Featured Archives - Page 9 of 9 - The Free Financial Advisor

The 14 Leadership Traits of the Marine Corps and How They Can Make You a Better Investor

February 11, 2014 by The Other Guy 8 Comments

Once upon a time, I stood on the parade deck a mere stone’s throw from the San Diego airport. My mom, grandma and grandpa, and best friend’s sister were in the stands, but I couldn’t find them.

Eyes. Straight. Ahead.

After all the pomp and circumstance, we heard the final phrase we had been waiting to hear for nearly 14 weeks, “Marines! Dismissed!” To which we replied, “Aye-Aye, Sir!” took one step back, about face and done.

I had earned the title Marine.

One of the things we learned in the Marine Corps were the 14 leadership traits – they were beat into our brains (sometimes quite literally)– so they’ve stuck with me for almost two decades. Undoubtedly, my time as a Marine shaped who I am today, and despite the fact that I’m not active any more, I still talk with Marine buddies, and quite often reflect on my time; the acronym JJ DID TIE BUCKLE ringing in my head.

Without further ado, here are the 14 leadership traits, as taught to me by Uncle Sam, complete with their definition, and how I think they can make you a better investor:

Judgment: The ability to weigh facts and possible courses of action in order to make sound decisions.
Justice: Giving reward and punishment according to the merits of the case in question. The ability to administer a system of rewards and punishments impartially and consistently
Dependability: The certainty of proper performance of duty.
Initiative: Taking action in the absence of orders.
Decisiveness: Ability to make decisions promptly and to announce them in a clear, forceful manner.

Tact: The ability to deal with others in a manner that will maintain good relations and avoid offense. More simply stated, tact is the ability to say and do the right thing at the right time.
Integrity: Uprightness of character and soundness of moral principles. The quality of truthfulness and honesty.
Enthusiasm: The display of sincere interest and exuberance in the performance of duty.
Bearing: Creating a favorable impression in carriage, appearance, and personal conduct at all times.
Unselfishness: Avoidance of providing for one’s own comfort and personal advancement at the expense of others.
Courage: Courage is a mental quality that recognizes fear of danger or criticism, but enables a Marine to proceed in the face of danger with calmness and firmness.
Knowledge: Understanding of a science or an art. The range of one’s information, including professional knowledge and understanding of your Marines.
Loyalty: The quality of faithfulness to country, Corps, unit, seniors, subordinates and peers.
Endurance: The mental and physical stamina measured by the ability to withstand pain, fatigue, stress, and hardship.

Which of these should you practice while managing your investments?

Knowledge is an easy one, but which others?

I think Judgment and Decisiveness are most important in my investing plan. It’s important to know what to do (knowledge), exercise sound thinking on when to do it (judgment), but most importantly, you need to act (decisiveness). I can see many other leadership traits that would help me (and others) become better investors. This is a useful list for your investment plans and for your day-to-day interactions with others.

A lack of decisiveness holds people back too often. When you have multiple options, and they all look good, it’s important to pick one and move. In the Marines it’s a matter of life or death. Luckily for us, in investing, it’s a matter of compounding interest!

While not life or death, missing out on a few days of interest, over long periods of time, has an increasingly damaging affect on your money. Missing $100 today could be a couple thousand dollars lost during your retirement years.

Other than the ones I listed above, do you see any leadership traits that if applied would help you be a better investor?

photos: Semper Fidelis – Marine Corps Archives & Special Collections; Marine Engineers Resting After Firefight – DVIDSHUB

Taxes Suck! 7 Ways to Stick It To Uncle Sam

February 3, 2014 by Average Joe 8 Comments

Let’s admit it: everyone wants a lower tax bill.

Well, everyone wants the combo of mo’ money AND a lower tax bill.

Doesn’t that sound like a “have your cake and eat it, too” scenario?

Maybe. But then again….maybe not.

Too many people pay WAY too much money on their tax bill. Sometimes they pay more because of poor decisions, but often it’s just because they don’t understand how taxes work and where to look for awesome opportunities.

Here are seven of our favorites:

Do you work for the man? Try these:

Open a retirement plan and use it. The #1 way to grow your net worth and help your tax return is to stuff money into your retirement plan at work. If you’re eligible for a 401k, 403b or 457 plan, jump on that opportunity.

