Set up your retirement account. Just do it. Then forget it.

My new mortgage company wants to see the balance of my 401(K) account. That turned out to be a bit of a problem, but for the right reasons.

You see, I might or might not get 401(K) statements. I don’t look at them. Sometimes I save them. Usually I don’t. So I hadn’t looked at my 401(K) balance in years, and I really only had a vague idea what was in it. I knew there ought to be enough to make the lender happy.

What I found when I finally got my hands on a statement shows why part of my strategy is to never look at the account. Read more

My counterpoint to Forget Frugality

I saw a reference this week to an editorial by Ramit Sethi called Forget Frugality. While he has some good points, I think some of his advice is counterproductive and even contradictory. He argues that you should focus on earnings and negotiation instead of trying to actively cut costs.

I really think you have to do a combination of the three, and you should start with what you have the most control over, which is your own budget. Here’s what I have to say about his seven strategies. Read more

I want to feel for this ad executive, but I can’t

There’s a problem in this world, according to Mike Zaneis. It’s ad blockers.

On one level, I can relate to the guy. Ad blockers cost me between $500 and $1,000 a year, personally. But on another level, I have no sympathy for him. Because there’s so much problematic advertising out there. If you ever try to download something from one of the major download sites, good luck. There are 14 download buttons. 13 of them are ads that deliver something other than what you want, or ridealong stuff you don’t want. Somehow, Mike Zaneis thinks that’s OK, but blocking ads is wrong.

How about misleading ads that talk about government programs that don’t exist? I see an ad promising me a mortgage bailout every day. I’d love for Mike Zaneis to explain to me how this is ethical.

There are hundreds, if not dozens, of spammy news stories that are really just advertisements, preying on ignorant people, spreading misinformation and damaging society, littering the web today. Stop eating cumquats and lose 20 pounds! Buy gas at precisely 7:05 AM and gain 4 MPG! Here’s how Warren Buffet is preparing for the apocalypse! These things don’t work, and I haven’t figured out how these newsvertisements make anyone any money except perhaps through profiling, and I’d love for Mike Zaneis to explain this. There’s a guy named Kevin Trudeau who made a career of spreading this kind of stuff. He’s in prison now. The difference between Trudeau and this stuff is that Trudeau pitched it in late-night infomercials charging $19.95 rather than giving it away for free and turning the people who read it into the product–something Mike Zaneis denies anyone thinks is a problem.

But the worst of all are malvertisements–advertisements that plant malware on your machines. If I run computer code on someone’s computer who doesn’t belong to me, I’ll be hanging out with Kevin Trudeau in prison for the next 20 years. But for some reason, it’s ok to do this in the name of advertising. I’d love for Mike Zaneis to explain this, too.

But unlike Mike Zaneis, I’m not complaining. It might be nice to be a professional blogger, but I’m better off with my day job than I would ever be as a pro blogger. It’s nice when I make a little money off this web site, but a lot of what I write is to support that day job–I can find what I need at a later date very quickly if it’s on the blog. That content never makes me a dime. I have some niche content that makes virtually all of the revenue I see, but I’m hesitant to elaborate much further lest someone like Mike Zaneis launch a site and steal all that traffic.

But that’s the thing. I adapt. I have to do that in everything I do. I can whine about how I don’t make the kind of revenue I made in 2005, but the fact is, if I were willing to change a few things, I probably could make more now than I did in 2005. About 5% of what I write accounts for all of my revenue. If I could devote 20% of my content to those subjects, I’m sure I would make considerably more. Since that would require me spending four times as much time thinking about and doing different things from what I do now, I haven’t made that shift. But if I ever needed to, I could.

Mike Zaneis thinks people who create and use ad blockers are out to extort him. They aren’t. They’re trying to encourage certain limits on acceptable behavior. That’s one reason I’m careful about the kinds of ads I let run on this site. There are certain categories–profitable categories–that I don’t allow, such as ads for gambling sites, political ads, prescription drugs, and get-rich-quick schemes. Some of those categories were profitable for me before I discovered my account was using them, but taking money from those behaviors would be wrong, so I stopped doing it. There was nothing illegal about those ads, but there was nothing ethical about them either. So I draw the line there, because some things are much more important than money.

Mike Zaneis draws the line at a different place, and he’s trying to start a war. I’m not convinced it’s a war he can win, and I have no reason to root for him.

I am not in jail.

The bank vice president apologized for calling the police on me.

That’s neither the beginning nor the end of the story, but it seems to me that police involvement of any kind is a sign that your real estate deal isn’t going as well as it could.

