“Five years later, I still regret not buying those shoes,” said no one ever.

Doctor’s Orders

SOME OF MY CLIENTS incur hefty medical expenses for themselves and family members. I tell them not to expect too much help from the IRS when it comes to deducting such expenses—unless the costs are well into five figures.
To deduct medical costs, taxpayers have to forego the standard deduction and instead itemize on Schedule A of Form 1040. Their expenses also have to be for bills that aren’t covered by insurance or reimbursed by employers.

Read more »

First Responders

MY DOCTOR TOLD ME that my white blood cell count has been trending lower for the past five years. He was concerned there was something going on with my immune system and wanted me to see an oncologist.
The oncologist performed a number of tests and couldn’t find anything that would have caused my condition. He wasn’t concerned about my ability to fight off infections because my absolute neutrophil count was in an acceptable range.

Read more »

Separated at Birth

IF YOU’RE A FAN of basketball, you may be familiar with the Lopez twins—Brook and Robin. On the surface, they are identical in every way. Both stand seven feet tall. Both went to Stanford University. Both entered the NBA draft in 2008 and both were picked in the first round. Since then, both have enjoyed successful careers.
A casual observer would be hard-pressed to see any difference between the Lopez twins, but there is one: While they are both impressive players,

Read more »

Latest Blogs

Doctor’s Orders

SOME OF MY CLIENTS incur hefty medical expenses for themselves and family members. I tell them not to expect too much help from the IRS when it comes to deducting such expenses—unless the costs are well into five figures.
To deduct medical costs, taxpayers have to forego the standard deduction and instead itemize on Schedule A of Form 1040. Their expenses also have to be for bills that aren’t covered by insurance or reimbursed by employers.

Read more »

First Responders

MY DOCTOR TOLD ME that my white blood cell count has been trending lower for the past five years. He was concerned there was something going on with my immune system and wanted me to see an oncologist.
The oncologist performed a number of tests and couldn’t find anything that would have caused my condition. He wasn’t concerned about my ability to fight off infections because my absolute neutrophil count was in an acceptable range.

Read more »

Separated at Birth

IF YOU’RE A FAN of basketball, you may be familiar with the Lopez twins—Brook and Robin. On the surface, they are identical in every way. Both stand seven feet tall. Both went to Stanford University. Both entered the NBA draft in 2008 and both were picked in the first round. Since then, both have enjoyed successful careers.
A casual observer would be hard-pressed to see any difference between the Lopez twins, but there is one: While they are both impressive players,

Read more »

Blog archive

Numbers

WHAT’S THE BEST WAY to invest money you won’t need for 10 years? Among U.S. adults, 32% chose stocks, 24% cash investments, 22% real estate, 9% precious metals, 8% bonds and 2% cryptocurrencies, according to a Bankrate survey.

Truths

NO. 59: OUR RISK TOLERANCE isn’t stable. There’s our portfolio’s risk—and there’s the risk we can stomach. The latter changes with the markets: We often grow braver as prices climb. Our tolerance also changes with experience: As we age, we may become more comfortable with stocks, even as retirement’s approach should prompt us to throttle back.

Truths

NO. 59: OUR RISK TOLERANCE isn’t stable. There’s our portfolio’s risk—and there’s the risk we can stomach. The latter changes with the markets: We often grow braver as prices climb. Our tolerance also changes with experience: As we age, we may become more comfortable with stocks, even as retirement’s approach should prompt us to throttle back.

Act

CHECK YOUR BENEFICIARY DESIGNATIONS. Your retirement accounts and life insurance will typically pass to the beneficiaries specified on those accounts, not the people named in your will. If your family situation has changed, or you simply don’t remember who you listed, take a moment to review your beneficiary designations.

Think

LEVERAGE. Using debt has the potential to boost our returns—or wipe us out. Let’s say we buy a $250,000 home. We put down 20%, or $50,000, and borrow the rest. If our home’s value rises to $300,000, the price gain is 20%, but the increase in our home equity would be 100%. Leverage, however, can cut both ways: A 20% price decline would leave us with no home equity.

Home Call to Action

Free Newsletter

Try This at Home

FOR THE PAST MONTH, I’ve been inviting readers to test a rough-and-ready financial tool called the Two-Minute Checkup. The tool is designed to provide a quick initial financial assessment.
The hope: It’ll eventually be one component of a larger website and app that help folks figure out what financial steps they need to take and then nudges them to follow through. This reflects a notion that’s been much on my mind in recent years: Improving America’s personal finances is partly about education—but it’s also partly about finding ways to change behavior.

