In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!
To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, twitter, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.
With your help this week, we made the front page of multiple social media with the post Should You Buy A House Outright? !!! Thanks for your help and also thanks for all the comments!!!!
Anyone who subscribes to the Rich Dad, Poor Dad philosophy believes that a house is not an asset. Still, so many people tout the belief that "home ownership is one of the best ways for the middle-class to build long-term wealth." Clearly, for some this is true. However, suppose you find yourself in the somewhat unique predicament of having the resources to purchase your house outright without a mortgage. Is it then financially-wise to make the purchase?
A House Is Not An Asset
Before tackling that question, let's give it the appropriate context by revisiting why some believe that a house is not an asset. The reason some argue that a house is not an asset, at least for the "homeowner," is because home ownership increases financial liability. Consider the balance sheet for a typical homeowner. The value of the house goes in the asset column while the mortgage value goes into the liability column. Thus, for most people, the house is a financial liability, at least until the property-owners sell it. Once sold, the homeowners can access the equity (asset). The real benefactors of home ownership are the mortgage lenders: our liabilities (mortgages) serve as their assets. If one owns the house outright, this eliminates the monthly financial obligations, but home ownership still costs money. Taxes, home maintenance expenditures, and home owners associations dues (if applicable) can still make home-ownership a financial burden. Thus, there are some proponents who believe that even a home with a paid-off mortgage is not a true asset.
Should I Cash Out Stock OptionsTo Buy The House?
I recently came across a scenario where someone had accumulated stock options at work over several years and was considering cashing half of them in to use the proceeds to buy a house outright. She wanted to stay at home with the kids, and without a mortgage, her family could survive on solely her husband's income. Still, the concern was whether this was in their best financial interests.
At the core of the above scenario lies the question "should I cash-out an asset (stock options) to purchase a non-asset (a house)?" I truly believe the best answer is it depends on your unique financial situation. For example, before purchasing the home and decreasing one's income (quitting a job), it is important to have a strong financial foundation. This would include being debt-free and having an emergency fund at the minimum. Even on a single income, they should be able to invest at least 15% of their income and contribute to their kids colleges funds, both of which could be feasible if they were debt-free. The answer also depends on their age. I'm assuming that they are young because they have young children (although you definitely cannot be certain). If they are older, it gets a little trickier. It is always sad when someone has to sell her home because she doesn't have the appropriate amount in investments for retirement. If you become house poor because too much of your cash is tied up in your primary residence and you want to retire soon, you could end up selling the house to eat.
Also, it depends on your investment strategy. I am NOT a fan of stock options in individual companies. It is far too risky for me to not have diversification. Enron, Lehman Brothers, and countless other company failures have proven the principle repeatedly. Thus, I would sell the stock options anyway. Lastly, it may depend on how long you plan on living at the residence. Although real estate is showing signs of recovery, who knows how long it may take your area to recover. The good news is that low real estate prices can still be found, which means you may find some good deals on property. However, it may still take a while for the value of your house to go up significantly, so it would be best to at least plan on staying there for 5-7 years.
Other Considerations
Some argue that they like mortgages for the tax benefits, but I wonder about their math. To keep a mortgage for the tax benefit is like saying that you are willing to pay the bank $10,000 per year to avoid paying the IRS $2500. It just doesn't add up in your favor, financially. Additionally, there is a freedom that comes with removing debt from your life. Excluding my house, I have been debt-free for over a year, and it's been wonderful not having payments. Not owing payments removes the constraints on your cash flow, which allows you to build wealth through aggressive investing, have more fun, and give. For most people, if you paid off your home and invested an amount equivalent to a mortgage payment consistently, you could be a multi-millionaire. Financial issues aside, the lady mentioned above wants to come home to be with her kids, which is definitely worthwhile if she can swing it. A house is where you live, and you have to live somewhere. Why not own it if you can financially afford to? The key is knowing your financial situation.
