Alltribes

Posts of the Week -- March 27

Here is a list of my favorite posts this week:

• Have a Hard Time Saving? You Can Amass a Fortune by "Tricking" Yourself
• A Great Example of How to Manage Money the Right Way
• How to Choose a Guardian for Your Children
• Seven Smart Ways to Spend Your Tax Refund
• Getting a Tax Refund is Costing Americans Billions
• How Much House Can I Afford?
• Thrive on One Paycheck
• Six Great Ways to Spend a Raise

Have a great weekend!

Alltribes recommends .

Three Ways to Make Sure Your Retirement Savings Outlasts You

One of the worst financial predicaments I can imagine is getting to retirement and running out of money sometime down the road. At this point, you'd really be in a tough place and simply have to throw yourself on the mercy of relatives, friends or the government for survival -- not a great situation no matter how you look at it.

To help ensure you never find yourself in this situation, here's an article from USA Today that gives . Their thoughts:

• Go variable. If you really want your portfolio to last forever, and you can adjust your lifestyle to the markets, consider withdrawing a fixed percentage of your portfolio each year, rather than starting with a percentage and increasing that amount by the inflation rate each year. Be prepared to make some big adjustments, though. Suppose you had used this strategy and started with $100,000 invested in the S&P 500 in 1995. Your income would have varied from $416 a month at the outset to $1,096 a month in 2000. This year: $769.
• Start small. A pioneering study at Trinity University in Texas looked at the success rate for different retirement portfolios during the withdrawal phase. "Success," in this case, meant having money left over at the end of the period. The study used actual returns from 1926 through 1995. It assumed that you withdrew a percentage of your portfolio at the outset and then increased that amount each year for inflation. The findings: If you adjust your withdrawals for inflation and maintain a portfolio of 75% stocks and 25% bonds, your initial withdrawals should be 4% to 5%. The 4% initial withdrawal had a 98% success rate; at 5%, the success rate fell to 83%.
• Annuitize. An immediate annuity is fairly simple: You give the annuity company a chunk of money, and it guarantees payments that last your lifetime. You can also get payouts based on the lifetime of you and your spouse, or for a certain number of years. The drawback is that your payments remain the same. The Vanguard Group offers an annuity with an inflation rider: Payments increase in line with annual changes in the consumer price index. A reasonable approach might be to put part of your savings in an immediate annuity and tap your savings when needed. And if you're going to do any juggling in retirement, do it with your finances.

Of all these, I think option #2 is the one I like the best. I also plan to save based on wanting income at one level but plan to live below that level in retirement, thus giving myself a margin of safety. Yes, spending less than you earn even works when you're in retirement. ;-)

How to Retire Early

Isn't it everyone's dream to retire early? Maybe not TOTALLY retire, but at least be able to kick back, relax, work less, maybe take a new job part-time because you love it, not because you need the money. Or maybe totally retiring is what you want. Either way -- there are steps you can take today to make it happen.

This piece from Kiplinger summarizes in one simple sentence:

You can call it quits before you reach 65 by saving as much as you can now then cutting expenses and squeezing the most out of your investments in retirement.

The piece goes on to tell the story of a husband and wife who are retiring at 60. A few of the key quotes from the article that are near and dear to my heart:

• To reach this goal, they have been super savers: Although he plans to work only three months this year, John will put $20,000 into his 401(k) plan, the maximum allowed in 2006 for people 50 and older.
• To make their money last, he and Pam will now turn their attention to cutting expenses and squeezing the most out of their investments.
• With a grown daughter and no college bills, John, vice-president of engineering for a steel company, was able to fully fund his 401(k) and save money on taxes.
• When their home in Naperville, Ill., is sold, John and Pam can pocket as much as $500,000 in tax-free profits.
• The Winkelmans' biggest retirement expense will probably be health insurance, on which they've already received quotes as high as $18,000 a year. To trim the premiums, they hope to buy a high-deductible health plan and possibly set up a health savings account, which will enable them to pay out-of-pocket expenses with pretax dollars.
• And with a low-key, low-budget schedule of activities, such as snowshoeing and water sports, they'll save money on entertainment. Pam and John plan to spend most of their free time volunteering for animal-rescue groups and at their church and an outdoor discovery center for local schoolchildren -- not to mention soaking up priceless lakefront views.

Wow -- these people are my heroes!!!

Yes, if you save money over a long period of time (40 years for these two), you can retire early and end up quite wealthy. But you have to first spend less than you earn which is a difficult challenge for many in today's debt-ridden society.

We are planning on retiring around 60 or so, though I can't be absolutely sure about that since I haven't yet decided upon my retirement number. But I have been maxing out my 401k for years, so we should be on target for that goal.

Comments: Exercising Your Most Important Assets

Here's a comment to my post on Exercising Your Most Important Assets that talked about the need to exercise our minds and bodies to keep them in good, functioning order well into our senior years. A reader made the following comment which I thought was a really great idea:

I have a suggestion for fellow parents. If your child is learning a foreign language in school, join in. Invest a little money in a textbook and a dictionary and learn right along with your child. Obviously, this approach works best if your child is just starting. My son will be starting to learn German next fall (or at least that was his first choice for a foreign language). I'm going to study right along with him.

Simply a great idea! You learn something new (and maybe useful), help keep your mind sharp, and enjoy doing it with your son/daughter.

What other ideas are out there for keeping minds and bodies active? Please share your thoughts below.

March Madness at Alltribes, Final Four, Your Chance to Win

Well, this is it. The Final Four. The last four articles in my tournament to pick the best Alltribes post since November 1. (If you want to see where we've been, start at the original post and click through the links to view all the rounds.) Because I'll only be sharing four posts, I'll be adding some comments on why I think each deserves to be in the final eight.

Again, in each set, one will be declared to be better than the other. Here goes:

• 10 Nasty Money Habits to Kick versus Getting Rich is Simpler than You Think
• Poverty to Prosperity versus What Do You Splurge On?

Wow, these are all good (to me at least). Here are my thoughts (reprinted from the Elite Eight round) on each of them:

• 10 Nasty Money Habits to Kick - I like this one because it's simple, practical, covers many different topic areas and gives the reader many different posts to click on and learn more about money topics they have an interest in. It also gets in several of my thoughts on these issues and I'm partial to that. ;-)
• Getting Rich is Simpler than You Think - This post has simple, tried-and-true financial principles that allow anyone to grow their net worth. I've applied them in my own life, and they are serving me well.
• Poverty to Prosperity - A post that's fundamental to what I talk about here at Alltribes: there are simple, basic, money steps everyone can take that will make their net worth grow tremendously if they do them over a long period of time.
• What Do You Splurge On? - Obviously this post connected with many readers as evidenced by the large number of comments. I also like it because it's not something you read about much on personal finance blogs (spending money on fun stuff). Besides, I get to talk about cycling. ;-)

Now, here's where it gets interesting -- and where you can win a prize just for participating in this round and/or the final (championship) round. Here are the details:

Everyone who leaves a comment saying which of these posts he/she likes will be entered into a drawing for a Suze Orman video series. This is a 3-tape video set titled "The Power to Attract Money" and includes videos on "The Market and Investment Strategies", "Embracing Your Financial Destiny", and "Internet Resources, Trusts, Wills & Probate." Each video is valued at $14.95, so we're looking at almost a $45 prize here. Not bad for simply leaving a comment, huh?

Here's how you can enter the giveaway:

All you need to do is leave a comment, any comment, on this post or the Championship post tomorrow. That's all you have to do. I'll draw a name at random at 7:30 am ET on Monday, April 3 and announce the winner later that day. As for rules, they simply are:

1. You can enter the giveaway twice -- with one comment on each post (Final Four and Championship). If you leave more than one comment on any one post though, your entries will be invalid.

2. The drawing will be final and I will be the complete and final judge (don't worry, I'll be fair).

3. U.S. mailing addresses only.

4. If you win, I will wait for a week for you to respond to an email I send you telling the procedure to get your prize. If you don't respond within this time, I'll hold another drawing and give it away to someone else.

Good luck!

Click here to read The Championship.

Star Money Articles for the Week of March 27

Here are interesting posts and news this week from the members and beyond:

• AllFinancialMatters listed .
• MightyBargainHunter details .
• Five Cent Nickel shared .
• Blueprint for Financial Prosperity advises you to .
• Consumerism Commentary notes that .
• Lots of stuff going on from the MoneyBlogNetwork including our , Blog of the Week , and a .
• Fat Pitch Financials .
• Financial Reflections .
• Stop Buying Crap covers .
• 2Million notices .

Enjoy!

How to Preserve and Protect Your Memory and Make It Grow

I've written before about how having a sound mind is more important than money. I've covered the topic from several angles, having detailed how you can keep your brain fit, how exercise can help your mind stay young, and how you can make your brain fitter in six easy steps. The short of it is: there are ways you can keep your mind healthy late into life if you take a proactive approach to exercising your mind.

This piece from Market Watch is similar but gives some new thoughts on the subject of exercising your mind. It tells . Their key thoughts:

But it's quite normal to lose some memory as time goes on. It's also occasionally normal to draw a blank on the phone number of a friend or the name of a Hollywood star whose picture is right in your mind's eye.  If you had a photographic memory years ago while you were in college, don't expect to regain it immediately if you later enroll in a literature course. But with some practice, you probably can regain much or most of your masterful memory.