It all began with a Citibank loan officer named Aaron who promised me a smooth closing. In my view, being questioned by a uniformed police officer has no place in a smooth closing. And that wasn’t even the worst part of it, which troubles me.  Read more

Some stock advice from the Post-Dispatch

I found this warning about trying to time the markets in the St. Louis Post-Dispatch over the weekend. The warning was that 2009 was when the stock market bottomed out. Nobody predicted that was when it was going to happen. People who were buying stocks in 2009, when things looked bleak, are sitting much prettier than people who weren’t.

Although the economy as a whole is still a bit shaky, the stock market has had a historic run from 2009 to now. It just goes to show that the markets are fickle. Very fickle.

When the market was sinking fast and hard in 2009, I saw an opportunity. The fortune my grandfather made in the Great Depression is something of a family legend. (Where that money went is another legend that I’m not interested in speaking about.) That year looked like it might be the best opportunity I would see in my lifetime, so I sunk every dime I could into my 401(K) that year and encouraged my coworkers to do the same, though the most vocal of them were certainly talking about how much of a waste of time the 401(K) was, as far as they could tell.

I don’t know how many listened, but those who did probably are glad they did.

You can’t time the market. The best you can do is buy whatever is cheap. Take the emotion out of it. Set it up and make it automatic. Buy stock every payday by having automatic withdrawals, set a mix of blue-chip stocks, growth stocks, small company stocks, and bonds, and set the portfolio to rebalance. Some years it’s been the big companies that made the best return and some years it’s the small ones. Rebalancing forces you to buy low and sell high, to take last year’s profits and turn them into next year’s.

Remember. The market is fickle. It’s not God, and it’s not infallible. It’s actually very fickle and stupid. The way you beat a fickle and stupid market is by not being fickle. Don’t trust the market. It’s not trustworthy. Exploit the market.

I’ve had financial advisors try to sell me other gimmicky investments over the years. None has come close to matching the simple formula of evenly dividing holdings between those four categories in plain, simple no-load index funds. (You may have to settle for a managed fund for your growth holdings, but that’s OK.) Then rebalance. Whether it’s better to rebalance once a year or once a month or once a quarter is unclear. Your 401(K) may only give you one option anyway, so don’t obsess over it. The important thing is having a schedule.

When I was still in my 20s, I lost most of my retirement savings to poor management. I don’t intend to repeat that.

Oh, and one more thing: Don’t look at your financial statements. Toss them in a drawer in case you need them. The only time I look at them is when I’m trying to get a mortgage. Real estate is cheap, but stocks are expensive, so I’m buying real estate. I have to prove I have six months’ worth of mortgage payments stashed somewhere to get a loan, so that’s when I look at those statements–and then, just to make sure the big number is big enough, and that I’m putting it right-side up in the scanner.

Hints for surviving if the shutdown put you out of work

I’ve seen plenty of news stories of how the government shutdown is affecting 800,000 or so government employees. What the news stories fail to mention is a large number of contractors are out of work too, until this passes. I can only guess on that number, but there’s no doubt it numbers in the millions, and little doubt it’s in the tens of millions.

As a former government contractor myself, I dealt with losing my job unexpectedly earlier this year, so some tips on dealing with an unexpected loss of a paycheck, even if it’s temporary, are fresh in my mind. There are five things you have to do.

I’m not here to gloat about anything. I’m here to try to help. Some of these things won’t be pleasant, but they’ll reduce pain in the long run if this lasts longer than a week. Keep in mind that everything I’m advocating is something I’ve done myself.

Read more

Two simple ways to increase your credit score

Two simple ways to increase your credit score

I have a friend who makes more money than me, has no debt except for a small mortgage, and his credit score is 150 points lower than mine. By becoming more like me, you can increase your credit score.

The key difference between us is that he puts a couple thousand into a checking account at the first of every month and pays for everything with a debit card. I do the same thing, but use a credit card, and pay the credit card off at the end of the month.

Read more

Another benefit of not having debt

I’ve written about how not having debt gives you power, though I can’t find the particular post at the moment. But I remember when I got my first mortgage. I went to a party, and my boss was there, along with my five other bosses, and the big boss got this look in his eye when I said I’d bought a house. That look in his eye said one thing: I own you, and I can do whatever I want to you.

And he did. From that day forward, all of the assignments nobody else wanted fell on me. Anything that was destined to fail went to me. And the cycle followed me from job to job, then stopped, like turning out a light, the day after my wife and I paid off our mortgage. It was the closest thing to magic I’ve ever seen. One day, I was the guy who got assignments at 3 PM on a Friday that were going to take me 8 hours to get done–and they had to be done by 8 AM on Monday, and one day, I wasn’t that guy anymore.

I tested it again this month. I turned down a job that offered me a $7,000 pay cut. Nothing unusual about that, right? Not in this case. In this case, rejecting that pay cut meant I didn’t have a job anymore. Read more

WordPress Appliance - Powered by TurnKey Linux