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My Favorite Room

"Jo Bo, I let Chrissy pick ‘em out. That way, if it’s a dud, I can blame her! Otherwise, we read reviews or exchange recommendations with friends that have similar tastes. We are currently watching the HBO series The Pitt, about an hospital emergency room in Pittsburg; it’s intense with some humor thrown in.  In the interest of saving a little money, we are not against subscribing to, and then canceling a streaming service when we finish watching a series. What good is ‘cutting the cable’ if you have to maintain six or more streaming services to see what you like? "
- DAN SMITH
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Flipping the Script on Asset Allocation?

"The sky high stock market, especially as to tech stocks, combined with the current elevated interest rates, have increased my desire for a little rebalancing. We happen to have a large portion of our domestic equity allocation in taxable accounts, and have held the postions for decades. So any sales in order to rebalance would come with a hefty capital gains tax bill. I recently took one step, which, while very modest, does avoid the tax problem. I turned off dividend reinvestment for VTI (Vanguard Total Stock Market), and a couple of other tech heavy ETFs, VGT (Vanguard Technology) and SCHB (Schwab Broad Market). As future dividends are paid out in cash, I'll probably roll it into money market funds rather than bonds. The MM interest rates are favorable--and probably getting better judging by the Fed's current attitude--and I'm still a little gun shy on bonds given recent experience."
- Andrew Forsythe
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When $2000 Isn’t Worth the Hassle

"These byzantine telecom companies are terrible to work with. I recommend just cutting your loss and moving on. The money is not enough to pursue legal action. Years ago in business, I had a company that owed me $27k and refused to pay. Our agreement was well documented in writing. The EVP would not return my calls. Finally, I sent him a letter documenting our agreement. A colleague suggested that I CC Counsel on the letter. That worked! I got a call the next week from the EVP and he said, "It looks like I am going to have to pay you bastards". I thanked him and we received a check a few days letter. You may want to try that little trick in written correspondence."
- Jerry Pinkard
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What would you do if you received this text from your child as I did this morning? 

"Dick, I am sorry to hear of your families health issues. I pray for good outcomes for each of them. Been there, done that. Two years ago, I started giving our two children $15k each year, rather than wait until we die to get any inheritance. The only stipulation I had was for my son to establish an emergency fund. My daughter is a SAHM and manages her family's funds very well. I know from casual conversations that my son used most of his money for a new roof and other home improvements which is good, but apparently no emergency fund. Fast forward to this month. My son's work truck transmission went out and it cost almost $5k to repair it. He did not have the cash so dear old dad covered the cost. I may reduce his end of year gift accordingly, since he did not establish an emergency fund. Years ago, we sent both of our kids to church summer camp. We gave them both the same amount of spending money. At the end of the week, my son had run out of money and had borrowed $10 from one of the counselors. Our daughter came back with half of her money unspent. How can kids be so different? This was a precursor for their future lives."
- Jerry Pinkard
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A Wedding Too Far

"Dan, appreciate the suggestion. I’m actually based across the pond in the UK, so our tax rules around gifting aren't quite the same, but thanks for looking out for my wallet — it needs all the support it can get right now, even if it's only in spirit!"
- Mark Crothers
Read more »

I will still take the dividends

"Jack thanks for sharing. It’s interesting too that while you can read stock analysts saying that circumstances have changed and Berkshire should start paying a dividend, many (most?) individual shareholders are strongly against it. They have heard and internalized Warren’s advice."
- Michael1
Read more »

On Being a “Healthy” Person

"Thanks for this. In my case, my high CAC officially makes me a person with cardiovascular disease, and the reason I described myself as “healthy” is that, thankfully, at 66 I’ve not had any adverse cardiac events or even symptoms, and I do pretty robust cardio 4-5 days a week (heart zones 3-4 most days) with no ill effects. My Lp(a) number alone probably wouldn’t have gotten me approved for Repatha in 24 hours. As you note, Lp(a) is a risk factor, not disease itself. If I could go back 10-15 years, I’d have gotten myself under the care of a cardiologist sooner and probably would have been on a statin years ago, which might have prevented at least some of the calcification. But I felt fine, never had bad “regular” LDL numbers, and didn’t know from Lp(a). So other than being aware of bad family history, I didn’t have enough information as a layperson to be more proactive. So oh, well—onward, as you say!"
- DrLefty
Read more »

