There are some standard rules and recommendations when it comes to preparing for retirement. Things like:

• Start saving as much as you can as early as you can
• Contribute to your company’s 401(k), at least to the match (it’s free money!)
• Open a Roth IRA for added withdrawal flexibility when you retire
• Calculate the nest egg you’ll need to accumulate for the standard of living you want
• Take out 4% of said nest egg every year and live only off of that

It’s all good advice when the market is doing what the market has historically done. But if you’re near retirement right when something apocalyptic happens (like the mortgage crisis in 2008) and you followed these rules, then you’re probably going to be a little pissed off.

Because there are thousands of people out there that followed the rules and aren’t going to be able to retire the way they’d planned.

This has some financial experts thinking that it might be time to retire the old-school retirement mindset and move on to a new retirement paradigm—one that doesn’t involve saving up a whole bunch of money, investing it, and then living off the proceeds when you’re 65 and no longer want to work.

This Reuters article lays out the case for a focus on “other forms of capital.”

The goal is to focus on other assets that can help bridge the gap during retirement if money is in short supply—assets that aren’t being risked in the market.

“If they don’t have the money, they have human capital like skills and education, and social capital in terms of friends, neighbors or a church. All these things help,” says Larry Cohen, director of Consumer Financial Decisions.

Even if you don’t have the money, investing in things that aren’t stocks and bonds can pay off. If you learn a skill that can save you money, like gardening, then that can help a little bit during retirement.

And being a part of a community can also help with reducing costs—you can buy in bulk or use someone else’s car.

Then there are skills that can actually generate money, like blogging, consulting, or freelance writing. I mean, you have to spend your retirement doing something, right? Another thing you could do is teach. After 60+ years, there have to be a few things you’re really good at or know a lot about. If you had a career in the automotive industry, you could teach a class on how to repair cars or something like that.

I like this idea. It actually does two useful things:

1. It helps make retirement a bit easier financially and
2. It helps answer the eternal question of “what the hell am I going to do when I retire?”

Traveling and playing golf are good answers, but that still leaves you with a ton of time. I like the idea of a 65-year-old Carlos writing an occasional magazine article here and there, teaching a computer class to other grandpas, and then going on a long walk to stay healthy (and keep health-care costs at a minimum).

In theory, that means I don’t have to stress out so much about accumulating a million-dollar-plus nest egg to be able to “do nothing” after I retire.

If retirement experts can somehow factor these types of activities into the classic retirement calculations, couldn’t I put away less money right now as a 30 year old? Which means I could go on skiing trips or fly to Australia to go scuba diving. If I need less money when I’m older, I should (theoretically) be able to cut down on some of my contributions and use the money right now, while I’m still a strapping young man.

Is this a totally irresponsible and knee-jerk reaction to a stock-market plunge or do you think there’s something to this “new retirement?”

Image by Dawvon

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Had an interesting conversation with some co-workers the other day. I was trying to gauge how much money it would take for people to take a job that’s traditionally frowned upon.

I’m curious to hear what other people think.

Here’s the scenario:

Would you take a job at a fast-food restaurant (assuming you aren’t in that industry already) in exchange for a tripling of your current salary? The catch is that you would have no opportunity for advancement (you would have the entry-level job of casheering, cleaning, etc.) and you have to sign up for a 10-year contract.

You break the contract, you stop getting paid. If you agree, you basically have to stay for 10 years.

The Upside

• The money, obviously.
• One co-worker mentioned you would save money on clothing since you have a uniform you’d be wearing every day for the next 3,650 days.
• You get to work with people, which can help make it less monotonous.
• No pressure to advance…you’re in for the next 10 years.

The Downside

• Locked in for 10 years (we’re adding in that you can’t “get fired” even though I know that makes no sense…it’s an exercise for God’s sake).
• No advancement.
• Dull days ahead.
• Cleaning bathrooms will be a step down for a lot of people.
• No career prospects after the 10 years are done since you basically have a black hole in your resume.

