Tag Archive | "financial planning"

Use multiple “buckets” to maximize your retirement earnings potential

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Use multiple “buckets” to maximize your retirement earnings potential

Using “buckets” or multiple portfolios isn’t a new idea. I’ve seen it used for various purposes. The premise is pretty simple but proper use can be very powerful and financially rewarding. Rather than creating one portfolio that is set to mature when you reach a certain age, let’s say 65, create multiple portfolios with different target or maturation dates.

Retirement rocking chairs

Let me explain using my wife and I as an example. Normally, a couple spends all of their working years putting money away into 401Ks and IRAs with the goal of retiring at age 65. Due to tax laws, we can’t touch the money in those retirement accounts until we reach at least age 59 1/2. So we dutifully invest money for 40 years. As youngsters, we invest aggressively because our time horizon is long and we can afford to have years with losses. But as our retirement date approaches, we move more and more money into safer investments. So our portfolio makes less money as we get closer to retirement. And yet, with the high life expectancies of today, this one portfolio will have to be sufficient enough to last us 20-30 years. But if we are only earning 3-4% each year, then we may run into trouble.

Now let’s consider using multiple buckets or portfolios. We’ll start with just a simple two bucket or portfolio approach. In this example, I expect to live 30 years after I retire at age 65.

  • Portfolio 1 contains only one half of all our retirement money and is designed to be available the day we retire at age 65. So again, we slowly move money into safer investments as that day draws near. BUT, we only want this portfolio to last 15 years and then run out.
  • Portfolio 2 contains the other half of our retirement money and is designed to be available when I’m 80 years old and the first portfolio runs out. Since I have an extra 15 years to invest this portfolio, I can be aggressive for much longer and earn more money before having to move to safer investments such as bonds.

So the benefit is that through using multiple portfolios, I can be more aggressive where possible and increase my potential return. Now, let’s get a bit more fancy again using my wife and I as an example.

  • Portfolio 1 uses only normal, taxable accounts because I want to retire at age 50. So I need to withdraw from accounts where I don’t face tax penalties for early withdrawals. But I only need this account to last 10 years because then I can access my tax deferred (401Ks) or tax advantaged (Roth IRA) accounts.
  • Portfolio 2 uses tax deferred or tax advantaged accounts and is designed to mature or be ready to use when I turn 60 and Portfolio 1 dries up. In our case, I want that account to last until we are 70.
  • Portfolio 3 may use a combination of taxable and tax deferred accounts because I intend to draw every penny out of it in my 60th year in order to build our retirement home (we plan to do a lot of traveling in our 50s).
  • Portfolio 4 is invested more aggressively for longer than any other account because I don’t need it until I’m 70. But then I intend to use this account until the day I die. So it has to last for 20 years.

This may seem a bit absurd or overboard, but so does coupon-ing until you try it and see the cost savings. The goal is to maximize the time that you have and the return that you can earn on your money. Don’t just make your money work for you, make it work smarter for you.

Understand, though, that this bucket approach is a numbers game. Meaning, you have to crunch a lot of numbers to determine how much money needs to be in each account on the day it is supposed to mature or be ready for use, how much money you need to put into each portfolio on a monthly or annual basis, and how much you need to be earning on average in each portfolio in order to meet your goals. So if you are not comfortable running the numbers yourself, please consult a competent financial advisor. I’m a strong advocate of hiring a professional if you need the help.

For a few ideas on selecting an advisor, you can read our post titled 5 Tips for finding a good Financial Planner.

Hopefully I’ve adequately explained the bucket approach well enough that you have at least an idea or inkling of its potential. Please feel free to ask any questions or provide suggestions to others in the comments section below.

Also, you can follow Rabbit Funds on Twitter for more investing and retirement ideas.

Posted in Investing, Featured, RetirementComments Off on Use multiple “buckets” to maximize your retirement earnings potential

Losing your second income? 4 Ways to prepare

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Losing your second income? 4 Ways to prepare

So every month, we have dinner with some good friends that we’ve been trying to convince to jump on the bandwagon and have a baby. Well, I just found out that she is eight weeks along and we couldn’t be more excited. However, they are a two income family and are now faced with losing the second income.

Couple Kissing BabyMany couples find themselves in the same situation. Both spouses work for several years until junior comes along and then mom decides to stay home. Unfortunately, they’ve become accustomed to living on two incomes. So how do you adapt to a one income family and not go broke?

First of all, let me dispel the myth that you must have two incomes to be financially viable in this day and age. Maybe you’ll call me a chauvinist, or a romantic, but I firmly believe that the male gender has a responsibility to get as much education as possible and then work hard. I know too many men that are not willing to work hard and provide for their family. Now, please do not assume that I am opposed to an educated, successful woman. I am proud to say that my wife is a college graduate and business owner. We also have two lovely little girls. The oldest turned three just yesterday.

