We’ve heard a lot of discussion about the toxic assets held by our financial institutions. Here’s what hasn’t been explicitly stated too often – in order for these financial institutions to have toxic assets, many of us must be carrying toxic debt. ___ ___ We’ve seen government at all levels, corporations, and yes, individuals borrow more and more money over the past few years. Many people now have this sinking feeling that they will never get out from under it all. So today we want to talk about what to do if you have that feeling. The King and Queen of Personal Finance Cash is king again and credit score is queen. In the coming years, people with cash and a good credit score will have more options, be able to take advantage of more opportunities, and will experience less stress. Isn’t that a nice place to be? A Timeless Principle Makes a Comeback It requires discipline. It’s amazing how we can rationalize our purchasing decisions. If I can’t afford to buy it now without credit, why would I think that I can afford to pay for it later along with an exorbitant interest rate? So we need to pay cash or don’t buy at all. Eliminate purchases on credit, even ones that promise “no interest, no payments” for some period of time. Of course, if you already have the money, and you’re just using their money, and you need the item … really need it … then go ahead and enjoy! Two Important Financial Moves Perhaps more so than at any time in our lives, we need to build up our emergency reserves. Financial planners have been saying it all along, for the most part. Many of us weren’t listening. Keep six to twelve months of living expenses in a readily-accessible reserve account just in case you need it. Pay off almost all of your debt. You may not pay off your mortgage. You may even keep a car loan for a time. Get rid of all other debt; it’s robbing you of your future. Then you’ll be ready to start looking for the tremendous opportunities that will be available to anyone with cash to invest. Drastic Steps to Dispose of Toxic Debt Drastic times call for drastic measures. These steps will not be easy. In fact, they will be uncomfortable at best. However, if you’re feeling overwhelmed by all of your debt, they are necessary. Sit down and logically determine how quickly you could get out of debt, given the two exceptions we noted above. If it’s more than five years, even after considering the steps we’re about to outline, it’s probably best to seek professional help. Here are the steps: Sell assets Look around for anything that you don’t need, never needed, don’t use, or never used. Get rid of it and use the money to build up your cash reserves and/or pay off debt. Get a second income Get a part-time job or find a way to make some spare money. Even if it’s only $300, $400, or $500 a month, plowing this money into paying off high-interest debt will pay you bigg dividends in the future. This doesn’t have to be something to do forever, just do it until you get your financial situation shored up. Cut back on contributions to your retirement plan We always hesitate to suggest this because you’re robbing your future. Talk to your financial planner before you take this drastic step. But even with an employee match, it may be better to pay off high-cost debt. You may earn 30% by paying off a credit card, for example, and give yourself more room to maneuver through tough times and unexpected events. Reduce housing costs With the price of houses down in many markets and the continued lack of buyer demand, now probably isn’t the time to consider downsizing. However, analyze your specific situation because you might be surprised. Another option might be to rent part of your home. Or find other ways to cut costs on your existing house. For example, property tax assessments will be going out in January. Check your assessment and the price of houses that have sold nearby to see if you can protest the value you’re being charged for. Cut transportation costs Could you get by with one less car? Could you take advantage of public transportation? Could you car pool? All of these ways put money in your pocket that can be used to build up cash and pay off debt.  Stretch your dollars We’ve covered the bigg ones, but it’s also important to look at all your other discretionary expenses. Many people have already cut back on dining out. Go even further – buy fewer prepared foods and cook meals yourself. Sure it will take more time, but it will save you money that can be used for stockpiling cash and knocking down debt. Look for your recurring expenses – cable bills, cell phone bills, and everything else. Is there a way to make cuts? Strive to stretch every penny you can out of every dollar you bring in so you get back on your feet and on track to being a bigg success! ___ Get the tips and tools you need to be a BIGG success! Subscribe to the Bigg Success Weekly – it’s FREE! ___ Next time, we’ll discuss the “must-haves” for your productivity tool kit. Until then, here’s to your bigg success! Subscribe to The Bigg Success Show in iTunes.  Subscribe to the Bigg Success feed. Direct link to The Bigg Success Show audio file: http://media.libsyn.com/media/biggsuccess/00246-102008.mp3 Related posts Squirrels, Nuts and Business Cycles 6 Easy Steps To Financial Freedom Getting Aggressively Passive: Creating A Passive Income That Sets You Free (Image by sufinawaz) Less

