Free Money Finance

Top Ten Assets Owned by Millionaires

Dr. Thomas Stanley lists the top ten assets owned by millionaires (with the percentage of total wealth in each asset class) as follows:

1. Investment real estate (17.7)
2. Closely held stocks (14.5)
3. Publicly traded stock (12.6)
4. Retirement assets (11.4)
5. Personal residence (9.2)
6. Insurance (7.2)
7. Cash assets (6.9)
8. Limited partnerships (4.1)
9. Tax-exempt bonds (3.9)
10. Farms (3.1)

Just to be clear, the data is from "IRS' estate returns computed during 2007-2009 for those decedents who were under 70, married at the time of their deaths and had a gross estate of $2M or more." Just so we're all on the same page.

Here's how my top assets break down:

1. Retirement assets -- work 401k + rollover IRAs invested in Vanguard index funds
2. Investment real estate -- Two places (10 units) at the moment and working on more
3. Publicly traded stock -- taxable accounts invested in Vanguard index funds
4. Cash assets -- higher than normal now because I'm looking for a property to buy
5. Personal residence

All my other assets are negligible in value.

How about you? How do your assets break down?

Star Money Articles for the Week of June 17

Just a reminder that Wealth Lion is up and running with posts on Mondays, Wednesdays, and Fridays. Here are the latest posts:

• My Real Estate Objectives and Strategy - What I'm trying to accomplish by investing in rental real estate and how I'm going about it.
• My Multiple Streams of Income - Details on the various ways I make money. Comments has some good suggestions from readers.
• 80-20 Your Finances - The few, key steps you need to apply faithfully over time to become wealthy.

And here are a few other posts I enjoyed this weekend:

• Financial Ramblings talks about the effects of a speeding ticket.
• Get Rich Slowly tells how you can save on medical bills.
• The Wall Street Journal has an interesting piece on Social Security for couples.

Have a great week!

Sumo Emperor Review

A few weeks ago the people at Sumo Lounge contacted me. They wanted to know if I would like a free Sumo Emperor chair to review. Having done a review of a Sumo product previously, knowing my kids like them (the old one is currently in my daughter's bedroom), and being a sucker for anything "free" I said "Sure!" They shipped one to me a couple weeks after that.

The product arrived in a huge box. We opened it up, cut away the plastic wrap (that serves both as protection as well as a shrinking mechanism), and the thing started to expand (we knew it would since we had another one, so we opened it up in our living room where there was plenty of space.) When it was all out of the box, we had a 55" x 25" bean bag chair in the middle of our living room!

Now that we've had it a few weeks, I'll give you what I see as the pros and cons of the Sumo Emperor:

What I Like

• Good size. Not as humongous as the last one we got.
• Looks decent. This one has some styling that makes it a viable alternative for a living room. The previous model was simply a huge bean bag chair.
• Comfy. The kids love it. Video games, surfing the web, watching TV, etc. -- they are in it.

What Could Be Better

• Cost. $399 for a bean bag chair (even a high end one)? Yikes!
• Color. It only comes in red. BRIGHT red. If you really wanted this in your living room, it would need to be another color.
• Size. One man's "just right " is another man's "too big." It's a bit big for our needs.

Overall, I say this product is best used in a good-sized entertainment/media room. It would have to be a high-end one given the price of this product, but to some people, $400 for a chair is nothing. To me, it's a bit pricey.

Anyone else out there ever tried a Sumo product? What did you think of it?

Interview Preparation -- In Advance

The following is an excerpt from the book Cut the Crap, Get a Job! a New Job Search Process for a New Era I will be running a series of excerpts from this book over the next several weeks.

I am a BIG, BIG, BIG proponent of preparing for an interview in advance. I've written about it several times including An Interview is a Test You Can Study For and How to Stay Relaxed During (And Make the Most of) a Job Interview. If you don't prepare for an interview in advance and instead "wing it" like most people do, you are doing yourself a great disservice.

Sam Anderson was interviewing for the job of his dreams. He researched the company, had a brother-in-law in another division of the company who could be a reference, and was confident in his sales skills. When Jane, the interviewer, asked, “If I interviewed other people you have worked with, what would they say are your strengths?” he froze. He began thinking about specific people he worked with and what they might say. Then he thought about a prior manager and what he would say. Pretty soon, he was all over the place with his answer, sharing random strengths that had no connection or story. What happened? Well, the question was just another version of “tell me about your strengths.” The interviewer simply worded it differently. And Sam wasn’t prepared.

How about this interview request: “Tell me about yourself.” Have you rehearsed a short three-sentence version that is compelling to an interviewer?

