Friday, May 25, 2018

A Question Still Unanswered

Can money buy happiness?

 Answering this question either way will put you in one of two camps.  Answer “yes” and you become a selfish, soulless money-grabber.  But if you are decent, family-oriented, unselfish, or a churchgoer, you are expected to answer “no”. 

 I don’t think it’s that simple.  And, perhaps unconsciously, neither do most Americans.

 Charles Schwab, the money management and investment firm, just released its second annual Modern Wealth Index, and the results of this national survey point to money being a big contributor to people feeling wealthy.  Oh, not on the face of it.  No, when asked their personal definition of
wealth, the leading answer was “living stress-free” (28%).  Another 17% cited loving relationships with friends and family.

 But I’ve written before regarding the studies that show worrying about financial matters is the leading cause of stress in the United States; so maybe that 28% of respondents is hiding behind the “stress-free” answer—which sounds a lot more high-minded than the 18% who responded flatly “being able to afford all wants” defines “wealth”.  Put these two groups together and you nearly have a majority who implicitly or explicitly believe money is the key to happiness.

 When the survey drilled down to specifics, people listed owning a home, eating out, having the latest tech gadgets, or even subscribing to a streaming service like Netflix as contributors to their feeling wealthy.

 Sounds like money buying happiness to me.  And when the survey asked respondents to put a number to it all, Americans on average said it took $1.4 million to be considered financially comfortable and $2.4 million to be truly wealthy.  Wow.  You have to be a millionaire these days.

 I don’t have $2.4 million; not even close.  But I feel rich on a number of fronts.  Yes, I can afford a
lot of things that I couldn’t when I started out in my twenties.  I have been through some financial  straits, and I can testify that it’s better to have more money than less, at least up to a point that I can’t define here and which probably varies by person anyway. But paradoxically it is not all about the money.  Money can set the table, so to speak, but the real feast is what the money enables me to enjoy around the table: family and friends; leisure; some modest travel.  If this means I answer “yes” to the big question, then so be it.  I still give to others.  I share.  I love.  I pray.  I think I am still a decent person.

 Maybe it’s not about the amount of money but how you got it, whether you’re jealous that someone else might have more, and what you’re doing with it besides making yourself reasonably comfortable.  So is it the attitude toward money that makes us feel wealthy?  Ponder that one.  I’m still not absolutely certain how to answer our question of the day.

 Until next time,


 “I am not complaining about having too little.  I have learned to be satisfied with whatever I have.  I know what it is to be poor or to have plenty, and I have lived under all kinds of conditions.  I know what it means to be full or to be hungry, to have too much or too little.  Christ gives me the strength to face anything.” Philippians 4:11-13 CEV

[This post has been edited from the it’s original version to change the Scriptural reference.]

Friday, May 18, 2018

A Time to Roth, a Time not to Roth

With this year’s decrease in tax rates, it is time to consider directing your retirement contributions into a Roth account.

Named for the Delaware Republican senator who proposed the creation of this type of account, a Roth retirement account is a vehicle for investing money that has already been taxed and which, when withdrawn for spending in retirement, is not taxed again.  Nor, significantly, is the growth or interest on the invested money.

To illustrate, say I earn $100.  After taxes I have $72 left and I put that into a Roth account.  Years later, that initial investment is worth $300.  I can take out that entire amount and not pay any more taxes on it.

In contrast, a non-Roth retirement account—including most company-sponsored 401(k) plans—allows me to defer taxes and invest the entire $100 upfront.  Years later it might have grown to $380; but when I withdraw it, the entire amount is taxable.

The theory behind non-Roth accounts is that in retirement your income will be lower, thus your tax bracket and tax rate will be lower, so you would presumably pay less in taxes by deferring the taxation until then.

But what if tax rates are higher when you retire, not lower?  That nullifies the “lower tax rate” argument.  And having higher rates later is a distinct possibility, especially when you look at the ballooning national debt and the structure of the tax legislation that Congress passed.  The tax relief is scheduled to expire after just a few years.  You could even say Congress has scheduled a tax increase.  And that likely makes paying taxes today at the new, lower rates an even better deal than delaying taxation until retirement.

