Jonathan Clements's Blog, page 141

Fessing Up

WOULDA, COULDA, SHOULDA is part of every retiree’s investment vocabulary. I’ve certainly had my share of bloopers.

Too often, we writers stand up here and pontificate about our exploits, leaving readers feeling they couldn’t possibly do the same. With an eye toward leveling the playing field, I thought I’d divulge two of my biggest blunders.

Error of commission. Using the royalties from her husband’s high school Spanish textbooks, my mother-in-law Rose began to accumulate municipal bonds in the late 1970s. It was an auspicious time. Interest rates peaked a few years later and, as they fell, bonds embarked on a multi-decade bull market. Rose reaped an unexpected capital gains windfall, in addition to a tax-free and relatively low-risk return.

The bonds proved a boon for us after Rose died, with the interest supplementing our income. To build up a reserve for a house down payment, and as diversification for our stock investments, Alberta and I left the bonds in an account overseen by Rose’s broker and let them mature one by one to avoid any selling costs.

Perhaps still flush with Alberta’s inheritance and cocky from eluding any further investment costs with the bonds, I proceeded to make a series of egregious misjudgments. In those days, I regularly hung out at a Charles Schwab investment center, where I heard that bond sales don’t incur a commission. To my chagrin, I subsequently discovered they sometimes do, and—if a commission isn’t charged—the bid received by a seller is marked down.

Unfathomably, I never questioned my fantasy that Rose’s full-service broker gave freebies to bond sellers. With the need for the house down payment approaching, I blithely sold all the bonds, not just the number necessary to fund it. In the process, I forfeited thousands of my wife’s dollars.

I realize now that, had I known about the selling expense, two alternatives were open to me. Given the overall size of the transactions, I could have asked for a discount, a request that brokerage firms occasionally grant. On top of that, I shouldn’t have felt beholden to Rose’s old firm. I could have transferred the bonds to Schwab, where presumably their liquidation would have been far cheaper.

Trial by fire. “Steve, the phone is ringing. It’s four in the morning. I hope your brother and Robin are okay.”

“Is this Steve Abramowitz?”

“Yes, it is.”

“You own the Victorian at 2015 21th Street?”

“Yes, I do.”

“This is the Sacramento Fire Department. You’ve had a three-alarm fire. The building is destroyed. It’s not habitable.”

“No one was in the building, right?”

“We think that’s the case. Who works there?’

“Thank God nobody was inside. Sixteen psychotherapists. I’ll need to call them so they can inform their patients and find a new office.”

“We recommend you call your insurance agent as soon as possible.”

“Sure, thank you.”

In need of support and guidance, I immediately called my brother Richard, a Fort Lauderdale attorney, and explained the situation. Although shaky and unsteady from the devastating news, I felt certain we were insured for fire. But I also realized I’d have no rental income and would soon be up against my fixed expenses, including mortgage payments and property tax.

My brother was concerned but calm. “Steve, look, I’m telling you, the cash won’t be a problem. You’ll have the loss-of-rents coverage until you get the big check for the fire damage. You’re okay. Just you and Alberta take care of yourselves.”

I got off the phone, feeling grateful and relieved. Later that morning, I called my insurance agent.

“Iris, hi, this is Steve Abramowitz.”

“Hi Steve, what do you need?”

“Iris, there was a terrible fire at 21st Street. It burned down. I’m covered, right?”

“Definitely.”

“Great. I’ll need some cash to tide me over. We need to get the ball rolling on loss-of-rents.”

“That shouldn’t be a problem. They’ll front some money to you on good faith. Give me a moment and I’ll check to see how much you’re covered for.”

“Sure.” I waited while Iris looked at my policy.

“Steve, you’re not covered for loss-of-rents. I checked in two places. I’m so sorry. I guess you never asked for it.”

I suspect my negligence in not securing loss-of-rents coverage had to do with my frustration with the legalese and ponderous requirements of owning real estate. I was chastened by my lapse. These days, I look over my insurance policies much more closely.

Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve's earlier articles.

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How We Unretired

ONE RECENT TREND among newly minted retirees: unretirement. According to an AARP study, some 3% of retirees are back in the workforce one year later, taking on either fulltime or part-time jobs. Often, unretiring wasn’t part of the retiree’s original plan—but we shouldn’t assume it’s necessarily about needing money.

Starbucks’s Howard Schultz, quarterback Tom Brady and Disney’s Bob Iger are poster children for unretiring. Even our HumbleDollar world includes many examples of those who have reinvented, retooled or rebooted their life so they could rejoin the working world. In 2022, after five years of retirement, my wife and I returned to work.

We spent our first three retirement years dealing with a host of transitions and challenges facing our kids, our aging parents and ourselves. We were finally ready to get going with our retirement plans when the pandemic hit in 2020.

Fast forward to 2021, and both children indicated they’d be working and living in New Hampshire by mid-2022. We had thoroughly enjoyed the state’s outdoor vibe during past vacations. New Hampshire is also a zero-income-tax state, which is especially beneficial while we undertake large Roth conversions before our required minimum distributions kick in.

But how might New Hampshire fit into our retirement life? As a test drive, we rented a cabin on Lake Winnipesaukee for two weeks in June 2021. Our family joined us there, and everyone agreed that they adored lake life and wanted more.

We’d already started house shopping. But for the most part, we couldn’t afford lakefront properties, plus many lake houses are basically glorified hunting cabins. The locals call these rustic places “camps.” Common challenges include well water, septic tank issues, slipshod construction, limited heating, no cooling, century-old wiring, dangerously steep terrain and bunk-house configurations. Locations can be remote—down unpaved roads or on desolate islands. Many only serve as six-month residences.

