May 012013
Adding some additional outdoor exercise lately to whip the garden into shape.

Adding some additional outdoor exercise lately to whip the garden into shape.

It’s the last day of April and time to check in on my weight maintenance progress as well as recap the last two-months of posts focused on diet and nutrition.

You may recall that my theme word for the year is “routine.” Without intending to figure out a diet and exercise routine that works for me, that is exactly what happened over the last two months. You may have noticed that I didn’t post a routine checklist for April. Because my mind was so focused on maintaining the weight loss I had achieved in March, I didn’t really feel up to working on all my routines at once. I think this focus really helped me. Now in May, I really need to add back in new routines, particularly for cleaning up around the house and working on the garden, which have suffered.

Below is a blank May 2013 daily routines checklist. I changed the format a bit. If you are using these charts, please let me know what changes you would like to see in them.

Before I reveal to you how my weight loss maintenance has been going, I wanted to combine some lessons learned with a recap of the past posts.

1) If the inspiration strikes, act on it! When I received the offer to review the DDP Yoga system, I wasn’t really planning on a big weight loss or exercise focus to my blog. I don’t know why I was so enthusiastic about the program but I am so glad that I let that energy carry me. Diet and exercise require an intense amount of self-motivation so if the inspiration strikes you, go with it! Don’t wait for it to come again at a more convenient time. It may not!

2) Hard change requires a bit of anger. The last thing I wanted to have to do on my health regimen was go on a diet. I don’t like restricting my eating patterns. At the time, I was listening a lot to Dave Ramsey’s radio show, and he always emphasizes that you know you are ready to change when you get so angry and fed up with a situation to the point that you yell out, “I’ve had it! I’m not living this way anymore!” At that point, you are ready to commit fully to whatever changes you need to make to get your desired result. I was thinking about that when I kept stepping on the scale and seeing negative progress despite my exercise diligence and made the commitment to try a diet. It was that feeling that helped me continue my diet despite changing conditions like the snowquester and to take it to the next level by limiting myself to just 1200 calories per day. And with that level of focus and dedication, I achieved success, losing first 7 pounds, then 4 pounds, then 1 ½ pounds, then an additional 1 pound for a total of 13 ½! I faced up to some hard lessons during this process including realizing that dieting or calorie restriction is something that will continue to be necessary as I age.

3) Keep perfectionism in check. It is so easy for us to want our bodies to look like models or athletes since those are the images we are faced with every day. Yet we don’t really want to make the sacrifices these people make to look like that. Portia De Rossi’s book exploring anorexia helped me to realize that the key endpoint of exercise is to focus on achieving a skill or getting better at something. Exercising to achieve a body type is almost impossible. Also, we have to be realistic about our own time constraints to exercise and fix special diet-friendly meals. Parents, in particular, may be suffering from sleep deprivation or lack of energy and may have a harder time sticking to a diet. Pick an achievable weight loss. It’s so much more motivating to hit your goal than to be endlessly seeking a goal you can’t achieve.

4) It’s the big changes not necessarily the small changes that matter. While I spent some time agonizing over small changes like using whole wheat flour in my pancakes or coloring healthy hard boiled eggs or swapping out snacks for my kids, or reviewing the difference in fortified versus non-fortified processed foods, in the end, I’m not sure these changes made a whole lot of difference in my weight maintenance.

5) It’s hard to override human nature. When I first went off my diet, I had a great time eating! I showed you the paintable Easter Egg sugar cookies I made for my daughter’s preschool class and the Matzoh lasagna and matzoh lemon cake we tried.

6) You must have a pleasurable distraction if you are going to diet! When I am not eating, I am knitting a lot more. I made Easter sweaters, have completed another project I will share with you later and am halfway through a third knitting project. I had no idea how much time I spent eating! I also spent some time bargain shopping.

7) Be open to alternative interpretations of your results. While I knew my diet was giving me success in the weight loss department, I wanted to know if it really was healthier. My blood test results helped me to realize that my diet still could use a few tweaks.

8) Even when you are successful, keep looking out for new things to try. I keep reading just about every article I see about healthy eating and exercise habits. I get new ideas all the time. I try them out, like eating more parsley and drinking green tea. I was also introduced to fasting, the latest form of dieting through Dr. Michael Mosley’s PBS series. Ramit Sethi also hosted a webchat with his personal trainers and it was eye-opening to see how many women were facing the same problems. Why can’t I lose weight? How do I get these pregnancy pounds off? The trainers made an interesting recommendation that people try 16 hours of fasting per day and noted that estrogen is a challenging hormone when it comes to weight loss for women. It was about then that I realized that dieting often comes down to a “what” or “when” decision.