Lastly, if you like this post, please subscribe (see upper right-hand corner), Mixx it, Propel it, Stumble it, and tag it on Delicious. Also, click here to get my eBook FREE.
In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!
To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, twitter, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.
With your help this week, we made the front page of multiple social media with the post Have We Stopped Saving Already!!! Thanks for your help and also thanks for all the comments!!!!
Well it is finally happening. With the apparent positive turn in the economic tide, the shock and fear that drove consumers' purse strings and wallets shut is also wearing off. For over a year, people have been talking about a new wave of frugality sweeping through America. However, if this frugality was just a side effect of fear over the decimated economy, will it last now that people are beginning to use that other r-word: recovery?
Three months ago, we asked a pertinent question: ls Recession-Induced Frugality Sustainable? For example, we rediscovered the art of savings. Goldman Sachs predicted 2009 savings rates to be between 6-10%. We even went from record high debt-to-income ratios in 2007 to the American debt load shrinking in 2008, which is the first time American debt has shrunk since 1952. While it would be great for financial temperance to become the new norm, we knew that this unfortunately might be too optimistic. Recent data from the Bureau of Economic Analysis suggests that Americans may be saving less again, as our personal savings rate (as a percentage of disposable income) fell to 4.6% in June, compared with 6.2% in May. Now, it is true that even June's 4.6% is still a lot better than the negative savings rates we had a few years ago, one must wonder if the drop in savings is a signal our former ways of reckless spending will return.
It is possible to read too much into this though, after all this is just two months' data. However, even if you believe these two months are indicative of the present trend in spending, there are some recent events that might be confounding this data. For example, May was when some individuals received their federal stimulus checks, which would help spruce up savings for May and make June look particularly worse by comparison. Additionally, 4.6% represents savings as a percentage of disposable income, and June marked the fourth consecutive month that personal incomes decreased. This is partly due to job loss and underemployment. These are indeed important considerations to remember when interpreting the data.
Financial Abstinence Is Not An Option
Additionally, unless you are Daniel Suelo and willing to live in a cave, you have to spend some money. Just like a food addict, total abstinence is never a viable option. It was inevitable that we started spending again. This still doesn't mean that we couldn't retain the lessons of frugality, and the lack of retention is what is particularly troubling. Programs such as Cash for Clunkers that induce people to trade in their working cars to purchase new cars that they most likely cannot afford appear to be a step in the wrong direction. Such debt-driven spending may be great for the auto industry and even temporarily for the overall economy, but as Suze Orman said nearly a year and a half ago, what you have to be concerned about is your personal economy.
What About The Good News: Economic Recovery
The good news is there are definitely some strong economic signs. Home sales have risen for three straight months—a first since 2004. The stock market has rallied a whopping 44 percent since March. Macroeconomic Advisers, a consulting firm, says the economy is expanding at a 2.5 percent annual rate in the current quarter. Economic activity "will increase slightly over the remainder of 2009," Federal Reserve chairman Ben Bernanke told Congress. Even with these positive trends, one must be concerned that we don't readopt the same kind of debt-fueled consumption that contributed to the economic mess in the first place. The last recoveries were based on bubbles and financed by consumption. This formula doesn't work long-term, and broke consumers end up with the short end of the stick. We should all be mindful of our spending regardless of what incentives are being offered to ignore our financial well-being. Our most powerful wealth-building tools are our incomes. Protecting our incomes by not being leveraged in debt and overspending is one of the best ways to stimulate our personal economies.
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It is well-known that media often focuses on doom and gloom. For example, hundreds of airplanes land safely everyday and will never garner any media attention (unless the landing is miraculous); however, the one that crashes will be plastered on news across the country. Perhaps it is just human nature to gravitate towards the sensational. By far, fixing our current economic woes is a top priority for many Americans, so the fact that US economic hardships is getting tons of media attention is not wholly unexpected. However, a recent sobering and fear-inducing article by Forbes columnist Tom Riper might have pushed the limits with respect to responsible reporting.
