The Personal Side of Financial Strategy

Achieve Retirement Success - How to Stress Test Your Plan Now

07/23/2022 By Opher 742

Stress-testing your retirement plan is a crucial step to reduce the risk that life will blind-side you and take you down. That means looking at all sorts of really bad possible situations, and seeing how they’d impact your retirement plan. Here's what the pros do and how they do it.

Are 401(k) Plans Really Worth It? Savings, Risks, and Benefits

07/20/2022 By Opher 529

From my personal experience investing for retirement through 401(k) and 403(b) plans for 25 years, the benefits far outweigh the drawbacks and risks. However, if the same would be true for you depends on a variety of factors such as whether or not your employer matches your contribution (and how much), the investment choices, etc. Here's a deep-dive look at all that with help from several financial professionals.

Know What 401k Balance Progress Says About Your Retirement Hope?

07/19/2022 By Opher 491

What you can learn from looking at your 401k balance: (1) compare it to the median and average balances by age, (2) compare it to how much financial professionals say you should have by now given your age, and (3) figure out what (if anything) you need to do to change the trajectory of your retirement plan execution. Here's what you need to know.

7 Nasty Investor Mistakes to Beware in Down Markets

07/07/2022 By Opher 553

Going through a bear market isn’t fun. Frankly, even if you’re not about to retire or already retired, it’s plenty stressful. However, by avoiding these seven mistakes, and following the professional advice here instead, you may well come out the other side of the downturn even better off than when you entered it.

7 Simple Tips for Surviving and Thriving Through Every Bear Market

07/04/2022 By Opher 606

These 7 tips for investing through a bear market are simple, but no less powerful for their simplicity. Also, simple doesn’t equal easy, especially in the emotional sense. However, if you want extraordinary results, you can’t do the ordinary thing like most people.

Know When Better Interest Rates Are Really the Wrong Choice?

07/03/2022 By Opher 508

All other things being equal, of course paying a lower interest rate is better. The problem is that all things aren't always equal. Here's an example where refinancing a loan to get a better interest rate could lock you out of a far more lucarative opportunity.

3 Really Simple Factors Determine If You'll Ever Become Wealthy

06/29/2022 By Opher 438

There are three simple factors that determine whether or not you can reach whatever level of wealth you desire. How much money you can invest, how much risk you’re willing to take, and how long you’re willing to continue investing. Here's how to use that for building your wealth.

Ultimate 50-Point Checklist for Effective Layoff Prevention and Preparation

06/24/2022 By Opher 627

Recessions are notorious as times when companies try to reduce their spending, which usually leads to layoffs. This 50-point combined checklist can help you proactively prepare yourself emotionally, practically, and financially for a possible job loss, as well as if and when the risk of a layoff turns into an unwelcome reality.

What Hurts Your Money Now? Inflation, Recession & Bears Oh My

06/23/2022 By Opher 653

Unless you’re fabulously wealthy, the current economic situation must be worrying you. While you can't do anything to change the overall situation, here's what you can do to protect yourself...

5 Ways out of an Intolerable High-Interest HELOC Trap

06/22/2022 By Opher 919

Most HELOCs are variable-rate, which can become a trap when interest rates spike, because your payments can easily double or more. If you're in such a situation, here are 5 ways to escape.

Why the Market Crash May Actually Bring Surprising Blessings

06/21/2022 By Opher 546

If you take these bear-market lessons to heart, do what you can and should, and avoid what you should not do, in the long run, this market crash can end up being a blessing in a scary disguise. Here are the blessings, the actions to take, and those to avoid.

3 Ways Financial Plans Can Help Save You from Yourself

06/20/2022 By Opher 457

The best time to start financial planning is yesterday. Next best is today. A saying goes, ‘It’s easier to prepare than repair.’ While this applies especially to your finances, it extends to the rest of your life.

IRA? 401(k)? Both? What's Really Best for Your Retirement Money?

06/19/2022 By Opher 530

Both IRAs and 401(k) plans offer great tax advantages. Each has its own pros and cons, which apply differently to people's different specific situations. Here's how to extract the most from each.

Annuities - Shrewd Solution or Really Part of a Big Problem?

05/30/2022 By Opher 629

One of my clients had the majority of her retirement funds in annuities. That could have been the right choice for her, or she might have been misled by a financial advisor. If a financial advisor is pushing you to buy an annuity (or if you're considering it for any other reason), here are the factors affecting whether or not it’s a good choice for your specific situation, the questions you should ask, and the red flags you should watch out for.

The Bear Is Here! Why That's (Mostly) Awesome Portfolio News

05/21/2022 By Opher 587

If you're following the stock market daily, and despairing to see your portfolio being decimated, I have good news (at least if you're not retired or need to retire in the next 2-3 years). For most of us, a market crash can be the best news, and a wonderful opportunity to build real wealth. But only if you have the stomach to do the right things, rather than running for the exits. Here's why.

How I Protect My Portfolio Through Crashes, Keep My Retirement on Track, and Sleep Nights

05/15/2022 By Opher 529

The stock market rises and falls from day to day. Over time it periodically drops, and sometimes crashes. If you're not prepared for that, both mentally and in terms of how you position your portfolio, you'll be hard-pressed to stay the course, and may panic-sell at the bottom, locking in your losses, Here's how I prepared myself for the current correction, which I think will very likely continue into bear-market territory, or even a full-blown crash.

Quitting? Simple "Avoid Penalty, (Never) Do This" 401k Assets Guide

05/10/2022 By Opher 433

Too many Americans forget old 401(k) Plans, while too many others cash them out. Both are bad mistakes (in most cases). If you're leaving your current job and have a balance in your 401(k) account, you need to make an informed decision as to what you want to do with it. Here are your 4 options, with the pros and cons of each, and other important details to consider.

9 Surprising S&P 500 Facts You Better Know Before Investing Money

05/09/2022 By Opher 642

If you choose to follow Warren Buffet’s advice to invest in low-cost index funds, you can find many ETFs and mutual funds that follow the S&P 500. Your money would then join over $5.4 trillion invested in funds tracking the index, and would likely outperform 80% of actively managed mutual funds. However, it would slightly underperform the market due to fees, as well as the remaining 20% of mutual funds. If you're considering an investment in a fund following this index, here are 9 things you should probably learn about it first.

How to Make Sure Your Spending Decisions Support a Bright Future

04/20/2022 By Opher 489

If you aren’t intentional about your discretionary spending, you very likely live paycheck-to-paycheck, and risk spiraling into debt if any unexpected expense comes up. To avoid this, and have a good chance for a comfortable retirement, use this framework to make better spending decisions. Your future self will thank you, and your present self won’t find it very hard to stick with, because you’ll still spend on your priorities.

Are Stocks Really a Risky Way to Wealth? The Answer May Surprise You

04/06/2022 By Opher 509

Historical data from Yale economist Robert Shiller dating back to 1871 show that investing in stocks for the long haul handily beats investing in bonds. Comparing worst-case outcomes after 30 years shows stocks win by a landslide. In general, the longer you invest, the less growth you’ll need; but perhaps perversely, the less risky it will be to invest in the stock market. That’s why you need to start investing as soon as possible, as much as possible consistent with living a life worth living. It’s also why investing in stocks (with at least a healthy portion of your portfolio) is likely to give you a better outcome.

11 Worst Retirement Investing Pitfalls You Need to Avoid

03/20/2022 By Opher 541

Personal finance, as I often point out, is exactly that – personal. What’s right for me could be completely wrong for you. However, as the well-known quip goes, “The race isn’t always to the swift, nor the battle to the bold. But that’s the way to bet.” You may choose to go against any or all of these 11 recommendations, and may even be better off for it. However, in my experience, the odds will be against you.

Easy How to Guide - Your Retirement Investing Made Super Simple

03/15/2022 By Opher 558

Investing for retirement now is crucial for your future self’s wellbeing. Here are the 5 critical, yet simple steps to do exactly that. Whether you’re a complete investing novice, a middling-fair investor, or can beat the pants off the pros, these will help you chart your path to financial success.

