Kids Archives - Lazy Man and Money

What’s Your True Investment Rate?

July 31, 2019 by Lazy Man 6 Comments

Usually, when I start an article, I have an idea where it’s going until the end. This is not one of those articles.

Part of the reason is that things have been busy over the last couple of weeks. I’ll explain more in the monthly report, but our dog sitting has reached new records. At the same time, my wife has been spending more time office. I honestly feel like my kids, at age 5 and 6, are more competent than their camp director or counselors (but I try to go easy on them as managing many kids can’t be easy.) Finally, I’m feeling that summer is passing us by as it does every year. It will be back to school in about a month.

The topic of school is a large part of what I wanted to cover today, but first I want to review some FIRE basics. Most FIRE people would say that your savings rate is what impacts you the most about being able to FIRE (be Financially Independent and/or Retire Early). Some bloggers are saving as much as 50% of their income and investing it. With the power of compound interest and 10-20 years, they’ve got a nice nest egg to retire on. That would be a accurate, though oversimplified version of our financial situation.

Our situation is a lot more complicated with my irregular freelance, side hustles, and businesses (blogging and dog sitting), and our investment properties. For this reason, I don’t bother to calculate our savings rate. Instead, I’ve recented used a net worth growth to income ratio. They are both high numbers for us, so that’s a good thing. For most people a savings rate would be easier to calculate.

Spending vs. Saving vs. Investing

You’d think after blogging about these for 13 years, I’d be clearly able to delinate all these things. It’s not always so easy. In fact, there are mashups of them like “spaving”, which is loosely defined as spending money to save.

It possible to have a high savings rate, but not invest it. For example, maybe you love the safety of having cash in the bank, but it’s not paying a good interest rate. Technically, you may be investing on that savings account, but it’s called a savings account for a reason. A high savings rate doesn’t mean a high investing rate.

In our situation, we have a good savings rate. If anything, we may invest too much and it might be better to keep more liquid cash on hand.

I suspect that for most FIRE bloggers, once they get a nice cushion of liquid cash in their emergency, they invest a vast majority of the rest. When I read some blogs, it seems like most of that 50% gets invested. You’ll see the typical brokerage and retirement accounts mentioned: 401k, Roth IRA, SEP-IRA, TSP, solo 401k. Occassionally, you even see a 529 plan for bloggers with kids.

These are all great investment vehicles. We have them too. As explained above, we have a lot of unusual things about our financial lives.

What About “Invest in Yourself?”

For the last few years, we’ve paid around $30,000 a year for school. You may notice that I didn’t wrote “paid” not “spend.” What I really mean to say is that we invested an extra $30,000 in education.

With my wife graduating in about a week, we’ll be down to around $22,000 for the next few years for just the kids. My wife’s investment was for an MBA to add to her Pharm. D. (We’ve messed up our health system so bad that we are asking our pharmacists to have masters in business as well.) It’s too early to tell if that MBA will pay off, but the “powers that be” at her employment have seemed to change course on valuing it when it comes to promotion time. I could write another 3000 words on the topic, but it wouldn’t help anyone and possibly cause more problems.

If my wife moves on from the military to the private sector, the degree will have a large ROI. However, she may choose to just retire, now that she has her pension.

The other $22,000 is a private school for our two kids. We’re “spaving” a huge percent of the typical costs with my wife’s military status. It’s still a lot more than an average private elementary school. Obviously we think it’s an exceptional school. Would you pay half price if you got into Stanford or Harvard? It’s not an easy question at the elementary school level.

What if that money was put in a 529 plan? Almost everyone would agree that’s investing, right? So is this different? What if it leads to a scholarship down the line?

In almost all these cases, they qualify as the old adage of “investing in yourself”, except it’s literally the people closest to me.

It feels like the rest of the community would consider this as spending, no different than if we spent an extra $22,000 on a sports car.

However, if I were start to really calculate our savings rate and investing rate, I’d create a “True Investment Rate” that included school tuition. It’s not in a brokerage account, but that doesn’t mean it’s any less valuable.

What do you think? This is a complicated topic and I’m sure people have different feelings. I can see a lot of gray areas. Is a vacation to Paris museums an education investment? Are tennis lessons an investment?

In the end, I don’t think the characterizations matter. You are the judge of what’s the best value for your money. I find value internally knowing that the money is invested in personal development that matters deeply to us. For a long time, I felt like we should be saving even more in brokerage accounts or wondering why we don’t feel rich. Once I started to think of education spend as investing, my outlook changed dramatically.