In Where You Won’t Shop in 2009, Tom not only highlights that some retail stores that have already announced that they are closing doors in 2009 (i.e. Circuit City and Sharper Image), but he makes a series of fatal predictions for several other beloved American brands (i.e. Starbucks and Gap). These predictions are based on interviews with some industry experts and surveys. For example, normally just 4 percent of women would not plan to buy any clothes in a given year, but nearly one-third of women plan no clothing purchases in 2009.
The article reads “while industry executives and shoppers will remember 2008 as the year the party ended, figure 2009 to be the year of the hangover.”
Is There Any Room For Any Optimism? Although it is true for some of these companies, he is just stating the obvious, I seriously doubt all of these companies will close doors completely in 2009, yet that's what the title of this article would suggest. Of course putting on rose colored glasses and being blissfully ignorant is not the answer. Blind optimism helped get us into this mess, but optimism tempered with a dose of reality is what's needed in these times.
It would be more precise, although less attention-grabbing, to merely state the truth: these companies have some real challenges ahead in this coming year.
Entrepreneurship Less Desirable It is likely that the economic uncertainty is causing a decline in interest in entrepreneurship as a career amongst high-school students and others. With business closures (and potential closures) receiving so much media attention, being in business for oneself seems remarkably more risky now than during the last few decades. Still, these risks alone should not dissuade those who are passionate about entrepreneurship. For example, the following is a list of 14 big businesses that started during a recession. Notice that none of these are on Mr. R.I.P.er's list. It is possible to have phenomenal success in business if you act smartly, even in today's economic climate. This message of hope is often neglected by today's media.
Funny Quote From Article Perhaps the most comical quote in the post was "people are so scared they are starting to save." It's as if he is almost saying "surely, it has not come to this, people are actually saving... gasp." The truth is he is right! Whereas the United States has historically had a negative savings rate, the Federal Reserves reported a positive savings rate and a decline in debt during the 3rd quarter of 2008, and some experts believe our saving rate may increase to 6 to 10% in 2009. Personally, I think consumers being fiscally responsible is a good thing. Individuals who appropriately manage their monies typically end up investing and spending, both of which are great for the economy long-term.
In summation, media outlets produce sensational stories to get readers (or viewers), for which advertisers will pay big bucks, but such reporting can be demotivating and even irresponsible in some cases. It's up to us to decide the true motives behind such one-sided reporting and whether this is the kind of news that we want to support.
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Best Personal Financial Planning and Personal Investment Articles this Week from Personal Finance Blogs
Welcome to the August 7, 2009 Edition #101 of the Carnival of Financial Planning.
The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.
This edition is arranged by subject heading, so that you can browse efficiently.
Susan Saverton presents Living Expense Tracking posted at Family Financial Planner, saying, "If you do not understand how much you spend and how much you are saving and investing, you simply do not have a financial plan. This situation dramatically increases your family’s long-term financial risk."
Tony Cookson presents Chicago: Why we have good apples, but few old cars posted at This Young Economist, saying, "Chicago streets have a lot of nice cars: BMWs, Audis, Hummers, Range Rovers, etc. Even the less expensive cars are relatively new. This is in stark contrast to the stock of cars in Montana. Not only are such fancy cars rare in Montana, but the fleet of vehicles is much older -- at least based on my casual observation. Our 1997 Oldsmobile Cutlass is a dinosaur in Chicago, but it does not stick out too much in Montana. This article explains why."
Zach Scheidt presents GDP Report Offers Positive Headline, Negative Details posted at ZachStocks, saying, "The GDP report was trumpeted as an improvement and an indication of a recovering economy. However, behind the headlines there is significant detail pointing to risk for the economy and for investments."
TIE presents Efficiency and Rationality in Financial Markets posted at The Incidental Economist, saying, "A careful review of the EMH and the extent to which it applies to non-institutional investors."