One of the surest ways make the most of your memory is simply to pay more attention to paying attention. That's because very much of your memory is simply a matter of concentration and focusing on a task. "To learn a set of instructions to a new location, for instance, repeat the directions out loud. Just by concentrating on what you want to remember, your memory will improve dramatically."

The authors note that there are three factors that characterize those who maintained their mental abilities over time: 

• They were more mentally active, meaning that they did everything from reading books and tackling crossword puzzles, to using a computer and going to lectures or concerts. And they were less likely to spend time in the passive mode of watching television.
• They were more physically active.
• They maintained a sense of effectiveness in the world around them, meaning that they continued to maintain a sense of control over their lives, felt that they were contributing to their family or to society, and generally felt good about themselves, too.

Good information. I've stated before that I like to play chess and am learning a lot of new computer skills with this blog. I also exercise frequently, so hopefully these efforts are helping to keep my mind sharp (though my wife may say differently). ;-)

The piece ends with speculation that women/shopoholics all over the world will love to hear:

"We can't prove this, but it may be that women not only live longer but possibly maintain their brain functions better than most men in part because they shop. While shopping, they are physically active, wandering through stores and carrying parcels. They are mentally active, comparing prices and making choices. And, after completing their shopping, they feel they have accomplished something."

So, if shopping is related to higher mental awareness, could the credit card companies come out with campaigns that say, "Pile up more debt with us -- the shopping will help keep you mentally alert."? ;-)

Most Retirees Don't Relocate

I always thought that when people retired that they moved to Florida, California, or Arizona to a sleepy little town that was warm and peaceful. Well, according to Market Watch, that doesn't happen much as . And most of those who do stay in an urban setting.

However, I'm not totally wrong. Those who do move tend to relocate to quieter parts of urban areas. They also like warm areas of the country. Here are the main takeaways from the article:

Americans might envision the ideal retirement as involving a move to a small, slow-moving town in a warm climate, but most retirees don't end up relocating after all. In fact, even among those who do make a move, most usually choose to live in a major metropolitan center, loath to give up the cultural attractions and other conveniences that are hard to find in more placid settings.

A quieter part of a major metropolitan area anchored by a large city, often in a warmer climate, is a popular relocating-retiree choice. "Generally, people are moving from metropolitan counties where there are dense populations to other metropolitan counties that are less dense," said Ron Manheimer, director of the University of North Carolina's Center for Creative Retirement in Asheville, N.C.

Still, most retirees don't move. Over the five-year span, 76.1% of those 60 and older stayed put. Of the rest, 18.5% moved within their states, 4.6% moved to other states, and 0.8% moved abroad. "Some people think everyone moves in retirement. The vast, vast majority stay put," Manheimer said. "They have their friends and families, a familiar environment and their favorite places, or they may not be able to afford moving."

Retirement for us is decades into the future (at least 20 years, maybe 30), so it's hard telling what we'll do. However, we may consider moving to a foreign country like many have already done (and more will likely follow). I've posted about this issue several times and noted how people are moving to Mexico, Nicaragua, Cancun, Mexico, and another plug for Mexico. This may be a viable option for people who haven't saved a lot for retirement, but still want to live a good, relaxing lifestyle when they stop working.

Comments: Save Big Money by Using Generic/Store Brands

I received several comments on my post Save Big Money by Using Generic/Store Brands -- Even I Didn't Know the Savings Were This Big!!! I didn't know you all cared so much about store brands! ;-)

Anyway, here the comments starting with one that re-emphasized my point:

My big savings through them is with the A&D ointment for diaper changes -- A&D is $3.96 for a tube, and the equate version is $1.47.

Yep, I'd take that $2.49 (63%) savings too!

The next thought:

I've noticed that the price gap between generic vs. brand non-food products is much bigger than the gap between generic vs. brand food, yet the quality of generic non-food products is generally closer to that of brand non-food than generic food is to brand food. Still, we swear by both since anything available in "generic" form is probably bad for you anyway. (I wish they had generic fruit and veggie options...)

I noticed this too. And in several cases (oatmeal for example), the generic simply can't hold a candle to the taste of the name brand. We actually buy little generic food items (though we try them regularly).

Here's a comment I disagreed with:

Not all generic and brand names are created equal. Listerine, for example, clearly writes on its bottle that their formula is not sold to any store brand. This means what you buy as Walmart-Equate may be cheaper but is not the same product as Listerine.

In the particular case of Listerine, I have tried other brands (big name brands as well as store brands) and nothing comes close to Listerine.

Also, its well known that some big brands have separate (read lower quality) production centers for Walmart. So, Walmart-Tylenol may be cheaper than Target-Tylenol, its probably not the same thing.

I responded:

I've tried both Listerine and the Walmart brand and I like the Walmart brand BETTER (even if the cost was the same). It tastes tons better and works just as well in my opinion.

As far as their medicines go, here's the litmus test: do they work? Yes, they do -- at least for our family. So why not use them? Besides, if you try them and they don't work better, you can return them for a full refund.

Another commenter said that the items are not only the same, but they are EXACTLY the same and made by the same manufacturer:

In many cases Walmart is actually selling you the "name brand" product and its just rebranded with their name. Wal-Mart has a lot pull or well push with its vendors and in many instances they get/force them to give them their "A" product to them at a huge discount and they just put a new label on it and the lower price, so you often are not sacrificing any quality.

Example would be Wal-marts butter, the individual sticks actually have the Morning Glory emblem on the paper lining.

This may be true in some cases, but I don't think it is in the non-food product categories. I think there are companies that specialize in making exact replicas of name brand products.

Here's a comment that captured the spirit of those of us who buy generics over name brands:

I started surfing the cheapo brands within the last 6 months. I came to realize that there are some things that I JUST DON'T CARE if they are "name brand". How about fabric softener? Would I really notice a difference if I went with the generic brand vs. Bounce? Guess what? I can't tell the difference. Here's another...butter! Guess what - store brand butter tastes no different than Land O'Lakes! Sure, there are a lot of food products where you would notice a difference in taste - but think of all the non-food products that you wouldn't!

And finally, let's end on a warning about shopping Walmart to "save" on generics:

I like the Equate Brand for many of the non-food items. But I use a name brand mouthwash.

I have to be careful when going into a store like Wal-Mart because it is easy to spend the extra savings on stuff that I don't really need.

;-)

My List of Must-Read Books

I'm starting to get a relatively sizable list of books that I view as must-reads (ones that score 8 stars or higher on my 10-star rating scale) so I thought I'd list them as one post, then refer to them as needed. That said, here's my list (not all are in the area of personal finance):

15 Questions to Ask Discount Brokers

Thinking of opening a new account with a discount broker? Money Central suggests :

• What is your minimum opening balance requirement?
• Do you offer 24/7 customer service by telephone?
• Do you have a walk-in office in my area?
• Are your accounts insured by the SIPC?
• Do you offer free S&P stock reports?
• Do you offer any free broker’s analyst research reports?
• How many mutual funds do you offer, and how many of those are no-transaction-fee funds? What is the fee for trading transaction-fee funds, and do you charge two transaction fees if I sell one fund and buy another at the same time?
• What is your minimum mutual fund initial purchase requirement?
• What is the minimum holding period for mutual funds without incurring a penalty?
• I plan to maintain a $_____ minimum balance and do around ___ trades per quarter.
• Given my situation, how much do you charge for market orders and for limit-order Web trades? Also, do you charge a separate order-handling fee, and if so, how much?
• Given my situation, do you have an account maintenance fee, and if so, what is the minimum trading frequency and/or account balance requirements to waive the fee?How much do you charge for trades placed via your touch-tone phone system, or for orders placed with a live broker?
• Do you offer a dividend reinvestment plan?
• Can I download my account details from your site to my MSN Money or Quicken portfolio?
• Do you charge an IRA maintenance fee, and if so, how much?

Based on my experience, these are good questions. I've had accounts with Schwab, Ameritrade, and Etrade and wish I'd asked some of them these questions early on.

As far as discount brokers themselves, I don't have a recommendation for you. I still use Etrade and Ameritrade, but don't really love either one of them. How about you? Does anyone out there use a discount broker that they really like? If so, please share it with the rest of us in the comments below.

Savvy Strategies for Tax Refunds

Along with posts about wills, it seems like I've been running into (and writing about), articles that suggest . So we might as well let USA Today weigh in on the subject. They start by telling us how the average refund is $2,379 this year, how bad it is to get a refund in the first place and what we should do to make sure we don't get a huge refund every year. Then they suggest the following ways to use a refund if you do get one:

If you have loads of debt, paying it off is your best move.

But let's say you're debt-free and are getting an average-sized tax refund each year. Why not start an individual retirement account?

Don't wait until you get your check. It can be tough to save when you have a check in your pocket whispering, "iPod." Instead, consider adjusting your W-4 form so you're not overwithholding in the first place. The W-4 tells your employer how much to take from your paycheck for taxes. Be careful, though, not to underwithhold. No one likes paying the IRS at tax time.

Your next step: Start an automatic investment plan at a mutual fund company, using your tax savings to fund it. Many fund companies will let you start with as little as $50, provided you let the company tap your bank account electronically every month. T. Rowe Price, for example, will let you start an automatic investment plan in most of its funds for just $50.

