Tricks to cut cooling costs


On May 2014 issue of Money magazine, there is a page on energy savings during hot summer. Here are some tips:

Three habits of the energy efficient:
1) Use the shades to block solar heat.
2) Keep the air flowing by leaving the doors and vents open. Don’t put furniture in front of the vent.
3) Open windows strategically. If it is humid, your system will have to work hard to remove the moisture.

More tips:
1) Clear the condenser by pruning back shrubs and ground covers at least a foot away from your outdoor A/C equipment.
2) Get a checkup: have a technician service your central-air system every year or two.
3) Replace filters, install new filters at least twice a year.
4) Plant a tree on the south or west side of your home.
5) Tighten ducts, hire an energy efficiency contractor to seal and insulate attic ducts.
6) Install ceiling fans.
7) Upgrade, if your A/C is more than 10 years old and you are in a hot summer, replacement will pay for itself quickly.



Building wealth, according to money magazine, Part II


Tip 101: pick a clean start day. And then bet on seeing it through. I think it works for setting any goals.

It’s one thing that you know what you should do; it’s another to actually do it. What is harder is to act.

Research suggests that you are more likely to start working toward a goal on days that mark a dividing line. Such as, more people start dieting on New Year’s Day. A clear start date makes people feel disconnected from their past imperfections and promote a big-picture view of life.

Find a tool to track your progress toward your goal and even commit yourself to putting some money on the line, if you fail to reach your goal. More people hit their goals when they have money at stake.



Building wealth, according to money magazine


I spent some time on May 2014 issue of Money magazine during the first weekend after I got back from China. The cover story of this issue is “101 ways to build wealth.” So many ways! Of course, I was intrigued to find out what they are. After flipping through them, I have picked a few of them which might be helpful.

The article treats wealth building as a series of projects taken over the period of one’s life:
Project 1: lay a base
Project 2: expand
Project 3: refine
Project 4: reconstruct

Tip 1: Don’t sweat the investment at first–saving trumps savvy. Investment choices don’t matter much initially. “about 20% of your true total wealth, including future pay, is likely to be in financial assets at age 35. So even if you lose 30% in your 401k, that is an overall hit of less than 7%. You can recover. Get started, and give yourself a year or two to learn to be an investor.

Tip 2: Spend less to enjoy more. Focus on using your dollars in the way most likely to make you happy. When you buy a luxurious coffeemaker–“you are more likely to feel buyer’s remorse when you go high-end. One reason: you will soon feel annoyed by the effort required to learn to use the extra bells and whistles.

Tip 3: when you are young, go Roth IRA

Tip 9: Ignore this one habit of the young and the rich: the most active traders earned 7% less per year than the ones who tended to stand pat.

Tip 12-14: build around three cheap funds: 40% on U.S. stock market index fund; 40% on bond market index fund; 20% on foreign stock index fund.

Tip 15: invest in a team, not a star. Stick with stellar funds run by a disciplined committees, not a single manager.

Tip 16: Get more by doing less. By trying to outsmart the market, overly active investor usually dig themselves into a hole.

Tip 17: Do something by “doing nothing.” Tossing in an option is called “Doing nothing.” “This small addition to your set of choices will subtly remind you of your goal and help you stay disciplined.”

Tip 18: Investing with your head, not your heart. Don’t make any financial decisions with a forlon heart. When feeling lonely or socially isolated, you are more apt to take bigger risks with your money. So delay important financial decisions following a breakup or a falling-out with friends or family.

Tip 22: protect your portfolio like Buffett: build moat. “determining the competitive advantage of any given company and, above all, the durability of that advantage,” said Buffett. Wide moat describes firms with products, services, or business models that can stand the test of time.

Tip 27: diversify your tax exposure. Everyone should put some money in a Roth IRA. With a Roth, you take the tax hit up front but get to pull money out tax-free at retirement.

Tip 28: cash is a poor choice for a long-term investment.

Tip 32: put your adviser under a bright-scope.” You need to know more than just their fees and disciplinary record. Check brightscope.com

Tip 33: pay next to nothing for basic help. Don’t overpay. Check some internet based advisers.

Tip 34: learn the ABCs of 529s to save for education

Tip 37: build in safeguards. Want an investment that will keep you safe in times of trouble? Seek out funds that over the past decade have lost less than the broad market in months when stocks have tumbled, while still outperforming over the past 10 years.

Tip 48: buy the smallest house in the best neighborhood you can afford.

Tip 50: fight tomorrow’s war today. Safeguard your cash with I bonds, government bonds.

Tip 51: defend your bonds with TIPS–Treasury Inflation-Protected Securities. VIPSX

Tip 53: forget the usual hedges. Investors have traditionally turned to hard assets such as real estate and commodities to guard against inflation. History shows these tools are barely as effective as cash.

Tip 54: utilize the best retirement plan you’ve never heard of. Use HSA, health saving account, where money grows tax-sheltered, and withdrawals for medical expenses are tax-free.

Tip 57: automating your payments use makes life easier, but study shows that nothing promotes saving more than paying the old-fashioned way. Very often you are not aware of how much you have overspent with automatic payment arrangement.

