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Americans and their credit cards

R Quinn | Aug 24, 2026

"Most people are underpaid. Many are trapped paycheck to paycheck. This includes many people who would otherwise be responsible if they could just have an opportunity to dig out of their debt. It's easy to say, well they should have rented a smaller apartment, but maybe that's not an available or realistic choice. A lot of people have to own cars. It's not a choice to have to buy new tires and gasoline. Even with Obamacare, a huge amount of debt and bankruptcy are due to medical costs. In most cases, the need for medical care is bad luck, not problems caused by personal responsibility. (And why is medical care so much more expensive in the US than other wealthy nations, like across Europe?) People should not be blamed for situations truly out of their control. I'm not saying that a lot of people don't handle finances well or that some need of medical care isn't due to self-destructive behavior. But looking at the systems we have to negotiate, as capitalism gets less regulated, more individuals need to scramble to pay their way. Credit cards are designed by our corporate overlords to make a profit. We own stock in banks and credit card companies. Why? Because we expect them to have high revenue streams of interest and fees and to grow. This is proof that the system is designed to suck money from creditcard holders and that we are well aware of this."

- Cammer Michael

Traditional or Roth

ArticleRichard Connor | Aug 29, 2026

THE CHOICE BETWEEN a traditional retirement account or a Roth is a frequent topic on HumbleDollar. The choice is generally framed as a choice between paying taxes up front (a Roth), or deferring taxes until withdrawal (traditional). I thought it would be interesting to evaluate a real-life example of how this choice might work out. In December of 2016 my wife and I had an opportunity to each open a Roth IRA. My wife took a partial sabbatical that year, and that, combined with maxing out our 401k accounts, gave us a chance to each open a $4,500 Roth IRA. The maximum allowable contribution that year was $6,500 for those 50 and over. Up until then we had assumed that our marginal tax bracket would likely be lower in retirement, and focused on contributing to our employer’s traditional 401k plans. Despite that, we decided to move forward with opening a Roth IRA. I thought it would give us some tax diversity, and the opportunity to do Roth conversions when, and if, it made sense in the future. In December of 2016 we opened Roth IRAs at Vanguard and invested the $4,500 in their S&P 500 Index Fund. Those initial funds have been invested for almost 10 years. Over that decade we have added some additional funds, and have done a few conversions. I recently did a quick analysis to see how my Roth experience would have compared to investing in a traditional IRA. In 2016, our marginal tax bracket was 28%. To contribute the $4,500 required $6,250 of pre-tax income. Due to some financial engineering over the last year, including selling our second home in late 2025, I expect our 2026 marginal tax bracket to stay within the 12% bracket. I’ve been looking at this closely because I’m considering doing a Roth conversion later this year. The table below shows the comparison between the Roth performance, and what a traditional IRA would have produced. The annual rate of return was determined using Nick Maggiulli’s S&P 500 Historical Return Calculator. Roth vs Traditional

The table shows that the Traditional IRA would have been the better choice, producing about $3,500 more in available funds, or about 22% more. This demonstrates that the primary driver in choosing between a Roth and a traditional qualified account is a consideration of the tax rates at the time of contribution and at the time of distribution. There have been a number of changes to the tax code in the last decade that have contributed to the result, but I certainly didn’t predict any of them. If you guess wrong, you pay the price in a higher tax bill. In the example above, the extra $1,750 invested in the traditional account produced an additional $6,143.31 in earnings. The lower tax rate at the distribution of the traditional IRA results in the $3,500 in extra funds. Even though the Roth IRA had tax free earnings growth, the initial larger tax rate overcame that advantage, when compared to the traditional IRA. Because of my pension and my wife’s social security benefit, 85% of her social security benefit is taxable income, so that is not a consideration in our tax calculation. I used Dinkytown’s 1040 Calculator to run a series of estimates of our 2026 tax return to assess if we want to execute a Roth Conversion this year. We are still 4 years from taking RMDs, and I will start my Social Security in a year when I turn 70. My current thinking is a conversion of about $40,000 will keep us in the 12% bracket. There would also be a small NJ state tax impact. My simple analysis reinforces what I’ve been taught. Roth contributions make the most sense when you think your current tax bracket is lower than when you expect to withdrawal the funds. There are secondary considerations, like no tax diversification, no RMDs, and uncertainty about future tax rates. If you intend to pass the funds to heirs, it might make sense to perform Roth conversions today at the 22% tax bracket if you intend to pass these accounts to heirs who may be in their peak earnings years. Not sure? I believe I recall several HumbleDollar contributors write something about splitting the difference? Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.

The Wrong-Sided Man

Dennis Friedman | May 8, 2025

"I too walk early in the morning and now I carry a small can of pepper spray. It might be a vicious dog, wrong-way man as you describe, or a wayward hobo looking for an easy roll."