What to do about the new ID.me login requirement at TreasuryDirect

"My experience creating an ID.me account can be best described as "hinky," glitches that indicated a misstep but then seconds later it worked. I also got several "retry" prompts. Based on a comment on this thread I expected trouble, and an interview process, because my credit is frozen, but nope, I was able to establish the account anyway. Yes, I'll be sticking with "hinky" to describe the process."
- Ted Tompkins
Read more »

The Silent Committee

"It’s great to hear from you, Rick! Thank you for the thoughtful comment!"
- John Goodell
Read more »

The Ultimate Tail Risk

"I think the situation needs addressing, but I think you have prescribed the wrong tool. Congress can regulate AI through ordinary legislation. Legislation is vastly easier to change as technology evolves. Constitutional provisions are intentionally difficult to change. And we have very little idea what "AI" will mean 30, 50 or 100 years from now."
- John Katz
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Free Breakfast

"Just finished my free hotel breakfast. For the first time, there was a tip jar next to the buffet. No need to seek out the worker."
- Marilyn Lavin
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My Favorite Room

"Jo Bo, I let Chrissy pick ‘em out. That way, if it’s a dud, I can blame her! Otherwise, we read reviews or exchange recommendations with friends that have similar tastes. We are currently watching the HBO series The Pitt, about an hospital emergency room in Pittsburg; it’s intense with some humor thrown in.  In the interest of saving a little money, we are not against subscribing to, and then canceling a streaming service when we finish watching a series. What good is ‘cutting the cable’ if you have to maintain six or more streaming services to see what you like? "
- DAN SMITH
Read more »

Flipping the Script on Asset Allocation?

"The sky high stock market, especially as to tech stocks, combined with the current elevated interest rates, have increased my desire for a little rebalancing. We happen to have a large portion of our domestic equity allocation in taxable accounts, and have held the postions for decades. So any sales in order to rebalance would come with a hefty capital gains tax bill. I recently took one step, which, while very modest, does avoid the tax problem. I turned off dividend reinvestment for VTI (Vanguard Total Stock Market), and a couple of other tech heavy ETFs, VGT (Vanguard Technology) and SCHB (Schwab Broad Market). As future dividends are paid out in cash, I'll probably roll it into money market funds rather than bonds. The MM interest rates are favorable--and probably getting better judging by the Fed's current attitude--and I'm still a little gun shy on bonds given recent experience."
- Andrew Forsythe
Read more »

When $2000 Isn’t Worth the Hassle

"These byzantine telecom companies are terrible to work with. I recommend just cutting your loss and moving on. The money is not enough to pursue legal action. Years ago in business, I had a company that owed me $27k and refused to pay. Our agreement was well documented in writing. The EVP would not return my calls. Finally, I sent him a letter documenting our agreement. A colleague suggested that I CC Counsel on the letter. That worked! I got a call the next week from the EVP and he said, "It looks like I am going to have to pay you bastards". I thanked him and we received a check a few days letter. You may want to try that little trick in written correspondence."
- Jerry Pinkard
Read more »

What would you do if you received this text from your child as I did this morning? 

"Dick, I am sorry to hear of your families health issues. I pray for good outcomes for each of them. Been there, done that. Two years ago, I started giving our two children $15k each year, rather than wait until we die to get any inheritance. The only stipulation I had was for my son to establish an emergency fund. My daughter is a SAHM and manages her family's funds very well. I know from casual conversations that my son used most of his money for a new roof and other home improvements which is good, but apparently no emergency fund. Fast forward to this month. My son's work truck transmission went out and it cost almost $5k to repair it. He did not have the cash so dear old dad covered the cost. I may reduce his end of year gift accordingly, since he did not establish an emergency fund. Years ago, we sent both of our kids to church summer camp. We gave them both the same amount of spending money. At the end of the week, my son had run out of money and had borrowed $10 from one of the counselors. Our daughter came back with half of her money unspent. How can kids be so different? This was a precursor for their future lives."
- Jerry Pinkard
Read more »

A Wedding Too Far

"Dan, appreciate the suggestion. I’m actually based across the pond in the UK, so our tax rules around gifting aren't quite the same, but thanks for looking out for my wallet — it needs all the support it can get right now, even if it's only in spirit!"
- Mark Crothers
Read more »

I will still take the dividends

"Jack thanks for sharing. It’s interesting too that while you can read stock analysts saying that circumstances have changed and Berkshire should start paying a dividend, many (most?) individual shareholders are strongly against it. They have heard and internalized Warren’s advice."
- Michael1
Read more »