1) Plan to lose your second income years in advance

Do you realize that many of the financial woes that we are experiencing in this nation would probably not exist if companies and families would have sufficient planned before spending way too much money? For example, if new homeowners had asked themselves, “Do I have enough money in the bank to cover my mortgage for 3-6 months if I lose my job?” then maybe a lot of Americans would have taken out smaller loans.

The point is that if you know that in the next few years you may lose one of your incomes for a variety of reasons (it doesn’t have to be a new baby), then do not put yourself in a financial situation that makes it impossible to lose the second income and stay out of bankruptcy.

2) Reduce your monthly expenses through good budgeting

The second step to prepare to live on one income is to reduce your monthly expenses to the point where one income can cover all expenses. This should seem fairly obvious to you. However, reducing your monthly expenses (and that includes investments) by $1500 to $3000 may be very difficult. Though, if you’ve planned ahead as in Step #1, then you hopefully aren’t locked into any financial commitments and simply need to make a lifestyle change.

You should be using a budgeting tool like Mint.com anyways, but if you aren’t, making this type of change will almost necessitate that you become an excellent budgeter. Basically, create a new budget based one just one income several months before losing your second income and start making all of the lifestyle changes. I say months in advance because it will take you several months to figure out how to consistently stay within a new, reduced budget.

For more information bout budgeting, read Stop Lying, 5 Ways to Stop Overspending and 6 More ways to stop overspending and save money.

3) Save money in a dedicated savings account

If you are reducing your expenses as in step #2, then you will have extra income. PUT IT IN THE BANK AND DON’T TOUCH IT. Open a dedicated savings account that is just for this income. Hopefully, you will build up a nice emergency fund that you can use to ease your transition if hiccups arise. Please be realistic though about what expenses are and are not emergencies.

This account should be in addition to your normal savings since it is coming as a result of reducing your expenses. So don’t think you get to go buy something all shiny and new with it if you are already saving month.

Once you’ve transitioned to a single income, then decide how to best invest the money in this savings account. Maybe it remains an emergency fund or maybe you can invest it in a Roth IRA account or open a 529b account for the new baby.

4) Celebrate your accomplishment

Any good or true goal should have a reward at the end. So plan some way to celebrate a successful transition to income. Maybe it is a nice evening out or other small indulgence. Don’t go too extravagant but you’ve done something amazing and it’s important to recognize that.

Conclusion – The real secret to success

I probably haven’t said anything that you haven’t already considered. The reality is that what I’ve described are simply the mechanics of change. For any successful change to occur in life, you need a change motivator. You need a reason inside of you that says not only do I need to do this, but I can do this. So find your change motivator (I hope it isn’t job loss, which can be a powerful motivator). Write your motivator down and stick it on your mirror or put a picture of it somewhere that you will see everyday. Then the mechanics of change have a living force behind them driving you to make the right decisions.

Do you have experience of going from two incomes to one? If so, please share below.

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Posted in Budgeting, FeaturedComments Off on Losing your second income? 4 Ways to prepare

REVIEW: Get Financially Naked by Thakor and Kedar

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REVIEW: Get Financially Naked by Thakor and Kedar

Guys, do you remember that feeling you had about 50 pages into Twilight? That sudden realization that you were reading a chick book? Long before 40 year old women were passing out in theaters over Taylor Lautner, I decided to see what the Twilight rage was all about. I was thinking Bram Stoker’s Dracula. Instead I found myself reading Ann Brashares’ The Sisterhood of the Traveling Pants.

Get Financially NakedThat’s pretty much how I felt about 10 pages into Get Financially Naked. It’s a chick book! The two female authors are writing specifically TO women. It felt slightly awkward at times due to the sensation that I had stepped into Jane Austen’s world and Mr. Darcy was no where to be found. Or like that time my wife made me do prenatal yoga (I don’t want to talk about it).

What I liked about Get Financially Naked

Though, I do need to give the authors, Manisha Thakor and Sharon Kedar, some credit. The book was straightforward and certainly applicable to men as well. Here are a few highlights.

  1. It’s really a workbook. What really impressed me was that Thakor and Kedar asked you to complete written exercises within the pages of the book. Meaning, if you completed the tasks, you would have a clearer picture of your financial situation, attitudes towards money management, and a plan of action.
  2. It’s in plain English. Meaning, if you are not already financially literate, then don’t worry. You are not going to have to worry about calculating the alpha or beta for a mutual fund.
  3. It addresses your fundamental attitudes. The reason the book is titled Get Financially Naked is because it is about digging in, finding what your attitudes, where those attitudes came from, and how spouses can talk about money topics and get stuff done. Think of this book as a how-to guide for baring your financial soul. Changing a behavior is easier when you know the root source. Here’s a quote from the book that illustrates this point.

“Your current financial beliefs are like a series of short recordings in your head that influence your every interaction with money – for better or for worse.”

What I did not like about Get Financially Naked

In case you missed my satirical comments above – it’s a chick book! So if you are a female, then this is actually a big plus. But if you have a Y chromosome like me, then be prepared. A couple of other thoughts.