I’ve heard many “reasons” people don’t invest in their workplace plan. Here are a few:

I can’t afford it. Ask yourself this: how will I afford to retire when I have no money later. If you’re too poor to save now, what will you do if you can’t work later?

I don’t like my work, so I don’t want to put money in the 401k plan. Your work farms out the administration of the 401k plan to professionals. Use your workplace plan.

They don’t match. Matching contributions by your employer are gravy on top of an awesome tax shelter. Don’t worry about the match….get invested.

Take advantage of workplace pretax plans: Besides the retirement plan, there are other opportunities, such as HSA accounts. Some companies allow you to pay for everything from childcare to optical with a health spending account. Use as much of this as possible to score huge savings on these services. (If you’re in the 25% tax bracket and have a 5% state tax, you’ll save 30% on your childcare!)

Use bonuses and incentives wisely:

It’s a great day if you’re getting a stock award or bonus, but make sure you understand what you’re getting into tax-wise carefully:

Stock options or stock purchase plan: You’ll pay taxes on these plans when you sell. Having a tough year tax-wise? Don’t sell today. There’s also a HUGE difference between short term and long term capital gains rates. Wait until you’re paying the (significantly lower) long term rate before selling.

Bonus money: If you’re eligible for a big bonus but this isn’t a good year to sell, ask your boss if you can defer your bonus until the new year. Or, if you feel that your income will stay consistent, ask if you can break up a big bonus into two even halves to lower the tax impact. This strategy is best used if you’re getting a bonus at year-end (I hate deferring money in my pocket for several months….).

Have a budget? Try these:

Give to charities. Not only are you helping your community, but you’re putting money back in your pocket if you itemize. Cash gifts will obviously lower the amount of money you have overall, but gifts in kind, such as clothing, old automobiles, and items to 501c thrift stores can both lower your tax bill and remove clutter.

An increasing number of people are now donating larger items and receiving sizable tax deductions as a result. For example, if you have an old boat that you no longer use, making a sponsored boat donation could help you to save a significant amount on your taxes.

Donating a boat is a great thing to do on a number of levels, since the boat is then sold at auction with the proceeds going to charity. Then, for your donation, you receive a tax deduction that is equal to the value of the boat or the boat’s true value.

Claim ALL of your refinance costs. If you’re FINALLY taking advantage of low interest rates to refinance, remember that any points or closing costs you pay might be deductible also. Ask your tax preparer or read this IRS notice to see if you qualify.

Investments? Here are some:

Think about your dividends. I love dividends as much as the next guy, but a portfolio full of dividend-paying stocks in a non-qualified account can be a huge tax speed bump on your investment returns. If you aren’t spending the dividends today, purchase dividend-heavy investments inside of your IRA and use your non-IRA account to house more tax efficient investments.

Buy/sell creatively. If you’re finally selling your big winning stock, look for that stock in your closet that’s been horrible and has no prospects of coming back. You can cover up all of your capital gains with losses from losing stocks…and $3,000 more.

Photo: DonkeyHotey

Blog Post of the Week! …Another Great Month edition

January 31, 2014 by Average Joe 13 Comments

Where the hell has the month gone? Well…we’re wrapping up a great January here at TheFreeFinancialAdvisor.

Here’s a list of things we accomplished between FFA and our sister site, Stacking Benjamins:

– We’ve completely redesigned this site. I hope you like the look of our new home. We’ve got more coming in February that I can’t yet disclose, but you’re going to love it!

Maybe not so lovable. “Made with real anis!” doesn’t sell me….for some reason.

– I also redesigned Stacking Benjamins, my personal blog. Now you’ll see pictures on the tops of the posts and the podcast player has been moved to the top.

– We created better written content this month. Now that I have a podcast editor (thank you to Isabella Bianca, our new editor!), I can focus more on the written word. Hopefully you’ve gotten some great tips from our new posts here.

I’m especially proud of:

5 Secrets Auto Insurance Agents Won’t Share

How The Repo Guy Nearly Took My Car

and on Stacking Benjamins:

What To Do When Your Mutual Fund Manager Leaves

21% Interest Rate Credit Card or Build Your Emergency Fund? The Choice is Obvious

Joe’s Top Films of 2013

I hope to do more of these in the future, so you’ll know these two sites are well worth your time every day!

