Free Money Finance

Funny Money Commercials

It's Friday, so I thought you might like a bit of a lighter post today -- something cheery to get the weekend started in the right way. So I thought I would post some money commercials that I've found to be cute/entertaining throughout the years. (FYI, I'm not sure how the formatting on this will turn out -- it could be kind of sloppy based on how it looked in my blog software -- but I'm hopeful all the videos are at least included.)

We'll start with a couple pieces for a self-storage company. The first:

And here's its "sister" commercial:  

I love the "you've become the mayor of Stuffville" part. :)

Next we move to a funny but oh-so-true situation many Americans find themselves in when it comes to debt:

This next commercial is probably familiar to most of you. It's the best IMO of a series talking about getting credit reports (which, by the way, is NOT the way to get them -- you do not need to buy them from this company when you can get them for free). But the commercial is still fun:

Next is a snappy commercial touting ways to turn assets into cash (which I don't know much about, but I'm guessing would not be a great deal):

Here's a cute one with a funny twist at the end:

This one is not really about money, but they do get something for free and there's a career angle. Plus, I love it, so here goes:

Of course there are the Geico "rhetorical questions" series. Here's a compilation (I LOVE the little piggy at the end):

And, of course, there's the king of all money "commercials", this skit from Saturday Night Live:

Enjoy!!!!

Star Money Articles and Carnivals for the Week of June 25

Here are some pieces I found especially worthwhile and some of the carnivals Free Money Finance was in this week:

• Money Life and More says to use emergency funds if you need them.
• The College Investor reviews Monsanto.
• Young Adult Finances tells how to write a resume.
• Wealth Pilgrim reviews Scottrade.
• Prairie EcoThrifter tells how to limit waste and save money at the grocery store.
• Retire by 40 wants to be a stay at home dad.
• Earl E. Bird tells when your annuity value is not your money.
• Carnival of Wealth

Enjoy!

P.S. Carnival Hosts -- If my post is in your carnival in a given week, please send me the URL to the carnival and I will include it in my weekly roundup.

Help a Reader: Saving for Retirement

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

I am struggling to determine the best way to save for retirement now that our income level and earning vs. spending gap are large enough that I am hitting the ceiling of common tax-advantaged savings vehicles. Yes, I realize this is a good problem to have. I have searched around for advice but found little that has helped me figure out the best way to proceed.

My wife and I are both 29, and by working hard to grow our careers we have increased our income significantly over the past couple years to around $210k (before bonuses). We live in a city in the midwest with a low/moderate cost of living, and as such have been fortunate enough to afford a comfortable lifestyle while getting more aggressive with our savings as our income has increased.

I receive a 5% 401(k) match from my company, and my wife receives a profit-sharing bonus each year that goes into her 401(k) which is also around 5%. After recently paying off some debt, I bumped up our 401(k) contributions to a total of 20% of our salaries. This is when I discovered that we will exceed the maximum pre-tax contribution limit ($17,000 per person, as I understand it, for 2012). We can continue putting money in, up to $50,000 per person per year, but it will be taxed after $17,000.

So the question is, what should I do now? It appears that Roth IRAs are off the table because of our income, so I'm looking at a traditional IRA, but since we're both covered by employer 401(k)s and our income is at a certain level it appears I can't deduct contributions to a traditional IRA. I'm thinking of several possible directions but get more confused the more I research:

1. Contribute max pre-tax ($34,000 per year total) into the 401(k)s, then invest in a traditional IRA up to $5,000 (contributions will not be tax deductible), then go back to putting the rest in the 401(k) even though contributions will be taxed

2. Forget the IRA, and continue contributing to our 401(k) plans until we hit the max $100k/year even though the contributions will be taxed after $34k/year

3. Max pre-tax 401(k), (maybe max the IRA?), and then find a new vehicle for the rest...is this what a Roth 401(k) is for? Other advice?

I don't know if it's relevant, but I also currently shunt around 10% monthly post-tax income into a savings account and another 10% into a series of Vanguard index funds and bonds. I'm considering a financial planner to help us sort this out, but wanted to see what the astute FMF readers could offer first. Thanks!

What's your advice for him?

Reader Profile: AW

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.

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

Please tell us a bit about yourself.

I am a 26 year old single guy living north of Washington DC. I bought a townhouse about two years ago (April 2010). Luckily I live close enough to work that I usually bike or walk in to avoid driving. In the next few months I expect to bring in a roommate. I enjoy running and triathlons even though swimming is a weakness of mine. I plan on doing my first Ironman this August in Louisville, Kentucky. I feel real fortunate that I graduated college in 2007 with only 10k in loans which I was able to pay off within a year. I don't really have a set budget but I try to limit my spending and keep track of progress using Quicken.

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

I make roughly 4300 every month from my salary before taxes and deductions I contribute 13% to the 401k at work (6% match at 50 cents/dollar) I still have about $92000 left on my mortgage at 5.25%. My total monthly payment is $780 but I add another $120 towards principle every month My future roommate will bring in another $550 a month I have an interest free car loan from my parents and sill owe $4700 I have about 7800 in savings I pay off my credit card in full every month I currently have about $13k in Vanguard mutual funds I have a Roth IRA with $32k and contribute the full $5K every year I have $25400 total in my 401ks I have about 4k total in various stocks I had picked out My monthly bills are small, about $300

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

I would like to pay off the loan to my parents but don't want to stop the extra payments to my mortgage. I think once I get my roommate this will be paid off much quicker. My biggest problem is that I'm not sure where to put my extra money (savings, investing, bump up 401k contribution or paying off my house).

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

It is my hope to retire by the age of 55. I also want to pay off my house early (in process). I would love to sell my house and move out to Colorado but at this point in my career that just isn't that practical.

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

Keep track of everything going in and out; You can't find where your money is leaking if you don't look.

Soccer Earnings Update

As many of you know, my son and I are soccer referees. Now that the season is over, I thought I'd detail our spring earnings as well as give a general update on our efforts. If you want to get up to speed completely, read my last post on this subject before reading this one.

We have been referees for 3 1/2 years (it seems a lot longer than this -- maybe all the cold, rainy and hot, blistering days make it seem longer.) Anyway, here are the number of games we've done as well as what we've earned (total) by season:

• Spring 2009: 28 games, $0 earned
• Fall 2009: 36 games, $465 earned
• Spring 2010: 27 games, $440 earned
• Fall 2010: 25 games, $545 earned
• Spring 2011: 34 games, $905 earned
• Fall 2011: 28 games, $1,321 earned
• Spring 2012: 51 games, $1,885 earned

In summary, we've refereed 229 games (148 paid) and earned $5,561 in 3 1/2 years.

A few notes to add perspective to the numbers above:

• While one of us is usually the center referee (higher paying position) we pool our funds and then split the money. So the $1,885 ended up yielding us $942.50 each. This works out better for my son since I'm in the center more often and yet he shares in the spoils. (FYI, most of our games are for 11- and 12-year olds, though we do referee higher and lower than those ages.)


• We did two tournaments this year. The benefit of tournaments are that you can get a ton of games in a short time period (we got 20 games in three days this way). The disadvantages are that they pay less per game than normal, league games (and the coaches are much more aggressive towards the referees, so it's more stressful.) That's why our total earnings are higher than ever but our earnings per game are lower than last fall.


• We had very few expenses since we have all of our gear from past years. We do track and deduct mileage and we had some food expenses, but that's about it.


• As is usual in Michigan, we had cold, rainy, 50-ish degree days and 90+ degree days this spring. Oh yeah, good times! :-)


• We plan to keep refereeing for some time -- probably at least until my son either gets a "real" job or heads to college in three years -- but those plans are subject to change. Our current certification is good until next year, so we will at least complete the fall season this September/October.


• As per an agreement with my wife, my earnings go to pay for our cable bill. What I've made in the spring season alone almost covers our annual cable costs. My son is saving his money for a car.


• In addition to being a money maker, refereeing has several other advantages: 1) my son and I get to spend a lot of time together around a sport we enjoy, 2) my son is developing leadership skills that will serve him well throughout his life, 3) I get a mental challenge out of the game, and 4) it's a great way to get exercise (I swim five times a week, but I enjoy mixing it up, and you can sure get a lot of running in while doing four games on a Saturday.)

That puts a wrap on the spring soccer season. Now we can take a couple months off and will be ready to hit tournaments at the end of August.

How Not to Be Average

Here's a piece from the NY Times that says both median net worths and incomes have declined in America. The data, while from 2010, is still the most recent available, and highlights the hit that the average family has taken during the current financial crisis.

Let's look at each of the results and then discuss them a bit. Here are the net worth numbers:

A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss.

The reason for much of the drop is the decline in home values:

One basic reason for this disproportion is that the wealth of the middle class is mostly in housing, and the median amount of home equity dropped to $75,000 in 2010 from $110,000 in 2007. And while other forms of wealth have recovered much of the value lost in the crisis, housing prices have hardly budged.

For a few more specifics on the data, see this post (FYI, read the comments for some interesting thoughts/perspectives.)

Switching gears a bit, here's what happened to incomes:

Families’ income also continued to decline, a trend that predated the crisis but accelerated over the same period. Median family income fell to $45,800 in 2010 from $49,600 in 2007. All figures were adjusted for inflation.

Ok, so the middle class has taken a hit during the economic crisis. That's not really new news. Nor is this an economics or political blog where I'm now ready to comment on wealth gaps, economic policy, and the like. But what does interest me are the absolute numbers -- what the average American owns and makes.

Just to make things interesting, let's look at the results before the crisis. You know, back when everything was "great" financially. Once we do, I think we'll see that things weren't so rosy even back then.

Prior to the current economic turmoil, the median American net worth was $126,400. Of this, $110,000 was in home equity. That means that the average family only had $16,400 in non-real estate net worth (assets - liabilities). Really? Wow. Does anyone else think that this is an extremely LOW number?

Look at it this way: the average family is probably in their mid-40's. And in 20 or so years of working, all they have managed to save is $16.4k? That tells me right there that the average American was (and probably still is) a much better spender than he is a saver. Otherwise I think he might have been able to sock away more than $820 a year.

But this again is not new news. I think we all know that the average American isn't really a great money manager.

The income numbers are pretty poor as well and harder to explain (there are some guesses in the comments at the second link above -- but no one has a clear answer.) That said, even $49,600 is not easy to live on. Yes, it can be done (of course) and if you manage your money well you can save a decent amount even on this income (as some readers noted on my post about living on $50k). But few people are getting really wealthy on $50k a year.

So what does this mean for the rest of us? It's all just blah-blah-blah fodder if we don't look at it, learn something, and apply it to our lives. So, what can we take from this?

Fortunately (or unfortunately -- depending on how you look at it), these results reinforce what I've been talking about here at FMF for years. Namely:

1. Do everything possible to grow your income. Your career is your most valuable financial asset. You need to do everything you can to make the most of it, including guarding/protecting it from harmful circumstances. In addition, you should take steps to make money in addition to that generated by your career. For help in this effort (in addition to the posts already linked in this paragraph), see these posts:

• 80-20 Your Career
• How to Maximize Your Lifetime Earnings
• Five Steps to Six Figures in Seven Years
• The Value of Early Career Investment
• 11 Great Ways to Earn More Money
• 7 More Great Ways to Earn More Money 

2. Live below your means, creating as big of a gap as possible between income and expenses. For suggestions on how to do this, see my series on the best money saving tips.

3. Take that gap and invest it for as long as possible.

4. Avoid the money mistakes that can kill your financial progress.

I know. That's pretty much what I said in 80-20 Your Finances. In fact, it's what I've been saying for over seven years now on this blog in one form or another. And the reason I keep reiterating the advice is for one simple reason: it works. It's what I've done for about 25 years now and it's worked quite nicely for me. Perhaps the economy and the financial "rules" have changed a bit since then, but the steps above will help you grow your net worth no matter the environment. And if nothing else, you'll certainly be better off for applying them than you would be if you didn't.