  1. I prefer a bit more depth. So I’m about to contradict myself. I prefer a book with a bit more technical detail and how-to info. So although plain English is good, if you like a little Greek in the mix, then this may not be the right book for you.
  2. Not enough commentary from the author’s husbands. Throughout the book, the authors’ offer personal commentary. Occasionally, they add a comment from their husbands. For a book about relationships, I feel that it lacks a balanced commentary. Understanding the attitudes that men have can greatly help women (the target audience).
  3. More of the same. If you’ve been involved in financial planning or reading books from authors such as Suze Orman and Dave Ramsey, then you’ve heard most of what’s written in this book. Though referring to point #1 of the reasons I like this book, Thakor and Kedar have more of a workbook approach than other authors.

Honey, we need to talk…

Honestly, where is this relationship going? When will we buy a house? Should we buy a house? What are we going to teach the kids? Authors Thakor and Kedar resonate well with many Americans by asking, “When did talking about money become more intimate than sex?” As couples, we need to learn to be more open and Get Financially Naked can be a great starting point for open and earnest discussion in your relationship. So if you are a woman looking for financial advice, especially as it relates to your husband, then I recommend this book.

Posted in Reviews, FeaturedComments (1)

4 Reasons not to use debt to make an investment

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4 Reasons not to use debt to make an investment

A few years ago, my wife and I had the opportunity to invest in a company that we hoped would go public. We were young, just married, and broke. So we took out a personal loan from a family member (for a fairly small amount) to make the investment.

Money and Investing NewspaperWithin months, the company went belly up. Since we weren’t able to recoup a single penny from our investment, we were left to work off the debt. This experience taught us several valuable lessons. Among those lessons was that one should be extremely cautious when using leverage to make an investment or increase the expected return on an investment.

Let me give you four reasons not to use debt to invest

First, you may not  have the right experience to manage the use of debt, such as borrowing from a margin account, when investing. Without the aid of an experienced advisor, avoid using financial instruments such as margin accounts.

Second, for the average Joe, slow and steady will win the race. We all have goals and dreams and it would be wonderful to achieve them today. However, our dreams can become nightmares if we try to run to them too quickly. Realize that if you follow tried and true investing techniques, you will arrive at your goals and have had peace of mind along the way.

Third, your mama was right – don’t spend money you don’t have. This is the foundation for any solid financial house. I read an article several months ago that referred to credit card arbitrage, which is borrowing money from a credit card with a very low promotional rate and then investing the borrowed money. The idea is that you’ll pay off the credit card before the interest charges hit and you’ll have made more money from investing the money than any fees associated with borrowing the money (e.g. cash advance charge).

The problem is that you are building a house of cards. What if you can’t liquidate the investment in time to pay off the credit card? Even though the nice marketing pitch says you pay no interest, it is actually accruing. So if you don’t pay off the credit card within the promotional period, then wham! You’ll be hit with all of the interest charges.

Fourth, we become too emotionally involved. For many people, investment decisions are based on emotions. We see the market begin to fall or rise and we sell or buy accordingly. So if we know that getting out of a bad investment now means we are left owing the debt, then we may choose to not sell hoping that the investment will come back. We may get lucky and the investment rebounds, or the investment will decrease in value even further leaving us with even more debt to repay.

So why would anyone use debt or leverage when investing?

Leverage acts as an accelerant. Just like adding gasoline to a fire, leverage can allow you to gain larger returns than you would otherwise be able to obtain.

Also, leverage increases the percentage return on an investment. Ever heard of OPM? Other People’s Money. Here’s a specific example.

  • Scenario 1: I invest $100,000 and gain a return of $10,000. My percentage return is 10%.
  • Scenario 2: I invest $10,000 of my own money and $90,000 of borrowed money (or OPM). If the return is still $10,000, then my percentage return is %100. This of course assumes no fees or interest associated with borrowing the $90,000, which is never the case.

Scenario 2 sounds nice because my return is %100 and I only had to tie up $10,000 of my own money. Though, at the end of the day, I’m $10,000 richer in either scenario. And I’m not financially committed to someone else in Scenario 1 if the investment begins to sour.

What are your experiences with using debt to invest? Good or bad. Also, sign-up for our RSS Feed for timely updates on other financial topics.

Posted in Debt, FeaturedComments (2)

The Trouble with Identifying Debt Relief Scams

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The Trouble with Identifying Debt Relief Scams

Any American who pays even the slightest bit of attention to television commercials or newspaper advertisements – not to mention the many direct mail inserts that seem to daily flutter through the mailbox – has likely seen his or her share of debt relief offers that seem to good to be true.

Debt Relief ScamCertainly, the demands of the marketplace mean that the majority of the nationally renowned debt relief companies are legitimate without question. Of course, simply because the debt relief agencies (and the agency representatives) are not willfully fraudulent does not mean that the very nature of their approach to debt relief won’t end up rather different than the client originally thought.

