Lazy Man and Money

Dog Day Care or Not Dog Day Care…

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That is the question…
Whether ’tis nobler in the mind to suffer
The slings and arrows of financial ruin,
Or take arms against a sea of barks and bites…

(Thanks for sticking around while I get a little pseudo-Shakespeare out of my system. I should be good now for the next 5 years.)

The wife and I are going on vacation to see family in Boston at the end of next week. We thought about bringing Jacoby, our dog, but transferring a dog 3,000 miles for a week is tough. We’d be limited to certain hotels and certain activities where dogs are acceptable. We looked into boarding him and found that Doggyville was the place for us. They partnered with the rescue that paired us with Jacoby and the reviews are awesome. (Oh and Chris, if you are reading this, can we get a discount on Jake’s boarding next week ;-) ).

Doggyville doesn’t want to board Cerberus, so they require a 10-15 minute introduction. It turns out that my work is 5 minutes away from Doggyville. My option was either drive a half hour with Jacoby for the introduction, bring Jacoby home, and drive back to work (ugh…) or pay the $35 for a day of dog care. I opted for the later.

I realize I left an important part of the story out. From 5:30-8:30 (both AM and PM), Jacoby is the most rambunctious dog ever. He’ll wake us up with gentle pawing. If you ignore that he’ll “mouth” your hand, foot, whatever is convenient. I say “mouth” because he doesn’t crunch down as if he’s biting. He just wants to get your attention… all your attention. The only real cure we’ve seen for rambunctious dog is walking and trips to the dog park. Even those are more temporary treatments than cures.

However, Doggyville is different. I noticed a big change in Jacoby after his Doggyville visit. He got in the car at 6:00PM (the start of his attention-seeking schedule) and crawled to the backseat and just sat down… for the whole ride. We got home and he walked over to my wife’s feet and curled up in a ball at them. She asked if maybe Doggieville gave us the wrong dog back. Jacoby was so well-behaved, I felt like pushing my luck and asking him to fetch my slippers.

This brings up the question I started with… dog day care or no dog day care? If we buy a bulk package we can get the price per day (7AM-7PM) to about $27. If you were to extrapolate that for a month you’d be spending $810 or nearly $10,000 a year. Obviously we wouldn’t do it that much, but it still gets expensive quickly. On the other hand, having a few hours where a puppy isn’t begging for attention is big. It’s also good socialization of Jacoby.

So my wife and I are thinking about a once a week dog day care. Anyone go the dog day care route? Thoughts?

Helping Parents Cope with Damage to their Retirement Nest Egg

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The following is a guest post from Mr. GoTo, a baby boomer who blogs at Go To Retirement. On a personal note, I’ll be taking advantage of the “email this” button below and send it to my own mother. I hope you will join me and do the same. And don’t forget to subscribe to Mr. GoTo’s RSS feed here.

Do you have parents who are retired or who are baby boomers in the home stretch toward retirement? Like so many others, have your parents suffered significant damage to their retirement nest eggs? If so, you may not fully understand how that damage may have negatively impacted the mental and emotional outlook that your parents have toward their financial future.

Adult children can be a source of support and advice during this time. Compared to your parents, you may be optimistic because your investing horizon is much longer than that of your parents. You probably have greater emotional and mental resiliency that enables better coping skills. Your job is to carefully and lovingly apply those attributes in a way that can benefit your parents’ situation.

I am a baby boomer in the retirement home stretch. My retirement portfolio lost 21% last year and I am one of the lucky ones. Both of my parents are still alive. Fortunately, they are financially comfortable but worried nevertheless about their future.

Here are my suggestions for ways in which you can help your parents with retirement nest egg damage control.