3 Great Ways You Can Quickly Dig Out of High Credit Card Debt

03/10/2022 By Opher 517

If you’re deep in credit card debt, your first and immediate concern is to stop digging yourself deeper. Next, there are several good debt consolidation options. If that’s not an option, cutting expenses even a little and bumping your payments over the minimum can save you thousands of dollars and years of debt servitude. Here are the details of what to do and how big an impact each method can have.

Your Ultimate Guide: How to Safely Establish Forever Retirement Paychecks

03/02/2022 By Opher 607

Retirement income planning has two big pieces: first, accumulating as large a nest egg as possible; second, establishing a forever retirement paycheck for your drawdown stage. In this article, I cover that second stage in detail (including what I'm doing personally) with guidance to create sustainable retirement income throughout your golden years.

My Personal Approach – How to Actually Keep Retirement Money Safer

02/21/2022 By Opher 817

My approach to retirement planning is vastly different than conventional wisdom, and while I agree with some of Wade Pfau’s ideas, I chart a different path than he suggests. My approach starts with 4 critical questions, and uses my experience building our by-now-comfortable nest egg. Finally, I’ve come up with an extra “strings to my bow” that reduces our risk and increases my confidence that my retirement plan should work. Here are the details.

4 Critical Questions – Know How to Keep Your Retirement Money Safer

02/20/2022 By Opher 791

Figuring out your stock allocation as you approach retirement is crucial, and not intuitive. You have to consider 4 critical questions. Your answers will determine whether you should be more or less aggressive. And what’s right for you may be very different than what’s right for me. Here are those questions and how they affect your ideal allocation.

How to Keep Your Retirement Money Safe – a More Practical Way

02/19/2022 By Opher 778

Retirement planning, like visits to your dentist, is unpleasant but crucial. You have to take into account and address multiple uncertainties, and 7 significant risks. The simplest and most ideal solution is to have a lot more money than you’d expect to need. However, given how little most Americans manage to save for retirement, telling you that even if you’re ahead of 90% of Americans approaching retirement you need to double your nest egg and/or cut your retirement budget in half isn’t practical. Here's what you can do instead.

Know the Best & Worst Places for Coders to Make Good Money?

02/02/2022 By Opher 602

While this is hardly a definitive study, it’s does show that coder incomes vary widely from state to state and even inside states. If you’re willing and able to move, you can pick and choose where to look for a job. This could be crucial, as the cost-of-living-adjusted average coder salary in the best location is 3-fold higher than in the worst! When comparing offers from different locations, consider the local cost of living to see how easily you’ll be able to afford living there, and how much of your admittedly high income will be left over. Ideally, you may be able to earn more from a company located in one of the higher-income parts of the nation, while working remotely from a low-cost location, assuming that company doesn't penalize remote workers.

15 Sure Reasons Renting Benefits You Over Buying a Home

01/26/2022 By Opher 594

One of the hottest controversies in personal finance is whether people should buy or rent their home. I tend to fall more on the buy side, but I can’t think of many financial rules that have no exceptions, and the buy vs. rent is certainly not one such. In fact, here are 15 sure reasons and situations where you should avoid buying a home. However, if none of these are true for you, I'm still confident you’d be better off buying.

Your Portfolio Behind? 3 Reasons It’s Safer to Not Care

01/25/2022 By Opher 788

Missing out on a ton of money is a pretty good reason for regret. However, I keep in mind that hindsight is always 20-20. Trying to time the market, or making high-risk bets with a large chunk of your nest egg (e.g., day-trading, crypto, meme stocks, etc.) is almost never a good idea. And if you allow regret to inform your future investments, you’re more likely than not to regret it even more. Here's why I look at things from a different perspective...

Build Wealth on a Median Income in 3 Really Simple Steps

01/23/2022 By Opher 643

Even on a median income, which is less than 1/7 of the top-1% income, you can build real wealth. By that I mean a nest-egg large enough to cover your retirement spending. All it takes is a bit of knowledge, a bit of planning, a good bit of grit to keep on plan when (not if) things go sideways for a while, and following these 3 simple steps.

Why High Interest Bank Accounts Aren't Really Worth Your Time and Effort

01/16/2022 By Opher 665

High-interest checking accounts beat the national average by over 100x, which is nice. However, is it worth the effort of jumping through all those hoops? For me, the answer is no. After experimenting with such a high-interest account for 5 months, I’ve concluded the time, effort, and attention I spend to earn that interest are simply not worth it. Here's why, and what I'll probably do instead to keep my money ahead of the recent 7.2% annual inflation rate.

How Using a Personal Finance App Can Change Your Life

01/14/2022 By Carla 626

Whether you’re looking to improve your money management in your private practice, personal life, or both, a finance app could prove invaluable. Consider this information and advice as you search for the apps to help you accomplish your goals. In no time, your friends might be looking to you for expert financial advice!

3 Ways Big Corporations Take Advantage and Take Your Money

01/12/2022 By Opher 647

Like the old proverb says, “Fool me once, shame on you. Fool me twice, shame on me.” To prevent big corporations from misbehaving and taking your money, you need to pay close attention, not let inertia stop you from protecting your financial interests, and not let setups intended to discourage you from making the best choice for yourself deter you from doing just that. Here's how I saved hundreds of dollars by doing just that, and how you too can likely do the same.

A Reassuring Truth: Are New Cars Really So Very Expensive?

12/30/2021 By Opher 625

In their haste to publish sensationalist headlines, mainstream media tends to overlook important factors. Whereas they claim that new-car prices are “through the roof,” that's beyond hyperbole and into outright error when you compare to new-car prices of a decade ago or more. Plus, today’s new cars come with a suite of safety features that would have been in the realm of science fiction back then. Here's a comparison of my last car's price when new to a similar car today, along with a tip on how to get the best price possible on a new car in today's environment.

Simple Rules, False Comfort – How Much Do You Really Need?

12/26/2021 By Opher 981

Knowing how much you really need to save for retirement is far from simple, and a “rule” like 10x income is woefully oversimplified. If you want to have a decent estimate, here's a 5-point roadmap to figure out your own personalized answer. If you’re too far from retirement (or don’t trust your financial literacy), consider hiring a fee-only financial planner, or at least using the more-nuanced estimates from JP Morgan or T. Rowe Price. Regardless of the answer you arrive at, try to lead a balanced life, where you spend enough to enjoy your present, while saving and investing enough for your future self. Finally, know that the majority of Americans fail to achieve 10x income by retirement age (let alone more than that even if they need it). Don’t let that be you. Start saving and investing as soon as you can.

3 Important Reasons Your Happiness Depends on Your Next Raise

12/14/2021 By Opher 623

It’s not hard to believe that your next raise is good for your happiness, but there are more reasons why that’s so, beyond the simplest – more dollars hitting your bank account. Once you know how important that next raise is to your happiness, present and future, you’ll be well armed to overcome any trepidation in pursuing the biggest raise you can achieve. Then, my bonus tips will help you strategically pursue it.

A Super Simple Way to Double Your Income and 10x Your Savings

12/13/2021 By Opher 641

If you're like most of my clients, there's a simple change you can make that could double your profits and 10x your savings rate. However, just because it's simple doesn't make it easy. Here's the change, and what it will take to implement it.

Inflation Is High – Can Debt Actually Make It Your Best Friend?

11/30/2021 By Opher 924

For many people, fast increases in prices, as happens when inflation soars, makes life harder. However, in certain situations, high inflation can be your best friend! Here are the four factors that determine how inflation affects your own personal finances.

5 Solid Money and Related Life Tips for Near-Retirees

11/24/2021 By Opher 588

Here are 5 solid tips around money and related life choices for near-retirees (and retirees too!). They revolve around staying active and engaged, transitioning into retirement gradually, and if needed putting off full retirement until your retirement income sources cover your retirement budget. They also emphasize doing things you enjoy and spending time with family and friends as much as you can.