It’s so very important that you ask questions from the moment you begin talking to a debt relief counselor about the smallest guidelines of their debt relief philosophy so that you’re not accidentally misled. Even though the debt relief professionals genuinely believe in the effectiveness of their own company’s system, that still doesn’t guarantee it’ll be the right fit for your particular circumstance.

Traditionally, when it comes to debt relief scams, most of the consumers who’ve previously fallen for one of the less than trustworthy efforts have one of three common complaints that absolutely must be avoided:

  1. The supposed debt relief strategy actually created more unsecured debt than had formerly existed
  2. Despite sky high monetary expenses, the debt relief firm did less than nothing to aid the situation.
  3. Whether or not the debt relief agency did an effective job reducing the financial burdens, the client’s credit scores were seriously damaged

Now, to an extent, the criticisms of specific debt relief methods could just come down to the customer’s faulty recognition of what the debt relief programs represent. It should seem obvious to any adult that a debt relief plan seeking to lower the monthly payments, the interest rates, the amount of unsecured debt-loads, or all of the above will feature some comparatively less favorable consequences for the borrower alongside. However, since so many of the debt relief counselors (even the ones that work for technically non profit organizations) are paid primarily by the amount of business that they bring in to the company, they’re hardly going to stress the disadvantages of their program.

Also, remember, most of these debt relief professionals truly think their approach would be the best bet for erasing credit card balances regardless of the surrounding household circumstances. As a result, even if they know that the mandatory minimum monthly payments required under one strategy may be a bit of a stretch for one consumer’s income, they might push forward the debt relief payment schedule anyway in the hope that a bit of budgetary discipline’s what needed. Similarly, although they realize that their method of debt relief will wreak havoc upon FICO scores for up to a decade while closing accounts as a part of the process, some specialists might well believe that their clients could do with less capacity for thoughtless spending.

You could hardly accuse these debt relief professionals of scamming their customers, but neither did they take the needs and interests of their clientele seriously. For this reason, even if the company seems thoroughly above board, it’s always a good idea to ask a particular debt relief agent for recent recommendations so that you’ll make sure the debt relief offered will be just what you wish.

Posted in Debt, FeaturedComments (1)

4 Things Fahrenheit 451 taught me about Personal Finance

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4 Things Fahrenheit 451 taught me about Personal Finance

I just finished reading Ray Bradbury’s best known work Fahrenheit 451. I was supposed to have read it in middle school, but never quite got around to it (sorry, Ms. Kolstad).

Fahrenheit 451After reading the book and researching various statements that Bradbury himself made about it, I realized that there are several points that coincide with personal finance.

1. The effects of entertainment

First, Bradbury has stated that the purpose of Fahrenheit 451 was to examine the effect of television and mass media on the general population. Basically, he asserts that in lieu of reading, the population became uncontrollably obsessed with being entertained.

I believe that we often make the same mistake with our finances. How often do we forego saving money to be entertained? To purchase a larger TV? To have 500 channels? To have a bigger, badder stereo system? To eat out because we don’t feel like making dinner? To go to the movies when we could just put on a DVD we already own?

2. Choosing slavery

Second, the people in Fahrenheit 451 choose to become fat, dumb, and happy. The government didn’t mandate it. The book burnings started within the populous. They had they power to start down a road of destruction and ultimately, had the power to walk away as Guy Montag, the protagonist, did.

Similarly, our financial difficulties are often a result of our own actions or inactions. There are certainly circumstances beyond our control, but I believe too many people believe themselves to be that exception. Living without an emergency fund, for example, is the equivalent of choosing to burn.

3. Knowledge allows you to break the norm

Third, the thing that caused Guy and others to question their current condition and to challenge the norm was the acquisition of knowledge.

If you ever hope to defeat anything in life, especially debt and an average lifestyle, then you must obtain the knowledge and know how which propels you away from the norm. You must read books, blogs, and articles. Socialize with smart individuals you can help explain unfamiliar financial concepts and practices. Learn!

4. Have and use a support network

Lastly, and this may like a bit of a stretch, but to save knowledge (and by extension mankind) from being snuffed out of existence, a network of individuals memorized bits and pieces of books and collectively formed a library. In other words, they created a support group that became essential to the very existence of society (the book ends in war).

Being frugal and money smart all of the time is hard business. Even those you have been at it a long time have temptations and weaknesses. Therefore, create a support group. Your network may be online through blogs, Facebook, or Twitter. Or maybe it’s close friends and families. Either way, share your goals and how you are working to achieve them. Having someone ask how you are doing can be just enough motivator to make a good decision today.

Posted in Reviews, FeaturedComments (3)

5 Simple ways for college students to start financial planning

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5 Simple ways for college students to start financial planning

A neighbor, who is currently in college, had an assignment in her journalism class to create a investigative report on financial planning and students at her college. I happily offered some thoughts and suggestions on the piece.

