Friday, January 19, 2018

Book Review: Smart Couples Finish Rich

Smart Couples Finish Rich, Revised and Updated: 9 Steps to Creating a Rich Future for You and Your Partner by [Bach, David]


About the Book:

DAVID BACH has helped millions of couples plan for a future they love. And now, completely updated and revised, Smart Couples Finish Rich, America’s favorite money book, is back! You’ll discover the latest techniques to live a life as a couple, where your values align and your money decisions become easier. Whether a newlywed, a couple planning for retirement or already retired, this timeless classic provides couples with easy-to-use tools that cover everything from credit card management to detailed investment advice to long term care. Together you’ll learn why couples who plan their finances together, stay together!

My Comments:

About 29 years ago I acquired my greatest economic asset--and he also happens to be handsome, funny and a great dad.  Yes, my greatest economic asset isn't my 401(k) or my IRA or my small but growing portfolio of stocks.  It isn't my house.  It is the man who chose to ask me to be his wife.  

I wish I could tell you that he makes tons of money--but he has a very average income, just like I do.  It would sound cool on this blog if I told you he engaged in all sorts of side-hustles, but he doesn't.  He likes to come home at night and be with the family.  I read books about men who handle all the family investments, and do it well--but in case you haven't guessed, that has mainly been my job.  Nevertheless, this man is a great economic asset because he has stayed with me and because he shares my goals for the future and we have compatible spending styles.

Smart Couples Finish Rich is a book that encourages couples to see themselves as a financial team and to work together to formulate goals for that team--which isn't just good financial planning but good marital planning.  

Using stories about his clients, David Bach encourages couples to not only dream but to share those dreams with their partners so they don't end up on the cusp of retirement with one partner preparing to buy a beach house across the country while another dreams of more time with the nearby grandchildren.  Bach also gives advice about how much to save and where most couples can find the money to save--yup, another one who advocates putting latte money in the bank. 

Bach also discusses insurance and investment options.  He writes in an easy conversational style and takes what can be a complicated subject and makes it easy to understand.  Bach makes it clear that family finances aren't his job or her job, but rather that they should be a cooperative effort and that even if one partner handles most of the work, the other should have a good idea of what they have and where it is.

I found Smart Couples Finish Rich to be an interesting read with good financial and marital advice and I think it would make a great wedding gift--it is certainly more practical than some in the back of my closet. 

I'd like to thank the publisher for making a review copy available via NetGalley.  Grade:  B+
*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Monday, January 15, 2018

Check-In on 2017 Financial Goals

The beginning of the year is a common time to set goals, so  I shared mine a year ago.  Now I'll talk about how things went.

Pay High School Tuition From Checkbook, Not Savings

This didn't happen.  We had to withdraw about $2,000 to pay tuition and fees this year.  However, we also started putting away money every month to cover the bill when it comes due in June, so hopefully this year will be better than last.  

Continue 401(k) Contributions at Current Level

We managed to do this.   

Work On Monetizing This Blog

I started the  year off with a bang, scoring a couple of sponsored posts and garnering clicks on AdSense, but things slowed down thereafter and I haven't pushed it.  Not sure how much of a 2018 goal this will be. 

Buy at Least One Share of Stock Per Month

I've been buying stock regularly, primarily with money I've been withdrawing from Kickfurther.  My Robinhood portfolio is over $900.00.   

Continue My Freelance Writing Jobs and Selectively Try to Find More

Both my regular clients decided not to maintain a blog anymore.  I've taken a few glances through Upwork but the reality is that I can find a lot more interesting ways to spend my evenings than writing 500 words about some product for $10.  Yes, it adds up, but I have more than enough work at my office and they pay much more than $10 per hour.  

Add $4,000 To Our IRAs.

We've sort of met this goal.  We deposited over $4,000 in each IRA; unfortunately the money came from Prosper and Lending Club primarily.  Only a small amount was newly saved and it didn't total as much as we withdrew to pay tuition and other bills. 

Cut Spending On Food

Total fail; but on the other hand, who wants to live like they are broke when they aren't? 

Home Renovations

We are working on this.  My job is requiring me to use up accumulated sick leave and vacation last year and this year, which means I spent three weeks last summer pulling wallpaper and painting my house.  It looks nice and while the paint did cost several hundred dollars, there are few renovations that give you so much bang for the buck.

We still have paneling in our den that needs to be replaced, and I still need new flooring throughout the house.

So, How Was the Year?

Overall, not bad.  I'm a paralegal and if I get involved in a big trial, it means a big overtime check.  We didn't have any of those this year, so my income was down.  My husband's seems to be picking up a little.

My older daughter has graduated from college so her tuition bills are done, and she is taking on more and more of her own bills. We have high school bills built into our monthly spending via a special savings account.

Big expenses for the year were my teeth, a medical incident for me, the house paint, a trip to Universal Studios and a new piece of furniture for our foyer.  We also starting paying for me and my youngest to visit New York City with the Girl Scouts this summer.  