Also – In the past, I had a hell of a time discerning the roles of the two sites. What was the difference between Stacking Benjamins and The Free Financial Advisor? From the beginning, I knew what I wanted to create with SB. I wanted a place that was MY home on the internet and a home for our podcasts. So, on that site, you’ll get my personal point of view with a big dose of “Joe” attached.

But FFA was a different story. When I began SB in the spring, I gave little thought to what FFA was going to become. I realized during January what FFA should be: exactly what the name implies. You’ll get lists of the best activities you should undertake with your money. Lists of the worst mistakes we’ve seen people make. Planning tips while you’re navigating the financial waters.

So, to try and put it succinctly, Stacking Benjamins will be Joe’s quirky thoughts and Free Financial Advisor – Average Joe’s Money Blog will focus on clear tips to manage money better.

Also in January:

– We tweaked the podcast to feature a better introduction sequence, a few more voices on the roundtable, and we added an awesome new contributor, The Evil HR Lady.

– I’ve been experimenting with video, and I’ll have our first Stacking Benjamins video up in February.

– Work has continued on my book. I’m now at 32,000 words, just over halfway to my 60,000 word goal.

– I’ve joined on as a contributor at another awesome site, Daily Capital. You can now find me at American Debt Project once a month and Daily Capital from time to time.

Enough about me, because this post is about you….and the best writing I read on the web this week.

The Blog Post of the Week!

My favorite article of the week comes from Snark Finance and was actually written eight days ago. I know….that should invalidate Mitchell from the grand prize, but in fairness, I missed the post and actually read it yesterday. So, the judges conferred and decided to grant an exception.

I’m sure Mitchell was sweating.

So, why do I like How to Become Creative: Tips!? People often tell me they aren’t creative, but they don’t realize that creativity isn’t something you’re born with….it’s a muscle you can develop. I love Don Hahn’s book on creativity: Brain Storm: Unleashing Your Creative Self, and Austin Kleon’s book Steal Like an Artist: 10 Things Nobody Told You About Being Creative
(our affiliate links if you’d like to help the site!). These books say in 60k words what Mitch stresses in a few hundred: work to become creative and soon you’ll have ideas when you least expect it.

So, Mitchell, here’s the deal. Congrats on the award….which is us allowing you to print this and post it on your refrigerator for exactly one week.

You’re welcome.

Hello, my name is:

In the “new to me” department, let’s welcome DebtFreeTejana to our little world of financial bloggers. She’s been blogging seriously since what appears to be October….but this is how long it takes me to actually pay attention. Read: The Cost of Being a Female.

Hope you have an awesome weekend! We’ll see you Monday on the Stacking Benjamins podcast and back here with more fun articles on saving.

A Huge Thanks!

Big thanks to our friend J. Money. He popped our post 21% Credit Card vs. Emergency Fund: The Choice is Obvious on the top of his Rockstar Finance page. Have you heard our interview with J. from Fincon? Check out: How Much Does a Baby Cost?

Finally, a big thanks to Tonya at Budget and the Beach for mentioning Joe’s Top Movies of 2013 on her Big Picture list of reads. Have a great half, Tonya! Remember my mantra: start off slow and then settle into a slower pace….

photo: Greg.Buri

5 Secrets Auto Insurance Agents Won’t Share

January 28, 2014 by Average Joe 4 Comments

Car insurance agents, for quite awhile, have been the butt of finance-related jokes. Lately though, with hard-hitting advertisements from big firms like State Farm and Allstate, agents are fighting back. People are beginning to understand that while you may pay less with an online auto insurance service, there’s a ton of value attached to having an insurer who’s there when you need them.

But that doesn’t make agents little angels, either, does it?

Insurance agents have a few tricks up their sleeves, and the more you know about those tricks, the easier it’ll be to navigate meetings and phone calls in the future.

Here are my favorite 5:

1) Auto insurance is a loss-leader. Maybe the insurance company makes money on auto insurance, but the agent doesn’t. Auto insurance pays so little that it’s very difficult for an agent to survive. Therefore, the agent will sell you an auto policy as a way in to your heart. Most agents have a full line of far more lucrative products, ranging from life insurance to annuities, that they’d love to sell to you.