9) Each person is different. My experience trying to help my husband eat a healthier breakfast was a failure. When it comes to weight loss, we are all motivated by different things and have different taste buds. It’s important to keep searching until you find a routine that speaks to you. I received many positive comments on the 400 calorie salad recipes that I shared, including a humorous one from my dad that 2 or 3 of those together would make a good meal!

10) Normal people have a lot to think about besides diet and exercise but that is not an excuse for why we can’t be successful. In our family, for example, I had to spend some time in April doing some detailed financial research to audit our accounts, get our taxes filed, review our college savings strategy, review our retirement savings plans, research ideas to improve our investing strategy and plan our children’s summer educational activities. I could easily have said that all this stressed me out and derailed my diet but I didn’t let that happen.

So now for the moment you are waiting for . . . did I manage to maintain my weight loss in April?


Yes I did! But it wasn’t as easy as these numbers appear. The first week after my diet, I managed to regain 5 ½ pounds eating a lot of Easter candy and lemon cake! I realized that something had to change. I contemplated going back on my salads but didn’t have quite enough willpower to do that. So I decided to continue with the one part my diet that was easy for me, the breakfasts. I also decided to experiment with fasting and added a one mile walk to my exercise program. So here is the “formula” that is working for me.


If I don’t do every single one of these things every single day, I will gain about one pound the next day. This program works for me because it allows me to eat what I want and the exercise is enjoyable. I love the one-mile walk because it warms up my muscles. I also have fun with my children along the way. After the walk, I like to do my 30 minutes of strength exercises right away while my muscles are still warm. It really helps with my yoga stretches.

I can maintain this diet even if I am on vacation or otherwise not in control of my eating situation. If I have to, I can bring a bag of chia seeds and mix them with water for my breakfasts. I can also switch up the timing of the fast period, etc. if there is a special feasting event. My diet does not really impact anyone around me except that occasionally they will have to accept that I am not eating and will be sipping my water. Over time, I may have to cut down the “forage period” to keep my weight in check but it seems feasible that I will always have at least one hour a day when I can eat whatever I want to. So I don’t have to “cheat,” I just have to wait!

I keep improving in my fitness and that is exciting. My legs feel strong and light. It sounds weird but it feels like it takes so much less energy just to do basic things like walk and climb stairs in this condition. My flexibility is returning. It has taken 60 days worth of exercise to finally feel like my muscles are loosening up. I even had one yoga-related injury along the way! I sought the help of a chiropractor who told me that my hip flexor muscles are too tight and that I need to work on stretches to loosen them. As I understand, the hip flexor muscles connect to the abdominal muscles in some way and as my abs are getting stronger, my hip flexors seem to be getting better as well.

Going into May, I feel confident that my new diet and exercise routine is under control and that it will take less effort to maintain what I have established. Now to tackle other areas of my organization that need addressing!

How do you feel going into May? What would you like to accomplish? Please share in the comments.

Apr 182013
"Pioneers Festival Investor Day,"  Photo by Heisenberg Media.  From the Flickr Creative Commons.

“Pioneers Festival Investor Day,” Photo by Heisenberg Media. From the Flickr Creative Commons.

This week, I am reviewing my finances. One of the tweaks I made to our financial systems last year was to subscribe to a paid investing advice newsletter. Since I don’t know all that much about investing or stock picking, I figured that receiving some specific advice from an investing expert would give me some concrete suggestions about what to invest in.

How did it work out for me?

Sadly, not so well.

There are a million different investing newsletters out there. All of them market themselves on the reputation of one or more seasoned stockpickers on the staff. They sound really impressive. The newsletters are generally written well and give you an investing recommendation along with the various reasons supporting the recommendation. There is usually some supporting economic data, stock data, industry trends or quotes from millionaire investors that makes the recommendation sound even more convincing.

The only problem is that the stock market isn’t a scientific problem to be solved. You can’t just follow a pattern of economic facts to stock market success. The investing newsletter I chose to follow last year ended up being “wrong” on just about every piece of advice they gave. It was written by intelligent people with a lot of experience and facts. The reasoning was a plausible guess about market conditions but the market went the other direction.

Fortunately, we did not blindly follow the advice and invest actual money. Instead, we were lazy. We read the recommendations but thought about it rather than acting on it. We made one investing decision based on the newsletter advice, which ended up being an OK decision but probably not the best one we could have made.

This year, I am trying another investing newsletter with a different perspective. So far, I can’t say I am really impressed. When I read the investment recommendations, I generally think, “Why that company? I never shop there.” or “If we hit economic difficulty, I don’t want to own that stock.”