Similar advice to what I've previously shared, but it never hurts to go over the basics. Who knows, someone may actually listen and follow this advice. ;-)

For a bit more detail, see Getting a Tax Refund is Costing Americans Billions.

How to Write a Good Will

If it seems like I've been writing a lot about wills lately, it's because I have. The subject's on my mind because it's something we're working on right now -- updating our will. And it's something that a lot more people need to work on as it's estimated that 70% of all adults don't have a will. That's a sad state of things -- especially since without one, the state will decide where your kids and money go. And based on what I've seen, states aren't that great at making these sorts of decisions!!!!

This article from MSNBC tells us . Since I've already covered this subject, I thought I'd just highlight a few of their comments that seemed especially good. This first one seems to cover an often overlooked point of dying without a will:

[Without a will] blended families can face an assortment of unintended consequences, with some or all assets passing to first-marriage children and bypassing second spouses and stepchildren altogether. In some cases, family heirlooms may be put up for sale with family members having to buy them back from the state.

The piece is sure to tell us how easy it is to complete a will -- it's really pretty simple. Their summary:

Drafting a will does not have to be a big production. Basic, legally enforceable wills may be written rather quickly and economically using online software programs. They can later be fine-tuned, expanded or amended as personal situations and assets change. Web sites like Nolo.com, and LegalZoom.com are among those that can help get the deed done. With LegalZoom in particular, legal experts will actually review all documents before allowing them to be endorsed into legally binding existence.

The piece continues with this interesting finding:

“They say that siblings are five times more likely to fight about family items than about money,” says Arnold.  Such fights often lead to wounds and resentments that never heal.

Thankfully, there's a simple solution to this problem:

This is why Arnold advocates writing a "good" will. It addresses such "why’s" either through letters of explanation included within the will or through discussions with those named in the will ahead of time. It can head off potential feuds, ill feelings regarding misunderstood intentions and lead to the healing of old rivalries once and for all.

'Nuff said on this topic. At least for a day or two. ;-)

For more information on wills and estate planning, see these links:

• Proof that You Need a Will (And What to Do About It)
• Wills that Work
• Benefits of a Will

Low Costs Mean Higher Returns (Another Advantage of Index Funds)

I've posted on this topic before, but it's one of those that's worth covering over and over again. This time, we'll highlight an article from Kiplinger's that notes .  Here's their summary of the piece:

The old adage that you get what you pay for doesn't apply to investing. Indeed, some of the lowest-priced investments produce the most sparkling returns -- largely because every nickel you save on fees goes straight into your pocket.

And the investments that they recommend as a result:

Among mutual funds, for example, index funds offer some of the best deals around.

Yes, this is one of the reasons that I like index funds -- their low costs lead to great returns.

The Best Cash-Back Credit Card

Update (March 2009): Moved to a one-card option -- the SINGLE best cash back credit card.

Update (September 2007): There may be an even better option -- to use a combination strategy with the Blue Cash card and the Chase Freedom card.

Update (May 2007): I'm revising the last statement in this post, the $330 was nothing. I made almost $500 in 2006 with my card (1.8% overall -- a great return) and I recommend the Blue Cash from American Express card as the best cash-back credit card.

-----------------------------------------------

Kiplinger's held a competition to pick . They started by assuming the following spending patterns:

To determine which cards are most rewarding, Kiplinger's assumed that you spend $35 a week on gas, $100 a week on groceries and $1,000 a month on everything else, including $100 at the drugstore and $100 to watch movies, at home or at the theater.

Here are their results:

• Winner: Chase Rewards Plus Visa (5% rebate on all the basics -- gas, groceries and drugstore items -- 1% on other purchases.) Total annual rebate in our scenario: $493.
• Second Place: Citi Dividend Platinum Select. (5% rebate on purchases of gas, groceries and drugstore items, 1% on everything else.) Annual rebate cap of $300.
• Third Place: National City Everyday Rewards Elite Visa. (rebates 4% on gas, 3% on movies and video rentals, and 2% for food-related spending at grocery stores and restaurants. Everything else earns a 1% reward -- but only after you spend $10,000. Below that, you earn a measly 0.25%.) In our scenario, you'd pocket $281.

I thought that I was getting a good deal with my American Express Blue card in earning over $330 last year, but it appears that I could have done much better with the Chase card. I spent just about what they spent in their scenario (with the only difference being I don't think we spend $100 a month at a drugstore) yet they made almost $500. I'm going to have to check it out. It could net me a couple hundred more dollars a year!

How to Choose a Guardian for Your Children

Previously I've covered a Money magazine piece on how to protect your family with a will and today I'd like to refer back to that article again. Except this time, I want to focus on what is probably the most important (and most difficult) part of drafting a will -- . Here's what Money advises:

• Make a list. Jot down possible guardians and have your spouse do the same. Anyone you both name makes the short list.
• Score the candidates. Ask yourselves: Is this person healthy? Is the family okay financially? Do they share your values? Get along with your kids? Are they willing?
• Split roles. Still not sure? Consider appointing one person as the financial guardian to manage the kids' money and another as the personal guardian to care for them on a day-to-day basis.

I think this is a GREAT list of suggestions and one we will certainly use as we update our wills.

How to Save on Almost Everything

Here's a piece from Kiplinger's that supposedly gives tips on . That might be a bit of an over-statement. But, there are some good ideas here (many of which I've already covered in previous posts). Here are some I haven't yet posted on but that I like:

• Pinpoint stealth energy drains. Consumer electronics, such as PCs, printers and home stereos, continue to draw power while they're plugged in -- even if they're turned off. With the Kill A Watt ($30 at Amazon.com), you can measure the stealth electrical usage of any appliance or electronic device. Or plug the power leaks by buying a Smart Strip Power Strip ($31; ). Plug in your devices, and the power strip will stop drawing electricity when the gadgets are off -- and pay for itself within a few months. 
• Compare prices. At Pricegrabber.com and Shopping.com, you enter a description of the product you want and the sites display a list of prices from several online stores.
• Google for help. When you're at a store, send a text message to 46645 (Google's number) and enter the letter f followed by the name of the product you're shopping for. Google will reply with a text message quoting the online prices. To compare prices at local stores, go to Cairo.com or Shoplocal.com.
• Save on appliances. Before buying a washer, go to the maker's Web site, such as , where you'll often find printable coupons and rebates that your local salesperson might not mention.

Like I said -- not really revolutionary money saving tips. But good nonetheless. Check out the article if you want more.

Alltribes Giveaway of the Week: Stay Tuned

We haven't had a "regular" giveaway here at Alltribes for a few weeks. Yes, we've had a ton of books given away in a day as well as a week's worth of giveaways, but the simple, one item Wednesday giveaway hasn't been around for some time now. Well, this post is to simply say: it's not coming back this week. ;-)

Instead, I'm completing my March Madness series at the end of this week and into the weekend -- and giving you a chance to win in the process. Watch for the March Madness posts on Friday and Saturday and for the opportunity to win a great prize from Suze Orman.

Good luck to all those who enter!!!

Alltribes in Five Carnivals This Week, Hosts Carnival of Investing Next Week

Alltribes is part of five carnivals this week. Here are the carnivals and my posts that were included in each:

• - Merrill Lynch's Thoughts on Investments for 2006
• - David Bach Day at Alltribes, Interview Part 1
• - 7 Credit Card Trends that Can Cost You
• - Money Saving Tip: Go to the Right Garage Sales
• - David Bach Day at Alltribes, Interview Part 1

Stop by these carnivals to read some great posts!

In addition, I will be hosting next week's Carnival of Investing. If you'd like to be included, you can submit a post by using the handy submission form at the or .

Deadline for submission is Sunday, April 2 at 4:00 pm ET

Looking forward to some great submissions!

Seven Smart Ways to Spend Your Tax Refund

Four out of five workers say they'll get a tax refund this year and the IRS estimates the average refund will be $2,480. So odds are that most of you reading this have either received your tax refund or will be receiving one. As such, there's no better time to share this article from Money Central that offers . Their suggestions (hyperlinked to some of my posts where I've already written on these topics):

1. Blow (some of) it.

2. Pay your credit cards.

3. Fund your retirement.

4. Boost your emergency fund.

5. Contribute to a college fund.

6. Continue your education.

7. Attend a conference.

I agree with these except that I'd add "give" to the list.

Also notice that this is a good list on what to do with a raise, bonus, or monetary gift as well -- any time you get "extra" money.

For those of you who haven't yet completed your taxes, here are some links to tax-related posts that may help you out during the process:

• Six Don't-Miss Tax Breaks
• Need Help this Tax Season?
• Eight Ways to Avoid an Audit
• Tax Law Changes You'll Need to Consider for 2005 Income Tax Returns
• Top 10 New Year Tax Resolutions
• The Fastest Tax Refund Possible
• 3 Keys to Choosing the Best Tax Pro
• Five Common Tax Filing Mistakes
• Why I Use a CPA to Do My Taxes
• Tax Savvy Ways to Save for an Education
• The Basics of Tax Record Keeping: What Should You Keep?
• As Audits Increase, Taxpayers Should Seek Professional Assistance to Avoid Trouble with the IRS

FMF recommends:

March Madness at Alltribes, Elite Eight, Part 2

Here's the second set of posts in the final eight articles to pick the best Alltribes post since November 1. (If you want to see where we've been, start at the original post and click through the links to view all the rounds.) Because I'll only be sharing four posts in these last rounds, I'll be adding some comments on why I think each deserves to be in the final eight.