Read More »
Jonathan Clements

About Jonathan

Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His next book, now available for preorder: From Here to Financial Happiness.

Money Guide

Start Here

Coverdell Accounts

LIKE 529 COLLEGE SAVINGS PLANS, a Coverdell education savings account can give you tax-free growth if the money is used for qualified education expenses. A Coverdell is also typically treated as a parental asset for financial aid purposes—another attractive feature—and, like a 529, it can be used to pay for education expenses from kindergarten through college. But there the similarities end. While 529 college savings plans restrict you to the plan’s menu of investment options, you have a much wider choice with a Coverdell, which means you could potentially slash your investment costs by, say, favoring index funds with rock-bottom annual costs. But that advantage is offset by a few notable disadvantages. You can invest just $2,000 a year in a Coverdell. The amount you can contribute phases out if your modified adjusted gross income is between $190,000 and $220,000 and you’re married filing jointly, or between $95,000 and $110,000 and you’re filing as single or head of household. Above these income thresholds, contributions aren’t allowed. These income eligibility thresholds do not rise each year with inflation. You could sidestep the limits by having a family member with less income make the annual contribution. Indeed, you need to be aware of what others are doing, because the $2,000 annual limit is a total amount per child. Thanks to these various drawbacks, the Coverdell hasn’t proven that popular, and some financial firms have stopped offering them, instead focusing their efforts on 529s. Once the beneficiary of a Coverdell turns age 18, you can’t make further contributions. The account needs to be emptied within 30 days of the beneficiary turning age 30. But if, as that deadline approaches, there happens to be money left in the account, you can keep the tax-free growth going by switching the account’s beneficiary to another family member who is under age 30. Next: Custodial Accounts Previous: Prepaid Tuition Plans
Read more »

Archive

Wanting for Something

WHEN I CREATE MY MONTHLY BUDGET, I subtract expenses I deem to be “needs” from my take-home pay. What’s left is money I can spend on items I desire—my “wants.” For budgeting purposes, I divide my discretionary income into four equal amounts and budget that amount for each week of the month. Psychologically, I find it easier to keep my budget on track if I can see how much I spend on a weekly basis. For things I want, I don’t have discrete spending categories, like I do for necessities. Instead, I focus more on staying within my overall budget. If I overspend on my hobbies one week, I know I need to cut back in another area, like eating out. In looking over my budget for the past couple of months, it’s obvious where most of my discretionary income goes: Hobbies: My primary hobby is competitive pistol shooting. Nearly every weekend, I compete at a match. Between maintenance of my equipment, travel expenses and entry fees, my hobby easily eats up the largest portion of my discretionary budget. I have, however, figured out ways to make my money go further. By serving as a volunteer at matches, the hosting clubs usually provide me with free entry. I also write articles for a national shooting club’s magazine, which provides me with a small stipend. Entertainment: I subscribe to the most basic cable package available in my area. By bundling internet and television subscriptions, I get both services for less than either as a stand-alone. Thanks to my Amazon Prime subscription, I have access to thousands of movies and television shows I can stream through my Roku. And, as a fan of the UFC, I occasionally indulge my passion for the sport by springing for a pay-per-view fight. Dining Out: Unlike the average American—who spends more on dining out than on groceries—I tend to spend very little eating at restaurants. During the month, I might eat out as many as five or six times, or as infrequently as once or twice. I’m far more likely to spend my food money on quality meat and produce that I prepare myself. My Dog: I admit I like to spoil my corgi. Buying her dog treats, and the occasional new dog bed, makes me happy, and Zoey doesn’t seem to complain about the treatment. Clothing: I’m fortunate to have a job where I can dress casually. My clothing budget is minimal, and I can’t remember the last time I paid full price for an item of clothing. End-of-the-season sales are a girls’ best friend. As with my “needs,” being frugal comes into play with my “wants.” My overriding goal: Maintain a healthy financial balance between saving for the future and having fun in the present. Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Ore. She has an M.S. degree in biology, and hopes one day to retire and become a fulltime writer. Kristine's previous blogs include Where It Goes and A Less Taxing Time.
Read more »