2) If you don’t ask about the discount, I might not tell. This isn’t universal, but agents hoping to make a few extra bucks might try and steer clear from discussions about discounts. Because the agent is paid a commission based on the amount you pay, it’s in their interest for you to pay more.

Of course, agents who are after the “bigger picture” will try to give you as large a discount as they can find. That way, when you’re looking for help in other areas, you’ll come running back to them for advice.

3) That multi-line discount, while giving you a little off the premium, might not be your cheapest option. For years, I’ve had my auto coverage through a different insurer than my homeowners. Yet, agents always ask me if I have a multi-line discount. I’ve found that by forgetting this discount and paying a little more, I still save in the aggregate by purchasing from separate insurers.

Why doesn’t the agent share this one? That’s easy. Wouldn’t you rather have a client who thinks they’re getting a discount AND who owns two of your products instead of only one? You betcha.

…by forgetting this discount and paying a little more, I still save in the aggregate by purchasing from separate insurers.

4) I’m not going to monitor your policy. I remember people getting angry because their insurance agent never called them except when she wanted to sell something else. They never asked about bithdays or new discounts that might apply to the client. Simply put: agents don’t have time to waste on these small issues. With several hundred (or thousands) of clients, there simply isn’t enough time in the day for those personal calls. It’s up to you to take care of your own needs. Call your agent periodically to review your policy for discount opportunities and new rates based on any changes in your life.

5) My assistant knows a ton more about you than I do. In most offices, the assistant handles 85% of the day-to-day “low commission” business. I always told my clients that for routine business calls, ask for the assistant, not the agent. While the agent might take two days to return your call, the assistant may be available right now to take care of address changes, premium payment changes, or small policy questions.

That doesn’t mean you should ask the assistant if you really need that permanent life policy. If you think your question is at all technical, talk to the agent for your best answer.

4 Factors to Weigh When Choosing a College

January 27, 2014 by Average Joe 5 Comments

College students in America are facing a financial crisis.

According to the Center for American Progress, more than 13 percent of students who started loan repayment in 2009 wound up in default by September 2012. Another 26 percent of those borrowers were delinquent.

Ouch.

Many experts argue that the causes for these epidemic rates are systemic: College is getting more expensive, forcing students to borrow more, but the rising cost of college degrees is not being met by increasing value of those educations.

Many students who began loan repayment in 2009 entered into an economy that struggled to create new jobs for the youngest generation, resulting in an employment crunch where college education was not rewarded with the employment they merited. With horror stories running rampant, today’s prospective college student is increasingly weighing the cost of college against its supposed value. If you’re facing a similar situation, here are some financial considerations to keep in mind:

Consider the Total Costs

For many students, college is expensive. But there are other costs associated with college that are worth considering when weighing the total cost. For example, if you go to a school where you need to own a car, you’ll have to pay for the up-front cost of the vehicle plus maintenance, gas and insurance while you’re in school. That could easily up the price of college by thousands of dollars per year, depending on the vehicle.

And if you plan to live off-campus, the local cost-of-living might also factor in. Consider housing prices, food budgeting, and other situational costs that might affect how you consider the overall cost of attending one college over another.

How Does Financial Aid Vary?

Federal financial aid is typically awarded according to your family’s presumed ability to pay for college. This affects the federal grants you qualify for as well as the types of student loans you are eligible to borrow. Additionally, individual schools also have financial aid packages that can feature an array of scholarships and grants. Depending on the school you plan to attend, strong students can sometimes lobby for better financial aid packages.

Because your financial aid is likely to be different at every school, you need to get hard numbers from each institution, and use this aid to reassess your college options. One report by HCM Strategists identified financial aid packages and emerging aid channels as vital tools to make college more affordable. These tools help avoid the worsening student-debt crisis, so don’t ignore how these alternatives might create much-needed economic relief.

You can even receive financial aid if you enroll in an online institution, depending on your overall financial need. Contact your school’s admissions advisor for more information on state loans, personal loans, veterans’ benefits, and tuition reimbursement through your employer. The tuition reimbursement program is a great option for employers who want to invest in their employees and keep them around long-term.

Will You Get Your Money’s Worth?

