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Dickie and his magic beans

R Quinn | May 6, 2026

"This really isn’t about the cost of coffee. It’s about the price of convenience. It’s the single serving that. Is driving the cost of Keurig— rhink about the price of packaging!"

- Marilyn Lavin

The reality of Social Security and Medicare- My real life experience.

R Quinn | May 4, 2026

"If only the disturbing ignorance you highlight regarding Social Security and Medicare were the only intellectual drag on current society; I fear it is but the tip of the iceberg."

- Chris Rush

OUR FIRST GRANDCHILD recently arrived, which naturally has us thinking about the smartest ways to build a strong financial foundation for her future. In 2019, I wrote Take a Break, which outlined saving strategies on behalf of children. Since then, the landscape has changed with the introduction of Trump accounts and Roth-conversion pathways for 529 accounts. Families have four tax-advantaged savings approaches on behalf of young children plus the Roth IRA option once the child has earned income – 529 education savings account, a Uniform Gift to Minor (UGM) custodial account, a Coverdell account, and the new Trump account. Each option offers a different mix of tax benefits, contribution requirements and withdrawal rules. 529 Accounts Pros

Tax-free growth when used for qualified education expenses
High gift-tax contribution limits: $19K per contributor per year (indexed)
New ability to convert up to $35K into a Roth IRA for the beneficiary

Cons

Relatively complex with penalties and taxes on non-qualified withdrawals
Limited, state-approved investment options
Risk of underutilization if the child does not pursue qualifying education

Caveats

Technology and AI could significantly reduce education’s cost structure in the future
Roth conversions are capped at $35K lifetime
The 529 must be open 15 years, and contributions must age 5 years before conversion
Conversions require the beneficiary to have earned income (i.e. they could Roth anyway)
Annual Roth contribution limits still apply (e.g., $7.5K in 2026), so completing the full $35K conversion would take five years

UGM Custodial Accounts Pros

Brokerage account where up to $2.7K of unearned income can be tax-free each year
High gift-tax contribution limits: $19K per contributor per year (indexed)
Broad investment flexibility — stocks, bonds, funds, etc.
Few restrictions on how funds may be used for the child’s benefit
Potential for low taxes on capital gains, but subject to marginal “kiddie tax” at parent’s rates until tax-independency or age 24

Cons

Higher income or capital gains could trigger the kiddie tax at the parents’ marginal rate
Assets count as the child’s for financial-aid purposes

Caveats

Custodians have some ability to spend down the account for legitimate child expenses if the child is a wild-child in the later teen years

Coverdell Accounts Pros

Tax-free growth for qualified education expenses
More flexible investment choices than most 529 plans

Cons

Low contribution limit: $2K per year plus income limits restrict who can contribute
Essentially irrelevant today given the expanded options within 529 plans

Trump Accounts Pros

$1K government seed deposit for children born 2025–2028
Contribution limit of $5K per year in 2026, indexed to inflation
Parent employers may contribute up to $2.5K per year (also indexed)
Tax-deferred growth with Roth-conversion opportunities beginning at age 18
No earned-income requirement for Roth conversions
Roth conversions are ideal in low-income years starting after age 18 once the child has transitioned to tax-independency of parents or at age 24 when “kiddie taxation” ends. Early tax independence could even be a combined Roth plus student financial-aid strategy
Potential to convert large account values over several years at relatively low tax rates (potentially marginal 10-12% tax-rates, but averaging less due to the standard deduction).

Cons

Investment options limited to low-cost indexed stock funds (not necessarily a drawback)
Penalty-free withdrawals must wait until age 59½, but the accounts could be advantageous even including penalties
Limited custodian control and intervention possibilities if the teen is a wild-child

Caveats

If Roth conversions are not undertaken during the child’s low-income years, a UGMA invested to capture long-term capital gains tax-rates may outperform a Trump Account taxed at ordinary income tax-rates
Watch this space as future adjustments or eligibility changes are possible

In effect, the 529 is a two-decade college savings program having some complexity and withdrawal limitations; the UGM is a reasonably flexible, 18-30-year college or house downpayment savings program; and the Trump account is a somewhat inflexible, sixty-year retirement accelerator. Resulting Playbook Here is our family’s intended playbook for tax-advantaged accounts in the grandchild's name:

