Touch all of the bases when calculating cost basis...

For those of you thinking about moving your finances to a financial planner be prepared to provide him or her with the cost basis for any stocks that you have. The cost basis of your stock is its purchase price adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between your stocks cost basis and the current market value. Also known as "tax basis". Now one would think that even a haphazard record keeper would be able to come up with something as simple as the purchase price, but let me through you a curve. I have some stock that I have owned for over 15 years. I know what I paid for the original stock, but what threw a wrench into my calculations is the 15 years of reinvesting the dividends every quarter. That combined with the fact that the brokerage that held the stock for me changed hands 3 times, really muddied the water. If figured that finding the cost basis would be as simple as going to the old broker, pulling up my account and finding a button that I could click that says "cost basis". Nope! Not my friends at E-trade. I had to look through 15 years of archived statements to figure out what was what. I dug through their stuff and also through every box, file, nook, and crannie that I had at home stashed away in my attic. Talk about bats in the belfry! Mind you, I have moved 6 times since I bought the stock, so that in itself was quite painful. After several hours of hard work, I was able to get pretty close. I believe I have covered all of my bases. Don't let yourself get into the same predicament that I did.

Does paying off your mortgage early make good cents?

The question of the day is should you pay off your mortgage early? In speaking with my financial adviser, he advised against paying off my mortgage early. I have been making extra payments against the principle each month in hopes of paying off my house before I retire. It just felt like the right thing to do if I could pull it off. My adviser said that I should consider that the rate on my mortgage, 6.25%, is fairly cheap money. He felt that the extra being paid should be invested. There is a good chance that it can earn as much or more than the interest I am paying on the mortgage. I could agree with that, but was not convinced that I wanted to change my strategy. Where he sold me was when he reminded me that I only have a couple of years left to use my kids as a tax deduction. Once they are out of the nest, the mortgage deduction will be about the only big deduction I will have left. I might as well take advantage of that as long as I can. Uncle Sam gets enough of my money. I don't need to give him more. As long as my wife and I maintain the discipline of saving the money that we were paying down the mortgage with, I can live with my planners suggestion. It makes good cents and sense to me...

Dog food is bad for your health...

Over the past several months I have worked hard to drop a few pounds and get into better shape. I wasn't what I would call obese, but I was packing 220 pounds around on my 6 foot frame. I wasn't in very good shape for someone that wants to retire in a few years and enjoy it when he does. I was having a hallway discussion with a coworker that had lost some weight and he said he figured he had been walking around with the equivalent of a 30 pound bag of dog food draped over his shoulders. It was that visual that got me off my dormant duff and gave me the incentive to start investing some time into my health. With me, it was and is all about making a commitment to exercise and then having the integrity to keep that commitment. I hear people say they have integrity, but then they don't act with integrity when it comes to commitments they make to themselves. I had a treadmill sitting in my basement collecting dust and just waiting for me to make a date with it. I started out walking a mile 3 days a week. Walking, not running. Running beats my knees up too much. I gradually increased to 5 days per week and am now up to 3 miles per workout. Every now and then I go for 5. I walk at between 4 and 4.5 miles per hour and raise the incline from 3 to 4 degrees as I walk. For me the key is to sweat. If I sweat I feel good when I'm done. I have also tried to be more aware of what I eat. I try to stay away from junk food. I can't say that I have been on a diet, but I try to watch my portions. I eat a bowl of cereal for breakfast and have found myself looking at the labels on the food that I buy at the grocery. I don't deprive myself of anything, but I just don't go overboard. If I want chocolate, I eat chocolate. I just don't over do it. You are what you eat. I am currently fluctuating between 190 and 195 pounds. I want to get down to 185, but I seem to have reached a plateau. I feel good. No, I feel great. I actually had to go out an buy new pants with a smaller waist size. Wow! That felt really good and it only cost 1 bag of dog food! I want to retire, but I want to retire healthy. Investing for retirement is not just about the money. Investing in you health now will give you a better chance to enjoy that money when you get to the finish line. Start walking now for a better tomorrow.