Again, in each set, one will be declared to be better than the other. Here goes:

• Make Sure Your Financial Advisor is Not a Loser versus Poverty to Prosperity
• The 12 Biggest Money Mistakes versus What Do You Splurge On?

Here are my thoughts on each of them:

• Make Sure Your Financial Advisor is Not a Loser - How can you not love a personal experience that deals with finances and involves Judge Judy? :-) However, this is a serious post that more people need to heed -- don't just trust anyone with your money.
• Poverty to Prosperity - A post that's fundamental to what I talk about here at Alltribes: there are simple, basic, money steps everyone can take that will make their net worth grow tremendously if they do them over a long period of time.
• The 12 Biggest Money Mistakes - I like this piece because it covers a wide range of personal finance topics and includes links to several other posts within it (which gives readers lots to choose from).
• What Do You Splurge On? - Obviously this post connected with many readers as evidenced by the large number of comments. I also like it because it's not something you read about much on personal finance blogs (spending money on fun stuff). Besides, I get to talk about cycling. ;-)

In the comments below, let me know if there are any of these you particularly like or dislike and I'll take that into account as I decide on the winners.

Click here to read Final Four.

Have a Hard Time Saving? You Can Amass a Fortune by "Tricking" Yourself

Here's an article from Kiplinger's about a young man who has a hard time saving for retirement, so . Here's what he does:

So far Goldberg's best strategy has been to trick himself into saving. He contributes 6% of his income to his 401(k) -- money that comes off the top of his paycheck before he can spend it. Because his contribution is made in pretax dollars, it lowers his taxable income. In fact, Goldberg could probably bump up his contributions without noticing too much difference in his take-home pay. As a bonus, Goldberg's employer matches 25% of his contribution -- and that's free money.

In addition, Goldberg automatically transfers $200 a month from his checking account to his Roth IRA. With a contribution limit of $4,000 on Roth accounts for 2006, he could invest as much as $333 per month. Unlike a regular IRA, Roth contributions aren't tax-deductible. But Roth money won't be taxable when Rob retires and withdraws it.

Two simple principles that can help everyone amass a fortune:

1. Contribute as much as you can to your 401k -- at least enough to get the entire employer match.

2. Set up a system where you automatically save a certain amount each month by transferring it from your checking account to investment/savings accounts -- just like the system detailed in .

I max out my 401k (which, by default, gets me the full company match). I also have an amount automatically moved from my checking account to my investment account every month -- and it adds up pretty quickly.

These are two great ways to save money and I recommend them completely -- especially if you're currently having a problem socking away some extra bucks.

FMF recommends .

Protect Your Most Precious Assets

Since I'm in the process of updating my will, I guess articles about wills are really catching my attention. This one is from Kiplinger's starts off with :

Many parents put off writing a will because they see it as a downer -- a way to dispose of your assets after death. Think of it instead as a way to protect your most precious assets -- your children -- if something should happen to you and your spouse while the kids are minors.

The article then gives some tips on how to select a guardian for your kids -- probably the hardest decision you'll make regarding your will. Their thoughts:

• Look to your generation. Many older people lack the stamina or the desire to start child-rearing all over again.
• Name one guardian, not two. Choosing a couple might seem natural, but things could get complicated if the couple splits up.
• Consult the prospective guardian. Don't assume the person you have in mind is prepared to accept the job. If your children are old enough to understand, tell them your plans.
• And don't be shy about leaving a letter or recording in which you give detailed instructions about how you want your children to be brought up.
• You may even want to name two separate guardians: a guardian of the person to take care of your child, and a guardian of the property to manage your child's finances.

This is good advice -- and we'll consider it as we have our will updated. Currently, we have named a couple in our generation and have talked to them about the issue (of course). We've also separated the guardians from the inheritance dollars by naming a trustee who will make sure the kids are well-provided for (and reasonably provided for).

For other posts on this issue, see these links:

• Proof that You Need a Will (And What to Do About It)
• Wills that Work
• Benefits of a Will

A Great Example of How to Manage Money the Right Way

I love stories of people who are doing it right -- spending less than they earn, saving for retirement, keeping out of debt, and being sure to splurge a bit.

Here's a story from Money magazine about Natalie and Greg Turner, a couple who are . Here's a summary of where they hit the mark:

• Greg, a pharmaceutical salesman, and Natalie, a software engineer, make a combined annual income of $130,000. Even though their net income affords them a comfortable lifestyle they have made saving their first priority.
• "He invests 19 percent of his paycheck, while I put 15 percent into retirement, but we also put aside about $12,000 a year into mutual funds and always have at least a year of living expenses saved up just in case of an emergency."
• The couple are modest spenders, Greg uses a company car so they only own one car between the two of them which has been paid off for a few years. They do most of their shopping at Costco and Natalie admits she has even curbed her clothing expenditures thanks to Greg's influence.
• Natalie and Greg never put more on their credit cards then they can pay off at the end of the month.
• And they still allow for at least one nice vacation a year and one other indulgence -- Pearl Jam. They make time for concerts whenever and wherever they can.
• Any extra income, including bonuses and monetary gifts from family, goes directly into an investment or savings account, and they plan to start a 529 college savings plan with the money they expect to receive from their families after the birth of their child.

Ok, so someone's going to say, "Well, if I made $130,000 a year, I'd do the same thing." No you wouldn't. Not unless you're doing it now. You can take the same steps the Turners are taking (the amounts just change) whether you make $30,000 or $130,000. The point is -- everyone can spend less than they earn and thus have a sur that will help them save, pay off debt, etc.

Don't believe me? Check out the story of this guy and consider that spending less than you earn is the way people become wealthy.

Organize Your Tax Files for 2007

One of the keys to making your tax return as easy as possible is to organize all your important documents throughout the year. Then, when you go to do your return, you don't spend hours hunting down the right slip of paper. We keep all of our records in a filing system in my desk at home, but here's a  different suggestion from Money magazine on :

Many taxpayers may have settled for the standard write-off because they didn't have the proper backup for deductions. The answer: Get a shoebox or large folder [such as an accordion file], and as soon as you get any document that might be useful at tax time, throw it in. Include:

• Your real estate tax bill and mortgage interest statement
• Receipts for charitable contributions and unreimbursed business expenses (including travel and entertainment costs)
• Brokerage statements documenting investment losses.

If you haven't started doing this yet for next year, now's the time to begin -- while tax season (and the pain of going through it) is fresh in your mind. Maybe the thought of avoiding several nightmarish hours will spur you to set up a simple system like this. ;-)

Getting a Tax Refund is Costing Americans Billions

Here's a piece from USA Today on how Americans are getting . The details:

• Taxpayers overpaid their federal income taxes by a record 29% in both 2003 and 2004, according to a USA TODAY analysis of Internal Revenue Service data.
• That has pushed refunds above $200 billion a year. Final figures aren't in for the 2005 tax year, but the average refund so far is $2,423, up 4% from last year.
• The fatter refunds are the result of taxpayers withholding nearly twice the traditional safety margin from their paychecks to avoid a year-end tax bill.
• The extra withholding gives the government an interest-free loan worth more than $10 billion a year, equal to about $100 per tax return.

So, it's costing tons of money, but people still do it. Why? Here's part of the reason:

But many people love the forced savings and its reward — the fat refund — no matter how much it costs. "Taxes are so complicated people are just happy to come out ahead on April 15 rather than behind," says Ellen Katz, editor of the Tax Savings Report newsletter.

I've previously written that giving the government an interest-free loan is a bad idea, but for those people who couldn't save any other way, maybe it's not so bad. However, it is a more expensive way to save. Plus, it doesn't really benefit the "saver" if he/she just blows the money when it comes in.

What do you think -- are refunds ok in some situations for some people?

Money Saving Tip: How to Buy Nothing

Here's a piece from WikiHow on ). It has several ideas listed (many that I've already covered) and one that really summarizes my philosophy on spending money:

Think to yourself "Will I use this each day, Will I use it enough for it to be worth buying?" and questions around those lines.

The page also includes a "fact" that I've seen listed several places before:

Studies show the average person spends less when paying with hard currency, and much more when paying with credit - because it feels as though you are not parting with anything real.

I found these two particularly funny:

Fill your shopping cart with things you think you need. Spend as much time as you want looking though the aisles and choosing your items carefully. When all finished, abandon your cart and leave the store. Store employees frown on people abandoning their full shopping carts. This practice works better when shopping online.

Watch out for appearing too cheap. At times, you will need to spend money for social and peer reasons.

I think most Americans have this last one TOTALLY covered -- some!!!!

March Madness at Alltribes, Elite Eight, Part 1

Well, we're down to the final eight articles in my tournament to pick the best Alltribes post since November 1. (If you want to see where we've been, start at the original post and click through the links to view all the rounds.) Because I'll only be sharing four posts in these last rounds, I'll be adding some comments on why I think each deserves to be in the final eight.