Parents’ retirement account fundings remain their top priority - 401K’s at a minimum up to the match, HSAs with their triple tax advantages, and Roths as long as eligible within income limits.
A Trump account has already been initiated to secure the free $1K government seed contribution – grows to potentially $2.6K at age 18 after penalties and taxes.
Limited 529 funding has also been initiated to start the 15-year clock for potential later Roth conversions.
The family’s next priority is to fund the Trump account which starts at $5K later this year. Maximizing the Roth conversion opportunity will require ~$116K of contributions (at 3% inflation) over 18 years which we grandparents intend to help fund. I estimate the Roth converted Trump account could grow to ~$2 million of tax-free money at age 60 (6% growth) assuming early-age Roth conversions, and the Wall Street Journal projects as much as $3 million (link likely paywalled).
The subsequent priorities are to start UGM taxable account and 529 account contributions in parallel to perhaps initial levels of about $35K each. This may take our family some years depending upon available resources for contributions.

For the UGM account, a balance of $35K should capture a sizeable chunk of the annual $2.7K tax-free income limit by investing in high-yield income alternatives. For the 529 account, $35K aligns with the Roth conversion limit. On a personal note, we had extremely positive UGM outcomes with our children. We saved taxes for two decades, and each child used the ~$60K balance as down payments on their first house shortly after college. Due to the 529’s withdrawal rigidities and potential technology impacts, we are unlikely to fund the 529 to the max.

We will skip Coverdells as the alternatives offer ample savings opportunity in the child’s name ($200K+).
Depending upon spare resources available for gifting, we can always reassess future contributions.

That’s our plan, and we’re sticking to it…. until something changes. John Yeigh is an author, coach and youth sports advocate. His book “Win the Youth Sports Game” was published in 2021. John retired in 2017 from the oil industry, where he negotiated financial details for multi-billion-dollar international projects. Check out his earlier articles.

Living On Autopilot

Mark Crothers | May 6, 2026

Be the first to comment.

Retirement Toys

Mark Crothers | May 4, 2026

":)"

- Jeff Bond

New Face, old scam

Jim Wasserman | May 2, 2026

"My wife is an amateur artist and sells her paintings on her web site and Facebook. She gets contacted by scammers with similar pitches. One wanted to license one of her paintings to supposedly use the image on commercial products. My wife has a boilerplate licensing agreement she sent out and never heard anything more. The internet has made it possible for every criminal in the world to try to steal your money."