College StudentsAfter chatting for awhile, she asked if I would “officially” answer some questions as an expert (I think that term was used liberally). One of her questions was, “Can you give 5 tips or suggestions I can include in my article?”

I started jotting down thoughts beginning with a budget and so on. After a minute or so, I realized the gravity of what I was writing. Here I was limited to five ways a college student could improve his or her financial situation. Thoughts of my college experience started coming back (I’m sorry to everyone that was involved in that duck incident).

So here is my list of the top 5 suggestions for college students

No. 1 – Take responsibility for your money by creating and living by a budget. Sites like Mint.com or MoneyDesktop.com make it very easy to do. Also, remove or reduce as many fixed payments (subscriptions, cable bills, car payments, etc) as possible.

No. 2 – Pay off debt using techniques such as the debt snowball.

No. 3 – Have an emergency fund of at least $1000 and preferably enough to cover 3-6 months worth of expenses.

No. 4 – Start saving for retirement with the goal to save 20% of all your pre-tax income.

No. 5 – Give generously. You will probably receive more dividends from your generosity than any other investment. Also, if you can give when you are poor, it will be easier to give when you are rich.

All of the ideas listed above are widely talked about, but…

I’m not sure many college students fully grasp the fundamental nature of each one.

Let me give you an example. I have a coworker who is a pretty sharp guy. He graduated with a minor in Economics and worked at Goldman Sachs. He can explain credit default swaps and have in-depth macro-economics discussions with you. But he is lost when it comes to simple personal financial planning.

Maybe that’s why Wall Street is having so many problems.

So if you are a college student, take some time to understand how to create and use a budget. Stay out of debt and learn how to put together a portfolio of index funds in a 401k or Roth IRA. If your college offers a financial planning course, take it. I’ll bet you a shiny nickel that you will use that course more than the capstone course in your major.

So what advice would you offer college students?

Posted in Budgeting, FeaturedComments (2)

INTERVIEW: Seth Risenmay, Founder of MoneyDesktop.com

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INTERVIEW: Seth Risenmay, Founder of MoneyDesktop.com

I have a real treat today. Seth Risenmay, the founder of MoneyDesktop.com, answered some questions from me and also graciously offered a promo code for a free 3 month trial of his product.

Money DesktopAbout MoneyDesktop

For anyone unfamiliar with MoneyDesktop, it’s an online tool to track your finances, plan for the future, and most importantly get out of debt. What’s unique about MoneyDesktop in a world of sites like Mint.com of PocketSmith.com is that the software auto-generates a plan using a variety of methods to help you get out of debt the most efficient way.

So for example, the ever-popular debt snowball is built in. Also, the less well known mortgage checking account method is also available. You the user are able to select the method that you are comfortable with, tie it into your overall budgeting and finances, and get out of debt faster.

Essentially, it’s a one stop financial wizard.

The Interview

RabbitFunds: Why did you decide to start MoneyDesktop?

Seth Risenmay: I started MD because I wanted to get America out of debt. We look at debt as THE greatest threat to the future of our country. When you think about it, our country has been able to defeat Nazism, Communism etc… and the one enemy that actually has a shot at bringing down our country is debt.

RF: Where did you come up with the idea for the feature set included in MoneyDesktop?

Seth: We had a database of 39,000 customers that gave us feedback on our product. We asked all of them this question; “What does this product need to be to give you the best chance of success?” From this market research we learned that America needed a product that did not then exist and so we set out to build it. It took 4 years and about $5 million to build but we feel confident that MD is the greatest debt and personal financial management tool in existence.

RF: What is different about MoneyDesktop as compared to Mint or PocketSmith?

Seth: The greatest difference between MoneyDesktop and any of our competitors is that it is first and foremost a debt tool. Other PFM’s are typically tools that help you track where your money went, but if that is all you do that would be like driving your car down the road backwards, you’ve only seen where you’ve been, not where you’re going. Some products and companies help you project the future and your debt payoff but since they don’t track where your money is going the projections are inaccurate. MoneyDesktop is the only company that looks to the past by tracking your spending, to help you project an accurate future for debt elimination, with real time in the present instructions in the form of text messages and emails. We also have systems to help people make decisions with financial intelligence, which no one else has. We also help people increase their discretionary income to help them get out of debt even faster. We do this by actually increasing their cash flow while lowering their bills and payments. All of this is unheard of to most PFM’s. I would say that we are one of, if not the only DPFM (debt and personal financial management).

RF: Are there any plans to make the service free like Mint?

Seth: We have thought a lot about offering our services for free like Mint. The problem is that we have found that if a person is not paying for a service they do not value it enough to actually implement it into their life and become successful. We wanted people to actually commit to their financial wellness. However, we also understand that there are a lot of people who desperately need MoneyDesktop who may need our services for free. Because of this, we have created a promotion called 3 for Free. If a user of MoneyDesktop is willing to help us in our mission to get America out of debt then we feel they have shown the commitment necessary to succeed and deserve to receive our services for free. If they refer 3 other people to MoneyDesktop our system will automatically track that and when 3 others have signed up the referrer will receive MoneyDesktop free for life!