Unfortunately for the average American, while these principles are simple to understand, they aren't easy to implement -- because they require effort. And most Americans don't rate too highly on the "financial effort" scale. So they don't apply the principles and thus end up with results like those detailed in the article above. Just to clarify, I'm not saying that luck and circumstances don't have an impact on some people, because they do. But ON AVERAGE, most Americans are in the financial situations they are in because of their own choices and the right or wrong money decisions they have made.

So, in short: if you want to be average, do what the average person does (which is not much -- at least not much proactive effort) and you will get average results. But if you want to be extraordinary, you need to make the effort and apply a few simple concepts over a long time. Honestly, that's all it takes to become wealthy.

Reader Profile: PA

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.

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

Please tell us a bit about yourself.

24, male, single, no children

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

I graduated from a flagship state school two years ago, with a bachelors in business. I got a good amount of scholarships which kept costs down, and then my parents were able to pay a decent amount of the tuition, with loans covering the rest. While I only worked a couple hours a week during the school year (security at school basketball and football games), I was able to pay for all my rent, food and other living expenses (including study abroad travel) out of my earnings from internships and other random jobs in the summers. A key part of that was relocation money - All three of my jobs were on the opposite end of the country, which resulted in sizable relocation payment, which usually paid for all or most expenses in the summers, leaving my salary to cover the other 9 months of the year. So in the end I only accumulated debt for the $15K I received in federal student loans.
 
I currently work for a manufacturing company earning a little under $60K, with a bonus that could potentially be another $8K or so. I put 7% in my 401K which maxes out the company match at 3.5%, plus I put another $200/month in my HSA (although my health expenses are currently less than a third of that - I'm going to contribute a lot less next year). I fully fund my Roth IRA (Vanguard), and the rest then either goes to new index funds, or Prosper and Microplace investments (I really like both of these sites a lot - for someone who is not very good at stock picking you can get some really good returns on there - even when lending to AA rated borrowers with 800 credit scores. My expenses are mostly:

• Housing (rented w/1 roommate - $450 each plus utilities)
• Car payment ($350/month)
• Gas ($120-200)
• Groceries $150
• $100 eating out

I like traveling, and each of the past couple years have flown to South America for my vacations. So normally that would a relatively large expense, however I have taken advantage of most of the good credit card bonus offers lately, and so have been able to fund all my flights with miles (and I still have a ton left), so the trips are considerably less expensive.

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

My only debt is my car loan, which is at 0%, so I'm in no hurry to pay that off :-) So right now all of my excess goes into savings/investments, which is currently around $28K for everything including Roth and 401K. One of my issues is I don't really do any investing systematically - right now I'm just investing by promotion. What I mean by that is I'll leave money in my checking account, then every couple weeks transfer a couple thousand to whichever investment option is offering a deal - so for example today Prosper has a 2.5% cash back on featured listing loans, so I transfer a grand over there. Often times I have a minimum spend on a credit card promotion, and so my current preferred way of meeting the minimums after the demise of the dollar coin program is investing in Microplace, which is actually pretty cool (yes I also pay for my auto insurance, and any other large expenses, but there is always at least $1,500 I can't meet with normal spending). So while right now the amounts I'm investing aren't large enough for me to be really concerned by this lack of a strategy, but I know that going forward I'm going to need a personal investing (i.e. non-retirement account) strategy that is more sophisticated than responding to investment promotions. I've recently bought into a few more Vanguard funds, and am currently toying with a twice-monthly automatic investment plan - just have to figure out what percentages I want.
 
I also am somewhat of a credit card offer junky, with my count of active card at 6 (4 of which were opened in the past year for especially lucrative bonus offers). Now of course I pay them all off on time, and I make sure that after the first year I don't pay an annual fee (either by calling and cancelling, or letting them talk me into downgrading to a free card or an offsetting statement credit), and I know the affect on my credit score is minimal. But I still think I'll probably have to scale this back a bit, which probably won't be a problem as the offers seem to be declining in quality in the past year or so.

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

Right now I love my job - I'm basically being allowed to work on what I want, they've invest a ton in putting me through all sorts of training, and I generally do like the company and people there. My first concern is that the company is very cyclical, and is historically known for going on hiring binges in good times and mass executions in down times. The past two years or so have been good times for us (overseas markets), but I'm starting to see signs that concern me. Now the company is probably on much stronger footing now than it was in 2009 (the last time we had layoffs), but all the same I'm fortifying my position, and beginning to follow up with the recruiters who contact me on LinkedIn, instead of sending them polite rejections as I had mostly done before.

My second concern has to do with quality of life. Within the US, and even in our international locations we are predominately located in small towns, including the town I am moving to right now (which is less than 10,000). On the one hand, it does keep living costs down. On the other hand it increases my travel costs as I end up driving several hours to nearby cities many weekends. Now we do have some locations in three decent cities,including the location I am currently, a very fun yet low cost of living city in the South. However my job options were quite limited here, and so to advance my career I am taking my next role in a smaller town, which I've come to realize is more of a sacrifice for me than I thought it would be before taking the job. So in several years (assuming I stay here that long, which I plan to) I will probably have a decision to make:

1) Do whatever it takes to maximize my number one asset, including living in smaller towns

2) Guide my career path in a way that keeps me in cities at the possible sacrifice of career maximization

3) Look at jobs in a different company. Still a bit away for me, but something I'll be thinking a lot about.

Also on my mind is an MBA. Having done business for undergrad, and seeing the textbooks of some of my friends doing MBA, it seems there would be a lot of repeat. However I'm beginning to believe it is something that would help a lot, no matter if I stay with the company and build a career here, or if I want to move somewhere else. My first inclination is to do it part time while working, as I don't want to stop earning for several years, and the company would pay a small, but non-neglible portion of my tuition only if I keep working. However I'm wondering if there is value in doing it full-time. Anyone have an opinion on that?

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

Well apart from the advice already dispensed by other readers, I have two pieces of advice:

1. Focus your savings on the areas that matter. I'm naturally a cheap person, and so I always look for the lowest prices on everything. So this meant that until recently I would visit as many as three-four grocery stores a week to buy the items that were on sale in each individual store. This did save me money (even net of extra gas), but my focus on saving on all these everyday purchases meant I wasn't spending time planning savings on some of the big ticket items (for example I overpaid slightly for my car because I rushed into it and didn't walk away when I probably should have).  So while I still can't shop at only one store, I am bringing more balance to this equation.

2. Reduce your suppliers for strategic items. This is sort of a continuation of 1. In the beginning of my car ownership years, I clipped coupons and got my work done at various shops for cheap. However when it came time for my first major service I took it to the dealer.....and you can probably guess the rest. Since then, I've got all my work done, at a good mechanic. So this means I do pay a little bit more for each oil change, but then it means I don't get ripped off on the big ticket items. Similarly, because of moving around I had gone to various doctors for check-ups and bloodwork. My insurance is supposed to cover all that preventative work....but some hospitals code things different ways, and I got hit with a hospital charging me an insane amount for routine bloodwork (after the insurance discount, and after me negotiating with them). So my lesson is that the switching cost, which I had not considered, can be extremely important. So for these and a few other items, one of my biggest priority this year will be to do the research to find one good provider, and stick with them, even if a different company offers a coupon that saves me a few bucks on one visit.

Help a Reader: What to Do with a House

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

I am married, we are in our mid-30s, and live in the northeast.
 
I purchased a small home in late 2006, right around the peak of home prices.  We now have a baby on the way, and our home is going to get much tighter very quickly.
 
We’d like to take advantage of lower house prices / low interest rates, and purchase something we can grow into in a nice neighborhood.
 
Here is the dilemma: My home (like so many others) is worth less than my mortgage. I owe $146K, and according to local realtors and sites like Zillow.com, the house is probably worth $135K right now.
 
I feel like I have a few options:
 
1. Rent my current house and try to break even until prices come back. Could be many years. (I qualify for a HARP program to refinance that will bring my total payment down to $1,300/mo, which is just about what I can rent it for)

2. Sell my current house at most likely a $15K - $18K loss after debt repayment and Realtor commissions. (Not a great option since I need cash for a down payment on new house)

3. Stay where we are for the time being.

We are in good shape financially and have stable jobs.

The way I see it, option #1 (renting) would not take a lot of cash out of my pocket today, but could over the course of a few years through maintenance, potential rental income loss, etc. I would also assume an overhaul would be needed to sell after renters being in there. However a rebound in prices over the next several years could bring the value back up above what I owe.

In option #2 (selling), I could try and list it for what I owe and hope I get lucky, or take a fairly substantial hit in savings which I need for a down payment.

I have money invested in stocks, bonds, preferreds, etc. that I would like to not touch if possible.
 
Any advice would be greatly appreciated!

What's your advice for him?

The Best of Money Carnival

Just a note to let you know that the Best of Money Carnival is now up.

Enjoy!

Using Wealth to Honor God

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

I'm starting a new practice here at FMF on Sundays. On some posts I will simply pick out a money-related verse/verses from the Bible and post it. Then readers are free to leave their thoughts on the verse (in the comments below) or simply think about what it means to them and how they might apply it in their lives.  Sometimes I'll add commentary (my own or from others) and sometimes I won't.

Since I have been reading through Proverbs, most of verses for the foreseeable future will be from that book. Here's a good one to get us started -- Proverbs 3:9-10 (NIV):

Honor the Lord with your wealth, with the firstfruits of all your crops; then your barns will be filled to overflowing, and your vats will brim over with new wine.

And here's the take from the Contemporary English Version (CEV):

Honor the Lord by giving him your money and the first part of all your crops. Then you will have more grain and grapes than you will ever need.

Thoughts?

For those wanting more commentary on these verses, here's a good one I found.

Reader Profile: GM

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.

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

About Me

I'm a 30 year old man with a wife and two kids aged 3 years old and 9 months. I'm originally from Australia but have been living in the Caymans since 2003.

I have a Masters in Applied Finance and Investment. I work in the hedge fund industry and run an options trading website. My wife used to work for a residential property development company but since the birth of our second child has been a full time Mom.

This has been quite an adjustment financially and we've really had to start watching what we spend. Date night used to be a 3 course dinner with wine, but now it is a sandwich and a beer sitting on the beach.

We paid off our mortgage on my 30th birthday which I felt was a great and significant achievement. This was also the only way my wife could stop working as we would not have been able to service the mortgage on one salary.

Main Issues

Our main issue at the moment is that we are not saving any money from my salary (website and trading I view as a bonus). In fact, for the first few months after my wife stopped working we were spending more than we earned. Part of this was due to the fact that most of our big expenses are due in the first half of the year. Car, health and home contents insurance were all big expenses that really hurt. We are doing a little better lately, but it seems like every month a big expense comes up that we are not expecting. Last month our TV died, so that was $1,200 to replace and we had yet another month going backwards.

Financial picture can be summarized as follows.

Income

• Salary – $7,500
• Stock and options trading – average $1,000 – 2,000 per month
• Website / coaching – $400-1,500

TOTAL $8,900 – 11,000

Expenses

• Bills - $1800
• Groceries - $1750
• Health insurance - $1000
• Charity - $200
• Misc - $2500

TOTAL $7,250

Assets

• Cash - $103,000
• Brokerage account - $131,000
• Property (home) - $365,000
• Property (1/3 ownership with brother and sister) - $120,000
• Cars - $20,500
• Retirement accounts / pension - $107,600

Liabilities

• Mortgage (1/3 ownership with brother and sister) – ($68,800)

NET ASSETS $778,300

Goals, etc.

My main focus is on building my website and also increasing my returns from trading. I used to be quite career driven but since having kids my priorities have changed and I would prefer to take the "Daddy track" rather than the "Fast Track".  Ideally I would love to be able to quit my job and trade / teach trading full time within the next few years. My only concern is that my Dad was very entrepreneurial and always owned businesses but a lot of them were not successful and it put a lot of strain on our family. I wouldn't  want to put my wife and kids throughthe same thing. There's something to be said for a steady income when you have a young family.