On Tuesdays, we usually talk about time issues – time management, productivity and getting things done. But today, with the volatility of the stock market, we thought we’d take a look at how time affects your investments. ___ ___ It took many years to create a portfolio of value. It’s been frustrating to see that value fall so quickly. But we’re reminded of a Gordon Gekko quote from the movie Wall Street: “Don’t get emotional about stocks. It clouds the judgment.”        Yet that’s exactly what we tend to do. We get emotional and do the opposite of what we should do. We should buy low and sell high. We buy high on exuberance and sell low in a panic. The smart money does just the opposite. It buys low in the panic and sells high on exuberance. A look back at the Dow We ran some calculations to see if there is a benefit to buying and holding for a period of time. We specifically looked at the Dow Jones Industrial Average because it’s the basket of stocks with the longest history. Going all the way back to 1896, we assumed we bought the Dow on the last day of every year right before the close. We looked at every period up to December 31, 2007. Then we looked at holding periods of: 1 year 2 years 3 years 5 years 10 years We looked at two specific things for each holding period: our return and our chance of losing money. Risk and return results We found that the longer we held the Dow stocks, the better our return with one exception – the average 3-year return was lower than the average 2-year return. Even more interesting, we found that the longer we held, the less likely we were to lose money: In one year increments, we had a one in three chance of losing money. Over five year time frames, we had a one in four chance of a decline in the value. Of the ten year periods, we only lost money in one out of five cases. Then we looked a little deeper – to the size of the volatility. The range of highs and lows went down over time, so the downside was as follows: About 14% for the 1-year increments About 2.75% if we invest over 5-years 0.55% for the 10-year ranges So based on these historical numbers, the longer you hold your portfolio, the less likely you are to lose money and, if you do, the less you are likely to lose. Just remember – the past doesn’t necessarily predict the future. However, it’s not unreasonable to use it as a guide. Beyond the Dow You’ll most likely invest in a bigger basket than the Dow. You’ll also probably want to invest in more than just U.S. stocks. You’ll also almost certainly invest in bonds and other assets. As a general rule, the more diversified you are, the more likely longer time periods will work in your favor – even beyond what we’ve shown here. You, CIO Here’s something we can’t possibly emphasize enough – no one will look after your money like you will. You are the Chief Investment Officer for you and your family. So it’s important to understand investing basics. DIY doesn’t work Having said that, do-it-yourself investing doesn’t work well for most of us. So plan to outsource and inspect. Your most critical decision, then, is the hiring decision. You’re not trying to figure out specific stocks to buy, how to allocate your assets among stocks, and those kinds of decisions. Turning to professionals With full knowledge of investing basics, you’re ready to work with a certified financial planner to help you plan your retirement portfolio. You’re also ready to invest in mutual funds with proven managers. Time is money in the bank As we saw with the Dow, time is money in your account. So keep investing – month after month or paycheck after paycheck. In times like these, you’ll get a sweet deal. The smart money is getting it too! You’re buying low so you can sell high later. That puts time on your side! ___ Get the tips and tools you need to be a BIGG success! Subscribe to the Bigg Success Weekly – it’s FREE! ___ Subscribe to The Bigg Success Show in iTunes.  Subscribe to the Bigg Success feed. Related posts Squirrels, Nuts and Business Cycles 6 Easy Steps To Financial Freedom (Image by vuk011) Direct link to audio file: http://cdn3.libsyn.com/biggsuccess/00242-101408.mp3?nvb=20081014021845&nva=20081015021845&t =0490b5c27f5cc6e9d7402 Less