As mentioned above, Seth was kind enough to offer a free 3 month trial to any RabbitFunds readers with a special reduced price of $14.95 afterwards. Just use the promo code “Rabbit” when you sign-up.

RF: What do you hope that users will achieve by using your site?

Seth: Total financial wellness. We want our users to become debt free, achieve financial freedom, gain financial intelligence, and become wise stewards of their money and wealth. And hopefully by using the 3 for Free feature they can help start a community of people committed to getting out of debt which will help strengthen our country and in a lot of preserve what we know as America for generations to come.

RF: How has using the software helped your own family?

Seth: I know where every penny goes, I know when every debt will be eliminated and I have piece of mind knowing that I am being a wise steward of the things I’ve been blessed with. It has helped me eliminate all of my debt with a little left on my home still to go.

RF: What upgrades or changes can users expect to see in the coming 6-12 months?

Seth: With tax season upon us we are adding features that will allow a person to easily organize their finances for tax season with their CPA. We are also adding added benefits of ID protection and Credit Monitoring. Other companies like LifeLock will charge you upwards of $10 per month for each of those services, we are close to having those services provided to our subscribers at no additional fee as an added benefit of using MoneyDesktop. We are also redoing the set up wizard for a more simple and effective setup to get people using it more efficiently.

For More Info

Thank you Seth for your time. If you have any questions or would like to see more then visit MoneyDesktop.com or follow them on Twitter at @MoneyDesktop.

Posted in Debt, Cash Management, FeaturedComments (2)

Review: “The 5 Lessons a Millionaire Taught Me” by Richard Paul Evans

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Review: “The 5 Lessons a Millionaire Taught Me” by Richard Paul Evans

I was a little surprised to receive as a gift a financial planning book from an author who writes feel good, inspirational stories. Though just like everyone else, Evans has faced the same financial decisions that each of us have to make.

Richard Paul EvansA brief read, Evans focuses on five lessons that he learned as a very young man from an individual that he would not have suspected to be a millionaire. Each lesson has helped him and his wife ensure financial security.

The Five Lessons

Listed below are the five lessons from the book, none of which will some as a large surprise I’m sure.

  1. Decide to Be Wealthy
  2. Take Responsibility for Your Money
  3. Keep a Portion of Everything You Earn
  4. Win in the Margins
  5. Give Back


Evans preaches a simple and straightforward way to approaching saving and spending, though offers little that is unique or not already frequently discussed in financial planning texts. If anything though, his book is motivational and may help give you more enthusiasm to continue to be frugal.

My one issue with this book is Evans’ suggestion to begin saving by buying gold coins. I could not disagree more. The growth rate in value of gold is historically very low and you can find better returns in other relatively safe investments. Further, Evans made the suggestion to help satiate cravings to shop and buy something. Even though buying gold is better than blowing your money on stuff, this method has not changed your habits. Rather, you will have only substituted one thing for another. In my opinion, put in the effort to control spending.

Similar to Dave Ramsey, Evans has provided resources, which include forms for budgeting, in the back of his book. The section titled Winning in the Margins with Extra Income caught my attention. Basically, Evans has compiled a list of ideas to bring in extra income. I appreciated that Evans mentioned selling plasma. I sold my plasma for nearly two years to help my wife and me to finish college.

All and all, not a bad read, especially since it’s a short book. If you’ve read it, let me know what you thought in the comments below.

To buy a copy for yourself or to read additional reviews, check out The 5 Lessons a Millionaire Taught Me by Richard Paul Evans on Amazon.com.

Posted in Reviews, FeaturedComments (3)

Does your investment strategy need to be on Ritalin?

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Does your investment strategy need to be on Ritalin?

Are you aware that your investment strategy can end up with a social disorder? Do you currently need to put your investments on Ritalin? Here’s your fiscal check-up. Open wide…

PrescriptionsIs your investment strategy ADHD?

Let’s begin the discussion with a great definition of what it means to be ADHD (from Wikipedia): “Attention-deficit hyperactivity disorder (ADHD) is a neurobehavioral developmental disorder. ADHD is primarily characterized by ‘the co-existence of attentional problems and hyperactivity, with each behavior occurring infrequently alone.’ While symptoms may appear to be innocent and merely annoying nuisances to observers, ‘if left untreated, the persistent and pervasive effects of ADHD symptoms can insidiously and severely interfere with one’s ability to get the most out of education, fulfill one’s potential in the workplace, establish and maintain interpersonal relationships, and maintain a generally positive sense of self.’ (emphasis added)”

So how can your investment strategy end up with a social disorder? Let’s evaluate each underlined section above.