Tip 58-59: bring some joy back to investing. Let loose by taking a flier on these stocks with some play money–Linkedin, skyworks, etc.

Tip 61: go for McSaving, not McMansion. Amount you’d save by buying a $300k instead of $375k house is $162k, if you put $75k down and take out a 30-year 4.4% mortgage. Squeeze out as much savings as possible by purchasing a modest property at the lower end of your range, instead of buying the maximum that you can afford.

Tip 62: grab a second paycheck by earning rental income. Own a second house for renting.

Tip 66-68: use funds to tap high tax-exempt municipal bonds, 2% for intermediate-maturity issues vs. an after-tax equivalent of about 1.5% for regular bonds. For short-term money, use Vanguard Limited Term (VMLTX), Vanguard Intermediate Term Tax Exempt (VMITX), iShares National AMT-Free Muni Bonds (MUB).

Tip 71: avoid parental bailouts: your kids’ college debt shouldn’t exceed a year of post-grad pay.

Tip 74: diversity for income: 32% for US high-quality bonds, such as Vanguard Total Bond Fund; 18% international and high-yield bonds, such as Vanguard Total International Bond; 25% large US companies with dividends; 10% international stocks with dividends…

Tip 77: make sure you have this hedge: one reason to own foreign stocks is that currency fluctuations can boost returns and add to diversification.

Tip 80: if you have enough in your IRA to leave to the next generation, but worry junior will cash it out, set up a trusteed IRA.

Tip 81: stretch those legs–and stretch your dollars. The healthier you are, the less of your nest egg you will need to spend as chronic disease can be costly.

Tip 82: if you are not qualified for Roth IRA, make a contribution to a non-deductible IRA, then immediately covert to a Roth.

Tip 85: put your portfolio in buckets, that is, segment your nest egg based on when you need the money.

Tip 91: move to a smaller house and average school district when your children have left.

To be continued next day with the last tip.



The cost of the stuffs, unused and clustered in your house


As I continue plodding on house-cleaning, for some reasons, I thought of an article that I read long ago “How Much Money Is Your Clutter Costing You?”

And then, I read this piece recently “10 Clever Uses for the Space Under the Stairs.” As I read it, I couldn’t help asking, “Why do we have so much junks and we need so much space?”

Perhaps because I saw in my house something stored in boxes or piled in a corner, unused and untouched for many years and will remain so until we move out of this space. “What shall I do with them?” I don’t know how many times I have asked myself. Yet, this question always comes to my mind when I clean the house and see the piles of unused and untouched stuffs.

I know they are burdens but I never think of the cost of the stuffs that I am not using, nor intend to use. It actually cost more than the space they occupy. It cost my time to think about them. Yes, I have to think hard about how to dispose them without committing the crime of being wasteful.

I never thought of this when I bought them. Now I have to deal with the consequence of thoughtless shopping. Another cost.



Postpone retirement for lacking of retirement savings


I read these “5 Shocking Retirement Facts” on 7/1/2013, written by Christian Hill.

“…millions of Americans still have a dismal outlook when it comes to their own ability to retire. Consider these five statistics:

(1) 46% of Americans have less than $10,000 saved for retirement. (Employment Benefit Research Institute)
(2) 40% of baby boomers now plan to work until they die. (AARP)
(3) 36% of Americans say they don’t contribute anything at all to their savings. [CNBC]
(4) 87% of adults say they are not confident about having money for a comfortable retirement. (Lifehappens.org)
(5) Expected retirement age is up to 67 from age 63. (Zero Hedge)”

That’s a rather depressing picture of one’s senior years. Why didn’t people save while they can so that they can retire early like this Mr. Money Mustache, the man who retired at 30?



Small and steady stream runs long


With the other adult away from home right now, I have to enlist my daughtger’s help with household work. I asked her to wash the dishes since I do the cooking.

While she was washing, I told her a Chinese saying, small stream runs long “Xi-shui-chang-liu.” At first she didn’t understand what it meant.

When your water resource is limited, that water will last longer if you let it run in a small and steady manner than if you let it pour through the sink in as large quantity as it can. Same can be said of any resources.

Not wasting can help you go a long way.



The world’s most expensive dishes


Last weekend, while my daughter was at the recycling center doing volunteer work, I was trying to catch up with some writing that was due last Tuesday. But I bumped into this article on BBC- The world’s most expensive dishes. Just out of curiosity, I checked it out and was shocked at what I saw. Here are some of them.

The Golden Phoenix Cupcake
The world’s most expensive cupcake was introduced to sweet-toothed spectators in Dubai’s new Bloomsbury’s cafe on 5 July. It is priced at a whopping 3,676 dirhams, and is created from a recipe that includes Italian chocolate, 23-carat edible gold sheets, organic strawberries and lots of edible gold dusting. The cake is presented on a 24-carat gold stand and must be ordered at least 48 hours in advance. (Bloomsburys, Dubai)

The Frrrozen Haute Chocolate
Here’s an exaggerative description of its cost: a moment on the lips; a lifetime on the credit card. Such is the case with the world’s most expensive dessert, the Frrrozen Haute Chocolate, priced at $18,713. Available at Serendipity 3, a restaurant in New York’s Upper East Side, the dish combines 28 different kinds of cocoa, is adorned with 5g of edible 23-carat gold and infused with gold flakes. The sweet treat is presented in a goblet lined with edible gold leaf, served with an 18-carat gold and diamond bracelet and eaten with a solid gold spoon encrusted with rare black, white and chocolate-coloured diamonds.