- Howard Schwartz

Wall Street Trap

ArticleAdam M. Grossman | May 2, 2026

IN THE INVESTMENT world, May 1st is a notable day. It was on May 1, 1975 that the Securities and Exchange Commission deregulated the brokerage industry. For the 183 years prior to that, trading commissions on the New York Stock Exchange had been fixed at uniformly high rates. But when deregulation arrived, competition got going. That’s when discount brokers like Charles Schwab got rolling, and over time, May Day, as it’s now referred to, has delivered enormous savings to consumers. More than 50 years later, though, Wall Street still operates in ways that are often at odds with consumer interests. As an individual investor, what are the obstacles to be aware of? At the top of the list is Wall Street’s fixation with individual stocks. For almost 100 years, the data has been clear that stock-picking is counterproductive. Probably the first to uncover this was a fellow named Alfred Cowles. Cowles came from a wealthy family and wondered whether the investment advice his family had been receiving was worthwhile. He set about answering that question and in 1933, published a paper titled “Can Stock Market Forecasters Forecast?” Cowles’s conclusion: They can’t. More recently, research by finance professors Brad Barber and Terrance Odean came to a similar conclusion. The title of their most well known paper is self-explanatory: “Trading Is Hazardous to Your Wealth.” Along the same lines, Standard & Poor’s regularly examines actively-managed mutual funds to see how many are able to outperform the overall market. The most recent finding: Over the past 10 years, fewer than 15% of funds benchmarked to the S&P 500 managed to beat the index. Research by Jeff Ptak at Morningstar has found that the more active a fund is, the worse it performs. So-called tactical funds, which shift among different asset classes in response to economic forecasts have, in Ptak’s words, “incinerated” shareholder dollars. This data is fairly well known. The problem, though, is that trading activity generates revenue for the brokerage industry, so it has an interest in keeping investors engaged with the market. That’s why brokerage analysts are on TV every day, offering their forecasts for individual stocks, for the overall market and for the broader economy. To be sure, this makes for interesting television. The problem, though, is that it’s been shown to carry almost no value. According to research by Joachim Klement, the accuracy of Wall Street prognosticators is approximately zero. Why are they so poor at forecasting? For starters, there’s the simple fact that no one has a crystal ball. No one can know what a company—or its competitors—will do a month or a year from now, and how that will translate into stock price gains or losses. Sociologist Ezra Zuckerman Sivan uncovered a more subtle explanation. In research published after the technology selloff in 2000, Sivan found that Wall Street analysts are constrained by two obstacles. The first is that they’re dependent on access to companies’ management teams to help in their research. For that reason, it’s in their interest to maintain positive relationships with the companies that they follow. Investment banks that take a positive view on a company may also be rewarded with profitable mergers or acquisitions work when the need arises. Those factors bias stock recommendations overwhelmingly in the direction of “buy” ratings. Another reason analysts tend to avoid negative comments about the companies they cover: Sivan found that there is a community effect that tends to form among the analysts assigned to a given company, and thus an incentive develops to not “rock the boat” in saying anything too critical. People generally want to get along, and that results in a sort of self-censorship. This research is well understood, and yet Wall Street continues to generate forecasts day after day, year after year. Why? There are two explanations, I believe. The first is that it’s entertaining. I’ll be the first to acknowledge that index funds aren’t terribly interesting to talk about. It’s far more interesting to talk about smartphones or AI and the companies behind them. That makes Wall Street analysts invaluable to the media, who need to fill airtime. And as long as they’re granted that airtime, forecasters are of great value to the brokerage industry. Since trading activity is profitable for Wall Street, it’s in brokers’ interest to generate continued interest in stocks. That brings in commission dollars for brokers. And even though commissions have shrunk in recent years, brokers benefit in other ways from active trading, including the “bid-ask spread” on each trade. That’s the difference between what buyers pay and what sellers receive, and though these spreads are tiny, they add up for the brokers who collect them. For good reason, then, Wall Street continues to promote stock-picking. At the same time, the investment industry is always busy developing new funds. In the first half of last year, for example, fund companies rolled out more than 640 new funds. Among them: funds that hold single stocks with varying degrees of leverage and other seemingly unnecessary new formulations. The result: There are now many more funds than there are stocks trading on U.S. exchanges. Many of these new funds follow ever more esoteric strategies. They’re often opaque. And almost invariably, they carry higher fees. In a 2011 study titled “The Dark Side of Financial Innovation,” finance professor Brian Henderson and a colleague looked at one popular category of fund known as a structured product. Their conclusion: These funds were overpriced to the point that their expected return was actually a bit below zero. How were they able to market such an inferior product? Henderson’s hypothesis was that the fund companies designed them to be intentionally as complex as possible in order to exploit individual investors. The bottom line: To a great degree, Wall Street is upside down. But as an individual investor, you don’t have to be. My rule of thumb: In building a portfolio, investors should do more or less the opposite of what Wall Street recommends. That, I believe, is a reliable formula for success. 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.

How much to provide a college student monthly?

Chris | Apr 25, 2026

"“Concerned” seems a misnomer here😎"

- R Quinn

Is saving really that hard? Nope, not for the great majority of Americans.

R Quinn | Apr 28, 2026

"Difficult requiring great discipline, yes. Impossibility, no. Simply because some people do it. Don’t focus on the $3,000, that’s an illustration. It’s the concept that is important. Many people earning double the amount claim they can’t save. An 8% return for the stock market is pretty close to the average over the last 50 years."

- R Quinn

Investing Fundamentals: A Simple Guide for Beginners

W.D. Housley | Apr 24, 2026

"Excellent article. Now let’s forward it to our young relatives and friends who have limited attention spans."