Dorian Wales presents On Causality and Correlation in Economics posted at The Personal Financier, saying, "Causality is perhaps the most fundamental element of empirical evidence available to economists. However, it is also the source of many misconceptions due to its elusive nature."
Roshawn Watson presents The Rich Get Poorer posted at Watson Inc, saying, "The implications of this recent recession have been far-reaching enough to put a big dent in American and world wealth. Both the magnitude of wealth and the number of millionaires decreased profoundly in 2008."
Estate Planning
Jeff Rose presents Taking Care of an Elderly Parent posted at Jeff Rose, saying, "Find of what you need to do when you have to become the parent of your parents."
Financial Planning
Tom Drake presents Fee-Only Financial Planners posted at The Canadian Finance Blog, saying, "Looking for someone to help with your investments with your best interests in mind? You should hire a fee-only financial planner."
Patrick @ Military Money presents How Much Life Insurance Do Military Members Need? posted at Military Finance Network, saying, "Military members may have different life insurance needs than civilians. Here is information regarding how much life insurance military members should buy, and some resources for finding the best life insurance deals."
Big Cajun Man presents Mid-Year Personal Finance Check Up posted at Canadian Personal Finance Blog, saying, "Mid year is a good time to go over your plan for the year to see how well you are doing, so do it now!"
KCLau presents I achieved financial freedom at 38 posted at KCLau's Money Tips, saying, "This post is contributed by WaiYin, a reader whom I admire very much because she achieved financial freedom at age 38! Here, she shares how she did it."
Sam presents New !! Prenup !! Should I Sign a Prenuptial Agreement? Do I Need a Prenuptial Agreement? posted at Surfer Sam and Friends, saying, "Sometime before the wedding, your loved one may bring up the issue of a prenuptial agreement. Don't panic. You've heard about prenuptial agreements. Donald and Ivana Trump had one. Liz Taylor and construction worker Larry Fortensky had one. Tom Cruise and Katie Holmes have one. Keith Urban and Nicole Kidman have one. A prenuptial agreement, also called a prenup, is a way to protect your interests if it becomes time to untie the knot."
Fitz Villafuerte presents How To Find The Best Personal Financial Adviser posted at Ready To Be Rich, saying, "How do you find the best personal financial adviser? It's easy and you'll be surprised where you could find him or her."
KCLau presents Why Robert T. Kiyosaki is a best-selling author? posted at KCLau's Money Tips, saying, "Robert T. Kiyosaki is the best personal finance author I follow. I started reading his books back in 1999. Although some reviews you found written by readers on Amazon say that he keeps repeating most of the points, I still find them interesting every time. It works as a revision whenever he repeats."
Susan Saverton presents Personal Investing Strategies posted at Family Financial Planning, saying, "When pursuing optimal financial planning and investing strategies and controlling your costs and capital gains taxes, you also need to establish a time-efficient system to monitor, adjust, and adhere to your financial plan. You need to control and limit the time that you spend on your financial planning, and you need to focus your planning efforts on the most effective activities."
Financing a Home
FMF presents Now's the Time to Buy a House posted at Free Money Finance, saying, "Has the housing market hit bottom? If so, now's the best time to buy a new home."
Ben Dinsmore presents Why Do I Have to Pay for Private Mortgage Insurance (PMI)? posted at Trees Full of Money, saying, "If you do not stay on top of your Private Mortgage Insurance (PMI), you may end up paying hundreds (if not thousands) more than you need to!"
Ray presents Net Worth Update and First Time Home Buyer Plans posted at Money Blue Book, saying, "Looking to finally purchase a new construction home. Need to improve credit score and save for down payment"
Dividend Tree presents Which High Do You Prefer? posted at Dividend Tree, saying, "High profitability or high income, or high EPS growth rate as a standalone does not provide a true picture. We can get a true picture by looking for consistency. Two simple statistical measures of average and standard deviation can help us measure consistency."