  1. Gently encourage your parents to confront the damage. – You know they are thinking about it. You also suspect they may be stressing about it. Ignoring the problem is bad for their financial health. The stress is bad for their physical and mental health. How do you bring it up? My recommendation is to find a relatively private moment with your parents. Then choose that moment to openly talk about how the market downturn has affected you. That may prompt them to share their feelings. If not, ask them. After you have shared your story of market damage, just ask them how things have gone for them.
  2. Send your parents for a consultation with a fee-only planner. – If your parents are like most baby boomers and retirees, they are not receiving professional advice about retirement investing and planning. Now is the time to change that. You can help by making the arrangements and, if necessary, offer to pay for the consultation. Just be sure you do your due diligence on selecting a fee-only planner who is comfortable working with folks who are like your parents. To find a fee-only planner, check the and National Association of Personal Financial Advisors. Assure your parents that meeting with a financial planner is like meeting with a physician or other professional. They have a problem that needs fixing. The planner is the one who can provide a fix.
  3. Don’t let your parents turn to credit cards. – It should go without saying that adding debt to an existing financial problem is to be strongly discouraged. If you think your parents might be inclined in this direction, time for another preemptive strike. Talk about all of the credit card offers that keep arriving in your mailbox and how crazy that is considering what’s happening with our economy.
  4. Don’t let them take on excessive investment risk. – A natural reaction to suffering market losses is to move money into riskier investments. Sort of like doubling your bets in Vegas. I don’t recommend this strategy. Chasing the “next big thing” alternative investment is like rolling the dice. It’s time to get smarter about asset allocations, not take on more risk.
  5. Evaluate and adjust their retirement withdrawal rate. – If your parents are already retired and dependent on income from investments to live, encourage them to reconsider and decrease their withdrawal rate. This may require a spending reduction but that beats running out of money completely. I would encourage them to use one of the free financial planning tools and run some “what if” scenarios. A newer one that I have tried and seems to work well is Financial Fate. This is a downloadable (free) software tool. You may need to help your parents set it up and use it.
  6. Have them consider a fixed annuity. – If your parents are in a panic about having a sustainable income and still have retirement savings to provide that income, now may be a good time to have them consider other retirement income sources. A logical place to look is in immediate or deferred fixed annuities. To put this issue in front of them, send them a link to Immediate Annuities where it is very easy to run numbers on different annuity purchase and payout options. Although a fixed annuity may not be the perfect use of your parents’ money, if that guaranteed income relieves stress, it may be worth it.
  7. Suggest Downsizing – Lots of baby boomers and retirees have most of their net worth tied up into where they live. If that’s the case with your parents, it may be time to look at downsizing. When I say “downsize” I mean finding a place to live where your parents can free up equity to invest and lower their cost of living. Sometimes this requires a geographical re-location as well. For some, this is considered a desperate strategy but it shouldn’t be. Downsizing and relocating for affordability is logical and doable. A way to get this issue in front of your parents is to send them a link to Sperlings Best Places where there is an abundance of information comparing different areas of the country, including that all-important cost of living.
  8. Offer a private reverse mortgage – If your parents are really in bad shape financially and need help from family, one way to provide that help with dignity is through a private reverse mortgage. If your parents have equity in their house (or expect to grow equity over time), you can offer to buy that equity. I suggest that you agree on a total sum that you will lend your parents, to be paid out monthly or quarterly. Have a lawyer draw up a promissory note and first or second deed of trust that protects you. The note is paid off (with interest) when your parents sell the house. If you are taking risk because the loan amount exceeds the available equity, then the documents should provide that you share in any increase in value of the house, even if it exceeds principal and interest owed. This may sound too business-like but I think it will help you and your parents accept the entire relationship with less guilt and embarrassment.

I hope that your parents don’t need help following a disastrous 2008. If they do, I hope these tips will assist you in providing that help.

If you want to read about retirement planning and retirement living, come visit me at Go To Retirement or subscribe to my RSS feed.

The Price of Injustice?

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I’m not usually one to write with such emotion as I do now. When I do, it’s universally about core personal finance beliefs – that’s not exactly the case now. I’d like to take a little space and a little of your attention to address a topic a little outside the box.

I was watching the Olympics tonight and I couldn’t help but cringe when I saw Alicia Sacramone get robbed of a bronze metal. For those who missed it, she had a great routine and landed everything extremely well. The winner of the bronze was a vaulter who made several mistakes according to the judges… her hands did not land in the vault in parallel (far from it), and she landed on her knees – a clear fall. Here’s the kicker – it was a very difficult routine – and the judges gave her a lot of points based on that. So is a difficult routine an automatic pass to a medal? Excuse me if I’m a little biased in supporting my fellow Massachusetts native.

I know I should give a personal finance angle to everything on this site. Do you have any idea how many thousands that the Olympic hopefuls pay for training? Here’s a hint, it’s many – many thousands. Some families use up their life savings to give their children a chance for glory. I can’t fault that. It feels like a gamble – an educated gamble and one that can pay off… think about Michael Phelps’ endorsements…

I have to wonder what might become of Alicia Sacramone… she had some problems in the team gymnastics round, but performed well and was considered to be “robbed” by a few Olympic experts in her individual event. I can only hope that Mr. Destiny can show her the light.

Snowforting: Snowflaking an Emergency Fund

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snow-fort.jpgThere are lot of metaphors in the world of personal finance. If you want to be a personal financial guru, you have to have one. Robert Kiyosaki has his Rich Dad, Poor Dad. David Bach has the Latte Factor. Dave Ramsey has his Debt Snowball.

David Bach’s Latte Factor is the practice of looking at the small things you spend your money on every day and see whether you could redirect that spending to yourself. A personal finance guy defined the “debt snowball” as when you pay off the smallest debt first to create the greatest momentum in your debt snowball. Recently Paid Twice has sparked a snowflake revolution with her snowflaking primer, originally taken from an iVillage Message Board. Paid Twice explains how she snowflakes as “I also try to collect up little bits of money wherever I can and I apply those as well to my top priority debt as immediately as possible.” If you think about it, the idea is simply the combination of the Latte Factor and the Debt Snowball. Why it’s not called a Latte Snowball mystifies me to this day – it must be due to copyright issues.

Yesterday, Brip Blap coined the term wealthstreaming – or snowflaking for income. (I think he should have gone with wealthflurrying to keep with the snow theme) His idea with wealthstreaming is to have multiple income streams. A bunch of small streams is better than one large one – diversification is the key. I didn’t have a fancy word for it, but the concept was similar to the first post I’ve written for Prosper’s Blog.

I realize that Lazy Man and Money is going to nowhere if I don’t coin a term and/or champion a cause. So today, I’d like to introduce you to snowforting. Snowforting is the practice of building an emergency fund from little bits of money (snowflakes) from savings wherever you may find them. The more snowflakes that you add to your emergency fund, the stronger your snowfort becomes. Get a strong enough snowfort and you can shelter yourself from nearly any emergency.

Over the last 20 months my wife and I have built an 8-month snowfort. We are looking to build that up to a year. How strong is your snowfort?

Photo Credit: your neighborhood librarian