The state of most candidates’ interview performance is pathetic. It IS a performance and there is no excuse for poor interview answers for 80% of the questions you will be asked. It is remarkable that the most frequently asked questions are available on the web, yet candidates fumble their way through them. Even more remarkable is that candidates who do prepare do so right before the interview. You can do this now, without having any
interviews pending!

This chapter focuses on the interview preparation you do WELL BEFORE applying for jobs. Do this work very well ONCE, then you can review, refine, and rehearse it before an interview later.

You need to shatter all that you believe about interviews and restart. There are no secrets.

Success requires good old-fashioned preparation and practice. And the more nervous you are, the more you need to prepare.

First, let’s bust some myths:

1. The Myth: The interviewer really cares about what I say…the content.

The Truth: Sometimes. With certain questions, such as your strengths and weaknesses, yes, they want to learn. But they are also looking for your ability to articulate ideas, start a thought then stop a thought, and simply observing if your speaking style is clear and articulate.

2. The Myth: I don’t want to sound scripted.

The Truth: You won’t. You will still use tone and inflection to say the words. You will be more
relaxed since you know the content. You will sound self-aware, confident, and thoughtful.

3. The Myth: I should wait to see what they ask then think about it during the interview so I
can tailor my answer to the hiring manager.

The Truth: Complicated and unnecessary. Your skills, experiences, strengths, weaknesses, and more are already fixed. You will still be able to tailor messages to the specific interviewer, but that will be accomplished by adding to the answers you prepare during the interview.

4. The Myth: Interviews are all about the interviewer’s questions, not the questions I ask
them.

The Truth: Often the hiring decision is made based on the questions YOU ask and the discussion that follows those questions. So you need to prepare your questions, as well as the answers, well prior to the interview. Not the night before!

Solution: Create two separate documents well in advance of any interviews

1 Document #1: Your interview answers using the Cut the Crap (CTC) Interview Prep Guide: The Most Commonly Asked Interview Questions

2 Document #2: The questions YOU ask during an interview

Interview Questions and Your Answers

Following “listening,” a huge part of answering interview questions well is to understand why the interviewer is asking this question. Once you put yourself in their shoes and understand their intent, you will be able to provide answers that are truthful yet formulated in such a way that you perform well throughout the hour.

Use the Cut the Crap (CTC) Interview Prep Guide: The Most Commonly Asked Interview Questions

The Questions YOU Ask During an Interview

The questions you ask in an interview can help you OR knock you out of the running.

Joseph had an hour-long interview at 8:00 a.m. with the hiring manager, Susan, for a position he really wanted. He did some research on the company, reread the job description, and brushed up on his top strengths and weaknesses. He was on time and did
well during the interview. Until the last 15 minutes. Susan asked, “Well, Joseph, what questions do you have for me?”

Joseph displayed “crap” in the form of mistakes that sabotaged his odds of winning this job.

Mistake #1: He didn’t have any questions prepared.

Solution #1: Prepare your questions, write them down, and bring the piece of paper in with you to the interview.

Mistake #2: Joseph asked, “What is the starting salary?”

Solution #2: Never ever, ever, ever talk salary, even in ranges. Your mission is to get an offer in hand. Once you do, you can ask questions and possibly negotiate. Not before. Not to the human resources (HR) person, a recruiter, or to any interviewer.

Mistake #3: “Is there a training program or structured on-boarding process?”

Solution #3: Think about the story or perception the interviewer is creating with your questions. Put yourself in their shoes. In this case, they may be thinking, “Wow, he needs handholding and may be too high-maintenance for me. I need someone who knows how to do this.” If a training program is mentioned in the job description or on the company website, then it is appropriate to ask for more insights about the structure, length, etc.

Mistake #4: “What does your division or company do?”

Solution #4: It is still shocking how many job seekers ask this question. With the web, calling people you know, social media, and many other resources, there is no excuse like, “I didn’t have time.” By the way, in the U.S., one of my favorite resources (that I have referred hundreds of job seekers to) is your local city’s Business Journal, both their online resources and receiving their publication. Look up American City Business Journals at acbj.com.

The keys to a great question from you to the interviewer are:

• How can I show a strength through the question?
• How can I convey something to the interviewer that we haven’t already covered but it’s important for him/her to know about me?
• How can I avoid inadvertently showing a softness in a skill they need strength in?
• Is my question relevant to the interview? You are there for a purpose. Your questions should focus on helping you understand the job or the team you will be joining. Examples: Don’t ask, “What are Boeing’s top challenges as a company?” when you are interviewing for an accounting job in a certain department under a hiring manager who is looking for a very specific set of skills. You’re burning up valuable time, you can read those online or in the papers, and the question is not relevant to the job unless you are interviewing for their CEO or CFO position.

