Huge Average Net Worth Round Up with Uncommon Money News

By: Roshawn Watson

Every now and then, you just have to call foul when reading something because the data is wrong, misleading, or incomplete. That's how I feel about a new figure.

When Sam (Financial Samurai) read this WSJ article, he saw that the average net worth for 2009 was $182,000. Since this number was significantly higher than expected, he was initially doubtful but then changed his tune. He sent out some really fun tweets (here and here), published a post saying the average net worth is huge and every detractor is sipping on "haterade," and the rest is history.

From reading, Sam is jokingly arguing that 1) the average isn't skewed by the wealthy because the sample is sufficiently large, 2) the WSJ wouldn't lie, 3) most of us are way too biased because of Schadenfreude.I thought we would just deconstruct his points a little for fun (not at all because he is wrong).

• The Average Isn't Skewed Upward - This is untrue (I'll get to that later), but to see whether a distribution is skewed, all someone would need to perform is an outlier test and look at the distribution of net worth. If there are outliers (extreme values that are statistically different from the middle), then one way to handle them is to throw them out to adjust the average net worth appropriately. Looking at the distribution of net worth could also tell you a lot about this sample and help you determine whether to believe the data. I believe this was performed because they clearly say in the article:
  
  

  "the average is pulled up by a small group of the very wealthy."

  Look the primary purpose of looking at the average is to see how the middle of the distribution is doing, and they are stating here that their number doesn't reflect the middle. In addition to this disclaimer, I would have preferred to have seen a measure of the middle that was insensitive to outliers (i.e. the median or the mode). Here an example. Let's say that you have 5 people with the following net worth: $10,000, $10,000, $11,000, $8,000, $150,000. The median and the mode are $10,000 whereas the average is $37,800. Which measure of the middle do you think best represents our sample?
• The WSJ wouldn't lie - Again, he is likely being facetious here too, but let's pretend he is serious for comedy sake. Sam obviously has a lot more faith in any publication than I do. Personally, I see retractions all the times from very authoritative publications. In fact, I just wrote about one last week over here. That said, I don't necessarily know that their math is wrong. It is easy for people to unintentionally "lie" or mislead with numbers. Again, I just would like more data so I could make a more informed interpretation, especially since they explicitly state that outliers are skewing the data upward. To be honest, this acknowledgment alone makes their number more credible as the average of their sample but not the middle of the distribution.
• Detractors just want to feel better about themselves - This could be true. I certainly don't know others motivations for trying to discredit the data. I will tell you that I hold myself to a higher standard than the average, and hopefully you do too. Thus, doing better than the average should be immaterial with respect to our emotional states. Alas, for some this may not be the case though.

I have deliberately avoided going into other critiques of the WSJ data for sake of length and attention spans. For example, another consideration is "does this sample even represent the general population (sampling error)?" It's always interesting to reanalyze data. There are always problems. I can point you to limitations that I acknowledged in my own published work. Highlighting certain weaknesses doesn't invalidate the data as much as give boundaries for interpretation. As a colleague recently told me, just because you don't like what you can conclude doesn't make the conclusions wrong. In this case, you can conclude that the average net worth of that sample is $182,000 AND that the average doesn't represent the middle net worth (which is lower). I believe saying much more without any additional data would probably be speculation.

Well, those are some my thoughts on the matter.

Thought Question: What say you?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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 to this site, and I appreciate your! Thank you sincerely.

Personal Finance (Yakezie and other PF bloggers)

The Lost Decade of Investing at Generation X Finance - Jeremy challenges the argument that most investors lost as much money as they though. In fact, he shows how several investors made money.

The Average American Net Worth Is Huge! at Financial Samurai - Sam's argues that since the WSJ reports the average net worth as $182,000, people are doing well and calls every detractor a hater.

How Expensive is it to Eat Healthy Food? at Invest It Wisely - Kevin challenges the myth that eating healthy has to break the bank in this very analytical and useful article (enter his giveaway while there).

AARP States That Lower Income Americans Are Nervous About Retirement? at Everyday Tips and Thoughts- Kris states her astonishment over how few lower income responders are concerned about retirement.

Reasons To Spend - I Don't Want a Coffin Full of Dollars at Money Reasons - Money Reasons lists eight reasons to spend.

Who Wants a Free Mp3 Player? at Barbara Friedberg Personal Finance - Barbara cautions you about being enticed by things that appear "free"

Business
Facebook Founder to Donate $100 Million to Help Remake Newark’s Schools

Here are 7 intriguing facts from 'The Forbes 400' and here is the Forbes 400

Walmart's 'aggressive' new convenience store strategy

Investing and Economy
Apple shares hit all-time high, bordering on $300

Let's Talk about Deflation (Squirrelers) -Squirrelers discusses the current economic climate and which factors contribute to deflation.

Entertainment Money News
Stars and Their Billionaire Beaus

Wall Street 2 is No. 1! Here is Roger Ebert's review and some real-life Gordon Gekkos

Carnivals I Participated in

• Carnival of Financial Planning at Personal Finance By The Book - Why Is Debt Really Decreasing? and Economists Blame ME for the Slow Recovery
• Carnival of Wealth at Personal Dividends - My Big, Fat Trashy Home: The Fall of the McMansion
• Carnival of Personal Finance at Well-Heeled Blog - Why Do We Save Anyway? (Editor's Pick)
• Festival of Frugality The Money Beagle - 7 Surprising Facts About Millionaires

Round ups that linked to posts from this site (excluding the Festival of Frugality)

• Wisebread Best Money Tips - Do Competent Kids Need an Inheritance? (Editor's Pick)
• Barb at Barbara Friedberg Personal Finance - Inspiring Weekend Reading
• Squirrelers at Squirrelers - Updates and Favorites
• Kris at Everyday Tips and Thoughts - Links to Love
• Money Reasons - MR Cache
• B Simple at Simple Financial Lifestyle - Heat of Fall Edition
• Laura at Move to Portugal - Autumn is Here Edition

Why Do We Save Anyway?

By: Roshawn Watson

If you have been financially responsible, then it's time to rid yourself of the fear and guilt associated with reasonable spending on things that you value. Extreme frugality can be harmful. If your saving habits are an obsession despite attaining your financial goals, little good is coming from such deprivation and self-torture. You must give yourself permission to enjoy your money; otherwise, your austerity will leave you feeling unfulfilled and without any peace.

Fear and Guilt

Does the "fear of lack" control you?

I am convinced that we are too often motivated by fear. It is quite sad that people who have been responsible [i.e. are free of consumer debts, have fully-funded emergency funds, have invested for retirement and their kids' education (if applicable), and have even given to charitable organizations] are still being controlled by fear. Unfortunately, fear can rule frugal people too.