We kept hitting roadblocks—until October 2021, when a different kind of lakefront property came on the market. This property had three cottages, one occupied by the owner and the other two available for rent. Two of the cottages were freshly rehabbed. The location was ideal for the highway and stores.

The lot was level, and the property featured two docks, a boat ramp, and even came with kayaks and paddleboards. In addition, the cottages were furnished down to the linens, dish soap and paper towels.

Of course, there was just one catch: price.

We pounced anyway. Instead of buying a forever house, we exited retirement and embarked on managing a year-round VRBO-Airbnb operation. Never did we foresee a retirement of cleaning houses, making beds and doing laundry for up to 16 guests a week. Our duties include restocking toiletries and firewood, repairing what breaks and occasionally rescuing our tenants on the water.

This operation might seem daunting for older owners. But we have housekeeping, landscaping and occasional handyman help. Cleanliness is the key to positive rental feedback, so tidy turnovers are our most critical focus.

The new property is working for our family. Our just-graduated son lives with us, and our daughter and her husband visit regularly. Our family enjoys lake life activities, which include fishing, wakeboarding, foiling, kayaking, skiing and hiking through stunning natural terrain.

How is unretirement going for us? In a word, fantastic. Here are six benefits to our unretirement, most of which are common to small business owners:

The business puts structure back in our lives. This occurs mainly during the May-to-September rental season, when our family wants to be at the lake anyway. The work is part-time and flexible, but changeover Fridays are busy.
The structure helps us stay mentally sharp, especially for my wife who manages the business. It generates oodles of things to track, including schedules, maintenance requirements, tenant communications, parking, trash and recycling, supplies, accounting and so on.
The business keeps us physically active. My wife especially enjoys showing off her step count on changeover days.
The rental income helped us buy a property that we otherwise couldn’t have afforded. Costs are high for things like electricity, cable, weekly laundry, booking fees, housekeeping and property taxes. Despite all these expenses, the rentals should be nicely profitable.
The property further diversifies our investments and adds a fourth leg to our three-legged stool of Social Security, pension and investment income. True, we’ve taken on increased real-estate risk. But Zillow indicates New Hampshire lakefront property is up more than 15% since our purchase. Our timing was also a bit lucky. We locked in a 3.25% mortgage right before interest rates took off, and sold stock for the down payment at the market peak in 2021.
Best of all, we have interacted with many interesting people, which expands our social engagement. We’ve shared drinks, meals and fireside chats. My wife’s VRBO and Airbnb feedback is highly positive, which feels great and is critical to sustaining a rental business. Four favorite renters are returning this year.

Our unretirement has provided a renewed and refreshing sense of purpose. We aim to provide a positive experience for our renters and to develop the business for our children—one that, we hope, they’ll eventually take over.

John Yeigh is an author, coach and youth sports advocate. His book “Win the Youth Sports Game” was published in 2021. John retired in 2017 from the oil industry, where he negotiated financial details for multi-billion-dollar international projects. Check out his earlier articles.

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Other People’s Stuff

MOST OF US HAVE TOO much stuff, and we’re apt to joke about it. But clutter, if allowed to spiral out of control, can turn into hoarding.




Hoarders are people who acquire an excessive number of items, some with little or no value, and yet they continue to add to their chaotic overflow. Unable to manage the clutter but unwilling to let any of it go, they become upset and anxious when others offer to help clear it up. The result is debilitating clutter.




It’s estimated that there are some 19 million people in the U.S. who are hoarders. The majority are age 55 and up. It’s hard to arrive at an accurate figure, however, because hoarders are secretive about their habits, usually live alone and don’t invite people into their homes.




The exact cause of hoarding is unknown. While hoarding can be triggered by a traumatic event, not everyone who experiences trauma becomes a hoarder. Family history can also be a factor. Initially, it was thought to be connected to OCD—obsessive-compulsive disorder. But recent studies reveal that it may be a disorder all its own, and possibly linked to a form of dementia.




I think that, as we age, we experience loss in many ways—diminished hearing, eyesight, loss of teeth, hair, mobility, cognitive abilities and so on. Maybe we react by trying to hold on to as much as we can for as long as we can.




Throughout history, there have been extreme hoarders. Perhaps the two most infamous examples are the Collyer brothers, Homer and Langley, of New York City. Born into a wealthy family, they were graduates of Columbia University. Homer was a lawyer, while Langley studied engineering and was a concert pianist. They lived in a four-story brownstone mansion in Manhattan. But they devolved into hermits and slowly withdrew from society, presumably because of family eccentricities.




Their collection of unbridled junk threatened to engulf the mansion, leading the Collyers to improvise what are known as goat paths—narrow aisles and tunnels—by which they navigated through the mountains of stuff. The brothers had a grim life and came to a gruesome end.




Langley became trapped in a goat path, buried under ceiling-high piles of papers, books, debris and garbage. Deprived of Langley’s help, his disabled brother Homer died of starvation surrounded by boxes and newspapers piled to the ceiling. Among the 120 tons of junk authorities removed from their home was the chassis of a Model T Ford, a horse’s jaw bone, an old X-ray machine, massive stacks of newspapers and several pianos.






Another pair of hoarders were the aunt and first cousin of Jacqueline Bouvier Kennedy Onassis—Edith Ewing Bouvier Beale and her daughter, Edith Bouvier Beale, known as Big Edie and Little Edie. The Beales were part of the elite upper class. But as circumstances caused their financial resources to decline, they became recluses in a 28-room dilapidated manse known as Grey Gardens in East Hampton, on New York’s Long Island.




