Feb 09

During the recent State of the Union, we were introduced to a new flavor of retirement account, the MyRA. Even the president had a tough time spitting out the words, he started to say, “My IRA,” and then corrected himself, saying, My R A, meaning My Retirement Account. A few days later, the Treasury issued a press release to clarify the details regarding this account.

It has the same limits and tax status as a Roth IRA, and will be offered only through employers, presumably those who don’t offer a 401(k). It offers just one investment, a treasury product that offers a guaranteed rate, pretty low, of course, but with no downside risk. Once he account reaches $15,000, it must be transferred to a regular Roth IRA account.

Let’s start with Michael Kitces’ The New MyRA Roth IRA Proposal: A Financial Planner’s Guide To Everything We Know So Far. I’ll warn you, Michael’s discussion approaches 4,000 words, he looks at the rules for this account as well as the potential impact.

The Patriot Post comes right out and says it – MyRA Proposal Is a Head-Scratcher. They quote National Review’s Kevin Williamson, “Does anybody know why savings bonds went out of fashion? Because they are a terrible way to save money.” They conclude it may be the first step toward nationalizing our retirement accounts.

Next is myRA: What You Need To Know About The Newest Retirement Plan. Jay at The First Million is the Hardest sees one real benefit, the low $25 initial deposit. This may help people kickstart some savings. The downside? the low guaranteed return.

Money Reasons isn’t too high on the account either – I think the MyRA will be a poor investment option. That says it all. Don doesn’t care for the low return and sees the guarantee as an issue, feeling no good can come of governments guaranteeing anything.

The Oblivious Investor, Mike Piper, explained MyRA: Not “Like a Roth IRA.” It IS a Roth IRA. The distinctions are listed, including that it’s through your employer, and how it must be invested.

I’ve read enough about the MyRA to have my own opinion. It offers nothing that prompts me to say “great, that will help a certain group that needs a bit of help.” Part of the issue is that 62% of adults do not have an emergency fund to fall back on. I suspect that most of these 62% are cashing Friday’s paycheck at 5 pm to put dinner on the table at 7pm. It’s a sad reality. Those with no 401(k) can till use an IRA or Roth IRA to get the start this program offers. The problem remains, when you have no money to set aside, even a $1 minimum deposit wont make a difference. Sorry to appear such a cynic on this issue. I’m in favor of raising the minimum wage as a first step to helping people who are willing to work, but aren’t earning a living wage. How to get them to save for their future is a bit more complex.

What do you think? Will the MyRA help? A year from now will it be a success or go over like a lead balloon?

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Jan 26

Now and then it’s time to point out things that are just nonsensical. Today’s the day for a few. We start by recalling how the media and our president both used the word Rich when really what they meant was High Earners. No doubt, if a couple makes $400K a year, they are high earners, but if they spend every cent, and have little savings, they are actually not rich. I recently read an article making a similar mistake, How Many Millionaires in Belmont? Not As Many As You May Think. The headline caught my attention, but as I read the article I saw, “Of the 11,557 state tax filers who reported at least $1 million in income in 2011, Belmont can only claim 178 millionaires.” Hello? Just when I came to terms with “black is the new black,” do I need to accept that ‘millionaire’ now means ‘million dollar per year earner’? Probably not, even the cited article had a title of, “The Massachusetts towns and cities with the most million-dollar earners,” exactly describing this correctly.

I love reading Paula Pant’s blog, Afford Anything. It reminded me of a teaching moment I had with my daughter many years back when she asked me if we could afford something. My response was, “We can afford anything, we just can’t afford everything.” For me, there are many aspects of my spending that are clearly frugal, yet others that seem extravagant. Balancing the two fits our budget. Paula recently offered an anecdote we can all learn from, Why I Wasted an Hour of My Life to Save $3.60. It’s a look at how even someone focused on the numbers can slip up, wasting time that’s far more valuable than the money one might save. In Paula’s case, the cash discount meant an hour round trip in the car. A stupid mistake by someone I know to be a bright entrepreneur and financial author.

And the third article is actually a pair by Forbes author Laura Shin, 13 Money Mistakes To Stop Making By Year’s End, and The 13 Biggest Money Mistakes Retirees Make. I’m sure there’s a psychological effect on an article of mistakes to avoid vs stuff you should consider. Which is why these two lists strike me as brilliant. A total of 26 bits of advice, I’d bet you’ll find at least a handful that can help you improve your finances.


You are Here” is an article by The Reformed Broker, frequent CNBC commentator Josh Brown. It’s an overview of where we are in the market and what 2014 might hold in store. If you don’t read any other links today, read Josh, he’s an investment advisor who pulls no punches, using phrases such as “Thank god there was no f***ing Twitter back then.” With all the talking heads on TV shouting this or that, Josh appears the voice of reason, expletives aside.

Bargain Babe asked, “Are We Saving Too Much Money?” She and her husband were saving 26% of their take home pay, and she was having a bit of internal monologue on this. She’s in the minority, as a country we save far too little despite the recent media promotion of claims to the contrary. More on that topic on Tuesday.