- art winslow

How Did You Find Paid Work After Retiring from Your Primary Career?

Jeffrey Chan | Jul 31, 2026

"After years in the workforce, I came home to raise our twins and eventually homeschooled them through middle school. During that time, I worked part-time for a nonprofit for nine years before "retiring" to help care for my mother in her mid-90s. Along the way, I managed several family estates, including a complex probate estate, as well as my mother-in-law's and my mother's affairs. After my mother's death, my sister, an RN, and I were asked to help an older woman in our hometown navigate aging-related challenges. We helped her remain safely in her home for several years and later assisted with her transition to skilled care after a serious fall. Through those experiences, I gained firsthand insight into the gaps in support available to older adults and their families. Around the same time, I managed the estate of my best friend after she died of cancer during COVID, deepening my exposure to end-of-life planning and estate administration. I thought I was retired. My husband and I traveled, and while we were financially comfortable, I wasn't planning to draw Social Security until age 70. Then a financial planner friend asked if I could help some of her older clients. The idea intrigued me. With a CPA, MBA, and a career that included commercial real estate, construction management, relocation, and a wide range of financial responsibilities, I realized I had skills that could make a meaningful difference. What began as a part-time venture became a growing Daily Money Management practice. Today, three of us help clients manage their day-to-day finances and navigate life's transitions. The work is challenging and rewarding, and it gives me the flexibility to enjoy regular travel and time with family. Best of all, it has allowed us to preserve our retirement savings while continuing to do work that genuinely improves people's lives. There's nothing wrong with knitting or other retirement hobbies (I tried knitting and was terrible at it), but I find deep satisfaction in helping clients solve problems, maintain independence, and face life's challenges with greater confidence."

- cynthiahoffman

This would be a great posting on a web site with the name “HaughtyDollar.”

R Quinn | Aug 28, 2026

"t"

- Mick

You Heel!

Michael Flack | Aug 24, 2026

"Counterpoint- I purchased a brand new pair of Bostonian oxfords, maroon in color for about $20, about 25 years ago. I liked them so much I bought a black pair, but they were only reduced to $35. The black ones were go to shoes for my work environment for a couple decades. I spent ~$150 combined to replace the leather soles and rubber heels multiple times. I wondered if it was a prudent decision to keep spending so much more than the original cost. Then I shopped for equal quality and comfort in new shoes, and I found they were around $250 and could not be re-soled due to the rubber soles. I therefore succeeded in exercising my frugal muscle and got the maximum value out of a relatively paltry investment. And I supported small local businesses, making a modest living for their family. I call that a win-win. I've trashed the black shoes as I felt they were no longer worth repairing, or needed for work. I'll be wearing the maroon ones (original heel/sole) later this year in my son's wedding."

- John Verlautz

The Intentional Spendthrift

Mark Crothers | Aug 21, 2026

"This article really hit home for me. We’ve been retired since 2013 and started off somewhat “frugal” as well. My wife got cancer (twice) in 2016 and 2017 but recovered. This was the first wake up call for me. When we were able to travel again in 2019, that frugality disappeared (within reason). However, I realized that it was mostly while we traveled. I had not realized that until I just read this article. We have always enjoyed traveling but the “getting to the destination” part was the challenging part (flying economy, for example). Now we fly first class and book suites on cruises. At the same time, I think it is funny that I still peruse the menu and may shy away from a dish that costs $3 more or that I will drive out of my way to save $0.05 on a gallon of gas (does anyone else get that paranoid on gas prices). On the other hand, I feel no remorse spending $1,000 on an excursion to Iguazu Falls. Another factor has recently entered my thought process. Now that we are in our mid-to-late 70s, it is apparent that our go-go years will be waning at some point and traveling will lose more of its appeal (as walking up 300 steps to reach the castle or shrine entrance might entail). One way I have mentally “justified” spending more is to say to myself “this is the last trip will be taking.” The reality has been that I’ve been mentally saying that since 2019, while taking typically three international trips per year since (avoiding 2020 and 2021 for Covid). We are booked through 2027, so far. As far as spending limits, our RMDs are fully available for vacation, since we have sufficient income to cover all other expenses. As half our portfolio is in Roth, we have established twice our RMD as the upper end of our discretionary spending plan. This should allow us to spend while still enabling long-term growth."

- snak123

A Place At The Table

Andrew Clements | Aug 26, 2026

"Thank you, William. I’m glad you enjoyed it. The Philippines has taught me quite a bit, and often it’s the small, everyday experiences that have left the biggest impression on me."