The property was overrun with feral cats, raccoons, overgrown bushes and tangles of vines. The ramshackle house was filled with piles of empty cat food cans, animal and human waste, and assorted debris. The health authorities declared it unfit for human habitation, and they were preparing to evict the Beales.




The major newspapers and tabloids had a field day—sensationalizing the story because of the Beales’ direct link to Jacqueline Onassis. Shortly after, the Beale family paid to clean up the property, bringing it up to required standards, and provided the mother and daughter with a small stipend.




The Beales were happier hoarders—a more cheerful duo than the Collyers. Big Edie was a singer and Little Edie was a former glamorous socialite who also had theatrical leanings. A 1975 documentary called Grey Gardens , depicting the Beales and their way of life, met with success.




This was followed by an HBO television movie in 2009, also called Grey Gardens, starring Drew Barrymore as Little Edie and Jessica Lange as Big Edie. I preferred the documentary. The movie version was glamorized and sanitized, in usual Hollywood fashion, which made it a little more palatable.




There have been reality TV shows about hoarders and books galore on the subject of de-cluttering. Some contain tests for you to rate yourself on the hoarder scale. Do we all have a little of the hoarder in us? If you have a lot of stuff, but don’t yet see any noticeable signs of goat paths, maybe you still have your stuff under control.



Marjorie Kondrack loves music, dancing and the arts, and is a former amateur ice dancer accredited by the United States Figure Skating Association. In retirement, she worked for eight years as a tax preparer for the IRS’s VITA and TCE programs. Check out Marjorie's earlier articles.

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Closing the Door

I FOUND OUT A YEAR ago that my Aunt Ina Lou, then aged 95, had designated me as her agent in her financial and medical powers of attorney. She also named me as executor of her estate and the trustee for her trust.

She wasn’t well and needed more help than her thoughtful neighbors could provide. Within months, my brother, my wife and I had our aunt settled in an assisted living facility near her townhome in Burke, Virginia, about a six-hour drive from our homes in North Carolina.

The next big task I faced: deciding what to do with her townhome. She bought it new in 1980. The furnace, roof, washer and dryer were fairly new, but the carpet, vinyl flooring and kitchen cabinets were all original, and they looked it. It’s in a desirable planned community, not far from Washington, D.C., with easy access to the city by commuter train. There are lots of walking and biking trails through protected wooded areas within the community, and houses there sell at a premium.

I knew that eventually I’d have to get the house ready to sell, but when should I sell it? The answer depended on taxes, the cost of maintaining the house until it was sold, and how long my aunt might live. Aunt Ina Lou bought the house for about $67,000. The tax value was now $460,000, yielding a capital gain of $393,000—assuming it sold for the tax value.

While houses often sell for a bit more than their assessed value, I guessed that would not be the case here, given the age of the kitchen and bathrooms, and since the house had just one-and-a-half bathrooms and an unfinished basement. Most other similar-size homes in the local market had two full baths and a finished basement.

That $393,000 is a hefty capital gain. There’s special tax treatment for gains on the sale of your home, however. If you live in the house for two of the five years before you sell it, you can exclude $250,000 of the profit from capital gains taxes if you’re single and $500,000 if you’re married. That meant that, if I sold my aunt’s house within three years of her moving out, she would qualify for the $250,000 exclusion.

Here's the math on that: She’d have to pay capital gains tax on $393,000 minus $250,000, or $143,000. At her income level, she’d pay a maximum of 15% on the gain, or $21,450 total.

I’m one of six beneficiaries of my aunt’s estate. If I waited until Aunt Ina Lou died to sell her house, there’d be little or no capital gains tax to pay. The tax basis of inherited property is stepped up to the property’s value on the date of death. We would only pay tax on any appreciation between her death and the sale of the house.

There is, however, the cost of maintaining the house to consider. Everything in Burke, Virginia, is more expensive than where I live. Between property taxes, homeowners’ association fees, insurance, electricity bills, water bills and yard maintenance, it was going to cost about $12,000 a year to keep the home. Thus, it would take about 21 months for the cost of maintaining the house to exceed the capital gains tax if I sold the house immediately.

While she has a decent amount of savings, the cost of Aunt Ina Lou’s assisted living facility exceeds her state pension and Social Security. If she lives long enough, I’d have to sell the house to pay for her care. If that occurred after she had been out of her house for more than three years, the tax exclusion would no longer be available. That would cost her $37,500 more in capital gains taxes.

I wasn’t interested in being a remote landlord, though I know I could pay someone to handle that. Also, I have no idea how long Aunt Ina Lou will live. Another important consideration: I wanted to simplify this part of my life. Besides, there’s always the possibility that something bad would happen at the house: fire, water leak, squatters—you name it. I decided to proceed with selling the house.

Before I could sell, we had to get the house ready. It was a team effort, with much help and hard work from my brother and my wife. We cleared out everything from the house, and made many trips in my brother’s truck to Goodwill, the county dump and the recycling center. We ripped out the old carpets, arranged for painters to come in, and flooring people to put in new carpets and vinyl flooring. Then we made some minor and not-so-minor repairs, and spent a couple of days fixing what the painters had messed up.

There was a bit of good fortune at the end of this process. My brother knows a woman who lives in North Carolina and works remotely as the transaction coordinator for a real estate outfit near Aunt Ina Lou’s home. My brother’s friend can get a finder’s fee for referring interested sellers to her company.

She put me in touch with the realtor who owns the company. My wife and I met with the realtor on the afternoon that the flooring was completed. The realtor was knowledgeable and energetic, and she was quite familiar with the area and the housing market. Eight days later, we had 13 offers, one of which was $68,000 over the asking price. I decided to go with that offer.