As an additional benefit, Roth account money withdrawn in retirement does not count toward total taxable income, which might keep you under the threshold at which Social Security benefits become taxable, saving you from paying taxes at all on that money.  See my post about taxation in retirement by clicking here.
So why would you not put your retirement investment dollars into a Roth account?  There are several reasons:

  • Income restrictions: The limits are fairly high, but people beyond a certain income level are not eligible to contribute to a Roth account.
  • Employer match: You are contributing all you can to your employer’s non-Roth 401(k) plan in order to get their “match” (the company’s contribution to your account) and you don’t want to miss out on the free money.  And they don’t offer a 401(k) Roth option.
  • Paying NO taxes: You believe that your total taxable income in retirement will be so low, or that you can structure it to be low enough, that you will not be taxed on your withdrawals, meaning you will never pay taxes—upfront or deferred—on the money invested.
  • Tax law changes: You believe that the Roth account is such a good deal that eventually the government will get wise to it and change the law to allow taxation of the money in retirement or somehow reduce the tax benefit.

These are good reasons and not to be easily dismissed.  (For example, I can’t imagine the government ignoring for long the huge sums sitting in Roth accounts that they can’t touch under current law.)  Do the math for yourself or hire a financial planner and go over your tax and retirement strategies together.  Then decide which is better for you, Roth or non-Roth.

Until next time,


“There is a time for everything, and a season for every activity under the heavens.” Ecclesiastes 3:1 NIV®*

*Scripture quotations taken from the Holy Bible, New International Version® NIV®
Copyright © 1973, 1978, 1984, 2011 by Biblica, Inc.™
Used by permission.  All rights reserved worldwide.

Friday, May 4, 2018

Tony is Giving You Baloney

I got my passport last week.  It’s my first—which tells you how much of an international traveler I’ve been up to this point.  Nevertheless, I feel special somehow (even though nearly any U.S. citizen with $140 to spare and the ability to make an ugly face for the camera can get a passport) and even entitled to write a blog post about travel—or, more accurately, write about somebody else who is an expert on travel.  At least they say he is.
I’m referring to Anthony Bourdain, the six foot four, former chef who travels the globe for his travel series on CNN, “Parts Unknown”.  Money magazine interviewed him for a feature in its April issue. 
Bourdain demolishes the idea of a normal vacation that you or I entertain.  He advises immersing oneself in a culture, staying and observing rather than trying to take in as many tourist sights as possible.  He offers a host of ideas throughout the interview for improving Americans’ vacation experiences.  And I don’t think I’ll ever use any of them.
Take for example Bourdain’s early experiences as an international traveler.  Not knowing the language or the culture, he often found himself in very awkward situations and had to resort to pointing, as when he had to point to what someone else was eating in a restaurant to order his own meal.  Bourdain disdains organized tours, but if you are a retiring sort, maybe a little bashful and not given to pointing at other people, a tour is exactly what you need to make you comfortable in the unfamiliar environment.  Not everyone wants to immerse themselves in the culture.  Just show me the Eiffel Tower, ami.
And the places he goes.  Myanmar, Beirut, in the “pristine desert” with Bedouins…I’m not even sure they’re all on the State Department’s “safe to travel” list.  Yet Bourdain talks them up like we should all go there and eat pit-roasted goat.  So we shun the organized tours and head out alone or as a family to these world hotspots (that’s hotspots in a bad sense).
Let me point out that Bourdain is not alone when he takes these journeys.  It’s like those nature shows where the host is "by himself", just feet from some ferocious animal and in mortal danger; and apparently the camera operates itself, there’s no director onsite, no film loader, no sound man or boom operator, no native guides, and certainly no safety personnel or men with hunting rifles trained on the wild beast.
Similarly, Bourdain has his own filming crew and probably some advance men who scouted out these places and arranged for guides and even a security detail from the host country.  Are you going to take a crew like that with you on vacation to ensure you’re not immersed in something other than culture?
But the crown jewel of Bourdain’s advice in the column was how to find a good restaurant.  You won’t believe me unless I quote it verbatim and refer you to the page number (45) in the issue.  “I used to say a dirty bathroom was a sign you should not be eating in a restaurant.  I’ve learned the opposite is true.  Some of the best food experiences I’ve ever had are places where they really don’t [care] about that.  They know their food is good, and that’s enough”.
Has this man never heard of hepatitis A?  Has he never seen season five, episode fifteen, of Seinfeld, the famous “Poppie is a little sloppy” episode where the chef uses the restroom and walks out without washing his hands?  Is there a reason Poppie and Bourdain are both former chefs?
My point is, do what works for you.  Bourdain may enjoy a certain type of vacation experience, but don’t force yourself into his mold of travel.  Stretch your limits a bit, but not to the point where vacation becomes a dread, even a nightmare.  “Experts” aren’t always right, in personal finance or in travel advice.
Until next time,


“Without good advice everything goes wrong—it takes careful planning for things to go right.” Proverbs 15:22 CEV