  1. Each behavior occurring infrequently alone – This is for those of you who don’t really have an investment strategy. You buy whatever “hot investment” your buddy tells you about while golfing. Or you sporadically contribute to your retirement accounts. In order to retire with enough money in savings, you need (1) a defined investment plan with frequent, planned contributions and then (2) you need to stick to your plan only making occasional improvements or thought out modifications.
  2. Symptoms may appear to be innocent – So you like to play with part of your investments. I know individuals that find an adrenaline rush in short term investments. Have you ever calculated the amount of money you are losing to transaction fees and taxes? Have you seen the studies that show that frequent investment changes lead to lower returns? Or maybe you don’t play the market but you don’t think too much of skipping contributions to purchase something that you really don’t need. Or maybe you just don’t see a convincing reason to have a strategy. Don’t fall into these traps. Responsible adults make plans.
  3. The persistent and pervasive effects of ADHD symptoms can insidiously and severely interfere with one’s ability – I’m not sure if I can say that any plainer. Though, let me give you an example. Let’s say that you decide to contribute $500 a month to your retirement accounts. However, you skip your contribution every December (have to buy all those presents). At the end of 30 years (invested at 12%), you will have $1,609,695 in the bank. If you had not skipped those contributions, then you would have $1,747,482 in the bank. A difference of $137,786 even though you only contributed $15,000 less! See my point? Having an ADHD investment strategy will insidiously and severely interfere with your ability to reach your goals!

Stop right now and think about your investing style? Do you need to put your investments on Ritalin?

Let’s read a bedtime story from Aesop.

tortoiseandhareThere once was a speedy hare who bragged about how fast he could run. Tired of hearing him boast, Slow and Steady, the tortoise, challenged him to a race. All the animals in the forest gathered to watch. Hare ran down the road for a while and then paused to rest. He looked back at Slow and Steady and cried out, “How do you expect to win this race when you are walking along at your slow, slow pace?” Hare stretched himself out alongside the road and fell asleep, thinking, “There is plenty of time to relax.”

Slow and Steady walked and walked. He never, ever stopped until he came to the finish line. The animals who were watching cheered so loudly for Tortoise, they woke up Hare. Hare stretched and yawned and began to run again, but it was too late. Tortoise was over the line. The moral of the story is that “Slow and Steady won the race!”

So what does this have to do with your investment strategy? Well, Aesop is prescribing financial Ritalin. Again from Wikipedia, Ritalin “works by increasing the activity of the central nervous system. It produces such effects as increasing or maintaining alertness, combating fatigue, and improving attention. (emphasis added)” Outlined below is what I think Aesop would have us do with our investments.

  1. Central nervous system – The tortoise was able to win the race because he maintained one objective in sight and had an unfailing winner’s attitude. We also need to go straight to the core. Write down what you expect your life to be like when you retire. Describe your relationships, financial status, living conditions, location, etc. That list is your one objective and you must have an unfailing winner’s attitude. The old adage, “Keep your eye on the ball,” will have more impact on your financial resolve than most any other approach.
  2. Increasing or maintaining alertness – The hare decided that he wearied from his efforts and could therefore take a nap. You can’t take a financial nap! Keeping to your budget every month moves you one step closer to financial freedom. Making monthly contributions to your investment accounts moves you one step closer to retirement. In the words of Winston Churchill, “Never, never, never give up!”
  3. Combating fatigue – Don’t try to run. Everything has its time and place. Establish a plan that outlines when you intend to retire, how much you need to retire, how much you need to invest monthly, and which investment vehicles and types will help you reach your goals. Then slowly but surely follow your plan. Just keep walking, don’t try to run and do everything at once. You just can’t do everything right now and don’t beat yourself up for it.
  4. Improving attention – In many accounts of Aesop’s tale, the hare focuses on the fame and attention of the crowd. Conversely, the tortoise ignored the crowd and stuck to his plan. Don’t be sidetracked by the latest trends, need for huge returns, infomercials, pop star financial gurus, or anything else for that matter. Once you have a plan, stick to it.


Does your investment strategy need to be on Ritalin? Well, ask yourself, “Do I have a set contribution amount and schedule? Do I have a defined plan? Do I invest in hot investments? Do I day trade? Am I focused on the short term? Am I tackling too many financial goals at once that are confusing me?” Depending on how you answer those questions, you may need to start taking financial Ritalin by (1) focusing on your reasons for smart investing, (2) adhering to your plan, (3) taking one month at a time, and (4) ignoring the crowd.

P.S. I recognize the irony of me criticizing the hare and my blog is called RabbitFunds. Maybe I should have named it TortoiseFunds.

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Review of writing a Will on LegalZoom

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Review of writing a Will on LegalZoom

LegalZoom LogoMy wife and I hand wrote Wills several years ago before we had any children or assets for that matter. With the birth of our second girl two weeks ago, we decided that it was definitely time to update our Wills. We decided to try LegalZoom.com this time to make sure that we didn’t miss anything. There are three packages available, shown below. The big difference between the packages is whether or not you believe you’ll need to make revisions in the next 30 days or over the next year. Also, the Premium package gets it to you faster. We selected the Standard option.