People who find joy in bad news have to be pretty happy lately. The financial crisis has dominated the news, as we watch Wall Street and Washington scramble. ___ ___ We don’t usually do this – in fact, we’ve never done it in the 230 shows we’ve done so far. But this subject is so important and so timely. So we want to share some valuable information that our newsletter subscribers received in their In boxes last Friday. In the last edition of The Bigg Success Weekly, we discussed “Profiting from Panic”. It was about maintaining the proper mindset in the midst of all this turmoil. We started with the safety net that exists for depositors, investors, and insureds. Here are some links directly to pages that can answer your questions about banks, brokers, and insurers in a hurry.  Banks In general, banks are insured by the Federal Deposit Insurance Corporation (FDIC). However, not all money invested through banks is insured. What would happen if your bank failed? If you have accounts with a failed bank, what should you do? How can you obtain a release of lien, if a failed institution is your lienholder? The following links provide the answers to all of these questions: What is the FDIC A Guide to What Is and Is Not Protected by FDIC Insurance FDIC Bank Find (make sure your institution is FDIC insured) When a Bank Fails- Facts for Depositors, Creditors, and Borrowers Is My Account Fully Insured? Obtaining a Lien Release Brokers Accounts with brokerage firms also offer some protection through the Securities Investor Protection Corporation (SIPC). The coverage isn't anything like that offered by the FDIC, but it's still important to know what remedies might be available to you.  How SIPC Protects You Insurers While banks and brokers have federal backing, insurance companies have backing through associations at the state level. The National Conference of Insurance Guaranty Funds If your insurance company fails, you'll want to contact your state's Department of Insurance, since insurance companies are overseen by that department in each state in which they operate. Click here for a directory of each state's office.  Your State's Department of Insurance or Guaranty Association Two billionaires, two eras, one mindset Warren Buffett, the richest man in the world according to Forbes, recently invested $5 billion in Goldman Sachs, in the midst of all this turmoil. That’s pretty typical of how he’s made his fortune – he says he’s “fearful when others are greedy and greedy when others are fearful.” He has also opined, “We want to do business in [a pessimistic] environment, not because we like pessimism but because we like the prices it produces.”   From: The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor, by Robert Hagstrom, Jr.  Warren Buffett is not alone. J. Paul Getty was one of the first billionaires and the richest man in the world in his day, according to The Guinness Book of World Records. He said, “I began buying stocks at the depths of the [Great] Depression. Prices were at their lowest, and there weren’t many stock buyers around. Most people with money to invest were unable to see the forest of potential profit for the multitudinous trees of their largely baseless fears.” He went on to say that he made over 100 times his investment on many of these stocks! From: How To Be Rich, by J. Paul Getty. Our best strategy So we can learn from these two men that we shouldn’t panic, even in turbulent times. Now, you may not want to rush out and buy a bunch of stocks. However, you probably shouldn’t sell out right now either. These two billionaires made a fortune by going against grain. So keep making those 401(k) contributions. By investing consistently over time – paycheck by paycheck – you’re dollar-cost averaging into the market. In bad times, you’ll buy more shares with the same money than you can in good times – just like the billionaires.  Above all – diversify, diversify, diversify. Diversification is one of the four key investment principles, according to William Sharpe, a Nobel Prize winning financial economist. Our newsletter subscribers read about these as well as some ideas to simply put them into practice. Today, more than ever, it’s important for you to take on the role of Chief Investment Officer for you and your family. You can’t count on Wall Street or Washington to do it for you! ___ If you would like to get the newsletter we’ve referred to here, just e-mail us: bigginfo@biggsuccess.com, with “Profiting from Panic” in the subject line. We’ll send it to you and sign you up for The Bigg Success Weekly! ___ Next time, we’ll discuss why it’s so important to move beyond personal productivity. Until then, here’s to your bigg success!  Subscribe to The Bigg Success Show in iTunes.  Subscribe to the Bigg Success feed. Related posts Why Your Brain May Not Be the Best Money Manager Getting Aggressively Passive: Creating A Passive Income That Sets You Free Recession Progression Warren Buffet's Single Piece of Wisdom Want to be a Millionaire? Here's How to Think Like One (Image by PocketAces) Less