Just Starting Out? Top Money Tips from Top Finance Writers

11/19/2021 By Opher 663

Four of us, top finance writers on Medium, pulled together our top tips for people just starting out, in their 20s and 30s. Two of us are almost out of their 30s, one is in his 40s, and I'm in my 50s. As financial writers, we all agreed on the importance of living under your means and investing as much as you can. However, beyond that (unsurprising) tip, we each emphasized different aspects of the best way toward financial freedom. Some of the tips, surprisingly, had less to do with earning, cutting spending, or investing, and more to do with self reliance and flexibility...

Know Top Finance Authors' Best and Worst Ever Money Decisions?

11/16/2021 By Opher 655

Financial mistakes come in all shapes and sizes. It could be spending more than you should on something and paying for it using debt. It could be paying for something you end up not using. Or it could be missing an opportunity for a long time or altogether. For our panel of personal finance authors, our best money decisions were to take a leap of faith and pursuing financial freedom doing something we enjoy.

Living Paycheck to Paycheck? Stop It Using Profit First Method

10/27/2021 By Opher 769

To escape the “paycheck to paycheck” trap that holds so many Americans (and others), you need to disconnect the metaphorical firehose through which your money shoots out of your pocket from where you keep all your money. By making it harder to overspend, you gain control and safety. Here's how and why it works for businesses, and a step-by-step guide on using it to free yourself financially.

The Real Reason You Never Feel Rich, and How to Think Differently

10/22/2021 By Opher 1306

Feeling rich has much less to do with your objective wealth than you might imagine. You can reach this feeling by bringing balance to the different domains of your life, and by staying present to what you have and feeling grateful for it. You also need to accept that as much as comparing yourself to others around you can inspire you to work harder and improve your objective lot, it comes with a price of dissatisfaction and emotional pain, so don’t overdo it. These and several other mindset factors are what's missing for you to feel rich, even if you're not wealthy by most "objective" criteria.

Why "I'll Work Until I'm Dead" Really Means "I'm not Willing to Manage My Money"

10/06/2021 By Opher 1016

Even if you love your work (as I love mine), or if you plan to develop a side hustle and build it into a business you love, planning to never retire is not a plan. It’s just being unwilling to tackle a hard task. It’s calling the ability to retire “sour grapes” so you feel better about giving up on it. To be clear, there are certainly people who suffer truly crushing poverty, and can’t even cover today’s expenses, let alone save and invest for the future. This article isn’t addressed to them. It’s addressed to those of us who have a reasonable (or even great) income, but due to lifestyle inflation always live paycheck to paycheck, never saving and investing.

Can I Retire Yet? Answer Question with One Simple Wealth Formula

09/26/2021 By Opher 661

Have you ever faced a crucial financial decision, and felt anxious because you really didn’t want to take the wrong path? For example, you may be sick and tired of your 9-5 job, hate your boss, or just feel totally done with the rate race; but pulling the trigger and quitting for good is, well, frankly terrifying. You’ve spent your entire adult life working. You’ve done your best to set aside money for retirement, despite all the emergencies (and if you’re like me, the occasional large purchases that are anything but emergencies…). So, can you finally call it a career, and kick back and enjoy your “golden years?” How can you tell if what you have now is enough to retire on?

3 Reasons Pay Cuts for Remote Workers Are Absolutely Unconscionable

09/14/2021 By Opher 668

If you’re an employee of some of the largest tech companies, you may have recently faced a tough choice. According to a Reuters report, Google recently informed employees that if they choose to work remotely, their pay could be cut significantly – some employees report cuts as high as 25%! Other large tech players such as Facebook and Twitter also cut pay for remote employees who move to lower-cost areas. What's the ethical justification for such cuts?

Debt Isn't Bad (or Good), Painful Truth Is You Don't Know How to Use It Right

09/13/2021 By Opher 642

Think of debt not as borrowing from the lender, but rather as taking (more money) from your future self so you can spend it now. You get to use money today without taking it out of your current resources. However, your future self will need to pay it back, with interest. This is why, while debt is neither bad nor good, you have to know when and how to use it, or suffer potentially devastating consequences.

How Refis and High Inflation Turned 3 Mortgages into Assets that Actually Make Money

09/03/2021 By Opher 632

In an article I published 3 years ago, I made the argument on general principles that prepaying a mortgage is a terrible mistake for most people. Now, reality proved that not only is the real cost of a mortgage far lower than most people understand, in the right circumstances, like we’re seeing now, mortgages actually make you a tidy profit on the bank’s money. Given how banks normally set things up, it’s nice to be able to turn the tables on them.

Thoughtful Ways to Rate Every Money Action Good to Best, Bad to Worst

08/30/2021 By Opher 601

Scripture doesn't say money is the root of all evil, as some misquote. It's actually the love of money – “For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” 1 Timothy 6:10. And to quote my own grandmother’s pithy thoughts on money, “Money is the least important thing in the world, so long as you have enough.” The important thing is to have a healthy relationship with money. I hope this piece will help achieve that.

Why Your First Year Investing Is the Most Important of Your Lifetime

08/27/2021 By Opher 657

There are many reasons why investing is important, not least of which is that if you never invest you will almost certainly never be able to retire. However, there are also reasons why it's important to start your investing path as early as possible. The blow that delaying another year will deal to your eventual financial wellbeing is impossible to overstate. Here's a brief synopsis of my investing path, mistakes I made, and lessons I learned from those. Especially about the critical importance of your first year investing.

Practical Math Reveals Why Getting Rich Is Hard but Gets Way Easier over Time

08/18/2021 By Opher 731

The math of wealth building isn’t terribly complicated in principle. However, that doesn’t make building wealth easy for those of us who start at zero, let alone owing more than we own. I agree that you can get rich slowly at first, but rather than say “then suddenly,” I’d say “gradually faster, until your investment returns zoom past whatever you can bring in from working.” Here's the math that proves it.

How Does Net Worth Actually Develop over a Lifetime?

08/16/2021 By Opher 932

It’s disheartening that most Americans never manage to build enough wealth for a decent retirement, and for most it’s likely not because of poor choices, lack of talent, or laziness. However, it’s important that we look at the data as they are, and learn whatever lessons we can about what we can control in our own lives, so we can work toward better outcomes. Here's how wealth accumulation (or lack thereof) looks like for the poor, the median, the top 25%, the top 10%, and the top 1% in the US.

How Much Money Makes You Wealthy, Wealthier, or Wealthiest?

08/11/2021 By Opher 893

Having a lot of money isn’t the only, or even most important thing, but… As my wise grandmother used to say, “Money is the least important thing, as long as you have plenty of it.” This article shows where you stand relative to other Americans in terms of your net worth, either with or without counting your primary residence equity. Further, it'll show you how to figure out where you stand relative to where you “should be” based on your age and income.

7 Easily Avoided Mistakes that Make Approving Your Mortgage Hard

08/03/2021 By Opher 653

Especially since Covid, getting mortgages approved is harder than ever. If you want to make it easier for your chosen lender to help you, avoid the above 7 mistakes. Doing any of these (let alone more than one) is a great way to make the already difficult into (nearly) impossible. However, if you follow the “Do This Instead” advice, your lender will likely be able to get your loan approved more quickly and easily (assuming you meet the loan-to-value and payments-to-income ratios, the home appraises, etc.).

Is Your Salary Spectacular, Ok, or Needs a Little Help Compared to State Data?

07/31/2021 By Opher 714

Comparing your situation to others around you or in your country or state is a very human things to do. There’s nothing to be ashamed of in doing it. However, rather than stopping at that, whether it shows your income is epic or sad, consider following these suggestions, to enhance your finances in both the present and future. Your future self will thank you profusely.