I haven't put down and age on when I would like to retire, but I think the idea of semi-retirement at the age of 40 sounds pretty nice.

I would also like to use some of our excess capital to purchase another rental property and this positively geared (I.e. producing more income than expenses). That would go a long way to securing our future if we can obtain some rental income while having someone else pay off the mortgage. The only problem is there is no where we want to buy. We don't want to buy in Cayman as the market is very illiquid and it can take years to sell. The US is attractive right now, but we don't know enough about the market and it might be hard to manage from overseas. Australian property would be easy as we know the market but it is EXTREMELY over valued right now.

Best Financial Advice

Live below your means. Seems obvious and to be honest we are struggling to do that ourselves but thankfully we have some good money saved and should be able to get back on track once the kids are in school and my wife goes back to work.

The other thing would be to educate yourself. This website is a fantastic place to start as it is filled with loads of practical advice. Also start investing early and get your kids investing early. I was always interested in money and finance from a young age, but one of the best things my parents did for me was buy me some shares in Telstra when I was 13. It really fostered my love affair with the stock market and helped me get to where I am today. There are so many great books out there on investing so get out there and educate yourself or even take a short course to get you started in the right direction.

My other piece of advice when investing would be to never risk more than you can afford to lose and always know the worst case scenario. Don't think "how much money could I make on this trade / investment", instead you should think "what could go wrong and how much could I lose".

Help a Reader: Getting a Grad Degree

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

I am 23 years old. I live with my parents in New Jersey at the moment, looking to move in with a friend sometime in late 2013- early 2014, probably into Manhattan ($1,300 month in rent. I recently graduated from undergrad-college, and have a very reliable steady job making ~$70,000 a year. I spend ~$1,100 a month in personal expenses.

I am fairly anal about spending.  I try to live below my means.  I have ~3,000 in my ROTH 401k, 10K in my IRA, and 25k in a personal investment portfolio (diversified, doing very well, and about 9k in savings. I have no debt, but my parents are paying my student loans and I would love to help them out - they are 70k.  I have a credit score of 740.

My burning question is I just got accepted into a 50k master’s program and I can most likely get student loans at around 4%. Should I sell my personal investment portfolio and pay off the tuition immediately? Should I continue to invest and just pay off the interest on the loans and make the minimum payment? When do I make the decision to pay off more than the minimum payment?

What's your advice for him?

My Discussion with Comcast

It's been awhile since I've written about my relationship with Comcast. Long-time FMF readers will know that it's been a rocky past. For those of you new to my relationship with Comcast and wanting details, check out my last post on the issue.

The short story is that I got cable a few years ago and through a series of mistakes on Comcast's part was able to extend my promotional rate for a couple years. Then I upgraded a couple times (after complaining) to get promotions to keep my rate relatively low. Even with all this, my monthly rate had crept up to $60 per month (FYI, this includes way more channels than I need (several hundred), but they don't let you select the channels you want, a DVR, HD, and the sports package which shows worldwide soccer games I like to watch.)

Well recently I went "off promotion" and now my bill is $90 per month. Even though this is now $1,080 per year, it's still below what I earn as a soccer referee and my deal with my wife is that I pay for cable with my soccer earnings. Still, I want to pay as little as possible.

Back in the good old days (a couple years ago), you could get promotional deals renewed again and again if you simply called or chatted online with a rep and complained enough (and in the right way.) It's been increasingly harder to do this though as the cable companies have gotten wiser. In addition, as they've seen the writing on the wall that competition is heating up, Comcast has been more aggressive in bundling services like phone and internet access in with their cable. They offer these at low prices at the start, but then ratchet them up once the promotional period is over. Sounds familiar, huh?

So not wanting THREE high-priced services with a company I hate, I've been putting off that option. Besides, this is the year I think we'll get rid of our phone line anyway. So with that said, I decided to hit up a Comcast rep via online chat and see what they could do to help me out on price. I had a DirecTV ad that offered great prices on three services and wanted to use that to get a better price on cable from Comcast. I thought it would be pretty easy, but I was mistaken.

Anyway, see for yourself how things transpired. Here's the transcript of our conversation:

Comcast Rep: Hello FMF. Thank you for contacting Comcast Live Chat Support. My name is *******. Please give me one moment to review your information.

FMF: My issue: I am currently paying Comcast $90.91 a month for cable only. I just received a Direct TV insert for cable, internet, and phone for $94.94 per month (for all three). See the issue?

Comcast: I hope your day is going well! I'd be happy to help you with your concern. Our Comcast Customer Guarantee is our promise to you that we stand behind our products and services and we are available to you 24/7.

FMF: ok, great

Comcast: As I have understood your concern, you had offered for a deal from DirecTV and you are interested getting it. However, you want to know if we have same offer like what we they have before you make your decision. Is that correct?

FMF: Yes, because I can get TV, internet AND phone from them for the price you are charging me for just cable. I want to know if there's something you can do to help me get into their price range -- either with all three services or simply cut the cost of the cable.

Comcast: I understand that you want a package similar to what DirecTV is offering you or either have cable package lowered rate.

FMF: yes

Comcast: Let me pull up your account to see what we can do to solve this issue. To verify that I am chatting with an authorized contact, may I please have your complete service address and the last 4-digit of your SSN?

FMF: My service address (I have the bill right here) is: ***********************************. The account is in my wife's name so I assume it would be her SSN. Last 4 digits are ****.

Comcast: Thank you for that information. May I also have the account number of the account?

FMF: **********************

Comcast: Thank you for the information. I am currently pulling up your account. This will take me a minute or two to review. Would that be okay?

FMF: sure

Comcast: Thank you for being so patient. As I review your account here, you are currently under a stand-alone package which is only cable. Just to set proper expectation, promotion varies from time to time and is usually given once. However, I can try searching for available promotion for you. You made mentioned also about bundling your services, a bill can be lowered by having individual services bundled as one to have a lowered bundled rate. Having bundled service, you will have two or three services (video, cable, internet) for a price of one.

FMF: That's what Direct TV is offering -- 3 services for the price of one.

Comcast: We also have it on our end, FMF. Since, you are interested of bundling your package, we also offer that promotion.

FMF: I would be ok just with a cable reduction -- I get decent rates already on phone and web. And I'm not sure how long we're keeping our phone anyway.

Comcast: Okay, FMF. I will check on what we could offer you. Just to set proper expectation, to help you lower down your bill, these are some options that you can choose: 1. A bill can be lowered by downgrading the package for your service to have a lower package rate. 2. A bill can be lowered by removing some services on the account to remove additional costs. 3. A bill can be lowered by taking advantage of package upgrade discounts. I will further check on cable service promotion if there is any as of this time. Are you able to hold for another 2-3 minutes while I check on it?

FMF: FYI, the Direct TV deal has 225 all digital channels, 11 movie channels, HD DVR and 3 HD receivers, HD included, free set-up in 4 rooms, and HBO, etc. free for 3 months. This is BETTER than my current cable set up with you.

FMF: Yes, I can wait. But I don't want a reduction in service when Direct TV is offering more.

Comcast: Okay, I understand FMF.

Comcast: Since promotion varies from time to time. Based on my search on available upgraded promotion, the only available promotion as of this time is the Digital Premier package which is 84.99/monthly for 6 months promotion. Has more than 200 channels, you will also get free premium channels (HBO, Cinemax, Showtime, and others). Over 17,000 On Demand movies and shows that you can watch on your TV and now online. That is the only promotion available as of this time for cable upgraded promotional package.

FMF: I don't really want to upgrade either.

FMF: I'm looking to spend LESS money, not more.

Comcast: I understand that you are not interested of upgrading your service and want to spend less for your cable package. The option/s that could lower down your bill is either to downgrade service or remove some add-on services that you rarely use to lower down bill.

FMF: That's not my choice with Direct TV -- only if I stay with you.

FMF: Here's the deal: I contacted you to see if you could work with me to lower my bill before I call Direct TV. It appears you can't or won't. So my only choice is to call them.

FMF: I've been with Comcast a long time, but the Direct TV deal is just too good.

Comcast: You’ve been a great customer. We value your business. Here at Comcast we truly care about our customers, please be advised to call 1800-934-6489. They can give you more options to lower down your bill.
As much as I want to help you, however, the options that I could see here are limited only.

FMF: I'm not calling. I gave you guys a shot and now I'm moving on. Thanks anyway.

Comcast: Okay FMF. We respect your decision. I am sorry to know you are no longer interested with us. Just to set proper expectation, please notify us once you have decided to cancel your service with us through calling 1800-934-6489.

FMF: I will. Thanks.

Comcast: Please be advised also to return all Comcast owned equipment for you not to be charged for it. You are welcome. Is there anything else that you want me to help you today?

FMF: No. I'm signing off.

I'm not sure what would have happened if I had called the number. Maybe it was some sort of escalated call center that was a bit more lenient on pricing. Then again, I've been escalated before and they don't really offer you that much savings.

Of course I could always go with DirecTV, but it's just trading one devil for another. Plus they have to drill holes in my roof, something I'm not excited about.

When all is said and done, I'll probably simply decrease my package and see how much I can save. I get way more channels than I need, but I'm guessing that the channels I want are the first to drop off if I downgrade.

Ugh. Add another hassle to the to-do list. I can't wait until we get some solid, viable competition to cable companies. I know there are options out there now, but none are comparable IMO and they don't offer the soccer games I want to see.

Anyone else dealing with the pain of cable TV?

More Kids Answer Money Questions

When I posted My Kids Answer Money Questions, I asked FMF readers to ask their kids the same questions and send me the responses. A few did and I want to share those with you today.

The first is from a 12-year-old girl. She's homeschooled, an only child, and her parents will be 50 next year.  Her father (or mother -- I'm not sure which) emailed me and said she went out to dinner with the family last year when they celebrated paying off their mortgage. Plus she used to listen to Dave Ramsey while they drove around in the afternoon. I think I smell a ringer. :) Here are her responses:

• What is money? Money is currency.  It’s what you use to buy stuff.


• Where does money come from? The US mint.  Where else would it come from?


• Name one thing you would buy if you had $100. A real live cat, if Mom would let me.  If Mom wouldn’t let me, then I’d buy (live) chickens.  Or I’d save it for pointe shoes.


• How much money do you think it takes to be considered “rich”? $500,000.


• Would you consider our family “rich”? Yes.  Well, we’re richer than some people.


• What job do you want to do when you grow up? Something that is in the field of dance.  Or a cake decorator or baker.  Or a professional Lego set designer.  Or a wife and mother.


• How much do you think that job will pay? I have no idea.  The dance field probably wouldn’t pay the most but you might get stuff that comes with it (like leotards and dance shoes).  I don’t know how much any of them will pay.


• How much do you think a new house costs? $280,000.  (She remembers going through the neighborhood a few years ago, looking at the “take-mes”.)  But it depends on the size of the house.


• At what age do you think people retire? Whenever they’ve saved up enough money, or when they’ve run out of energy or get fired.


• How much do you think people need to have saved up for retirement? At least $500,000.  It costs a lot to be retired unless you have a pension or something.

Pretty good answers IMO.

Another reader sent in responses from two very young children. Here are the responses:

Daughter, 6 years old

• What is money? Is used to buy stuff.


• Where does money come from?  From the printer.


• Name one thing you would buy if you had $100.  Lots of stuff, like a car.


• How much money do you think it takes to be considered “rich”? Like $2000


• Would you consider our family “rich”?  No, because we don't have a mansion.


• What job do you want to do when you grow up? Become a nurse.


• How much do you think that job will pay? $100 a month


• How much do you think a new house costs?  $2,800


• At what age do you think people retire?  46 yrs old


• How much do you think people need to have saved up for retirement? $100

Son, 4 years old

• What is money? It is made from metal.


• Where does money come from? From the office. 


• Name one thing you would buy if you had $100. A puppy


• How much money do you think it takes to be considered “rich”? $100


• Would you consider our family “rich”? No, because we bought a house.