On the plus side, neither my husband nor I had car repair bills beyond normal maintenance.  

The stock market has made us a good bit more wealthy this year and we can see that retirement date approaching.  Two people with whom I work closely are retiring soon; I'm going to miss them.  Seems hard to believe that it will be me in the not-too-distant future.

Could we have saved more?  Sure.  Do I regret not saving more?  Maybe a little, but not enough to substantially change my behavior.  All the calculators we run say we are on track, and there is little point to living life like I'm poor now so I can die rich.  

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Wednesday, January 10, 2018

2017 Investing Results


Recently we got together with a bunch of old friends.  We all got married about the same time; we all had our (older) kids about the same time, and now most of us are becoming empty nesters.  We were all pushing 30 (or over) when we married, so it isn't surprising that we are all starting to contemplate retirement.  We all have friends our age who are retired.  When we talk about saving for retirement, the goal isn't quite so abstract anymore.

As anyone who has any amount of money in the stock market knows, this has been a very good year.  It makes up for a few stinkers we've had lately.  Let's take a look at how things are going financially at my house.

My college graduate is still looking for a fulltime job but her mean mom has started to make her pay rent and for her phone and Netflix, so its a little less outgo here.  At this point we own her car but starting with the next payment, the insurance bill is hers.  She has two part time jobs and is considering moving out in the not-to-distant future.  I'll miss having her around, but it's time.

Let's take a look at some numbers.

Vanguard:

My husband and I have Roth IRAs and regular IRAs, and a taxable account.  We deposited money in each Roth IRA this quarter and the money was taken from Lending Club and Prosper.   These accounts consist of a variety of mutual funds purchased for us by our ex-financial advisor, along with Vanguard's International Bond Index Fund, Total Stock Market Index Fund, 500 Index Fund, Total Bond Market Index Fund, Dividend Appreciation Fund (new this quarter) and REIT Index Fund. In the last year, our rate of return has been 14.4% overall.

One interesting figure Vanguard puts on its statements is your estimated yearly income and estimated yield from each fund, and for your account as a whole. Here are the figures for our accounts:

  • My IRA:  Estimated yield 2.17%
  • My Roth IRA:  Estimated yield 1.81%
  • Husband IRA:  Estimated yield 2.88%
  • Husband Roth IRA:  Estimated yield  2.64%
  • Taxable Joint Account:  Estimated yield 1.86%

My husband's IRA is the largest of these accounts and his return figures are higher than the other accounts because our REIT fund shares are in his accounts and they are high-yielding (4.59%).

MFS:

My 401k has a year to date return of 19.78%.  It is invested in Janus Triton,  Oppenheimer Int'L Small Mid Co A, MFS Government Securities Fund-A , Pioneer Fundamental Growth Fd-A,  and Delaware US Growth Fund-A.  My firm contributes 5% of my salary, and I contribute 6%.  Dividends this year totalled about two weeks' pay.

AXA:

My husband's 401K is with AXA and it has increased in value, though not a lot.  He puts in the minimum necessary for employer match.

Motif:

The initial investment in this account was $7,000.  It began the quarter at $8,850.43 and ended the quarter at $9,268.55.  This quarter  the account has paid $34.32 in dividends.  I have invested in "Motifs" or baskets of stock with a variety of themes including dividend payers, things I like and online gaming.

I had been withdrawing my dividend payments and investing them via a no-commission broker, but Motif has changed their fee policy such that if you have less than $10,000 and do not have any commissions in a given six month period, they charge you a $10 fee.  To avoid that, I have started accumulating my dividend payments and last quarter  I purchased another Motif--this one contains shares of a variety of REITs.  My plan is to contribute to the account until it reaches $10,000.  The market is helping.

I was curious about whether I would have been better off putting this money in an index fund rather than in Motif.  For each motif, Motif tells you how much the S&P has gone up since you bought the motif, and how much that motif has gone up.  I did the math, and I'm about $50 better off, based on share appreciation alone.  Dividends aren't included. 

Lending Club:

While my returns have been steadily dropping for  months, accounting for expected defaults, Lending Club estimates my return since I began the account at about 4.58%   whereas three months ago I wrote that it was 4.53%.

During 2017, my interest was $2848.71 and the amount lost to defaults was $2827.33.  Needless to say I'm not a happy camper.

 As my notes mature I'm moving the money to our Roth IRAs. . The economy on the whole is fine now; if I can't make money with Lending Club under this economy, I'm going to lose it big time if things go downhill.  The profits today do not justify the risk.

Prosper:

My returns here have dropped as well.  Three months ago my annualized net returns were 5.41%, and my "seasoned" returns--the returns on notes that are more than ten months old were 4.82%. Those figures have dropped to 5.09% and 4.39%, and while the first few months of the year had positive returns, the last few have been negative.   As I receive payments from Prosper, they are going to our Roth IRAs. 