Again, in each set, one will be declared to be better than the other. Here goes:

• 10 Nasty Money Habits to Kick versus Becoming a Millionaire -- A Real-Life Example
• Comments: How Much Would You be Willing to Spend to Save Your Pet's Life? versus Getting Rich is Simpler than You Think

Here are my thoughts on each of them:

• 10 Nasty Money Habits to Kick - I like this one because it's simple, practical, covers many different topic areas and gives the reader many different posts to click on and learn more about money topics they have an interest in. It also gets in several of my thoughts on these issues and I'm partial to that. ;-)
• Becoming a Millionaire -- A Real-Life Example - A real-life story combined with a very simple message -- everyone can become wealthy if they just do the basics over a long period of time. It doesn't get much better than this.
• Comments: How Much Would You be Willing to Spend to Save Your Pet's Life? - There's a lot I like about this piece: 1) It covers a topic I write a lot about -- the cost of pets -- that I feel most people don't think about/consider when they decide to get a pet, 2) it has real-life comments/issues from readers -- which are always better than theoretical posts, and 3) there are a wide range of viewpoints which helps to cover the topic from many angles.
• Getting Rich is Simpler than You Think - Similar to the Becoming a Millionaire post above, this one has simple, tried-and-true financial principles that allow anyone to grow their net worth. I've applied them in my own life, and they are serving me well.

In the comments below, let me know if there are any of these you particularly like or dislike and I'll take that into account as I decide on the winners.

Click here to read Elite Eight, Part 2.

How to Stretch a Small Income

Here's an article from Kiplinger's on that has a few good money saving tips. The ones of note are (with hyperlinks to previous articles I've written where appropriate):

• Thrifty by nature, the couple saved money on their wedding by getting married at a friend's house on a farm. Instead of registering for gifts, they encouraged family members to give cash or gift certificates, which they used to pay for the wedding. (There are actually many ways to save on a wedding.)
• Tina and Mickey make the most of their digs, by cooking in rather than eating out. (See Don’t Let Restaurants Rip You Off!, Comments: Don't Let Restaurants Rip You Off, Skip Dessert when Eating Out, Comments: Money Saving Tip: Skip Dessert when Eating Out; Drink Water and Breakfast over Dinner).
• A fireplace helps lower their heating bills during the winter.
• They buy in bulk at Costco and use discount cards at other stores.

Basic money saving tips, but good reminders nonetheless.

How to Educate Kids on Money Matters, Nine Tips for Teaching Teens, Tweens about Fiscal Responsibility

My kids are still young (at the stage of learning to count money, make change, etc.) yet we take every opportunity to teach them the basics of handling money. Like lots of other kids, they have a bank where they put long-term savings (like a new bike), short-term savings (like a new game), and giving (where my daughter puts most of her money). We also talk about the price of items while shopping, the impact of advertising, etc. A couple months ago we even videotaped them answering the question: where do we get money to eat, pay for our house, and so on? Their answers were hilarious!!!!

This piece from MSNBC gives . Before we get to those, let's cover a few of their quotes that I thought were particularly interesting:

“Financial awareness is now key at an earlier age because young kids are becoming more aware of consumer issues, and marketers are responding to them,” said Brent Neiser, director of collaborative programs at the National Endowment of Financial Education (NEFE) in Denver. “Cell phones for 8-year-olds is a perfect example. Companies are trying to capture market share and brand affinity at an earlier age than ever before. That results in young kids making spending decisions earlier, but they’re still not learning how to save for the long term.”

And it certainly doesn’t help when they see the typical financial skills of their elders: The U.S. savings rate is at an all-time low, bankruptcies are at near-record highs and the average household has $9,000 in credit-card debt.

Ha! They've got that right! Many of today's parents didn't learn much from their parents regarding money -- and what they did learn was not that great. (I know, there are exceptions -- don't kill me in the comments.)

In addition, kids aren't learning much at school -- but things are starting to change:

Personal finance education for kids has not been too high on the priority list for schools or states, but that is now changing. Only 12 states require students to take a course about basic finances to graduate high school, but another 12 have pending legislation. Texas is the biggest and most recent state to mandate the requirement starting this fall.

David Bach talked about his desire to help kids learn about money in the third part of my interview with him (scroll to the end). It's a good cause to get behind.

The article goes on to give a thought all parents need to consider:

Still, like with most lessons, children should be learning the big ones at home. Parents need to lead by example, even if that means cleaning up their own financial act, said Foster. “It’s like smoking and telling your kids not to smoke. If you want to make them save, learn about investing and pay their credit card off every month, you need to do that too. If you do something different, that defeats the purpose.”

Yep. Kids won't do what you say, they'll do what you do.

Finally, here are MSNBC's nine tips for teaching children about money:

1. Don’t teach, just talk.
2. Get them a piggybank – or a spending account.
3. Give them a goal.
4. Monitor their use of plastic.
5. Have a “Family Money” night.
6. Tone down the consumerism.
7. Use extracurricular activities.
8. Turn them into investors and donors.
9. Make them work for it.

My thoughts on these:

1. Good point. Be natural and just share what you know.

2. As I said, we have one for each child.

3. We have goals: my son is saving for a bike while my daughter is saving for...what is it again she's saving for?

4. My oldest is 9. Needless to say, we don't have credit cards for either of them.

5. Good idea! I like this one a lot.

6. As you might imagine, we're not big spenders in our house anyway. ;-)

7. I haven't seen many of these opportunities. However, the kids did play Life the other day -- it made my daughter realize that you can't make much being an artist. ;-)

8. We've got the donor part down -- investing will come soon.

9. Of course. They need to learn that money is made/earned, not a right for just "being".

Any tips you can share with the rest of us? I'd love to learn something new that works well.

Increase Your Home's Value -- Plant Some Trees

Want to increase your home's value? Then consider doing some landscaping -- and focus on trees. That's the ticket to increasing your home's value quickly according to Money magazine's April issue. Here's a summary of the piece:

If you've spent any time at all reading about real estate here or elsewhere, you probably know that attractively landscaping your yard can be one of the most cost-effective ways to boost your home's curb appeal. But you can plant all the geraniums you want -- at the end of the day, trees are what will set the tone.

And a warning goes along with this:

And no aspect of your yard is trickier to get right, or potentially more expensive.

I would have linked to the article, but I can't find it online yet (the magazine just came out). Check the magazine (page 62) for more information and details.

I've written before on the value of gardening/landscaping and noted that "landscaping can increase townhouse and condominium values by 5% to 15%." It's a pretty good investment if it's done correctly, but probably something you don't want to do on your own unless you have some experience.

If you want to read more on home-related money issues, check out these posts from Alltribes:

• The 3 Worst Reasons to Buy a House
• To Pay or Not to Pay Off Your Mortgage
• The Hidden Costs of Homeownership
• How to Get Rid of Private Mortgage Insurance

How Much House Can I Afford?

Here's a question most people don't ask themselves: ? Instead, they ask a bank how much they can afford -- which is a very bad mistake. Fortunately for the person in this article, she asked MSNBC how much house she could afford. Their answer:

This question really has two very different answers: 1) how much will a lender give you? and, more importantly, 2) how much do you feel comfortable borrowing?

Especially for first-timers, you really need to start with question #2, and no one can answer it better than you can. If you’ve never made a budget, sit down and come up with one. How much cash do you think you can comfortably afford to devote each month to housing (mortgage) payments? Some people are willing to forego movies and dinner out, bring lunch to work every day and give up their car – anything to own a home. Some stretch too far and find themselves pouring all their income into the house, leaving themselves in permanent financial stress.

They also recommend checking out mortgage calculators on the web like ones found a .

My two cents on this topic is that if you follow the right formula for buying a house you can be a wealthy homeowner with little stress on your finances. On the other hand, if you stretch too far, buying a house could be your financial downfall. Proceed with caution. And before you do, check out these posts from Alltribes:

• Six Ways to Get a Fast Downpayment for Your Home
• How to Bubble-Proof Your Home
• Why Homeowners Get Rich and Renters Stay Poor
• Big Money Blunders to Avoid: Buying a Home

Thrive on One Paycheck

One of the most interesting posts I've had at Alltribes was Can I Afford to be a Stay-at-Home Mom? It generated several good comments, including this one that I especially liked.

Here's a similar piece from Kiplinger's on . It promises that "extensive planning and cost-cutting moves can allow one parent to quit and stay at home with the children." It details the trials and successes of a couple who went from two paychecks to one with the main parts of their advice being:

For Raffi and Elaine Boloyan, both 32, stretching their income became doubly challenging when they chose to cut their income by nearly half. Two years ago, Elaine left her $67,000-a-year job in human resources to stay home with daughter Ava. To make this kind of transition, the Boloyans have three words of advice for other families: "Plan, plan, plan."

In the end, Elaine and Raffi say, the secret to boosting cash flow is to figure out which expenses you can cut. "Sometimes it's really hard to separate necessities from extras."

It's not easy, but it can be done, as this couple have shown. My thoughts from the original article still apply, so I'll conclude with them:

The bottom line is that if the right choices are made and spending is controlled, many can stay at home. If you're in this situation and are trying to see if you can make it, remember that simply by staying home you'll have lower expenses in work-related areas. It's likely that transportation, clothing, and food (eating out) costs will all go down (maybe even dramatically) if a spouse stays home. Of course some expenses will go up as well, but probably not that much in comparison.

Six Great Ways to Spend a Raise

Here's a piece from Money Central that tells what most people do when they get a raise: they spend more. It also suggests what you should consider instead -- . The piece rambles a bit, but when you sift through it, they suggest the following ways to spend a raise:

• Pay down debt
• Put some towards short-term savings
• Spend some!
• Save some for long-term purchases.