Why Social Security Timing Isn't About Maximizing Lifetime Benefits

07/27/2021 By Opher 734

Trying to maximize your payout will indeed, on average, give you more money over your lifetime. However, it increases your long-term financial risk. The question you should ask yourself then is not, “How do I get the most money out of Social Security over my lifetime?” Instead, it should be, “What claim timing makes the most sense given my retirement needs and my other available resources?”

Can I Safely Retire at 60 Years Old with a $500k Portfolio?

07/22/2021 By Opher 739

If you’re 60 and want to retire now with a $500k portfolio, you may be able to do it, if you can live in retirement on just over $30k a year. If you can’t or don’t want to squeeze your budget and the retirement it enables that far, here are 3 viable paths to make it work. Obviously, the changes you’ll need to implement will be smaller if you put off by a few years the date when you call it a career.

Is Using Past Results to Pick Your Investments Really Crazy or Actually Smart?

07/22/2021 By Opher 616

There are two commonly accepted pieces of investing wisdom that I mostly reject. First, Warren Buffet’s assertion that investing in low-cost index funds is the best way to invest. I’ve invested almost every dollar in actively managed funds, and my picks beat the S&P 500 (including dividends) by about 1% per year over nearly 2 decades. Second, that using past results to pick investments is like “driving while looking in the rear-view mirror.” Let’s look at that second assertion a bit more closely, and see if it’s really crazy, or actually smart (or as I prefer to say, crazy like a fox :)).

Prices Keep Soaring; Which Ones Really Hurt You Most?

07/13/2021 By Opher 610

Inflation is running hotter than in decades, and it seems to just keep going up. The Fed insists (hopes?) this is a temporary situation, and that prices will go back to the much more sedate inflation we’ve experienced for 20+ years. Even if it is, nobody expects prices to drop back down. In fact, they may continue to soar for months or even a year or more. This is really bad news for most consumers, especially those on fixed income, and most especially those whose income doesn’t benefit from any cost of living adjustments (COLAs). Some categories have seen price increases far greater than the overall 5.4% of the overall CPI, some as much as 87%! Paying attention to prices, and especially which categories are seeing the fastest price increases, will let you pick and choose where you can and should economize, what purchases you may want to delay, and which ones you may decide to hurry up with, before prices shoot up even higher.

High Inflation Is Here Now; How Badly Will It Hurt Your Wallet?

06/27/2021 By Opher 922

Inflation in general isn’t good for consumers, and is especially bad for people living on fixed income. Even if you're not on fixed income, your personal rate of inflation can be lower or higher than the official CPI number from the Bureau of Labor Statistics (BLS). Here's how to calculate your personal inflation rate using BLS data, so you know what to prepare for.

How to Actually Use the $1000-a-Month Retirement Savings Rule

06/17/2021 By Opher 925

Here's an example of a hypothetical 40-year-old figuring out how much he needs to amass to be able to retire, with a step-by-step method to figure out how to use the corrected $1000-a-month retirement savings rule, and how to make it work if your income and spending don’t quite allow you to reach the level of retirement investing you might first think you’d need. All this without letting despair overwhelm you.

What the Simple $1000-a-Month Retirement Savings Rule Really Means Now

06/13/2021 By Opher 1037

As I’m fond of saying, personal finance is… personal. What’s right for me could be totally wrong for you, or mostly wrong, or somewhat right, or even totally right. It depends on too many factors to be able to rely on rules of thumb and follow them blindly, not knowing whether they apply to your personal situation or not. Perhaps the only personal finance rule of thumb I’d sign off on for (almost) everyone is this: “If it fits in a tweet or on a bumper sticker, don’t count on it being accurate for you.” However, that doesn’t mean you can’t or shouldn’t personalize a rule of thumb to your personal situation, as long as you periodically reevaluate if it still seems to fit. Here's how to do that with the so-called $1000-a-month retirement savings rule.

Liquid Net Worth – Easy Definition, Why You Should Care, and a Quick Calculation

06/04/2021 By Opher 892

While your net worth is an important measure, and lets you track your financial progress (up or down), your liquid net worth is a far more useful gauge of what you can survive and what opportunities you might be able to afford getting into. The above shows you a simple way to define and calculate that liquid net worth, whether for the survival situation or the opportunity one.

To Reach Financial Independence Some Day, Conquer the Wealth Effect

06/02/2021 By Opher 866

There’s an almost magical allure to the thought of being the master of your own time. Being able to pick and choose what to work on, when, how long, and how hard, without your financial survival hanging in the balance. That magical time is called Financial Independence (FI for short). If you’re striving for your own FI, know that there are two monsters lurking in the dark, like vampires waiting to suck the life out of your dreams.

7 Revealing Questions to Know You Found a Solid Used Car

06/01/2021 By Opher 882

Cars are one of the largest budget items for most Americans. Used cars aren't necessarily less expensive to own overall than new ones, but if you decide that buying used is the path for you, here are 7 questions you want answered, and where you need to pay close attention not just to the content of the answers, but also to the non-verbal cues you pick up when the seller answers.

Do these Little Investing Mistakes Cost You Money each Time?

05/20/2021 By Opher 971

My experience with investing has taught me many lessons, including some painful ones. Here are 7 little investing mistakes that could be costing you money time after time. Be wise, and learn from my experience, avoiding having to pay with your own money to consider them.

7 Distractions You Look at that Make Investing Success Harder

05/16/2021 By Opher 644

The noise from market mavens, pundits, and assorted talking heads who get paid to keep your attention makes it hard to just do your investing thing. Paying attention to those distractions just makes it harder to reach your own financial goals. Whenever you’re tempted to listen to them, just remember that if they truly knew what’s coming next in the markets, they wouldn’t be wasting their time talking at you. They’d be online, making their next guaranteed 10-bagger investments. Here are 7 simple yet crucial lessons I learned over several decades. I only wish I didn't have to lose thousands of dollars in the learning.

7 Practical Ways to Reach Your Financial Independence Faster

05/12/2021 By Opher 839

These are the top 7 financial lessons I learned over the decades it took me to go from negative net worth to being financially successful. Following them may not, by itself, make you financially independent since there’s a lot that’s outside our control. However, I’d be very surprised if they won’t help you do better than you'd do ignoring them.

What Retirement Can You Actually Afford with $500k, $1 Million, or $2 Million in Assets

05/06/2021 By Opher 966

Retiring on $500k was sort of possible in the 1990s. Doing the same today would require $1 million, if not more, given inflation over the past 30 years and the more muted market returns expected in the coming decades. If you want to retire on even $1 million, you’ll likely be able to safely draw only $30k - $35k in your first year. This means you’d better be prepared to forgo most if not all luxuries, move to a low-cost country, and probably continue working part-time doing something you enjoy for which others would be willing to pay you. However, there are several things you can do to improve your retirement standard of living.

5 Annoying Ways Your Job Costs You Lots of Money

05/04/2021 By Opher 824

Being your own boss comes with many perks, but also with lots of risk. Not everyone is cut out for this path, and not everyone who tries succeeds. However, if you stay an employee for your entire career, be aware that you’re very likely losing a lot of money as a result. Here are 5 ways I experienced first-hand.

Can Credit Cards Actually Help You Get Debt Free Faster?

04/22/2021 By Opher 1174

If you’re deep in credit card debt, it isn’t easy to get out. However, if you stop digging (i.e., don’t use the cards for any purchase you can’t pay at the end of the month), and use the snowball or avalanche method, you can save yourself a ton of money and years of debt-servitude. Even better, there are ways to use credit card perks to reduce your costs and time in debt, a lot!

Is Contrarian Money Advice Really Good for Your Financial Health?

04/16/2021 By Opher 1453

When you read something that offers a contrarian point of view, understand that being contrarian just means it’s different. This could be good different or bad different. You need to be a critical reader, consider if the advice is well-thought-out and supported by logic and/or data. See if it’s relevant to your situation. See if the person presenting it has a vested interest in your following their advice, even or especially if it’s bad for your financial wellbeing.