- Nick Politakis

Ageing and the Open Road

ArticleMark Crothers | May 2, 2026

RECENTLY I TOOK a free ride on a driverless bus trialling its proposed route, part of my local administration's ten-year rollout plan for self-driving public transport and taxis. I see real potential in this technology, and I'm hoping the infrastructure and implementation stay on schedule. That hope is mostly selfish, I'll admit. In fifteen years I'll be in my mid-seventies, and I'd love to ditch my car and rely on cheap, dependable robo-taxis instead. It would give me freedom precisely in that decade of life when driving starts to become genuinely problematic. I'm planning to change my car in 2027 for a modern hybrid, but in the back of my mind is the thought that it could be my last. If the self-driving rollout hits its targets, I can see the case for never buying another. The advantages for someone in my demographic at that stage of life would be hard to argue with. Think about what car ownership actually costs. There's the purchase price, insurance, road tax, fuel, servicing, tyres, and the occasional bill that arrives like a punch to the stomach. For most people, a car is the second most expensive thing they own after their home. In retirement, when income typically drops and budgets tighten, that ongoing drain becomes harder to justify. This is especially true when the car spends the vast majority of its time sitting on a driveway looking pretty. A robo-taxi model, where you pay only for the journeys you actually take, could represent a dramatic shift in how much personal transport really costs. The numbers, I suspect, will be compelling — with current estimates from real world operations suggesting an 80% reduction in the cost of fares being achievable. Then there's the question of independence. This is the one that matters most to me personally, and I'd imagine it resonates with anyone approaching or already in their later years. Giving up your car keys is one of those milestones that nobody really talks about, but everyone in that demographic understands. It represents a loss of spontaneity and self-sufficiency that can genuinely affect quality of life. The difference with autonomous vehicles is that surrendering the wheel doesn't have to mean surrendering the freedom. A reliable, affordable self-driving taxi available on demand restores something that previous generations simply had to go without once driving became difficult. This could be a trip to the supermarket on a weekday morning or a late evening visit to family. The safety dimension is also worth considering. Reaction times slow as we age. Night vision deteriorates. Concentration over long distances becomes harder. Most older drivers are aware of this and manage it carefully, but there comes a point for everyone where the road becomes a source of anxiety rather than freedom. Autonomous vehicles remove that calculation entirely. You get in, state your destination, and arrive, without the cognitive load of navigating, anticipating other drivers, or worrying whether your responses are still sharp enough. That peace of mind shouldn't be underestimated. There are wider social benefits too. Older people who can no longer drive are disproportionately affected by isolation. Poor rural transport links, infrequent bus services, and the general assumption that everyone has access to a car all contribute to a situation where many retired people find their world gradually shrinking. Autonomous vehicles, particularly if integrated intelligently with existing public transport, have the potential to reverse that. A robo-taxi that can be summoned by a smartphone, or even a simple voice command, could keep people connected to their communities, their families, and their routines far longer than is currently possible. There are, of course, reasons to be cautious. Technology rollouts rarely go entirely to plan. The ten-year schedule my local administration is working to is ambitious, and a lot can change in funding priorities, in public appetite, and in the regulatory environment. The early trials are promising, but promising trials and full-scale dependable infrastructure are very different things. It's worth keeping in mind, with a groan inducing pun: your mileage will vary — literally. Dense urban and suburban areas will almost certainly see reliable services first, and I'm fortunate that describes my situation. For those in more rural communities, the very people for whom isolation is already the sharpest problem, the wait could be considerably longer. I'm hopeful, but I'm not banking on it entirely. Which is why the 2027 hybrid still makes sense. It's a practical hedge, a good, modern, efficient car that will serve me well through the transition years, whatever pace that transition takes. But the fact that I'm already thinking of it as potentially my last car feels significant. A decade ago that thought wouldn't have crossed my mind. The technology has moved from science fiction to credible near-future fast enough to genuinely reshape how I'm thinking about retirement planning. If it delivers, the generation hitting their seventies in the late 2030s could be the first in history for whom ageing and mobility don't have to be in conflict. That's not a small thing. That might turn out to be one of the most personally transformative shifts of the entire autonomous vehicle revolution. It is not about the flashy early adopters or the logistics industry efficiencies. Instead, it is the simple dignity of an older person getting where they need to go, independently, on their own terms. I'm hopeful I'll be taking that ride and certain my children and grandchildren definitely will.

Mark Crothers is a retired small business owner from the UK with a keen interest in personal finance and simple living. Married to his high school sweetheart, with daughters and grandchildren, he knows the importance of building a secure financial future. With an aversion to social media, he prefers to spend his time on his main passions: reading, scratch cooking, racket sports, and hiking.

Tax Free Income Trap, Dealing With MAGI

DAN SMITH | Apr 21, 2026

"Agree! When it comes to Roth conversions, tax arbitrage is usually the focus of discussion, but “portfolio return“ arbitrage (if that’s a proper term?) is usually less mentioned."

- Andy Morrison

Dickie and his magic beans

R Quinn | May 6, 2026

"This really isn’t about the cost of coffee. It’s about the price of convenience. It’s the single serving that. Is driving the cost of Keurig— rhink about the price of packaging!"

- Marilyn Lavin

The reality of Social Security and Medicare- My real life experience.