In the Total Money Makeover, Dave Ramsey wrote about Michael, a caller who wanted to purchase a Harley-Davidson motorcycle. This can run you over $20,000 for a nice one. Dave prejudged Michael to be young and irresponsible for wanting to purchase the bike without adequately providing for his family. It turned out that Michael made over $550,000 a year and had a net worth of over $20 million. Dave enthusiastically told Michael to buy the bike. Clearly, this is an extreme example: Michael is a prodigious accumulator of wealth (a.k.a. Balance Sheet Affluent) with a net worth approaching the top 2% of millionaire households. However, despite his success, he still feels guilty spending an amount equivalent to the cost of a Happy Meal, given his financial position.

This example illustrates the need for eliminating the "fear of lack" and guilt from enjoyment. I really don't know what amount of money would have made Michael feel comfortable making that purchase because his problem had nothing to do with his financial statements.

Balance

Breathe.

While I am certainly not promoting irresponsibility, I do want to make the case for moderation. If you have already been responsible and have an average income with reasonable expenses, there should not be so much conflict between building wealth and enjoying life. I don't see anything personally wrong with having a very nice car (if that strikes your fancy) if you are hitting your other financial goals. Just because it is not prudent to have too much of your financial world tied into depreciating assets (i.e. such as cars) doesn't preclude you from ever having such items. Financial detriment occurs when people refuse to delay gratification long enough to build a solid foundation. However, once one is built, then there should be allowances for some fun.

Of course, there are many enjoyable activities don't even require money, but some meaningful experiences and purchases do. In Is Extreme Frugality for You?, I cite new research findings showing that out of the nine major categories of consumption, only spending on leisure correlates with happiness. Thus, argue as you may that "the best things in life are free," there are plenty of things that will bring fun and happiness to you that require M.O.N.E.Y. I don't think I will ever advocate materialism, but I also refuse to live in denial. Moreover, there are plenty of non-selfish and enjoyable things that also require resources. For example, money provides medical care for the sick, feeds the hungry, educates our children, and provides for the poor.

In societies that have glamorized conspicuous consumption to the point of a worldwide financial catastrophe, a call for balance may seem somewhat untimely. However, this admonishment is for those who are financially-solvent, fiscally-responsible, debt-free, and have built wealth but are so consumed with saving that their lives lack joy and peace. Until one has built this foundation, being off-balanced (very frugal) is a very good thing in most cases.

Security

Some people argue that they are compelled to save and invest for financial security. This is certainly a valid motivation for frugality. Nonetheless, there should not be much of a conflict between becoming financially secure and enjoying life (in most cases), provided that you have reasonable income and expenses. If this cannot be done, my concern is somewhere we may have lost our ways under the guise of frugality. We should be concerned if we will barely go out to eat or have fun with others because we’re too cheap. The warning bells should go off if we stock up on napkins and utensils that we stole from the condiment bar at McDonald's. We are not right if we’re “regifting” crappy stuff that we don't want ourselves.

Please don't call yourself frugal if you are really cheap. It's really not fair and hurts the cause.

If your goal is financial security, be sure to clearly define what this means to you. Consider "how much do you need?", "how long will it take to obtain it?", and "from which sources do you want this income?" We must also develop and execute plans to achieve it. Financially security doesn't typically happen by chance, even for the frugal.

Self-care is okay

It is not selfish to nurture yourself AND your love ones. I often say that the best gift you can give someone is a better you. For some this is intuitive, but for others it is a revelation. There are so many kind and loving people who invest nothing in themselves, yet the atmosphere that they are in determines the decisions they make. For example, merchants create environments that influence our buying decisions. When you go into a clothing store for younger people, the music is often fast, upbeat and energizing. Contrast that to music at a high fashion retailer, which is often quiet, classical, or dignified. This isn't by coincidence.

Unfortunately, few people really care about your specific needs like you do, yet your productivity and prosperity depend on it. There are books that will revolutionize how you handle your finances, but no one will make sure that you read them. How many lives do you think have been changed by following the message in the Millionaire Next Door, yet there are some who will argue that $10 is too much to pay or that it takes too much time to read. Your future is worth considerable investment. Don't think saving a few dollars at the expense of your comfort or enrichment is smart: it's merely penny-wise but pound foolish.

Past building a foundation, a primary focus of investing and saving is obtaining financial peace, but if you derive little to no enjoyment from your money, are you missing the point entirely?

In this journey to acquire wealth, don't rob yourselves of a fulfilled life.

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

Related Posts
Is Extreme Frugality for You?

A Warning to All Tightwads

Are You A Financial Sinner? Round Up and Uncommon Money News

By: Roshawn Watson

I read a very interesting post last week over at Money Reasons entitled: Frugal Sins of a Personal Finance Blogger. The satirical tone was so inviting, I couldn't help but participate. Before I knew it, I was confessing my love of eating at nice restaurants and entertainment. Apparently, I wasn't alone in my transgressions, as there were several people who used the comment section to gain absolution. The idea is to highlight that everyone has an Achilles heel when it comes to frugality.

Upon reflection, I really don't feel that there is really any reason we should feel guilty for enjoying ourselves if we have been responsible, such as operating off of a budget, have become debt-free, supported causes or ministries that we believe in, and invested for our futures. There is absolutely nothing wrong with making responsible purchases from which we derive pleasure. I would argue this is part of frugality: obtaining maximum value for input. Guilt-free enjoyment of our money is part of the financial peace that we should all be aiming for anyway.

If this is so, then why are we so hard on ourselves? Well, in some cases, we haven't been particularly responsible, so our self-criticism is somewhat justified. Also, many of us are conditioned to feel good old-fashioned "Protestant and Catholic guilt," regardless of how responsible we have been. In these cases, it is a lot less about our balance sheets and more reflective of the internal struggles to feel "worthy" of such pleasures. Lastly, I do think that there is an adjustment process that we go through as well. For example, I have significantly less stress now than I did just 5 years ago. As we mature and reach financial goals, we reevaluate what is frugal at this time in life. I remember a time when going on a vacation seemed irresponsible; however, this is no longer the case.

Thought Question: Are there any things that you feel guilty about that you shouldn't?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up


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 to this site, and I appreciate your! Thank you sincerely.

Personal Finance (Yakezie and other PF bloggers)
Welcome to the Post Consumerism Era: Will You Make the Turn? at Balance Junkie - 2cents explains what is necessary to be prepared in this turbulent economic environment: Deleveraging, Downsizing, and Destabilization plus much more.

Your Overconfidence Could Hurt Your Portfolio at Moneyed Up - Miranda Marquit explains why being an average investor isn't so bad after all.