The phrase “perfect storm” has been used more recently than when the movie was out! Here in the United States, we’re being hit with rising costs, falling home prices, volatile stock prices, the subcrime (oops, make that subprime) mortgage crisis, and talk of a possible recession. Recently, we discussed why cashing out a 401(k) is one of the worst things to do in response to these tough times. Today, we want to discuss cutting back on contributions to a retirement plan. Two to three months ago, the word was that people weren’t reducing the investments they make for their golden years. .  .  Even now, the overwhelming majority of people aren’t making any changes. However, there is evidence that more people are considering (or are) cutting back. It’s certainly understandable – insurance, groceries, gas, taxes all keep going up. Investing less in a 401(k) is a way to put more dollars into a paycheck now. 3 reasons not to cut back on your 401(k) #1 – Contributions are made with pre-tax dollars – Assume you’ve been contributing $1,000 a year to your 401(k). You stop making contributions so one would think that would mean $1,000 more in your paychecks over the course of the year. But you have to account for taxes – if you’re in the 30% tax bracket, you’ll owe $300 in taxes on this $1,000. So you’ll only net $700 by stopping your contributions. #2 – Money accumulates tax-deferred – With your retirement plan, money is compounding on money on top of more money. And since you don’t pay any taxes on it until you take it out, all of your money keeps working for you, rather than paying a part of it every year in taxes (and therefore having less money to accumulate on top of). #3 – Employer match – Employers match as much as 100%, up to some limit. So say, for example, you contribute 3% of your salary and your employer matches that. It’s like found money … your employer is guaranteeing you a 100% return on your initial investment. Now granted, this is part of your overall compensation. However, we often look at our tax refunds as found money, when it is just a return of an overpayment. This is truly found money – the employer is giving you money as long as you invest up to the maximum. It’s your choice. Cutting back could cost you $53,551 Consider a fictional 30-year old woman who has been investing 3% of her $50,000 salary, with her employer matching it 100%. Money is tight, so she decides that she will stop investing for three years. This $125 invested for just three years, and then left alone until she retired (at age 62) would have grown to $53,551, if she earned just 6% on her money. So if she invested just 3% of her salary for the next 3 years, it would grow to 108% of her salary when she retires. A small amount of money now makes a huge difference in the long term. So at least try to keep investing as much as your employer matches because you get a huge boost in your portfolio by hitting that target. Until next time, here’s to your bigg success! Related posts 63 Moves to Stop Living from Paycheck to Paycheck Don't Make This Costly Mistake  (Image by srbichara) ShareThis Less

The financial news seems to be all gloom and doom these days. The reports are that we’re not in a recession, but times are tough for a lot of people. No matter how tight things get, we still have bills to pay. People are responding to this very intelligently. They’re turning to public transportation, eating out less, seeking cheaper forms of entertainment, and cutting back on unneeded items. But what do you do if that isn’t enough? .  .  Tapping your retirement plan … It’s tempting to pull money out of your retirement plan, like a 401(k), especially if you change jobs. In fact, about 40 percent of job changers in their twenties and thirties have done just that, according to a recent report by the Financial Industry Regulatory Authority (FINRA). … could cost you $130,000 … If you’re under 59½, it’s usually not a good idea to cash out your retirement plan. Let’s look at the example that FINRA used: You’re 30-years old with $20,000 in your 401(k). If you earn just 6% on that money until you retire at 62, you’ll have nearly $130,000 in your account, without making any additional contributions. … and then some! Of course, you can start over. But you lose the power of money compounding on top of money on top of more money, all accumulating tax free until you take it out. So it’s like taking at least two steps backward. But that’s not all. Here are 4 other steps back: You’ll have to pay income taxes out of this money, since it was invested pre-tax. There’s also a 10 percent penalty for early withdrawal (unless you’re over 59½) Your employer is required to withhold 20 percent toward income taxes. If you owe money, your creditors can’t touch your 401(k) unless you cash it out. By the time you get a check, that $20,000 will probably be more like $14,000 net of everything. So cashing out of your retirement plan is a short-term solution with long-term consequences.  Subscribe to The Bigg Success Show in iTunes.  Subscribe to the Bigg Success feed. Related posts 63 Moves to Stop Living from Paycheck to Paycheck Don't Make This Costly Mistake  (Image by nighthawk7) ShareThis Less

Morningstar, one of the most respected names in financial information, recently held their annual investment conference. There was a great deal of discussion about the volatility of the market and how jittery it’s making many investors. Jittery investors like to do something, but the problem is they don’t make the best decisions in troubling times.   We have met the enemy! One of the speakers was Jason Zweig, who is also the author of Your Money and Your Brain. Our brains can be our own worst enemies when it comes to investing. He said there are two parts of our brain – the reflexive (emotional) part and the reflective (logical) part. The emotional side is ever-present; we have to consciously call upon the logical part. Obviously, we want to buy low and sell high. The problem is, with the emotional part of our brains running rampant, we may tend to buy high and sell low! So don’t get in a hurry to sell in times like these. Stay the course if your investment horizon is five or more years, because research shows that a broad portfolio of stocks tends to go up as long as you hold them for five years or more. If you need the money (e.g. you plan to retire or send a kid to college) within the next few years, talk to your investment advisor to determine your best move. You can make money with a stock that goes nowhere! Let’s say that you have $100 to invest each month. You decide to invest it in a broad index fund (e.g. the S&P 500). NOW: Assume that shares of that fund are selling for $20 right now. So you buy 5 shares. Month 1: Assume the price falls 50% to $10 per share. But you keep investing. You buy 10 more shares with your $100 monthly contribution. So you’ve invested $200 total and your 15 shares are worth $150. You’re in the red. But you don’t care – you’re in it for the long-term! Month 2: Assume shares of this fund are now selling for $20 again. With your $100 monthly investment, you buy 5 more shares bringing your total to 20 shares, worth $400. But you’ve only invested $300. You’re $100 ahead, even though the share price is the same as it was when you started! Reacting logically may mean not reacting at all! It’s very difficult (if not impossible) to predict what the stock market will do. However, research has shown time and again that staying the course is usually the most profitable path for most people. It’s understandable that you might be worried right now with the market being so turbulent. But don’t panic – react logically … which may mean not reacting at all! Subscribe to The Bigg Success Show in iTunes.  Subscribe to the Bigg Success   Related posts  Getting Aggressively Passive: Creating A Passive Income That Sets You Free How To Get Rich 6 Easy Steps To Financial Freedom (Image by woodsy) ShareThis Less