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Dec 22

This is the last roundup before Christmas, so it seems appropriate to stay with the theme of the holiday in my highlighted articles this week.

With one exception – SEP IRA versus Solo 401(k)-Which is Better? This was the question Barbara Friedberg answered at her blog this week. An important question and timely for me as my freelance writing has picked up speed and I should take advantage of the tax benefits I can get by using these accounts. A nice write up on the different choices I’ll have.

Lazy Man wrote about Gift Cards: A Guaranteed 20% Return on Your Money? These deals are great if you can get them for stores or restaurants you already frequent. For example, Lazy Man buys his pet food at Petco, and when he found a 26% off deal on Petco gift cards, he was all over it. Nice discount.


At NarrowBridge Finance, John guest posted 4 Last Minute Christmas Ideas That Don’t Suck. I like his ‘homemade coupon’ idea – maybe giving a friend a free night of babysitting so he can enjoy a date night without needing a sitter. Check out the article for more ideas.


At One Cent At A Time, The Importance of Giving this Holiday. Giving is always important, but much giving tends to happen at year end. No matter when you choose to give, or how much you give, it’s a personal matter, not one that I’d get pushy about. My own priorities are reflected in the charities I focus on, listed to the right.


Your “Thoughtful” Gifts Are Suboptimal.  This was the theme at priceonomics this past week. An interesting, if not unusual view on how we choose gifts to give.


A guest post at Money Ning explained Why Americans Are Spending Less This Christmas. Unemployment and stagnant wages are part of the issue, no doubt. Have you pulled back on your gift list this year?

We’ll close this week with 6 Ways to Save on Holiday Get Togethers. You like a nice holiday get together, but the tab can be steep. Here are 6 great ideas how to trim the cost without trimming the fun.

And that’s a wrap this Holiday Season. Merry Christmas to you and your loved ones.

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Dec 15

Let’s start this week with an old post I just discovered. From Mormon Dems, A Minimum Living Standard in the World’s Wealthiest Country. An interesting view on the poverty myth, and why we need a higher minimum wage. This issue will be with us for some time, I’m afraid.


Today’s roundup is named for the storm coming through the NorthEast. It’s the first big storm of the season, looking at 8 inches before it’s over. The supermarkets were a madhouse, the bread and milk all gone. Amazing.

At Wealth Gospel, Ben wrote What People Living on Less Than $1 a Day Taught Me About Money. What’s frightening to me is that half the world lives on less than $1300/year, The median US income is over 20 times this figure.

On Yahoo Finance, the question is asked and answered – Could You Be Oversaving for Retirement? Could you? Sure. But the article doesn’t suggest that we are, only that the target that planners suggest, 80% of pre-retirement income, is a flawed number. The actual savings for the average 55-64 year old is just under $70K. You think they save too much?

Len Penzo offered 100 Words On: Why Frugality Has Its Limits. And he’s right. You can squeeze your spending only so much. It’s increasing earning that should be more of a focus.

We’ll close with Financial Samurai’s Asset Allocation Review – How Much Richer Do You Feel In This Bull Market? The market is up nearly 29% this year, but not everyone gained from this stellar move. Are you richer?

written by Joe

Dec 01

Tough to believe it’s December already. Thanksgiving is behind us, and 2014 right around the corner. No shortage of good reading this week –

First, Pope Francis calls unfettered capitalism ‘tyranny’ and urges rich to share wealth. I like the new Pope. Nothing against the prior ones, but it seems Pope Francis is focusing on the down to earth issues, and calling for his followers to stop obsessing over other issues. He recognizes that an extreme concentration of wealth is bad for society and preaches that we understand this as well.

Next, Rick Ferri offered Another Reason To Buy Index Funds. I’ve met Rick at the past two FinCons, and really enjoyed our discussions. When we ran into each other, he remarked that he just came from a panel where he was honored to be seated next to Jack Bogle. Rick wasn’t name dropping. He was genuinely happy to be sitting next to the father of index investing. Pretty cool in my opinion.

Black Friday is creating Gray Thursday and killing Thanksgiving. This is how Kevin Mercadante felt about this year’s early shopping. All I know is that these days that stores force workers to come in don’t really create any more business, only make for unhappy workers. Staples opened at 12:30 am Friday morning. I went at 1:00PM to a near empty store and got a printer on sale. The old one died  couple weeks ago, and I waited a bit to see what I’d save.

I’ve been reading Parker Tax Publishing to stay up to date on tax news and the latest there is Doubt is Growing on Whether Expiring Tax Provisions Will Be Extended. Too bad. The changes are disruptive. I’ve said it before, we need to have a tax code that’s unchanged, save for inflation adjustments, for the long term. Check out what’s going to expire at the end of this year.

I’ve written about Robert Shiller before. This week at Think Advisor, Shiller vs. Fama: Which Nobel Winner Comes Out on Top? I picture these two Nobel Winners putting on gloves and getting into the boxing ring. My money is on Shiller. Literally.

To wrap up this week, at The Chicago Financial Planner, New Stock Market Highs: It’s Different This Time Right? Actually, those very words are a sign of a market starting to top. I’m not selling it all, but scaling back. Because it’s never different.

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