Frugal Sins Of A Personal Finance Blogger at Money Reasons - Money Reasons highlights that everyone has an Achilles heel when it comes to frugality.

Memo to Government, Cut Spending at Hope to Prosper - Bret makes some interesting points about the present intersection between politics and the economy.


15 Inexpensive Things to Do in The Fall at Everyday Tips - Kris welcomes you to embrace some fun activities this Fall that don't break the bank.


Should Each Partner Have a Little My Money? at Frugal Dad - Jason discusses why it makes sense for he and his wife to have little private funds set aside.


Business News
30% Of Young Netflix Subscribers Are Skipping Cable

Economic News
California unemployment rate rises to 12.4%


Offbeat Money News and Humor
Tostitos Dip Caused a Bloodbath At Our House at The Penny Frugalista - Nicole explains how both she and her husband were "attacked" by a jar of dip.


Entertainment Money News
16 Luxurious Celebrity Homes on the Market


'Big Bang Theory' cast gets sizable salary bump (to the tune of a couple hundred thousand per episode)

Who Earns More Tom Brady or wife Gisele Bundchen?

Ben Affleck's Welcome in Town (#1 movie); Joaquin Phoenix's Shunned

My Guest Post

• Thanks to Jeremy Vohwinkle (Generation X Finance) for publishing my article: The Educated Indentured Servant

Carnivals I Participated in

• Best of Money Carnival at Green Panda Tree House (7 Surprising Facts About Millionaires)
• Carnival of Financial Independence at Ditch The Boss (Economists Blame ME for the Slow Recovery)
• Carnival of Wealth at Personal Dividends (Is Extreme Frugality For You?)
• Yakezie Carnival at The Millionaire Nurse (Do Competent Kids Need An Inheritance?)

Round ups that linked to posts from this site

• J Money at Budgets Are Sexy - Scammers, Millionaires and Lifetime Renters
• Kevin at Invest It Wisely - Weekly Reading Giveaway Edition
• Team Dinks at Dinks Finance - Some weekend reading for you
• Mich at Beating The Index - Weekend Edition: The World Energy Council
• Kay Lynn at Bucksome Boomer - Week in Review: Blackout Edition
• Kris at Everyday Tips and Thoughts - Links to Love, Sit down, and Read
  
• Adrian at 7 Million in 7 Years - Beat 80% of professional fund managers!
• Oblivious Investor's - Investing Blog Roundup: Hedge Funds and ETFs
• Craig at Free From Broke - A Tornado of Great Articles to Read

technorati code: KS35YU3NU4Z2

The Educated Indentured Servant

By: Roshawn Watson

Student indebtedness has reached an all-time high, as student loans now exceed credit card balances by over $3 billion! Never have students and graduates been so burdened, and all of this is to obtain an education and to fulfill the American Dream. Unfortunately, in today's employment market, secure jobs are even more elusive. Many graduates find that they have debt but inadequate means to repay, despite earning their degrees. I have long-advocated that costs must be a consideration when selecting schools. This is even more true today because the data is suggesting that student debts are only getting larger and the problem is getting very little press. I felt compelled to address this issue again. Today, my guest post at Generation X Finance has just been released entitled: The Educated Indentured Servant.  In it you will find out why:

• Student Debt Represents a Bigger Problem Than You May Think
• The Impact of Recent Financial Regulations
• How Did We Get Into This Mess in the First Place?
• Why Student Debt is Akin to Investing In Reverse

I hope you will help me further the discussion of this very important problem.

Festival of Frugality #248 - Celebrity Net Worth Edition

By: Roshawn Watson

It is my pleasure to welcome you to the Festival of Frugality #248!  This is my first time hosting, so I'm so thrilled you decided to join me. Today, we have some informative and entertaining posts from all over the blogosphere. This edition will also list some rather interesting celebrity net worth trivia. Without any further ado, let's get this party started!

Frugality Commentary


J. Money presents High Cost Hobbies vs. Low Cost Hobbies posted at Budgets Are Sexy.

Miranda presents Frugal Living: Attitude of Gratitude posted at Coupon Shoebox. 

FMF presents Three Expenses I Thought I Couldn’t Live Without posted at Free Money Finance

Crystal presents Do You Buy These Generics? posted at Budgeting In the Fun Stuff

Miss T presents Staying Healthy Saves You Money | Prairie EcoThrifter.com posted at Prairie Eco-Thrifter.

Ctreit presents Show kids how to save money posted at Money Obedience.

We have all heard about the Brad Pitt, Angelina Jolie, and Jennifer Aniston love triangle, but who is worth more?

If you guessed Brad Pitt, you are correct. His estimated net worth is $150 million (Angie's worth another $90 million & Jen's worth $120 million).

Credit

Neal Frankle presents What Is A Good FICO Credit Score Range? posted at Wealth Pilgrim

Investing

Ken presents Retirement Planning: Understanding the Various Types of Investment Assets posted at Spruce Up Your Finances.

Suba presents How much do I need for retirement – My Retirement Number posted at Wealth Informatics

Humor

Daniel presents Funny Finances: Episode 1 posted at Sweating The Big Stuff.

Oprah launches careers, but which Oprah protege road his or her new found celebrity to the bank: Dr. Oz, Rachel Ray, or Dr. Phil?

Straight-talking Dr. Phil has found the greatest financial success with a sizable net worth of $150 million. Bubbly Rachel Ray is worth $60 million, and Dr. Oz is worth $7 million.


Savings Tips

Laura @ Move To Portugal presents Frugal habits I've gained so far posted at Move to Portugal.

Craig Ford presents Save Money On Heating And Cooling Costs posted at Money Help For Christians.

John presents The Search for Cheaper Cable TV Alternatives posted at Passive Family Income.

Tom @ Canadian Finance Blog presents 10 Ways To Reduce Your Cell Phone Bill posted at Canadian Finance Blog.

Jason presents Cheap Vacations posted at Live Real, Now.


FIRE Finance presents 12 Tips To Lower Your Heating Bill posted at FIRE Finance.

The Homemaking Helper presents Saving Money On Kids Clothes posted at The Homemaking Helper.

I love Chicago and visit as often as I can, but which of these three Chicago natives is a cash cow: Kayne West, Jennifer Hudson, or Jeremy Pivens?

Music icon Kayne West got this one beat with a net worth of $70 million. Jeremy Pivens and Jennifer Hudson are worth $15 million and $5 million, respectively.



Other


Kay Lynn Akers presents Organize Your Rewards Cards with Cardmobili posted at Bucksome Boomer.