Le Burger Extravagant
The world’s most expensive burger is made of Japanese waygu beef, infused with 10-herb white truffle butter, seasoned with Alderwood smoked pacific sea salt, topped with cheddar cheese, shaved black truffles and a fried quail egg served on a white truffle-buttered Campagna roll and finished with a blini, crème fraiche and Kaluga golden caviar. Oh — and, a solid gold diamond-encrusted toothpick on the side. The damage? $293, by appointment only, also at the world-famously pricey Serendipity 3 in New York.

Sushi Del Oriente
How about some Sushi Del Oriente — nigiri sushi wrapped in 24-carat gold leaves and sprinkled with five 0.20-carat African diamonds? This is the dish one Japanese businessman tucked into at his personal residence in Manila, Philippines, in 2010, served by up-and-coming celebrity chef Angelito Araneta Jr of premium gastronomy company Karat Chef. The bill? A cool 85,727.59 Philippine pesos. Apparently, the chef’s “artworks” are typically purchased as marriage proposal gifts.

And much more. But to be honest, the thought of the expense makes me sick.



“Go to class: To make money or save money – or both”


I heard this piece of news on NPR morning edition on 3/11. It talks about vocational classes, which people used to call derogatorily “an academic dumping ground for students who weren’t succeeding in a regular classroom.”

But now these classes offer pathway to college and a way to gain skills to pay tuition. The students are not tracked into these classes because they are not “college material.”

One teacher said this to the class, “I try to tell students when they come into this class you should be in here for one of two reasons: To make money or save money – or both.”

When I told my daughter what the teacher said, she said “Wow, it’s all about money.” In this bad economic time, people have to be this practical. If you think of how to save money, you can avoid borrowing heavily for your education. Of course, it is a wonderful thing if you can make money at the end of your education?



Saving for my daughter’s college expenses


I know some Chinese parents have to buy meals from restaurants everyday for their children because the children don’t eat Chinese food. I have told myself not to make this kind of exception for my children, though I often fail to keep my promise.

I have told my daughter that we try not to eat outside when we can cook at home. Because home-made meal is always economic and more healthy than most of American fast food. Normally we don’t go from home to a fast food restaurant. She knows that we are trying to save for her college expenses, which can potentially run up to $50K per year.

The day before yesterday, I took her to the Central library to check out some books for her school work. On the way there, she ate two mid-size apples and asked to stop at a McDonald’s nearby the library. She had two-third of a big mushroom, cheese burger from McDonald’s.

After 15 minutes in the library, she wanted to buy a snack from the vending machine, claiming she was hungry, which I did not believe. But she insisted she was hungry. I said we would have dinner at home and we would be back soon. But if she so insisted, I said I would buy this snack on the condition that she promised not to eat outside for a week. I tried to stop her tendency of asking to eat outside. This she did promised.

But on the way back home, she asked to buy a bubble tea at a Korean cafe. When I reminded her of her promise, she said “Oh yea, I forgot.”

Yesterday, when she went to Crispy Creme to apply for a job there, she asked if she could get a doughnut. There I reminded her again.



In donation, both quantity and persistence count


Since my son’s first year of college, I made the point of donating to his school every year. I told myself I might not be able to make a chunk of addition, but it would all add up if I can keep on doing it, a few hundred every year.

I didn’t miss a year since then, even if we were financially tight when he was in college, even if we try to save for my daughter’s coming college expenses.

Last week, we had a big credit card bill, that donation being one of the large charges. I told my daughter of this annual donation. “Many of my colleagues spend around $25 a week on lunch expense. Since I bring my own lunch and plus I do away with many other feminine vanity expenses like makeup, nail polish, jewelries, etc, I can very well donate this saving to some worthy cause.”

She applauded my choice. Of course, I hope she will do the same in the future.



The Unsustainability of US Economy and the Need to Diversify Your Savings


On 8/15/2012, I read an article — “Economist Richard Duncan: Civilization May Not Survive ‘Death Spiral'” by Terry Weiss.

The article warns of the pyramid scheme, that is very sharp downward turn of American economy. “America’s $16 trillion federal debt has escalated into a death spiral.”

American lifestyle is sustained by a huge personal and national debt and by a colossal consumption of gas, water and electricity.

Totally unsustainable is US economy, energy, ecological resources, and the whole American lifestyle.

The article conveys a strong sense of urgency. Imagine what would happen if US dollar becomes worthless! It does you no good to keep telling yourself “This is impossible.”

We individuals have to diversify our savings in case the pyramid does collapse. Don’t put all your savings in the form of US dollar. We already know that we should not put all our eggs in one basket.