Can Buying Your Next Car New Actually Save You Money?

03/14/2021 By Opher 1248

Many financial experts (with or without quotation marks) harp on and on about what a terrible financial choice it is to buy a new car. Almost invariably, their main point is how the car drops in value by 10%, 20%, even 30% (so they claim) “as soon as you drive it off the dealer’s lot.” It’s so much more financially savvy, they say, to buy the car when it’s used, letting the poor sucker who bought it new pay for the massive depreciation of the first year or three. If you buy it used, say they, you’ll save massive amounts of money that you can then, e.g., invest for retirement. But is it really so?

Do You Really Need a Massive Emergency Fund After All?

12/23/2020 By Opher 1365

You must have an emergency fund! So say almost all financial professionals. And I agree, for most people. But what if you really don’t need an emergency fund, at least not in the conventional sense? What if you don't need to sideline tens of thousands of dollars earning next to nothing and gradually losing value to inflation and taxes?

3 Overlooked Secrets You Need to Know to Help Win a Bidding War

12/09/2020 By Opher 1027

It was spring 2005, and it was a sellers’ market out of hell, at least for buyers like us. We were getting married, and couldn’t find a house to buy in our neighborhood that didn’t immediately get multiple offers, with many buyers willing to pay far above the asking price. It was getting close to our wedding day, and it became increasingly clear we would not be able to buy our new house before that day. Here’s what we did to win the bidding war.

5 Effective Ways to Make Your Kid's College Costs Affordable

10/22/2020 By Opher 984

The cost of a college education appears to always go up. This is especially true when compared to the flat or even drooping inflation-adjusted income of most Americans. If you’re a parent, and especially if your kid is young, here are 5 effective tips (plus a bonus one) that will help put your kid through college without breaking the bank or taking on enormous student-loan debt.

How to Ace Your Holiday Shopping in 10 Simple Steps

10/20/2020 By Opher 862

With the Holiday season fast approaching, you need to read this now so you don't run out of time and spend far too much on Holiday gifts. Here are 10 steps that will help you "ace" this year's Holiday shopping by getting your mind right and not succumbing to external pressures.

How to Avoid Credit Card Debt in 3 Simple Methodical Steps

09/27/2020 By Opher 938

Credit card debt is no joke. First, the interest you pay drains your financial ability to buy things you need. Second, the stress and anxiety mount as you spiral deeper and deeper into debt. Third, your credit score can drop by 250 points just by letting your credit card debt go too high! Here's a simple 3-step method to avoid that.

How to Get Your Grocer to Send You on Vacation

09/21/2020 By Opher 927

Did you ever think you could get your grocer to send you on vacation? Or your cell phone provider or insurance company? Here's a simple and easy to implement way to do just that, without spending a dime more than you normally do.

How to Give Your Kid a Great Head-Start with Small Gifts

09/12/2020 By Opher 851

What if I could show you a way you could make your kid wealthy. For real. No get-rich-quick schemes. No summer jobs. No complicated financial shenanigans. All it takes is small gifts. If that sounds interesting, read on...

How to Avoid Poverty in Retirement

08/20/2020 By Opher 1064

Most of us have retirement savings (if any) that lag far behind where they should be to provide a comfortable retirement. As a result, many say they plan to continue working longer, at least part-time. If possible, this is a great way to delay and reduce how much you draw down your nest egg. However, it’s not a given that you’ll be able to do as you plan, which may force you to retire into poverty. Here are the 5 steps to take now that could save you...

This Is Why You Really Need to Avoid Elizabeth Warren’s Budget Method

08/16/2020 By Opher 1239

Budgeting. It’s probably right up there in your list of favorite things to do (sarcasm alert!)... along with visiting your dentist. Unfortunately, like visiting your dentist, it’s important that you do it. The consequences of not doing a decent job of it is likely responsible at least in part for the dismal retirement outlook for so many of us. However, over-simplifying a moderately complex task, like Senator Elizabeth Warren's so-called "50/30/20 rule" does, may devastate your finances.

How to Reach Financial Independence Even if You Do not Earn 6 Figures

08/11/2020 By Opher 941

Wouldn’t it be awesome if there was a real method to get rich quickly? Unfortunately, the only ones who get rich from get-rich-quick schemes are the scammers who sell them to people desperate to escape poverty. There are multiple paths to financial independence, and if you use several of them, you’ll need less time to achieve it. Here's a 4-step path to doing just that.

Should You (Plan to) Retire Early and If So, What Do You Need to Plan?

07/27/2020 By Opher 898

Why Do You Want to Retire Early or (Dare I Ask) at All? The answer could be that you’ve had a series of jerk bosses and want to be done with working for them. Or your boss has you working 60 hours a week, but only pays you for 40 and even that at miserly pay. It could be your stress level at work is through the roof and it’s affecting your health and your family. I’m sure there’s any number of other possible answers. Whatever your answers are, how do you know if you’re ready to “retire" and how do you put together a bullet-proof plan for it?

How to Prioritize Your Money When You Don’t Have Enough

07/22/2020 By Opher 1216

A famous psychological paradigm called Maslow’s Hierarchy of Needs is built like a pyramid. “Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up.” Maslow started with physiological needs: food, water, warmth, rest (if you’re an astronaut, you’d put air in front of all those). Next, safety needs: physical safety and personal security. Then he proceeded to psychological needs such as belonging and love, esteem, and self-actualization. Similarly, when considering how to allocate your money, there are needs you must attend to first, then other needs, and only once all needs are attended to can you proceed to your wants. Here's how you can use this Maslow-like pyramid to prioritize your own financial needs and goals.

The 4 Pillars of Healthy-Couple Money and How You Can Build Them

07/21/2020 By Opher 1194

Money may make the world go ‘round, but for most of us, it also triggers negative feelings - shame, guilt, obsession, blame, fear. It’s no wonder more than two of every three couples regularly argue about it, and that it’s one of the main contributing causes to divorce. Partners accuse each other of frivolous spending, out-of-control credit card debt, and debilitating frugality. You name it, if it’s a negative money-connected issue, it causes friction. But it doesn’t have to be that way for you.

Pay Off Your Mortgage ASAP, but then Again, Maybe Not?

07/10/2020 By Opher 1336

Like almost every homeowner in the US, I purchased each home with a mortgage. Like many, I had to decide if I wanted to make extra payments toward principal, paying off the mortgage sooner, or divert the extra cash to savings and investments. As in all things personal finance, the answer to the question, “Which is the right choice?” starts with, “It depends...” In this case, it depends on how comfortable you are with the psychological factors that arise from picking the option that is financially smarter.

Why Retiring Can Be Dangerous (Plan for This Instead)

06/21/2020 By Opher 1015

A 2016 study published by the Institute of Economic Affairs, a London-based think-tank, found that retirement “increases the probability of suffering from clinical depression by 41 percent.” Further, doubling the number of years spent in retirement was found to “increase the probability of suffering from clinical depression by 17 percent.” Here's what you should strive for instead...

What Do You Know About Credit Cards? I Guarantee You Don’t Know at Least Some of These…

06/19/2020 By Opher 1213

Credit cards are incredibly convenient. A wallet-sized piece of plastic weighing as little as 5 grams (about 1/6 of an ounce), with zero intrinsic value, lets you make purchases of thousands of dollars or more (depending on your credit limit). Learning everything you can about credit cards so you maximize your rewards and minimize your costs can free up money to juice up your path to achieving your financial goals. Here's some information that can help you do just that.

7 Simple Things I Do to Make Money Off My Credit Cards (that You Can Do Too)

06/11/2020 By Opher 1102

Finding simple ways to turn a potential financial trap into a money-maker can help you achieve your goals. On average, each year my net savings get “juiced” an extra 1.5% due to credit card rebates, rewards, and promos. Here are 7 simple tips on how you can do the same.