The author then goes on to detail how the group of women she's been following doesn't do much of any of these -- they simply spend more. ;-)

Here are my thoughts on six great ways to spend a raise:

1. Set up an emergency fund.

2. Fully fund your 401k -- at least to the point where you get the entire employer match.

3. Pay off debt -- especially credit card debt.

4. Sock some away for college.

5. Splurge some!

6. Give.

How about you -- what do you with your raises? How does that differ from what you actually do?

Exercising Your Most Important Assets

I've talked about how your mind and health (body) are more important than money. With them, you can always get more money and enjoy life in the process. But without them, life can be miserable no matter what you own -- and all the money in the world can't buy good health and a sound mind.

This piece from Market Watch agrees with me and discusses Their summary thoughts on this issue:

Your most valuable assets -- unquestionably and by far -- are your mind and body themselves.

The piece contains tons of facts, quotes from research, etc. on this issue. Here are my favorite takeaways:

• Scientific evidence increasingly points to the fact that you can take immediate and effective steps now to enhance these assets -- to keep your mind and body functioning at peak pitch much longer and better than we had previously thought.
• A lot of this has to do with exercise -- regular, hard, varied, determined and challenging exercise. The more of it we get, the better we stand to perform well mentally and physically, and the longer we stand to live.
• Medical scientists now are talking about much more than the simple old truism that exercise makes us stronger and fitter. What they are saying is that purposeful physical work and mental challenge (as when you tackle a difficult crossword puzzle or even a new dance step or other intricate movement) create actual physical changes in the body and brain.
• Says Shari Roan, a Los Angeles Times staff writer who has extensively studied the subject: "Movement appears to enhance memory, learning, attention, decision-making and multi-tasking, among other mental functions. It may slow or even reverse age-related decline."

They conclude with this thought:

Bottom line: You almost certainly can enhance your most important asset if you invest your time in a personal program of challenging physical and mental exercise.

I couldn't agree more.

On the body side, I train four times a week for an hour either on a bicycle or an elliptical machine.  This will bump up as the weather gets warmer and I can ride outside once again.

On the mind side, I have challenging work, am involved in numerous charitable projects which are fun and exciting, and I play chess when I find the time (I play blitz chess -- all moves are made very quickly -- so a game doesn't take that long). I've also studied Russian a bit lately, but haven't found the time to keep up with it. And I've read that learning new computer skills helps as well, which is something I certainly do running this blog.

What do you do to keep yourself physically and mentally fit? Please share your thoughts with us all in the comments below -- perhaps something you say will help someone else get started on the path to good physical and mental health.

Practical Advice from an Experienced Giver

Here's an article I found at Generous Giving that seemed fitting to share today. It's titled . The article is written by a Christian man who's been a giver for over 50 years and now gives over 50 percent of his income away each year. He offers his thoughts on giving and, in particular, shares four principles for honing your giving strategy. They are:

• First, I believe as givers we ought to try to pick two or three organizations to support, maybe four, where we can have some sort of an impact.
• Second, I think we need to think about how much we give to our kids, and that is a personal thing. For what it is worth to you, we decided that when we go to heaven, we are going to give 70 percent of our net worth to the Lord’s work.
• Third, because we give out of a grateful heart and give as God has prospered us, I believe we need to establish a lifestyle and stay with it.
• Lastly, I think it is important to give now.

The part that really hit home with me is his advice on giving only to a handful of charities. We spread our giving out a lot (less than in past years, but more than he recommends) and we probably need to look at consolidating a bit.

The entire article is a great piece -- both from an advice standpoint as well as a story of a faithful couple who give generously to help those in need. Enjoy it.

March Madness at Alltribes, Sweet 16, Part 2

We're now in the Sweet 16 of March Madness at Alltribes, the 16 remaining posts in my tournament to pick the best Alltribes post since November 1. (If you want to see where we've been, start at the original post and click through the links to view all the rounds.) Round #1 was yesterday, and here's round #2. Again, in each set, one will be declared to be better than the other. Here goes:

• Make Sure Your Financial Advisor is Not a Loser versus Money Saving Tip: Do Business with Companies that Back up Their Products/Services
• Poverty to Prosperity versus Sell Your House to Save Your Pet's Life
• The 12 Biggest Money Mistakes versus The World’s Best-Kept Retirement and Investment Secret
• What Do You Splurge On? versus You Choose -- Pets or College for the Kids

In the comments below, let me know if there are any of these you particularly like or dislike and I'll take that into account as I decide on the winners.

Click here to read Elite 8, Part 1.

Posts of the Week -- March 20

Here is a list of my favorite posts this week:

• My Three-Part Interview with David Bach
• The Most Good for Your Charity Dollar - Looking at Your Giving as an Investment
• Money Saving Tip: Use Your Freezer
• Americans and Money, Income and Debt
• Marriage and Money: Money Magazine Survey

Have a great weekend!

Alltribes recommends .

Money Saving Tip: Shop the Discount Racks/Bins

We were at JC Penney this past weekend and while my wife was shopping, the kids and I wondered the store looking for something interesting to look at. We eventually spotted a retail goldmine -- also known as the discount rack -- and proceeded to check it out.

As usual, 90% of what was there was useless. (Better than some places, though. The prior week we'd been to Sears where all the "toys" were 75% off -- and they still weren't moving.) The 90% at Penney's would have been the "bad stuff" at a low-end garage sale. But then my son found something. It was one of those video game sets that you plug directly into your TV (versus having a separate game card that you plug into a video machine that then hooks into the TV) and offers you a good number of games (64 in this case) that are usually far below the quality of the graphics, sound, etc. of today's video games (think early Donkey Kong, and you're in the ballpark).

The game set had been originally priced at $30.00 (which was reasonable -- I'd seen them in the $25 range at Walmart during Christmas) and was marked down to $6.67. Wow! If the thing lasted a day, it would be about 1/3 of what I'd drop on one trip to our local fun center. So we decided to get one.

Then, as I turned to leave, I spotted a discount bin (basically a shopping cart). It was full of those Lance-Armstrong-like rubber wrist bands. They were sold in packs and featured the logos of the Green Bay Packers (one green, one gold in a pack) and the Detroit Lions (one blue, one silver in a pack). They were originally priced at $2.99 pet set (of two), but were on sale for 7 cents each! (Now this is the going rate for Lions stuff, even in Michigan, but the Packers? My, how far they have fallen.)

I have a friend who LOVES the Packers, so I got him three sets. I figured he probably had some Packer friends who would want a couple and since he is a pretty good friend, I figured he was worth the 21 cents. The kids wanted Lions bracelets (for some unknown reason) and I felt generous so they each got a set. That 14 cents saved me $1.50 in sodas or candy later in the day. ;-)

Well, I was loving life -- then we went to check out, and it got even better. The clerk informed us that she hadn't priced all the video games yet, and they were supposed to be priced at $1.67!!!!!! Oh yeah, baby, score one for the home team!!! $1.67!!! $1.67? That's less than three video games (about 10 minutes of entertainment) at our local arcade! Needless to say, I felt like we had a REALLY great buy. All was right in the world. ;-)

So next time you're looking to kill time while your wife shops (or your husband if you're a woman), go look over the discount racks/bins. You may just find a treasure there for pennies on the dollar!

Saving Money on Car Insurance

Here's a piece from Money Central that gives how-to shop for car insurance offers thoughts on . Here's the saving money part of their advice that I like the best:

Call a couple of the larger carriers (State Farm, Allstate, Nationwide, SAFECO, etc.) and then check with a couple independent agents and phone-based carriers, such as GEICO or Amica, just to make sure you've covered your bases.

If you prefer to shop on the Internet, a number of services offer online price quotes. Web sites give you quick access to a number of quotes without ever picking up the phone. However, as convenient as they are, it's still advisable to consult other more traditional sources as well.

As I've written before, shopping around for car insurance is one of the best ways to save on auto insurance. Don't fall into the trap of just going with the same old carrier you've always been with -- especially when their premiums jump up.

The piece also lists the major factors that determine your car insurance rate:

• You. (age, gender, marital status, driving record and record of prior claims)
• Where you live.
• Your vehicle.
• How you use your vehicle.

Finally, it details the major types of insurance coverage you should be familiar with including:

• Collision
• Comprehensive
• Medical
• Liability
• Uninsured motorist
• Underinsured motorist
• Umbrella
• Gap insurance
• Other optional coverage

Overall, it's a great primer on shopping for and saving on insurance.

Save Big Money by Using Generic/Store Brands -- Even I Didn't Know the Savings Were This Big!!!

A few months ago, I posted on how you can save money on non-food items (vitamins, personal care products, over-the-counter medicines) by 1) buying them at a mass merchandiser (Walmart, Target, Kmart, etc.) instead of a grocery store and 2) buying the generic/store brand rather than the national brand. But holy cow, I never knew how much we were saving until I wrote the prices down for several items this past weekend! It's a fortune!

We shop for our non-food items at Walmart. On a day in, day out basis, they have the cheapest prices on average on this type of stuff -- even if we wanted to purchase the national brand (i.e. Walmart's Tylenol is cheaper than Kmart's Tylenol). In addition, Walmart has the Equate brand, their store brand that is an EXACT DUPLICATE of the national brand in what it contains/how it works. The only difference is that one is a national brand (and thus well-known) and the other is not known at all (unless you're a Walmart shopper).