Some Fun Facts of Physician Earnings


Around the end of April, I read an article from Medscape on comparing Compensation Across 25 Specialties. There are some interesting facts.

The 2012 physician income:
$315,000 radiologists and orthopedic surgeons
$314,000 cardiologists
$309,000 anesthesiologists
$309,000 urologists
bottom-earning specialties in 2012’s survey were pediatrics, family medicine, and internal medicine.

Male physicians across all specialties earned about 40% more than female physicians. In primary care, men earned 23% more. Those figures are fairly consistent with Medscape’s 2011 survey data. However, the gap in income is narrower in some specialties.

As in Medscape’s 2011 survey, the highest-earning physicians practice in the North Central region, comprising Iowa, Missouri, Kansas, Nebraska, and South and North Dakota; the mean income of physicians there is $234,000.



Tax Preparation: Learn To Do It Yourself


On 1/21, Saturday morning, while my daughter was still at Manhattan, KS, I went to an eye doctor for annual eye check. From there I went to Liberty Tax service to have an estimate of cost and the amount either we owe or we have overpaid on our federal tax.

The person serving me talked with Indian accent, punched in numbers into his tax return software, and in less than half an hour came back with the result. I was surprised to see his bill of over $300 for his service and that was after the coupon and discount. Plus, I was disappointed that he has not reduced the amount of tax that we owed. I know there must be some tax loops that I am not aware of and that can open a big door for shrinking tax dollars.

I thanked him and let him know that I would do some research myself to see if I could come up with a better deal. He looked unhappy and told me no matter where I went I wouldn’t get any better deal than this and in fact I should have paid more if without him. He kept talking while I thanked him all the same, and left his empty office.

I know this is the only time when tax preparers get most of their revenue during the whole year. It makes financial sense to maximize one’s profit during tax reason. Still, I can’t see why he charged over $300 for his half an hour work when he even failed to meet my expectation. I am not sure what I have learned from this experience but I think I did a right thing walking out of his office.



Money Is Medicine, Part II


Continued from yesterday’s posting, well, an attempt at interpreting that piece.

Money functions like medicine. It can taste sweet, but it can make one feel hot or become toxic if one abuses it. Money can relieve a person from hunger, pull him out of hot water. On a large scale, money can help build a strong country. If taken well, corrupt officials will implement equal distribution of wealth. Otherwise, social unrest would arise.

If one accumulates money without spending or sharing it, one is prone to being robbed; if one spends all without saving, one is likely to suffer in time of urgent needs.

A taoist person (dao) both shares and saves his money;
A virtue person (de) does not view money as topmost important;
A fair person (yi) does not get more than what he gives;
A righteous person (li) does not ask for what is not his;
A benevolent person (ren) uses his wealth in charity;
A trust-worthy person (xin) takes care of his debt;
A wise person (zhi) is not impacted by money.

The above practices are the medicine to longevity. A person will live a long and healthy life if he follow these practices. Otherwise, one will suffer from weak will and poor health.



Money Is Medicine, Part I



On 12/18/2011, when I talked to my mother over the phone, she shared with me this article from one of her readings. I will try to bring out English meaning tomorrow.



When Fool Set Afoot, Wealth Steps Out


On 9/23/2011, I read online something like “Stars who went broke.” To be sure, I am not surprised when wealth parts company with the unwise. But still, it was a bit shock to see how fast people have gone from being millionaire to utter poverty. Here are the incomplete list of those yesterday’s millionaires.

Nicolas Cage–The Oscar winner, once earned $20 million, was forced to put some of his properties on the market after failing to pay $14 million taxes for several years.

Mike Tyson–The former heavyweight champion, who made $300 million over his career, once spent $2 million on a bathroom fixture, filed for bankruptcy in 2003 after accumulating $27 millions in debt.

Randy Quaid–The “Independence Day” star and conspiracy theorist, once made nearly $817 million, filed for bankruptcy in 2000 after his aptly named film bombed at the box office.

MC Hammer– The “U Can’t Touch This” rapper earned $33 million in 1991, filed for bankruptcy in 1996, told the United States Bankruptcy Court Central District of California that he was $13.7 million in debt.

Kim Basinger–The Oscar-winning actress filed for bankruptcy after an ill-fated attempt to own an entire town (find it on a map). She earned a $5 million paycheck for the movie “I Dreamed of Africa.”

Willie Nelson–The “Red-Headed Stranger,” who found himself in hot water with the IRS in 1990, released a hilariously titled album to help pay off the debt.

Scottie Pippen–The NBA Hall of Famer, who lost $120 million in bad investments and big purchases, left the courthouse in tears after winning $2 million in a 2010 lawsuit.

Teresa Giudice of New Jersey” star and her husband filed for bankruptcy in 2009 after accumulating $9 millions in debt.

Also see stories on Chris McAlister, Burt Reynolds, Heidi Montag, Toni Braxton, etc.

I am sure readers would appreciate the expensive lessons these insolvent stars have to offer through their real life experience. Now we are supposed to be wiser than them.



Memory of a Speeding Ticket


One of the documents that I have kept for many years is traffic tickets, not many of them though. Here’s one of them.