My Kids Get Roth IRAs

May 5, 2019 by Lazy Man 9 Comments

My kids are getting a Roth IRA to jump-start them to an early retirement. How? Read On.

Yesterday, my dog walked me to a yard sale. I’m used to be walked places by him since he’s a sled dog. Rarely is there anything very interesting. This time was different:

Found a bunch of a games at a yard sale. Picked out 8 classics. The seller wanted a dollar a game. I offered a $20 and she was so excited. pic.twitter.com/15pn17PJew
— LazyManAndMoney (@LazyManAndMoney) April 28, 2019

Someone asked why I negotiated up at a yard sale. If someone is going to save me $50-60 in something that will give our family literally hundreds of hours of entertainment, I don’t mind giving him/her an extra Hamilton. It makes the seller’s day and keeps the money in the community. My day (with the savings) and my kids’ days were already happy. It’s a rare, feel-good case where everyone wins.

It was later that evening, during a family game of Rack-o where I had a revelation – my wife was going to win the game. I had a pretty poor board and I pinned myself into needing a couple of specific numbers. Although there were four of us playing, it was a simple matter of process of elimination…

… the other two players were my 5 and 6 year old sons. The game is 8+, so there were no expectations that they would be able to play a strategic game. So jokingly, said that they were a “couple of buffoons.” Everyone laughed because buffoon is a funny word, especially for a 5 and 6 year old.

That’s a long Grandpa Simpson Story way of saying that I hired my sons to do real work. I’m going to pay them real money. They’ll start funding their retirement plan this year.

Kids and Roth IRAs

It’s difficult for a child as young as ours to build wealth. They get money on birthdays and Christmas. Occasionally they give my wife a toy to sell on Ebay. We recently started to have them do some chores around the house for extra money.

Their ability to earn extra money is very limited. The US Internal Revenue Service (IRS) makes it clear that only earned income can be used for a Roth IRA. The problem is that my baby modeling idea never took off. I also don’t see people lining up to purchase their wonderful Pokemon art creations.

For a more detailed look at kids and Roth IRAs, CNBC has a helpful video. It’s especially powerful to see the amazing growth of compound interest over 55 years. Who wouldn’t want 3.4 million in one of their accounts?

So how are they going to earn this money to comply with the IRS’ demands for funding a Roth IRA. I’m going to pay them. Unfortunately, the IRS doesn’t let you pay them for household chores. For many people that’s a show-stopper for kids this age.

However, I make money dog sitting on Rover.com. It’s a very significant amount too since I can “double dip” at home doing other freelancing gigs.

I’ve been doing this for three and a half years now, so the kids have grown up with a couple of extra dogs around. They’ve become naturally curious about feeding dogs. They love to play fetch with the dogs. Recently, we’ve introduced them to picking up the dog droppings. It’s a chore that their peers do for allowance. However, for the family dog sitting business it’s a core part of the job.

Feeding dogs, playing with dogs, keeping the water bowl filled, and picking up after the dogs is most of the dog sitting job. These are all things that my kids can do. Occasionally I have to give them medicine, but that’s about the only thing that I need to do 100% myself. The IRS should have no issue with me subcontracting out some of the work to them. In fact, I did some math on what a professional pooper scooper company costs and it seems like it could be thousands a year for the amount of dogs we have and how often they’d have to come.

My kids are going to go into the dog sitting business. I haven’t figured out exactly what I will pay them. I think the professional pooper scooper service may be a good guide. My kids aren’t professionals, but the service doesn’t fill the water bowls or play with the dogs.

Contributing to a Roth IRA at this age is very, very powerful. Money grows quite a bit with 60 years of compounding until they reach ages 65 and 66. If they were to earn 7% interest over that long period of time, a single dollar would be nearly $58. So $1000 in a Roth IRA would be worth $58,000. Of course, at 3.5% inflation over that time, you’d need $7,878 to have the buying power of $1,000 today.

When you crunch those numbers, it gives them a real post-inflation gain of 7x their money. Theoretically, if they could earn the $6000 Roth IRA limit, they’d set themselves up with $42,000 in retirement. Of course, that would be an extreme amount of dog care and that wouldn’t be reasonable.

In addition to the Roth IRA, we’ll be paying them some real spending money. They are saving up for a Nintendo Switch, so we’re going to be creating a chart of their progress.

Finally, in the next couple of years, I’m hoping they can participate in some of blogging work. Perhaps later this year or next year, I’ll introduce a bi-weekly kids article. I’ll interview them and get their perspective on what money-related thoughts they have. I’ll then explore how we are parenting their use of money. This is just a seed of an idea. I need to think a little more about how this would work. Of course, I’d pay them for their time and insight.