After my experience so far with these investing newsletters, I have a few lessons learned:

1) There is no shortcut to investing success. Reading one newsletter is not a substitute for finding your own investments and developing your own investing method. The newsletter should supplement and not replace your other investing reading.

2) Patience is a virtue. If you choose an investing newsletter with a strong or unusual opinion, wait at least a few months to just read the advice, research and follow the market before acting on the guidance.

3) Watch for hidden agendas.
Some of these investor newsletters seem to have an ulterior motive. Think about whether the investing newsletter is trying to boost a stock price so that it can profit while you lose. If your gut instinct says that something is a bad investment, it probably is.

4) Your eyes will be opened to the depth of the investing world. If you gain nothing else from an investing newsletter, you will at least learn about the millions of different types of investments out there. Portfolios are not just limited to stocks, bonds and CD’s. There are new and sophisticated types of investments that are accessible to anyone willing to learn how they work.

5) The investing advice world runs on paper. The two investing newsletters I subscribed to both provide their main newsletters via paper copy and snail mail. It seems completely backward and out of touch with the modern world but it ended up being a brilliant choice. We get so little via hard copy mail anymore that when the investing newsletter arrives, I find myself drawn to reading it. I also seem to comprehend more when I read it on paper than on a screen. Since there is an obvious time lag between the stock recommendation and the printing of the newsletter, it also provides an instant check for the long-term investor. Has the investment performed well since the recommendation was made? If not, it probably isn’t the investment for me.

6) Expect a lot and know how to cancel. There is so much free investing advice out there, if you are going to pay for advice, you want something that is easy-to-understand, relevant and that performs well. At the end of each subscription term, if you aren’t getting your money’s worth, be ready to switch and try something else.

Do you subscribe to paid investing or financial advice? What tips would you share about choosing a good investor service? Please share in the comments.

Apr 172013
"Fluorescent Servitude."  Photo by Michael C. Rael.  From the Flickr Creative Commons.

“Fluorescent Servitude.” Photo by Michael C. Rael. From the Flickr Creative Commons.

Since I have just tackled the thorny issue of college savings, why not jump next into the even more thorny issue of retirement savings!

My money strategy is to tackle all of these difficult issues head on. I would rather know now if I am going to have a major problem in 30 years than push it off to worry about another day. So far, the strategy seems to be working. Even if you can’t fix everything wrong with your retirement savings plan, just by paying it some attention, you will start to make at least some positive progress.

Last year, I started a tradition of formally reviewing my 401(k) savings and creating a short written report about how we are doing. (You can download the template I use and some instructions about how to use it here.)

2012 was a terrific year for 401(k)s!

Mutual fund companies and retirement plan purveyors couldn’t ask for a better marketing year for 401(k)s than 2012. In our plans, every single fund increased in value in 2012. Nothing lost money. Nothing! You couldn’t pick a bad investment. Whether it was stocks or bonds or international, it all made money. Just because of the positivity, you should do the detailed 401(k) analysis for 2012.

The best investment of 2012: stocks

If you could time the market, in 2011, you would have put all of your money into bonds but then, in 2012, you would shift it all to stocks. Stocks performed fabulously in 2012! We had gains in some funds of over 35% in one year! Wow! If only every year could be half this good.

2013, what will happen?

The numbers looked so good in 2012 that they honestly scared me. How can every single mutual fund make money? There were zero losing investments? This almost never happens. Yes, the economy seems to be recovering but to have this type of tremendous gains . . . it feels a bit bubble-ish.

So far, 2013 is off to a bit of a rocky start and we probably aren’t going to see 2012 repeat itself. It doesn’t mean it is time to get out of stocks, but rather accept that there is risk in every investment and to make sure your investments are appropriately diversified for your own savings goals.

Do you take the time to check in with your retirement savings each year? What lessons did you learn from 2012? Please share in the comments.

Apr 162013
"Daisy Chain - Vassar Graduation, June 1908" Photo by Bain News Service.  From the Library of Congress Prints and Photographs Division.

“Daisy Chain – Vassar Graduation, June 1908” Photo by Bain News Service. From the Library of Congress Prints and Photographs Division.

Our eldest daughter will turn 8 this year and along with that comes a scary realization . . . we have only 10 years left to save for her college education!

Even scarier? Based on standard financial advice that you should not put at risk money that you need in 5-7 years, we have only about 3-5 years left for any aggressive investments for her. After that, it is low-interest earning CDs and bonds which will not build savings quickly.

I have been trying to learn how to be a better long-term saver when it comes to retirement saving and it has been a long and steep learning curve.

But when you look at saving for college, it is truly even more challenging than retirement saving. You have at best half as much time to amass almost as much money!

Can you even afford to be saving for college?