- Andrew Clements

Inflation Hedge

ArticleAdam M. Grossman | Aug 29, 2026

THE OPEN KITCHEN restaurant has been a fixture in Charlotte, North Carolina for 75 years. The restaurant has an old-time feel, with memorabilia, including menus from years gone by, lining its walls. Those old menus provided David Enna, a financial journalist, with a laboratory for examining the effects of inflation. What did Enna find? The oldest menu on display is from 1963. To state the obvious, today’s prices make those from the 1960s look quaint. Back then, spaghetti and meatballs cost just $1.10. Today, it’s $15.50. But, as Enna points out, that was more than 60 years ago, so increases are to be expected. Over the past 60 years, the Consumer Price Index (CPI) has averaged 3.8% per year. That isn’t unreasonable, especially since that average includes the 1970s, when inflation sometimes topped 10%. What’s of more concern, though, is what consumers have experienced more recently. Since 2020, prices across the economy have risen 29%. And though those increases have slowed, the Fed is still struggling to ratchet inflation back to its preferred 2% level. This has given investors renewed interest in strategies to defend against inflation. At first glance, this doesn’t seem like it should be such a difficult problem. The U.S. Treasury offers an investment specifically designed for this purpose: Treasury Inflation-Protected Securities (TIPS). These are bonds that are guaranteed by the federal government to increase in value with inflation. And though I hesitate to use the words “bond” and “exciting” in the same sentence, today many investors are finding the return on TIPS compelling. The 30-year TIPS is now paying close to 3% on top of inflation. If inflation averages 2.5%, for example, over the next 30 years, this bond will end up returning a total of 5.5% per year, and with minimal risk. That sounds good in theory, but do these bonds make sense for your portfolio? It’s worth taking a closer look. The first thing to note is that this seemingly attractive 3% yield only applies to 30-year TIPS. Yields on shorter-term bonds are lower. So unless your investment horizon happens to be exactly 30 years, these bonds may be of limited practical value. Putting aside the yield question, though, a more fundamental challenge with individual TIPS—and individual bonds in general—is that they’re a cumbersome way to build a portfolio. Even if you didn’t mind the process of buying bonds one by one, which can be tedious, there’s the fact that it’s hard for most people to be able to forecast their cash flow needs each year into the future. That’s a problem because choosing maturity dates is the foundation on which bond portfolios are built. Ideally, if you can align the maturity dates of the bonds in your portfolio with your future cash needs, then you can hold bonds to maturity, which is when the issuer would promise to pay you back in full. But that redemption value is guaranteed only at maturity. Buy a 20-year bond and sell it after just 10 years, and there are no guarantees. A bondholder could easily lose money selling an individual bond before maturity. Given these challenges, would a TIPS fund be a better choice? To be sure, bond funds are much simpler to purchase and to manage, but they typically offer even less protection from losses than individual bonds. Most recently, shareholders in TIPS funds were disappointed by how they performed in 2022, when inflation spiked to 9%. Investors expected that to be the year when TIPS rewarded investors, but instead, diversified TIPS funds such as the Vanguard Inflation-Protected Securities Fund (ticker: VAIPX) lost nearly 12%. Why did funds like this fare so poorly when inflation was running so high? The problem is that, at the end of the day, TIPS are still bonds. And though they receive a bump in value when inflation rises, a countervailing force is that they lose value when interest rates rise. In 2022, the Federal Reserve raised interest rates aggressively to fight inflation. The negative impact from those rate increases far outweighed the benefit TIPS received from inflation being higher. That puts investors in a difficult position. If TIPS provide inflation protection in theory, but both individual TIPS and TIPS funds carry limitations, what other options are there? The good news is that not all TIPS funds are the same. Some hold only short-term bonds, and they have historically held up much better than more broadly diversified TIPS funds because short-term bonds are more resilient when interest rates rise. Over the past five years, a fund like Vanguard’s Short-Term Inflation-Protected Securities ETF (ticker: VTIP) has outperformed a comparable fund (ticker: VGSH) holding standard short-term Treasury bonds every year, as well as this year to-date. It’s important to note, though, that this is relative performance. In 2022, when the entire bond market was under pressure, even short-term TIPS funds like VTIP did still lose money. They just lost less than funds holding conventional bonds. The bottom line: We should never become too wedded to any one strategy. No investment can promise reliable and complete protection against inflation in every market scenario. That said, I do still recommend TIPS and would specifically recommend a short-term fund like VTIP. But I also suggest taking a diversified approach to inflation protection. Here are other steps to consider. If you’re in your 60s and considering when to claim Social Security, that decision offers a powerful lever. Because Social Security benefits increase with inflation and also increase with each year you delay claiming, it’s maybe the most effective way to build additional inflation protection into your plan. What else can you do? Fortunately, you may already own one of the most effective—and underappreciated—inflation-fighting instruments: stocks. While rising prices in recent years have been frustrating for consumers, the result has been that companies have been able to maintain their profit margins. That, in turn, has helped to support their stock prices through this period of inflation. To be sure, some companies have more of an ability to raise prices than others, but overall, stocks are, in my view, a good way to keep pace with inflation. The one thing I wouldn’t do is to buy gold. Despite its reputation, various studies have confirmed that gold really isn’t a reliable inflation hedge. In a paper titled “The Golden Dilemma,” researchers wrote: “Over practical investment horizons, gold is an unreliable inflation hedge,” though they acknowledge that it may be more reliable over longer timeframes—“if the investment horizon is measured in centuries.” Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on X @AdamMGrossman and check out his earlier articles.