On Being a “Healthy” Person

"Thanks for this. In my case, my high CAC officially makes me a person with cardiovascular disease, and the reason I described myself as “healthy” is that, thankfully, at 66 I’ve not had any adverse cardiac events or even symptoms, and I do pretty robust cardio 4-5 days a week (heart zones 3-4 most days) with no ill effects. My Lp(a) number alone probably wouldn’t have gotten me approved for Repatha in 24 hours. As you note, Lp(a) is a risk factor, not disease itself. If I could go back 10-15 years, I’d have gotten myself under the care of a cardiologist sooner and probably would have been on a statin years ago, which might have prevented at least some of the calcification. But I felt fine, never had bad “regular” LDL numbers, and didn’t know from Lp(a). So other than being aware of bad family history, I didn’t have enough information as a layperson to be more proactive. So oh, well—onward, as you say!"
- DrLefty
Read more »

What to do about the new ID.me login requirement at TreasuryDirect

"My experience creating an ID.me account can be best described as "hinky," glitches that indicated a misstep but then seconds later it worked. I also got several "retry" prompts. Based on a comment on this thread I expected trouble, and an interview process, because my credit is frozen, but nope, I was able to establish the account anyway. Yes, I'll be sticking with "hinky" to describe the process."
- Ted Tompkins
Read more »

The Silent Committee

"It’s great to hear from you, Rick! Thank you for the thoughtful comment!"
- John Goodell
Read more »

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Get Educated

Manifesto

NO. 27: RISK and potential return are inextricably linked. If an investment holds out the prospect of high returns, we should presume it’s highly risky—even if we can’t figure out what the risk is.

Truths

NO. 120: INFLATION is the friend of borrowers, but the enemy of savers. If you have money invested, you need to earn an after-tax return that outpaces the inflation rate—or your money will lose purchasing power. But if you’re a borrower, inflation is good news, because it allows you to repay the money you owe with depreciated dollars.

think

OPPORTUNITY COST. Whenever we make a financial choice, we give up something else, which may be a better use for the money. If we buy one item, we can’t spend the dollars on other items, either now or in the future. When we devote money to one goal, we have less for other goals. When we buy one investment, we’re effectively choosing not to buy other investments.

act

TAP HOME EQUITY to trim other debts. If you have high-interest auto loans or credit card debt, you might set up a home equity line of credit and then use it to pay off these higher-cost debts. That’ll reduce the interest you pay. You won’t, however, save on taxes. Thanks to 2017's tax law, such home-equity borrowing is no longer tax-deductible.

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Manifesto

NO. 27: RISK and potential return are inextricably linked. If an investment holds out the prospect of high returns, we should presume it’s highly risky—even if we can’t figure out what the risk is.

Spotlight: Health

Paradox of choice. What to do, what to do?

I used to be a big fan of choice when it came to employee benefit plans including life insurance, health insurance and, of courses 401k investment options. 
When working I crafted a plan with lots of choices. Employees said they wanted choice, it was all the rage at the time. Our unions were not so thrilled, but went along. 
The unions were right and I was wrong. 
People may say they want choice, but when faced with it for very important decisions,

Read more »

Healthcare spending and premiums during a post age-65 retirement- facts and ideas.

About 5% of the population accounts for nearly half of total health spending, and many of these are older adults with multiple conditions.
Do seniors (65+) pay as much as perceived for health care?
Seniors pay a lot for health care, but it is not that simple. Many, perhaps most, seniors pay no more, even less, out of pocket, than many younger families. 
The bulk of spending by seniors is premiums, not the actual cost of care.

Read more »

Why US Healthcare is so Expensive.

This morning I found this very good summary of this issue on USA Today.
Check out this article from USA TODAY:
Seven reasons why Americans pay more for health care than any other nation
https://www.usatoday.com/story/news/health/2024/12/15/why-americans-pay-more-for-health-care/76900978007/

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The Oldest Daughter Dilemma

One of the most well known advocates for elder care, who worked for a prominent national health center, was talking with me about a year ago.  When I asked him what his plan was for he and his wife, as they aged, he replied “ I have four daughters”.
This was pretty shocking to me, given that he worked in this industry, and specialized in helping adult children and their parents to talk about future health care planning.

Read more »

Frugal Fitness

AS A PHYSICAL therapist, I’ve spent a large slice of each work day teaching and encouraging patients as they exercise their way to better health. Along with other elements of treatment, each patient pays for a custom exercise program tailored for their specific problem.
These are folks looking for a way past the debilitating effects of injury or disease. Even so, many of them find it hard to follow my plea to “do your exercises”.