PT presents Mystery Shopper Jobs: Deciphering the Mystery posted at PT Money. 
Squirrelers presents What Kind of Car Should a Teenager Be Driving? posted at Squirrelers.

Silicon Valley Blogger presents Get Out of Business Liquidation Sales: Not A True Bargain posted at The Digerati Life.

Control your Cash presents Charles Barkley, Read This posted at Control Your Cash.

Free From Broke presents Pay For Amazon Purchases With AmEx Membership Rewards Points posted at Free From Broke.

Both Tyra Banks and Heidi Klum have expanded their brands beyond the modeling world. However which  supermodel turned media mogul is worth the most?

That would be Miss Banks of course with $90 million, but Heidi is not hurting with her $70 million.

I hope you enjoyed this week’s festival! Don’t forget to submit for next week, which will be hosted by Money Beagle.

If you were included in this list, please don't forget to link back to the festival here. Thanks!

Do Competent Kids Need an Inheritance?

By: Roshawn Watson

Competent children don't need an inheritance, and incompetent children don't deserve one. In other words, if you have truly taught your children how to fish, they can find their own way; otherwise, placing significant wealth in their hands can be irresponsible and disastrous. While this is certainly a pragmatic philosophy, many parents with substantial wealth struggle to balance providing advantages that will propel their kids towards greatness and removing the incentives for hard work and productivity.

Don't Want to Raise A Spoiled Brat

A couple months ago, my wife and I went to Jamaica with several of my friends from high school. As the topic shifted to starting families, the conversation got interesting. Incidental, none of us have children, yet we had so many ideas about the ideal way to parent. Perhaps the most poignant moment of the entire conversation was when I proclaimed that: "I refuse to raise a spoiled brat." I believe I would personally consider it a failure if my kids turned out as entitled monsters. In truth, time will tell; however, my rationale is that spoiling kids does not do them any favors. We all know the story of the kids who had "everything" but amounted to nothing. A dated pop culture example would be the characters of Sebastian (Ryan Philipe) and Kathryn (Sarah Michelle Geller) from Cruel Intentions. (Oh come on, you know you watched it too :) They were so bored with life, because everything was handed to them, that they became destructive. The idle mind is the devil's workshop. There are plenty of real life examples as well, but you get the point. The thought that an inheritance or other gift could ruin the life of your precious offspring is certainly troubling to say the least. It is all quite tragic.

Recently, I read "one of the most precious gifts you can grant your children is the true independence they gain when they learn to earn what they covet and become stewards of their own happiness." Personally, I think this is a very rich quote because it suggests that by lavishing gifts on your children you may be impairing their development. Interestingly, sibling studies further support this theory. Often, the oldest child receives less from parents and is forced to be more responsible than his or her younger siblings. As a result, the oldest child often develops more independence while the younger children will need help longer, sometimes... indefinitely. In effect, the parents continue to strengthen the oldest child while hurting (enabling) the younger child. Parental subsidies can greatly impact the growth and potential of their children.

Nepotism

Some have decided that they don't intend to leave an inheritance, so this isn't a big issue for them. For example, Yu Pengnian is a Chinese real-estate tycoon who is committed to giving away his billion dollar fortune entirely to charity. When asked how his children felt about receiving nothing, he said that they didn't oppose it. (Notice he didn't say, they celebrated the decision). Mr. Pengnian logic is rather simple though:

“If my children are competent, they don’t need my money. If they’re not, leaving them a lot of money is only doing them harm.”

Along this vein, it appears that giving your children wealth is akin to saying that you lack confidence in their ability to find their own way. Inherent it the tone of his comment is a dislike of nepotism. Nepotism is favoritism granted to relatives or friends with no regard to merit (Wikipedia).

I find Mr. Pengnian perspective especially interesting given his Chinese heritage. Wealth in Asia is dynastic. I previously referred to this distinction subtly in Creating Phenomenal Wealth Over Time. Several Asian companies invest in where they will be in the next century, which vastly different from the short-term business plans many of us are familiar with. Thus, Mr. Pengnian decision to ignore tradition in pursuit of his passion for giving back is quite compelling.

Suppose your children have proven their merit?

Some would argue that families of some means don't have to follow Mr. Pengnian's model to have successful children. For those of us who purpose to leave an inheritance for our families, the challenge becomes finding the appropriate way to bestow our inheritance so that it enhances instead of destroys.

There are some interesting examples of how this is done. Possibly, the best example is Warren and Peter Buffet. Recently, Peter wrote a book entitled: Life is What You Make it: Finding Your Own Path to Fulfillment. It suggests that parents focus on giving their children values rather than spoiling them. Peter says it was the values he was brought up with that helped remain normal despite his family's wealth. He writes "values are the steady currency that earn us the all-important rewards." Moreover, he argues that it does your children a disservice to give them everything they want. Remember, his father is the ultrarich billionaire who famously lives in the same home that he purchased in 1958 years ago for $31500. Bufftet has also committed to giving away a 85% of his wealth to charity (the Gates Foundation). Thus, Peter argues from an extremely rare perspective.

Other prominent examples are Ivanka, Donald Jr., and Eric Trump who all finished school and went on to work for their dad's (Donald Trump's) enormous empire. Interestingly, it appears to me that Ivanka Trump finds it particularly important to prove herself. She graduated summa cum laude in economics from the University of Pennsylvania, initially interned some place else, and even got a mortgage in one of her dad's buildings. Gary Vaynerchuk and Dylan Lauren (daughter of billionaire designer Ralph Lauren) are two additional examples of prominent offspring who have successfully moved beyond their parents brand to become successes in their own rights. I would probably even throw Nicki Hilton (Paris Hilton's younger sister) into the mix. She designs and famously said "I'm not a celebrity like my sister... I just design clothes..." when an interviewer was asking too many personal questions.

Not The Money That Ruins the Child

All of these examples show that money doesn't necessarily have to ruin the child. Now if you have a deep desire to donate most or all of your wealth to charity, such as Yu Pengnian, I doubt anyone who matters can really fault you. After all, you were the one who created the wealth in the first place. (Note, only 2 out of 10 millionaires inherited a substantial portion of their wealth). However, I don't see it necessary to disinherit kids in an attempt to prevent them from being spoiled rotten. In many cases, it was providing for your family that initially prompted you to pursue wealth in the first place. Thus, it would appear unfair to some if they were deprived the privilege to give to their children. However, according to Peter Buffet, the key to not raising trust-fund babies is making sure that your kids embrace the values you hold dear, such as strong work ethic, trust, tolerance, belief in education etc. As the seemingly well-adjusted son of the third richest man in the world, perhaps we should listen.