Image via Wikipedia FAP827: Student credit cards, coffee scholarship, Free stuff Friday Listen now: Student Financial Aid News + Chronicle: Attorney General Andrew M. Cuomo of New York hopes to have completed by this fall an investigation into the relationships between credit-card companies and college officials, according to Benjamin Lawsky, deputy counselor to Mr. Cuomo, who previously investigated questionable ties between student loan companies and financial-aid officials. + Mr. Lawsky testified at a hearing today of the House consumer-credit subcommittee in which members considered various ways to reduce students’ credit-card debt and misuse. Panelists, including Mr. Lawsky, sketched a scenario in which students are taken advantage of by predatory companies, who offer free gifts and withhold important information about payments and rates to students who apply for credit cards. + Check out our student credit card guide at StudentPlatinum.com + Inside Higher Ed: It’s that rare story involving a pig, a taser and a happy ending. For weeks now, Colby College officials and Maine authorities have been trying to capture a runaway pot-bellied pig that escaped from its owner, a student, at a picnic. The pig was roaming the campus and managed to elude capture with nets. Local press coverage has been extensive. This week, the pig was enjoying a snack of some French fries offered by an area resident who called the police. The Morning Sentinel reported that the person who shared the fries also called the police, who used a taser to stun the pig, leading to the pig’s capture and ending a month of freedom for the animal. While the pig will not be continuing on at Colby, it will stay in education, and has been adopted by a preschool. Scholarship Update + Maxwell House Minority Scholarship + ELIGIBILITY: Applicants must be minority high school students or graduates from New York, Philadelphia, Detroit, Chicago, St. Louis, Baltimore, or Newark. Applicants must be willing to attend one of the black colleges participating in their local black college fairs. + AMOUNT: $3,000 + Details at our free college scholarship search site Free Stuff Friday + CL Desktop - visual Craiglist shopping tool - I’m checking out the free stuff in Boston category by photo - VERY useful! + WebKut - application to make a PDF of any web page - also very useful! + Fotobooth and iSpy - two other free apps + Free Prima J tank top at Wet Seal + Free pack of Stride gum + Updated info on the free credit reporting from Transunion + Google Finance adds NYSE quotes in real-time + Evernote has a Mac desktop application now + Boxee is a Tivo style interface with social stuff + Stupid fun: make a radiation shield from your cell phone out of a Red Bull can Free Song of the Week + Geoff Smith, Bohemian Financial Rhapsody Did you enjoy today’s show? If so, please consider subscribing for free to get it delivered to you . Subscribing for free means you don’t have to remember to download it every day. + + + Direct MP3 file download: Click here to download the MP3 Reminders + + Financial Aid Podcast Show Notes at FinancialAidPodcast.com. + Free scholarship search secrets eBook at StudentScholarshipSearch.com/ebook + Open an FDIC-insured savings account today! + Private student loans available at any time - visit AlternativeStudentLoan.com + Student credit card information at StudentPlatinum.com + FAFSA form tutorials and free help at FAFSAonline.com + Financial Aid discussion forums + Get FAFSA news at the FAFSA blog + Stafford federal student loans at StaffordLoan.com + The Financial Aid Podcast is a publication of the Student Loan Network. I want to hear from you! Email me at financialaidpodcast {at} gmail {dot} com, visit http://www.FinancialAidPodcast.com, or call 206-350-1208. ShareThis Less

It’s easier to find stuff ! More wacky personal finance video . More mobile blogging . More DC social media . And where Friday’s Fiscal Tickle continues each week. Stop by anytime. You’re always welcome at the new digs ! Less