Most people didn’t have to think twice, they said they would do it without even hesitating. This surprised me so I tried to slow them down to actually think of what this would be like. To work in something they have no interest or passion for and to be locked in for 10 years.

They didn’t care. The tripling of the salary clinched it…I’m not sure if that makes me naive or makes them greedy and heartless.

What’s your take?

Image by Mike Baird

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I’ve been reading a lot of this lately:

The American Dream has been shattered. It used to be that a hard-working person could pretty much bank on getting a job after school. And if they worked hard at it, they knew they would make enough money to buy a home and support their family. They would have insurance, they would be able to provide the things the family needed, and they would be able to have a comfortable retirement. Now the housing bubble has burst, unemployment has spiked, and the American Dream no longer exists. It is gone.

Is that really the American Dream—that if you worked hard at your job you would pretty much have a guaranteed “decent” lifestyle with a comfortable retirement?

Because I always thought the American Dream was this notion that anything is possible. That if you work hard and give it your all, you might hit the jackpot and become very successful. I thought the American Dream was that notion of potential. Of possibility.

That it was possible, not guaranteed.

Nothing is guaranteed—regardless of how hard you work—except for the chance at living the good life. In other countries, a large swath of the population never even gets a lottery number—they don’t get to play. But that’s how I always viewed the American Dream: everyone has a shot at it, no matter what.

It got me thinking about old-school industries like the car industry. There used to be factory jobs where people showed up to work, put in their 30 years or whatever of hard work, and then were taken care of for life. Sweet retirement pensions meant that their future was guaranteed.

Now we know that this type of perk is unsustainable. That a company can’t carry all that shit on their books and stay profitable—it doesn’t make sense. This isn’t the death of the American Dream, it’s more like the awakening of reality. A pension sounds great and all, but to expect a guarantee like that seems unrealistic to me.

Maybe it’s because I’m from Guatemala. Nothing is guaranteed down there. You might have all your savings in a bank and then poof—turns out someone stole all the money and you’re never getting it back.

Ever.

Go to court to get it back? Please, you’re wasting your time. Press charges? Wasting your time and whatever money you have left.

Nothing is guaranteed down there. People work their asses off and they know that everything could be taken away tomorrow. It’s happened in past and that’s the shadow that everyone lives in. Everyone: rich, poor, middle class. Doesn’t matter.

That’s why Guatemalans save money, unlike Americans (until recently, anyway). They’re constantly worried about what might happen tomorrow so they save money or buy land—anything that might seem like a safer way to hold value.

There are no guarantees. It feels like this country is starting to get the gist of this idea and it’s a rude awakening.

But the American Dream? I don’t see that changing one bit…this is still the place where anyone can make it. Right now it’s just harder than it was before. But just because nothing is guaranteed, it doesn’t mean the dream doesn’t exist anymore.

This post was included in the MoneyCrashers Personal Finance Roundup.

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“I think I live a humble life,” Rose said. “Of course, I know I’ll be able to afford whatever I want, but other than that, there aren’t too many things that excite me. Me winning is one of the things. Me being around my family, that’s another. Money, that’s the last thing I think about.”

To those that don’t regularly follow him, this isn’t a surprise. All Rose likes to do is work on his game and win.

That’s it.

It’s refreshing to see someone so driven by his passion to get rewarded with both accolades and a ton of money. Sometimes you really can be successful by doing what you love and giving it your all.

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When financial-aggregation site Mint.com came out a few years ago, I remember having several questions:

• How are they going to get people to sign up and enter all their usernames and passwords? Won’t people be too scared?
• How are they going to make money?

They addressed the first one right out of the gate—security was almost all they talked about when the site came out. As it should’ve been: entering all the information you need to get a view of a person’s entire financial picture is a big deal.

As for making money, I remember thinking their idea was a little weak: because they could “see” what credit cards you used, which banks you kept your money at, and which brokerages you invested with, they could show you alternatives that would save you money. They would present these offers to you and if you signed up, those partners would pay Mint a commission for referring you.