We buy the Equate brand all the time. It's just as effective as the national brand, and it saves us big, big money. Just to see how much people save on the Equate brand, this past weekend I selected some items at random and wrote down the price of the national brand and the Equate brand. Here's what I found:

Mouthwash

• Listerine (1.5 liters) - $6.20
• Equate (1.5 liters) - $2.37

Pain Medication

• Advil (24 tablets) - $3.14
• Equate (24 tablets) - $0.96
• Tylenol Extra Strength (100 tablets) - $5.12
• Equate Extra Strength (100 tablets) - $2.87

Shoe Inserts

• Dr. Scholl's Air Pillo - $1.57
• Equate - $0.84

Fiber Supplement

• Metamucil (36.8 oz.) - $14.92
• Equate (36.8 oz.) - $5.84

Grand Total

• National Brands - $30.95
• Equate - $12.88
• Savings with Equate - $18.07 (58.4%)

Now, imagine if you saved this every week. On different things, of course, but one week you might get toothpaste, shampoo, lotion and eye drops, the next you get bath soap, vitamins, band-aids, and shaving cream, the next you get deodorant, cold/allergy pills, toothbrushes, and baby soap, and so on. Saving $18.07 per week nets you $939.64 a year!!!!! Even if your savings is half as much per trip (or you only buy every two weeks instead of every week), you still save $469.82 each year. Do that for 10, 20 or 30 years and you save a boatload of money simply for using a non-advertised brand. It's a no-brainer!

Better yet, there's no risk in trying the Equate-branded items. We've seldom disliked a product they make, but when we do, they take it back with no problem -- they have a 100% satisfaction guarantee. So, 1) there's no risk in trying it, 2) it does the same thing as the national brand, and 3) it costs a TON less -- what's not to love?

Next up: The Equate brand takes on Costco's national brands and its Kirkland store brand. Stay tuned.

Comments: Experience versus Education

Lots of good/interesting comments to my piece on Experience versus Education where I asked what makes more difference in your career -- having great experience or having a good education. Clearly, there's not a "perfect" answer (that's the life when you talk about personal finance) but there are certainly a lot of opinions on the issue.

We'll start with this comment:

I have to take a bit of exception with this article, as it is not really comparing apples to apples. Candidate "A" and "B" above would probably not be competing for the same job.

A more fair comparison would be if both candidates were at the same point in their careers (had risen to president) and were both looking for a different job. All else being equal, you would probably pick the candidate with a degree.

The education is just one more advantage in a competitive job market. I agree that education does not matter in your CURRENT job, but it very well may matter when you are looking for your NEXT job.

I didn't think this was a fair comment and responded as follows:

But in reality, all else is NEVER equal (at least that's what I've experienced in almost 20 years in business). If two people are applying for the same job, they always have different skills, abilities, experiences, personalities, and on and on.

I'm not saying education is not important -- far from it, just check out all the pro-education pieces I've written in my "education" category. What I am saying is that as a person gets into his/her career, a degree means less and less as time goes on. Business experience and performance means more and more until the degree is really marginalized.

Where the degree does help is at getting your foot in the door initially -- to help you get good experience at good companies.

Next, another commented chimed in with these thoughts:

I work as a software developer, making bleeding edge network security products. I got my bachelor's degree in computer and electrical engineering and  my master's degree in electrical engineering. All the degrees came from a top 10 program nationally. That educational background has opened a lot of doors for me and I have a very nice career going. When I'm interviewing, candidates with advanced degrees from top programs get a little bit of extra credit.

But the sheepskin isn't everything.

My company does technical interviews, in which we give candidates technical problems to solve, so that they can demonstrate that they can really handle the kind of high level work that we do. Plenty of people with top-notch educational backgrounds fail at this.

Similarly, my last two managers have been college dropouts. As it happens, they're two of the most technically excellent engineers I've known in more than a decade in the business. Even if their educational backgrounds aren't as impressive on paper as mine. If I were a hiring manager and either one of these men came to me looking for work, I would hire them on the spot.

Here's one tip, though. Education is important. Your resume is important. But as you move further and further in your career, both pale in importance next to your network. That's what's really key.

I agree with this commenter mostly. His example (experience trumps education as you get into your career) is one that I agree with. However, he somehow concludes that your "network" is more important.

Our next commenter added the following:

I'm a manager that has done some recruiting to hire employees. The reality is that when you are hiring, you have to sift through a stack of resumes. Typically you get over 100 resumes. You MUST narrow the field down to a reasonable number to interview; about 10 is the most I can interview; typically about 3-4. How do you narrow down the field from 100 to 3-4? It's unfair, but the biggest criteria for narrowing the field is education, and of course, 
obviously relevant job experience. If you graduated from MIT and you have experience doing exactly what we're looking for, you're going to get interviewed. If you don't have masters degree (or even college education), then you better have a very specific experience that we want to hire (i.e., you are currently working with the client, doing the exact thing we're hiring for). Otherwise, you won't get interviewed. Its sad, its unfair, its stupid. But its 
practical and easy.

So he says that both education and experience are used to hire people. I agree with this, though my experience is that the higher level person you're looking for, the more emphasis on experience and the less emphasis on education. I've hired people for Director-level positions making over $100,000 a year, and believe me, experience was MUCH more important than education in these cases.

Here's another person's reaction to this comment:

If you're in the position of the candidates MikeK is referring to (your resume and letter land on the desk of the hiring manager or -- far, far worse -- the HR department, along with 99 or 999 others that look more or less just like them) then education matters. Or at least, it matters in the sense that the lack of it will kill you in the first culling, as opposed to the second or third, which is where you'll probably end up getting killed if you've got the degree.

Candidates with track records and networks don't get jobs by sending a looks-like-all-the-others resume to a hiring manager, and HR doesn't often learn about them until they've gotten offers. Which is why education doesn't matter anywhere remotely close to as much for us.

Yep.

And here's one final perspective on the issue:

Like the woman in the article, both my father and the head of our corporate compliance department do not have college degrees. They all worked their way up and received on the job training. But I also think they're a dying breed. I can't think of even one person younger than 35 in my department who doesn't have at least an associate's degree. Outside of the corporate context, it's a whole different scenario. On the one hand, as documented in the 
Millionaire Next Door, you could be a small business owner and do quite well for yourself with or without a degree. But on the hand, if you want to be an attorney, physician, nurse, pharmacist, etc. you can't just apprentice yourself to someone anymore. You absolutely have to have that degree under your belt. It really just comes down to what you want to do in life. A degree just gives you more options.

Here's my experience and bottom line on the issue:

1. Overall, education versus non-education is a financial no-brainer. Statistics show that you'll make tons more money in your lifetime by getting an education.

2. For entry level positions, education is vital. Why? Because you don't have any experience and the hiring manager has to base his/her decision on something. As such, as one of the commenters said above, a college education is becoming a minimum requirement to get your career off the ground.

3. As you progress in your career, education means less and less with every passing year. This is because companies hire people that perform. They don't care (for the most part) what the educational background is as long as the person can deliver results (which usually means making money for the company).

4. So my advice is to get your degree, get your foot in the door, then manage your career so that you maximize your experience (and thus your earning power).

March Madness at Alltribes, Sweet 16, Part 1

Is anyone out there enjoying this March Madness thing I'm doing? Maybe too many people are watching the real thing to pay attention to my posts. ;-)

I am certainly learning a lot -- about what I've written (I forgot several of these pieces!), what I like, and what makes a "great" post at Alltribes. I also learned that if I do this again, I need to seed the brackets. Some of the weaker posts made it too far simply because their challengers were even weaker while I often had two great posts go head-to-head (and only one could advance).

And, of course, I realize that in the first two rounds, there were waaaaaaaaay too many competitions for you to look at them all. Well, never fear -- from now on, there will only be a very readable number of articles on each post -- so few that you'll be able to view them all.

That said, we're now in the Sweet 16, the 16 remaining posts in my tournament to pick the best Alltribes post since November 1. (If you want to see where we've been, start at the original post and click through the links to view all the rounds.) Again, in each set, one will be declared to be better than the other. Here goes:

• 10 Nasty Money Habits to Kick versus 4 Habits of Successful Investors
• 5 Mistakes Investors Just Can't Afford versus Becoming a Millionaire -- A Real-Life Example
• Comments: How Much Would You be Willing to Spend to Save Your Pet's Life? versus Don't Let a Bank Tell You How Much to Borrow for a Home
• Even a Small Leak Can Empty Your Money Bucket Quickly versus
  Getting Rich is Simpler than You Think

In the comments below, let me know if there are any of these you particularly like or dislike and I'll take that into account as I decide on the winners.

Click here to read Sweet 16, Part 2.

Star Money Articles for the Week of March 20

Here are interesting posts and news this week from the members and beyond:

• Consumerism Commentary noted that .
• AllThingsFinancial made .
• MightyBargainHunter offers .
• Five Cent Nickel confessed to .
• Blueprint for Financial Prosperity had .
• The .
• My Open Wallet covers .
• It's Your Money discusses .
• Boston Gal's Open Wallet says .
• The Happy Capitalist notes that .
• Clutter2Cash !
• Phil Town .
• Our Money details .

Enjoy!