R Quinn | May 4, 2026

"If only the disturbing ignorance you highlight regarding Social Security and Medicare were the only intellectual drag on current society; I fear it is but the tip of the iceberg."

- Chris Rush

Saving for Grandchildren

ArticleJohn Yeigh | May 2, 2026

Tax-free growth when used for qualified education expenses
High gift-tax contribution limits: $19K per contributor per year (indexed)
New ability to convert up to $35K into a Roth IRA for the beneficiary

Cons

Relatively complex with penalties and taxes on non-qualified withdrawals
Limited, state-approved investment options
Risk of underutilization if the child does not pursue qualifying education

Caveats

Technology and AI could significantly reduce education’s cost structure in the future
Roth conversions are capped at $35K lifetime
The 529 must be open 15 years, and contributions must age 5 years before conversion
Conversions require the beneficiary to have earned income (i.e. they could Roth anyway)
Annual Roth contribution limits still apply (e.g., $7.5K in 2026), so completing the full $35K conversion would take five years

UGM Custodial Accounts Pros

Brokerage account where up to $2.7K of unearned income can be tax-free each year
High gift-tax contribution limits: $19K per contributor per year (indexed)
Broad investment flexibility — stocks, bonds, funds, etc.
Few restrictions on how funds may be used for the child’s benefit
Potential for low taxes on capital gains, but subject to marginal “kiddie tax” at parent’s rates until tax-independency or age 24

Cons

Higher income or capital gains could trigger the kiddie tax at the parents’ marginal rate
Assets count as the child’s for financial-aid purposes

Caveats

Custodians have some ability to spend down the account for legitimate child expenses if the child is a wild-child in the later teen years

Coverdell Accounts Pros

Tax-free growth for qualified education expenses
More flexible investment choices than most 529 plans

Cons

Low contribution limit: $2K per year plus income limits restrict who can contribute
Essentially irrelevant today given the expanded options within 529 plans

Trump Accounts Pros

$1K government seed deposit for children born 2025–2028
Contribution limit of $5K per year in 2026, indexed to inflation
Parent employers may contribute up to $2.5K per year (also indexed)
Tax-deferred growth with Roth-conversion opportunities beginning at age 18
No earned-income requirement for Roth conversions
Roth conversions are ideal in low-income years starting after age 18 once the child has transitioned to tax-independency of parents or at age 24 when “kiddie taxation” ends. Early tax independence could even be a combined Roth plus student financial-aid strategy
Potential to convert large account values over several years at relatively low tax rates (potentially marginal 10-12% tax-rates, but averaging less due to the standard deduction).

Cons

Investment options limited to low-cost indexed stock funds (not necessarily a drawback)
Penalty-free withdrawals must wait until age 59½, but the accounts could be advantageous even including penalties
Limited custodian control and intervention possibilities if the teen is a wild-child

Caveats

If Roth conversions are not undertaken during the child’s low-income years, a UGMA invested to capture long-term capital gains tax-rates may outperform a Trump Account taxed at ordinary income tax-rates
Watch this space as future adjustments or eligibility changes are possible

Parents’ retirement account fundings remain their top priority - 401K’s at a minimum up to the match, HSAs with their triple tax advantages, and Roths as long as eligible within income limits.
A Trump account has already been initiated to secure the free $1K government seed contribution – grows to potentially $2.6K at age 18 after penalties and taxes.
Limited 529 funding has also been initiated to start the 15-year clock for potential later Roth conversions.
The family’s next priority is to fund the Trump account which starts at $5K later this year. Maximizing the Roth conversion opportunity will require ~$116K of contributions (at 3% inflation) over 18 years which we grandparents intend to help fund. I estimate the Roth converted Trump account could grow to ~$2 million of tax-free money at age 60 (6% growth) assuming early-age Roth conversions, and the Wall Street Journal projects as much as $3 million (link likely paywalled).
The subsequent priorities are to start UGM taxable account and 529 account contributions in parallel to perhaps initial levels of about $35K each. This may take our family some years depending upon available resources for contributions.

We will skip Coverdells as the alternatives offer ample savings opportunity in the child’s name ($200K+).
Depending upon spare resources available for gifting, we can always reassess future contributions.

Living On Autopilot

Mark Crothers | May 6, 2026

Be the first to comment.