On 7/12/2005, at 11:24 noon, I was on my way to Shawnee Mission West high school, where my son attended summer school. I remember following a swarm of cars, feeling as safe as a group of tigers. At the intersection of 103rd and Grandview, a police siren suddenly burst out. I was looking around to see who was the unfortunate one.

This time I was that one. I noticed the cop was following me, so I stopped in the mid of traffic. He approached with a got-ya smile, asking for my driver’s license and insurance card, then handed me a speeding ticket for $77 for driving at 47 mph in a 35 mph zone. Whatever. How I hate that moment!

The fine has doubled now as this is one of their revenue channels. Just be careful next time if you don’t want to feed with your hard-earnd money this way.



Money for Most People: Easy Spent, Hard Earned


On 5/11/2011, a summer-like afternoon, I took my daughter to eye doctor for her annual eye check. We waited for a long time and were seen by the doctor for a very short moment. The bill is over $200. Luckily, our insurance company picked up the large portion of it. With her orthodontics doctor, a brief check cost $150 out of pocket money.

That evening I took her to the main library where she would prepare for the AP exams with her classmate. While she was there, I toured the inside of the library and saw the display of beautiful ceramics. I saw this display before. It reminded me of the time when my daughter was in first year of high school, taking a ceramics class. To be sure, she enjoyed doing and was thinking of making and selling them. But that idea has remained an idea.

On the way back home that night, I told my daughter of two incidents. “For a great majority of people, it is difficult to make a few dollars, but so easy to spend it. For a tiny fraction of population, the opposite is true.”



Car, Transportation, Luxury, Vanity, Time and Life


On 9/26/2011, I told some of my colleagues that I had been car-shopping during the weekend. That started the conversation on car. I have learned that one co-worker owns an Audi, the other expressed the desire of buying one, but was deterred by the 6-digit price. To me, a car is nothing but a mean of transportation from A to B. I did not share with them my view, which might sound too foreign to them after all.

My idea of spending is this simple equation:
money = time; time = life.
Hence, the amount of money spent on something must be worthy of the amount of my time and life.

Nothing comes from nothing. You have to pay for whatever you desire. Comfort, luxury, vanity, and the final cost of money, time, life and health, all will balance out.

In my life, I compromise on many things, but never on time and some other major matters.



Parenting, Money, and Need for Re-education


On 5/20, I learned of the breakup of a young relative of ours with his girlfriend. On one of their date out, the girl bought a purse for 20,000 yuan, one third of her annual salary. The boy said jokingly, “Wow, with this spending, I am not sure I can support you in the future.” The girl was upset and told her mother of his words. The would-be mother-in-law told her daughter, “It’s none of his business. We spend our money.” This led to the final breakup.

I shared the story with my daughter. She agreed the girl was too extravagant. “You don’t spend that much on a purse even if you made $600,000 a year,” she said.

As a parent, I see clearly the hand of the girl’s mother in the whole thing. Number one, she is responsible for her daughter’s wastful spending. Number two is the fact she added fuel to the fire over the boy’s words, which hurt the feelings on both sides.

Secretly, I was hoping the boy could be more tactful in dealing with the girl, then further down the road, educate the girl and gradually free the girl from the undesirable influence of the mother on her. Then I think it too much for the boy to assume the role of re-educating the girl when he himself is not as mature as his age.



The Rich Set the Fashion; the Poor Follow


On 8/11/11, some of my colleagues talked about designer bag by Michael Kors. One of them loves it so much that she plans to buy one of them. After that I went to the website to take a look at them.

Wow, one little box-frame bag, size 4″Height x 4 1/2″Wide x 3 1/4″Deep cost $1,595. Most of them cost a few hundred dollars each. I am simply blind to any charm that they claim to possess. Instead, I feel repulsed when I see the price.

I simply don’t understand why people are willing to squander their hard-earned money on these designer bags. Thanks to these loyal customers, these top designers can exist in splendid style, driving limousines in town, living a life free from any concern or any need to work for a living. Why do people have to fall for this trick?

This once again reminds me of the saying — the rich set the fashion; the poor follow with their money.



If You Have To Make Money, Do It in Unconventional Way


On my 7/16/2011 posting, I mentioned a high schooler working almost 40 hours per week at a grocery store so that he could make monthly car payment. I have realized that I need further explantion here.

Number one, it is highly commendable that this teenager earned his own luxury instead of asking his parents, so much unlike many Chinese children of wealthy second generation.

Number two, in case you do need money, this is what I told my children — make it in a creative way instead of working as a grocery boy/girl. Don’t ask me how to be creative. It is totally your job to find it out.



Money and Your Mental Health


On 4/7/2011, I read an article from BBC new, “Money woes ‘linked to rise in depression'” Economic problems may be fuelling a rise in depression in England, it has been suggested, which seems to be a good thing for pharmaceutical company as they saw an increase of 40% of prescriptions for anti-depressant drugs such as Prozac over the past four years.