How to Make Your Brain Fitter in Six (Sort of) Easy Steps

I've written previously that your mind is more important than money and that there are steps you can take to make sure your brain stays fit. So when I saw this web show from Forbes on , I had to share it. Their six ways to help keep your brain fitter:

1. Music

2. Languages

3. Juggling

4. Dancing

5. Puzzles

6. Ping Pong

Ok, I'm in trouble with these because:

1. If they mean LISTENING to music, I'd be cool. However, they're talking about playing. Not one of my strong points.

2. I'm still working on mastering English (though I can count to ten in French and Spanish and I learned some Russian this past year -- enough to say, "I don't understand Russian." Think this will help me out?)

3. I can juggle a career, a wife, two kids, church commitments, a side business, riding my bike several thousand miles a year and a seemingly endless list of "to-do's", but that's about all I can keep up in the air at once.

4. Let's put it this way: saying that I have "two left feet" would actually be a gross over-exaggeration of my dancing ability.

5. FINALLY! One that works for me. I love puzzles (and their cousin -- challenging games/brain teasers). Maybe there's hope for me yet.

6. Yes! Two in a row! I love ping pong as well. Too bad I haven't played it in 10 years.

Ok, at least I have a handle on many of these - there may be hope for me yet. ;-)

How to Avoid Ruining Retirement - The Five Worst Retirement Money Mistakes

Want to make sure you don't blow retirement financially? You should -- how you save now will dramatically impact your quality of life in your retirement years.

Here's an article from USA Today that lists the -- errors you want to avoid if you want a good retirement. Their list of the worst:

1. Not saving enough.

2. Not having an emergency fund.

3. Not diversifying.

4. Not counting health care costs.

5. Not getting all the paperwork done.

My thoughts on each of these:

1. We're maxing out our 401k saving in a SEP IRA and a non-tax-advantaged account.

2. We have an emergency fund. We keep ours at Vanguard (easier to move around with our other investments), though offers a better yield.

3. We diversify by using broad-based index funds.

4. I need to get a better handle on my post-retirement health care costs.

5. We're updating our will this year which takes care of most of this issue.

If you want more information on retiring right, see these links:

• How Much Do You Need to Save for Retirement?
• Retirement is More Expensive than You Think
• Figuring Out Your 401k
• Retire in Style South of the Border

March Madness at Alltribes, Round 2, Part 2

Well, we're now in the second round of March Madness at Alltribes. If you want to see where we've been, start at the original post and click through the links to view all the rounds.

Here is the second set of winners to make the second round -- after this, we'll be down to the Sweet Sixteen. Again, in each set, one will be declared to be better than the other. Here goes:

• Investing Versus Your Career versus Make Sure Your Financial Advisor is Not a Loser
• Money Saving Tip: Do Business with Companies that Back up Their Products/Services versus Money Saving Tip: Tell Friends when You're Thinking of Buying Something
• More Reasons Pets are Expensive versus Poverty to Prosperity
• Sell Your House to Save Your Pet's Life versus Start on Your First $1 Million at Age 16
• The 12 Biggest Money Mistakes versus The Dot-Com Billionaire: Mark Cuban (Value of Time)
• The World’s Best-Kept Retirement and Investment Secret versus Using an Interest-Only Mortgage is a Recipe for Disaster for Most People
• What Do You Splurge On? versus Why I Like Index Funds
• Why I Use a CPA to Do My Taxes versus You Choose -- Pets or College for the Kids

In the comments below, let me know if there are any of these you particularly like or dislike and I'll take that into account as I decide on the winners.

Click here to read Sweet 16, Part 1.

Comments: New Rating for Rule #1, Part 2

For those of you that haven't been paying attention, there's been quite a bit of comment fury around my post on Comments: New Rating for Rule #1. It seems Phil Town's investment theories generate quite different responses. First, let's cover a few of the comments in support of Phil:

I'm a big fan of Phil's so I feel the need to defend him. I first saw him at a "Get Motivated" seminar about a year ago...I was there to see someone else, but Phil's presentation was one of the best. Before seeing Phil, I had no interest in investing, but that has all changed. I started following his advice from his blog and we exchanged a few emails. When I finally got comfortable with the idea of investing in the market, I found one company and researched the bejeezus out of it. I ended up purchasing a few thousand dollars in this company's stock at the end of June '05 and today, I'm up over 60%! Did it take more than 15 minutes? Sure. Will the next investment I make take more than 15 minutes? Probably. Does Phil's method work? You bet it does! And he never tried to sell me a thing, in fact, he told me where to look on the Internet for FREE information.

As I've mentioned, I heard Phil speak on the same event tour. I was there to see others as well and I too liked Phil's presentation. He was very professional, smooth, and funny. However, that doesn't mean that his investment principles are correct. And one stock returning 60% is not a track record, it's one data point. You can't draw any conclusions from it. Finally, it sounds like this commenter spent a lot longer on finding the stock than Phil promotes.

Here's another pro-Phil comment:

I haven't started trialing Phil's method, and it'll be a while before I do (I agree that he's understating the time, although it MAY be because he's got good software, which he mentions in his podcast).

HOWEVER, all the people above who are claiming that he's utterly wrong and giving very very bad advice -- NO. You are operating under Modern Portfolio Theory, and as such you assume that the market is perfectly efficient and risky returns are random. Both assumptions are highly questionable, have never been proven, and people provide counterexamples every day. This doesn't mean that the efficient-market-hypothesis is false per se, it just indicates that there's more to it than Modern Portfolio Theory considers (which is no surprise, it's just a simplification).

Personally, I believe that the market is efficient as a whole, but the efficiency is caused by people buying and selling based on information they possess. Before they acted on the information, the market did not "know" that information. I also believe that although MPT offers a great way to manage risk when you're not able to control it, its assumption that the normal distribution applies is inaccurate.

(Oh, and by the way -- to the person who claimed that 50% of the Market will experience losses "because it's a market" -- easily disproven. 50% of the _futures_ market will experience losses because it's a zero sum game. The majority of stocks produce a profit because the economy is growing; it's not a zero sum game. And a market is by definition composed of trades which are profitable at the time to both sides: both the "buyer" and "seller" are giving up something they value less in return for something that they value more, so there's ALWAYS a gain to both sides.)

A good fun read that might show a little bit about the controversy in Modern Portfolio Theory would be "Fortune's Formula". It's not really about the controversy, but it manages to show it and make it interesting. (It's not about how to invest; it's more of a history, but as interesting as any sci-fi I typically read).

Now for the opposing side.

There were several comments ranging from "you're generous to give the book 5 stars" to "why did you even decide to re-rate a book that you think is only fair?" But here's one I kind of liked:

Relative to the market average (not in absolute terms), half of investment dollars will beat the average and half will not. This is what a market average is, so it's not "easily disproven".

Graham divides stock buyers into speculators and investors. He spends a lot of time in The II arguing against speculation, and that's what it seems like Town's method is. He wraps it up as investing (e.g., the 10-10 rule) but it's really about pulling the plug when the arrows tell you to. Sure, you might be able to get a 60% return once or twice, but can you consistently do it over the long term? Probably not.

And another:

Billy, just to set the record straight, MY opinions are based upon 22 years of investing in stocks, 13 of those as my sole source of income, not modern portfolio theory...whatever that is.

I love this last comment! ;-) Great attitude and on point. It's all theory until you practically apply it, then the rubber hits the road. I'll take the advice of someone who has experience over a person with a theory any day!

Merrill Lynch's Thoughts on Investments for 2006

A buddy of mine who uses Merrill Lynch (ML) as his broker went to a dinner ML hosted the other night. (It was free!) At the event ML gave it's thoughts on what was going to happen in 2006 and my friend passed them on to me. I thought you'd be interested in them:

• Economy slows to 3%. (Retail will be down but the backend will be strong. Corporations are spending.)
• Earnings fail to give double digit growth.
• U.S. yield curve inverts. (Short term bonds have higher yields than long term bonds.) (There is always an inverted curve before a recession but not all inverted yield curves lead to a recession.)
• US. Equity Market corrects 10%, making way for the 2nd half of the bull market. (On average there is a 10% correction every 19 months, it has been 48 months since a 10% correction. We have had 5 years of a bull market.)
• Growth investing outperforms large cap, value and small cap investing.
• U.S. Dollar resumes its downtrend. Feds will print more money. Foreign investors are buying US treasuries.
• Led by Asia, non-US equity markets outperform the U.S.  China will be the number 3 economy by 2009.
• Strong cash flow leads to high dividends, more buybacks of stock, and more M&A activity.
• Commodity prices higher in 06 than 05. Emerging markets require more energy. Opec is at 96% capacity.
• Republicans retain control of congress, but lose some power.

I'm not sure that ML is particularly good at predicting the future, but obviously they are a trusted source in the financial services industry, so their thoughts bear some weight.

What do you think of these?

Comments: You Could be Rich and Not Know It!

Here's an interesting comment I received on my post You Could be Rich and Not Know It! where I told readers they could go to certain sites and see if they were owed any "lost" money:

From what I understand, these sites are also used to "smoke out" people who have creditors after them. A friend of mine used to work for a collections agency and he said that you'd be shocked by the number of people who, after going "underground" for owing thousands of dollars, would pop up to claim a $20 credit. He said that many times the "found money" would be at the same company that the person owed money to, indicating that some companies invent credits to collect unpaid debts this way. Gotta wonder if the IRS does the same thing.

Let me just say this: if you're running from the IRS or have committed some illegal act where law enforcement agencies may want to "smoke you out," getting your hands on any lost money should probably be the least of your concerns. ;-)