Bad Maths, Good Fire.

Mark Crothers | Aug 28, 2026

"Thanks for another nice read over morning coffee, Mark. Reading this took me back to the early 1970's when the oil embargo contributed to heating oil prices skyrocketing and the availability of the oil spotty at times in New England. The wood stove in our house became the primary source of heat during that time and for years after the crisis had abated. We were blessed with virtually unlimited access to firewood on the property and adjoining properties. I have great memories of both sitting in front of the stove (sometimes open like a fireplace or closed to run for hours on a armload of wood) and of the many hours working in the woods with my dad cutting, splitting and stacking wood for the coming seasons."

- Dunn Werking

Blood Money

Michael Flack | Mar 28, 2026

"I agree with you about KO but XOM is involved in climate deception since it knew about global warming risks 60 years ago and ranks as one of the top global greenhouse gas polluters."

- Nick Politakis

Feeling TIPSy?

ArticleSanjib Saha | Aug 22, 2026

NOT TOO LONG ago, Treasury Inflation Protected Security (TIPS) was a relatively obscure investment for safe long-term fixed-income investments. For the first twenty years of the new century, consumer prices were mostly stable or rising at a too-slow-to-notice rate. Why bother with anything related to inflation? Sadly, persistently low inflation made us complacent on the biggest long-term risk of bond investments -- the insidious unexpected inflation that robs us of the purchasing power of our “safe” investments. Yes, let’s not forget that the biggest risk of bond or bond-like investments is unexpected inflation. Any bond or CD with a maturity beyond a few years must either offer a sufficiently high interest rate to compensate for sudden bouts of inflation, or have its principal adjusted for the inflation actually realized. The former is nearly impossible to find without sacrificing safety. The latter is what TIPS is for. To be clear, the market and investors always expect some level of inflation. Therefore, a bond’s effective interest rate - measured by its YTM (Yield to Maturity) - must be high enough to not only compensate for “expected” inflation and the uncertainties around it but also provide a meaningful increase in the purchasing power of the original principal. A concrete example might help. Consider a 10-year US Treasury nominal bond with a face value of $1,000, selling at $1,000 and paying 5% annual interest. The interest rate reflects the expectations about inflation and other factors over the next 10 years. The rate would be lower if market expected lower inflation, and higher if market expected the opposite. The omnipresence of inflation means we’re likely to lose some purchasing power when we get our $1,000 in 10 years. It won’t buy what $1,000 buys today. By how much? That’s the thousand dollars question (pun intended). There isn’t a readily available number that explains why that 10-year Treasury Bond yields 5% instead of 3% or 7%. Investors essentially take a leap of faith that annual inflation stays low enough over the 10-year period for the interim interests to compensate for the purchasing power loss, plus some changes. Most of us are perfectly comfortable assuming that inflation won’t be as high as 5% for 10 years. But are we fooling ourselves? I suggest using an inflation calculator to see for ourselves. Spoiler alert: Late 1960s through early 1980s can be an eye-opening period. How’d we feel if the next 10 years turn out to be something similar? Think about how you might feel when you safekeep your money in a so-called secure investment, give up higher returns available from risky investments, and then encounter an inflationary regime. Your minimum expectation was that your purchasing power would remain intact and perhaps improve a little by the time your bond matures. Instead, unforeseen inflation erodes your purchasing power and compromises the financial goal the fund was supposed to cover. Your “safe” investment fails you completely. You realize that it wasn’t safe at all. If unexpected inflation is so devastating, why are we so lax about it? I can think of two reasons. First, our minds haven’t adapted to the reality that, unlike to a “real” asset like a bag of rice or a gallon of gasoline, money in its current form is inherently self-eroding. It slowly loses its worth over time. A hundred dollars sitting around will still be a hundred dollars next year, but it won’t buy the same amount. We don’t intuitively perceive the continuous loss of purchasing power. Even when we do internalize it with some effort, we get used to the “pace” of the loss. In other words, we view inflation as steady and unexpected inflation as highly unlikely. Alas, all it takes is a single prolonged inflationary period to change that perception. By then, however, the damage to existing fixed income investments may already be done. Frankly, I’d be very wary of keeping my long-term “safe” money -- fund that I need to preserve beyond a three-year horizon - in any form that isn’t protected against unexpected inflation. For bond investments, the most meaningful option would be TIPS. Why? Because, in addition to being secured by the full faith and credit of the US Government just like any other Treasury securities, TIPS provides three important assurances upfront. First, it provides