What are the best questions to ask in an interview?

There are many, but I’ll share my favorites.

• I’m very self-motivated. How will you measure my success in this position after one full year?
• The first 30 days are very important for me to meet as many team members as possible. How will you recommend I do that?
• What are the top 3 skills or experiences you are looking for that may not be mentioned in the job description?
• Of all of the people who have worked for you, what are the characteristics of those who have stood out as great performers?
• I have to admit I’m a perfectionist in some areas. What are the aspects of this position that absolutely require precision and attention to detail?
• What do you find most creative about what you do…and what aspects would have a creative feeling to them for me? (Replace “creative” with another positive skill of the
• position.)
• Of all of the criteria you have outlined for this position, what are the top 3 in stack rank order?
• The position we are discussing is something I am very excited about. Can you give me feedback on how I am meeting your qualifications and if I will proceed to the next level of
• the hiring process? (This is called “going for the close” or “asking for the order” in sales.)

Tricks

1 LISTEN!!! When nervous, LISTEN harder. Well over 50% of the poor interview answers are because the candidate didn’t listen to the very basic question. This sabotages your entire interview because the hiring manager is going to have concerns that you won’t listen to their instructions on the job.

a. Check yourself to be sure you don’t have your own set of messages you want to blurt out. This will cause you to answer in a way that pushes your information versus what the interviewer asked for.

b. Sometimes the interviewer will repeat the question since you answered a different one. Only let that happen once, as they are giving you a break. LISTEN harder from now on.

c. If you don’t understand the question, ask, “Can you repeat the question and clarify please?”

2 “The Law of 3s”—For every question, both during your preparation AND during your interview, state no more than 3 things then stop. A full stop, not just a pause for breath. If the interviewer wants more, she will ask. If the silence becomes too awkward, you can ask, “Would you like more information?” Smile at the end of every question. Not a huge, silly smile, but grin as if you just hit the right note, crossed a finish line, or got an A on a quiz.

3 You will have a pen and paper open on the table during a face-to-face interview. In the far right or left margin, you can have short clues to some key interview questions and answers that you are nervous about remembering.

4 Scribble some words about the question down so you can peek at it and stay on track.

5 Pause after the question is asked and think. Feel free to scribble 3 words down that will be your 3 points. Then begin.

Help a Reader: What to Do with a Bonus

Here's an email I recently received from a reader:

I'm a recent law school graduate who has spent the last year working for the federal government; in a few months, my job will end and I'll begin working for a corporate law firm. Along with the salary increase ($60k to $175k), I'll be getting a $50k bonus from my new firm for having spent the last year in the government position. My question for you and your readers is how to use the bonus, which after taxes will be $30-40k. Let me give you some background:

First, I have about $150k in law school debt. I haven't consolidated the loans yet because I'm in an income-based repayment program and consolidating would've negatively affected me for that purpose, but when I leave the government full repayment will kick in and I'll be making monthly payments of between $1500 and $2000. That's obviously a lot but manageable given my salary. The worst loan—by both principal and rate—is around $50k at 8%; the others are lesser in amount and rate.

Second, my wife has a trust in her name with around $150k in it that distributes fully upon her 35th birthday, which is two years from now. We plan on using the bulk/entirety of that for a down payment.

(Aside from the trust, which we can't get at yet, we have about $10-12k available cash, and no credit card debt/car payments.)

Third, we've recently discovered we're that expecting twins. This is awesome, but also complicating, as it will knock out my wife's salary for a while, possibly permanently. So the increase in my salary, while great in absolute terms, ends up being only about $50k more than our two current salaries combined.

So what do you think the best use of the bonus is? Should we use it entirely for my loans? I plan to consolidate the loans, but using the bonus to first pay down a big chunk of the loan with the worst terms could significantly improve the results of consolidation. Should we lump it in with the trust for a bigger down payment (which in all likelihood would not mean bigger house but instead smaller mortgage)? Should we keep it as cash on hand for unforeseeable but inevitable baby expenses? Split it up into, say, thirds, and put $10k toward each option? Some other option altogether that I'm overlooking?

What's your advice for him?

Star Money Articles and Carnivals for the Week of June 10

Just a reminder that Wealth Lion is up and running with posts on Mondays, Wednesdays, and Fridays. Here are the latest posts:

• Income and Spending Scenarios and the Impact on Wealth
• How to Make More Money
• Your Career is Your Most Valuable Financial Asset

As for FMF, it was included recently in the Carnival of Wealth Management.