• What job do you want to do when you grow up? A funny doctor (giggling)


• How much do you think that job will pay? $100 a month


• How much do you think a new house costs? $1 million


• At what age do you think people retire? 100 years old


• How much do you think people need to have saved up for retirement? $100

Ha! These were so much fun to read -- I had a smile on my face with every response!

Finally, here's one from a 13-year-old:

• What is money? That one evil thing that makes the world go around.


• Where does money come from? The idea that there must be something given in return for a service or good.


• Name one thing you would buy if you had $100. A warhammer 40k rule book.


• How much money do you think it takes to be considered “rich”? Material-wise, at least $1,000,000 big ones. Otherwise, if you are successful in life, have ones that love you, and the ability to do things for fun and not for survival.


• Would you consider our family “rich”? Not really, we're technically middle-class.


• What job do you want to do when you grow up? Either a singer/actor, or an astronomer.


• How much do you think that job will pay? Singer/actor, next to nothing if I'm not successful, millions if I am. Astronomer, I would think I'd at least get six figures a year.


• How much do you think a new house costs? On average, anywhere from $300,000


• At what age do you think people retire? Around 50-70, hopefully.


• How much do you think people need to have saved up for retirement? It depends on where you live, but anywhere from $300,000-$800,000 if you're smart with it.

 Very nice indeed! Many of these responses seemed pretty on target to me.

Reader Profile: SR

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.

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

Please tell us a bit about yourself.

I am 46 years old, married with two kids and employed at an aerospace company as an engineer for the past 23 years. It is the only day job I have ever had.  My wife has been a ‘stay at home’ mom up until the last year when she went back to work part-time for a local CPA. She was previously a CPA before she chose to stay at home.

I consider investing in stocks one of my main hobbies and I have spent the last 25 years trying to learn all things about stock investing

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

With some modesty I will share my financial position.  Being anonymous doesn’t hurt. It’s not that great, but still after reading this; it comes off as a bit arrogant. I guess my purpose would be to share with someone just starting out.  It gives an example of someone who has slowly built wealth, so it can be done.

My financial position is relatively strong. Despite living on a single income for most of my career I have been able to grow my retirement accounts to around $560K and also have a taxable brokerage account around $200K. I keep pretty good records of my investments and my average annual return has been around 10.5% (compared to 9.3% s&p 500). I hold around 10 public stocks and have probably made less than 50 trades in my entire career. So, I am definitely a buy and hold investor. In addition, I have a defined pension benefit with my company that is projected to yield 50-60K annually at 55 years of age. There are many different ways to value this but a rough estimate would be the equivalent of maybe $500K in savings for someone who doesn’t have a pension.

My salary has benefited from consistent employment for 23 years as an engineer. I will say it is north of $135K. My kids are just starting college. My daughter will start at a private school next year and my son will probably go to a public university. My daughter received scholarships such that tuition, room and board is only modestly higher than if she were to attend a public university (~25K). Both kids will pay a portion of their tuition and may have to take on some debt to accomplish this. My wife and I feel we can fund their total college expenses with our incomes.

I do still have a large mortgage. I owe $375K on a 30 year loan at 3.75%.  My life strategy has always been to invest in stocks as opposed to pay off mortgages. However, this will inflate my expenses in retirement compared to most others who have paid off their mortgages. We have no other meaningful debt and traditionally live below our means by about 10%

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

I am in the last push towards financial independence and I am working on figuring out the optimum time to leave my work , start something new and be assured that my family’s financial foundation is secure.

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

My current goal is to leave my company at the age of 53 with a two year retirement leave such that I can take full retirement benefits at 55. I will need to be financially independent by this time.

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

I can still remember the day when my father first showed me a graph of his projected 401K value. I was only 18 at the time. I understood exponential curves from my math classes but the actual real world application of his salary, savings and investment return opened my eyes.  In that instant I knew it was possible for anyone to become a millionaire. Living below my means always had purpose for me as did optimizing my investment returns. These two things along with time and patience have always been my ticket to financial independence.

Help a Reader: What to Do with a Windfall

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

I would love some advice about what to do with a $20,000 windfall. My wife's grandpa died, and we are getting $20,000. I'd love some input on what's the best thing to do with it.

No credit card debt, and we have enough of an emergency fund (though I'm not against setting more aside). 10% will be paid as tithing.

Debts

Student Loans

• $1,899.59 @ 6.3% ($42.36/month)
• $3,350.04 @ 5.55% ($56.28/month)

Mortgage

• $94,402.92 @ 4.875% ($842.66/month)
• Includes PMI of $51.15/month. We currently have a loan-to-value ratio of 85.8%. The value of the house is estimated to be $110,000.

The Complication

I'm going to grad school this fall and was planning on taking out student loans to cover tuition (I'll cover books and other expenses from my salary). Tuition is $14000/year. My program will take 3 years.

Subsidized student loan rates are currently between 5% and 6.8%. I won't know what rates I can get until late July/August.

Is it better to get out from under PMI and the current student loans, or keep paying them and only need to borrow for tuition for 2 of my 3 years? Is there something else I should be considering doing with the money?

What is your advice for him?

The Best of Money Carnival

Just a note to let you know that the Best of Money Carnival is now up.

Enjoy!

More Thoughts on Tithing

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Recently the Christian Financial Alliance asked several bloggers the following question:

“What are your convictions regarding the practice of tithing?”

Here was my response:

“I believe that 10% of gross income is the minimum a person or family should give to their local church. Call it a 'tithe' or 'generous giving' (if you hate tithing), but either way it nets out the same. There are many reasons for my feelings on this but the two main ones are 1) tithing was and Old Testament standard and we’re called to a HIGHER standard in the New Testament (Matthew 5:21-48) and 2) Jesus endorsed the practice of tithing (Matthew 23:23).”

I'm sure this position will generate a lot of conversation. :)

FYI, you may also want to check the link above to see what other bloggers had to say on the issue.

What do you think of my response?

Reader Profile: JY

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.

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

Please tell us a bit about yourself.

I am a systems engineer at a multinational biomedical device company. I am 32 years of age and my husband is 35. This job is my first "real" job as I was in school continuously until I was 30 - culminating in a doctorate degree in 2010. I earn roughly 80k/yr including bonuses and also about 15-20k/yr from my side job as a software consultant. My husband is a software engineer at a local software start-up and he makes 62k/yr.

I have always had some part-time software programming job since my freshman year in college. While I wasn't paid particularly well on an hourly basis, I was still able to save enough for a down payment on a house and fully fund a ROTH IRA for 10 years. We were both very lucky in that we have no school loans whatsoever. We both went to a very inexpensive state school and I had a full ride in graduate school.

We are not particularly frugal but we are mindful spenders and only spend on things that are of value to us. We share a beat-up older car, bag our lunch daily, spend only about $100 a month on "shopping" and eat vegetarian at home to save on food costs. However we enjoy and pay for annual vacations as well as our hobbies (piano for me, robotics tinkering for him). We feel we've struck a very happy balance between our wants and our needs, and we feel blessed with what we have at this point in our lives.

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

My current job is the first job where I was able to participate in a 401-k, so I am maxing out the limit to the plan ($17k for this year). I have about 25k in that account as of right now. Prior to opening my 401k I started a ROTH IRA in 2001 and have 56k in that. I have other IRAs and brokerage accounts totaling roughly 44k. My husband only has a ROTH IRA and a Rollover IRA totaling 65k. In all we have roughly 190k spread across all manners of retirement accounts. In our opinion we're doing ok, but the lack of a 401-k for the husband is detrimental to his savings rate. His start-up doesn't provide any benefits other than 2 weeks of paid vacation and I am encouraging him to look for a new job or quit and work on our own business venture.

We purchased our home at/near the height of the market in 2004. The mortgage is at 179k  and the home appraised for 260k when we refinanced although we are into it at least 320k at this point with our remodeling and much-needed fixes. However we love it and plan to stay a while. We pay 3x the minimum on our loan (a 5 year arm at 2.85% refinanced last year) with the aim of getting it paid off before it resets in 2017.

Our monthly expenses generally ring in at about $5k. This includes our accelerated mortgage payments. If we had to, we could live off of $3,000 a month. The breakdown of our typical monthly expenses looks like this:

• Mortgage/Insurance/Escrow:  $2600
• Utilities: $400
• Food: $500
• Eating out: $300
• Shopping: $100
• Gas: $150
• Cell Phones: $160
• Cable/Internet: $140
• Charities: $100
• Life Insurance: $50
• Yoga/Piano/Tennis Lessons: $200
• Misc (Travel, car repairs, etc.) : $300

We have emergency funds of 40k in a variety of online savings accounts. In January of this year I extended a 50k personal loan to my MIL to help her pay off her CCs. Her children are paying me back at the minimum interest rate to avoid paying gift taxes (3% over 5 years). I realize this  might be considered risky  but consider my husband was already paying the CCs for his mother at 19-24% interest rates. This will help everyone out. In exchange for the bailout we froze MIL's credit report and cancelled all of her CCs with the understanding she will only pay with cash from here on out. We've also implemented a savings plan for her where she contributes to her work retirement and saves her SS checks.We only wish we did this years ago before the CC amount ballooned to 50k. Some of the money from the MIL loan will go towards paying off the house balance in 5 years.

I am also providing financial support for my divorced parents. Between my parents I pay out roughly 10k a year to support them in retirement. While this is a definitely a pinch it is expected in my culture for the children to provide support and I expect to do this until the end of their days.

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

The biggest concern right now is my husband's job security going forward. His start-up is running low on money and people are leaving in droves. We can survive off of my single income and we are now deciding whether he should quit his job to concentrate on our ventures (I fully support him on this and will be involved) for a few months before he goes back to job hunting. In our area demand for software engineers is very high and he already has a standing offer to join another company although that one won't pay very well. It is our dream to start our own business and we both want to get going while we are both still relatively young and there are no children in the picture yet. While I am doing well with my side consulting job we want to eventually both work on our business ideas full time.

If my husband does quit and we are down to my single income I can no longer max out my 401-k and it may impact my ROTH IRA contribution as well. We also will not be able to pay off our house in 5 years. So there are lots of concerns. My husband's current job could end at any time with only 2 weeks' notice. I am curious to see what people would recommend for us to do.

Since all the benefits (medical, dental, vision) are from my job it is less likely for me to quit anytime soon but I also want to eventually quit so I can work on our business. I am not sure how/when to take the plunge and would like to know from others when they were able to make this plunge and how they did it.

A looming concern is the implicit retirement support for our aging parents. They all think we are doing "well" and expect us to help them with their retirement expenses. MIL has almost nothing saved and has severe health issues. My father is in the same boat. My husband and I are going to have to increase our financial support down the road and possibly take them in. We are not sure how to plan for this and any help or experience would be helpful.

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

We want to build our own company and be able to eventually become angel investors in early stage companies while also being able to pursue our passions (travel, sports, music). While we are thinking of having children that is not our top priority. Our current financial goal is to pay off the house note and save $100k in liquid cash before my husband's 40th birthday in 5 years - very achievable as long as we stick with our current savings rate. That milestone will free us to the opportunity to quitting our day jobs and pursuing our business venture. Healthcare remains our biggest concern if we both quit our jobs.

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

Be mindful at an early age of the power of savings. I was lucky in that I encountered people who gave me good advice at an early age that propelled me to start working/saving early. I've made some mistakes but overall I have managed to build up significant savings and achieved many financial goals early because I am a disciplined saver. I definitely splurge on travel and personal hobbies, but I only do so when I can pay for everything with cash and meet my savings goals first.

Make sure you keep reading books and educating yourself about personal finance and understand how to manage your own finances. While there are situations where a financial adviser could be useful (i.e. complicated estate planning), most of the time you should be able to handle your own money and know where you stand.

Another piece of advice I would give is to start working asap as a young person. Get out there and get some real world experience as soon as you can. I have worked part-time since I was 8 years old as a babysitter. Working young can instill a strong work ethic and appreciation for the value of money.