This is totally expected when all these things shower upon you at the same time– the loss of job, inability to pay your bills, the buildup of debts, the self-perception as a loser who cannot even support oneself or one’s family, loneliness when the loved one leaves, feeling of being trapped down below, helplessness and hopelessness…

It is so dreadful to be hit twice, first by economic downturn and second by depression. The best protection against this type of misfortune is to build your fortune, your financial security before crisis set in.



Income, Savings and Retirement


On 5/20/2011, I read an article “People Plan to Work Into Their 70s or Later” by Andrea Coombes. It was rather depressing to learn that “almost four in 10 workers say they’ll retire after age 70 — or just keep working… if they even retire at all, and a growing number of people said the recession will force them to work longer in life, a new survey finds.”

For some reason, the article reminds me of the scene in our chemo treatment room where so many senior folks work all their lives and finally reach their retirement years but are struck down by cancer. So pathetic.

To be sure, there are some who can afford not to work at an early age, but choose to stay on because they love their jobs. But for the majority, they don’t have this luxury. They work because financially they have to.

People may find various reasons for their failure to get ready for retirement, yet as far as I can see there are mainly two simple reasons.

Number one: they were not able to make big money. Number two: they have not been able to save enough during the springtime of their lives, even worse, they might have spent more than they had earned, resulting in negative savings.



Economic Commonsense


On 5/20/2011, I read an article “5 Easy Steps to Becoming a Millionaire” by Erin Joyce. Here are the main points.
1. Only Marry Once, without Schwarzenegger’s out-of-wedlock trick.
2. Live Off One Income, save the other one.
3. Choose the Right Career, “self-employed people make up less than 20% of the workers in America but account for two-thirds of the millionaires.”
4. Put Your Money in Appreciating Assets
5. Don’t Live the Millionaire Lifestyle, especially for those who are not. Warren Buffett is your example.

On the same day, one of my colleagues told me of her high school child, who worked almost 40 hours per week at a grocery store so that he could make monthly car payment. This yields the direct connection between the amount of time one has to throw in and the material possession one desires to enjoy. I would throw in that amount of time for some cause much higher than a car. Unless I am doing something I enjoy, I would rather consume less and work less.



Overspending, Debt and Impulse-Control, Part II


Continued from yesterday.

(2) “People will like me more: Overspenders may believe that a purchase will make it easier for them to connect with others. One woman in the study wanted to buy a house so that she could entertain and be more social, and thus find more friends.”
People attract others with their strong character, nice personality, wit and humor, and tons of success traits, not by with what they possess.

(3) “I’ll be more fun: Some believe that a purchase will make them more fun and fulfilled. A man in the study wanted a mountain bike because then, he figured, he’d become more adventuresome and interesting.”
It is so pitiful that people cannot create fun from what they have. Think of the moment when you go broke, unable to pay rent and bills or to put food on the table, and go homeless in the bitter cold winter night. Is that more fun?

(4) “It’ll make me more effective: The typical overspender believes that a purchase will make them better at a certain pursuit. Several in the study said that a new car would make them more independent and self-reliant.”
Independence and self-reliance are the qualities that one cultivate over time, not any purchase can accomplish this.

By the end of the day, if people cannot control their buying impulses, they can always find excuses to lie to themselves and to others until they go deep into debts and end up being as miserable as you can think of.



Overspending, Debt and Impulse-Control, Part I


I never let go an article on financial discipline without calling my children’s attention to it. “Overspending: 4 Lies That Lead to Debt Problems” by Dan Kadlec Monday, May 9, 2011. I like the part when the author raises it to the level of impulse control and self-discipline. Indeed, this is all we need when it comes to buying the do-not-needs.

The problem with those heavily in debt folks is “they have unrealistic expectations for how material things will make their life better.” The author quoted a study done by marketing professors at the University of Missouri. The study summaries four types of unrealistic expectations common to overspenders, who buy things they don’t need:

(1) “It’ll make me a better person: Many overspenders believe a purchase will literally change them into a better person. One woman in the study was certain that cosmetic dental surgery would improve her looks and quickly render her more confident and successful.”
Nothing is more erroneous that this. We know that’s not how people become successful and no better person is made of any materials. I have emphasized to my children that they will gain confidence in themselves when they excel in something. No fine clothes nor rich decoration can disguise the stupidity of an empty-headed person, which nobody want to be known as.
To be continued…



Money Lessons That Children Need to Learn at Home


Last weekend I read from the Internet about mistakes that parents are likely to make regarding teaching children on money management. Oh boy, all of them sound so familiar. Here are a few mistakes.

(1) Set no limit. One is lucky if one’s child behaves responsibly. Otherwise, one should set a weekly or monthly or yearly limit on how much a child is allowed to spend.

(2) Neglect giving life lessons in daily life. Of course, life lessons include money management. A child starts boosting his/her financial IQ right from home with the parents.

(3) Leave children out of the picture when you make long-term financial plans, considering children too young to understand or sparing them the burden of financial matters of the family.

(4) Fail to start a kid’s saving account and to give the kid an opportunity to manage his/her own finance.

(5) Fail to explain how credit cards and bank work. Actually, many parents themselves fail to set a good example in using credit cards.