Three weeks later, we closed the deal. What a relief to have that done. While we have to pay capital gains taxes on the sale, I can be sure of getting the $250,000 exclusion, I don’t have to worry about dealing remotely with the home and we’re done with the $12,000 a year in carrying costs. I consider that a win.

Brian White is retired from the University of North Carolina, where he worked as a systems programmer and then director of information technology in the computer science department. He likes hiking with his wife in a nearby forest, dancing to rocking blues music, camping with friends and stamp collecting. He also enjoys doing Volunteer Income Tax Assistance (VITA) work at the Chapel Hill senior center. Check out Brian's earlier articles.

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Making Their Own Way

OUR FIVE KIDS SPENT a collective 24 years in college. All five have bachelor’s degrees, and three also have master’s degrees. The youngest graduated May 2023. Only one child qualified for non-merit aid—a $300 Pell grant.

My wife and I didn’t give them money for college. We don’t live near a major public university, so four of the five had to live on campus. Here’s what prepared them for college and how to pay for it.

First, grade school is more important than college. If a kid gets lost there, you can forget about any other education. They’ll struggle everywhere. But excel at grade school and they’ll be able to make it anywhere. Our kids went to a small rural Catholic grade school. I don’t think the teachers were any better than public school teachers. But the classroom discipline was very conducive to learning.

Next, tell your kids the hard truth. Our oldest child was smarter than average and a forward thinker. Renee came to me in sixth grade and asked, “Daddy, when I go to college, you’ll pay for it, won’t you?” I looked into my daughter’s beautiful brown eyes and said, “No, we won’t.”

I knew at the time that, if we paid for all of our children’s education, we’d have to beg, borrow or steal some $500,000. I explained to Renee that her parents would be ruined financially if we borrowed money for each kid’s college education. The best we could do was get each of them through high school and then they were on their own. We were not going into debt for them.

That was a lot for a sixth grader to take in—but she now knew she’d have to do it on her own. It pushed her to excel. Our oldest set the bar high, and the other kids then followed her lead.

Renee talked to the guidance counselor as soon as she reached high school. She explained her goals for college and her lack of parental support. She did this in the first week of her freshman year. The counselor was surprised. This was unusual for a freshman. The counselor provided some good advice that led to scholarships four years later.

The guidance counselor also put her in contact with a teacher who oversaw a highly active student organization running multiple events each year. Renee took on leadership positions and eventually became the organization’s president. She also had smaller roles in some of the academic clubs. But remember this: It’s better to do a few things extremely well than to have a student resume listing gobs of organizations where the student could only have had minimal involvement.

Competitions are important. Any sort of competition—but particularly academic—should be sought after. It all adds up, whether it is school-wide, district, regional, state or national. Children shouldn’t be afraid to put themselves out there.

Kids should also take every hard or advanced course they can, and then strive to keep their grades up. When struggling, they should stay in constant contact with their teachers. You’d be surprised how much teachers, for the most part, really do want to teach. But you have to ask for help.

Choose college majors wisely. It has a big bearing not only on future job opportunities, but also on the scholarships that are obtainable. My oldest was planning to major in business and later become a lawyer. I was doubtful. Everything I read said the country was drowning in lawyers and it was an expensive degree to get. Then Renee was invited to a gifted student conference at a major university, along with a few hundred other Kentucky high school students.

The students and parents met in a huge gym and were asked to follow the representative of whatever school they were interested in as a major. I’d say 75% of the students and parents got up to follow the engineering school representative. We ditched the business school and went with the engineers. We found out that the job opportunities for engineers were one of the best, if not the best, for students from that university.

It’s also a great idea for the student to work jobs while in high school. It could be fast food, babysitting or pretty much anywhere. It teaches the value of a dollar, looks great on a student resume and shows you can balance school, work and extracurricular activities. The extra money isn’t bad, either.

College entrance exams like SAT and ACT are pretty standard, though some universities don’t require them anymore. But it seems to me that, if you want a big scholarship, they’ll be asking for those scores.

I had my kids test up to 10 times on the ACT to get the highest score possible. Three ended with 31s out of a perfect score of 36. This had a huge bearing on what they ended up with in scholarships.

Look for the big scholarships, internships and conditional job stipends. Three of our kids were selected for the Kentucky Governor’s Scholars Program. Every year, a few get picked for the program from each high school. It was a huge factor when winning multi-year scholarships from Kentucky universities.

The kids all earned money through internships while at college, either during the summer months or during the semester, when the internships served in lieu of classes. Three had part-time jobs during the college academic year as well. Three of our children received stipends from the state while earning civil engineering degrees. In return, they were required to work for the state after graduation. Each of the three kids got about $50,000, and had to work one year for each academic year that they’d received the stipend.

Our youngest was selected to attend a college residential program for math and science students after her sophomore year of high school. This led to a free education and she actually made money each semester. She became a mechanical engineer.

One child didn’t get the big scholarships. Instead, she attended a community college, and later took online and Zoom courses to complete her four-year degree and later her master’s degree in education.

Finally, each came out of college with no student loans and money in the bank. The youngest had $43,000 in her bank account. We have three civil engineers, one mechanical engineer and one grade-school teacher.

True story.

They all have other problems, as does any individual, so don’t envy us. But this part of their lives turned out better than we ever dreamed—and it’s a reason I could retire at age 60.