Joe E presents President Obama Increases Pell Grant and Perkins Loan Limits posted at Consolidating Student Loans Online, saying, "New loan limits on Pell Grants and Perkins Loans - both government backed financial aid products - may make it easier for some students to afford school. The new limits will go into effect in fall, 2009..."
Health Care
Brian presents High Cost Of Health Care: What Is The Root of the Problem? posted at How To Live a Longer Life, saying, "It doesn’t matter if we have private health care insurance, single-payer public coverage, or if we pay out of our cash and savings. No matter the health care system, the last year of life will be more expensive. At some point the costs might not be worth it."
Income
Joe Plemon presents Is a College Degree Necessary For Success? posted at Personal Finance By The Book, saying, "Besides, being billionaires, what do Richard Branson, Bill Gates and Michael Dell have in common? None graduated from college. What attributes helped them succeed and can help you succeed?"
Praveen presents Easy Ways to Generate Cash posted at My Simple Trading System, saying, "Easy ways to generate extra cash"
FMF presents My Jobs, I Get My Dream Job posted at Free Money Finance, saying, "This post details the twists and turns associated with me getting my dream job and lists several key career-building principles I learned in the process."
Dan at Everydayfinance presents Swine Flu Stock Mania - Just Wait 'til Fall posted at Everyday Finance, saying, "This article highlights the recent triple digit gains in several so-called 'Swine Flu Stocks' and questions whether the hype has gotten ahead of the fundamentals."
Marc Ryan presents IndependentInvestor.info - Non-traditional ETFs in Canada: wolves in sheep’s skin? posted at IndependentInvestor.info, saying, "In this second commentary on exchange traded funds, we look at the various types of ETF’s traded on the TSX (Toronto Stock Exchange) in Canada. We explain how to find yourself among the more and more numerous new ETF funds, where to find information on fund management fee levels, and the speculative aspects and weaknesses of many of the new funds."
Dividend Tree presents Apple - Great Products But Is It a Great Investment? | Dividend Tree posted at Dividend Tree, saying, "I am one of those millions of aficionados who love Apple products. Unfortunately, I cannot say the same when it comes to investing. Questions like these make me wary of investing in Apple."
Silicon Valley Blogger presents Online Discount Brokers: SmartMoney Broker Survey posted at The Digerati Life, saying, "The SmartMoney broker survey ranks the online discount brokers on various criteria."
The Skilled Investor presents Personal Investment Management posted at Personal Investment Manager, saying, "Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees."
Zach Scheidt presents Verso Paper Breaking Out From the Brink of Death posted at ZachStocks, saying, "Verso Paper Corp (VRS) has been under intense pressure relating to excessive debt and a lack of paper orders. A slight improvement could touch off a sharp reversal in fortunes, however, as many competitors are now gone. Debts have been re-negotiated and are no longer so serious."
Mike Johnson presents Trading System Part 2 posted at System Trading | Stocks Trading Systems, saying, "Now we covered a large form of protection in the exit strategy. In other investments, there is usually not as much overlap. However you probably want to learn a lot about forming a business entity. Talk to your accountant, bookkeeper, and attorney, and any other needed professionals to determine what is right for you."
Dividends4Life presents Snap, Crackle and Pop: The Sound of a Rising Dividend! posted at Dividends Value, saying, "Dividend increases aren’t the only thing the Kellogg Company (K) is known for. For anyone over the age of two, Snap, Crackle and Pop are very familiar characters. Since 1933 the three elf characters have been the spokesmen for Kellogg’s Rice Krispies."
TIP Guy presents Stock Buying Process posted at TIPBlog.in, saying, "For my long term portfolio, I buy stocks that I want invest for long term and grow with the company. I buy stocks in blocks of one third over a period of time. I initiate a position which helps me follow the company. It also helps me make sure; I am not making a mistake. It may take me one year, two years, or more for second or third installments."