I have to confess, at some point during my previous parenting, I have committed the above mistakes, one by one without missing any of them. I am glad to say I am getting better now, after enduring some irreparable losses. Hopefully, readers who are like me, will become wiser because of their previous mistakes.



Money — Number One Cause of Divorce in America


Can’t believe half of the year has gone!

Last weekend I was reading the book Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth by Harv Eker, 2005. There is an interesting statement in the book. It is something like this, statistics showed that number one cause of divorce in America was money. Also see part of this article: “Why money is the leading cause of divorce”, http://www.highbeam.com/doc/1G1-18930297.html

This reminds me of an incident happened last weekend in my household. My son will come back for the coming long weekend. Since the other adult let his nephew drive my son’s car to his school, I said we needed to get the car back for my son. The other adult said, “How can we do this after we gave it to him? If our son needs to drive, he can drive my car and I can walk to the office.”

I have no doubt it would trigger conflicts if it happened in some families.



Can We Convert Our Useless Stuffs Into Cash?


Last weekend, 3/14, I learned from a friend of mine that some of the Chinese that I know of just got laid off from Sprint’s recent massive RIF drive. Among them is a single mom with two young children. My thought has been with her all the time since I learned of the news. I know both of her children are like mine, involved in many extra curricular activities like music and sports. They also go to Sunday Chinese school here. How could she manage to pay her bills and all their activities now that she lost her job?

I have been to some of my friends’ houses before, with piano, treadmill, and plenty of toys, large and small, its crowdedness being so typical of average American families. I learned that some of them like shopping. I wish I had cash in hand instead of so many stuffs. Too bad this is only one-way traffic from cash to goods, that is, once you transform your hard-earned cash into stuffs taking up space of your house, you cannot convert them back to the same amount of cash you originally paid.

One of my neighbors often holds garage sale, trying to salvage some cash from all the junks that she once feels compulsive to buy — a rather time-consuming and futile activity. My children once commented how rich they were just from the amount of stuffs they bought. Wouldn’t it be a whole lot better if we had not bought these junks in the first place and not have to hold these garage sales?

Once again, bad economic time = good learning experience, only the tuition is too high for those who have to sell stuffs. I will make sure my children read this posting so that they can learn something without having to pay for the tuition. Cheaper by double.



Teaching Children Financial Discipline


Recently I have been writing a lot on economy or a bad one, not only because it is the focus of national attention, but also out of a genine concern for my children.

American-born Chinese children grew up in America, fully soaked in the American consumer culture — shop until you drop, enjoying while you can, as if it were their birth right to consume, being spoiled in every commercialized holiday.

I have long realized the folly, the wantonness, void of discipline, brainlessness, and short-sightedness of such consumer behavior, but have not been effective enough to curtail it.

It would be a shame if I failed to take advantage of current economic situation and pass some indelible lesson to my children. After all, recession of this scale does not come often, probably once in half a century. I remember a couple that I met back in Waco, TX, in 1984. The husband told me of his parents living through Great Depression. “They never wasted a tiny bit of bread crumb. They drilled the concept of thrift at every dinner table.” Isn’t that what we should tell our children?

My intention lies in seeing my children avert the senseless conspicuous consumption demonstrated by a retirement-fund-poor BMW-driver, the extreme irresponsibility headed by Uncle Sam down to nearly every household.

A parent can never over-emphasize the need for financial discipline and can never relax in educating the youngsters about responsibilities, starting as early as they can take it.

I talk with my daughter everyday about it and really have seen delightful change in her. “Do you think it makes sense to borrow and spend more money instead of cutting down cost when you are deep in red?” I asked her. “It is stupid!” The answer is always short and sweet.

It reminded me of the words from a little child, “But the Emperor has no clothes.” Who is really smart here?



A More Budget-Conscious Spending Behavior


On my posting 12/13/2008 “How To Put a Safe Brake on Teen’s Expense,” I wrote, starting from year 2009, I would put a cap of $500 on her total yearly expense on clothes and other luxury. This and the current economic hardships that my daughter has heard of so much lately have, to some extent, changed the youngster’s spending behavior, for the better.

Yesterday evening, Friday 2/6/09, we went to Town Center where she could not suppress the urge to try and buy some clothes. After trying some clothes, she really wanted to buy one or two, then on second thought, she held herself back, saying “It is still too expensive.” It is a little over $10, a hugely less expensive than what she used to buy in the past. The only difference this time is she will use her own money.

The teenager used to spend very much on impulse, making no distinction between need and want, much as I had emphasized this distinction to her. To be sure, a typical big spender is the one who wastes tons on impulsive purchases to satisfy the desire or want for more and more. Basically, we don’t really need that much, it is our want that is like a bottomless well.

When my daughter becomes this budget-conscious, I find her more like a Chinese than an American. What is the difference between the two? The Chinese are over-saving-under-spending while Americans are over-spending-under-saving. Some fun mathematics need to average this out (1 + 1)/2, in theory only.