Lastly, if you like this article, please subscribe to my FREE email updates or RSS feed (reader), Retweet it, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

Related Post
Creating Phenomenal Wealth Over Time

Questions

What do you think about leaving kids an inheritance? Does a "good man" leave an inheritance for his children and their children?

Dirty Diaper Round Up with Uncommon Money News

By: Roshawn Watson

The post entitled: Diapers, Diapers, Diapers (see below) got me thinking about running an economically productive household. Activities that are productive for one house can negatively impact the wealth of another. Someone may go out of his way to save a few bucks (good defense) whereas someone else will allocate most of her time to earning income (good offense) while avoiding waste . Who do you think is worth more? There is no clear answer.

Also, sometimes looks can be deceiving. It may appear frugal to do your own plumbing to save $150, but you are trading in your time, may not do as good a job, and may buy inferior parts. Thus, being "first-cost" sensitive may not be as productive overall as being "life-cycle-cost" sensitive. Remember, frugality is about obtaining maximum output while being parsimonious with your resources (not just dollars). There is a reason why the majority of millionaires are not do-it yourselfers. It may be much more economically productive to focus on playing good offense (earning money through your career).

None of this really answers the question of whether to use disposable or reusable diapers though. I'll let you be the judge after reading Carol's article!

Thought Question: What is your least financially productive activity?

Now, it's time to do the weekly Uncommon Money News and Yakezie Round Up.

Uncommon Money News and Yakezie Round Up

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 to this site, and I appreciate your! Thank you sincerely 

Personal Finance
Is it Worth  it to Have an Emergency Fund Or Should I Pay Off My Mortgage? at Invest it Wisely - Kevin's unintentionally controversial post that caused me to create so much new content in the comments that I decided to use that topic for Friday's post (When Paying Down Your Mortgage is a Bad Idea?)

529 Plan at Joe Taxpayer - If you have kids, you want to consider a 529 plan for investing in their education (especially if you earn a lot). Joe teaches some essentials about this plan.

Simplify Your Finances One Tackle at a Time at Simple Financial Lifestyle - B Simple has advice for simplifying your banking, debt repayments, insurance, retirement, and other areas of your financial life.

Do You Buy These Overpriced Items? at KNS Financial - Khaleef expands on a enlightening Yahoo Finance article about how we unnecessarily overpay for common items.

Diapers, Diapers, Diapers at In The Trenches - Carol conducts a detailed analysis on the pros and cons of disposable and reusable diapers. (I would have to adjust these numbers by the yuck factor of  reusable diapers personally). She has a suggestion for that too though!


Business
Android to overtake Blackberry and Apple


Bank Screws Man For $900, He Tells Others, Ultimately Costing Bank $100,000 In Lost Business

Entertainment Money News


Movies By The Numbers: Resident Evil's Afterlife Rules

My Guest Post

• Thanks to David (Money Ning) for publishing my motivational article: Seize Your Wealth Today

Carnivals I Participated in

• Carnival of Wealth at Personal Dividends (Economists Blame ME for the Slow Recovery)
• Carnival of Personal Finance at Danielle Liss (When Is Paying Down Your Mortgage a Bad Idea?)
• Yakezie Carnival at Engineer Your Finances (7 Surprising Facts About Millionaires)
• Carnival of Financial Planning at Watson Inc (multiple)
• Festival of Frugality at My Personal Finance Journal (My Big, Fat Trashy Home: The Fall of the McMansion)

Round ups that linked to posts from this site

• Wise Bread's Best Money Tips (Editor's Pick) - 5 Tips for Those Working at a Job They Hate
• Joe Plemon at Personal Finance By The Book - Photo Exhibit Round Up
• Kevin at Invest It Wisely - Weekly Reading 
• Nicole at Penny Frugalistisa-  Posts that Piqued My Interest
• Khaleef at KNS Financial - Emergency Fund Edition Round Up
• Ken at Spruce Up Your Finances -  Link Bonanza

When is Paying Down Your Mortgage a Bad Idea?

By: Roshawn Watson

I hate debt almost more than anyone I know. I am a HUGE fan of paying off your mortgage quickly, if you decide to have one at all. However, my spirited but friendly debate with Kevin from Invest It Wisely inspired me to clarify my position on when paying down your mortgage is a bad idea.

Sophisticated Calculations

When you tell a "financial person" to slow down on the repayment on their mortgage in order to maintain an emergency fund, what is her response? Her answer will typically come from two main perspectives: risks or rewards. In other words, "what is the risk of not maintaining an emergency fund" or "what is the benefit in paying off my home early?" You can arrive at two entirely different answers based on which question you ask yourself. Are you risk adverse or risk insensitive? If you are only risk insensitive, you will just run the numbers, and you may decide that it is pointless to keep several thousand in the bank while having mortgage debt. It makes more sense to forgo having an emergency fund and pay the home off sooner. If you are only risk adverse, you may think nothing can compare to the security of maintaining adequate liquidity (cash reserves). You will pay the mortgage off with your cash flow (income) but not at the risk of your liquidity.

Both sides have valid points, which is why I believe it's best to incorporate both perspectives in your decision.

To do this, revise your initial question to "what is the risk reward ratio of paying down my mortgage without an emergency fund?"

The Reward: If your mortgage is at 6% APR, and you pay it down early, then you are effectively getting a 6% rate of return on your money. That sounds reasonable, right? Some people argue that 6% is a lot better than the 3% they receive from their bank, so it only makes sense to put the money towards the mortgage. Additionally, if you pay it off, you have a debt-free home, which is pretty awesome.

The Risk: However, if you stop here, you are only seeing part of the story. Consider things like "how stable is your job?" Keep in mind that the average person changes jobs every 18 months or so. I have said it before: no amount of skill or experience can insure that you won't be unemployed tomorrow. Also, when will you need to replace your car, your roof, your furniture, or your HVAC? How long will it take you to pay off the mortgage? Even frugal people with decent incomes often take at least 7 years to pay off their mortgages. Many take longer. Numerous data show that most people fail to systematically prepay their mortgages. Things such as prom dresses, car alternators, job losses, and child births always seem to “get in the way.” Statistically, we know that medical expenses, credit card expenses, and job losses are the major contributors to financial ruin.

If we mathematically factored risk into the calculation, we would see that the spread is no longer 3% (6% mortgage saving versus 3% interest in emergency fund). Because there are so many variables (financial risks) that could occur during the payoff of a mortgage, one must conclude that the actual rate of return is less than 6%. In the investment world, this is referred to as a risk-adjusted rate of return. According to Investopedia, the risk-adjusted rate of return "refines an investment's return by measuring how much risk is involved in producing that return." This correction is necessary because the initial rates of return are exaggerated. Thus, if your calculations don’t factor in the risk of encountering an emergency, they have limited validity in the real world.