The Dividend Guy presents Dividend Stocks in My Portfolio that Have Raised Dividends posted at The Dividend Guy Blog, saying, "As a dividend investor, I watch closely how my dividend stocks perform. In an environment where may stocks are cutting their dividends, here are some of mine which have been increasing them."
Tom Escent presents Quantitative Finance posted at Nerds on Wall Street, saying, "Think of this book as sort of a Hitchhiker’s Guide to Wired Markets. There are no robots parking cars for six million years, but there are robots trading millions of shares in six milliseconds, so maybe that’s close enough."
Dividend Tree presents BRIC Acronym? Does it Have Any Relevance? posted at Dividend Tree, saying, "This BRIC label does not have any fundamental basis other than emerging markets. There are thousands of companies in all four economies, and clubbing all together to preparing a representative fund of few tens, or few hundreds does not make sense to me. Also, the idea that one can capture and hedge by investing in BRIC based funds is something that I cannot understand."
Frank Vertin presents Best Index Funds posted at Best Index Funds, saying, "Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds.".
Zach Scheidt presents Solar Stocks Cheer SunPower Results posted at ZachStocks, saying, "Solar Stocks traded higher after SunPower Corporation announced positive earnings. The industry is working through an inventory glut but it appears that certain segments are finding strength. SPWRA could reach $50 over the next few months if analyst expectations prove correct."
Larry Russell presents Best Noload Mutual Funds posted at NoLoad Mutual Funds, saying, "Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work."
Tushar Mathur presents Can't Control the Markets? Try controlling the Costs posted at Everything Finance, saying, "As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You're not alone."
Big Larry presents Stupid Ways to Get Cash posted at Out of Debt Christian, saying, "When you are desperate for cash, there is always *someone* willing to lend you money, but of course at a tremendously high price. We reveal the high price of for popular ways to get quick cash and provide more sensible alternatives to each."
Mr Credit Card presents Airline Credit Cards Survey posted at Ask Mr Credit Card, saying, "This is a survey of available airline credit cards"
Roshawn Watson presents Outrageous Law Transfers Parents' Debt To YOU posted at Watson Inc, saying, "With few exceptions, such as a divorce decree, you are not legally liable for debts you have not personally signed for or agreed to pay. There is an inherent sense of fairness to this principle: your finances cannot be obligated to pay for something without your consent (except perhaps to the taxman or to your dependents). However, an archaic law in Pennsylvania is being enforced to make adult children to pay for their parents' debts."
Pinyo presents What is a Good Credit Score? posted at Moolanomy, saying, "Your credit score is an important aspect of your finances if you're planning to borrow money -- e.g., mortgage for home purchase or a student loan. In this article, learn what the industry considered a good score and follow instruction on how to get your credit score and credit report, as well as how to improve your score."
Flea presents Getting Out Of Debt posted at Be A Survivor, saying, "Learn how to pay off your debt faster using proven techniques."
Miscellaneous
FMF presents Details on Cash for Clunkers posted at Free Money Finance, saying, "Details on the governments new car-buying incentive."
Tyler Tervooren presents Can You Benefit From Energy Efficiency Rebates? posted at Frugally Green, saying, "Being frugal means being able to look past the initial cost of something to see its long term value. Luckily, our government seems to understand this and is willing to help you with the purchase price of high efficiency appliances and renewable energy systems."
Roshawn Watson presents Colleges Pimping Their Students posted at Watson Inc, saying, "Colleges Pimping Their Students: Universities are selling students' personal information, typically to the highest bidding credit-card companies."
Noload Bonds presents Bond Index Funds posted at Bond Index Funds, saying, "Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. The best bond fund buying strategy is to pick only very low-cost no load bond funds."
Retirement Planning
Patrick @ Cash Money Life presents Tips for Managing Your 401k Plan posted at Cash Money Life, saying, "Tips for managing your 401k plan and other retirement contributions."