I remember seeing pitches for different online banks that had 0.25% better interest rates than ING, which is where I had (and still have) my money. They also splashed a bunch of credit cards in front of me that I had no interest in getting: I knew my credit card was solid and the rewards program was among the best.

I was pretty full of myself back then.

This was all years ago, by the way. I stopped using Mint because I was so obsessed with my finances at the time, that I was already logging into all my accounts and checking them out no a daily basis—I didn’t want a site doing all that for me. I kind of enjoyed it.

Well now things have changed and I have more accounts and less time to scrutinize them all. So I joined Mint again and found their service extremely helpful.

I also noticed a few of their credit-card pitches sounded pretty good. One in particular stood out because it was a LOT better than my current card, which gives me a flat 1% cash back on all my purchases.

This card would give me 6% cash back on groceries, 3% cash back on gas and department stores, and 1% back on everything else.

Since I got the card a month and a half ago, I’ve already gotten double the amount of cash back that I would’ve gotten on my old card. Thanks Mint/new card!

Not only that, I also got a $150 bonus for spending at least $1,000 in the first three months.

As I learned by doing a bill audit recently, you should always keep your eyes open for a better deal—even when you think you’ve already got it. There’s always the possibility of something better coming along that might be worth taking advantage of.

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Freelance writers are always looking to balance two things: writing something good and getting paid for it. It can be a tough line to straddle, but that’s always the goal.

Writing an affiliate post is the most direct way to provide value and get paid…as long as it’s done right.

What is an Affiliate Post?

Are Affiliate Posts Sleazy?

• It’s filled with useful information
• It’s on a respected site
• The author clearly calls out the links as affiliate links

Is the Content Awesome?

Where do you Get Affiliate Links?

The Checklist

• Join an affiliate program (again, the big ones are Linkshare (affiliate link), Commission Junction, Google Affiliates, and Amazon Associates.
• Find a product or service you want to write about and become an expert on it.
• Create a fantastic, useful article that helps readers learn more about that product or service.
• Identify your links as affiliate links.
• Publish it on a respected online site (could be your site or a guest post somewhere else).
• Stay up on the comments to answer any additional questions readers might have.

If you’ve created something truly useful for readers, they will have no problem rewarding you buy clicking on your affiliate links if they want to sign up for a service or buy a product.

Image by CarbonNYC

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The New York Times has a great article we can all learn a lesson from. In How a Financial Pro Lost His House, financial adviser Carl Richards tells the story of how he got caught up in the go-go enthusiasm of the mortgage bubble and wound up buying more house than he could afford.

It’s an honest, introspective look at the types of feelings that were swirling around during those times. It’s easy to look  back and say the people that over-bought were stupid and deserve any hardships they encountered later on. But it overlooks one key element of decision making: our emotions. In my review of Jonah Lehrer’s book, How We Decide, it was pretty clear how our emotions can railroad our decision making.

Did Richards deserve to go through the turmoil and anxiety he went through? Sure, maybe he did. But the image of him standing in the dark looking back at his family in the house he couldn’t afford, wondering if he would ever get through it all…it’s hard to be so cold.

Let’s take a look at some quotes:

I have a friend who is going through a tough time financially. He has a high income, but is burdened by debt from a few real estate deals that went south. He continues to take fairly expensive ski trips. That would seem irresponsible in his situation, and maybe they are.

But I now realize that it is not that simple. Maybe those trips are keeping the guy alive, or saving his marriage or keeping him sane enough to work.

I have another good friend who borrowed against his house to pay for a therapist. Unless you were walking in his shoes you might think that was stupid, but it saved his life and changed his career. It ended up being one of the best investments he ever made.

The process of making financial decisions is about more than building a spreadsheet to calculate the answer, because life rarely fits cleanly into a spreadsheet. Our decisions often appear irrational until we understand the whole story.