Carnivals for the Week of June 11

Here are some of the carnivals Free Money Finance was in this week:

• EDITOR'S CHOICE! Festival of Frugality
• Cavalcade of Risk
• Carnival of Personal Finance

Enjoy!

P.S. Carnival Hosts -- If my post is in your carnival in a given week, please send me the URL to the carnival and I will include it in my weekly roundup.

Securing Your Credit

The following is a guest post from Marotta Wealth Management.

If you plan on applying for a new job or applying for a credit card, car or home loan, you may want to check your credit report first. A U.S. Public Interest Research Group report in 2004 found that one in four credit reports have serious errors that could significantly lower your chances of being approved.

Employers and potential creditors look at your credit report as an indication of your character and creditworthiness for short- and long-term loans such as a credit card, car loan or home loan. Even if you think you have good credit, begin the new year by checking the facts on your credit report anyway. Your credit report will outline your full credit history. And it can help you verify you have not been the victim of identity theft.

Establishing good credit or bad credit takes time, as does fixing errors that appear on your report. Discovering these problems while sitting in your bank's loan office is no way to win.

An amendment to the Fair Credit Reporting Act and the Fair and Accurate Transfers Act (FACT) now requires each of the three consumer reporting agencies to provide you with a free copy of your credit report annually. To get a complete look at your credit report card, you'll need to request a copy from each one: Equifax, TransUnion and Experian.

What is in my credit report?

Your credit report includes both personal and credit repayment history. Included in the personal information section is your name, address, Social Security number, current and previous addresses, and employment history. I recently checked my credit history and discovered that one of the digits of my Social Security number had been incorrectly entered on an account. It was listed as an SSN alias in the report.

The body of your report outlines your current lines of credit, your payment history and any potentially negative items such as companies that have denied your requests for credit. It also lists companies that have requested your credit history and any companies you have authorized to view your credit for business or insurance purposes. Review this information for accuracy.

How can I check my credit report for free?

To request your free credit reports, visit the central source for credit reporting at www.annualcreditreport.com. From that site, you can view a copy of your credit report from one or all of the bureaus. Or call toll-free at 1-877-FACT-ACT to request your free annual disclosure from the agencies. Your report will be mailed to you within 15 days.

For verification purposes, you will be asked a series of security questions. In my case, I was asked how much my mortgage payment was each month, what county I live in and the make and model of my car.

Beware of bogus credit companies claiming to offer free credit reports. Entering the wrong web address may land you at a bogus site claiming so-called free credit reports. These may be a trap to garner your personal information. Remember, there are only three official credit reporting agencies.

Each of the credit bureaus will try to sell you a detailed report. Some offer credit reporting packages for as little as $5.95 or as much as $68.70. You do not need to purchase these products. Proceed carefully on the websites, and click only on the free credit report offer.
How can I check my credit report regularly?

To get the maximum benefit, stagger when you check your free reports throughout the year. Your spouse is also entitled to free credit reports. By alternating with your spouse, you can check your shared credit every two months.

• January: You request a report from TransUnion
• March: Your spouse requests report from Equifax
• May: You request a report from Experian
• July: Your spouse requests a report from TransUnion
• September: You request a report from Equifax
• November: Your spouse requests a report from Experian

You can add a fraud alert message to your credit report to help protect your credit information. Fraud alert messages notify potential credit grantors to verify your identification before extending credit in your name in case someone is using your information without your consent. Review a copy of your personal credit report. If you believe that information in your credit report is inaccurate due to identity theft or fraud, contact the bureau at the phone number on your report for assistance from a representative specially trained in consumer credit fraud.

What should I do if I suspect someone has applied for something in my name?

Identity theft hits about 7% of households each year. If you receive any notice that someone has applied for something and you did not originate the application, you may be victim of an attempted identity theft.

The first step is to call the credit reporting companies and add a fraud alert to your credit information. Start by calling Equifax at 1-800-203-7843. Follow the prompts to have a fraud alert added to your credit information. If you are married, call separately for your spouse. They will ask you for your Social Security number, and they will offer to sell you credit monitoring services. Putting a fraud alert on is what's important.

A fraud alert notifies potential credit grantors to verify your identification before extending credit in your name. This helps prevent your personal information being misused for the next 90 days. When you place a fraud alert with one credit bureau, they will notify the other two bureaus. For the next two years, your name will be removed from all preapproved credit and insurance offers.

At the end of 90 days, you can reactivate the fraud alert for an additional 90 days. If you can provide proof you have been the victim of fraud, you can put an extended fraud alert that will last for seven years.

Is there a way I can lock down my credit completely?

You can place a complete credit security freeze on your credit record. A credit freeze does everything a fraud alert does and more. First, it is permanent, not just for 90 days. Second, it prevents lenders from accessing your credit report entirely unless you specifically grant them access. This strategy prevents identity thieves from getting new credit in your name even if they have every bit of your personal information.

In some states, each credit bureau is allowed to charge a onetime $10 fee. If you have already been the victim of identity theft, the charge is waived. And some states do not allow agencies to charge for placing a security freeze. We recommend a credit freeze for people who have already established the credit they need. A freeze both reduces the frenzied marketing of additional credit opportunities and the potential harm of compromised personal information.

After a few minutes of effort and $30 in payments, your credit should be locked for life. Couples should lock down the credit file of each spouse. Here is how to accomplish securing your credit at each bureau:

• At Experian (888-397-3742), go here
• At TransUnion (888-909-8872), go here
• At Equifax (1-888-766-0008), go here

The process is not standardized across the three credit bureaus. Each uses a different method. But with a little effort, your credit will be safe and secure.

Can I lift the credit freeze later if necessary?

Each bureau will give you a personal identification number (PIN). They are likely to be all different. Don't lose these. Trying to get a security freeze lifted when you have forgotten the PIN necessary to change your credit security is a catch-22 you don't want to experience.

If you do apply for additional credit, you will have to remove the freeze temporarily.

If you plan on applying for additional credit cards or getting a new cell phone provider or cable package, a credit freeze may not be advisable. And those promotions linked to new credit card applications will no longer flood your mailbox. But these deals are never a way to build real wealth anyway. Get the few credit cards you need, and don't let any promotional offers suck you in.

The Portrait of the Perfect Investor

The following is excerpted with permission of the publisher John Wiley & Sons, Inc. from The Big Win: Learning from the Legends to Become a More Successful Investor by Stephen L. Weiss. Copyright (c) 2012 by Stephen L. Weiss. 

The book profiles various investors, their strategies, and what has made them successful. This excerpt summarizes the author's conclusions as to what makes a great investor and I thought FMF readers would appreciate reading it.

So what are the common threads running through each of these personalities? What makes them so successful at what they do? And is it possible for someone to replicate these traits and processes with the goal of becoming a better investor? The obviousness of all this makes it almost too simplistic to catalog but, never one to pass up a fat pitch, I am going to proceed with a numbered list.

1.  No emotion. Not one of the successful investors I know, and I know many in addition to those chronicled herein, expresses any emotion about the markets. Cool, calm, and levelheaded, they are confident in their strategy and process. In fact, they see the bright side of dislocation — opportunity. They do not get caught up in euphoria and chase stocks or markets, nor do they sell at bottoms because they panicked or were taken by surprise.

2.  No ego. There are many big egos in this business and I have seen ego destroy a fund more often than I have seen it work in its favor. No one in this book had any evidence of ego. Self-confidence, yes, but ego, no. They all recognize that they can be wrong at times.

3.  Long-term investors. Who really makes money actively trading? Not these people; they have too much money to whip around effectively. And, they profess to not being smart enough to trade the market. Very, very few traders are smart—or lucky—enough to consistently make money trading in and out of positions, particularly with the way the markets have evolved. It takes time for an investment thesis to mature, particularly if you are a value investor and usually early to a story.

4.  Discipline. Disciplined risk management and a disciplined investment strategy that they never veer from, ever. Style drift is one of the most popular ways to lose money.

5.  Thorough research process. They all have it: the real estate investors, the equity investors, the commodity investors. Diligent, thorough, and disciplined (that word again). They do not buy anything they don’t know and will not even look at what does not fit into their style.

6.  Passion and work ethic. With unseen opponents and unexpected pitfalls, investing is too tough an endeavor to pursue unless you have passion. Despite the length of time they have been investing and the long days they still put in and the incredible wealth they have all built, they all work extremely hard. Taubman has stepped away from the day-to-day of the company he founded, although he is still the largest shareholder. Instead he has channeled his work ethic to other pursuits, charitable pursuits, working just as hard to find a cure for cancer as he did to build malls and wealth through investments.

7.  Drive.  They all want to be the best  and devote whatever effort it takes to get there.  They all have enough money, so wealth is not the motivator except for what it can do for their families and philanthropically. Moreover, it is the challenge of doing well against the markets, of figuring them out and coming out ahead; of being engaged and having a focus.

Drive. Passion. Process. Equanimity. Discipline. Humility. These are the commonalities between all those profiled in this book and the qualities that make for a great—and legendary—investor.

Your Money or Your Life, Become a Great Investor

Today we're going to cover the final step, step #9, from Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century.

Last time in this series we discussed the Crossover Point, the point where your monthly investment income becomes more than your monthly expenses. Since your money earns enough to cover all your costs (without you working), at this point you are financially independent. Today we're going to build on this thinking with step #9.

The book summarizes step #9 as follows:

Become knowledgeable and sophisticated about long-term income-producing investments and manage your finances for a consistent income sufficient to [cover] your needs over the long term.

This chapter details various investing issues you might expect it to: return, safety, inflation, risk, and so on. But it does this in ONE chapter. As you might imagine, it gives very simplistic and general advice. I can't see anyone reading this and having a viable investment strategy. I wouldn't really expect this any way since the book is more of a "lifestyle finance" book IMO than an investing book, but to even try and cover a complex subject like investing in such a short space (and in a Pollyanna way in many cases) seems a bit careless to me.

That said, their point is valid: if you have the assets to generate enough income to cover your expenses, you better spend some time learning how to make the most of them. Otherwise you may not have them that long.

I'm the last person to say that investing advice needs to be long-winded and complicated. But to me they miss the basics of what it takes to be a successful investor. Then again, they are investing mostly for income and I am not (at least not at this point in my life.)

Even with that said, you'd be much better off reading "Income Investing for Dummies" (if such a book exists) or something similar than trying to develop an investment strategy off of this chapter. There simply isn't that much "meat" in it.

How I Feel About the Book

After several posts on this book you're probably guessing that I'm not in love with it. You would be correct. That said, there are some thoughts that I do like including the following:

• You give up your life to get money. You trade an hour here and an hour there for pay so that your family can survive/thrive. Let's not forget that we're trading hours of life for money when we work.


• Tracking every cent you spend is a good exercise. Maybe not forever, but if you do it for 30 days or so it will be quite insightful. You will certainly learn things about your money and your spending that will totally surprise you.


• Not letting your lifestyle creep up is a key part of financial success. And if you really want to ramp up your money performance, take it to a whole new level and look for places you can cut spending.


• At the same time, look for ways to increase your income. By cutting expenses (or at least keeping them from growing too much) while also growing your income, you'll be increasing your gap -- the difference between revenue and expenses. And this is the fundamental step for anyone wanting to grow their net worth.


• I LOVE the Crossover Point concept. It's the heart of what many of us are trying to accomplishment (as I wrote about in The Safest Retirement). If you can get to the point where your money makes enough to cover your expenses, you are certainly financially independent.

However, there are some negatives to this book for me including:

• The "life energy" talk is a bit esoteric and long-winded for me. I get it, we all trade time for money. But do we need to go on and on about it for four chapters?


• The book is for beginners -- people that know relatively little about managing money. This is a positive if you fit into this group, but for me it was a bit like reading "See Jane run" over and over again.