It is instinctive that high achieving parents want their children to go to college and want to help if not fully fund college for their children. But is this a realistic expectation? Many financial advisers are now telling people that unless you are fully funding your retirement and have money left over to invest, the answer for you (and your children) is that you don’t have enough money to be saving for college.

Ouch! That answer really stings and hurts if it applies to you.

If you don’t believe this is true, consider a few things. The cost of college is rising at an astronomical rate compared to wage-earning power and every year becomes more unaffordable.

You can also run some specific numbers for your child.

1) First, choose a representative school that your child might attend and find out the current cost of that school, using the National Center for Education Statistic’s College Navigator search tool.
You might choose a community college, a state school or an expensive private college, depending on your child’s educational goals. For example, the University of Virginia (a wonderful state school if you can manage to be admitted!) currently costs $25,325 per year for an in-state student living on campus and $15,546 per year if you can live at home with your parents during college.

2) Take the annual tuition cost and plug it into the calculator at Saving for Put in your child’s age and then on the next screen you can adjust how much the college your child will attend costs. For the University of Virginia example, starting saving right now at age 8, you would have to save $530 – $863 per month until college to have enough. (Note: this assumes you can earn at least 7% per year in your college savings account, which is ambitious.) Even providing the cheapest college option for your child (attending a community college for 2 years and living at home), will require you to save approximately $100 per month from birth. If you have more than one child to save for, these costs multiply quickly.

So, what if you run these numbers and saving for college is scaring you to death?

The 20/20/20 (or one-third) Plan

Financial columnist Ron Lieber of The New York Times shared a strategy on NPR called the 20/20/20 plan. This plan, developed by financial planner Kevin McKinley, suggests that parents divide the cost of college into three chunks: a portion saved before college starts, a portion saved while the child is in college and a portion taken out in loans. For example, $20,000 prior to college, $20,000 in college and $20,000 in loans. If you pursue this strategy, you are assuming you will have more disposable income by the time your student is in college and that you will also be able to pay back any loans after your child completes college.

Suze Orman: Don’t Ever Cosign for Private Student Loans

Suze Orman recently gave a tip to parents tempted to make up the difference in their college savings by cosigning for private student loans for their children. Her advice? Don’t ever do this! Suze advises that parents should only cosign for federal student loans, not private student loans. (Of course, if you happen to have the rare student who has a 6-figure job waiting after graduation, this rule may not apply to you.)

Suze also provided a brave guest who laid bare her financial mess after borrowing almost $200,000 to attend art school, most of which was co-signed by her parents. This creates a huge financial problem for both the student and the parents and is a good warning to us all.

Students: Don’t Attend a College that Will Require You to Take out More Than Federal Student Loans to Attend

Ron Lieber also gave a general tip to students (echoing Suze Orman in the video above) that if you have to pay for college on your own, you should generally never borrow more than the maximum limit on federal student loans. Even though more loans may be available to you via private sources, Mr. Lieber advises that students have a far better chance of paying back their loans by sticking to the federal student loan limits.

What are your strategies for saving for college for your children? Do you find these savings targets achievable or intimidating? Please share in the comments.

Apr 152013


This year, I have to give an organizational award to the IRS. After many years, my paper-filing tax protest has ceased!

You see, for the past several years, I have printed out and mailed my tax return rather than e-File it because I felt that it was wrong to charge people to eFile their returns online. The IRS for many years decided that people of low income levels could eFile for free but everyone else would have to pay one of the designated service providers an e-Filing fee. Meanwhile, you could still paper file your return for free (even though paper-filing costs the government more to process than eFiling). So, frugalista that I am, I paper-filed for years.

A few years ago, the IRS decided that they would provide the Free File Fillable Forms Option to everyone for free. This is a bare-bones, fill-in-the blank type of tax form that does some calculations for you but for the vast majority of the calculations, you are on your own. This was fine with me and satisfied my criteria that the government should provide a free eFiling option.

The only problem? The Free File system often had errors or couldn’t be used with certain tax schedules, deductions or forms. Last year, we came close to eFiling but some form we needed wasn’t allowed on the Free File system. So, we printed out and mailed again!

But this year . . . S U C C E S S ! ! ! !

The Free File system had all the forms we needed available. The calculations were all correct with no errors. For many reasons, it was great for us that this year in particular was an eFiling year. It made things so much easier for both us and for the government.

When I went to eFile the first time, I had a typo on one piece of identifying information and the return was rejected. I called the IRS to inquire what was wrong. The first person I spoke with was quite abrupt and unhelpful but she transferred me to another person. I had to wait a while on hold but the next woman I spoke with was very helpful, very patient and helped me find the error. I then eFiled with success!

