iMac at 50% off with his currency.

So what do my fellow countrymen think of this concern? I was listening to CNBC today on my way to work and heard one of the early morning guests state he “is for a strong Dollar, just not right now.” This guy should be a politician.

With as much control as the Fed and the Treasury seem to think they have (and probably do), I’m certain they could prop up the dollar a bit. If for no other reason, how about for my pride each day at work?

What are your thoughts on the Dollar?

- Jeff

Learn to manage money and mind your own business.

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What Are You Going to do With Your Stimulus Check?

Jeff — Thu, 03 Apr 2008 01:59:59 +0000

I can’t wait for my economic stimulus check. I’m not going to run out and spend it. Nope, not me. Remember, I’m the Money Earner, not the Money Spender on my team. I intend to sock it away in my money market account. I’m trying to kick off my investments in real estate, so the freebie handout from Uncle Sam will help me get my foot in the door, so to speak.

I’d been expecting a check for $1200 until late last week when I received a letter in the mail from our Uncle explaining that not only was I going to receive $600 for each adult, but an additional $300 for each child as well. A grand total of $1800. Not too bad. I’m a bit envious of my friends with five kids who are getting $1500 extra, but they have to deal with five kids all year round, so I can live with the fact that I’m only receiving $600 for having two children. $900 is a small price to pay for less chaos in my life. Those of you with children love them dearly, I’m sure, as I do mine. But sometimes they can be trying…..especially the boy.

Being curious about my letter, I went to the IRS website to see what I could dig up on the economic stimulus checks and found the following…

“To receive a payment, taxpayers must have a valid Social Security number, $3,000 of income and file a 2007 federal tax return. IRS will take care of the rest. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. Millions of retirees, disabled veterans and low-wage workers who usually are exempt from filing a tax return must do so this year in order to receive a stimulus payment.”

A key phrase in this quote is “Eligible people will receive up to $600.“ If you scroll down the web page about halfway, you’ll find some stimulus payment scenarios. I was surprised to find that there will be many people (both low and high income earners) who will not be receiving the full $600 per qualifying adult. You may want to check out the scenario that applies to you.

I had also been under the impression that the payments would all be in May. While that is true for many, there will be a lot of folks who won’t be receiving their checks until July. Thank goodness I e-filed and chose direct deposit for my refund. That unknowingly vaulted me to the head of the line for stimulus payments. Apparently I’ll be receiving a direct deposit (likely to my money market account ) before mid-May. Paper check payments will drag on into the summer. You can check out the payment schedule here.

So, what are you going to do with your economic stimulus check? Save it? Invest it? Pay down debt? Splurge on the huge flat screen TV? All of those are good options to me.

I just have to decide whether I’m going to communicate with my Money Spender about what I plan to do with our check. Out of sight, out of mind….maybe she won’t notice.

- Jeff

Learn about personal finance to successfully mind your own business.

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Personal Finance and Success - A Team Sport

Jeff — Tue, 01 Apr 2008 18:13:09 +0000

For those of you who are terminally single or don’t involve your spouse in financial decision-making you can’t skip this post. This discussion will apply to you as well….you’ll just find yourself playing more than one position.

In my family our financial success is a full up team sport. My wife and I each have a position we play with our own individual responsibilities. The children haven’t been given a position on the team yet. For now they are sitting on the sidelines. I’m hopeful that they will learn a thing or two from the united effort their parents make on the playing field.

In the most basic sense, we have two positions:

The money earner - aka me

The money spender - aka my wife

While that may sound a bit humorous and a jab at my wife, it’s not intended to be. Let’s face it, when you go to work for the better part of the day and spend the weekends doing “Honey-Do’s” it’s a bit difficult to be the one spending the bulk of the household money. On the other hand, my wife is a proud stay at home mother who takes wonderful care of our children, keeps a spectacular home, volunteers at school, finds time to do those things that make the house run (shop for food, keeps clothes on the kids (and me), does the laundry) and still manages to make a restaurant quality dinner for us to enjoy precisely at 6:00pm each evening. Bottom-line in our household, I earn it and she puts it to work for our family.

Don’t get me wrong. I do spend money. However, it usually creates a situation where I have have to move money over from the money market account to cover us.

Let’s take a closer look at these positions and the responsibilities each has in my family.

The money earner. Seems pretty simple. Get up and go to work every day. Yes that is part of it, but in my family, this position has the responsibilty of also being the money manager. Not only do I go to work for my family, but I try and perform the “big picture” management of our money. Where do we store our money? Do we have enough to make ends meet each month? Where do we invest our money? Answering these questions entails choosing the banks and credit card companies we do business with, managing our investment portfolio and monitoring our business’ (family’s) bottom line.

The money spender. I sometimes wish this was my role. Spending money is a very important part of your team’s financial success. Assuming your paycheck is relatively stable (meaning increasing your income is not always an option), it’s more likely that your financial success will be dependant on how you choose to mange the outflows of your precious resources. My wife does a great job of minimizing our expenses at every turn. Don’t think for a minute, however, that we go without. Well there is the swimming pool that she and the kids want, but I don’t think that’s relevant to this discussion. Today’s discount and large volume warehouse stores offer great quality products, most retailers have end of the season sales (this means you plan ahead for next year) and you’d be amazed what you can find at the thrift store. Yes, I said thrift store. She has purchased brand new clothes (with tags still on) for our children, I’ve purchased a pair of $15 water skis (Summer here I come), and we even saw a painting for $9,000 all at our local thrift stores. Our friends wonder where all the cash comes from. I am amazed and very pleased with how well she spends our money.

Communication is the key. I learned early in my military career that communication is the key to success. It can also be your key to failure, if you don’t practice it. Suffice it to say, we communicate. A lot. It’s not always fun and can sometimes be embarrassing (”you bought what!!”), but talking about your family’s financial business is absolutely essential to creating a team approach to your success.

How do you manage you money? What position do you play?

-Jeff

Learn to manage money and mind your own business.

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Setting Goals

Jeff — Sun, 30 Mar 2008 21:42:04 +0000

Going anywhere in life requires setting goals. This applies to not only your hopes and dreams but also to the little things that make your day go by. Your plan for future riches and success or just a simple “to do” list are all goals. They just have different scopes and time frames for completion.

I’m sure books have been written covering effective techniques for setting an achievable goal. I’ve personally never read one, however. The best approach I’ve come across that works for me is the SMART method. I’ll spare you a detailed discussion of the SMART’s but will tell you that they stand for Specific, Measurable, Attainable, Realistic, and Timely. In my opinion, you can’t go wrong setting goals that follow these guidelines. For more details you can find all kinds of info on the web by Googling “smart goals.”

While SMART works well for crafting each individual goal statement, I think you still need to consider grouping your goals according to some categories and timeframes. Categories and timeframes can be as broad or defined as your desire. But remember the “S” in SMART. The more specific you can be the more clear your vision and your actions will be. My personal technique is to examine the next year, the next five years and the next ten years and set goals that address my Personal, Professional and Financial desires at each of those points in time.

I try to be very specific in the one-year time horizon. I only have 12 months to complete the goal, so I need a clearly identified target. However, I tend to be a little less specific with the five-year and ten-year goals. My reasoning is that I’m likely to change direction a bit over that time horizon, so I don’t go too far into the weeds.

Goal setting should be an annual event in your household at a minimum. While I will refine my “master list” throughout the year, my main effort is at the end of the year when I do my other “housecleaning.” Things like rebalancing my financial portfolio.

I’ll share my goals in a future post. How do you set your goals?

- Jeff

Learn to manage money and mind your own business.