Never Pour All Your Money into Your House


Last Saturday morning, on our way to her art class, my daughter and I talked about those homeless people from foreclosure. I told her there were 3900 bank-owned foreclosed properties just in Kansas City. Imagine where the previous owners live now after moving out of their houses. They would be lucky if they had relatives, but we don’t have any.

My daughter said, “When I grow up, I will pay off my mortgage.” Well, good thing that she does not want to get into a heavy debt like our dear uncle. Still, remember it is not a good practice to put all your money in your house.

I have not read much on economics, but from my own experience and from what I have read so far, I feel a strong urge to share a few common sense with my children. I bet they have heard me talking about these all the time and have zero patience with me now. Still, here they are.

(1) Invest as early as possible so that money will give birth to more money. It is like the birthing of a baby, tiny at first but, given enough time, will be bigger than its parent. Time is one of the decisive factors. Don’t lost it.

(2) Diversify. Imagine what will happen if you put all your eggs in one basket and that basket suddenly smashes to a rock. You don’t need to be absolutely evenly balanced out. If you want above-average returns, you can invest a larger part of your money in high risk and high yield stocks and have a little bit ill-balanced investment. But never become too greedy to pour all in one basket.

(3) Do not pay off your mortgage before you have enough savings in reserve. Why? If you put all your money in your house without any cash reserve left, what would you do if you find yourself suddenly in dire need of cash? The only way to get cash out of your house is to sell it. Imagine how your life would be if you have to sell your house under that circumstance? The smart way is having money in both your house and your investment.

(4) NEVER spend more than your earnings, that is, living on credit, with an exception of your house mortgage. Always have at least 10% left from each paycheck either as investment or saving for a treat for yourself like a vacation or a trip overseas or to see your senile mom and dad before they become “dear departed.”

I wish I knew better and could offer them more advice in money management. These are the rules that I have followed and have found it beneficial to me. When they grow up, they might be able to hire professional financial counselors. Still, I wish they could give some attention to my words. Right now, I find it hard to get their attention, especially that of my son’s.



Why Is Money Important? What does money means?


Here’s some random thought on the role of money in our lives and why we need to think twice before spending. We all know that money is not everything but nothing can be done without it. It cannot make one happy but one cannot be happy without it. Not so hard to figure that out, right? Here’s the twisted way of thinking about money or not that twisting.

(1) Money = time.
If you have money, you can choose between working and not working, between working full-time and working part-time. You certainly have more time for yourself if you choose not to work or work part-time. You can choose to spend time watching bird or waiting for a dog’s smile if you can afford that time. Or like the 25-year-old relative of ours, you can retire at age 40. If that’s the case and if you live up to 100 years, you have 60 years at your own disposal. More money = more time for you.

(2) Money = freedom.
If you have money, you have the freedom to choose where to live and where to work, like my children who are so eager to move to places like New York City, Boston, or anywhere that millionaires like to gather around. Or if you don’t like your job, you are free to leave and can afford to land any job you wish if you still want a job.

(3) Money = health
With money, you can afford to build a swimming pool in your backyard or basement and take a dive any time you want. Or enjoy a deluxe fitness club. Or have a personal fitness trainer to make your workout more fun and tolerable. I learned that some unemployed people have to give up some medically necessary tests and procedures for lacking of money. And it is a known fact that people at lower social level suffer from a large share of cancer morbidity and mortality.

(4) Money = comfort
With money, you can live in a spacious house and hire someone for your backbreaking cleaning and cooking needs. Or dine out anytime you please.

(5) Money = entertainment.
With money, you can travel anywhere you like, if that entertains you. Or drive a fancy car without worrying about gas price.

… and many many more possibilities …

Have you done exercise like this? A = B = C = D, if S = A, then we can say S = B = C = D. I know how preposterous it may appear. Try this exercise next time you want to exchange your money with some stuff in the store —

Known: money = time, freedom, health, comfort, and entertainment, therefore, the stuff you want to buy also = time, freedom, health, comfort, and entertainment. Ask yourself: is it as valuable as your time, freedom, health, comfort, and entertainment?

It is not just a penny saved = a penny earned, but = a fraction of time saved. That may be too much a challenge to some people’s imagination. At least we have some idea of the important role that money plays in our lives and give it a second thought when you are going to spend your hard-earned money.



An Old-Fashioned Saying: A Penny Saved is a Penny Earned


I explained to my child about the dire situation our economy is in on our way home yesterday. By the end of our conversation, she came to understand why creditor nations have to keep US economy alive by constantly lending tons of money to us. She knew how we got ourselves into this mess in the first place, that is, Bush’s favorites — the two wars which both parties supported but neither realized the burdens of wars.

There is an interesting site that gives a running dollar costs of Bush War. Do a google search with this, costofwar_home and watch the cost being building up every second as I am writing, — rushing quickly to reach $600,000,000,000 and up and up.

I remember during my first year of English study I read something like this from a book on Ben Franklin, “A penny saved is a penny earned.” Yes, I feel so stupid and sound so much like a person in your history book when I quote something like saving a penny while I am witnessing billions of dollars dumping into a bottomless sea every second and non-stop, and knowing the wise politicians are talking about borrowing more without any intention of stopping this dumping.


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