Dare I say, that even if you are abnormal and do manage to pay off the home in 7 years, you may still end up behind financially if you decide to forgo the emergency fund. Again, there is a lot that could happen during the pay off, and the last thing that you need during a major life event is to be house poor and broke. Thus, the damage done by encountering an emergency without adequate cash reserves may exceed the interests savings from paying off the mortgage early.

What about borrowing on a HELOC or Credit Cards in an Emergency?

Some people think that their Home Equity Lines of Credit (HELOCs) or credit cards will be there during a pinch. Financial institutions have tightened lending criteria, so I wouldn't necessarily count on easy credit to get out of a bind nor would I want to put my financial destiny in the hands of bankers (does anyone remember what the credit act changes in the 1980s did to entrepreneurs?). HELOCs and credit cards have a nasty tendency to be slashed just when you need them the most. They can cut you off almost at will and often do so, especially when you don't appear to be able to pay the bills (hence an emergency). The financial reform act did not solve this problem for you. Additionally, the last thing one needs during an emergency is to be leveraged up to their eyeballs anyway. Remember, debt is NOT your tool, and getting into more debt is definitely a poor option, particularly when it's preventable by maintaining an emergency fund (adequate liquidity).

What about using my investments as an emergency fund?

Another common rebuttal is "I have investments, so I really don't need to maintain an emergency fund." If you are talking about 401K or Roth IRA investments, it is best to treat them like they are not there except to avoid foreclosure or bankruptcy. For example, if you want to take money out of a 401K, you get taxed at ordinary income tax (your current income tax rate) plus a 10% penalty. For most people that's like borrowing money at 40% interest: not smart especially when it could be prevented with better liquidity. The 401K loan is not a great idea either because it is due in full whenever you leave the job. With the average job lasting just 18 months, changing jobs is not just a possibility for many people, it is a reality. However, what if you have non-retirement account investments? Well, for all practical purposes this is an emergency fund. As long as you are willing to cash out the investments in an emergency, regardless of whether the investment is up or down, then you have reduced your financial risks with adequate liquidity.

So When is Paying Down Your Mortgage a Bad Idea, Again?

Okay, there are the rewards, the risks, and "the bad alternative solutions" (borrowing on credit cards, HELOC, retirement accounts or cashing them out). My hypothesis is that it is unnecessary to be house poor for a marginal return when you can pay down your mortgage AND maintain an emergency fund. In retrospect though, we didn't really answer the question directly. When is paying down your mortgage a bad idea? Well, it is really quite simple...at the expense of your long-term financial solvency.

Lastly, if you like this article, please subscribe (see upper right-hand corner), Retweet it, Tipd it, Fark it, Stumble it, and tag it on Delicious. Also, click here to receive my eBook for FREE.

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Carnival of Financial Planning - Edition #157

By: Roshawn Watson

It is my honor to welcome you to the September 10, 2010 Edition #157 of the Carnival of Financial Planning! It is hard to believe that this is my second time hosting the carnival. It travels every week and always includes several "gems of posts." If you are unfamiliar with the carnival, it "takes the long-term view of personal financial planning for individuals and families." It focuses "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.
Enjoy!

Today's carnival was edited by The Skilled Investor

Budgeting and Economics

Roshawn Watson presents Is Extreme Frugality For You? posted at Watson Inc, saying, "Austerity can help you maximize your dollars, but is extreme frugality for you?"
 
Joe Plemon presents Five Steps Toward Automating Your Way to Wealth posted at Personal Finance By The Book, saying, "Will power won't get the job done, but automating your finances will. This post tells how."

The Skilled Investor presents Save More posted at Personal Financial Strategy, saying, "Budgeting and self-control in consumption is far more important than clever investing. Expenditure control and budgeting works, while "clever" investing usually is counter-productive."

Roshawn Watson presents Economists Blame ME for the Slow Recovery posted at Watson Inc, saying, "We are responsible with our money, yet instead of admiration (or even understanding), these efforts garner contempt as the frugal once again get the blame for dismal economic activity."
 
Kim Staudenraus presents What Is A Budget? posted at Life & Finances, saying, "The word "budget" is not a controlling word, it is not a word meaning “you can’t have.” It is a word meaning you have freedom and are in control."
 
Khaleef @ KNS Financial presents Should You Really Pay for These Things? posted at Faithful With A Few, saying, "Here is a list of items that you are most likely paying for, that you probably can get for free! A lot of great tips in the comments as well!"
 
Control your Cash presents Meet your role model, Part II of III posted at Control Your Cash, saying, "Brandon proves that you don’t have to be born rich to avoid being poor. He buys assets, he sells (or never incurs) liabilities, and he lives better than plenty of people who make 3 times as much."
 
Wise Bread presents Be In Charge Of Your Finances posted at Wisebread.

Joe Plemon presents How to Successfully Budget For an Irregular Income posted at Personal Finance By The Book, saying, "You CAN budget for an irregular income by following these five simple steps."

Mike @ Green Panda presents The $7.27 Mistake Plus Ways To Avoid It posted at Green Panda Treehouse, saying, "How to make the most out of your money when going out."

MoneyNing presents Money Mistakes That (Mostly) Women Make posted at Money Ning, saying, "Women are prone to make certain money mistakes more often than others."

Financial Planning

Sustainable Life Blog presents Prioritizing Goals? posted at Sustainable Life Blog, saying, "Wondering where to turn when starting to attack debt? Here's a quick guide on how to help you prioritize your goals."

jim presents Review Your Credit Reports Every Year posted at Identity Theft Wall.

Ryan @ MFN presents What to Do With an Enlistment Bonus posted at The Military Wallet, saying, "What should you use a large cash bonus for? Pay down debt, invest, spend?"

Larry Russell presents Best No Load Mutual Funds posted at Best Index Mutual Funds, saying, "Superior past performance has simply not been shown to be a reliable predictor of superior future performance. However, low costs can lead you to the best mutual funds.

Frank Knight presents Roth IRA ConversionFinancial Planning Software posted at My Financial 
Freedom Plan, saying, "Whether to invest in a Roth IRA or Roth 401k versus their traditional retirement account alternatives is one of the most complex personal financial decisions. Roth accounts do not make sense financially for most people. They are a good deal, for a minority, but you need to do the analysis."

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, "whether it is running a business or individuals investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.
 
The Dough Roller presents The Best Airline Miles Credit Cards posted at The Dough Roller, saying, "A list of airline credit cards that can pay for your next vacation."
 