Go Ahead and Buy It, It’s OK

06/02/2020 By Opher 1311

While it's important to be thoughtful when you choose what to spend money on, how much to spend, and when, don't overdo frugality to the point that you can’t enjoy your life. Too many adherents of Financial Independence, Retire Early (FIRE) go so far overboard that after a few months or years, they fall off the wagon completely, and then go too far in the opposite direction. Avoid that by following Seneca the Younger’s admonition: “Everything that exceeds the bounds of moderation has an unstable foundation,” while keeping in mind Oscar Wilde’s rejoinder, “Everything in moderation, including moderation.” Here's how you can tell if and when it's ok to go ahead and buy what you want.

Low Inflation Helps Your (Taxable) Portfolio

05/31/2020 By Opher 1059

The U.S. tax code is famously complicated. Congress, over decades, has enacted tax measures (and will continue to do so) that it believes will benefit society (or at least segments of society that they care more about than others, a.k.a., earmarking or pork). One aspect that bewilders me is that we’re required to calculate as income interest and capital gains in nominal dollars, which means that you have to pay income taxes when you don’t really make money. Here's how it happens.

Use a 529 Plan to Save for College (and Save Thousands of Dollars)

05/27/2020 By Opher 1021

Talking with a friend who has four kids, I suggested he look into using 529 plans for their college savings. I’m not sure if he ended up following the advice, but my guesstimate is that it would have saved him tens of thousands of dollars over more than a decade. The savings are greatest if you start saving as soon as your child is born, but if your state has income taxes and provides a tax benefit for 529 plans, you can save thousands even if you never save a penny for college expenses. Here's how.

How Your Opportunity Costs Shrink Over Time

05/20/2020 By Opher 948

It's not every day you'll hear a financial person suggest you spend more, but in certain circumstances, that's the right thing. As my grandmother would say, “Ever since they invented death, nobody is safe in this life.” Nobody promises us we’ll actually live to retire, so make sure to enjoy at least some of your hard-earned cash today. Balance your future self’s needs and wants with those of your current self. But remember that this balance changes over time. Here's why.

Your Crucial Money Moves for the Next Few Months

05/16/2020 By Opher 1339

As a financial strategist, I'm constantly looking for ways to improve our personal and business finances, and then extracting from what I come up with ideas that can benefit others like you. Recently, the things I've been working on include trimming discretionary spending, finding ways to reduce interest on debt (e.g., refinancing our mortgage), and increasing our emergency fund. The ongoing pandemic-caused upheaval has brought financial and health emergency situations far too close to home for far too many of us. That's why I've tried to distill my thoughts on what the crucial next steps are for people in different circumstances.

Make the Most of Your Employer’s 401(k) Match

04/30/2020 By Opher 989

A while back, one of my daughters made my day by asking me a question. A question may seem like an odd thing to make one’s day, but this one did… She asked me how to make the most of her employer’s 401(k) match. This made my day for several reasons. (1) She trusts me enough to ask financial questions (no small thing for a parent!). (2) She’s saving for retirement even though she’s still in her 20s. (3) She’s savvy enough to make sure she’s getting the most “free money” possible from her employer. Here's how I suggested she make the most of her employer's 401(k) match. If your employer matches retirement plan contributions, it should help you too.

What Are Your Job and Time Really Worth?

04/26/2020 By Opher 1257

When I started doing contract work on the side, I was shocked by how much more I made from that side hustle than I did at my day job. My first gig brought in almost three times more than my regular job! And yes, not only does this say something good about the gig, it also says something sad about my salary back then. Had you asked me then what my hourly rate of pay was at my job, I’d quickly calculate it for you since I’ve always been great with numbers. Only one problem… my answer would have been dead wrong. Here’s why.

How to Maximize Social Security Benefits for Your Spouse

04/16/2020 By Opher 1068

Social Security benefit rules seem to be designed for maximum complexity and confusion. With multiple benefits, requirements, and amounts depending on specific scenarios, it’s impossible to cover all of it in one go. Since the information on SSA.gov leaves something to be desired, here’s how to maximize your spouse’s benefits, especially important if your income isn't in the top couple of percentiles.

When Interest-Free Offers Aren’t

04/15/2020 By Opher 912

I had just moved my family to the U.S. and bought a used Ford for $8000, financing $6000 of that with a 3-year auto loan with a 10.4% interest rate. Ouch! Salvation came in the form of an incredible convenience-check offer. That was then. Today’s convenience check offers are simply a thinly veiled invitation to get yourself into financial trouble by borrowing more against your credit than you would otherwise, thereby routing much more of your hard-earned cash to line the pockets of your credit card issuers.

Managing Your Money in a Crisis

04/08/2020 By Opher 1416

There’s no question. We’re in a major financial and economic crisis, worse than any most of us have ever lived through. In just 2 weeks, 10 million workers filed new unemployment claims. The Congressional Budget Office projects unemployment to exceed 10% during this 2nd quarter of 2020, and the economy may contract faster than a 28% annualized rate! If you’re still working, your employer may have cut your hours, and may be considering furloughing or even letting go employees. If you’re self-employed, clients may be staying away, cutting back, putting plans on hold, or outright canceling them as they try to stem the tide of red ink. Scary. But all is not lost…

Your First Step Toward Retirement - a Step-by-Step Guide to a Plausible Budget

04/08/2020 By Opher 952

If you want to ever be able to retire, you have to start building the foundation now. Your first step is to know what income you’ll need in retirement. Here's a 4-step guide for creating a plausible retirement budget, an alternative method that lets you double-check your results, and 5 under-appreciated big-ticket items that risk your retirement success.

If You’re Scared to Invest in Stocks, You’re Scared of the Wrong Thing

04/03/2020 By Opher 1790

It was the early 90s, I was in my 30s and having to support a family of 4 on a $31,000 salary. Finally, I managed to scrape together $1000 to set aside for retirement. It was time to decide how to allocate the investment. Frankly, I knew next to nothing about any options beyond a savings account, so I spent dozens of hours at the university library reading the Morningstar Mutual Fund Directory to educate myself. It was an eye-opening exercise. It was immediately clear that unless I could set aside a lot more than I thought I’d ever be able to, I couldn’t expect to ever retire if my investments didn’t return a lot more than the interest of a savings account. That meant taking on more risk in the short and intermediate term, but less risk in the long run, by allocating most or all of my investments to stock mutual funds. Especially in the current situation, with the S&P 500 recently as much as 34% off its recent peak, and still more than 26% off that peak, investing in stocks seems scarier than it has been in a very long time. However, if you're afraid of investing in stocks, you're not afraid of the right thing.

15 Coronavirus Pandemic Silver Linings to Brighten Your Day

03/27/2020 By Opher 1253

I tend to be an optimist. Not a Pollyannaish one, but I always try to see the bright side of things. It’s part of how I stay focused on things I can affect, without letting the things that are out of my control paralyze me. Still, like almost everyone, I’m finding this a trying time. Whether its concern about those directly affected by COVID-19, or about what our economy will look like in a month, two months, six months, a year; or something as relatively mundane as whether my favorite neighborhood gym will survive to reopen its doors when the pandemic is over. To help cope with these dark thoughts, I put together a list of things to be grateful for, silver linings in a dark storm. I hope these will brighten your day at least a bit, like they have mine.

Survive the Bear Market without Losing Your Mind or Your Shirt

03/19/2020 By Opher 1017

First, let’s acknowledge that the COVID-19 pandemic has far more urgent and critical implications than what’s happening in the stock market. There are tens of thousands of people worldwide in intensive care, in comas, dying, and dead! As much as we hate to think about it, short of a vaccine being developed, tested, and massively deployed in far less time than most experts believe to be possible, those figures will grow by orders of magnitude! However, beyond trying to minimize the risk that we personally infect or get infected by others, and not hoarding hand sanitizers or toilet paper (Really?! Toilet paper?!), there isn’t much that most Americans can do to help the broader situation. All that said, our financial behavior in the coming days, weeks, and months will have a major impact on our long-term financial outcomes, and those of our families. This is especially so when it comes to planning and investing for your retirement (you're already doing that, right?). Here's how you can survive the ongoing market bloodbath without losing your mind or your shirt.