Impact on Our Taxes

I have to check on this with our tax planning, but I think we’d make out well with this too. We’d be able to write off the amount we are paying, just as we would a professional service. Of course our kids would have to report the income, but it would be too low for them to be taxed on it. As best I can tell, this (small amount money) wouldn’t be taxed all and, since it is going into a Roth IRA would never be taxed.

I think it gets more complicated with them helping out with the blog since it’s an S-Corp. I may have to set-up payroll and things like that which get a little tricky. I’ll definitely need some professional tax guidance on that.

Again, I’m not sure if my understanding of that is accurate, so please check with your own tax professionals before trying anything like this.

After all, the real buffoon in the game was me. My 6 year old won handily.

This article contains affiliate links. I may receive compensation if you click on and choose to use one of the products or services.

The Best Educational Streaming Shows for Preschoolers

March 15, 2016 by Lazy Man 5 Comments

When my first son was born more than 3 years ago, I made it a point to not make this a parenting blog. While children change everything when it comes to money (and I’m happy to write about that), I simply didn’t want to give parenting tips. That’s not my strong suit anyway.

Over time, I’ve found myself, looking for more educational television for my 2 and 3 year old. I know some parents don’t believe in television for children, but I’m equal-opportunity when it comes to all learning formats. There’s a time and a place for books, television, tablets, and good old crayons and paper to teach letters, numbers, shapes… even foreign languages.

There was a time when parents had to accept whatever was on PBS at the time or buy VHS or DVDs of what they like. Fortunately, today we have on-demand, streaming media. Our Netflix and Amazon Prime subscriptions provide a ton of options at a great value.

I tried to find lists of the best educational shows online and couldn’t find any that I’d consider complete. Almost all of them get the obvious Daniel Tiger, but there are so many hidden gems. This list is going to focus on Netflix, because that’s where the majority of the best shows are. However, I’m going to slip in a couple of Amazon series that I think are top-notch as well.

I’d also like to add that Common Sense Media is excellent and often my first stop to read about a show. There’s almost too much information on the website that it is hard to best stuff. Admittedly, this is (obviously) one man’s opinion and shouldn’t be a substitute for the great work Common Sense Media does.

Animal Mechanicals – The focus is on 5 mythical animals living in a fantastic mechanical world. They solve very basic physic problems by working together and using their unique abilities (strength, stretching, flying, gizmos, and speed). Each of the characters have their own distinct personalities. My sons and I ended up loving this so much that we bought the DVD because it had episodes that weren’t on Netflix.
Super Why! – This is one of the only shows I’ve found to focus on reading. You can find shows on letters, but this really brings the whole words and reading to life. This isn’t exactly a hidden gem as it is still being regularly run on PBS.
Monster Math Squad – I found this simply by searching Netflix for “Math.” What a hidden gem! The monsters appear to be knock-offs of Pixar’s Monsters Inc., but I don’t care. These monsters teach math concepts! And when I was looking around to write up this article, I found there’s even an extensive teacher’s resource guideline online.
Special Agent Oso – The episodes are cleverly titled after Bond movies (but kid themed). The special agent bear teaches basic tasks in “3 simple steps.” I’m not sure my 3-year old is ready to mail a letter yet, but it was helpful for learning to brush teeth. Sadly, there’s Spanish as the Oso name may indicate.
LeapFrog (with LionsGate) – LeapFrog is known for its education material. The DVDs it produced a few years back are no exception. They are focused on letters, numbers, shapes, but extend to some math like simple adding and subtracting. I’m a big believer in STEM, so the math is a welcome addition.
Curious George – The majority of what you’ll find are the television shows. They are great, but it’s hard to pin down what they are really aiming to teach from a skill point-of-view. I’d say they teach life… if you happen to be a monkey where everything always comes up roses at the end. There’s a lot of problem solving and discovery which is priceless.
The real gem is the original movie with Will Ferrell and Drew Barrymore with music by Jack Johnson. For a kids movie, there’s a lot of entertainment for adults. They let Ferrell improv, his strength, and drew the movie to match it. It isn’t just his voice. Drew Barrymore is a voice of reason with the appropriate amount of Jessica Rabbit mixed in. (Was that too much information?) When I’m pulling apart pyramid schemes, I’m singing Upside Down and Talk of the Town. This is a top recommendation even if it doesn’t entirely focus on learning.