Let's meet at the hacienda...

Well the time has come for me to unveil my wife's top 10 things she wants to do when she retires. I did not tell her what my top 10 things were until she had plenty of time to answer the question on her own. She does not read my blog, so her answers were not influenced by my answers. She did not make this experiment easy. She listed 5 things very quickly, but it took a lot of time to get her list up to 7. Trying to get her to list more than 7 items was like pulling teeth and for fear of me risking the loss of life and limb, I finally let her off the hook. Without further ado, here are her "7" top things to do when she retires in no particular order:

1. Travel to Europe
2. Vacation in St Thomas
   
3. Golfing
4. Leisure reading
5. Volunteer work
   
6. Part time job
7. Exercise

Okay! So what did we learn from this little experiment? Are we in trouble? Do we have work to do? I don't think we are in horrible shape, but yes we have work to do. There are some things where my wife and I are in alignment. Travel and golf are on both of our lists. She was quite surprised that I wanted to visit Ireland, and excited I might add. We have both always liked to play golf together, so golf on both lists is no surprise. The fact that she has a part time job and volunteer work on her list is indicative of her high level of energy and probably her knowing that she will be miserable if she has too much idle time on her hands when she retires. There is nothing wrong with that. If our lists were exactly alike, then I would say that we were definitely in trouble. I don't think being joined at the hip is necessarily healthy. Having identical lists would not have been the ideal result of this experiment. Communication between my wife and I about the really important things in our lives is an ideal result. No trick plays in the fourth quarter. We may modify our game plan before the end of the game, but we will be playing as a team. Bring on the competition!

What ingredients are in your recipe?

I previously made mention that it is important that during the planning of your retirement that you include your spouse. What a concept! You would think this would be automatic, but I will bet you that there are a lot of folks out there that have a mental model of what retirement will be that is nowhere close to the mental model their spouse has. That is a recipe for disaster. I guess there are lots of reasons that this might be the case. I think I know what my wife wants to do in retirement, but it is a topic we never quite get to and it always seems to get pushed off to another day. I guess because there is some finality in this type of discussion and because we think we have a long time before we actually retire, we see no hurry in getting this task completed. The reality is that retirement will be here before we know it. I am going to do a little experiment to see just how aligned my mental model of retirement is with my wife’s. Today I am going to list the top ten things that I want to do when I retire (at least I am going to try). I will then ask my wife to list her top ten things. I will not show her my list until she has completed hers. I will post her list later this week so you can all see how we stack up. I guess it will be obvious at that point if we have a wing and a prayer. Keep your fingers crossed...

My top 10 things to do in retirement – not in any particular order:

1. See a baseball game in every major league baseball statdium
2. Visit Ireland
3. Golf
4. Visit the grand kids often (I hope)
5. Vacation on the beach a couple of times a year
6. Have a get away in the mountains or off the beat and path where I can just gin around
7. Take a cruise in Alaska
8. Go back to Aruba
9. Buy a pontoon boat and fish
10. Live in a mild climate (no snow)

Stay tuned… Mrs. Sam is about to enter the building.

Consider time management for your Super Bowl...

Where did the weekend go? Back to work tomorrow. Judging from the new counter I installed on this blog, I have a few more days to go before everyday is a weekend. It never ceases to amaze me how fast weekends go by. They seem to be over in the blink of an eye. Why is that? I plan every minute of my work week. I use time management techniques to ensure that I am as efficient as possible. My weekends on the other hand, are for the most part experienced in free fall. So does that say I should plan my weekend and let the chips fall as they may during the week? Interesting concept. Planning buys me time during the week. Maybe it can help me extend my weekends. At least create the perception that I have more time. I think it boils down to planning creates the illusion of time. We all know that time is a fixed resource. We need to find ways to utilize the time we have available to its fullest extent. You know where I am going with this don't you? Yes, back to the retirement discussion. I think that time management will be a critical component to a fulfilling retirement. Free falling through retirement will be sure to diminish any feeling of self worth and accomplishment. Time management can help ensure that each day is lived with a sense of purpose. It may be more critical to manage ones leisure time than it is the time that is controlled by the structure of your job. Retirement is like the Super Bowl of life. You can bet that Tom Brady and Eli Manning both had a plan to manage every second they had the ball when they started last weeks big game. We should be prepared to control retirement with the same commitment. Sam says: Be ready!

