Afternoon Reading 10/12
I take a lot of inspiration from both journalists and
bloggers whom I read, so it’s a pleasure to share a few pieces with you.
The first is a quick research-based story I wrote for FA
Magazine. At the risk of getting myself into trouble with my employer, I will -
as a rule - try to limit the number of plugs for articles from my publications,
especially those written by me, on this blog. I want to share with my readers a
broad mix of information from diverse sources, not merely push links to get
hits and clicks.
Adult Kids Sandbag Parents' Retirement
https://www.fa-mag.com/news/u-s--parents-spend-twice-what-they-contribute-to-retirement-on-adult-kids-41261.html
This article has an eye-opening headline – parents spend
twice as much on their adult children as they do on their own retirement. We
know that my generations (young Gen X/old Millennial) reinstated the concept of
young adults living at home for an unknown number of years – between a quarter
and a third of adults under the age of 35 still live with their parents. And
parents are continually having to assist their children with major life
purchases, or bail them out.
Why is this happening? There continues to be little formal
financial education in schools. Money is too often a taboo topic at dinner
tables and family meetings. More importantly, we’re not teaching each other or
talking to each other about financial matters at sufficient levels. Our
children don’t know how to ask the important financial questions because
they’ve never seen us ask them, out loud. I have hope that the financial
industry on one hand, and the financial independence movement on another, are
able to jumpstart a greater dialogue around financial issues.
No, Paying Down Debt Is Not An Anti-Depressant
Stephanie, or SimplisticSteph, paid off $38,000 in student
loans in three years, so she’s clearly mastered debt management – or has she?
Her “genius plan” to pay off her loans turned her life upside-down, she traded
off her independence, leisure, time and lifestyle to get those loans out of the
way quickly. That was her choice. Her post indicates that she was under the
impression that she would be happy after ridding herself of her debt – that
being debt free means sunshine and rainbows and unicorns, or at least the
financial equivalent thereof. She even sacrificed her Christmas money to make
it happen. And finally, it did, she
accomplished her financial goal.
But she wasn’t happy. In fact, she regrets not living a life
more balanced between frugality and debt management and, well, actually living.
Stephanie’s still young with plenty of living ahead of her – but those who
pursue frugality to quickly accomplish some financial goal should think
carefully about the period in their lives that they’re sacrificing for some
unknown Shagri-la on the other side of the financial independence rainbow.
There’s a lot more to life than dollars. Be sure to take some time to smell the
roses along your path!
Neither Is Downsizing - But It Could Save You Bucks
Downsizing is a common recommendation in both professional
retirement planning and in the financial independence community. Jenny at
Living Life, Loving Us made downsizing work well for her family, simplifying
their lives and reducing their monthly expenses – but downsizing also comes
with lifestyle consequences that not everyone will be willing to accept. My
wife and I actually downsized when we went from renters to owners – we realized
the house we were renting was unnecessarily large and sought out something a
bit more reasonable, and ended up saving at least $250 a month because of our
decision.
Financial Discussions Should Be Commonplace, Not Taboo
Hosting dinners, lunches, coffees and what-have-you is an
old financial firm marketing technique. You get a plate of chicken, fish or
beef and listen to them drone on about their products and services for an hour
or two, and they hopefully get a few prospective clients out of the deal.
Well, the growth of financial planning as a discipline
separate from selling investments and the development of financial communities
on the internet is changing the old ‘lunch-and-learn’ concept for the better. I
love the idea of hosting a dinner party (or a barbecue) with planners and
financial independence aficionados to discuss personal financial issues in an
informal roundtable with no products or services sold and no strings attached.
I can’t believe someone isn’t already doing this, this a perfect way for a
fiduciary to engage with members of their community.
Diversify Your Income Streams For A Secure Early Retirement
https://www.marketwatch.com/story/the-early-retirees-guide-to-surviving-a-stock-market-drop-2018-10-11?link=sfmw_tw
John from ESI Money gets some love from MarketWatch and
makes a good point that I think may be lost on some income investors. IF you’re
making portfolio income/cash flow your big investment goal, then for pity’s
sake diversify your sources of income. Many of the income investors I encounter
in online communities and on social media are solely dividend growth or
dividend yield or REIT investors. A retirement built upon a portfolio that
relies on a single source or asset class to build a retirement income stream is
not a secure retirement! His second main point, creating a margin of safety, is
as he says “personal finance 101” – it’s the main reason I round up my
liabilities and debts and round down my assets and income.
Let's Think Carefully About Where We're Wasting Money
Full disclosure, I am not one to buy beauty products,
self-improvement apps or yoga, but I sure do buy too many useless
organizational tools, office supplies and more produce than even a man with my
appetite can possibly eat before it goes down. In fact, I spend too much money on
food in general. As I go through the exercise of reviewing and making public my
budget moving forward, food will definitely be an area of concentration. I also
spend too much on a few of my vices, but that is a blog post for another day.
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