This reminds me of my post on how financial responsibility can ruin your life. There are certain times in life where the best financial decision isn’t always the right decision for yourself. For example, if you want to have a baby and it’s your last shot, you should do it even if the math doesn’t quite add up.

You better come up with a solution to make it work, but I don’t believe you should sacrifice these types of “living life” experiences in the name of “financial responsibility.”

Then Richards goes on:

But it’s not that simple. At times I’m absolutely clear about what makes sense. Then ordinary life choices arise, and things can get cloudy. Should our children play sports that cost money? What kind of family vacation is O.K.? How much is enough?

These are issues we all battle with on a daily basis. I like that Richards isn’t hiding behind his title as a financial adviser and is telling it like it is. It may not be pretty, but at least he’s being realistic instead of just spouting off all the different financial maxims people “should” be adhering to in an ideal world.

We don’t live in an ideal world.

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Picking a cell phone carrier isn’t easy. Today’s ads have so much fine print it’s hard to tell what you’re agreeing to when you sign a two-year agreement.

But each carrier has its own features that make it unique.

Let’s take a look at each one to see how they stack up.

Sprint: Unlimited Data

Sprint is currently hanging its hat on three things:

• They have the iPhone
• They’ll give you unlimited data (competitors either charge for more usage or throttle your speed)
• They have fewer customers and less congestion on the network

One thing about unlimited data: the average person doesn’t need more than 2GB, which is what other carriers offer, so I don’t know how valuable it is in the real world.

I know very few people on Sprint but they seem to be happy with their service and with their phone selection. As usual, make sure to check their coverage map.

Verizon: Service

Verizon has gotten a reputation for having great customer service and top-notch coverage. They too carry the iPhone and a host of high-end Android phones.

The downside of having great coverage and so many customers is that congestion becomes an issue and download speeds become affected. That’s the theory anyway—I haven’t met anyone on Verizon complain about this.

A few weeks ago Amazon had a crazy $0.01 sale of all Verizon smart phones, including the $299 Bionic. Other carriers have these types of deals too, but this most recent one was pretty tempting.

It’s always good to check a coverage map before making the switch, though talking to people and using a real phone is always the best way to test this stuff.

AT&T: Oops

A year ago before the iPhone 4 came to Verizon, AT&T always hung its hat on one thing: they were the only carrier with the iPhone.

Once that changed, AT&T had a hard time pitching customers on why they were a good option, especially after Consumer Reports rated them dead last in their rankings.

Ouch.

I used to be on AT&T but my phone only worked if I hung out of my apartment window, so I had to switch.

T-Mobile: Value

Ah, to be the value player is always a double-edged sword. People equate cheap with bad, and that’s what T-Mobile is trying to fight, especially since now they are the only major carrier without the iPhone.

They’re in the middle of a massive ad campaign promoting their new value plans. Dubbed “The Best Plan Ever,” it gives you unlimited talk, text, and data (you get throttled down to a slower speed after 2GB) for just $59.99. If you’re on a family plan with at least two lines, it comes down to $49.99.

Check out this handy chart Apple put together for their iPhone 4S page—it shows what T-Mobile’s competitors are offering. The numbers show T-Mobile is muchcheaper.

And because value is my biggest priority, I had to find out more about this plan.

Too Good to be True?

Of course, there’s a catch: T-Mobile’s “Best Plan Ever” doesn’t include any phone discounts. You can sign up for a  payment plan if you want to get a new phone and pay a little of it off every month, but you don’t get the massive phone discounts other carriers give you when you commit to two more years. You’ll have to pay retail—which can be upwards of $699.

T-Mobile won’t be waving a $499 phone in your face saying “Here, we’ll give this to you for $199 if you sign up for another two years.” That temptation is out the window.

Let’s take a look at the numbers and see what they say (using data from Apple’s comparison page):

Those are really substantial savings.

When I figured all this out, I knew I had to get onto one of these plans. The more I delayed a new phone, the more money I would save. And since I enjoy finding phones for cheap, this plan is perfect for me [See Buying a New Smartphone Without Extending Your Contract].