protection against unexpected inflation, which is a realized inflation that differs from what we expected when purchasing it. If the actual inflation averages 12% instead of the expected 2%, the principal is automatically adjusted to reflect the actual inflation. No guesswork or unexpected risk involved. Second, it provides a “real interest rate” upfront that tells us how much the purchasing power of the investment will increase over time, regardless of what the actual inflation turns out to be. Buying a 10-year TIPS with real 2% annual interest means the investment’s purchasing power will grow 2% per year over the holding period, before considering taxes and other factors. The third aspect is more nuanced. It involves the possibility of inflation being lower than expected, or even negative inflation (aka deflation). Let me elaborate. If a regular nominal 10-year Treasury Bond offers 5% annual yield and an equivalent TIPS offers a real annual interest rate of 2.75%, the market-implied inflation, the breakeven inflation rate, is roughly 2.25% (5% minus 2.75%). Actual inflation, of course, will be known only after 10 years when the bond matures. Suppose the actual inflation turns out to be only 1.25%. The nominal Bond investor would end up with more purchasing power than the TIPS investor because the TIPS principle would be adjusted by only the actual 1.25% inflation rate. The primary objective of the TIPS investor would still have been met: preserving and improving purchasing power by about 2.75% annually. But there would be a “missed opportunity”. The nominal Treasury investor would end up with even greater purchasing power. Does it mean that a TIPS investor can face an unlimited opportunity cost if inflation turns out to be negative? What happens if the actual inflation is, hypothetically speaking, negative 5%, in a severely deflationary period? Does the TIPS investor get back proportionately reduced principal at maturity? Thanks to the third assurance of TIPS, the answer is NO. TIPS guarantees that the principal returned at maturity will never fall below the original face value. During periods of deflation, the inflation-adjusted principal can fall below its face value and the interim interest payments will decline accordingly. But at maturity, the principal is floored at the original principal amount. Therefore, the breakeven inflation rate, the difference between the yield of a nominal Treasury bond and the real yield of an equivalent TIPS, represents the maximum annual yield advantage that the nominal bond can have over TIPS in an unexpectedly low inflation regime. To summarize, a TIPS investor gets unlimited protection against unexpectedly high inflation, while accepting a limited opportunity cost should the actual inflation be low or even negative. The magnitude of that trade-off is reflected in the breakeven inflation rate at the time of the TIPS purchase. An aside: given the destructive impact of deflation on economy and society, policy makers are generally more concerned about preventing prolonged deflation than about preventing modest inflation. Therefore, prolonged deflation is usually considered less likely. Still, we cannot ignore deflation risk altogether and should be prepared for the possibility that TIPS can underperform a nominal bond if inflation runs low. Therefore, the decision to favor TIPS over an equivalent nominal Bond hinges in part on the current breakeven inflation rate. If it’s low enough, favoring TIPS can be an easy decision. Getting unlimited protection against unexpectedly high inflation is worth accepting the relatively small opportunity cost if inflation comes below the breakeven rate. There is, however, a cautionary note about buying TIPS bonds in the secondary market, especially older issues. Consider a 30-year TIPS bond issued 20 years ago and a 10-year TIPS issued within last 6 months. Both might appear to be valid choices if they mature within a few months of each other and offer similar yields. But beneath the surface, one may be more favorable than the other. The older TIPS will likely have a much higher inflation-adjusted principal because it accumulated 20 years of inflation adjustments. But the protection against unexpected deflation applies only to the bond’s original face value, which is typically $1,000. In a prolonged deflationary period, the older bond has much more room for its inflation-adjusted principal to decline before reaching the $1,000 floor. The newer issue, whose adjusted principal is much closer to the $1,000 face value, has less exposure to this risk. Therefore, all else being equal, I’d favor a TIPS with a low inflation-adjusted factor when buying in the secondary market. All things considered, my vote goes to TIPS for long-term “safe” investments, provided the break-even inflation is reasonably low. For secondary market purchases, however, a high inflation-adjustment factor would give me pause. Sanjib Saha retired early from software engineering to dedicate more time to family and friends, pursue personal development and assist others as a money wellness mentor. Self-taught in investments, he passed the Series 65 licensing exam as a non-industry candidate. Sanjib is the president and cofounder of Dollar Mentor, a 501(c)(3) nonprofit organization offering free investment and financial education. Follow his nonprofit on LinkedIn, and check out Sanjib’s earlier articles.