New shoes, new iMac, & old cash worries: It’s fun spending cash reserved for emergencies. Even more than fun - it’s bloody easy! It’s easy to break discipline & access those dollars meant to protect from rainy days. But since that approach has made my family more vulnerable financially, it’s time to rethink. The short-term benefits of a change are clear. Emergency cash reserves & chess: create the pawns After 7.5 years of marriage, these prove true: if we have only one stash of cash, we’ll spend it. It matters not if it’s reserved for emergencies. We’ll spend it on non-urgent desires. Do these desires help us be more effective sometimes? You bet. But occasionally our compulsion runs rampant. it’s time to view emergency reserves like a chess queen and find ways to protect her. thus it’s time to create the ‘chess pawns’ in our personal finance life. The Pawns are the soul of the game. -Francois Philidor For the past few months, I’ve tested a new strategy. And it’s producing positive results for Sean and me. The goals are two-fold: truly learn to reserve emergency funds for unforeseen, urgent cases; and next, create a system to enable that habit. Here’s what we did: set-up (10) online sub-savings accounts via ING Direct, in addition to our main emergency cash reserves account. These are metaphorically ‘chess pawns’ protecting the emergency cash ‘queen’. In the past, we dipped into cash reserves for these reasons; so we decided to designate sub-accounts to ideally prevent future dipping. each month, monies direct to these sub-accounts i.e. medical/dental; clothes/dry cleaning; annual visit to parents; pet care; computer/tech; family gifts; books/education; condo; Alaskan trip for parents by 2012; relocation expenses. each pay cycle, 12% auto-deposits into emergency cash savings with app. 3% funneling to the sub-account buckets. And so far for one business quarter, the emergency bucket has stabilized and steadily increased since we use those other sub-accounts for spending choices. Hooray! Note: at least so far, we don’t necessarily spend monies each month that were allocated to those sub-accounts. Yet if for example my husband needs Ruby on Rails books for his coding library, he has accessible, dedicated funds for that decision. Pawns, marriage partners, & the psycho-summary: It’s just another way to budget. But the tangible existence of these ‘pawn’ sub-accounts has helped us stay on track with building emergency cash. And it’s helped to clarify spending priorities. It’s working too from a psychological perspective aka it’s less stressful in the guilt department. In the past, I’d mentally beat up on my husband and me for dipping into emergency reserves for play or even basic needs like new shoes (…to replace that broken heel). Footnote: guilt drains marital trust and fun for sure! More from: Housewifery & another whacky point along our rainy-day cash quest; The Simple Dollar’s tact to emergency reserves; Emergency Preparedness Tips & your cash (use the freezer?); MSN & the ever frank Liz Pulliam Weston on learning financial flexibility for tough times. Less

Some of the smartest people in the world work on Wall Street. Yet the news is ripe with Wall Street’s woes. Today, we’ll discuss some lessons that you can learn from their mistakes. We talked with Jake Novak on The Bigg Success Show. He shared his five signs that you’re managing your money like Wall Street. You can hear all of the fun if you listen to the show. About Jake Novak Jake is a comedy writer whose material is used by more than 100 radio stations across the world! His humor is also featured in weekly columns in Newsday and The Jewish Week. When Jake's not making people laugh, he teaches Journalism at New York University. Jake is also with the recently-launched Fox Business Network. Top 5 Signs You’re Managing Your Money Like Wall Street #5 – You'd run up huge debts on your credit cards, then demand that the government forgive those debts, cut interest rates, and then send you and everyone else you know checks for $600. #4 – You'd hire someone to handle your finances, and even after he failed miserably, you would give him a $100 million severance bonus. Then you'd prove you learned from that mistake by hiring a new financial advisor with a guaranteed severance of at least $200 million. #3 – After losing your shirt in a string of bad investments, you'd immediately go on a crusade to convince all your neighbors that your problems are their problems too. CNBC would give you as much air time as you want to get that message across.  #2 – You'd spend 364 days a year exaggerating how rich you are, then spend all of tax day telling the government you haven't made a dollar all year. #1 – After going over your finances and finding you're nearly broke, you decide to blow your last dollars getting the local little league baseball field named after you. Lessons Beware of following the herd. The herd often gets over-exuberant. Smart investors often do the opposite. We recently wrote an article on how John Paulson made $3 billion last year [article, 169] with his hedge fund doing just this. Don’t pay more taxes than you owe. You must pay taxes, but you don’t have to pay a dollar more than you owe. Studies of Main Street millionaires show that they take tax planning seriously. Take a lesson from Wall Street and Main Street – hire a good tax planner! Watch your debt load. Don’t buy it unless you can pay cash. If you do use a credit card, pay it off in full every month. If you can’t do that, you can’t afford it. After all, YOU can’t count on the government to bail you out! Look out for ego boosters. Forget the little league field. Dump the stock when your company gets their name on a major league stadium. That’s just one of the signs that the CEO is likely building his or her legacy, not your nest egg! If you’ve laughed with the lessons learned today, share it with a friend! Our bigg quote today is by the writer Gertrude Stein. “Money is always there but the pockets change.”   In every market, there are winners and there are losers. Use these tips so you end up with more than pocket change. Tomorrow is Valentine’s Day so we’ll discuss the heads-up way to follow your heart. We give a bigg thanks to Jake Novak for sharing his wit and wisdom with us today! Until next time, here’s to your bigg success. ShareThis Less