This is such a huge step forward in our tax collection process. Kudos to everyone involved!

In another huge leap forward, the Commonwealth of Virginia tax collection process now provides a Free File option and we eFiled with Virginia as well!


Like the IRS, Virginia was also charging all but low-income taxpayers to eFile their taxes until this year. Last year, I broke out the typewriter to type and manually mail our return to Virginia via the free method. Perhaps Virginia got the message from devout paper filers like me.

So, although I don’t enjoy paying my taxes, the eFile service this year made the process so much less painful!

Did you eFile this year? Please share in the comments.

Mar 152013
"Pay Director Edwin Stewart, Bureau of Supplies and Accounts" (between 1890 and 1901).  Photo by Detroit Publishing Company.  From the Library of Congress Prints and Photographs Division.

“Pay Director Edwin Stewart, Bureau of Supplies and Accounts” (between 1890 and 1901). Photo by Detroit Publishing Company. From the Library of Congress Prints and Photographs Division.

This is a very busy time of year for our family. We go through our finances for the past year with a fine tooth comb, prepare our taxes, review our 401(k) accounts, reconcile the flexible spending account and check our budget and other planning.

This is the first year I ever recall being surprised during any of this review process. Fortunately, my shock was not due to the state of our finances but rather upon discovering questionable business practices and fees among some of the companies we did business with in 2012.

Perhaps you can attribute it to the poor economy but the general tone seems to be that businesses are willing to do whatever they can to scrape together more dollars, even if that means taking advantage of people.

For example, we found that one of our medical providers had double-billed for its services, charging both the insurance company and us for the same amount. We complained and the business indicated that if we provided proof they would refund our money. We provided the documentation (that they should have had in their own system) and the charges were refunded to us.

Next, I was updating some accounts that are generally inactive most of the year and was shocked to discover every kind of fee imaginable being levied against these accounts by the bank. It was particularly bad when a savings account had gone from being an interest-bearing account to earning zero interest and instead being charged a monthly “inactivity fee,” all without notice to me. I no longer do business with that bank.

After some research on inactivity fees, I find these are really insidious fees that seem almost designed to take advantage of people who need their savings the most. Essentially these fees are charged by the bank after a period of time of “no activity.” For example, you might be putting your child’s birthday checks in a savings account for education expenses. If you don’t make any deposits or withdrawals on the account for a period of time (ranging from months to years depending on the bank), the bank can then start assessing your account a monthly fee, typically somewhere between $5 and $10, until the account becomes active again. It is not clear why the bank should be charging these fees in the first place but federal law allows it so they do.

Some banks complain that if you are not actively depositing into the account, they are not making enough money from you to cover their basic costs for preparing your monthly statements and other overhead charges. Some banks complain that they have no way of knowing how to contact you if you don’t actively interact with the bank–even if you have another account with the same bank that is “active.” These reasons seem very frivolous to me.

You might also be surprised to know that some banks have very high standards for what counts as “activity.” Interest deposits often don’t count. Sometimes banks will also not count deposits or withdrawals made electronically as activity. Some people have indicated that they have to physically go into the bank to make a deposit at least once a year to make it count as activity.

Don’t get caught by inactivity fees! Make sure you know your bank’s policies on these fees and make at least one active transaction on every account you hold at least once per year. Even a token dollar transfer in and out of the account should be enough to avoid the inactivity fees.

So a warning to all . . . make sure you are tracking all of your money and that at LEAST once a year you are poring over all the details of your accounts. If you have opted for electronic delivery of your bank or payroll statements, make sure you are logging in and downloading your statements every month so that you can catch these fees and account changes right when they start. Don’t blindly assume that things are just the same as they are last year.

Are you seeing an increase in business shenanigans? Please share in the comments.

Jan 302013



If you are a Quicken user, you may know that Quicken is planning another mandatory upgrade this year. I believe the last mandatory upgrade was in 2010. If you, like me are operating on the 2010 software version, by April 30, 2013 you need to upgrade to the 2013 version of the software or you will lose the ability to electronically download transactions from your financial institutions to your accounts. Electronic downloading is probably the biggest benefit of Quicken.

While I’m not a big coupon person, this past weekend, I was seeing a lot of deals on Quicken and I snapped one up. I was looking for the Home and Business edition of the software which retails for $109. If I was going to be forced to upgrade, I wanted to get the lowest price I could. I used a coupon at Staples and got a copy for about $89 with tax (the in-store coupon was far more generous than the shop online coupon), which I thought was pretty good. Prices on this software are maddeningly always changing however and now it looks like they have dropped online.