Money Guide

Start Here

Coverdell Accounts

LIKE 529 COLLEGE SAVINGS PLANS, a Coverdell education savings account can give you tax-free growth if the money is used for qualified education expenses. A Coverdell is also typically treated as a parental asset for financial aid purposes—another attractive feature—and, like a 529, it can be used to pay for education expenses from kindergarten through college. But there the similarities end. While 529 college savings plans restrict you to the plan’s menu of investment options, you have a much wider choice with a Coverdell, which means you could potentially slash your investment costs by, say, favoring index funds with rock-bottom annual costs. But that advantage is offset by a few notable disadvantages. You can invest just $2,000 a year in a Coverdell. The amount you can contribute phases out if your modified adjusted gross income is between $190,000 and $220,000 and you’re married filing jointly, or between $95,000 and $110,000 and you’re filing as single or head of household. Above these income thresholds, contributions aren’t allowed. These income eligibility thresholds do not rise each year with inflation. You could sidestep the limits by having a family member with less income make the annual contribution. Indeed, you need to be aware of what others are doing, because the $2,000 annual limit is a total amount per child. Thanks to these various drawbacks, the Coverdell hasn’t proven that popular, and some financial firms have stopped offering them, instead focusing their efforts on 529s. Once the beneficiary of a Coverdell turns age 18, you can’t make further contributions. The account needs to be emptied within 30 days of the beneficiary turning age 30. But if, as that deadline approaches, there happens to be money left in the account, you can keep the tax-free growth going by switching the account’s beneficiary to another family member who is under age 30. Next: Custodial Accounts Previous: Prepaid Tuition Plans
Read more »
Home Call to Action
Jonathan Clements

About Jonathan

Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His next book, now available for preorder: From Here to Financial Happiness.

Free Newsletter

Try This at Home

FOR THE PAST MONTH, I’ve been inviting readers to test a rough-and-ready financial tool called the Two-Minute Checkup. The tool is designed to provide a quick initial financial assessment.
The hope: It’ll eventually be one component of a larger website and app that help folks figure out what financial steps they need to take and then nudges them to follow through. This reflects a notion that’s been much on my mind in recent years: Improving America’s personal finances is partly about education—but it’s also partly about finding ways to change behavior.

Read More »

Archive

Wanting for Something

WHEN I CREATE MY MONTHLY BUDGET, I subtract expenses I deem to be “needs” from my take-home pay. What’s left is money I can spend on items I desire—my “wants.” For budgeting purposes, I divide my discretionary income into four equal amounts and budget that amount for each week of the month. Psychologically, I find it easier to keep my budget on track if I can see how much I spend on a weekly basis. For things I want, I don’t have discrete spending categories, like I do for necessities. Instead, I focus more on staying within my overall budget. If I overspend on my hobbies one week, I know I need to cut back in another area, like eating out. In looking over my budget for the past couple of months, it’s obvious where most of my discretionary income goes: Hobbies: My primary hobby is competitive pistol shooting. Nearly every weekend, I compete at a match. Between maintenance of my equipment, travel expenses and entry fees, my hobby easily eats up the largest portion of my discretionary budget. I have, however, figured out ways to make my money go further. By serving as a volunteer at matches, the hosting clubs usually provide me with free entry. I also write articles for a national shooting club’s magazine, which provides me with a small stipend. Entertainment: I subscribe to the most basic cable package available in my area. By bundling internet and television subscriptions, I get both services for less than either as a stand-alone. Thanks to my Amazon Prime subscription, I have access to thousands of movies and television shows I can stream through my Roku. And, as a fan of the UFC, I occasionally indulge my passion for the sport by springing for a pay-per-view fight. Dining Out: Unlike the average American—who spends more on dining out than on groceries—I tend to spend very little eating at restaurants. During the month, I might eat out as many as five or six times, or as infrequently as once or twice. I’m far more likely to spend my food money on quality meat and produce that I prepare myself. My Dog: I admit I like to spoil my corgi. Buying her dog treats, and the occasional new dog bed, makes me happy, and Zoey doesn’t seem to complain about the treatment. Clothing: I’m fortunate to have a job where I can dress casually. My clothing budget is minimal, and I can’t remember the last time I paid full price for an item of clothing. End-of-the-season sales are a girls’ best friend. As with my “needs,” being frugal comes into play with my “wants.” My overriding goal: Maintain a healthy financial balance between saving for the future and having fun in the present. Kristine Hayes is a departmental manager at a small, liberal arts college in Portland, Ore. She has an M.S. degree in biology, and hopes one day to retire and become a fulltime writer. Kristine's previous blogs include Where It Goes and A Less Taxing Time.
Read more »