Ken Begley has worked for the IRS and as an accountant, a college director of student financial aid and a newspaper columnist, and he also spent 42 years on active and reserve service with the U.S. Navy and Army. Now retired, Ken likes to spend his time with his family, especially his grandchildren, and as a volunteer with Kentucky's Marion County Veterans Honor Guard performing last rites at military funerals, including more than 350 during the past three years. Ken's previous articles were Loosening My Grip and How I Got This Way.

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Looking Forward

JOY DOESN'T COME easily to me. I tend to default toward melancholy, so I try to ensure my discretionary purchases bring as much happiness as possible.

Like many readers, I’m a firm believer that buying experiences sparks more joy than buying stuff. The dollars we’ve spent on family vacations, sporting events, church mission trips and, more recently, escape rooms—worth trying sometime—have created memories that’ll last a lifetime. Yet obviously not all of our discretionary money is spent on experiences.

Recently I’ve been pondering how serial purchases of similar items rarely create lasting joy. I’m an AFOL—adult fan of Lego. That’s the affectionate term applied to grownups like me who remain fascinated by the joy and wonder of building beautiful creations with small, plastic studded bricks.

My family and I have spent more than $12,000 on Lego sets over the past 20 years or so—a startling sum in retrospect. Each new set provides bliss and occasionally awe when building the most grandiose—and expensive—constructions. Yet, hundreds of builds later, I’ve also felt this joy quickly fade away. It’s replaced by the fresh impulse to purchase the next Lego set, although the delight the next one creates will quickly pass as well.

Knowing this, I try to teach my kids that they should never expect their next purchase, no matter what it is, to bring happiness that endures. Lately, my six-year-old son always wants to spend his money, earned by doing chores, on small robotic dragon toys. These dragons can be folded up into balls, only to sneakily emerge to unleash their vengeance on other dragon balls.

He recently bought a six pack of these toys for $30. That’s four weeks of his earnings. He played with them non-stop for 24 hours, even sleeping with a few in his bed. But within a day, he was already planning which dragon balls he’d buy next.

Being the wise Dad that I am, I explained to him that he shouldn’t expect another dragon ball to bring him some elusive, lasting joy that the first six weren’t able to deliver. “I know, Daddy,” he responded, and then continued planning for dragon ball No. 7.

My 11-year-old son, a little more learned than his younger brother, recently fell prey to the same sentiment. He was spending far too much money on miniature skateboard ramps. Imagine two fingers acting as the legs on a three-inch skateboard, sending the board flying down a ramp. At a cost of about $20 a pop, he spent at least $100 of his hard-earned money on something that brought only fleeting joy before ending up in the giveaway box.

He regretted those purchases a few months later as he was doing extra chores to save for an Apple Watch. I vividly remember the nugget of wisdom I offered at the time—that he shouldn’t assume that yet another skateboard ramp accessory would provide a level of joy that the prior sets hadn’t provided. I’m beginning to think my kids need to endure this regret a few times on their own before it sinks in.

As I gaze at the Lego website, however, I’m not quite sure I’ve yet learned this lesson myself. Perhaps it’s the anticipation of the purchase that provides almost as much joy as the item itself.

Speaking of anticipation, is it true that looking forward to something can create more joy than being surprised? I like surprises—surprise parties, an unexpected finish to a magic trick or a gift from my wife that I wasn’t expecting. I tend to assume that being surprised adds to an occasion's enjoyment. Yet I’ve also heard that looking forward to something—the expectation of a joyful event—increases the excitement. Which is more pleasure-inducing, surprise or anticipation?

Like many things in life, the answer is probably, “It depends.” For many years, one of the ways my wife and I have enjoyed making our kids happy is by surprising them with a late-night run in their pajamas to the donut shop. These events have an anticipation factor of zero, so the surprise meter consistently runs at 100%. The kids continue to love donuts in their jammies.

On the night I came home from the last of my final exams, after four years in dental school, my wife handed me an itinerary for a weeklong trip to New York City she had stealthily planned. She told me to pack my bags because we were leaving in the morning.

This was a colossal surprise. That’s partly because we were dirt poor and couldn’t afford it, but more so because it was a total shocker, perfectly juxtaposed with all the days of toil and studying I’d gone through for weeks. It’s difficult to know whether or not I could have experienced even more pleasure if I’d been anticipating the trip for months.

A few years ago, I flew home to Texas to surprise my Mom on her 60th birthday. I pulled into her driveway as she was sitting on the front porch, never expecting to see my smiling face. Her excitement was unparalleled. I doubt that knowing ahead of time could have made for a more heightened sense of gladness in her.

On an opposite note, my wife and I are planning our first cruise in celebration of our 25th anniversary this fall. We booked it last November, so we’re in the middle of a year-long wait, with growing expectations for our 10 days at sea. Will the months of looking forward create more joy than a surprise would have?

Perhaps the cumulative joy is about the same. After all, some people enjoy eating their dessert slowly and savoring it, while others prefer to down it as quickly as possible in a burst of sweet ecstasy. Either way, it tastes good.

Casey Campbell is an active duty military periodontist and a homeschooling father of five. He and his family currently live in Northern Virginia. The views expressed in this article are those of the author and shouldn’t be construed as official or as reflecting the views of the U.S. Air Force or Department of Defense. Casey's previous articles were A Job With Teeth and A Moving Predicament.

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Coming Together

I GOT CAUGHT UP IN some weird investment fads during the recent era of 0% interest rates. With cash investments and bonds yielding almost nothing, I instead sought to pad my investment returns by opening new brokerage accounts to snag promotion cash, and by dabbling in digital currencies and newfangled alternative investments.