When it comes to saving money in order to get more bang for your buck, students have a number of options available to them. They may choose to first attend a community college and complete general education requirements while the costs are low. It’s also helpful to keep online college courses in mind, particularly if you’re looking to maintain flexibility while juggling school and a job. Browse a directory of online colleges and programs to educate yourself on all of the options available to you. Scourge the web for all available online college resources you can find, and start comparing and contrasting each resource.

For Some, It May Depend on Your Major

A college education can offer job prospects and income opportunities that vary widely across different majors. According to a report from Georgetown University’s Center on Education and the Workforce, unemployment rates tend to be much higher for some courses of study than for others, as Forbes highlights.

Architecture graduates have the highest current unemployment rate, largely because the stagnant economy has deflated demand for new buildings. Not far behind are Arts, Humanities and Social Sciences, all of which have unemployment rates of 8.9 percent or greater.

Given those numbers, students might find it particularly risky to invest in an expensive education that offers poor income prospects and a high risk of unemployment. Degrees in business and other stable professions, on the other hand, are more likely to deliver a strong return, making it more practical to spend for a more expensive education.

How the Repo Guy Nearly Took My Car

January 21, 2014 by The Other Guy 12 Comments

When people ask, “What do you really know about the average guy? You manage money for rich people?” I always smile. I’ve had the privilege of working through my share of wonderfully challenging personal financial situations. And when I say “challenging” I mean the worst timing and situation imaginable.

Here’s one you’ll love and can learn from:

I’ve been a member of an entrepreneurial coaching group for a long time. Early in my career I was getting ready to head out of town. My job was to pick up two additional participants and get the heck on the road since we were getting some pretty crappy winter weather. As I was just finishing loading my bags in the car, my phone rang:

“Hello, is this TheOtherGuy?” (clearly someone who doesn’t know me. They even pronounced TheOtherGuy incorrectly!)

I answered with the affirmative.

“Hi, this is Rick with American Recovery…”

“Hey, Rick, whatcha trying to recover?” I said, half jokingly…and kinda wondering who this guy was.

“Uh, let’s see here…an Acura. We need to get that picked up today.”

What? That was my car!

AT this point I’m sure what’s happening: My wife listens to a radio program in the morning where they call people and get them all riled up and then surprise them with the fact that it’s all a big joke. I’ve listened a couple of times and have told my wife that there was NO WAY I would ever fall for that stuff.

Ever.

So, immediately, I thought it was a joke. So I sort-of played along.

Then Rick says, “So, ’cause you filed bankruptcy, Acura wants the car back.”

Now it’s getting serious…I’m pretty sure I would remember filing bankruptcy. I assured Rick I had not ever (and would not ever) file for bankruptcy, and that he must have the wrong number.

Then he said the magic words…

“Who’s Sally?”

Mutha f*$#er.

Sally is my mom.

And here’s why that matters. Several years earlier, when I’d bought my nicely used car (doing the right thing…Dave Ramsey would be proud), I decided that I was smarter than the people who figure out interest rates. I was a young, aggressive financial planner and knew a thing or two about leverage. So, I figured out that if my MOM co-signed the loan, it would save me another 0.5% per year in interest, thus making it worthwhile for me to take the financing (instead of paying cash for the used car) and invest the difference in some investment that would beat the interest rate.

In fact, I distinctly remember thinking how smart I was.

As Julia Roberts said in Pretty Woman, “Big mistake. Huge.”

I figured that I could clear this whole thing up by calling Acura. You see, it was true. I’d just found out that my mom HAD filed (long story there, but a good reason) and not me!

Without boring everyone with all the details – I have never been treated worse in my whole life. The people on the phone at Acura actually said “Well, if you weren’t such a deadbeat and wouldn’t have filed bankruptcy, this wouldn’t be going on.”

It really didn’t matter that I HADN’T filed for anything. They kept repeating what a loser I was.

White. Hot. Burning. Rage.

Finally, I ask for solutions – they offer two:

Pay off the balance of $10,680
Have car repo’d

Obviously, I’m choosing option 1, so I inquire: Can I just wire you the money?

Their answer: “No. It must be Western Union.”

For those of you who don’t know, I found out that day that sending money via Western Union is a giant pain in the ass. Trust me.

Oh, and did I mention the joys of going to the bank to take a withdrawal of $10,700? The IRS likes those forms they make you fill out…they’re called Currency Transaction Reports. And, I happen to know that 100% of CTR’s are reviewed by an IRS Criminal Agent. Lovely.