Quicken Deluxe 2013 at

Quicken Deluxe 2013 at

Quicken Premier 2013 at

Quicken Premier 2013 at

Quicken Home and Business 2013 at

Quicken Home and Business 2013 at

Note that the “Starter” version of Quicken, while the cheapest option, has restrictions on converting your old data and might have issues if you decide to transfer your “Starter” data into more robust editions of Quicken. So, you probably want to avoid this edition so you don’t waste time entering transactions you can’t use later.

The 2013 software is about 90% the same as the old software but there are a few key changes.  The first is that the software has some sort of mobile interface where you can update your balances from a smart phone.  It sounds like a neat feature but there is no way we are going to use this.  With all of the sophisticated ways that people can “steal” data from cell phones, I am just way too nervous about snooping.  Interestingly, the 2013 Quicken End User Software License Agreement (yes, nerds like me do read these things) had this to say on the matter:

8.     USE WITH YOUR MOBILE DEVICE.  Mobile access to the Quicken Connected Service may not be available for all mobile devices or telecommunication providers.  Use of the Quicken Connected Service requires a compatible mobile device, Internet access and may require software.  You agree that you are solely responsible for these requirements, including any applicable changes, updates and fees as well as the terms of your agreement with your mobile device and telecommunications provider.   INTUIT MAKES NO WARRANTIES OR REPRESENTATIONS OF ANY KIND, EXPRESS, STATUTORY OR IMPLIED AS TO:  (i) THE AVAILABILITY OF TELECOMMUNICATION SERVICES FROM YOUR PROVIDER AND ACCESS TO THE SERVICES  AT ANY TIME OR FROM ANY LOCATION; (ii) ANY LOSS, DAMAGE, OR OTHER SECURITY INTRUSION OF THE TELECOMMUNICATION SERVICES; AND (iii) ANY DISCLOSURE OF INFORMATION TO THIRD PARTIES OR FAILURE TO TRANSMIT ANY DATA, COMMUNICATIONS OR SETTINGS CONNECTED WITH THE SERVICES.

I am still getting used to the new software.  Again, it seems mostly the same as the old version.  However, I did discover one new feature that is actually useful! If you have a home mortgage, Quicken 2013 has some new financial graphing and calculation tools. These tools let you experiment with different scenarios to see what would happen if you paid extra each month or made a one-time lump sum payment.

Example of the mortgage payoff chart in Quicken 2013.

Example of the mortgage payoff chart in Quicken 2013.  (Data obscured)

Mortgage payment options calculator in Quicken 2013.  (Data obscured).

Mortgage payment options calculator in Quicken 2013. (Data obscured).


Are you due for a Quicken upgrade this year?  How will you snag the best price on Quicken?  Are you pleased with any of the new features?  Please share in the comments.

Jan 172013
"Disgusted with life, she retired to the society of books," drawing by Rosina Emmet Sherwood (1888).  From the Library of Congress Prints and Photographs Division.

“Disgusted with life, she retired to the society of books,” drawing by Rosina Emmet Sherwood (1888). From the Library of Congress Prints and Photographs Division.

Recently, the news has been reporting on the sad, but completely unsurprising finding that people are raiding their retirement accounts to pay credit card debts and other bills. Of course, taking any amount of money out of your retirement account for any reason jeopardizes your retirement security.

Personal retirement saving is still a relatively new concept for this country and something we are all still learning about. In the past, pensions put the burden of saving on employers, now Social Security puts the burden of saving on the government. But for those of us with decades to retirement, the reality is that the government retirement system will start to fall apart just as we are entering retirement, leaving the burden of saving for retirement on us. Already, we are starting to see proposals to increase the retirement age for Social Security and Medicare to 70.

How much do you need to save for retirement? It depends and the recommendation changes person to person. Recently an NBC news report gave this generic guideline:

By age 35 – 1x salary
By age 45 – 3x salary
By age 67 – 8x salary

I like this guideline because it attempts to give at least some concrete numerical guidelines so that you know whether your savings goals are on track.

However, this guideline is a little bit too simplistic in a few ways. Is the salary guideline based on your highest, pre-retirement salary or your salary as it happens to be at those particular ages? Also, these guidelines, the same as all retirement saving guidelines, make the mistake of assuming that all of us will just continue to hold steady or earn more and more money until we retire. Based on recent economic challenges, we all know that it is probably more likely that our incomes will fluctuate up and down and there might even be period s of unemployment or under-employment as well.

Just testing out this guideline, what does it actually mean?

For all of my cases, I made the following assumptions:

  • The savings cases are for a couple so the retirement savings amount has to cover the cost of living expenses for two people and the contributions count both of their savings.
  • Constant employment and retirement savings contributions
  • 2% annual inflation
  • 4% annual rate of return on investments (probably low but a conservative guess)
  • Once you reach retirement age, you set aside an amount from your savings to cover out-of-pocket medical expenses, estimated to be $240,000 for a couple (in 30 years from now the inflation-adjusted cost would be about $433,000) and you live on the rest.