Frank Knight presents Asset Allocation Strategy posted at Best Personal Financial Planning Software, saying, "When you are already there and invested in an asset class, you are following a passive asset allocation strategy. Tactical asset allocation strategy advocates suggest that you can anticipate the crowd, but flow-of-funds studies show that almost all tactical asset allocation fund flows are late money flows that chase performance after valuations have already moved."

Financing a Home

Jeff Rose, CFP presents Things to Consider When Taking Out a Second Mortgage posted at Jeff Rose, saying, "A second mortgage is not the answer for everyone so read about all the factors before making your final decision."

FMF presents How to Improve Your Chances of Getting a Mortgage posted at Free Money Finance, saying, "Getting a home loan these days can be difficult -- even for qualified buyers. This post gives some tips for improving your borrowing potential."
 
Jeff Rose, CFP presents Before Purchasing a Bigger Home Consider These Steps or Go Broke posted at Jeff Rose, saying, "If you are considering buying a bigger home you need to read this article before you start the process. Here are some things that you need to consider."
 
Writers Coin presents Thank God for Stupid People posted at The Writer's Coin, saying, "Stupid people are great because they give us faith that we can accomplish things we might think are impossible."

Financing Education

mike presents 8 Things You Need to Know About Withdrawing Money From Your RESP Account posted at Mike, saying, "RESP withdrawal rules for Canadians."

Ryan @ CML presents Where to Open a Coverdell ESA Plan posted at Cash Money Life, saying, "Coverdell ESAs are a college savings account that have great tax advantages. This info can help you find a great place to open your Coverdell ESA."

Income

Daniel M. Wood presents How to Sell to a Customer Again and Again posted at Looking to Business, saying, "Selling to a customer that you have sold to before makes a lot of sense; It is easier, as they know what is expected and they are often open to spending more money, as you have already proved your worth, meaning you can sell more products or sign them up for a longer period of time."

MoneyNing presents 15 Ways to Earn Extra Money posted at Money Ning, saying, "There are lots of ways to make more money. Here are 15 to start you off."

Investing

FMF presents Understanding Investment Risks posted at Free Money Finance, saying, "Managing risk is a big (and important) parts of any investment strategy. This post details the types of risk every investor needs to consider."
 
freefrombroke presents Why Invest In Mutual Funds posted at Free From Broke, saying, "Mutual fund are a huge piece of many portfolios. See why most should invest in mutual funds."
 
Silicon Valley Blogger presents How To Invest Online Using The Peter Lynch Strategy posted at The Digerati Life, saying, "Investing like one of the greats!"
 
MoneyNing presents Second Recession: Don’t Let Fear Take Over posted at Money Ning, saying, "Whatever the circumstances, allowing fear to creep in will only make the situation worst."
 
Super Saver presents Choosing Data Analysis over Emotion posted at My Wealth Builder, saying, "Typically, I like discipline of relying on the data."

Tomas Escent presents Stock Trader Automation posted at Nerds on Wall Street

Praveen presents Caveat Emptor: If An Investment or Opportunity Appears Too Good To Be True, Beware! posted at My Simple Trading System, saying, "Beware of investment opportunities that seem to be too good to be true."

The Skilled Investor presents Stock Market Timing posted at Personal Investment Management, saying, "Always stay invested to earn risk premiums. You must have your money invested and at risk to get risk premium returns. Jumping out and in or "timing the markets" doesn't work."
 
The Financial Blogger presents Best 50 Canadian Dividend Stocks posted at The Financial Blogger, saying, "With the plethora of dividend stocks out there, here are the best 50 canadian dividend stock picks."

Dividend Tree presents Dividend Investing and Businesses with Moat posted at Dividend Tree, saying, "In general, companies with moats in their business are very good dividend growth providers. However, the opposite may not be true."

Frank Knight presents Muni Bond Financial Software, posted at Best Financial Planning Software, saying, "Municipal bond investments and your state and federal marginal income tax rates: Some investors hold municipal bonds in an attempt to reduce their tax burden. This article discusses the relationships between tax-exempt municipal bonds, bond market returns, marginal tax rates, and investment asset tax location."
 
Sam presents Hedge Funds in the News. What Are Hedge Funds. How Do Hedge Funds Make Money posted at Surfer Sam and Friends, saying, "Hedge Funds in the News What Are Hedge Funds And How Do Hedge Funds Make Money? Hedge funds pools of capital for investment. They are a prime example of capitalism in the 21st century. They reward risk takers and they exist to make rich people richer. Is it possible to beat the investment markets? Finance professors say no. Hedge fund managers say yes."
 
Dividends4Life presents 7 Dividend Stocks Sending More Cash To Shareholders posted at Dividends Value, saying, "If your goal is to accumulate wealth for a comfortable retirement, then there is no risk-free path. Throughout time every angle has been tried and failed. What appears to be a safe investment in a federally insured CD or money market , may not even be covering inflation. Growth stocks don’t always grow. The astute conservative investor turns to solid dividend paying stocks with a track record of growing their dividends each year.

Tushar Mathur presents Can't Control the Markets? Try controlling the Costs posted at Everything Finance, saying, "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 may have left you feeling concerned over your financial future. You're not alone."
 
Mike Piper presents Do You Have an Investment Backup Plan? posted at The Oblivious Investor, saying, "What's your plan in case your investments don't perform as well as you'd hoped?"

Frank Vertin presents Top Index Funds posted at Index Mutual Funds, saying, "Top ten no load index funds that track the Standard and Poors 500 composite index in terms of lowest costs.

Managing Debt

Jeff Rose, CFP presents Consumer Credit Counseling FAQ: What You Need to Know posted at Jeff 
Rose, saying, "What you need to know about consumer credit counseling."

Roshawn Watson presents Why Is Debt Really Decreasing? posted at Watson Inc, saying, "In the first quarter of 2008, our debt to disposable income peaked at a staggering 131%. This means for every dollar we earned, we spent $1.31. As of March, our debt as a share of our annual income is presently 122%. If you think this change indicates that we have collectively been so scarred by the "Great Recession" that we are now behaving fiscally responsible, think again. There is a surprising and sad reason why our debt has gone down. Hint, it has nothing to do with frugality."
 
David presents A Comparision of 0 % Balance Transfer Cards From Citi posted at Credit Card Offers IQ.

Learn Save Invest presents 5 Steps To Debt Reduction posted at Learn Save Invest, saying, "Here are 5 tips you need to master in order to reduce your debts."

Big Cajun Man presents Found Money Trap posted at Canadian Personal Finance Blog, saying, "Found money should go on debt no matter what!"

The Smarter Wallet presents Are Debt Counseling Services The Way To Debt Relief? posted at The Smarter Wallet, saying, "On debt counseling services."
 