Americans and their credit cards

R Quinn | Aug 24, 2026

- Cammer Michael

Traditional or Roth

ArticleRichard Connor | Aug 29, 2026

The Wrong-Sided Man

Dennis Friedman | May 8, 2025

"I too walk early in the morning and now I carry a small can of pepper spray. It might be a vicious dog, wrong-way man as you describe, or a wayward hobo looking for an easy roll."

- art winslow

How Did You Find Paid Work After Retiring from Your Primary Career?

Jeffrey Chan | Jul 31, 2026

- cynthiahoffman

This would be a great posting on a web site with the name “HaughtyDollar.”

R Quinn | Aug 28, 2026

"t"

- Mick

You Heel!

Michael Flack | Aug 24, 2026

- John Verlautz

The Intentional Spendthrift

Mark Crothers | Aug 21, 2026

- snak123

A Place At The Table

Andrew Clements | Aug 26, 2026

"Thank you, William. I’m glad you enjoyed it. The Philippines has taught me quite a bit, and often it’s the small, everyday experiences that have left the biggest impression on me."

- Andrew Clements

Inflation Hedge

ArticleAdam M. Grossman | Aug 29, 2026

Manifesto

Aug 28, 2026

NO. 34: FIGURING out what we ought to do with our money is relatively easy. Getting ourselves to do it is hard. Victory goes not to the smartest, but to the most disciplined.

act

Aug 29, 2026

HIRE OTHERS TO do chores you dislike. For each of us, time—not money—is the ultimate limited resource. Research has found that those who use their money to buy time—by, say, hiring others to clean or do yardwork for them—report greater happiness. Why? These folks feel less time stressed, while also freeing up extra hours for activities they love.

Truths

Aug 28, 2026

NO. 97: IT’S HARD to say “no” to our adult children if they get into financial trouble—which is why we should try to raise money-savvy kids. But how? Set a good example. Talk regularly about your own finances. Tell your kids about your lean early adult years. Involve them in family financial decisions. Encourage them to save up for larger purchases.

think

Aug 27, 2026

HABIT FORMATION. To improve our behavior—financial and otherwise—we need to turn our desired good behavior into habits. That might require doing the right thing daily for perhaps two months. To get through this transition period, helpful strategies include sharing our resolutions with others, visualizing our goals and automating our savings program.

Money Guide

Manifesto

Aug 28, 2026

NO. 34: FIGURING out what we ought to do with our money is relatively easy. Getting ourselves to do it is hard. Victory goes not to the smartest, but to the most disciplined.

Spotlight: College

Should affluent parents insist their children pay a portion of college costs?

Jonathan Clements | Apr 12, 2021

Marked Absent

Kyle McIntosh | Feb 15, 2022

THE NATIONAL STUDENT Clearinghouse Research Center recently published a report on postsecondary enrollment for fall 2021, including enrollment at community colleges, undergraduate institutions and graduate schools.
If you’re a believer in postsecondary education, the headline numbers weren’t encouraging. Enrollment fell by 2.7%, or 476,100 students. Over the two years since the start of the pandemic, it’s declined by 5.1%, or 937,500 students.
While the report offers no reasons for these declines, my view is that colleges are struggling to justify their value proposition to students and their families,

Budgeting 102

Catherine Horiuchi | Sep 30, 2021

IT’S BEEN A MONTH since I dropped off my twins at college, one east, one west. Each has a debit card for an account with the credit union here in our hometown. One has downloaded the credit union’s mobile app. Both are already developing their own ideas and strategies for managing college life on a shoestring budget.
I got them their debit cards some time ago. I also opened a teen account for their brother,

Finding Merit

Anika Hedstrom | Jun 30, 2021

THERE’S NO SINGLE, right way to legally crack the college admissions and financial aid systems. It’s up to teenagers and their parents to do the necessary work.

Still, it helps to have a tour guide—which is what you get with The Price You Pay for College, the new book from New York Times financial journalist Ron Lieber. Lieber’s book discusses why college costs so much, digs into the allure of elite schools,

College Savings Forum

Kyle Mcintosh | Jun 25, 2024

Over the last 17 years, I have been saving a modest amount each month in a 529 plan. I have been doing the same for my daughter for the past 14 years. Given the market performance and our steady contributions over time, these modest monthly contributions have grown to be a sizable amount. While I am thrilled that we should have most of our college cost covered, I’ve often wondered if the 529 plan was the best bet in saving for college.

Games Colleges Play

Greg Spears | Sep 13, 2022

WHEN OUR KIDS applied to colleges, the smallest detail of each campus visit mattered a lot. If our daughter admired the student leading our tour, the school skyrocketed in her estimation. If the class our son attended to “get a feel for the place” turned out to be a test period, Grandpa’s alma mater was forever struck from consideration.
In economic terms, the college decision features asymmetric information. Colleges know a lot about us from our detailed personal and financial applications.