All because I was too smart to just pay cash.

So, I went on my trip – worried the whole time that the repo dude was going to take my car while I was 800 miles from home. When I returned, I had to drive 4 hours round trip (since we bank online) to get $10,700 withdrawn from my bank account, then I filed out a CTR which basically invites the IRS over for dinner, I enjoyed standing in line at Walmart for 45 minutes…with TEN THOUSAND DOLLARS IN MY POCKET to fill out this long-ass form to Western Union a payment to Acura.

All because I didn’t pay cash.

…and because I thought I was smarter and could make a couple extra bucks on my own. I guarantee that the time, energy and stress associated with this incident taught me a lesson – it’s not worth the time.

So, yes, I manage money for rich people…and average people. But many of the lessons I’ve learned are because I’ve also been there myself.

The lesson for today? Pay cash for your car and be done with it.

That’s my lesson: What’s a costly lesson you’ve learned?

Photo: David Berkowitz

The 5 Dumbest New Year’s Resolutions of All Time

January 16, 2014 by Average Joe 2 Comments

New Years.

A time of overeating, watching football or old movies, and resolving to do better, maybe a week or two in the future…..

Are we at that point yet? Is anyone “doing better” yet?

Resolving and actually “doing” better are two totally different things, aren’t they? New Year’s resolutions are usually bound to fail….especially if you try any of these silly tactics:

5 Dumbest New Year’s Resolutions Phrases

1) Losing weight “on your own”: Yeah, I know. You’re going to lose weight or build savings without any help from your friends. This resolution is like putting a bunch of French fries in front of you and saying you won’t eat them. Of course you’ll eat them….willpower is baloney. Don’t count on any goal that you’ll do “without help.”

Who needs to reinvent the wheel?

Better solution: find someone who’s done it before and ask them for help.

2) Joining a gym so you’ll work out. Back when I belonged to a gym (before I began working out with friends), my least favorite time of year was the first two weeks of January. The gym was packed with people I’d never seen before….and wouldn’t see again the rest of the year.

Don’t convince yourself that by joining ANYTHING you’ll actually make the commitment to change. Instead, build systems to change. For workouts, force yourself out of bed at a certain time. Join chat groups on working out. Read magazines. Track your progress.

Create goals that begin with “How can I learn about this now and then spend money when I prove I’ll stick with it?…..”

Better solution: create surround sound environment so you succeed in your goals….and spend money later, once you know you’re serious.

3) Deciding to save more every month by “writing a check.” Nobody….and I mean nobody…..writes a check toward their goals. If we want to get all 2010 about it, nobody even presses buttons to transfer money from one account to another. Do you know how the ballers do it? They save automatically. If you have to think for only a minute about your goals, you’re toast.

Better solution: Set up a system of saving that doesn’t require you to think.

4) “I’ll try and…..”

Best. Solution. Ever.: Repeat after Yoda. There is no try. Only do.

5) I’ll cut back on smoking. Making a change halfway is a sign that you really aren’t commited to the goal. Want to achieve something? You can’t be half pregnant. Go for it. Don’t cut back on smoking: stop completely. Don’t save “a little more” toward your goals: find out what they cost and create a plan. Don’t try and budget this year: set up an account at Mint or Yodlee and track every penny automatically.

Better solution: Create automatic systems that will change your behavior completely.

Photo: Jeff_Golden

Consumerism on a Budget: Why Americans Proudly Use and Love Coupons

January 3, 2014 by Average Joe 2 Comments

Maybe Americans love of extreme couponing has something to do with their Puritan roots. While the word “frugal” probably wasn’t tossed around when the early settlers set up shop on American shores, making the food stretch and getting through the harsh New England winters certainly required vast amounts of foresight and budgeting. According to statistics compiled by the coupon-and-promo-code site RetailMeNot, which surveyed 10,000 consumers from 11 countries, Americans are the most frugal shoppers and deal hunters in the world. Numbers don’t lie, but what do these statistics say about our society?