Result? I ended up with far too many financial accounts—and it became a burden to keep track of everything. Just a year ago, I had investments in obscure real estate deals, individual pieces of art, bottles of wine, stablecoins and other relics of the speculative pandemic-era mania. What's more, after leaving both my fulltime job and my teaching position at the University of North Florida, there were old retirement accounts and a health savings account (HSA) that I was lazy about rolling over.

I craved a less complicated financial life. Simplicity is bliss, as many HumbleDollar writers have noted, and I’m now firmly in that camp. Here are six key benefits I’m enjoying now that almost all of my investments are in one safe place:

1. Getting my weekends back. As my number of accounts grew, keeping tabs on everything became cumbersome. A proud bean counter, I’ve routinely updated my personal finance spreadsheet since I was a freshman at Florida State University in 2007. But what used to take 10 minutes on a Saturday morning turned into something that felt like a chore. By the middle of 2022, logging into all those unique accounts to tally my net worth took north of 45 minutes. I sought to slim down that process starting at the end of last year.

2. Less wasted mental energy. Helping my future self by streamlining my finances now became mission critical. With all those taxable investment accounts, completing my 1040 tax return became brutal, especially when coupled with the headaches that come with filing taxes for a small business. I also felt oddly stressed by the disarray in my financial life—and there were far too many emails from all those investment sites.

3. Greater financial serenity. Not only do I now have fewer logins to remember, portals to navigate and websites to bookmark, but also I’ve cut down on the number of funds I own. Today, I’m mostly left with just a few different index funds across a traditional IRA, Roth IRA, solo 401(k) and HSA. Unfortunately, I still have some niche low-cost-basis exchange-traded funds (ETFs) in my taxable account that I’m reluctant to sell because that would trigger a big tax bill. The good news: At least these funds have low annual expenses.



4. Lower costs. The brokerage firm I came home to offers some 0% expense ratio index-mutual funds. I use those to keep more of whatever the markets deliver. Other companies, while offering high-quality, dirt-cheap ETFs, don’t have that little bonus of zero-cost investment funds.

5. Easier tax filing. Seasoned investors have probably figured out that my new investment home is Fidelity Investments. While I’ll still receive an uncomfortably large number of 1099 tax forms early next year, my tax life starting in 2025 should be much simpler—which is exactly how I want it to be. No more fumbling around other customer-unfriendly sites, sifting through complicated K-1 tax forms and worrying about whether some newbie financial firm has messed things up.

6. Simpler for my heirs. Six months ago, had I passed away, my family would have faced a frustrating mess trying to figure out all the accounts I had and how to access them. But now, it’s all right there in one place. Beneficiaries are listed on my retirement accounts, while my taxable accounts are titled as transfer on death. I also have confidence that a Fidelity rep will guide my family when my time comes—hopefully not for another several decades.

Simplifying my financial life, by transferring assets from roughly a dozen places to Fidelity, has been a strangely transformative experience. Not only has it smoothed my financial journey, but also it’s saved me time, brought peace of mind, potentially reduced costs, made for straightforward tax management and enhanced my estate planning. The cherry on top: Fidelity offered me a generous $700 bonus to move my other accounts there—and you know I couldn’t pass that up.

Mike Zaccardi is a freelance writer for financial advisors and investment firms. He's a CFA® charterholder and Chartered Market Technician®, and has passed the coursework for the Certified Financial Planner program. Follow Mike on Twitter @MikeZaccardi, connect with him via LinkedIn, email him at MikeCZaccardi@gmail.com and check out his earlier articles.

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Staying the Course

WHAT DO WALL STREET analysts, magazine editors, economists and academics have in common? They’ve all found it virtually impossible to make accurate market forecasts. That’s why Vanguard Group founder Jack Bogle gave this advice to investors: When markets go haywire, “Don’t do something. Just stand there.”

Warren Buffett has given the same advice. In 2008, here’s how he explained it: “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” In the years since, we’ve endured additional political turmoil, another pandemic and another recession, and yet the Dow Jones Industrial Average now stands at 34,000.

The “just stand there” approach is supported by years of data. Study after study has found that investors do better, on average, when they avoid reacting to their investments’ periodic ups and downs, and instead just stand there. I share that view, but this is sometimes easier said than done. That’s because—despite all the data—it just doesn’t feel like a satisfying strategy to submit to the whims of the market. What can you do to square that circle? Below are some suggestions.

Permanence. Technology commentator Tom Goodwin has pointed out how difficult it is to make predictions in the business world. Consider the music industry. After suffering a nearly 50% revenue decline due to the introduction of online music streaming, the industry defied expectations and bounced back. Revenue is now at an all-time high.

The newspaper industry appeared to be in a similarly tough spot after the internet made lots of news available for free online. Many newspapers did indeed fail. But some found new ways to make money. The New York Times, for example, is seeing revenue hit new records after several difficult years.

The lesson: Prognosticators don’t know the future. They don’t know which way industries, companies or individual stocks are going. But that, in a way, is a good thing. It means you can safely tune out these folks and avoid reacting to their (flawed) predictions.

Resilience. As I’ve noted before, we shouldn’t expect stocks to rise in the future simply because they’ve always risen in the past. Rather, we should expect stocks to rise because share prices, more or less, follow corporate profits.

While the pandemic years were unpleasant, they also revealed something important for investors. Whether it was restaurants setting up seating outdoors or companies adapting to work-from-home technologies, we all found a way to move forward. People are resilient and, as a result, so too is the economy.

That, I think, should give investors confidence in the future. If companies were able to persevere—and even thrive, in many cases—despite the challenges of the past three years, that should reassure you that profits, and thus share prices, will continue to rise, despite periodic downturns.

The media. It’s well understood that social media algorithms create unhealthy echo chambers for their users. But it turns out that Facebook, Twitter and other social media aren’t the only problem. Even traditional media organizations have strayed.