• The book was high on ideas, but low on practical suggestions. The concepts were often good, but I felt there were not very many thoughts on how to put them into practice. Not to say that there weren't any, but I would have preferred a less theoretical and more practical book.


• The investing section was dreadful, maybe even harmful. Ugh.

Overall, my main impression was that the book was "ok", but nothing special. If I had started reading it from ground zero -- not thinking it was one of the best personal finance books ever (since so many people have said this online) -- maybe I would have thought better of it. But since my expectations were so high, I couldn't help but be disappointed.

Now that you have had the chance to read my thoughts on the entire book, what do you think? Do you like this book? Why or why not? I'm very interested in reading your comments below.

Update: If you want to read this entire series, go here and then follow the links from one post to the next.

Why Conventional Wisdom Isn't Always the Best Advice

US News has a post on what to do if you receive multiple job offers. At least that's the title. The REAL issue they address is what to do if you get an offer from a company you like, but have one pending/in the works with a company you like better. How do you keep one offer "warm" while trying to get an official offer from the company you most want to work for?

Their advice is spot on IMO: contact the second company and tell them you love them but have another offer. Then ask them if they can speed up their process so you will know whether or not they will offer you a job. Good strategy.

Unfortunately, this plan doesn't always work out smoothly. In those cases, here's what US News suggests:

Company B might tell you that they can't speed up their timeline. If that happens, then you have a difficult decision to make: Are you willing to turn down Company A's offer without any guarantee that you'd get an offer from Company B in the future? Your answer probably depends on your financial situation and how confident you feel about other prospects coming along.

But what you shouldn't do is accept Company A's offer with the intention of backing out of it later if Company B comes through. Company A will have turned their other candidates loose by that point, as well as invested time and money in preparing for your arrival, so reneging on your acceptance would burn that bridge to a crisp. You'd also risk damaging your reputation in your industry, because people talk and you never know when that will come back to haunt you. Assume that once you accept an offer, you'll need to keep your word.

In other words, do what you can to expedite things, but know that you might need to decide if you're willing to end up without any job offers to see the process through with your favored company.

To me, that's good, standard, basic advice. But it's also advice I ignored once in my career and the decision has been one of the best I've ever made.

I won't completely re-hash the situation again (if you want details, read My Jobs, I Get My Dream Job and What to do When You Have a Job Offer but Are Waiting for Another One). But for those wanting the abridged version, here's what happened:

• I got an offer from Company A.


• I loved Company B and contacted them, asking if they could speed things up. They couldn't (for a few reasons.)


• So I accepted the offer from Company A.


• Two weeks later, Company B called and the new division president asked me to fly down to meet him.


• I told him I had already accepted a job, but he said he was paying for the trip, so what could it hurt?


• I took the trip. I still loved the company.


• They made me an offer.


• Then the agonizing began...

The conventional wisdom above would be to tell Company B that I'm sorry, but that I made a commitment to Company A. In fact the standard advice would have told me not to have even gone down to see Company B that last time (I tried that, but the president was persuasive.) But in the end, I took the job with Company B and called Company A to withdraw my commitment.

Let's review my situation in light of the advice above:

• Are you willing to turn down Company A's offer without any guarantee that you'd get an offer from Company B in the future? I wasn't. After all, I never knew if Company B would ever have a position for me (I actually lost out on the first job opportunity at Company B and didn't even know a similar job would be available.) And my current work situation was horrible (people were fleeing like rats off a sinking ship) and I had to get out of there. Company A was an "ok" alternative (not great, but good.)


• But what you shouldn't do is accept Company A's offer with the intention of backing out of it later if Company B comes through. I didn't have this intention. My intention was to go work for Company A.


• Company A will have turned their other candidates loose by that point, as well as invested time and money in preparing for your arrival, so reneging on your acceptance would burn that bridge to a crisp. Kind of. They told me they didn't want anyone else but me (who knows if that was true), so they would have had to keep on looking even if I had said "no." However, I certainly did burn that bridge -- both with the employer as well as with the executive recruiter (who I had worked for at another company.) Ouch!


• You'd also risk damaging your reputation in your industry, because people talk and you never know when that will come back to haunt you. I knew this was a risk and knew it had the potential to come back and bite me. This was one of the factors I had to weigh heavily before I decided what to do.


• Assume that once you accept an offer, you'll need to keep your word. This was my biggest question. I had given "my word" that I would take the job. Company A wanted me to sign a sheet of paper saying I accepted the offer officially, but I had not done that yet. But did I owe them anything by saying I'd take the job? Or is it every man for himself in the corporate world? I have lost people to other companies as a hiring manager and I know it can be painful (in many ways.) What exactly was I committed to doing (if anything?)

Here's what I did: I worked my network. I called several people I admired as either bosses or colleagues. I talked to them via phone or in person, presented my situation, and asked them for their point of view. Every single one of them said I should take the offer from Company B. The most compelling piece of advice was from my pastor. He told me of how he was once in a very similar situation (he had accepted a job from one church when another offered him one.) He had agonized over it for quite some time, then eventually took the second (preferred) job. The decision had turned out very well for him.

After all this advice, my wife and I decided to take the position at Company B. To this day, calling my manager at Company A and telling him I was not going to accept his job after all was one of the hardest things I have ever done from a business perspective (it's right up there with firing someone.) But he was very cool about it. He told me that it sounded like a job that was fit for me (we had discussed it during the interview process) and that I should take it. It was a totally unexpected response because he was actually a pretty rough sort of guy. I had expected him to start yelling at me.

It's difficult to know 15 years later whether this was a good or bad decision (as we've discussed, any specific move can have unexpected results), but here's what happened in both the near and long term:

• A year after I went to Company B, Company A fired the executive I was going to report to. They were in a turn-around situation (which I knew) and things went from bad to worse -- much worse. I would have gone from a difficult work situation to likely an unbearable one. I could have even found myself fired as part of the team that didn't turn things around.


• A year after I went to Company B, I was loving life. Over the next few years I had a (generally) great experience. And while there were some bumps in the road, my career thrived in both responsibility and compensation. That post at Company B eventually led me to another company and from there I found my current job -- the best job I've had at any point in my career.

So this post is a long-winded way of saying the following: Often conventional wisdom (or rule-of-thumb if you prefer) is good and solid. But there are always exceptions to the rule. And when you're dealing with an asset as big as your career, you need to consider ALL alternatives before you make any major decision.

The same holds true for almost all financial "rules". In many (most?) cases they point you in the right direction. But in some specific situations, it's actually better to go against the flow and make an opposite decision.

How about you? Have you ever made a financial decision that went against conventional wisdom? How did it turn out for you?

The Best of Money Carnival

This week's the Best of Money Carnival is now up. Enjoy!

Your Money or Your Life, Track Income and Expenses Monthly, Then Work on Lowering Expenses and Increasing Income

Today we're going to cover steps #5 through #7 from Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century.

In the past we've covered one step at a time, but to be honest I don't see enough "meat" in the next three steps to warrant a post on any one of them alone.

Last time in this series we evaluated our spending, looking at each spending category and determining whether or not the amount spent on that item was worth it for us or not. Today's steps follow along this line of thinking and evaluation as well.

Here's step #5:

Make and keep up-to-date a chart of your total monthly income and your total monthly expenses.

The book has you create a hand-written chart with dollars on the vertical axis and time (broken into months) on the horizontal axis. Then for each month you make a mark for your actual income and your actual expenses. You then draw lines between the marks for each so they form a line -- and you can see your gap (the difference between your income and expenses) each month.

I used to keep my finances by hand (in a ledger book) back in the "olden days." Then I got Quicken and have never looked back. I could create the chart they are talking about above in roughly 15 seconds (and include the past 15 years or so) using my computer and that software. Very easy.

From this information, they want you to then start concentrating on expenses -- and how you can cut them. There isn't anything about increasing income at this point (that's coming), it's all about eliminating costly things that you get no pleasure from. This spirit is evident in step #6 which is as follows:

Lower your total monthly expenses by valuing your life energy and increasing your consciousness in spending. Learn to choose quality of life over standard of living.

I'm all for cutting needless expenses (as regular readers are aware) and for spending on quality of life rather than standard of living. But was there really a need to go through all of this "life energy" stuff and 195 pages to get us to the point where we simply are concentrating on "cutting expenses"? Seems like a bit of overkill to me.

Anyway, the book continues with step #7 as follows:

Increase your income by valuing the life energy you invest in your job, exchanging it for the highest pay consistent with your health and integrity.

I'm going to say it now: I hate all this "life energy" mumbo jumbo. It's too touchy-feely for me. Why can't they simply say something like "time is money, so work to make more money in less time." I know, those aren't the right words, but you get the idea. All this "life energy" stuff makes me think this is a long lost book from the Starship Enterprise.

And at the end of step #7, we're now at page 233. Yes, 233 pages to say:

• Create a budget


• Evaluate what you can cut based on what you don't like/need


• Work to grow your income

Didn't I just recently say all of this in one post? I think I did.

And if you're looking for a short-list of ideas you can use to grow your income, check out 80-20 Your Career. These are the career-related tips that will give you the most results for your time and effort.

It's not going to be a surprise to those of you who are reading along, but I don't really care for this book. I Know that so many people have LOVED it, but it's too "out there" for me. Perhaps if I had read it when I knew less about managing money, then I would have liked it. Perhaps. But I don't think so.

So far, I haven't learned much from this book and it's been (almost) a waste of my time reading it. But there's a concept coming up in the next step that I do like (yes, I read ahead a bit), so stay tuned to see what that is...

Update: Click here to read the next post in this series.

Finding Your Calling

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Recently the Christian Financial Alliance asked several bloggers the following question:

“What is the connection between a Christian’s sense of ‘calling’ for their life and their professional career?”

Here was my response:

“I think it varies from person to person. I view a 'calling' as more of a faith-based area that you feel God is pointing you towards. For some people (like pastors, church musicians, etc.), the calling turns into a career. For others, their career is separate from their calling and they find non-vocational ways to fulfill that calling (like volunteering for a non-profit, serving on a church committee, etc.).”

What do you think of my response?

Good Advice on Long-Term Care Insurance

Based on my recent long-term care insurance post, many people are thinking about the same issues I am -- namely, what to do about it.

Shortly after I posted that piece, I ran into this article from Kiplinger's that IMO has some decent advice regarding long-term care insurance. The highlights of their advice:

Instead of buying enough long-term-care insurance to cover the full risk, you can keep the premiums more manageable by making some trade-offs.

Rather than buying a policy that provides lifetime benefits, go with a plan that offers benefits anywhere from three to five years. Advisers also prefer "shared benefit" policies for married couples. A three-year shared-benefit policy provides a pool of six years of coverage to divvy up between spouses. If you need five years of care and your spouse needs one, you're both covered. Such a policy costs about 15% more than two separate policies with three-year benefit periods.

Because you may wait 20 or more years to tap your policy, your daily benefit should keep up with rising costs. The 5% compound inflation protection is the gold standard, but some companies are offering cheaper policies that boost benefits by 3% a year. The 3% annual boost has kept up with general inflation recently, although the cost of care often rises faster than general inflation.

It's important to work with an agent who deals with many insurers, because the price differences can be huge.

Ryan says the major long-term-care insurance companies include Genworth, John Hancock, Mutual of Omaha, MassMutual, New York Life and Northwestern Mutual. "Make sure you give your agent as much of your medical history upfront, so the agent can match your risk with the company that can make the best offer," Ryan says.

Even with these cost-saving moves, Ryan says policyholders should be prepared for a premium increase of up to 20% every five years. To cap your future premiums, you can buy a "ten pay" policy. You pay more each year, but premiums end after ten years. Make sure you ask the insurer that it won't impose new charges after ten years.

Lots to comment on. Here are my thoughts:

• If you manage your finances correctly throughout your lifetime, their suggestions seem right on target. You should have enough saved up to cover much of your long-term care, so a three or five year plan seems appropriate. And the fact that you can share it with your spouse makes it an even better option for married couples.