The Downside

Of course, if you want an iPhone, you’re not going to get it on T-Mobile’s network. And if T-Mobile’s signal isn’t very good where you live or work, then it probably doesn’t make sense to switch.

If you really want the best value out there, these plans might be a good fit. As with any other carrier, make sure you find out beforehand how good the signal is at home and anywhere else you spend a lot of time.

Because if you can’t make any calls then all this talk about value goes out the window.

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A month ago, I wrote Cable TV is Here to Stay…for Now. I had just finished doing a whole bunch of research on ways I could cut my cable and decided most people weren’t ready to make the jump.

There wasn’t (and still isn’t) a convenient, reliable way to kill your cable bill and replace all the functionality you get with cable (like DVR and not having to fiddle with a bunch of wires or remotes).

The Challenge

But after I wrote the post, I said to myself, “Carlos, you aren’t ‘most people,’ you’re a tech-savvy person willing to figure a way to make this work.”

The challenge was set: it would test my problem-solving skills, my research skills, and my tech skills. I was excited to come back and disprove my article and announce to the world how I had killed my cable and saved a bunch of money.

It didn’t go as planned.

I spent a bunch of time and money figuring out a way to replace cable with an antenna and my Internet connection, while while making it as convenient as possible so my wife would approve.

And I couldn’t do it.

I tried different setups, I altered strategies, I returned one product to test another one…none of it mattered.

In the end, I couldn’t get the channels I wanted with the reliability and quality that I get from cable.

If I would’ve been successful, I would’ve saved $564/year.

Cable=Convenience

And that’s when I realized I wasn’t paying $47/month for “cable.” I could replace cable and make it all work, but it wouldn’t be as convenient.

And that’s really what it comes down to: convenience.

So I’m here to reaffirm that cable cutting isn’t ready for the masses. The masses watch a lot of TV and they want the channels they want without interruption and on a DVR.
Cable cutting won’t be ready for primetime until someone comes out with one product that you plug into your TV and boom—you get everything you need in one, handy remote.

Of course, some of you can do that fairly easily if you don’t watch a lot of TV or don’t need a DVR. But for the average TV watcher that’s been spoiled by having a DVR, cable is still the best option.

What’s the Best Option?

There are pretty much three basic ways you can replace cable, and the most convenient is to get a TiVo Premiere or something like it. Plug an antenna into the back of it, and you’ve got all the major networks (if you’re lucky) and a built-in DVR.

Then you can use their Amazon Video on Demand channel to get the rest, along with Netflix and Hulu Plus.

It’s convenient, but it’ll cost you $20/month (or the $499 one-time fee) and if your antenna doesn’t bring in a good signal it won’t matter: you won’t be happy. Still, that’s the closest thing I could find to buying one box that does it all—and again your paying for convenience.

I’d love to hear from people who’ve made the switch, are happy with it, and what setup you’re using. Please share in the comments!

Image by Luke Wisley

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How Lessons from Moneyball Can Help Your Career: Loved the book, haven’t seen the movie yet. But the idea of finding something that’s undervalued and dominating it will certainly help you in your job. This post was also quoted by BNET, which was awesome!

6 Tips to Shrink Your Bills Every Year: I learned a lot of tips when I did my bill audit, and these are some tips I learned from the whole experience. People were pretty impressed with the idea of doing this on an annual basis.

Learn New Skills for Free: The Power of Forums: I’ve always wound up on forums when trying to learn something new. It was only when I was trying to learn how to build my own PVR (kind of like a DVR) that it hit me how useful and helpful forums can be. So I wrote a post about and some things NOT to do.

How Investing Drives Us Crazy: Lessons From a Trade: I made all the right decisions. I wasn’t greedy. I was responsible. I did my homework. And it didn’t matter…this trade wound up driving me nuts regardless.

Any favorites out there? I’ve been writing about career stuff a lot lately, and it was kind of fun to relate Moneyball to something we can all use in our working lives.

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