Retirement Toys

Mark Crothers | May 4, 2026

":)"

- Jeff Bond

New Face, old scam

Jim Wasserman | May 2, 2026

- Howard Schwartz

Wall Street Trap

ArticleAdam M. Grossman | May 2, 2026

How much to provide a college student monthly?

Chris | Apr 25, 2026

"“Concerned” seems a misnomer here😎"

- R Quinn

Is saving really that hard? Nope, not for the great majority of Americans.

R Quinn | Apr 28, 2026

- R Quinn

Manifesto

May 6, 2026

NO. 40: WE SHOULD all know the minimum dollar amount we need each month to keep our financial life afloat. This will drive our emergency fund’s size and our cash holdings once we’re retired.

act

May 6, 2026

INVESTIGATE a reverse mortgage. Once you're retired, borrowing against your home’s value shouldn’t be a first choice, but a last resort. Still, it’s helpful—and comforting—to know what that last resort might be worth. To that end, try playing with a reverse mortgage calculator. Pay attention to the money you’ll receive—and to the hefty fees you will incur.

Truths

May 5, 2026

NO. 111: WALL STREET tries never to send us a bill, so we’re unaware of how much we’re paying. Fund expenses and financial advisor fees are quietly subtracted throughout the year. Stock trading spreads and bond markups are built into security prices. Load mutual fund commissions are swiped from our initial investment or they're deducted when we sell.

act

May 4, 2026

GO TO THE LIBRARY. You can borrow DVDs, rather than paying to stream movies and TV shows. You can cancel your magazine and newspaper subscriptions, and peruse the library’s periodicals instead. You can borrow the latest books, rather than ordering from Amazon. All this will get you out of the house, meeting your neighbors and reading more—at no cost.

Money Guide

Manifesto

May 6, 2026

NO. 40: WE SHOULD all know the minimum dollar amount we need each month to keep our financial life afloat. This will drive our emergency fund’s size and our cash holdings once we’re retired.

Spotlight: Borrowing

Smarter But Homeless

Jonathan Clements | Dec 5, 2015

SOARING STUDENT DEBT is putting the kibosh on another major financial goal: buying a home. According to a study by researchers at the Federal Reserve Bank of Cleveland, 40% of those age 18 to 30 have student debt, up from 27% in 2005. For these borrowers, the debt burden is staggering, with student loan payments estimated to devour more than 20% of their income in 2015.
With so much of their income devoted to servicing student loans,

Paid in Full

David Gartland | Jun 17, 2024

SPENDING ISN’T something I like to do. It doesn’t bring me lasting joy. I prefer just to buy what I need.
For many folks, spending involves borrowing. If spending is your thing, incurring interest charges on credit card debt and car loans probably isn’t a big deal. But to me, borrowing to buy something means I’m overspending. If I can’t afford to pay cash, I shouldn’t buy it.
Borrowing has been the downfall of many.

This Old House

Greg Spears | Aug 31, 2022

WHEN WE MOVED to Pennsylvania in 1996, I wanted to buy an old house. After months of looking, we found a stone farmhouse close to my new job and in a good school district. There was just one problem: We didn’t know if we could afford it.
We hadn’t been able to sell our home in Maryland, so we didn’t have any home equity to bring to the table. When our real estate agent saw the asking price,

No Interest

Ken Cutler | Jul 24, 2023

THE HOUSE I GREW UP in was built in 1950 by my father, with some assistance from his best friend Joe, who was a master homebuilder by profession. After his work day as an accountant for a local hardware and lumber chain, my dad would head over to the job site and labor into the night.
My mom also provided some sweat equity, painting and even swinging a hammer at times. I was born in 1962,

Digging Out

Lucretia Ryan | Jun 27, 2024

LIKE MANY AMERICANS, Sally found herself caught in a whirlwind of unexpected expenses and mounting credit card debt. It wasn’t lavish vacations or shopping sprees. Rather, it was veterinary bills for her aging dogs.
I conducted a credit-card debt-reduction workshop for Sally. Here’s a glimpse at her finances:

Her Mastercard balance was $12,970 at a hefty 17% interest rate.
Despite that, she had an exceptional credit score of 820.
She also had a $26,000 emergency fund.

When is it okay to go into debt?