• I have to think that inflation will be higher in the future than it has been in the recent past, so the 5% cost adjustment seems like a no-brainer to me.


• Where, oh where do you find a great long-term care insurance agent? Anyone have any suggestions? Ask friends and family? I have a good agent who helped me buy my disability insurance policy, but he's now out of that business. Perhaps I could ask him to refer someone who he's worked with.


• Anyone had any experience with any of these: Genworth, John Hancock, Mutual of Omaha, MassMutual, New York Life and Northwestern Mutual? Our company's 401k is with John Hancock, but I have no insurance experience with them. I believe my dad used to work for Northwestern Mutual for a short time selling permanent life insurance, but I have no direct experience with them either.


• That ten-pay policy seems interesting. I would need to run the numbers to see if it was a good deal, but there's something attractive about paying for a fixed amount of time and having the policy paid off. I guess it's kind of like an annuity -- you give them a set amount of money and that's it, it's all benefits from there on out. I wonder if they have a "one pay" where you can simply plunk down one lump sum and have all your benefits paid for in a single transaction.

In addition to the above, I ran into this copy of "Let's Talk", a PDF magazine from Genworth. It reminds us of another issue -- that our parents may need long-term care insurance. It suggests ways for bringing up the topic with them. Add this one to the "awkward conversations" list, just like talking estate planning with your parents. Ugh. It's bad enough we have to deal with these issues for ourselves, but we also need to work our parents through them.

Star Money Articles and Carnivals for the Week of June 4

Here are some pieces I found especially worthwhile and some of the carnivals Free Money Finance was in this week:

• EDITOR'S CHOICE! Carnival of Personal Finance
• Pastor Personal Finance lists a helpful site for pastors looking to take an affordable vacation or sabbatical.
• Work Save Live asks what phase of investing you're in.
• Carnival of Wealth
• Cavalcade of Risk
• Lazy Man and Money is timing the market.
• Tax Carnival
• And from the FMF vault The Richest Man in Babylon: Seven Cures for a Lean Purse 

Enjoy!

P.S. Carnival Hosts -- If my post is in your carnival in a given week, please send me the URL to the carnival and I will include it in my weekly roundup.

Help a Reader: Where to Keep Emergency Fund Dollars

Here's an email I recently received from a reader. It was in response to comments left on my post titled How is Your Emergency Fund Doing?:

I have an emergency fund that is composed of $3,000 in a rather low interest bearing account. (Small emergency) I have $6,000 in an on line savings account earning 0.85%. (bigger emergency) Then I have $12,000 in CD's that mature each month that are worth $1,000 each. A ladder of CD that earns around 1.25% but getting harder to achieve that with each passing month. I also have $6,000 in Vanguard short term bond fund which is about the safest Bond fund I know giving a current 2.47% rate. So grand total of $27K. My monthly expenses are in the neighborhood of $4,000 a month and my wife works full time and makes more than I do. We can live on one income. Hers or mine.
 
My point is that according to the posts of some people that they have $10k in a stock mutual fund, think that this is part of their emergency fund. Which I do not and I also think you do not. My only questionable part of my emergency fund is the short term bond fund. A little more risk for a little more reward.
 
So I pose the question: how do people have their emergency funds invested (where will they get their funds in an emergency)?

As I noted on that post, I am in line with this reader's thinking. To me, emergency fund money should be totally safe -- even if it earns a small amount. Other (non-emergency fund) money can be used for investing (to get the best possible return) and is handled completely differently (I invest it in index funds).

I look at emergency funds as needing to have two key factors: safety and access. In other words, is the money safe (will it be there if I need it) and can I get to it quickly? I store my emergency funds in places that answer "yes" to both these questions.

 As such, I have my funds spread through savings accounts, high-yield money market accounts, and CDs (which would be the last money I would need at the end of a long emergency.)  They are layered to maximize returns (though the returns are paltry) while also being available (in stages) should I need the money.

Yes, if I HAD to, I could sell some of my investments and turn them into cash. That said, I don't consider these emergency funds and I would not recommend anyone keeping their emergency money in investment vehicles like stock mutual funds. You never know when 1) you're going to need the money and 2) when the market will take a dip down. You'd hate to need $10k of emergency funds just when the market turned your $10k to $8k.

How about you? Where do you keep your emergency funds?

How I Lost $280 in Credit Card Rewards by Not Paying Attention

As many of you know, I use a multi-card credit card system to maximize my cash back rewards. Doing so I earned nearly $2,300 last year. It was going to be hard to beat that number in 2012 because I had a couple big bonuses in 2011, but I wanted to get at least over $1,000 since that would be my second biggest year ever, but those plans have hit a major snag because I dropped the ball. Here's the story.

Late last fall my wife received a credit card offer in the mail. It was from Citibank and it offered a straight 1% cash back. But for the first year it had an extra 1% bonus, effectively making the card a 2% cash back card for a year. We added this card to our basic credit card strategy as the "sweeper card". It was the card we charged to when we didn't have a higher cash back percentage on another card.

At the same time, I moved much of our giving to credit card, setting up an automatic payment/charge to our church each week. That way, even when we were gone (like when we traveled to see my parents over Easter), our tithe payment would be made. In addition, I had some business and travel expenses that allowed me to rack up some nice charges in March and April. So we were off to a good start -- or so I thought.

I noticed on my February statement that I didn't receive all of my cash back rewards credits. But the statement said that it could take "one or two months before all credits posted", so I didn't think much of it. In March, I didn't receive any either. At this point, I should have called them to see what was up. But I assumed it was the "two months" leeway they had noted. When I received my April statement and still had no rewards, I called them.

I talked to a representative for 15 minutes until he 1) understood my problem (he had limited English-speaking skills) and 2) determined he couldn't help me because he didn't have access to my past statements. He then sent me to a manager at a different location. She had just said, "I can see from your account that..." and the phone went dead. Ugh! By this time I was nearing 20 minutes on the phone with Citibank. I was not a happy camper.

I called the main number back, made it through the voicemail gauntlet, and finally got another representative. I told him that I was cut off with a manager and needed to talk to one. I got one rather quickly. I gave her my home phone and asked her to call me back if we became disconnected.

She looked over my records and came up with the answer quickly. The card had a $300 cap on rewards annually and we reached it. Ugh. The woman on the other end was sympathetic, but said there was nothing she could do. She did, however, give me 1% cash back on my last month of charges as a courtesy for being on the phone so long and for being disconnected.

In the end, the fault was mine. I didn't pay attention to the card's terms and simply assumed I had unlimited cash back. It was a complete lack of attention to detail on my part (not to mention the fact that I should have called them right away the second I didn't get all my rewards). And $279.73 in lost cash back rewards later, I have learned a lesson I should have learned long ago.

So here's my reminder to you: be sure you know the terms and conditions of your credit card rewards. Otherwise, you may end up losing a good chunk of change like I did.

As for what I'll do now, I will likely go with the 2% Fidelity Amex card as my "sweeper card." I already have three American Express cards (Costco, Blue Cash Preferred, and Delta) and don't really want another one, but I don't really have a choice if I want straight 2% cash back for my "all other" charges.

How about you? How are your cash back efforts going so far this year?

Your Money or Your Life, Evaluate Your Spending

Today we're going to talk about step #4 from Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century.

Last time we discussed how the book wanted us to create a budget, then convert all those spending categories into "hours of life energy" using the real hourly wage that we computed in step #2. In this step, we're now going to evaluate the fulfillment we got out of each category knowing how much it cost us in hours of our lives.

Step #4 has four parts as follows:

1. Of each spending subcategory in your Monthly Tabulation (budget) ask "Did I receive fulfillment, satisfaction, and value in proportion to life energy spent?" Mark your answer with a + (or an up arrow), a - (or a down arrow), or a 0 (for neutral.)

2. Of each spending subcategory in your Monthly Tabulation (budget) ask "Is this expenditure of life energy in alignment with my values and life purpose?" Mark your answer with a + (or an up arrow), a - (or a down arrow), or a 0 (for neutral.)

3. Of each spending subcategory in your Monthly Tabulation (budget) ask "How might this expenditure change if I didn't have to work for a living?" Mark your answer with a + (or an up arrow), a - (or a down arrow), or a 0 (for neutral) and write the estimated change on the Monthly Tabulation.

4. Review and make a list of all subcategories with the - symbol (or down arrow.)

Ok, I get it. They want us to look over our spending and then evaluate whether or not we really need it. I'm guessing that this will then eliminate some expenses so that our monthly budget decreases. And with a lower level of income needed, we can make additional life choices about the work we do and the time we spend at it. Am I right? (I have no idea, because I haven't read ahead at this point.)

The book calls step #4 "the heart of this program." If this is indeed true (which I assume it is since it's coming from the author), I'm a bit disappointed. This is it? Really? This is the "heart" of the program -- looking at your spending and deciding whether or not it's worth it? I understand that they add in the twist of the "hours of life energy", but this still isn't that different than most Personal Finance 101 books that I've read. And those are at least more practically oriented (IMO.)

But I'm not giving up on this book. So many people love it that I'm sure there's something coming up that I can hold onto. But as for now, this book isn't sharing anything I don't already know. Perhaps if I read it 20 years ago when I knew very little about personal finance, then I would have been much more impressed with what it had to say. But for now, color me unimpressed.

Update: Click here to read the next post in this series.

Reader Profile: TN

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.

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

Please tell us a bit about yourself.

I am a 30 year old, married man (wife is 28), and father of one (9 months old).  We live a smaller metro area in the Great Lakes region. I hold bachelor degrees in chemistry and math and a master’s in chemistry. Currently, I am working towards my doctorate in chemistry.

I am working as a research scientist at a small university after being a graduate assistant at my degree-granting university.  I am continually challenged by my position and maintain a goal of being a faculty member at a university that focuses on teaching, yet encourages research.  My wife has a communications degree and works full time in a fun yet challenging environment.

When my wife and I married, we combined our finances.  We entered marriage debt-free and have maintained our debt-free status.  We each take care of certain financial-related responsibilities:  I track our net worth monthly, monitor and manage our rewards-earning credit card bills (paid in full each month) and set the household budget.  My wife works on insurance claims and manages day-to-day and recurring bills.

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

Added together, our family income places us in the 66th percentile of US households. As of March 1, we have increased our net worth 364% since we began tracking this information in May 2010. 

My wife’s full time job benefits pay for our family health, dental, and life insurance coverage and her cellular phone plan. Additional recurring expenses include daycare, auto insurance, Internet coverage at our apartment and my cell phone plan. 

The greatest contribution to our savings accounts results from my side job as a property manager. In exchange for maintaining the building (cleaning, snow removal, facilitating tenant move-ins and –outs), we live rent free and pay no utilities. Management responsibilities require approximately 7-10 hours per week.

Throughout my college career, I have sought ought opportunities to work in exchange for tuition reimbursement (graduate, teaching, and research assistantships) and am close to completing my doctorate debt-free after 12 years of higher education.

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

We are currently working on enhancing our retirement and cash savings. My wife contributes 6% to her 401k (to receive the 3% match by her employer) and we both take advantage of RothIRAs. We have a 529 established for our son, funneling gifts of money (birthday, holidays) there. In the future, we hope to provide some assistance with college tuition, but will not put retirement funds at risk to do so.

Our cash savings include an emergency fund, and other accounts earmarked for recurring costs, maintenance funds and savings goals (car, house down payment). Our intentions are to establish liquid savings with the goal of purchasing a home within the next 5 years.

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

I am currently working to build my career through scholarly journal publications, the currency of academia.   Recently, I traveled to a large professional organization’s annual conference and participated in many career development sessions.  Also, I have received a few small awards for my work in my field.

My wife is happy in her current position, and plans to stay there while our family is young. We’d like to have as many as four kids, and she is considering providing stay-at-home care, dependent upon daycare costs when that time comes. She is building her portfolio and skill set in hopes of freelancing in the future.