Have a great week!

The Optimum Asset Allocation to Gold Is Always Zero

The following is a guest post from Marotta Wealth Management.

Gold ownership has grown in popularity over the past five years. Fearful of monetary or societal failure, many hope that owning gold will bring them peace of mind. Advocates also suggest that some amount of gold is part of a balanced diversified portfolio. Arguments can be made for gold, but its investment properties are not among them. The optimum asset allocation to gold in an investment portfolio is zero.

Through an executive order, President Roosevelt made the possession of monetary gold a crime in 1933. Then in 1971, President Nixon took the United States off the gold standard. This move triggered a high rate of inflation that severely devalued the dollar. In 1974 private ownership of gold was allowed once again, but it could not be used as payment in contracts.

Now, we can both own and pay with gold, but another president could make it illegal again. Thus some people believe you should buy gold now before that happens.

Today, the U.S. dollar is only valuable because the government has declared it legal tender and we act accordingly. The dollar has no intrinsic value and is not backed by any reserves of gold or silver. It is a "fiat" currency. If a significant portion of society ever lost faith in its value, it would no longer be accepted despite government edict. We would experience hyperinflation, and the dollar's purchasing power would fall precipitously.

Historians cite examples of fiat currencies imploding after hyperinflation, making these worries a real concern. Since 2008 the U.S. government has been actively devaluing our currency. Holding interest rates low with quantitative easing has kept inflation higher than normal. Meanwhile the government has kept the official reports of inflation artificially low.

This situation engenders deep concern. The value of gold is heavily correlated to fears of economic or political collapse. It is argued that gold could protect us from such a catastrophe.

This position makes gold a fallback currency, not an investment. The argument against gold as an investment is twofold. First, gold has an expected return that is little more than inflation. Second, gold is extremely volatile.

Expected returns are calculated by analyzing long-term movements in price. Although gold's price is highly volatile, its value averages little more than the increase in inflation.

Jeremy Seigel's book "Stocks for the Long Run" includes the growth of $1 of various investments from 1802 through December 2006. After being adjusted for inflation, gold grew from $1 to $1.95 while stocks grew from $1 to $755,163. At those rates, stocks have an average annualized appreciation over inflation of 6.86%, whereas gold is just 0.33% over inflation.

Gold and silver generally hold their value. They appreciate approximately by inflation. Little or no additional value is added. But gold and silver also rise and fall with global fears. They can be very volatile, even when measured in inflation-adjusted dollars.

Although gold tends to hold its purchasing power, it has not done so for the past 33 years. In January 1980, gold reached a high of $850 an ounce ($2,399 in today's dollars). For the next 21 years the price of gold dropped to a low of $256, losing over 70% of its value. Since bottoming out in 2001, it has regained about half its value.

Gold’s volatility means it has both positive and negative runs. Gold advocates try to make their case based on the positive returns from the bottom of the gold market in 2001 until recently. They ignore the 21 years of decline in favor of the recent 12 years of growth. But any serious analysis for portfolio construction must look at long-term averages.

In 2013 gold is currently trading at $1,368.75. Adjusted for inflation, it has the same purchasing power as it did in 1979. For the past 34 years, gold has just kept up with the official figures for inflation, albeit gyrating wildly above and below the Consumer Price Index.

Long-term averages make gold look like a safe store of value. But if you purchased gold at its height in 1980, you have lost more than half your buying power. In contrast, stock investments since 1980 have increased their purchasing power more than fourfold.

Modern portfolio theory advocates blending asset classes to maximize expected return and minimize portfolio volatility. Portfolios constructed according to these specifications have their risk-return ratio on the "efficient frontier," a curve depicting the best possible risk-return combinations of asset allocations. Assets with low expected returns and high volatility are not part of the efficient frontier.

For any portfolio that includes an allocation to gold, there is a better portfolio, one with a higher expected return or a lower volatility that has a zero allocation to gold. The efficient frontier teaches us that the optimum allocation to lower performing, higher volatility investments is zero. Therefore, the optimum asset allocation to gold over long periods of time is zero.

Gold is not an investment. It is better described as a store of value. We use the term "investment" to describe something that pays you money. Stock ownership is an investment because it has earnings or at least the hope of future earnings. Bonds pay interest. Rental properties collect rent.