I used this inflation calculator and this retirement calculator.

So what are some scenarios illustrating how this would work?





As you can see, in terms of the monthly contributions required to hit these targets (the numbers that people probably care about the most), you have to put the bulk of the money in by age 45! You have to make significant contributions right out of college and the largest share between ages 35 and 45. 35-45 is a tough time for a lot of people to be putting this kind of money away as many people are buying homes and raising families during those years. This model then slacks off once you hit 45 so you don’t have to be putting in as much and if you have to retire early for some reason, you are still probably covered.

It’s a sound model but a significant change from the way most people save for retirement now. When I first ran the numbers, I confused the guideline and thought it was 1x salary by 35, then 2x salary by 45 then 8x salary by 67. With these guidelines, you still have to put in a good amount by 35 but then you slack off a little until 45 at which time you ramp up and make the bulk of your contributions. While this model does not account for the risks of early retirement as well as the original, it probably better represents how most people actually save for retirement.

Whenever I run any kind of long-term retirement planning numbers, it does feel a bit depressing. The savings numbers are huge and the payoffs so low. It’s also kind of sad to think of the end of your working years or even the end of your life! But, once I face all this sadness, I get over it and forge ahead with my plan. With a plan in place, I can then relax and start to enjoy my current life more.

I also think that retirement saving tends to work best for people who don’t perceive money as the key to happiness. The more money (or a particular lifestyle or image) equates to happiness in your life, the harder it will be for you to trade off “losing” money today to your retirement savings. So a very real part of being a good saver is being able to build a foundation for your life that is rich in non-material gifts. You know, the REALLY good stuff like love, friendship, the passion to learn, optimism and the ability to appreciate the small things.

What is your reaction to this retirement savings guideline? Are you on track? If you are in retirement already, how would you have fared under these proposed changes? Please share in the comments.

Jan 072013
"Mesa Verde" by red, white and black eyes forever.  (August 3, 2010).  From the Flickr Creative Commons.

“Mesa Verde” by red, white and black eyes forever. (August 3, 2010). From the Flickr Creative Commons.

The “fiscal cliff” has come and gone and visits us again as we negotiate the “debt ceiling.” Sadly, I don’t think most people have any idea how to even begin to understand these issues. To really participate in the discussion, you need to understand tax law and for most people that is about as interesting as watching paint dry.

To drum up interest in the issue, all the news was telling us was horror stories about increased taxes. But our tax system is so complicated that there is no way to know without hours of calculations what any particular tax change REALLY means for any individual person or family. The Democratic party began circulating the figure of a $2,000 tax increase for the typical family. There was no real explanation of where that number came from and even if there was an explanation, who would understand it?

And so, at the last-minute, we had the fiscal cliff deal but what was it?

For a lawyer, all of this vagueness is maddening. You can’t mention increased taxes without getting really specific. And so, I present to you, my attempt to summarize what I think happened with tax rates both before and after the fiscal cliff. (Note: the tax code is so complex that I am not 100% sure I have this right. If you have a correction, please email me or post a comment.)


As you can see, the fiscal cliff deal increased taxes on only a very tiny fraction of all taxpayers (roughly only the top 3% of all taxpayers). But if you happen to be in this “lucky” group, thank you for “agreeing” to pay roughly a 5% increase in your overall taxes.

But what I find the most interesting is that the fiscal cliff really didn’t have much of an effect at all on the bulk of all taxpayers. Approximately 77% of all taxpayers earn less than $75,000 per year. Approximately 38% fall somewhere in the $17,400 to $70,700 income band (highlighted in yellow). These taxpayers didn’t really benefit from the Bush tax cuts since their taxes and dividend taxes have been the same. These taxpayers likewise didn’t face any threat from the fiscal cliff. So, if you want an explanation for voter apathy on this issue, you might have it there. I also find it interesting that no one was up in arms about the 5% tax increase on those earning less than $17,400. If there was one fiscal cliff tax rate increase that seemed bizarre and wrong, that one was a standout.

So, if there wasn’t much change on tax rates for most people, how else did people “save” money during the recent fiscal cliff deal?


For a lot of families, a cut of 50% to the child tax credit would be a big impact on their taxes. Yet, you heard nothing about this particular issue in the news. Likewise, the marriage penalty was not mentioned. I find it also strange to know that the estate tax exemption is now even higher than it was before the fiscal cliff, an odd result to be sure.