Crash Course

John Lim | Feb 5, 2020

THE JAPANESE JUST “celebrated” the 30th anniversary of their stock market’s peak. The Nikkei 225 hit an all-time high of 38,916 in December 1989. Today, it stands at 23,320, or 40% below 1989's level. “But the Japanese stock market in the 1980s was the mother of all bubbles,” you might respond. Perhaps. But what about the Nasdaq bubble of the late '90s? True, the Nasdaq Composite Index has finally returned to its 2000 peak. But it took 15 years. By contrast, it’s been 30 years since Japanese stocks last recorded a new high—close to an investing lifetime. Imagine the pain of a Japanese couple who started investing in 1989 and have yet to make any money after three decades. The Japanese experience may be anomalous. But I believe it can teach us five valuable investing lessons. 1. Geographical diversification is imperative. I disagree with the late Jack Bogle, who didn’t believe that U.S. investors needed to diversify globally: “I don't quite understand where this thing is that you must have a global portfolio. Maybe it's right. Of course, maybe anything is right, but I think the argument favors the domestic U.S. portfolio.” Bogle goes on to mention how the U.S. has so many advantages in terms of entrepreneurial spirit, sound institutions and solid governance. The problem is, many people were also singing Japan’s praises in the 1980s. Markets reflect that sort of information. If U.S. companies are felt to be dominant and have intrinsic advantages, that’s already priced into their stocks. I’m not saying that the U.S. is like Japan. But I also don’t know that what happened to Japanese stocks could never happen here in the U.S. Those who believe otherwise need a dose of humility. 2. Bonds still play a role in portfolios. The great Benjamin Graham warned against…

Time Is Running Out

John Lim | Dec 15, 2021

INFLATION CONTINUES to sizzle. November’s Producer Price Index (PPI) rose 9.6% from a year earlier. Even after removing food and energy, PPI was up 7.7%. Both figures are the highest since 2010, when such data were first compiled. This follows last week’s Consumer Price Index report, which showed inflation climbing 6.8% over the past 12 months. Since consumer prices lag producer prices, we can expect little relief from inflation in 2022. All this must be foremost on the minds of Federal Reserve members as they meet this week. Price stability is one of its two mandates, so it’s widely expected that the Fed will accelerate the tapering of its bond purchases. This will position the Fed to raise interest rates sooner as it seeks to quell inflation. Unfortunately, time is running out. A number of factors conspire to make the job of Federal Reserve Chair Jerome Powell a lot more difficult: 1. Inflation expectations are climbing. According to the Federal Reserve Bank of New York, inflation expectations one year out are 6%. This number has doubled since the beginning of the year. This is concerning because, once entrenched, inflation expectations can become a self-fulfilling prophecy. 2. Wages are on the rise. Wages are companies’ largest expense and hence a major determinant of prices. Wages also tend to be sticky, meaning workers are loath to accept cuts in wages. According to a recent survey by the Conference Board, companies plan to raise salaries by 3.9% in 2022. That’s the fastest pace since 2008. 3. The yield curve is flattening. The difference in yield between five-year and 30-year Treasurys was just 0.54 percentage point as of last week. The last time the spread was so small was during the depths of the COVID-19 pandemic in March 2020. A flattening yield curve has…

Deflated Pensions

John Lim | Sep 29, 2021

INFLATION IS BAD news for bond investors, but it’s really terrible for annuitants and those receiving company pensions. Bond investors can at least reinvest maturing bonds in newer bonds paying higher yields. But most income annuities and pensions pay a fixed monthly benefit for life. In fact, you can no longer even buy inflation-adjusted single-premium immediate annuities. Meanwhile, just 7% of all private-sector pensioners received automatic cost-of-living increases, according to a 2000 survey by the Bureau of Labor Statistics. Just how big a problem would sustained inflation be for annuitants and pensioners? In recent months, inflation has averaged 6%, as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If it remained stuck there, it would cut a pension’s purchasing power in half in just 12 years. One pension, however, has near complete protection from the ravages of inflation. The Federal Employees Retirement System contains a cost-of-living adjustment (COLA) that raises payments annually. Here's how it works: If inflation, as measured by CPI-W, is 2% or less, the COLA matches it. If inflation runs between 2% and 3%, the COLA remains at 2%. Most important, if inflation exceeds 3%, the COLA equals the CPI-W minus one percentage point. In other words, the worst-case scenario is that the COLA lags behind inflation by one percentage point in any given year. If inflation spirals out of control at 10% a year, the COLA would add 9% to federal pension payments annually. If a federal worker’s pension were to lag inflation by one percentage point annually—remember, this is the worst-case scenario—its purchasing power would decline 26% after three decades. That’s not too bad, considering the alternative. An annuity or pension without inflation protection would have lost 94% of its value after the same 30 years. Federal pensions are…