Using this definition means many items of value are not deemed investments. For example, a fur coat, original artwork, or comic book collection are not investments. Neither is a beach house reserved for private use. These items all have value. Some of them may even appreciate at a rate greater than inflation. But as a whole, they have an expected appreciation that is little more than inflation.

A wise rule is to opt only for investments. Gold is a safe store of value but not an investment. Cash isn't a safe store of value. When adjusting for inflation, $1 has dropped to just $0.06 in buying power over the last 200 years. Cash doesn't pay you money and is not an investment. The correct asset allocation to dollars is also zero.

Holding physical precious metals may be useful at times, but it is a mistake to purchase gold for its investment potential. The diversification of modern portfolio theory does not mean buying a little of everything. Rather it means finding the most efficient blend of assets to provide the best chance of meeting your long-term financial goals.

The optimum allocation to gold is always zero because its return is too low to be a real investment and its volatility is too high to justify its low return. If you choose to purchase gold, limiting it to less than 3% of your portfolio will protect you from compromising financial goals that depend on appreciation above inflation.

Social Media's Role in Job Search

The following is an excerpt from the book Cut the Crap, Get a Job! a New Job Search Process for a New Era. I will be running a series of excerpts from this book over the next several weeks.

I found this chapter particularly interesting since it deals with the emerging and growing impact that social media has on job search. As all those looking for jobs try and figure out what works best in social media, I hope this excerpt helps.

True story: As a job search and career expert, I was skeptical about all of these social media tools as recently as four years ago. I separated professional networking from social networking and felt that the social sites were a waste of time. All of that was flawed. So, as a complete convert and now raving fan of social media for job search and career growth, here is a summary.

Job seekers can no longer ignore their online presence. Additionally, there are brand new ways to use Social Media to enhance and accelerate your job search. “Social recruiting” is evolving and improving rapidly, so jump in NOW, because the only way to learn about it is to do it. Manage your expectations, as well. Social media is simply another element of your job search “mix.” Social media connections are not a quick fix, but neither are job boards.

Benefits of Social Media to Job Seekers:

• Be found. Social networking is simply preferred by recruiters and employers as a tool to acquire talent.
• Identify and contact hiring managers.
• Market and sell yourself and put yourself in front of many people.
• Collect great research in preparation for an application or interview.
• Social media enables you to develop a stronger network that can help you with your career as well as your next job search.

Benefits of Social Media to Hiring Managers and Recruiters: How many hiring managers browse social media profiles, and what type of information are they hunting?

A nationwide survey, which was conducted by Harris Interactive for CareerBuilder.com from February 9 to March 2, 2012 included more than 2,000 hiring managers and human resource professionals across industries and company sizes. 37% use social networking sites to research job candidates.

What are hiring managers looking for on social media? Hiring managers are using social media to evaluate candidates’ character and personality outside the confines of the traditional interview process. When asked why they use social networks to conduct background research, hiring managers stated the following:

• 65%—To see if the candidate presents himself/herself
• 51%—To see if the candidate is a good fit for the company culture
• 45%—To learn more about the candidate’s qualifications
• 35%—To see if the candidate is well-rounded
• 12%—To look for reasons not to hire the candidate

Is social media helping or hurting job candidates? A third (34%) of hiring managers who currently research candidates via social media said they have found information that has caused them not to hire a candidate. That content ranges from evidence of inappropriate behavior to information that contradicted their listed qualifications:

• 49%—Candidate posted provocative/inappropriate photos/ info
• 45%—There was info about candidate drinking or using drugs
• 35%—Candidate had poor communication skills
• 33%—Candidate bad-mouthed previous employer
• 28%—Candidate made discriminatory comments related to race, gender, religion, etc.
• 22%—Candidate lied about qualifications

Employers are also looking for information that could potentially give a job seeker an advantage. 3 in 10 hiring managers (29%) said they have found something that caused them to hire a candidate, citing content that showed them the following:

• 58%—Good feel for candidate’s personality
• 55%—Conveyed a professional image
• 54%—Background information supported professional qualifications
• 51%—Well-rounded, showed a wide range of interests
• 49%—Great communication skills
• 44%—Candidate was creative
• 34%—Other people posted great references about the candidate

Where are employers going to research job candidates?

• 65% are going to Facebook
• 63% are going to LinkedIn
• 16% to Twitter
• 17% to “other”

However, research by JobVite.com uncovers that the increase in social media use for recruiting is a direct result of the number of quality candidates seen from social channels. The Jobvite Social Recruiting Survey 2012 was conducted online between May and June 2012. Over 1,000 people across the globe completed the survey in response to an email invitation sent to a registered list of human resources and recruiting professionals.