Before You Invest presents 0% Balance Transfer Credit Cards – September 2010 posted at Before You Invest..., saying, "Do you have high credit card balances with equally high interest? Maybe you should look in to one of those zero percent balance transfer offers, but before you do there are always pros and cons. In this post we take a look at some of the benefits and drawbacks of transferring your high interest balances."
Silicon Valley Blogger presents Use Airline Credit Cards & Frequent Flyer Programs For Frugal Travel posted at The Digerati Life, saying, "A look at travel and airline credit cards as a way to get better deals when traveling."
 
assdfil presents Chase Travel Card Showdown ? Continental OnePass vs Sapphire Preferred posted at NerdWallet Blog - Credit Card Watch, saying, "A few months back, Chase launched a new travel rewards card called the Continental OnePass Plus, which pays out OnePass frequent flyer miles for every dollar spent. Not content to leave it at that however, we decided to pit it up against another one of Chase’s all-star travel cards – the Sapphire Preferred."

Miscellaneous

 
PT presents Free Online Checking Accounts posted at Prime Time Money, saying, "Make sure you don't pay for checking. Review this list of the best free online (and offline) checking accounts."
 
Carlos Sera presents A Tale of Love; Financial Tales posted at Financial Tales, saying, "I wanted to release a tale that conveyed some old fashioned wisdom, especially for those readers that are young. My daughter just came back from spending a few months on an island where every day an older man would put up a sign that said “Wisdom 5 Cents” and sit in his lawn chair waiting for customers. I found it curious and of course it started me thinking about what it is that I’m doing with financial tales. So here’s my 5 cents on what is important about money and relationships. If anyone has any good mini-stories to add I would love to post them."

Mike @ Green Panda presents Stop Waiting For The Big Idea posted at Green Panda Treehouse, saying, "Just thinking about the next big thing might just be a complete waste of time. Take that step towards your goals."

nissim ziv presents What Are Your Weaknesses? Interview Questions and Best Answers posted at Job Interview Guide, saying, "No doubt, that this question fears most job applicants, as the interviewer actually ask YOU to give him a reason – why s/he should NOT hire you for the job…"

Pasadena Financial Planner presents Vanguard's Investment Performance posted at Top Mutual Funds, saying, "Compares Vanguard's actively managed mutual funds and Vanguard's passively managed index mutual funds. Vanguard investors should read and understand this study."
 
Big Cajun Man presents Trust Only in Fire posted at Canadian Personal Finance Blog, saying, "What is the best way to dispose of sensitive material at home?"

Retirement Planning

FMF presents Withdrawing Money During Retirement posted at Free Money Finance, saying, "Details on when and how to withdraw your retirement savings."
 
Jessica Bosari presents How to Get More Money Every Month from Social Security | billeater.com posted at Billeater, saying, "Social Security Application Withdrawal - Options for retirees."
 
Consumer Boomer presents Distribution Rules For Roth IRA posted at Consumer Boomer, saying, "The Roth IRA is an excellent tool to invest and save money toward retirement. Find out what unique benefits a Roth IRA offers."

Super Saver presents Don't Count on Housing for Building Wealth posted at My Wealth Builder, saying, "The appreciation of home values is expected to be significantly lower."

Jules Wells presents Retirement Planning Calculator-Retirement Savings Software, posted at Retirement 
Income Planning, saying, "This article helps you understand the trade-offs between traditional and Roth tax-advantaged retirement plan contributions, including Roth 401k and IRA retirement plans. It helps with the 2010 Roth conversion decision."
 
Tom @ Canadian Finance Blog presents Can You Afford Retirement care? posted at The Canadian Finance Blog, saying, "Wondering if you can afford retirement care? Many Canadians are reasonably well set for retirement, but may not be ready for worst case scenarios.
 
Neal Frankle presents IRA FAQ ? All the Answers You Need In Plain English posted at Wealth Pilgrim, saying, "You need to know IRA FAQ PDQ (Pretty Darn Quick). I say this because we have to take responsibility for our own financial future. Nobody else is going to do it for us."

Larry Russell presents Roth IRA Conversion posted at Personal Financial Planning Software, saying, "Trying to decide about a traditional IRA to Roth IRA conversion without first having a comprehensive lifetime financial plan in place makes absolutely no sense. Without such a plan, you cannot figure out whether or not you are likely to achieve the tax savings in retirement that would warrant paying higher taxes now."

Risk Management and Insurance

Consumer Boomer presents Term Life Quotes posted at Consumer Boomer, saying, "When you purchase an insurance policy it is important to know exactly what you are buying. Here is some important information about Term Life quotes."

Big Cajun Man presents Self Insured Company Disability Plans posted at Canadian Personal Finance Blog, saying, "Sometimes insurance is not as safe as you might think (in Canada at least)"
 
Jules Wells presents Investment Risk Tolerance Questionnaire Financial Planning Software, posted at  

Financial Answers saying, "There is a way for you to get a much better assessment of your risk tolerance than you would from a simple conservative versus aggressive financial industry investor questionnaire."
 
Susan Howe presents 15 Things You Didn't Know Your Car And Home Insurance Policies Cover posted at  
Car Policies Articles, saying, "Your insurance policies probably include coverage you've never thought about. In order for you to get the most value from your policy, check out these things that may already be included for your premium payments."

Savings

Super Saver presents A Simple Way to Build Wealth posted at My Wealth Builder, saying, "One of my favorite personal finance principles is 'Pay yourself first.'"

Ryan @ MFN presents Military Savings Deposit Program (SDP) posted at The Military Wallet, saying, "The Savings Deposit Program is a government sponsored savings account that guarantees 10% return on interest for deployed military members."

KCLau presents Are You Rich in Internal Assets? posted at KCLau's Money Tips, saying, "pay attention to the internal assets

Taxes

Madison DuPaix presents Do You Have to Pay Taxes on Unemployment? posted at My Dollar Plan, saying, "Here's great info on something you may not even be considering if you lose your job - taxes on unemployment."
 
Ken presents Understanding Tax Deductions posted at Spruce Up Your Finances, saying, "Discusses how it is different from a tax credit, the types of tax deductions, and the biggest mistakes people make when claiming the tax deduction."

Financial Freedom presents Roth IRAFinancial Software, posted at Financial Freedom, saying, "The Roth tax optimization puzzle for asset conversions, as well as for annual Roth contributions during working years, is one of the most complex decisions that the ridiculously complex US taxation and retirement planning system forces upon individuals."

Intelligent Speculator presents Please do not let the Bush tax cuts expire posted at Intelligent Speculator, saying, "It may be easier to take the popular position and have the Bush tax cuts expire, but I personally think otherwise."

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.
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