Here Are 3 Ways Investing in Mutual Funds Can Cost You a Lot

03/12/2020 By Opher 1056

I’ve been investing through mutual funds for decades now. It’s not the sexiest way to invest, I know. It also can have some serious drawbacks if you’re not careful and/or get unlucky. Here are 3 ways it can hurt your results, and what to do about it.

The Legal Theft Called Private Mortgage Insurance (and How to Avoid It)

02/23/2020 By Opher 1388

When we bought our first home, we couldn’t afford the recommended 20% down payment. Heck, we could barely afford to bring $10,000 cash to the closing table. We could have done what many people do in similar circumstances, and taken out a mortgage for more than 80% of the value of the home. However, that would have required us to pay for private mortgage insurance, PMI, which can cost up to 5% of the total costs of the mortgage, and only helps the lender. Here's why that's such a bad idea, and what you can do instead.

7 Budgeting Mistakes You May Be Making and What to Do Differently

02/07/2020 By Opher 1193

We had just moved to the US. We were 30 and had two toddlers. My salary was $31k and my wife wasn't allowed to work. Budgeting wasn't optional. Almost obsessively, I’d review our budget over and over, trying to figure out what we could remove or at least trim. I’d try to convince myself that we could cut our grocery budget by $100 or even $50. Somehow, by the end of the month the total spent on groceries was the same as it was before. Lunch was a sandwich from home, or at most a fast-food “meal.” Dinner was often a few $0.20 packets of supermarket ramen noodles. When we discovered that we could get a cooked meal from the local hospital cafeteria for the same $3 as a Big-Mac Meal, that was a huge deal. Here's what I learned during our journey from there to our very different present situation.

Use a Roth IRA to Counter the Costs of the SECURE Act

01/31/2020 By Opher 985

When I made my first IRA contribution of $1000 back in the early 90s, I got a $262 inflation-adjusted tax benefit. Had there been a Roth option back then, my ultimate benefit would have been $3800, more than 15-fold higher. Since their establishment, Roth IRAs have always been a sweet deal for most people (though only ~10% of IRA balances are in such accounts). However, with the SECURE Act just implemented, Roth accounts offer an even more important estate-planning tool. Here's why and how Roth IRAs could give you and your inheritors millions of dollars more than traditional IRAs.

How the SECURE Act Hurts Your Retirement Planning and What You Can Do About It…

01/28/2020 By Opher 960

As lawmakers like to do, they recently tucked into a must-pass bill some last-minute changes to the tax code. These specific changes will hurt retirement planning even for the middle class. The so-called “SECURE Act” was inserted into a $1.4 trillion spending bill that had to pass to avoid another government shutdown. President Trump signed the bill into law on December 20. Here’s how the new law is supposed to help you, how it actually hurts you, and what you can do to minimize the damage.

If You’re Renting Your Home You Need to See This

01/24/2020 By Opher 1243

I was in my late 30s and still renting. I knew I was throwing money away each month. Hundreds of thousands of dollars down the drain by then. I knew I had to do something about it. But just thinking of scraping together a down payment and paying a mortgage on pain of losing the house seemed overwhelming. Then I did the actual math and realized I actually could afford to buy a home. A couple of months later, when I first stepped into the first home we owned, the feeling was indescribable. Now, doing the math to compare renting to buying in general, I show that (with a few important exceptions) if you're renting you need to seriously consider buying a home as quickly as possible. Here's the proof.

Save Money on a New Car in 4 Simple Steps - A Definitive Guide

01/20/2020 By Opher 3433

Since arriving here in 1992, I bought a grand total of 5 cars. Each time I bought a car, I learned something new. For example, I learned that it’s much better to buy cars new and drive them for at least 10 years. Next, I learned the importance of buying reliable cars that get good gas mileage. I also learned the critical importance of a good credit score. The most important thing I learned is that even if you're not a born negotiator, spending some time to educate yourself on the market for the car you want can save you thousands of dollars. Here's a step-by-step guide on how to do that.

How a Side Hustle Lets You Reach Financial Independence Faster

01/16/2020 By Opher 1451

There are three separate but related ways to reach financial independence earlier. Increase your savings rate, decrease your planned retirement budget, and/or increase your income while investing the new money. Any of these will work. The first two are harder to sustain than the third, but even that one isn’t easy. Here's a table that shows you in actual numbers what it would take.

Why Buying a New Car Makes More Sense than Buying Used

01/08/2020 By Opher 3056

You’ve thought about it and ruled out walking, public transportation, Ubers, and even renting a car only when you must. None of that works for you. You’re getting a car of your own and that’s that. Your options are to (a) buy new, (b) buy used, or (c) lease new. Which makes the most sense? Many financial experts will tell you that buying a used car is your best bet. Here's why they're (mostly) wrong.

Here’s How to Shock-Proof Your Retirement Plan (Once You Have One…)

01/05/2020 By Opher 974

Dad was several years older than Mom, and toward the end of their lives, in poorer health than hers. "Do you guys have a plan in place to take care of you if and when Dad passes away before you?" I asked. For obvious emotional reasons, she refused to even think about it. Less than two years later, Dad passed away and we had to scramble to make sure Mom was financially secure. Dad’s pension and social security benefits dropped more than 40% once he passed, while Mom's expenses dropped by only 20%. Shocks like this can derail your retirement plan, if you even have one. The following details some of the more likely shocks, and tells you how to keep your plan on track.

Over a Trillion Dollars! The Costs You Pay for High Credit Card Debt

12/29/2019 By Opher 1244

Credit card debt in the US recently topped a trillion dollars, $1.08T, according to debt.org. That’s over 26% of the $4T-plus total US consumer debt. On average, each household with credit card debt owes nearly $8400 on their average of four-plus credit cards. If you’re part of those statistics, do you really know all the costs you pay? Check it out…

How to Safeguard Your Retirement Plan from the 7 Biggest Risks - Abridged Version

12/24/2019 By Opher 1178

You spend a lifetime working hard, and saving as much as you can for when you no longer can or want to work (a.k.a. retirement). The last thing you want is to get to that point, only to have something devastate your retirement fund just as you're about to start drawing it down. Here are the top 7 risks, and what you can do to minimize them.

You May Need a Lot More (or Less) than you Thought to Retire

12/22/2019 By Opher 1146

The well-known 4% retirement rule says that you can expect to safely withdraw 4% of your retirement portfolio in your first year of retirement as your initial draw amount. Inverting that, you'd need 25x what you expect to need in your first year in retirement. However, new research points out that your personal situation can change your personal safe withdrawal to a lot more or less than 4%. Here's what that research says.

Here Are the States Whose Residents Are Really Best at Managing Their Money

12/16/2019 By Opher 1246

CreditCards.com recently reported that the state whose residents are best at managing their money is South Dakota, followed by Montana and a three-way tie between Wisconsin, Maine, and Vermont for 3rd place. This ranking places Texas, Maryland, and Washington DC at the bottom of the pile. As a Maryland resident, I smelled something fishy here, so I started digging at the data. Here's what I found.

Why a Roth IRA Is Almost Certainly Better for You than a Traditional IRA (and When It Isn't)

11/27/2019 By Opher 1307

It was 1993 and I was a post-doc at Texas Tech. I had just had a conversation about saving for retirement with a grad student from UCSD. Although he was still in his twenties, he was already setting aside money and investing it for retirement. I guess I should be doing the same, I thought, and invested in a traditional IRA. Back then, the Roth IRA had yet to be established. Now that it is available, you would most likely be better served by a Roth than a traditional IRA. Here's why, and the few situations where it might not be so for you...