• 92% of respondents use or plan to use social media for recruiting, an increase of almost ten percent from the 83% using social recruiting in 2010.
• 73% have successfully hired a candidate through social networks, making social recruiting a highly effective source of quality new hires.
• A large majority of recruiters (71%) consider themselves savvy in social recruiting, having a sizeable understanding of what to look for in social profiles.
• 49% of recruiters who implemented social recruiting saw an increase in the quantity of candidates, and 43% noted a surge in the quality of candidates.
• 89% have made a hire through LinkedIn, 26% through Facebook, and 15% through Twitter.
• 86% of recruiters are likely to look at social profiles, and poor spelling and profanity make a bad impression to a majority of recruiters.

The following are the top three most important tools within social media that you need to have completed to compete in today’s new era of job search (and why each is important):

• LinkedIn - Visibility, company job postings, research. If you are not here, you don’t exist for many recruiters and hiring companies.
• Twitter - Research, job leads, learning from others.
• Facebook - Visibility. Recruiters use the friend-finding search feature.

Solution

A. LinkedIn—LinkedIn offers the broadest array of resources to further your career. Whether you are looking for your first job, are considering changing careers, or want to move into a more senior position, LinkedIn can help you achieve it. How?

• Finding companies that hire people like you: Search using your own skills as the keywords and specify your geography.
• Finding work at a specific company: You can become instantly updated when a job opening comes up at one of your target companies. Search within your own network, as well as browsing your contact’s network.
• Develop human resources, recruiting, and hiring manager contacts.
• Advanced search features will save you time and deliver the best information to you.

B. Twitter—Twitter gives you free information about people, organizations, and job listings. You can be an observant follower and still reap many benefits.

• Start to Follow People and Organizations: Following someone on Twitter simply means receiving their posts, which are called “tweets.” Every time the person posts a new message, it appears on your homepage in real time. To start the process, use the search function to find people or organizations you want to follow. Once you find them, click on the “Follow” button and you will begin instantly receiving their updates. The best part about Twitter is that you don’t need to get the person’s permission. Anyone on Twitter can follow any person or organization. As an example, follow me by typing my name in the search bar and clicking “Follow.”
• Follow People and Organizations: Begin by following organizations you are interested in pursuing. Next, follow employees in your target companies. The information you receive will be valuable in helping you research the culture and mission of an organization.
• Job Listings: An easy way to search for openings is to use the hash tag sign, or what some people refer to as the pound sign, which is the # symbol. The hash tag is Twitter’s filing system. For example, if you search #Seattle and #jobs, you will find tweets for openings in Seattle.

C. Facebook—One of the reasons Facebook is important as a job search tool is because every business and brand that knows the power of the web is already there. Recruiters
are also scouring Facebook for candidates.

• Search: When you search for a particular term on Facebook, you can narrow it down to people, pages, groups, links, etc., which gives you wide range of options as to who to network with and reach out to. For instance, if you are looking for jobs related to “architecture,” you can simply search for that term and connect with people in that particular field. You can search for people who are architects, join groups and pages, or simply find links that have the term “architecture” in them. This allows you to connect with like-minded people and build a relationship with them, which can help you find a job later.
• Facebook Pages and Groups: These features allow you to join a group of people with similar interests, provide an opportunity for you to learn more about a company, and connect with recruiters via Facebook. The first rule of job hunting is to let others know that you are available.
• Facebook Applications: There are some really good applications for job hunters on Facebook that allow you to get more out of Facebook and other job search sites. Log in to Facebook, click on “Profile,” type the application name in the search box, then follow the instructions to install. Or, visit the Facebook Application Directory and search using “job search,” “career,” or “jobs” as keywords. You will find BeKnown, BranchOut, CareerBuilder Facebook App, CareerFriend Facebook App, Hire My Friend, and more.
• Facebook Pages: Many organizations use Facebook Pages to promote their brands to potential candidates. Not only do they post open jobs there, but these pages are often maintained by various members of their recruiting organization.

Tricks

1 LinkedIn Tricks

• Apply the principles of Search Engine Optimization (SEO) or keywords.
• Use first-person and your credentials will be more exciting than a résumé.
• Focus on the last 10-15 years.
• Assure “Contact Settings” are working to your advantage.
• Adjust your “Settings/Privacy Controls” so not everybody has to see every time you build a new relationship or connect with a recruiter.
• Set a “LinkedIn time” an hour a week or more. Make connections, research.
• Follow target companies and connect with employees. Click the “Follow” button and, on a weekly basis, monitor their updates. Many companies also have a separate tab that says “Careers” or “Employee Insights,” both of which are very helpful in terms of finding recruitment contacts and hearing more information about hiring at that company. Many even post the actual job listings.
• Begin your involvement with a LinkedIn Group by commenting constructively on a discussion topic. Or start a discussion if you need help.
• Pay attention to LinkedIn Group members. Don’t be shy to click on the profiles of people who contribute. They might turn out to be new connections for you, for info interviews or maybe more.