Robinhood:

At the beginning of the quarter I owned shares of AT&T, Visa, CVS, Lending Club Hormel and Hanesbrands.  During the quarter I bought Qualcomm, Ford, Mattel, Cardinal Healthcare, Omega Healthcare Investors, Ascena Retail Group, Macquarie Infrastructure and Pfizer.

I read about most of these companies on Daily Trade Alert.   or other blogs.  Basically, if I have money and the article makes sense, I'm likely to buy a share if recommended.  I know this is not enough research on which to base a major purchasing decision, which is why I buy a share or two.  Instead of buying shoes I don't need, I buy stocks I don't need, and if I lose them all, well, right now I'm out  about $800--but since I have stop loss orders for most of my shares, I should be okay.
So far, I'm doing alright though.

  • AT&T:  2 shares purchased at $37.62.  Current price $38.98.  Collected $3.92 in dividends in 2017.  No stop loss on this one; I bought it for the dividends.
  • Lending Club:  1 share purchased at $5.51.  Current price $4.11.  No dividends. No stop loss. 
  • Visa:  2 shares purchased at $78.00.  Current price $114.00.  $1.38 in dividends in 2017. I have a stop loss order placed at $100.00.
  • Hormel:  3 shares purchased at 33.91.  Current price $36.39.  Purchased June 21.  $1.02 in dividends since then.  I have a stoploss set at $34.00.
  • Hanesbrands: 2 shares purchased at $21.93 on January 13. Current price $20.91,  Stop loss set at $18.00.  $1.20 in dividends in 2017.
  • CVS:  1 share purchased July 3 for $80.77.  Current value $72.50.  $1.00 in dividends in 2017. No stop loss.  
  • Qualcomm: 1 share purchased October 9 for $52.68.   Current price:  $64.01.  I have a stop loss sell order in at $60.00.  
  • Mattel: 1 share purchased October 30 for $13.87. Current price $15.35. $15.00 stop loss.  
  • Ford: 3 shares purchased November 7 for $12.33.  Stop loss $11.50
  • Cardinal Healthcare.  1 share purchased November 27 for $56.42.  Current value$61.27.  Stop Loss at $58.00.
  • Omega Healthcare Investors.  1 share purchased December 6 for $26.75.  Current value $27.47. Stoploss at $26.00.         
  • Ascena Retail Group. 3 shares purchased December 11 for $2.00.  Current value $2.40.  Stop Loss at $2.03.  
  • Macquarie Infrastructure. 1 share purchased December 26 for $64.18.  Current value $64.20.  Stop loss at $62.00.
  • Pfizer.  1 share purchased December 26 for $36.17,  Current value $36.28.  Stop loss at $34.00.                      

 Robinhood is an online broker that uses phone apps only, no webpage.  They charge no commission and allow you to place limit or market orders.  They also allow you to initiate bank transfers and then invest the money immediately--you do not have to wait for the transfer to complete.  You do have to buy whole shares.

If you use this link to open an account with them, you and I will both receive a free share of stock. Here is a link to my review of Robinhood.

Stockpile:

This is an online broker for whom I wrote a sponsored post.  I invested $100 in Johnson & Johnson through them.  They charge $0.99 per trade, so even though they sell fractional shares, I don't recommend investing less than $100.00 per trade.  I plan to keep the account and use it when I want to buy shares of stock that are substantially over $100, since my investments in individual stocks are as much toys as investments and I don't plan to put too many dollars in any one stock.  Stockpile had a promotion last quarter where they were giving away $5.00 worth of Apple stock so I got mine.  At the end of the year this account was worth $112.56. 

If you use this link, you get $5.00 worth of stock to begin your account with them, and I get $5.00 too. I wrote a full review of Stockpile a few months ago.

Kickfurther:

I'm in the process of withdrawing my money not only because I'm in the red (an expected risk of investing) but because I've become convinced that Kickfurther is going to fail.  They have too little business at this time and while they have tightened their contracts and changed their business model somewhat, I've just seen too much incompetence to believe that the investment risk is the only risk I'm bearing and the returns have not justified the risk.


The Bottom Line

As compared to the beginning of the year, we are over a year's pay richer, but most of that is stock market gains, not savings.  We did not have to pull any money out of our savings this quarter, but we haven't been able to replace any we withdrew earlier this year.  However, the big bills for the year have been paid; the next big irregular bill will be the car insurance three months from now and we are saving for it and the other big irregular bills.

One thing I found interesting is that using a dividend rate of about 2% (more or less what we got on our Vanguard accounts) our dividends  and expected Social Security  would cover one of our paychecks.  Since leaving a substantial estate to help care for our autistic son is one of our financial goals, that's good to know.

How did 2017 go for you? 
*Part of Financially Savvy Saturdays on brokeGIRLrich.*