On a recent episode of Michael Lewis’s podcast, Against the Rules, Lewis interviewed a young scientist named Mallory Harris, who was involved in some of the earliest research on the COVID-19 virus. She observed that, during the early days of the pandemic, the media weren’t interested in presenting a balanced view. Instead, reporters sought out scientists who were making “the most sensational” claims—those who were at one extreme or the other, arguing either that COVID was totally harmless or that it was as bad as Ebola. That was despite the reality that most researchers saw it—correctly—as being somewhere in between.

The same preference for sensational claims applies to business and financial news. The more dramatic the prognostication, the more likely it is to get airtime. That means investors hear less from commentators with more balanced views. It’s not a great situation. But as individual investors, we can use this to our advantage. By recognizing that a lot of financial news is really just entertainment, it’s easier to tune it out.

Statistics. In another episode of Against the Rules, Lewis interviewed Bill James, the creator of the statistical approach to baseball that Lewis made famous in his book Moneyball. James’s technique allowed baseball’s general managers to field teams more effectively by identifying players’ hidden talents. But James laments that he’s also created a sort of monster. Baseball fans, in his view, now rely too heavily on statistics, and that can lead them astray.

Lewis, who got his start on Wall Street, draws a parallel to the use of statistics in finance. In baseball, for example, there’s a statistic called wins above replacement (WAR). It’s supposed to provide a shorthand summary of a player’s overall value to a team. It turns out to have a close cousin in finance, a measure called value at risk (VAR), which aims to provide a shorthand summary of an investment bank’s overall risk level. But WAR and VAR have both proven to be overly simplistic.

Turn on the financial news, and you’re likely to hear various market statistics, along with pundits’ conclusions. But as James says, and Lewis agrees, it’s dangerous to rely too heavily on any one figure in any domain, especially finance. Do statistics have some value? Yes. But as Lewis says, none should be interpreted as providing “the answer.” Feel free to listen to market updates. But never let them worry you too much.

Your DNA. A final, perhaps surprising, reason to take Bogle’s “just stand there” approach: your health. Research has identified a phenomenon known as headline stress disorder.

As you might guess, it’s the detrimental result of our always-on media culture. By now, it’s not news that “doomscrolling” on social media impacts our mental health. But research has found that it may even be affecting our physical health—at the DNA level. To be sure, this research is evolving. But in combination with all of the other factors, I see this as another compelling reason to take Bogle’s advice. When those around you are losing their heads, there’s no need to join them.

Adam M. Grossman is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on Twitter @AdamMGrossman and check out his earlier articles.

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Ask Before Quitting

AS FOLKS HURTLE toward retirement, they often wonder whether they’ve saved enough, debate when to claim Social Security and fret about how they’d pay for long-term care. Make no mistake: Such issues are hugely important.

But amid these financial musings, we should also spare a thought for four other questions:

How can I transform myself from a diligent saver to a happy spender? This sounds so easy, and yet many struggle with it, including Ken Begley and including me—and including those who amassed vast fortunes, as Marjorie Kondrack recently discussed.

To be sure, we don’t have to spend our money to get pleasure from it. Simply sitting on a pile of dollar bills can deliver happiness, thanks to the sense of financial security it offers. Similarly, giving away money, whether to loved ones or to charity, can also deliver ample happiness.

Still, I think every diligent saver should ponder whether there are ways to spend more on themselves that could improve their retirement years. I have no clever strategies to suggest that’ll help you go from avid saver to joyful spender. But I’ve found that practice helps.

My advice: Don’t start with a big purchase—a super-lavish vacation or a luxury car. That'll likely make you uneasy, and there's a risk you won't get much pleasure from the money involved. Instead, try buying some smaller items, which often deliver disproportionately greater happiness per dollar spent. If you part with a little more money than usual and it enhances your life, perhaps your attitude will slowly shift and you’ll find yourself enjoying the fruits of your earlier thrift.

What will get me out of bed in the morning? I’m a big fan of daydreaming.  Assisted by the internet, I muse about vacations I’d like to take, restaurants I want to try and musicians I’d like to see perform. Daydreaming costs nothing except time, and—I suspect—often delivers just as much pleasure as the real thing.

As you approach retirement, I’d encourage you to daydream about how you’ll use your time once you quit the workforce. Indeed, I think it’s worth creating a lengthy wish list. That wish list will no doubt include fun stuff, like trips you want to take and hobbies you might pursue.

But I’d also include a few items that have the potential to deliver eudaimonic happiness and that could put you in a state that psychology professor Mihaly Csikszentmihalyi referred to as “flow,” where you become completely absorbed in what you’re doing and time just whizzes by. We’re talking about activities that you consider important, that you find challenging, that you’re passionate about, that you feel you’re good at—and which could provide your retirement with a sense of purpose.

That sense of purpose will make your retirement more fulfilling and help to compensate for the identity you lose when you leave fulltime work behind. I’ve seen folks mourn the end of their career, with that deflating sense that not only were their accomplishments modest, but also there’ll be no more chances to rectify that. To ease this “grief,” it’s helpful to have something to look forward to—another chance to do good work.

Who are the friends I’ll see regularly? During our working years, we often count our colleagues among our friends. Yet these friendships often peter out when we change jobs or shift into retirement. How will we make new friends? I wouldn’t leave this to chance encounters, and instead have a plan for how you’ll meet others.

And, no, don’t count on family to fill the friendship void. Our adult children often have busy lives, and don’t necessarily want to spend big chunks of their limited free time with Mom and Dad. Moreover, as Dennis Friedman has noted, we spend time with friends because we think we’ll enjoy it, whereas with family it’s not solely about enjoyment—there’s also a sense of obligation.