Taking Pride in Saving Money

According to RetailMeNot, nearly half (48 percent) of consumers in the United States said that they use coupons such as sams club coupons as a symbol of their savvy shopping. Whether cutting food coupons from the Sunday newspaper or clicking through websites for Black Friday-type sales, in the end, it doesn’t matter if we shop at a brick and mortar store or find it online, we pride ourselves in saving money on products and gravitate towards places with the best deals, discounts and sales. Of course, why Americans spend so much time devoted to finding the best deal is another question; for many shoppers, bargain hunting is a hobby, sport and Grail quest all rolled into one. Our society may be comprised of entrepreneurial money-makers, but it is also a society of getting the most out of our money. Those 17th century Puritans would be proud.

America’s Most Coupon Loving Cities

So if we are a nation of couponers, what cities and regions take the gold medal when it comes to bargain hunting? According to DailyFinance, Midwestern and Southern shoppers love digital coupons, with Atlanta taking the top spot as the city with the most online couponers. Boston, Philadelphia, Pittsburgh, and Washington D.C. have the most frugal shoppers in the Northeast (notice the exception of New York). In Coupons.com’s Top 25 Most Frugal Cities list, the West Coast is the least frugal region in the nation, with only Seattle making the cut. What, if anything, does this say about Californians?

Couponing as Couture

People have always cut coupons and looked for doorbuster deals at stores. Who doesn’t want to save a couple of bucks, right? Budget shopping, however, gained popular attention following the 2008 recession. It makes sense. If you’re not in a good financial position, you will look to budget and cut costs everywhere you can. Savvy shopping became trendy, a sort of fashion-cum-lifestyle statement.

Just as all fashion fads rise and fall, however, couponing is not as trendy as it once was. According to NCH Marketing Services, manufacturers sent 305 billion coupons into circulation in the U.S. last year. That’s roughly the same total as 2011. However, the number of coupons used by consumers in 2012 measured 2.9 billion, representing a dip of 17 percent compared to the year before. Still, the question remains: are Americans more financially secure today and therefore using less coupons, or is the couponing craze as a trendy lifestyle statement waning? It all depends on whether you ask a budget-shopper or a spendthrift.

Forgetting to Rebalance Makes You Wobbly

November 21, 2013 by The Other Guy 4 Comments

Quick question:

What does a good investor have in common with a good tightrope walker?

They both remember to rebalance!

HA!

I’m here all week folks. Don’t forget to tip your wait staff!

Forgetting to rebalance is just as dreadful for an investor as it is for a circus performer. Let’s talk about why.

First, let’s dispense with a definition. My definition of rebalancing is this:

Rebalancing is the act of periodically putting one’s portfolio back to one’s previously well thought-out asset allocation based on one’s unique risk tolerance, time frame, goals, and objectives.

Fun, huh? Disecting each part of that definition results in the following:

1 ) …act of… – this means that rebalancing is an action. You. Must. Do. It. (or at least cause it to be done through automatic programming). Rebalancing is something that must be done, by you.

2) …periodically…this doesn’t mean whenever you feel like it or whenever you remember. It means you need to select that time and mark it in your calendar. We prefer annually, but semi-annually is OK, too. Quarterly…eh…you’re probably wasting time. Any more frequently than quarterly and you’re doing market timing by a different name.

3) …putting…portfolio back… This next part is relatively easy. You’re putting it back – the way it was. No thought required here. Just like I tell my kids. Put your toys back the way they were. In the places they were before you played with them.

4) …previously well thought-out… During your rebalancing activities, you do not need to redesign your model. You’ve already done that. Previously. And it was well though-out.

5) …asset allocation based on unique… We could spend hours here, but here’s where you should’ve spent some serious thinking time around your risk and goals. Rebalancing is only rebalancing if it’s back to an asset allocation.

What can happen if one doesn’t rebalance?

That’s easy – anecdotally, consider the late 90s or late 2007. A big run up in one area of the market (say the Large Cap stocks of the 90s) could mean they’re overvalued. What happens when something’s overvalued? It eventually becomes undervalued! Rebalancing can help to sell winners at a gain and buy more shares of positions that are undervalued.

One of the “tricks” professionals have up their sleeves is rebalancing. It is a automatic process designed to take the thinking and emotion out of investing and allow investors to capture profits and reposition those dollars where they can buy the most shares of undervalued investments. Use rebalancing to your favor!

PS: The US stock market is up HUGE this year. Is it time you rebalanced???

Photo: quinn.anya