Blog posts on personal finance

Posts selected fromManagement Blog - Engineering Blog - Investing Blog and other blogs

• Reverse Budgeting: Money that Must be Spent

  "Some people will put some amount into a checking account each month to limit their spending to say $2,000. I do something similar but for the opposite purpose to segregate money to spend. I move the decision from whether I am better off saving or spending that money to this is the money that has already been allocated for spending, so now go spend it on whatever is the best use for it."

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• Debate Should be Encouraged – Calling Judgement “Extremely Paternalistic” is Normally Unwise

  I also think it is sensible to object to payday loans in the USA. You could make the same argument that such an attitude is paternalistic...

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• The Importance of Long Term Disability Insurance

  Studies show that a 20 year old has a 30% chance of becoming disabled before reaching retirement age. In the USA, the Social Security Administration provides disability benefits for total disabilities. (but these payments are not very large and do not cover partial disabilities)

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• Financial Independence Retire Early (FIRE) and Location Independent Working

  Combining FIRE and location independent work provides some valuable benefits. If you have some investments saved up that can be tapped as you travel that can meet some of your living costs, this aids on of the bigger challenges – how to earn money while you travel. And if you travel frugally you can reduce your costs (below what you speed where you used to live).

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• Protecting Your Privacy and Security

  I suggested a way to make credit cards more secure and useful. When Apple Pay was announced I learned they are doing basically what I suggested.

  Apple Pay doesn’t share information that can be used to steal your credit card. Apple Pay gives the retailer a 1 time use code for that purchase.

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• Curious Cat Tax Proposals

  My plan would have 3 parts. I like a flat tax, I doubt it will ever happen, but if we could get one I would be happy. Cruz proposes that (at 10%). I am fine with his proposal to eliminate all deductions but mortgage interest and charity. I would definitely tweak that some – no more than $50,000 in mortgage interest deduction a year and the same for charity. Basically subsidizing it a bit for the non-rich is fine. Subsidizing these for the rich seems silly so I would cap the deductions in some way.

  Increasing the giveaways to trust-fund baby as Cruz and Trump propose is the single worst tax policy change that can be made. I have explained previously how bad an idea this is: The estate tax is the most capitalist tax that exists.

  Social Security taxes are nearly equal to other income taxes. They are highly regressive. I would eliminate the current elimination of the tax on high income earners. I would just have the tax due on all earned income (no cap). If that let me reduce the rate, great, if not fine it would just make the fund solvent for longer. I would not increase the benefits due for high earners beyond what it is now.

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• Making Money as a Nomad in the USA

  There are many posts about how to make money online as a nomad. Some ideas work pretty well for some people (freelance work – especially as a digital nomad, writer, bookkeeper, etc.). The biggest problem isn’t learning about these options (they are repeated all the time in many different places online) but actually making them work for you.

  ...

  I have been paying much more attention lately to nomads in the USA which opens up income possibilities in addition to online income.

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• 6 Tips To Help You Achieve A Better Retirement

  Are You Adding to Your Retirement Savings With Each Paycheck?
  Direct some of your paycheck to a 401(k) or IRA and you will soon be above average in preparing for your retirement.
  One of my favorite tips to nearly painlessly greatly improve your retirement life is to put some of every raise you get toward retirement savings.

  While these six ideas are easy enough to grasp and won’t require any financial wizardry to put into action, the challenge is breaking bad habits and replacing them with good ones. It’s uncomfortable, of course, but if you do, it will be rewarding in the long run. The earlier you get started, the better your retirement options will be.

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• Use FI/RE to Create a Better Life Not To Build a Nest Egg as Quickly as Possible

  Financial Independence/Retire Early (FI/RE) is about creating conditions that allow you to focus on what you value. Some people do focus too much on saving money quickly as though the goal is to save as much as quickly as possible. But that isn’t what FI/RE means. FI/RE doesn’t mean make yourself a slave to saving quickly in order to remove yourself from being a slave to a job until you are 65.

  To me what is most important about FI/RE is examining the choices you make and taking control of the decisions instead of just floating along as so many people do without considering the choices they make.

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• Saving for Retirement

  Saving for retirement is not complicated, it is just a matter of priorities. Most people care more about a Startbucks coffee each day (or season tickets, or new shoes, or a new car every couple of years or…) today than saving money for retirement. In a capitalist society we believe in letting people make their economic choices. The choices most of us make (in the USA) lead to the results above (few saving enough for retirement).

  Savings for retirement is difficult mainly because of our trouble planning for the long term, it is not at all a complex problem. The fable of the ant and the grasshopper illustrates this point very simply and it is really that simple. People need to do a better job of applying the lessons from that story to their retirement savings.

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• Financial Education

  The financial decisions we make have huge impacts on the quality of lives. This blog focus largely on management improvement: in such posts we often mention the importance of long term thinking and systems thinking. When planning our personal financial paths long term thinking and systems thinking (to optimize our long term financial well being given the options available in our individual situation) are necessary.

  Related: Curious Cat Investment blog - financial literacy posts

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• The Future for Investors

  The subtitle captures the basic theme of the book. Investing in the boring old stocks that people are not excited about is what have performed best.

  His basic advise is still to buy the broadest market index fund (such as the Vanguard Total Stock Market Index Fund [the broken link was removed]). He also concludes with the advice that those returns have been beaten historically by focusing on stocks with high dividend yields and low price earnings ratios.

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• Health Savings Accounts in the USA

  Health Savings Accounts (HSA) allow you to save money in order to pay health expenses in a tax free account. They are similar to an IRA but are for health expenses.  Eligibility is limited to those with high deductible health care plans.

  HSA funds can be saved over the years. Flexible spending accounts are somewhat similar but that money can not be rolled from one year to the next. The idea with HSA is you can save money in good years so you have money to pay health care expenses in years when you have them.

   

  HSA are a great tool to buffer yourself against the very costly USA healthcare system.  It is far from a solution to the huge personal financial risks the USA system imposes on people, but it is a wise small step to help cope with the system until we finally get around to catching up to the rest of the rich countries on earth by adopting a much less bad health care system.

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• Tiny Homes – A Great Alternative (for some people)

  Homes don’t have to be huge as they are now. The ever expanding USA single family home: average square footage of single-family homes in the USA: 1950 – 983; 1970 – 1,500; 1990 – 2,080; 2004 – 2,349.

  Tiny houses are looking at going back even earlier than 1950, and that is a good idea. I would also like to see experiments with small houses along the lines of 1950s (or even a bit smaller). By reducing the high cost of housing we can drastically change personal finances for the non-rich in the USA (and elsewhere).

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• Improvements to Credit Collection Requirements Have Had a Positive Impact

  Abuse of the credit system by 3rd party collection agencies (and credit reporting agencies) in the USA has been a long term problem.

  An attempt to partially address some of the abuses was a change in the required reporting practices that impacted collections accounts specifically, known as the National Consumer Assistance Plan (NCAP), which rolled into effect during the second half of 2017.

  ...

  This was a small good step in protecting consumers from the bad behavior of credit reporting companies and their customers. But much more must be done to protect us from having our financial lives negatively impacted by bad practices of the credit reporting companies.

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