Jonathan Clements | Apr 4, 2021

Grandpa’s Scholarship

Howard Rohleder | Mar 23, 2023

WHAT SHOULD I DO with the required minimum distributions from my rollover IRAs? I’m age 65, which means that—under last year’s tax law—I must begin taking taxable distributions in 2030, the year I turn 73. I’ve been looking at my retirement cash flow, and it appears that my wife and I won’t need the money for our living expenses. I’m investigating using the money to help fund my grandkids’ college education. I built a spreadsheet that maps my age against the age of each grandchild and determined the years they’re expected to attend college. Using an online calculator, I estimated my required withdrawals and dropped those amounts in. Currently, the six grandkids range in age from two-year-old twins to 11. My thought is to pay substantially all the cost of their junior and senior years. The kids are evenly spaced. Other than the twins, no two will have upper-class standing in the same year. I have 529 college-savings accounts for each child. Based on my current contribution levels, those accounts could be exhausted in their freshman years. Fidelity Investments’ college planning tool suggests that the average public university might cost $28,000 a year by 2031, which is when our oldest grandchild would be a freshman. The average private school might cost $64,000 by then. These costs inflate to $35,000 and $80,000, respectively, by 2038, when the twins are projected to begin college. Of course, these costs are only averages and could vary sharply depending on the specific school the grandchildren attend. On top of that, Fidelity is inflating current college costs by just 2.5% a year, which may be too conservative. For comparison, I’ve looked at the current cost of attending the private colleges my two children attended, as well as public universities in the states where the grandchildren live.…

Look All Ways

Howard Rohleder | Nov 20, 2023

WHAT HAPPENS WHEN you’re hit by the proverbial beer truck? Will it be easy for others to pick up the pieces—the pieces of your financial life, that is? To my knowledge, my wife isn’t checking the delivery schedule for the Anheuser-Busch brewery here in Columbus, Ohio. Still, she’s worried about the complexities of our finances. I’ve made a concerted effort since I retired to consolidate and close financial accounts, reduce our investments holdings, and streamline where it makes sense. Here are nine steps I’ve taken: I had two 403(b) accounts that I rolled into a single rollover IRA at Fidelity Investments. I combined two Roth IRAs into one. I had three regular, taxable investment accounts that I’ve consolidated into one. I’ve closed credit and charge card accounts that didn’t offer any notable advantages. I drew up a letter of last instruction, including a checklist with key contacts. Since I no longer have a paycheck to protect, I’ve allowed my disability and term life insurance to lapse. I drained a small 457 deferred compensation account, realizing the taxable income prior to starting Social Security benefits. Social Security will boost my taxable income, and that meant my 457 would have been taxed at a steep rate if I’d waited to empty the account. After I retired, I inherited a tax-deferred annuity. As with my 457 account, I opted to have the full balance paid out prior to starting Social Security. I evaluated our mutual fund holdings to identify funds with overlapping objectives, and then consolidated money into the more promising fund. As part of this process, I reallocated significant sums from actively managed funds to broad market index funds. Despite my focus on consolidation, I’ve allowed some new accounts to creep in: My former employer offered to buy out my defined benefit…

A Difficult Choice

Howard Rohleder | Nov 27, 2021

FEAR OF MISSING OUT, or FOMO, seems to be everywhere. We suffer it when we read about our friends’ fabulous experiences on social media. We can also suffer it when investing, as we fret that our friends are making more on their investments than we are. My own concern in recent months, however, hasn’t been FOMO, but FOLB. No, it doesn’t roll off the tongue like FOMO. It’s my own invention—and it stands for fear of losing big, a particular worry of mine. The U.S. stock market is near record highs. With my regular rebalancing, my stock allocation sits at 60%. When I look at the dollar value of that 60%, and think about the possibility of losing 30% to 40% of it in a bear market, I hear alarm bells. When I focused on the percentage I had in stocks, I thought I could weather a bear market. But I’d lost sight of the total dollars at risk. Losing 30% to 40% of that money doesn’t feel nearly as manageable. That’s why I’ve let my stock allocation trend down from 64% a year ago. I’ve lived through several bear markets. I’d learned to look at them as buying opportunities. I also have sufficient cash reserves to go several years without having to sell a stock or stock fund. Theory says that as long as I don’t sell after a big drop, the possible paper loss is irrelevant. I can add to my positions while the market is down, and the next bull market will make me whole again and then some. These thoughts should be comforting. But the sheer magnitude of the potential dollar loss is disquieting. The other concern I have: There are few good alternatives to owning stocks. Cash earns next to nothing. Bonds have the potential…