Amazon Prime Shows

Amazon Prime has some great shows as well. Many people have a Prime subscription for free shipping, so these come at no additional cost. As a extra bonus you can download them to Amazon Fire tablets and take them with you. (… Or so I am told. I haven’t tried this yet, but I’m going to look into it today.)

Go, Diego, Go! – I went looking for this because I wanted to introduce the kids to Spanish. They are much more interested in rescuing animals, but we’ve learned a little Spanish while watching it. Besides counting to ten, they can speak about 5-10 other words. If nothing else, Rescue Pack is 100x better than Dora’s lame Backpack.
Tumble Leaf – This Amazon exclusive is almost entertaining enough for parents to watch. The animation is incredible. The main character Fig the Fox, finds a new item each episode and figures out how to use it. The item could be a mirror for reflecting light, a flashlight for creating shadows, or a sponge for soaking up water. There’s a reason why it has won 5 daytime Emmys.
Peg + Cat – Another math show… but unfortunately I like this more than my kids. Maybe they aren’t old enough for the math concepts. At least once a week, I break an imaginary ukulele and sing this:
Fat Albert – I hesitated 5 times to include this for the obvious “Bill Cosby” reasons. It isn’t the best fit for my age 2 and 3 year olds, but I’m including it anyway. Learning/Morals + anti-consumerism + racial diversity = win. It’s hard to find this kind show elsewhere.

How do you feel about educational television? What are some of the favorite shows you and your toddlers have enjoyed? Let me know in the comments.

Musings about Kids and College

August 22, 2014 by Lazy Man 13 Comments

I was in a conversation the other day with someone who seemed really intelligent an accomplished. I was quite enjoying it, but when the conversation turned to their kids and college, I was surprised by this person’s philosophy. She said something to the effect of:

I told my daughter to just take the classes that interest her. There’s no need to focus on a direction.

I’m paraphrasing, but that’s how I remember it. (Some amount of wine may have been involved.) I found this really surprising, but I was in a situation where I was trying to be on my very best behavior so I didn’t stir the pot and call attention to it. I was surprised that the topic went in that direction because my wife and I had a similar conversation a couple days before. We both agreed that if we have a Lazy Man Jr. (or juniorette) and that person is going to receive any financial aid from us, there should be a definitive college plan in place.

What kind of college plan? Our thought is that the student should earn a degree in a field that leads to being able to pay off the cost of college – and makes it worthwhile. Personally, I’d prefer STEM fields – (Science, Technology, Engineering, Math). My wife went to pharmacy, partially because it does pay well for amount of school required. That was certainly one my thoughts when I went into computer science. There will always be a demand for those able to work in information security, since an increasing number of businesses are updating their security software and using technology daily. I do not necessary have to work with an IT firm, as nearly every major company in the country now hires its own IT staff. My current degree can lead me into the public sector, perhaps working with government or police agencies, or private sector with a multinational corporation. It is estimated that over 3 million jobs will be available in the industry by 2018, making it an excellent degree for those looking for job security. I met a mortician once who said that the literally did the cost-benefit analysis of every profession he could think of and found that morticians are paid extremely well for the amount of study. I had to hand it to him, that seemed extremely smart.

On the other hand, I know a person with a Ph.D. from a top 10 university, and her career doesn’t use that skill. It’s one of those fields that you ask, “What can you do with that?” And the answer is usually, “Well, I can teach others it.” I don’t know what her current job pays, but I wonder if it covers the 10-12 years of school. I can’t imagine it does. Fortunately, I don’t think money is an issue for the family.

My wife and I were talking about this and she mentioned she saw a news report on TV that a kids are moving back home with their parents after college. That’s what happens if you don’t have a job that’s in demand in a down economy. I’m sure there are many out there STEM degrees who can find jobs, but I believe that it’s much tougher out there for the history major to find a job than the software engineer.

We thought about what we’d do if we were ever in such a situation (talk about putting the cart before the horse, eh?) The news report suggested that it may be best to pay first month’s rent and a deposit to push the son or daughter out of the nest. (Presumably they have a job and can afford it and aren’t just staying home to save tons of money.) My thought was to pair that incentive with another one that makes it more difficult to stay. My wife and I agreed that the child would have to pay rent upon coming back home after college. My thought was that the rent should start off cheap (maybe $250, but this depends on the area where you live), but set it so that it increases 5% every month. (I am picking 5% at random, choose a number that best suits your timeline for getting the ~~leech~~ loved one out of your house.) By the end of the year they are paying nearly $450. At the end of the second year it is $806 a month. The idea is to make it fiscally beneficial for a move and to take away the incentive for staying at home.

Have some disjointed thoughts about kids and college? I’d love to read them in the comments.