3 Things You Need to Know About Advice from Financial Gurus (that They Won’t Tell You)

11/11/2019 By Opher 1093

I love quotes with a delicious twist like “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” or “Always remember that you are absolutely unique, just like everyone else…” (apparently both mis-attributed, the first to Mark Twain, the second to Margaret Mead). Here’s another, that may have originated from Albert Einstein, “Everything should be made as simple as possible, but not simpler.” So, what do all these quotes have to do with advice from financial gurus? Simple (pun intended), finances are complicated, the right thing to do depends on your unique circumstances, and following gurus’ advice slavishly will frequently get you in trouble because you think you know something, but in your specific case it may just not be so. Here are some examples where advice that's great for most people may be the worst advice for your personal situation.

Easily figure out your average expenses (and a plausible budget)

10/30/2019 By Opher 1307

Article after article on personal (and business) finance exhorts you to create a budget and a financial plan. You’re finally (reluctantly) willing to do it. But if you’re gonna do it, you really want to get it done already. Waiting with that budget for months to track your spending doesn’t cut it. You wish somebody would tell you at least if your spending is in line with your income, without having to go through every line of every statement of every account for the past year! Well, wish no more. Here’s a quick hack that will tell you exactly how much you spent in the last 12 months by just adding and subtracting a few numbers, and help you create a plausible budget from it.

Three simple secrets to financial success (that don’t involve budgeting and forgoing a daily latte)

10/28/2019 By Opher 1158

“When I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each” - Tim Gurner, Australian multi-millionaire. Deriding millennials for eating out too much isn't new, nor more true of them than other American generations. Any number of financial gurus have repeatedly suggested that people bootstrap themselves out of financial problems by brown-bagging lunch instead of buying a sandwich, forgoing a daily latte, or avoiding any other of a host of small daily or weekly purchases. However, that advice simply ignores our humanity. Here are three simple ways that don't involve denying yourself small daily pleasures, that are mostly within your control, and that will help you reach financial independence more quickly.

Achieve Financial Freedom by Asking Yourself This Before Buying Anything Significant

10/19/2019 By Opher 1367

... and It Isn't "Do I buy or not?" As I shared previously in "Embrace Your Humanness – A Practical Guide to Having More," I would have been better off had someone shared with me this hard-won piece of financial wisdom when I was 30. It was November ’92, and I was looking at the first car I’d ever buy in the US, a 3-year-old 3.8-liter Ford Taurus LX. Buying it took most of my cash on hand, plus $6000 borrowed at 10.4% annual interest rate. The payments were almost 10% of my after-tax salary! I could have, heck, should have found a car that cost half as much, even if it meant buying a 5- or 6-year-old midsize. But I was hooked, and the used-car salesman reeled me in. Here's what I wish someone had taught me.

Should You Buy or Rent a Home

10/11/2019 By Opher 1014

I recently read a piece called “Buying vs Renting A Home (DEBUNKED),” where the author makes the case that renting is much better than buying for a variety of reasons mostly having to do with how little of your mortgage payment goes toward the principal for many years, and all the other expenses of home ownership. As a landlord myself, I’m all for people wanting to rent, especially my properties :). However, I believe most people in most situations would do better buying their own homes. Here's why.

Make a Massive Difference in Your Life Through 1% Changes

10/06/2019 By Opher 1487

When I moved to the US many years ago, I was married plus two, just out of grad school, and in debt. My salary was a whopping $31,000, and being over 11,500 miles from home, Ramen noodles frequently served as dinner— you know, the type that comes dried, powdered, and sells for under $0.30 a packet? When we discovered that a hot meal at a local hospital cafeteria was under $3, that became our new go-to place for lunch. Creating a plausible budget and sticking with it wasn't easy, so I was always on the lookout for opportunities to improve our situation. Fast forward many years, and our situation is frankly unrecognizable (in a good way). Here's what worked, and how.

Embrace Your Humanness – A Practical Guide to Having More

08/06/2019 By Opher 1418

At first glance, personal finance may seem disconnected from running a practice, but it’s really all part of one (financial) system. How much you need to support your family informs how much you need to charge clients. Your ability to control spending at home translates to a similar ability in your practice. What’s left over after you cover business expenses determines what goes into your personal account. Here's a simple painless strategy for saving a lot more for the future without scrimping on your current budget.

I Have Good News and Bad News for You

10/06/2018 By Opher 1284

I love telling stories, and this time I have a few short ones to share that all combined in my head and led me to an important insight on dealing with the ups and downs of life in general, and our practices in particular.

Reframe Your Procrastination to Power Breakthroughs in Your Practice

09/07/2018 By Opher 3604

Mark Twain jokingly attributed to Benjamin Franklin a celebration of procrastination – “Never put off till to-morrow what you can do day after to-morrow just as well.” Joking aside, I’ve come to appreciate my own instances of procrastination as a deep probe into what my mind shies away from. If you’re like me, when you find yourself procrastinating, it’s almost always because your subconscious mind finds the task overwhelming, unpleasant, or unclear. Here’s how you can reframe that procrastination from something you might be ashamed of to a source of breakthroughs, both personal and in your practice.

5 Secrets You Can Use to Achieve Long-Term Success - Part 2

06/21/2018 By Opher 1302

In the first part of this article, we looked at how acknowledging our emotional/cognitive limitations is a crucial, if perhaps non-intuitive part of your long-term financial success. I also explained why I disagree with financial “gurus” and much of their advice on buying homes and prepaying mortgages. In this part, we start with another non-intuitive but compelling factor to your success, follow with a system/process “secret,” and conclude with how and why opening your own practice can be a critical part of your roadmap to success.

5 Secrets You Can Use to Achieve Long-Term Success - Part 1

06/18/2018 By Opher 1460

If you’re a fan of Suze Orman or Dave Ramsey, this article will challenge you. My advice on how to achieve financial success is very different from what such financial “gurus” have to say, but I have good reasons for it as you’ll read here. While I don’t know of any way to get rich quickly without unacceptably high risk (e.g., playing the lottery or day trading), you can achieve long-term financial success. Good fortune (think great stock market returns or marrying somebody who’s already wealthy ;)) helps but isn’t up to you or me. In this two-part article I cover five things you can control in your professional and personal life that help achieve long-term success.

Lessons from My Accidental Journey into Entrepreneurship

01/21/2018 By Opher 1390

Have you ever found yourself in a job where you’re required to do things you don’t care to do, paid less than you’re worth and less than others in similar positions, underappreciated by your supervisor, and with no path forward? That’s exactly how I felt. Despite years of attempts to change things without leaving, or to find a position at a different institution, I couldn’t seem to get unstuck. After 16 years with a mostly stagnant salary, fear was stopping me from making the sort of radical change that was my only hope. This was not a situation unique to me, and my journey from that low holds some important lessons about entrepreneurship and starting your own private practice.

How to Make Your Kid a Tax-Free Millionaire

12/27/2017 By Opher 1685

Year-end is a good time to think about your taxes, especially in a year that saw the biggest changes (like them or not) to our federal tax code in more than a generation. The famous (and often misattributed) quote goes, “‘Tis impossible to be sure of any thing but death and taxes.” (Christopher Bullock, 1716). More than 200 years later, medical researchers keep trying to disprove the certainty of the former, while Washington DC keeps proving that of the latter. A while back, I found a loophole that lets you legally help your teenager become a millionaire without his or her paying a dime of income tax, for less than $20,000! This loophole seems to be unaffected by the new tax law, and I can show exactly how to take advantage of it.

The Best Way to Pay Off all Your Debt

10/16/2017 By Opher 1772

We’ve all been there. Student loans to help pay for tuition, a business loan to help rent an office space and furnish it before you see any paying clients, or credit card debt to cover expenses while you start building your practice – it’s tough to get your education and start a practice without incurring debt, and usually many sorts of debt. If that describes you, what’s the best way to pay off all that debt?

Retirement Plans for Solo Practitioners

06/23/2017 By Opher 5362

Retirement plans are an important topic for solo practitioners, which I plan to cover more fully in my upcoming video course. However, I don’t want to hold off

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