LegalZoom Pricing

What I liked

  1. Straightforward questionnaire – You simply fill out a questionnaire, review your answers, and then make your purchase. Meaning, you can complete the whole process before making the purchase decision. You will have to setup an account though.
  2. Helpful information – On several of the questions, I wasn’t real sure how to answer. LegalZoom offers additional information via a Help button on every question. Also, you can see on several questions how other people responded. If you find yourself completely confused, you can call a 1-800 number.
  3. Free revisions for 30 days – Apparently I married myself, at least according to my Will. I entered my name when I should have entered my wife’s name on one field in the questionnaire making me my own executor. Luckily, the cheapest option allows for free revisions for the first 30 days.
  4. Advanced clauses and provisions – As I was taking the questionnaire, I had the option to include certain clauses and make provisions that I had never heard of, which I greatly appreciated. For example, I included a clause that says my executor isn’t liable if they make an honest mistake. I also setup a provision that gives my wife the option to setup a Credit Shelter Trust if she so chooses. If my wife and I died in a common disaster, then I have a provision for a Testamentary Trust that manages everything left to my girls until they graduate from a four year college or turn 25 (you set the restrictions).

What I didn’t like

  1. Lost my information – If you don’t have time to finish the questionnaire, then you can save it and return later. Great feature, but it lost some of my work multiple times. Usually it was just some names, which wasn’t a big deal. But I had written several paragraphs that outlined specific instructions to my heirs that was lost and had to be rewritten. I was a bit frustrated.
  2. Hard to pick up where I left off – When returning to complete my Will via My Account, I found that clicking “Finish Your Order” didn’t return me to where I had left off but rather returned me to page one of the questionnaire and I had to advance myself through the questionnaire to where I had left off. Though, I found that if I navigated to the homepage first and clicked the link to complete my Will, it usually took me to the right spot. Very odd and annoying.


We paid $69 for the first Will and $59 for the second one (total $130.95). I’m glad that we used LegalZoom. We spent far less than we would have spent with a lawyer, but I still have the peace of mind that it was prepared correctly and according to my state’s laws. Also, the process was simple and quick. So what you’re really paying for is time and peace of mind. If you don’t already have a Will or need to revise yours, DO IT! Don’t leave loved ones with a mess if you die, it’s just rude. I liked and recommend LegalZoom, but whether you use them or not, get your Will in place.

Posted in Estate Planning, FeaturedComments (10)

God is a financial planner. Wait, what?!

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God is a financial planner. Wait, what?!

Broken Piggy Bank

Although many of the principles that I practice and preach are founded in religion, my goal with this blog is not to preach my religion. However, I am a Christian and believe that we will answer one day for how we handle the resources given to us in this life (which includes money). In this post, I want to briefly touch on one particular verse in the Old Testament that holds my fascination.

“Now therefore thus saith the Lord of hosts; Consider your ways. Ye have sown much, and bring in little; ye eat, but ye have not enough; ye drink, but ye are not filled with drink; ye clothe you, but there is none warm; and he that earneth wages earneth wages to put it into a bag with holes. Thus saith the Lord of hosts; Consider your ways.” – Haggai 1:5-7

Little did you know

But God is actually a financial planner. In fact, He was the first to give that age old advice, “S-A-V-E!” What I love in particular about this passage is the phrase, “Consider your ways.” He is inviting us to take a moment to reflect on our financial habits. What that suggests to me is making and keeping a budget! Without a budget, how can I account for my expenditures and find the areas that cause me to, “bring in little.”

It seems to be a commandment to me

I feel safe arguing that not only are we being invited to “consider our ways” but that we are being commanded to. Knowing man’s propensity to self-indulge and the need to save for a rainy day, the Lord has helped us out by giving us this straightforward commandment, which is for our ultimate good.

G.O.K. Fund

If any of you are fans of Dave Ramsey, then you are probably aware of what he calls the G.O.K. Fund – God only knows fund. You can count on unexpected events to occur in life. Not only is the Lord aware of these unexpected events (car breaks, basement floods, broken arm), but He has given us a way out. And that way out is preparing and having an emergency fund. The Lord isn’t interested in seeing us fail even when He allows unexpected things to happen. So let us follow His counsel and be prepared.

Whether you are Christian or not

Take some time today to reflect on your current habits. Have you “sown much, and bring in little” Have you to “eat, but ye have not enough”? Have you to “drink, but ye are not filled with drink”? Do you “clothe you, but there is none warm?” And most importantly, do you “earneth wages to put it into a bag with holes.”

Don’t be the debt ridden person that puts his hard earned money in a bag with holes. Please, consider your ways!

(This article was featured in the 84th edition of Money Hacks Carnival)

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