Sams Says: Blogging is therapeutic

Just a few short weeks ago I was having quit a bit of angst over retirement planning. For what ever reason, I decided to blog to get all of the weight off of my shoulders. I never realized how heavy retirement could be, but believe me, I was feeling the weight. I am not sure why I thought blogging would be helpful. It was an epidemy. It just happened. I just started without any direction, no vision, no goal, no target, no nothing, nadda! And now, here I am. Blogging away! Therapeutic for me. Hopefully, helpful for someone else. Maybe just knowing that someone else is having the same thoughts and worries about making the wrong decisions. Maybe some of the decisions I have made aren't the best, but maybe they are. I am giving it my best shot. At the end of the day I will be better off for making some decisions instead of just not doing anything. It ain't over till the fat lady sings...

Top ten things to worry about before I retire...

Maybe if I list the things that are bothering me about retirement I will quit worrying about them. David Letterman, eat your heart out! Here are my top ten things to worry about before I retire. They are not in any particular order and I am more than willing to let you worry about them with me...

1. How much is enough money?
2. Will I live long enough to actually do it?
3. Will I be happy?
4. Will I be bored?
5. How much will health insurance cost?
6. Will I be healthy enough to get insurance?
   
7. Do I need to pay off my house first?
8. Will my 401K be worth anything?
   
9. Is social security really going to go bankrupt?
10. Do I need to move to a warmer climate?

I shouldn't have limited myself to ten. Does anybody out there worry about the same stuff that I do? Is this typical? Am I normal? Sam says: Don't worry. Be happy!

The Rule of 72 - What's in your wallet?

Have you ever heard of the "Rule of 72"? I had, but it was a very long time ago. Probably back in my college days. I probably wasn't paying close attention that day. When you are thinking about how much money you need to save in order to retire, it is helpful to know how fast your money can grow. The "Rule of 72" will let you quickly calculate an estimate of how long it would take any amount of money to double in value. All you need to do is take the number 72 and divide it by the interest rate you expect to get for your money. The result is a fairly close approximation of the number of years required to double your money. For example, if you have $25,000 in your savings account, and you expect to earn 8% interest on your money, then it should take approximately 9 years for the $25,000 to grow to $50,000. At 4% it would take 18 years to reach $50,000. This is a quick and dirty way to see the power of saving. It pays to invest your extra cash so that you take advantage of this growth opportunity . Let compounding interest pave your way to retirement. Sam says: "Whats in your wallet?"

Happy Ground Hog Day - Older and Wiser?

Today is Ground Hog day and it just happens to be my Dad's 80th birthday. Do you know what that means? No, it doesn't mean that we have to watch and make sure that he doesn't see his shadow (he didn't by the way). We will leave that up to Punxatony Phil and Buckeye Chuck. What it means is that he is getting older and it is making me realize that I am getting older too. Closer to retirement mind you, but older. I remember when 80 used to seem ancient. Now it doesn't really seem that far away. As we see our parents aging, we begin to feel our own mortality. This whole retirement thing is really shaking up my psyche. I know that I have a few years to go until I do retire, but less than 10 years I hope. With retirement comes a lot of good things, but also the unknown. Will I have my health? Will I even be alive. How dark is that thought? I guess that gives merit to what one of my friends used to say. "Life is short! Eat dessert first!" With that in mind, one can't forget about the rest of the meal. You need a good recipe for the main entre. A good chef will tell you that you must use all of the ingredients. Missing ingredients can ruin the whole meal. Don't get so wrapped up in planning for retirement that you forget some of the key ingredients. I know! One more thing to worry about.

Happy birthday Dad... Live long and prosper!