The Mary Jean List

Howard Rohleder | May 25, 2023

MY FATHER-IN-LAW Carson was a stereotypical engineer—organized and precise. All four of his children know the motto “measure twice, cut once.” Carson applied these traits to his finances, which he managed on behalf of himself and Mary Jean, his wife. Mary Jean depended on this. As they aged, Carson maintained his mental acuity, but he was the first of the two to deteriorate physically. Mary Jean was strong physically but slowly surrendered to Alzheimer’s. Before her diagnosis, Carson made a concerted effort to teach Mary Jean how to manage their finances in case, someday, she might have to do it on her own. They had an investment manager, so the actual investing was taken care of. Carson wanted her to be able to navigate the banking, bill paying and check book. With an engineer’s precision, he created a list instructions laying out who to contact and how to handle the monthly financial chores. It became apparent that this wasn’t going to work. Possibly due to the early effects of as-yet undiagnosed Alzheimer’s, Mary Jean couldn’t grasp what needed to be done. That was when he turned to us. I wrote a HumbleDollar article based on what we learned from this experience. Carson’s list, which my wife and I referred to as the “Mary Jean list,” guided us when he passed away. It was such a good idea that we adopted it ourselves. Enshrined in a manila folder in the front of our file cabinet is a three-page list of steps and instructions for my wife to follow, should I die first. Just over a page is devoted to 15 steps. Each step refers to an individual contact: attorney, accountant, investment company, bank, insurance agent, pension, Social Security, health insurance… the list goes on. There’s a name, a phone number, questions…

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Howard Rohleder | Jan 3, 2026

In my years working in Hospital Administration, I routinely had staff telling me about patients or families caught in a medical crisis caused by a fall or major surgery or simple aging. They were “surprised” to find that when they were told they could no longer live safely in their home, that Medicare was not going to pay for their needed long term care living arrangements. I’m assuming that this information will not be a surprise to Humble Dollar readers. But I found this post on Linked In from a Senior Care Educator and Advocate named Katie Monahan Brooks, CDP, DCS. I don’t know her and I don’t know the Humble Dollar policy about reposting what she posted on Linked In. But she has expressed this more clearly and bluntly than I could have. And, it is apparent from her writing that she wants this message broadcast far and wide. My hope is that Humble Dollar readers can be part of this education process. Here is what Ms. Brooks wrote, unedited by me: “I’m done pretending this confusion is acceptable. If I have to explain one more time that Medicare does NOT pay for senior living, I might actually lose what’s left of my sanity. Let’s be painfully clear: Medicare pays for your medical care. It does NOT pay for your housing, daily care, or supervision. Assisted Living, Memory Care, and Independent Living are NOT medical benefits. They are housing with support. And yet—every. single. week.—I sit across from families who are shocked. Angry. Betrayed. “Why doesn’t Medicare pay for this?” “Isn’t this healthcare?” “No one ever told us this.” And that’s exactly the problem. This isn’t just a misunderstanding. This is a massive, nationwide education failure that leaves families blindsided in the middle of a crisis—when emotions, guilt, fear,…

One Step at a Time

Howard Rohleder | Nov 3, 2021

IN MY LATE 20s, I found that I was 15 pounds heavier than when I was in high school. My cholesterol was over 200 and rising. I was huffing and puffing while mowing the lawn. I didn’t like where this was going, plus I didn’t want to buy a new set of business suits. I decided that investing in my health was as important as investing for my wealth. If my health was shot by the time I retired, my wealth would bring me less happiness. To get started, I applied the concept of continuous quality improvement (QI) to my goal of becoming healthier. QI is practically a religion in health care, where I worked for 30 years. The notion originated in Japanese manufacturing. The idea: continually add incremental value for the customer. One model for QI is the PDCA (plan, do, check, act) cycle. Once an opportunity for improvement is identified, you push it through these four steps: Brainstorm how to make it better (plan) Implement your best ideas for improvement (do) Use data to evaluate whether you’re truly adding value (check) Adjust based on data-driven evidence of what works and what doesn’t (act) One thing I like about this approach: It allowed me to take small steps. I’ve noticed that big lifestyle leaps often aren’t sustainable. Just as success in personal finance can be achieved by simple, inexpensive processes followed diligently over a long period of time, improvements in personal wellness can be achieved in much the same way. I didn’t have a lot of extra time, and it was the middle of winter. My plan was to wake up 20 minutes early to jump rope. I started slowly, but eventually could jump rope for the entire 20 minutes. No trainer would want this to be your only…

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