If you have received your first paycheck of 2013, you may have noticed that despite the avoidance of income tax rate increases, your pay may be up to $189/month lower than expected. This is, of course due to the resumption of “normal” Social Security taxes.


I personally don’t mind this increase as I think anyone who ever hopes to claim Social Security one day needs to pay in. We know this program is underfunded so it only makes sense to me to resume the old tax rates. We also see that higher income earners are going to start chipping in more to Social Security and Medicare.

If you take the perspective as I do that we need to start making meaningful progress in rectifying the nation’s finances, the fiscal cliff deal is hardly inspiring. Yes, we need to be careful not to kill the economy but honestly, we can all afford to take a few more hits for the sake of the country. I am shocked at the lack of creativity in creating these deals. For example, it is not as though the only choices were keeping the Bush tax cuts or raising them back to Clinton-era rates. We could have raised taxes 1% on everyone or even 0.5% and most people would not have noticed. The child tax credit could have been cut by $100 or $50 as a token of solidarity. As we head toward the debt ceiling negotiation, I hope we see a little more bravery and creativity.

What do you make of the fiscal cliff deal? Please share in the comments.

Dec 012012 is doing such a ridiculous amount of business right now that it was impossible to check out! I encountered this error for over 12 hours until I finally got through. After seeing this warning so often, however, I have decided that it should appear automatically on my personal voicemails and emails at the moment. Don't we all need a "high volume" warning this time of year?

One of the main reasons I haven’t been blogging lately is because I have been shopping.  Family budgets are a bit better this year so the holiday present exchange rules have been expanded.  While this is certainly great news, it means that we have to spend more time picking out gifts.  On top of that, there are 6 Briggs birthdays to celebrate between Thanksgiving and New Years.  As a further challenge, we “adopted” a little girl for Christmas through the Red Cross and are purchasing all of her Christmas gifts as well.  So there is a LOT of shopping to be done.

If you are going to do this much shopping and not have it result in a miserable, financial mess, you have to be organized about it.  It has taken me many Christmases of experience to figure out the system that works for us.  Below are some of my tips.

1.  Work the spreadsheet.  The only way I feel comfortable with all this spending is to diligently track it.  In addition to the standard financial accounting we do in Quicken, I create a spreadsheet for each year’s holiday spending where I track EVERYTHING related to Christmas.  My spreadsheet is ridiculously detailed.  I break out spending by person so we can keep things “fair.”  I also put down any travel or holiday entertainment expenses, charitable donations, holiday card expenses, postage, etc.

2.  All shopping is holiday shopping.  We also count any “bargain” purchases as Christmas gifts.  For our tracking purposes, there is no “regular” shopping for anything but routine groceries during the holidays.  So if we stock up on socks because they are on sale, they get wrapped up for Christmas and tracked just like any other present.  If we pick up after-Christmas bargains, they get added in too or carried over to the next year’s spreadsheet.  If we are spending money because of the holidays, it’s in there.  We have one bottom line number that we keep our eye on for our total spending.

3.  Realize that you are really going to flex your savings willpower.  Getting through the holidays without going into debt takes a LOT of effort.  There is no simple way to say that you will only spend $x and not go over.  It just doesn’t happen.  But what you can do is work hard to keep those expenses as low as possible while still enjoying yourself.

4.  Bargains are everywhere.  For children’s toys, buying used is a huge savings and, yes, I have given my own children used stuff for Christmas (see last year), and they didn’t mind one bit.  I don’t have the energy to watch every Black Friday sale but I do watch for free shipping or __% off your entire purchase specials.  This year I did better than usual picking up bargains.

5.  The best “savings” are usually the things you don’t buy in the first place.  The best “bargains” I have made occurred when, rather than immediately clicking “Buy” on my shopping cart, I slept on it and realized that I could do without certain things to stay in budget.  I put back over $100  this way.

6.  Be careful about buying things for yourself while shopping for others.  The danger of being the primary shopper for a family is that you find so many great things to buy for yourself.  I am officially done shopping for me at this point.  I hope my willpower holds ‘til Christmas.

7.  Know your priority deadlines and focus on those.  If you are shopping for charity, the deadlines are usually in the first week of December.  If you want a very specific toy or item, buy it now while it is still in stock.  If you need to ship anything, get it sent by December 15 or so to avoid expedited shipping costs.  December 20 is the last day for first class mailing of letters and cards for Christmas arrival.  Photos or photo gifts need to be ordered as early as possible as well.  The only gifts that can wait are those that don’t have to be shipped and where the recipient is not picky and a generally appreciative person (don’t we all wish there were more of those people)!

How is your shopping coming along?  What are your shopping secrets?  Please share in the comments.