Super Saver presents Planning to Retire Later also has Risks posted at My Wealth Builder, saying, "The option to continue working is no longer easily controlled by the employee."
MoneyNing presents 401k, Traditional IRA and Roth IRA Savings Not The Same posted at Money Ning, saying, "When you plan for retirement, do you really look into the tax situation and how it will affect your account balances?"
Jeff Rose presents 5 Year Rule for Roth IRA Qualified Distributions posted at Jeff Rose, saying, "How to get your money out of a Roth IRA tax and penalty free all depends on the five year rule."
Patrick @ Military Money presents Is REDUX Retirement Worth it? posted at Military Finance Network, saying, "REDUX is a military retirement option that offers military members a $30,000 Career Service bonus in return for a lower monthly pension. But is it worth it?"
Super Saver presents A Gift of Retirement Funds posted at My Wealth Builder, saying, "A relatively small lump sum investment of $10,000 can lead to a significant sized nest egg at retirement."
Top 10 Index Funds presents S&P 500 Index Funds posted at Top 10 Index Funds, saying, "Buy these top 10 very low cost no load S&P 500 index mutual funds directly. You do not have to pay the heavy added expenses of buying through a stock broker, financial adviser, investment adviser, or investment counselor."
Risk Management and Insurance
Paul Kamp presents Know the Signs! Pyramids and Ponzis… posted at Don't Quit Your Day Job - Personal Finance, Economics and Investing, saying, "I wrote this article about 3 types of financial scams... Ponzi Schemes, Pyramid Schemes, and Matrix Schemes. Education is the best defense against these risks, so I'm submitting it to your Risk Management and Insurance section."
That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.
An interesting study was published last week by professors from the Wharton School of Finance and Northwestern University suggesting that people often select spouses who have different attitudes regarding spending. For example, people who consider themselves tightwads will partner with those who consider themselves spendthrifts. Perhaps, this attraction is about becoming what you are not: their dislike of their present attitude regarding money and desire to change. If you are tight with money but admire or envy those who are more carefree, marrying someone who spends more freely can bring some joy into your life, even if some of it is vicarious.
The Irony
Perhaps the biggest paradox is that most single people say that they would be happiest married to someone with similar spending habits. There is probably a good reason for this. Money is the number one reason why people get divorced in the US, so agreement on money is a very big deal. Nonetheless, there is sometimes a disconnect between the characteristics someone says would make an ideal mate and who they are genuinely attracted to.
Wait a second.... Are There Other Considerations????
Are there any covariates that would confound the interpretation of these results? For example, age could be a an important consideration. We don't know whether the aforementioned relationship holds true for all age groups. Also, does being happy affect this attraction? Suppose you are a happy tightwad or a proud spender. If so, are you more happy with someone who is the same or different? That's is potentially an important threat to the validity of this study. I would personally be extremely frustrated if I was married to someone who not only didn't share my goals but consistently worked against them. I would submit to you that this scenario would upset countless others as well. In some cases, avoidance of conflicts with the tightwad leads the spender to even hide their purchases thereby allowing deceit to enter into the relationship. Although this can begin somewhat insidiously, it can potentially serious. Financial infidelity can precipitate divorce. Clearly, it is hard for two to walk together unless they agree (Amos 3:3)
Lastly, if you like this post, please subscribe (upper right-hand corner); You will RECEIVE My eBOOK; also, support this post and Propel it, Stumble it, and tag it on Delicious.
In preparing to write my posts, I often come across noteworthy and sometimes bizarre financial and business news. Below are links to some of these sites. Enjoy!
To my readers: I am so honored by your support. Thank you for reading, subscribing, and for voting for articles from this site on social bookmarketing sites such as stumbleupon, reddit, delicious, digg, propeller, and yahoo buzz. Together, we are telling thousands of the importance of financial literacy. I absolutely could not do it without you. You are vital this this site, and I appreciate your help so much! Thanks.