photo by Lois Raimondo, Washington Post, 2/10/08 What a blast! It was published today, in the Washington Post’s business section — with our happy mugs below the fold (& as the second photo in the online slideshow). Talking with Post reporter Nancy Trejos was a comfortable, positive experience. She expressed a lot of interest in different facets of family finance, especially in the face of a slowing economy & home sales . Thanks Shashi Bellamkonda for connecting Nancy, Sean, & me. More from: Awesome mind & equally so husband Sean Stickle with his feedback to the Post’s interpretation of our interview; U.S. News & the premise we’re convincing ourselves of a weak economy despite indicators of stability; Business Week’s podcast with ActionCoach CEO Brad Sugars on how we can thrive in slower economic times, especially small biz. Less

The history of sin stocks shows consistent or even strong performance in downturned stock markets. I grow more and more willing to embrace imperfection & inconsistency, especially when it relates to my own character (& the stock market). But heck, I don’t know if my moral code - whatever the heck it is - can bank on humanity’s weakness. And that type of hesitancy can make those more willing some big bucks. Where do you stand on investing in people’s vices? More from: Science Daily’s take on sin stocks & moral judgment; Kiplinger & their insight into how vice stocks can be virtuous in a very bear market. Less

“Mrs. Foster, you & your husband should save at least $5million for retirement…at least!” [THUNK] That’s my psychological (& literal) piggy bank passing out from that advice. Most all financial planners I met with last year suggested $5million be our retirement savings target (east coast). What the SAM HECK do we need to save that amount for?! I’ll calm my drama-momma attitude … & attempt to answer with some calm. Feel free adding ideas to this list: Longevity (age 100 to be commonplace) Health care (allocate $150k-200k for health care costs excluding long term care) Inflation Housing (assuming a paid-in-full home, consider property tax per US Treasury) Food Fun (one trip annually) With above factored in the equation — leaving $1k/mo for health care costs during retirement — our current retirement savings quest is $2.5million. It makes financial planners smirk but, although hefty it’s an aggressive goal that doesn’t leave my mental or literal piggy bank in shock. More from: FreeMoneyFinance writes on the $5million topic with an active discussion thread; Less

It could’ve been a winning green initiative: educating customers on energy-efficient CFL light bulbs. Yet instead, a Maryland power company’s approach has left a green campaign wanting — and their customers screaming mail fraud. More from: An Allegheny Power customer in the thick of it, Jimmy Gardner reports at East Coast Blogging. Less