Read more »

Senior Care Crisis – Are we prepared?

The signs of this looming crisis are everywhere. Expensive home care, long term care and end of life care are going to be the biggest challenges facing baby boomers.
There are over 69 million baby boomers, 21% of the US population, holding 50% of wealth. Unfortunately, most are unprepared to face this crisis. I find that in my retirement community, most have not investigated options to provide for such care and have shown little interest. They say they will handle it if and when they need it.

Read more »

Spotlight: Yeigh

Helping Out

SOME FAMILY MEMBERS recently asked me to help them find a financial advisor. As luck would have it, soon after, Barron’s published a perfectly timed article, “America's Best RIA Firms,” which listed 100 highly ranked registered investment advisors (RIAs). Similar lists are available from CNBC and the Financial Times. It was time for me to get to work. Who wouldn’t want to recommend a “top” firm to his or her family? The Barron’s article provided four pieces of information for each firm: the number of clients, advisors and offices, as well as the number of states where those offices are located. This allowed me to calculate the client-to-advisor ratio, which ranged from five to 3,855 clients per advisor. My family neither required nor could afford the attention of 20% of an advisor’s time, but they also needed more support than an advisor who was handling thousands of clients. Some web research indicated that the typical number of clients per advisor is around 150. As few as 50 higher net worth clients is often sufficient for an advisor to generate a decent income. Assuming 2,000 working hours per year, an advisor with 150 clients can devote about one hour per month to each client, but that would include time handling paperwork, developing financial plans, following markets, and keeping up with tax and regulatory changes. In other words, the advisor might be able to chat with a client for 30 or 40 minutes per month. (In practice, advisors typically talk to clients less frequently, but for longer.) Several articles suggested that, if an advisor wants to maintain a good relationship with his or her clients, the maximum number of clients should be even less—perhaps just 100. That means an important first question to ask any potential new advisor is, how many clients are you currently…
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Reluctant Spenders

A 2021 SURVEY by the Employee Benefit Research Institute found that three-quarters of retirees said the value of their financial assets was the same or higher than when they first retired. This finding was consistent from the poorest respondents to those with the most wealth. The typical time in retirement for the respondents was seven to 10 years. One implication: Retirees may be underspending their accumulated wealth. EBRI examined five reasons for this possible underspending: Saving assets for unforeseen costs later in retirement Don’t feel spending down assets is necessary Want to leave as much as possible to heirs Feel better if account balances remain high Fear of running out of money The first two reasons—"saving for tomorrow” and “no current need to spend”—were reported by almost half of respondents. By contrast, a “fear of running out of money” was mentioned by only a fifth of those surveyed.
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TINA Is Dead

OVER THE PAST FEW weeks, my wife and I did something we hadn’t done in four years: We bought bonds. Specifically, we parked some money in one- to two-year Treasurys paying 4.3% to 4.6%—the highest rates in 15 years. Our portfolio now approaches 5% bonds, and we plan to buy more. We’re waiting to capture higher rates following the expected Federal Reserve rate increases. Bonds represent a seismic shift for us. In early 2020, I even wrote that the 60% stock-40% bond portfolio seemed dead, thanks to near-zero interest rates. But today, bonds are back, and it’s TINA (there is no alternative to stocks) that now appears dead. We recognize that our bonds are losing to inflation in the short term. Still, as retirees, we may be hurt less by inflation because many of our costs are either fixed or in decline, including housing, transportation and education. Also, inflation should eventually come down. In 2021, I also wrote about our use of covered calls on high-dividend stocks as a sort of bond proxy. In today’s bear market, this approach has held up well because the stocks involved haven’t been crushed like technology stocks. In fact, some of these “value” stocks remain near all-time highs, despite the market downturn. Our bond-proxy approach resulted in our portfolio regularly having a stock allocation of more than 90% through much of the 2021 TINA era. This year, we thought it prudent to reduce our stock exposure due to a mix of personal and market changes. We bought a second home in January. This required some stock sales, plus we now need to maintain a larger stash of operating and emergency cash. We have also ramped up our vacation spending after a two-year pandemic hiatus. On top of that, inflation provides another reason for a…
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1,000 Days at a Time