Keeping It Going

John Lim | Nov 27, 2021

AS 2022 APPROACHES, countless people will begin thinking about New Year’s resolutions—both financial and otherwise. There’s nothing quite like the start of a new year to inspire hope. Many of us will set big dreams and resolve to drop bad habits. According to Statista, just 9% of those who make New Year’s resolutions manage to keep them all. Meanwhile, by year-end, 28% haven’t kept any of their resolutions. What differentiates these two groups? Is it willpower or the lack thereof? Is it the audacity of the resolutions themselves? I don’t claim to know the answers to these questions. I do, however, know one thing. When it comes to keeping resolutions or forming new habits, there’s immense power in one phenomenon: keeping a streak going. Jerry Seinfeld discovered this truth decades ago. When asked for advice by a young comic, Seinfeld reportedly said, “The way to be a better comic is to create better jokes, and the way to create better jokes is to write every day.” He went on to describe his process. A large wall calendar hung in his room. Each day that he completed his task of writing jokes, he put a big red X over that day. Eventually, he would have a chain of Xs. His goal: Never break the chain. Two things about this strike me as salient. First, he focused on the process, not the final result. He didn’t resolve to become a great comic. He simply resolved to write every day. I imagine that some days were a struggle. But he put in the time all the same. He focused on writing jokes, one day at a time. In short, he was singularly focused on process. Second, the chain became a motivating force in and of itself. The longer the chain, the more motivated…

Wait a Minute

John Lim | Jan 10, 2022

MINUTES FROM the latest Federal Open Market Committee (FOMC) meeting, which were released last Wednesday, roiled financial markets. Stocks fell sharply, with both the Nasdaq Composite and Russell 2000 falling more than 3% that day. On the week, the Nasdaq was down 4.5%, the S&P 500 down 1.9% and the Dow Jones Industrial Average 0.3% lower. What did investors read in the minutes that gave them such pause? For background, FOMC minutes are released three weeks after the meeting itself. They provide far greater color and nuance on the thought processes of Federal Reserve officials than does the official press release that garners all the media attention. By my count, the December FOMC press release contained 1,024 words, versus 9,457 words for the corresponding minutes. One word that appeared 28 times in the minutes—but which was completely absent from the press release—was “balance sheet.” The Fed’s balance sheet refers to its bond holdings—Treasurys and mortgage-backed securities—now totaling $8.7 trillion. This massive bond portfolio is the result of the Fed’s long-standing quantitative easing program, which has involved buying massive amounts of bonds. What interested me most from the latest minutes was the discussion surrounding “policy normalization.” This is Fed speak for returning to some semblance of normal monetary policy by raising the federal funds rate from zero—what the Fed refers to as “lift off”—and reducing the size of its balance sheet. In particular, there seems to be a growing consensus at the Fed that its bond holdings should be reduced sooner and at a faster pace. Many market watchers took this to mean that the initial rate hike may occur as early as March, three months sooner than had been expected. The growing narrative is that the Fed may have finally gotten serious about the risk posed by inflation. Aside from…

Ignore the Score

John Lim | Oct 7, 2021

I NEED TO CONFESS: I’m obsessed with the financial markets. Most weekdays, I check up on U.S. stocks, emerging markets, the EAFE (Europe, Australasia and Far East) index, the 10-year Treasury yield, gold and even the U.S. dollar index, or DXY, as it’s known. Then, at the end of most days, I view my updated portfolio online. I don’t know why I do this. Deep down, I know it’s irrational. At university, I was an electrical engineering major, studying signal processing. This subfield of electrical engineering focuses on the analysis of signals in things like sounds and images. One thing I learned was that all signals contain both information and noise. Electrical engineers work hard to design filters that eliminate noise while preserving the information in a signal. What does this have to do with my financial obsession? Day-to-day fluctuations in markets clearly represent noise. Whether the stock market closes up or down on a given day is mostly a coin toss. There’s little to be gleaned from following the financial markets’ daily gyrations. From my study of behavioral finance, I also know that humans have an asymmetric emotional reaction to gains and losses. Losses leave us sadder and more fearful than gains produce joy and optimism. The net effect of being a close market observer? Undue pain and stress. Still, I’ve always prided myself on taking market volatility in stride. I have a natural proclivity to go against the herd. When the stock market crashed, I would be in there buying. When it soared, I would raise cash. It made sense, then, to stay on top of markets—or so I told myself. What I’ve come to realize is that my obsession is not just unhealthy, but a symptom of a larger malady. The essence of my addiction is a…

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