I’m no great fan of retirement communities, but I could imagine my attitude changing in the years ahead. Those who live in retirement communities seem to find it easier to make friends, so these communities might be a good choice for those who fear social isolation and struggle to meet others.

What will my future self think of the decisions I make today? This is always an important question to ask—but it’s especially important for newly minted retirees, because so much will change in the years ahead.

Our mobility may be sharply curtailed or we may find ourselves devoting large chunks of time to medical issues. The activities that appeal to us at age 65—travel, pickleball, caring for the grandkids—may hold scant appeal a dozen years later. Because so much is unknown and things can change so quickly, it’s hard to imagine who we’ll be just a decade down the road.

And yet, despite all the uncertainty, retirement tends to trigger “end-of-history illusion,” where we assume that our life’s constant change will finally come to an end. Will it? I wouldn’t count on it. Our time in retirement could be marked by major upheaval, and the initial choices we make might get quickly thrown out.

Rick Connor touched on this recently. In 2021, he and his wife Vicky sold their home in the Philadelphia suburbs and moved to a New Jersey beach community, imagining this would be their final stop. And yet they’re already wondering whether they might move again.

I, too, wonder whether the retirement plans that Elaine and I are making today might get torn up just a few years down the road. What to do? Make sure your home will be suitable for your older self. Think long and hard before making major financial commitments, such as a second home or an RV. Don’t rule out options that might seem unappealing today, such as a 55-plus community or a continuing care retirement community. I think flexibility is the key—especially when it comes to housing.

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on Twitter @ClementsMoney and on Facebook, and check out his earlier articles.

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Regrets, I’ve Had a Few

WHEN I WAS ASSIGNED a high school essay on business morals, I asked my dad if he knew of any books on the topic.

“No, Stevie, I don’t. From what I’ve seen in New York real estate, it would be a very thin book.”

For more than 40 years, that cynical quip has haunted me, coloring my view of rental real estate. I’m not emotionally suited to being a landlord. But I wanted real estate as a stock market diversifier—and I was drawn to the benefits of combining rental income with stock market dividends. Together, they would give me a passive income stream to pay for retirement even if Social Security in its present form were to perish.

As seniors, the urge to reckon with our lives is a natural component of what’s colloquially called the “wisdom of old age.” Some of you may have already embarked on a journey of savoring the memories of your successful choices and regretting the ones that didn’t pan out. What about me? I’ve found myself reflecting on the moral tests I confronted during my years as a landlord.

Lately, one particular transgression has been replaying in my mind. It’s a seemingly minor incident that happened when I was renting my first duplex in 1983. Its outsized impact on me may be attributable to the fragility of my budding values as an owner of small residential-income properties. I was a child of the Kennedy era of youthful exuberance and aspirations, and I fashioned myself as a humanitarian landlord. Faced with a moral dilemma, I imagined myself adjudicating with enlightened fairness and sensitivity.

But I soon learned how my worries about financial success could corrode my integrity. I had already rented the two-bedroom side of the duplex, but—after it had sat on the market for two months—was growing worried about the more luxurious three-bedroom unit. Just as the next mortgage payment was coming due and my concern was turning to panic, I received a call from a student at the nearby university. He and his friend were looking for a place, and they were interested in the apartment.

Even back then, I knew that renting to two fraternity brothers was a risk to neighborhood quiet and the property’s condition. On top of that, I suspected it might be difficult to find a renter for the remaining bedroom. But I was enamored by the idea of finally renting two of the three bedrooms. I walked the boys through the unit and signed them up.

I was one relieved neophyte real estate investor. After the guys took possession, my good fortune seemed unbounded when I received a call from a fellow in Placerville, a small city some 50 miles north of Sacramento. After an exchange of pleasantries and some questions, we agreed to meet at the property.

James was morbidly obese and walked with a waddle. Although struck by his awkwardness, I was not fazed by it. He was amiable, and seemed forthright and a promising rental prospect. His references and credit were exemplary, and we scheduled a walk-through. He met his two co-renters and then drove with me to a nearby coffee shop to leisurely sign the lease. Boy, I could really cozy up to this landlord stuff.

But my reverie was short-lived. Late that same afternoon, I got a call from one of the students. James was gross and disgusting, I was told. The boys would withhold their rent until I undid my arrangement with him. I did not relish the prospect of an expensive and stressful eviction process, along with the unraveling of my newfound self-esteem as a landlord.

After a few days of deliberation, I called James and explained the situation. The silence on the other end of the phone told me that this was not the first time he had been the object of discrimination for an illness that was probably biological and out of his control. He stuttered that he’d been looking forward to his new home but didn’t want to pursue renting it under the circumstances. He agreed to cancel our contract.

Clearly, James had more character than his landlord. It took a while before I could recognize and acknowledge my lapse. I can’t remember how I ultimately filled the vacancy, which didn’t seem to matter as much anymore.

Viewing life through the lens of retirement is not always painless. How deeply had I wounded James? Does his mind still wander to that phone call as often as mine does?

You may already be revisiting the decisions you made in young adulthood, regretting the missteps and delighting in the triumphs. Half a life later, I tell myself the same dilemma today would evoke a very different resolution. But I’m also aware that talk is easy—and it’s behavior that’s hard.

Steve Abramowitz is a psychologist in Sacramento, California. Earlier in his career, Steve was a university professor, including serving as research director for the psychiatry department at the University of California, Davis. He also ran his own investment advisory firm. Check out Steve's earlier articles.

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