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

We believe the key to success is placing oneself in the line of opportunity.  By applying for funding opportunities, I have been able to travel to international conferences in France, the Czech Republic and Sicily, as well as opportunities in across the US. I’ve also been able to advance through graduate school with no student debt by taking advantage of work opportunities during the summer months that other students in my area did not.
 
The second piece of advice is to look for non-traditional ways to have your living expenses covered by others. Many of our vacations/trips have been add-ons to work travel, my wife’s employer covers the expense of her cell phone (and offers me a discount), the universities have paid for my tuition and we’ve been able to live rent-free by managing our apartment building.

How to Be Richer, Smarter, and Better-Looking Than Your Parents

I LOVED Zac Bissonnette's first book Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents. IMO, it's the best book on how to plan and pay for college out there. I have recommended it to several others who have kids preparing for college and they have given me similar feedback -- it was a great resource for them. If you have a child, relative, friend, or anyone you know who is starting the college planning process, get and read this book. You will not be sorry!

I liked the book so much that I ran a series of posts on it here on FMF including:

• Examples of How to Pay for College Without Borrowing


• The Dos and Don'ts of Paying for College


• The Crazy World of the FAFSA

Since I loved book #1, I was excited when I found out Zac was writing another one. I tried contacting his publisher and requesting a review copy, but their process was a bit hard to navigate through. So I found Zac on Twitter, sent him a note, and he responded. (Very cool, BTW -- an author who is responsive.) A few days later, I had the book.

The new book is How to Be Richer, Smarter, and Better-Looking Than Your Parents and, as you might guess, it's more of a general personal finance book. I dug into it right away and read it over the course of a couple days (it's an easy read) since I was expecting to be blown away with page after page of new insights (which is what I had happen with the first book.) Unfortunately, this never happened.

Here's the summary of the new book in two bullet points:

• The pathway to becoming wealthy is through controlling your spending.


• As such, here's a book on how to save money on many of your expenses.

Of course, there's more than that to it (near the end there's a chapter on picking a career you love -- which is advice you know I hate -- and earning money on the side), but these two bullet points do cover at least 80% of the book.

The book does mix in a lot of general personal finance advice as it lays out its money-saving tips. Here's the book's own conclusion -- listing eight points that summarizes what it covers (with my comments in parentheses):

• Materialism killed the dinosaurs. Materialism is really, really bad and will lead to misery and poverty in your life.


• Debt will make your life bad.


• A little bit of money in savings will make life good.


• Keep your fixed costs low.


• Bad people work in the financial services industry.


• Simplicity, laziness, and inattentiveness are the keys to investing success.


• Eat brown rice. (It's affordable and better for you than alternatives.)


• Your career should excite you.

All good advice IMO. It's just that it's not really new, innovative, or creative. It works, of course, but it's stuff I already know. Where are all the cool tips that I didn't know -- like in the first book? Answer: Nowhere to be found.

The other thing I liked about the first book was that it was written by an expert -- someone who had actually done what he was writing about and gave great insider tips as a result. The new book reads like it was written by someone who did a lot of research on the subject, but really hasn't lived it. And let's face it, Zac is in his early 20's, so he hasn't really had the chance to live out his personal finances like many of us -- he's still learning. The difference comes across in the two books. In the first, he touts more accomplishments. In the second, he relies on credentials. And you know what I prefer when it comes to accomplishments versus credentials.

This said, I don't think the book is really for me. It's for a 20-something who knows virtually zippo about managing money and will never read a "boring" personal finance book. This person wants to hear from someone in his own generation about how to become rich. And on that front, I think this book delivers. Zac has a very contemporary (and funny!) writing style that I like and I think will connect him with younger readers. As such, this book would make a great graduation present for either an advanced high schooler or any new college grad.

Here's a section of the book that both illustrates this point as well as dishes out some great, basic, personal finance 101 advice:

It's a cliché: "It's not how much you make, it's how much you keep." But it's true! Economists Steven Venti of Dartmouth and David Wise of Harvard found that income differences account for only about 5 percent of the differences in household wealth.

The way that people accumulate wealth is that they decide to save a significant chunk of their income. Most people of all income brackets don't do this, and that's why most people never accumulate any significant assets.

What matters in wealth building is the decision to live a life that allows you to save a significant portion of your income. There's no secret, there's no trick. Doing it is more important than how you do it. Just do it. This is great news because it puts your financial future in your hands, not your boss's or anyone else's.

You may be asking yourself, "Why should I save money for retirement now? Isn't it more fun to spend? Live in the moment!"

No. Once you get started with this plan you will find that, paradoxically, saving for retirement is actually more fun than spending on cool stuff. You'll have a feeling of power and control over your life. You'll sleep better at night knowing that you're making progress toward financial power -- the ability to be true to yourself. Plus, it's extremely unlikely that your parents were saving money at your age so this move will automatically make you smarter than the people who raised you. Which means that -- for the rest of your life -- you can yawn dismissive condescension whenever they try to give you advice.

As you can see from the above, the advice is good and the humor is tongue-in-cheek. I like both. :)

So if there's a new grad or other young person in your life, this book would be great for them to check out. But for the more advanced and seasoned money managers out there, there's really nothing new here.

A Non-Financial Benefit of Managing Your Money Wisely

For those of you new to Free Money Finance, I post on The Bible and Money every Sunday. Here's why.

Recently the Christian Financial Alliance asked several bloggers the following question:

“Name one non-financial benefit of managing your money wisely.”

Here was my response:

“Peace. If you have no debt, have a solid emergency fund, and have saved/prepared for life’s various monetary challenges, you have a lot of peace in your life. You know you’re prepared if/when challenges arise. It’s a great, great feeling that most people can only dream about.”

It's true. If your finances are in order or (even better) if they are strong, it takes a lot of stress out of life. It cuts down on conflicts with others, allows you and your family a lot of flexibility, and gives you peace of mind that's priceless. It reminds me of Proverbs 10:22 (NIV) which says:

The blessing of the Lord brings wealth, and he adds no trouble to it.

What do you think of my response?

Your Money or Your Life, Create a Budget

Today we're going to talk about step #3 from Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century.

If you recall, last time we discussed computing your real hourly wage -- the amount you "really" make from your job after you add in all the extra time associated with it (commuting and so forth) and deduct the expenses (commuting, clothes, etc.) In general, we all probably make way less than we actually think as we trade one hour of "life energy" (as the book puts it) for money.

Step #3 has several parts but they really boil down to the following:

• Using the information you've gathered from tracking your spending by the penny, create a budget of your expenses (in dollars).


• Convert the dollars spent in each category into "hours of life energy" using the real hourly wage that you computed in step #2.

I really, really, really hope this is leading us somewhere meaningful. But since I haven't read ahead at this point, I'm not sure. I'm banking on the fact that so many people LOVE this book that it's all going to come together at some point. But here we are at 1/3 of the steps completed and I can't yet see the finish line. Maybe that's the way they want/like it.

It's not the budget part that's got me in a quandary (after all, I list developing a cash flow plan as one of my 30 steps to great finances), but the whole "hours of life energy" thing has me wondering. I realize that I'm trading time for money. I get that. I also get that for most people, what they trade an hour for is a small amount of money. Ok, fine. But what am I (or anyone else) supposed to do about it?

I know, I know, be patient. I'm sure they'll get to the point. But I'm anxious to get there NOW. :)

As for the suggestion of developing a budget -- good one IMO. This is a foundational step for anyone looking to better manage and understand their finances.

As for the whole "life energy" thing, I'm withholding judgment for now. I like it from the standpoint that it equates time to money because that's something most people don't think about (at least consciously.) And I like the "you make less than you actually think" line of thought because there are expenses that you incur from working that you wouldn't have if you didn't work. I just don't know how they are going to translate this from something that's kind of abstract into action steps that are concrete. It should be interesting.

BTW, I know many of you have read this book and know where it's going. Don't tell me!!! While I'm agonizing over the wait, I don't want to spoil the surprise. :)

Update: Click here to read the next part in this series.

Win a Box of Books (#24)!

Welcome FMF newsletter readers! Here's a chance for you to win a box of personal finance books (the books included are here).

Here's how it will work:

1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.

2. In a week or so, I'll select the winner at random and announce the winner on this post.

3. I will email the winner, get their contact information, and arrange for them to receive their prize.

As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Win a Box of Books (#22)!

Welcome FMF newsletter readers! Here's a chance for you to win a box of personal finance books (the books included are here).

Here's how it will work:

1. All you need to do to enter is to leave any comment on this post. Be sure to leave your email address (no one else will be able to see it) when you leave the comment.

2. In a week or so, I'll select the winner at random and announce the winner on this post.

3. I will email the winner, get their contact information, and arrange for them to receive their prize.

As always, the standard rules apply.

Good luck! Post a comment below for your chance to win!

Reader Profile: JB

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.

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

Please tell us a bit about yourself.

I just recently turned 24 years old, I have been married for coming up on 4 years now. My wife is just a few months younger than I am. We have a son who is 4 years old. We both have lived in Minnesota for all our lives. We have been working for the last year or so to really get our debts paid down as we do not want the pressure and stress that often accompanies debt. We both have 2 year degrees in our respective fields and plan on going back to school within the next few years to finish off our 4 year degrees. We purchased our first home a year ago (May 2011) and are currently renting out the lower level to my brother-in-law.

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

My wife and I both work. I work for a private CPA firm on the IT side (my official title is Support and Application Specialist) and my wife works for a hotel splitting her time between Accounting and Serving in the restaurant. Our monthly income after taxes is ~4,450 (Although we both know we have our tax withholding set too high but would rather get a decent return than ever owe money). We are both in the very early stages of our careers so it still remains to be seen exactly how they will grow. She is currently contributing 2% to her 401k, however they have started matching contributions so we have considered increasing that amount. As I am writing this I do not have a 401K going yet, but will be eligible to start one with my company within the next month. Once I start it I plan to contribute ~6% with the company also contributing 3%.

Our overall financial picture can be summed up as follows:

Income:

• Job Salary: ~4450/Month
• Cash Tips (From Serving): ~300/Month
• Rental Income: $600/Month

Expenses:

• Mortgage (Includes Taxes, Insurance and PMI): $1200
• Utilities: ~$200 (Of which, my brother in law pays ~$70) Cable & Internet: $135 (Of which, my brother in law pays $45) Car Insurance (2 Vehicles): $102
• Gas: $400 - 450
• Cell Phone: $240 (Of which, my brother in law pays $60)
• Groceries: ~$400
• Daycare: ~$950 (220/Week)
• Debt Payments: $200
• Student Loan: $46
• Pet (Large Dog): $50
• Misc: $50

Total Expenses ~$4K

Debts:

• Father-in-law: $2200 @ 0% (The 200 dollar payment seen in expenses) Student Loan: $4300 @ 4.25%
• Mortgage: $153,500 (30 Fixed @ 4.45% - 29 years left)

Savings:

• Emergency Fund: $1600
• Wifes 401K: $1200
• Cash Savings: $3300 (have been putting aside ~1k/month last few months towards paying off debt)

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

Although we are making more than we are spending, things have been running pretty close to the edge as all spare money has been going to pay off debt, after we have the listed debts (aside from mortgage) paid off, we will save up for a new vehicle for my wife as both of our vehicles are ~12 years old and don't think hers will hold out too much longer. Once we are free from our smaller debts we will want to be saving up more for retirement, and but at the same time have enough to have a little bit of fun.

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

I do not have a specific plan for the future, however my main goal is to save up enough to have a very comfortable retirement, and have financial freedom so that i can focus on living and enjoying my life (not to be confused with spending my money on ridiculous things), not about where the money is going to come from. I would love to retire early, however I will most likely build my career and do some sort of semi-retirement.

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

Spend less than you earn. I know a lot of people will say "duh!" but I have seen it with even my own relatives, they think they "deserve" things like fancy luxury/sports cars even though the payments for the vehicle are nearly half of the income that they make.

The second piece of advice is get your finances under control NOW, do not wait until later, all things being equal, the longer you have, the better!