2 Twitter Tricks

• Tweetdeck.com easily organizes your hash tags and searches into one console that you personalize. This is the website I open up every morning.
• Twellow.com searches people’s bios and URLs on their bios. For example, if you do a search on <your target company>, a company you would love to work for, then you can see how many of their employees are on Twitter.

3 Facebook Tricks

• If you wouldn’t say something in front of a crowd of 300 million in the real world, you should not to do it online either.
• Narrow down as much as possible based on your field of expertise. If you are an architect, you can use the search feature to find pages and groups that are created for architects.
• If unemployed, frequently post status updates relating to your job search to keep it top of mind that you are still looking for a job. Say things like, “I had a great interview this morning... keep your fingers crossed!” or, “I have a networking meeting later today with a company I’m really interested in!”

Reader Profile: CT

The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.

If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.

Also, please leave constructive comments, questions, and so forth. Simply telling someone what a mess they have, how they have made poor decisions, and so forth is not helpful. There is a way to say, "That was a mistake, but here's what you can do to correct it" that both acknowledges the problem and offers a solution. It's this sort of feedback that this series is intended to solicit.

Next in the series is FMF reader CT. He answered my questions (in red below) as follows:

Please tell us a bit about yourself.
 
My wife and I are in our early thirties (32 and 33), have been married for almost 8 years, and have a 2-year old daughter.  I’m a mechanical engineer currently working at a power plant.  My wife is a licensed CPA, but currently stays at home with our daughter.  We currently live in a small (low cost of living) town south of Houston, Texas.  We both grew up in this area and have majority of both families within an hour drive.  Close vicinity to family was the main reason we chose to move back after starting our careers in Houston.

Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).

My income is stable, but total compensation can fluctuate a little due to overtime and annual bonus.  Current total compensation typically ranges from $125k to $140k.  The 401(k) match is 8.1%, is tier structured based on years of service, and tops out of 12.1%.  I’m maxing out to the $17,500 limit for 2013.

After paycheck deductions, my take home pay averages $6700 per month.

We are currently living in a small wood frame house that my wife’s father and grandfather built many years ago.  My wife is set to inherit the house and land, so we’re making payments to her parents so that it isn’t money out of their pocket to let us stay there (home insurance, property taxes, etc.).  My wife’s father doesn’t want to rent the place plus he gets free manual labor out of the deal (hauling hay, mowing pastures, mending fence, etc.).  The plan is to add on a room or two down the road (two or three years) and provide maintenance/improvements as necessary.  We are truly blessed to be in this situation.  It’s very sentimental to my wife, and I like taking on home improvement projects.

When my wife did work, we made it a priority to max out our 401k’s and max out our Roth IRA’s.  We still have this mentality today.

The financial numbers below are averages:

Expenses

• Rent/Property Taxes/Insurance: $260
• Utilities (electricity, trash, etc.): $175
• Communication (cable, internet, phone): $240
• Groceries: $350
• Dining out / Entertainment: $130
• Gas / Transportation (includes maintenance): $600
• Car Insurance: $175
• Life and Disability Insurance: $160
• Medical (doctor visits, medication, etc.): $130                   
• Charitable Contributions: $300
• Pets: $170
• Roth IRA’s: $916
• Other (clothes, toddler stuff, consumables, etc.): $1000

Supplemental Savings

• Savings Goal: $2000

Assets

• Land, Cattle, Farm Equipment: $130000
• Vehicles: $30000

Retirement, Medical, and Investment Accounts

• 401k’s: $152000
• Roth IRA’s: $147000
• Traditional IRA’s: $129000
• Joint Brokerage: $6600
• HSA: $24000

Liquid Accounts

• Checking: $12000
• Savings: $31000
• Emergency Savings: $20000

Debt

• NONE (hope to keep it that way)

What are the current financial issues you're facing (saving, paying off debt, etc.)?
 