THREE YEARS AGO, I wrote an article suggesting I had 7,000 days to go, at least according to the Social Security Administration’s life expectancy calculator. The 1,000 days since then represented a significant 14% share of my remaining actuarial life. The good news is, the Social Security calculator now estimates that my life expectancy is about 6,400 days. I’ve enjoyed 1,000 days of life but only used up 600 days of life expectancy. That’s like a 40% return on life over the past three years. Unfortunately, this math is doomed to the law of diminishing returns. Like fellow HumbleDollar scribe Dick Quinn, I’m counting down the days. So, what happened over those last 1,000 days? Lots. Our daughter got married, our son graduated from college and bought his first home, and we moved to be nearer to both children. We lost several close family members and the best hiking dog ever. I added a few creaks to my aging body and soul. Retired life is mostly good, and going as anticipated. We purposefully sampled several new-to-us life experiences, many of them pandemic-era additions to our bucket list. We went deep-sea fishing twice, tried fly fishing once, and took up wake-boarding and wake-foiling with varying success. We rented five different mountain cabins for a total of seven weeks, chartered a catamaran in remote islands, rented a lake camp for two weeks, and hiked in 10 more national parks. Per the modern senior mandate, we also sampled pickleball. These fresh adventures were all outdoors, often in isolation, usually inexpensive and always undertaken with family or close friends. All were enjoyable, though I learned that fly fishing is not my gig. The outside world has seemed stressful, what with COVID-19, the Ukraine war and far too much polarization. But except for COVID, such issues…
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Nothing to Chance

MY WIFE AND I TAKE some over-the-top precautions to protect our financial accounts. Why? After 40 years of working, our life’s savings boil down to digits stored on computers. No one anymore holds stock and bond certificates, stuffs money in mattresses or buries gold in the backyard. The integrity of those digits is all important. Here are our 11 strategies—which go way beyond the normal account and password protection recommendations: We only deal with major institutions. Several friends have their retirement funds invested through small, boutique wealth advisors. I know of one advisor who operates on his own out of his house. These small advisory firms likely provide great service. But to me, they seem ripe for mischief. Bernie Madoff is just one of many rogue investment advisors who have gone astray with Ponzi schemes or excessive commissions. We maintain 13 financial accounts split up among eight institutions—unlike many friends, who have consolidated all assets into one huge account. Just like portfolio diversification, we feel institutional diversification lowers risk, by reducing the fallout from a cyberattack or other issues with any single institution, while also marginally broadening our investment choices. We separate our investment accounts from our daily cash management and banking accounts. Except for occasional cash transfers from two investment accounts, these various accounts aren’t linked. The low interest rates of recent years minimize the penalty for maintaining larger bank cash balances. For our larger investment accounts, we utilize two-factor authentication, and also must painstakingly locate and input cumbersome passwords for each log in. We almost never save investment account passwords on any device. We don’t use any password manager or other lockable software, and we don’t maintain a spreadsheet with a list of passwords. We also feel “the cloud” isn’t our friend when it comes to protecting financial and…
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Getting Roasted

"YOU WILL ROTH!" “But Dad, I’m only 10.” “Evan, it is never too early to start saving. Besides, this gives you 70-plus years of compounding.” “Yes, Dad, but didn’t you tell me last week that I need a job and earned income to contribute to a Roth?” “We can arrange to get you a paycheck. I’ll get a friend or neighbor to hire you. What would you like to do?” “I like to play soccer.” “Evan, I meant what kind of job are you interested in? You know, engineers have among the best long-term employment prospects.” “Dad, stop! Shouldn’t I be thinking about today’s soccer game?” “The game is still an hour’s drive away, so we have lots more time to talk about starting your Roth account.” “You already told my two teammates and me all about Roth accounts when you drove us to last week’s game. Remember, you held me in that headlock to make sure I was listening.” “Okay, enough about Roths. Have you opened your health savings account yet?” My 24-year-old son performed the above soliloquy at our family’s Thanksgiving dinner last year. The performance included animated theatrics to imitate me driving, lecturing seriously, and holding him in a headlock. The family was in hysterics. Evan continued his tirade about my supposed transgression of providing too much parental guidance on financial issues. “You will become an engineer,” he declared. As he started to run low on material, my 29-year-old daughter, Megan, joined the fray. “And remember, it’s not just about Roths, but also asset allocation. You should be 100% in stocks when you’re young,” she said, using a deeper voice to imitate me, while wagging her finger in a parental-like scolding manner. “But Dad, I thought you always advised to first set aside six months of emergency…
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