I heard that as a kid growing up from Oklahoma relatives - said when it was really time to tell the truth! I love it. And for whatever reason, it surmounts my agnosticism & paraphrases the need for honesty to this day. In that spirit…: Life balance goals met & missed (2006 vs 2007) Come to Jesus 2006: -on dining out: spent $11k (what's that phrase…'ignorance is bliss'?!) -on cooking for family: avoided learning how -on retirement savings: had diddle for a plan -on spending habits: didn't have a clue -on tax protection: accrued $7k tax bill (paid for via credit card…gulp) Come to Jesus 2007: -on dining out: cut that puppy DOWN & roughly ended year spending app. $1.5k -on cooking for family: learned! We spent app. $5k on groceries this year. And my husband was fantastic in brainstorming ideas & being patient with sometimes a very smoky home (I'd like to think my self-esteem is pretty strong being 37 and admitting this … or just SILLY) -on retirement savings: met with financial planners & invested 12% income toward a specific plan (as in we now know 'the number' to save for by retirement age). I disagreed with some planners' suggestion on how much to save for. More on that later. -on spending habits: set an actual plan and more regularly audited habits via Quicken. Frankly I didn't audit them habitually. I attempted tracking via our spending plan which wasn't comprehensive. It's time for me to buck up and do that download account process per Quicken. -on tax protection: our pre-tax retirement contributions lowered our taxable income; I also worked from home (resigned from high stress management job & made far less money). That fact as pros & cons but it was a great year for re-gaining sanity, renewing/building communities online and off, & gaining a few clients. And the reduced stress enhanced the marriage (ain't that right honey??). NOTE: That $7k tax bill balance decreased some (see below). The main goal for 2008 is two-fold: to completely pay-off that '06 puke-vomit-ick-tax-bill (paid for via credit card in '07) and to build six months worth of savings. QUESTION TO YOU: What life balance/personal finance goal motivates you for 2008? …Any come-to-Jesus moments of your own last year? HAPPY NEW YEAR! And thanks for your ideas & motivation throughout last year. Your insight and humor strengthened resolve. MORE FROM: -Get Rich Slowly shares factory worker's story to millionaire retirement. This guy's simple, prudent decisions inspire! - Playful, honest journey through spending plans at Budgeting Babe; -Clear, actionable approach for starting 2008 … Chirs Brogan shares (3) words that help him decide or decline next steps. Less

Good ‘ole Drakestail keeps saying the same phrase throughout the story, most seriously toward the King who owes Drakestail cash. Quack! Quack! Quack! When shall I get my money back? That’s how I feel when seeing our investments take dives with the shaky Dow lately. Wise folks emphasize the long view when investing which I intellectually support and understand. But Holy Smokes I’ve really become addicted to torturing myself by looking daily at our accounts’ performance. And it’s a habit I’VE GOT to break less I go bonkers. So I laughed out load reading Drakestail over the weekend (…sucker for fairy tales which of note I didn’t become until after age 30). I emotionally, desperately wanted to some how chase the stock market as if it was an actual person - or the would be King being chased by Drakestail - and demand our lost investments back. Alas the personal finance blogosphere has been AWESOME in rejuvenating and stabilizing my investment outlook. Take the long view sista. If Drakestail were real and here today, he might say…: QUACK QUACK QUACK THINK LONG TERM ON YOUR MONEY TRACK! More From: The goddess of all things financially independent on how her portfolio continues to thrive despite current market pukeville. Less

So it’s time to take ownership & aim big. I remember once being fearless in the face of challenges and dreams — going after them was the fun rush of life. Then on the financial front - I learned how much it costs to retire, to retire with decent health care protection, to raise children and their education, to run one’s own business, and more …. my momentum to achieve sobered-up. Why is that? Maybe it’s just looking at too much at once -vs- one step at a time. Maybe it’s taking one’s self too seriously. Maybe dreams were too high with resources & energy too low. Is it even possible to have dreams too high? …a mix of all likely but here’s the sitch: family members need our help. They’d never, ever ask for financial support. But bottom line, their situations are precarious & their means too small to evoke stability on their own. My judgment could be off but after reviewing all up, down, and sideways my husband and I agree taking action helps more than fretting. And results just don’t fall from the sky. So can we realistically help? yes. Can we preserve our basic needs & personal savings plan too? yes. So is it time for a plan? Yes and here it is: $1million by 2012 (that’s $1million in overall paper value vs net). It makes my stomach tight writing this out, tight as in nervous. But Jonny Goldstein just published his big dream. And his resolve and zeal are contagious. So here it is: Summary of Intent: We are millionaires by 2012. By that year, we will have built our financial wealth to at least $1million through dedicated & united partnership to include: multiple income streams, property ownership in secondary cities, tax control, & wealth protection. Our love of life motivates this intent - and our family, whom we most dearly want to help. It’s posted at our desks. …along with the plan, the numbers, the benchmarks, a list of mentors (…need to contact them), & somewhere deep down is something that feels like resolve. More from: Todd Duncan on innovation & reconciling your inner dreamer & inner realist; KeyBank & their fresh reminder on making financial goals quantifiable & specific ; CNNMoney’s nice intro to self-directed IRAs; I/we haven’t built one yet but benefits seem overt. Less

It’s been a fantastic whirlwind with out of town family visiting this week. Housewifery will continue to track zany realities in personal finance (and more!) later this week. Until then, stay true & stay frugal! Less