Starting with the positive, my wife and I worked hard and stuck to our plan early in our marriage and careers.  We’ve been contributing the max to our 401k’s and Roth IRA’s since 2005 (with exception of my wife’s 401k when she resigned in late 2010).  In addition, we put our excess income toward paying down the principal on our first home.  When we sold it in 2011, we were able to pay cash for some land adjacent to the place we are living on now.  We took my father-in-law’s advice and also purchased a starter herd of cattle (he’s been in the cattle business for about 15 years).  I did not include farm/agricultural income because we’ve broken even the last two years.  With the recent years of drought here in Texas, cattle prices are high and diesel is still climbing…so adding to our herd or buying more pasture land will be a slow process purely for economic reasons.

Over the years, we have learned that saving the money is a strength of ours.  However, I’m not sure we are optimizing the ways our money can work for us and continually grow.

I manage our portfolio because my wife (CPA remember) is very good at taxes and bookkeeping, but shows very little interest in the investing side.  I follow a few financial blogs and have read numerous books to further educate myself, but I find myself sometimes emotionally reacting to market fluctuations and news speculation (I know…not a good thing).  I’m familiar with index fund investing, buy and hold vs. allocation moves based on bull/bear markets, and various methodologies (dollar cost averaging, lump sum investing, value averaging, etc), but sometimes I feel overwhelmed (especially as our portfolio gets bigger and bad decisions have potential to hurt more).  100% of our investment portfolio is with Vanguard.  I would love some pointers on various strategies to grow our nest egg over the long haul.  I’d even be willing to learn and try a combination of strategies for further diversification.  I believe I’m capable of understanding such concepts, but I need exposure to those who have the experience and knowledge of where to start, what to look for, possible tools to utilize, and how to stay on path.  I understand that time is on our side, and we can take on more risk, but a well-defined and thought-out plan would help me not second guess those decisions.

Some other questions include:

• whether Roth or Traditional 401k contributions are better for my situation?
• should we convert some of the traditional IRA to Roth IRA or vice versa?
• 529 vs ESA for college savings?

Our daughter is still young, but we would like to start saving for her college.  It’s really something that just came up in one of our conversations two weeks ago after attending a Dave Ramsey lecture.

As I mentioned before, we will be taking on some home improvement projects in the next couple of years.  These will be paid out of pocket as funding and schedule permits.

We have three paid-off vehicles (2000 Civic as work car, 2003 pickup for farm usage, and 2006 SUV for my wife).  As they get older and mileage accumulates, I’m sure we’ll be forced to replace at least the car or SUV in the near future.

We are currently building up the Savings account for the home improvements and potential vehicle replacement.  The ultimate goal is to try our best to minimize debt as best as possible.

What are your plans for the future (retire early, build your career, etc.)?
 
I know for sure that I will continue to advance my career by gaining experience in the power generation industry with focus on equipment reliability, outage planning and execution, and machinery (steam turbines, gas turbines, pumps, etc.) troubleshooting and diagnosis.  I’d like to see myself reach a point where I can retire and consult on a part time basis.  A few years back, I earned my MBA and became a licensed Professional Engineer, so hopefully I can utilize these once I get several years os experience under my belt.  Honestly, I don’t ever see myself ever not working.  I just prefer to be in the position where I can work on my own terms.

We’d like to purchase more land and expand our farm business such that it provides some supplemental income, but the ultimate goal is to provide a source for home grown food (beef, chicken eggs, venison, vegetables, fruit, etc.).

Obviously, we have a daughter to raise, send off to college, and marry away someday.

My wife may decide to take on a few clients for tax preparation and bookkeeping services, but that’s not in the nest egg accumulation plan for now.  This way, anything she does can be put back toward college or our daughter’s wedding or just makes us reach our financial goals quicker.

In the near future, we’d like to look for opportunities to give back to our local community and broaden our charitable work.

What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

These sound like I took them out of the table of contents of several books I’ve read over the years, but they’ve worked for us.

• If possible, automate your saving and investing vehicles.
• Keep things simple.
• Live below your means.

Need More Reader Profiles

The Reader Profiles series has been pretty popular around here. So far we've done over 110 posts and, while I still have a few in the hopper, I wanted to let you all know that I NEED MORE of them to keep the series going.

So if you're willing all you have to do is email me the answers to the following questions (it's all anonymous -- don't worry about your name getting out, I use initials to hide real personalities):

• Please tell us a bit about yourself.


• Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).


• What are the current financial issues you're facing (saving, paying off debt, etc.)?


• What are your plans for the future (retire early, build your career, etc.)?


• What's your best piece(s) of financial advice and/or your general philosophy on personal finances?

Take as much time/space as you like answering them, but don't be too short or people won't get the "meat" of your situation. If you want to see what others have done, all the posts can be found here.

Thanks!