Jonathan Clements's Blog, page 204

Getting Lucky

PEOPLE TEND TO attribute their investment gains to skill and their losses to bad luck. To these two categories, I’d like to suggest a third: making a fortune—thanks to good luck. Let me give you an example.

I’m a member of the National Press Club in Washington, D.C. It’s a downtown club where reporters went for a drink and a bite to eat after they filed their stories. As you might expect, business was rocky during the pandemic.

The club is decorated with front pages from historic newspapers and candid snapshots of U.S. presidents who dropped in. There’s also a large painting showing the old newsroom of a small-town country weekly. If you look closely at the painting, an artist named Norman Rockwell is opening the door to enter. He’s carrying a large portfolio under his arm.

Rockwell painted more than 300 illustrations for the Saturday Evening Post magazine, and this is one of them. They’ve become emblematic of a simpler, bygone America that people miss. The painting, called “Norman Rockwell Visits a Country Editor,” was donated to the National Press Club in the 1960s. It was hung in a place of highest honor—the entrance to the bar.

Rockwell’s paintings have grown in value. There’s a museum dedicated to his work in his hometown of Stockbridge, Massachusetts. The club asked the museum to evaluate the condition of its painting and its possible worth. The answer was startling.

The painting was so valuable the club needed more insurance, security and a climate control system. Which it couldn’t afford. Instead, the club had a copy of the painting made and hung it in the same place. Then it sent the original painting off to auction, where it fetched $11.5 million.

The money, which was invested and has grown, carried the club through the COVID-19 downturn. It also pays for journalism scholarships through a related foundation.

Bonanzas like these may happen more than we realize. Often, they’re associated with property that’s been owned for a long time. I have a friend whose parents bought a few rocky acres in the 1960s to raise their kids off the grid. Decades later, geologists located natural gas beneath the shale. My friend, who grew up without electricity, was able to retire early.

It’s hard to brag about your foresight with events like these—when money seems to fall into your lap almost accidentally. Money is fungible: A dollar buys the same amount of goods and services whether it’s earned through hard work, investment skill or serendipity. Of these three, I think good luck is the least appreciated.

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Taking Control

I WAS BORN INTO an upper-middle-class family in Thailand. My dad was a doctor and my mom was a nurse. Both had a profound effect on me—on how I tackled my career, financial issues and life more generally.

I was the oldest of four children and the only girl. My father made sure I was given the same opportunities as my brothers, whether it was education, sports or other extracurricular activities. For him, “because you’re a girl” was never a reason to do or not do something. My father was the first feminist I ever knew—before I even knew what the term meant.

Each of us has our own strategy for coping with life, usually developed early on. I now realize that my strategy was a response to my mother’s behavior. She has ADHD, as well as a personality disorder, but she wasn’t properly diagnosed until a few years ago. Amid my otherwise orderly and privileged upbringing, her behavior was erratic.

My mother frequently lost her temper with those around her, and especially with me when I was young. She was often disorganized and irresponsible. In response, I early on developed a strategy of always maintaining control. Growing up, I played junior competitive tennis. I learned never to let opponents, or anyone else, see my emotions, especially anger. That strategy worked well for me in school, my career and when managing money, even allowing me to retire at age 53. But it came at a cost.

Although my parents made good money, they lived modestly. My father was frugal, always dressing in simple clothes. I remember being turned away by upscale restaurants because my father was in his tennis shorts and sandals. I never saw it bother him. He often shrugged and used the opportunity to teach me never to judge others by how they dressed.

My parents never talked to me about money. Part of it was that they didn’t know much about investing or personal finance. What they knew was to work hard, live frugally and save as much as they could. One investment my parents believed in, however, was education. They were willing to pay and do whatever it took to give me and my brothers the best education.

With my father’s encouragement, I passed the entrance exam for the College of Engineering at Chulalongkorn University—often known simply as Chula—which is Thailand’s best university. When I was admitted in 1983, my class of more than 400 engineering students included just 25 women.

Though females were few, we were treated the same as our male counterparts and judged on our achievements. Chula is where I learned that men and women can collaborate to their mutual benefit and with mutual respect. It would become the standard by which I would later judge my work environment—and I often found myself disappointed.

Coming to America. After I graduated from Chula, I went to work as an industrial engineer in a garment factory and later for the government, where I reviewed machinery, equipment and raw materials imported into Thailand. I quickly realized that I didn’t particularly like the actual job of engineering. My father and I discussed my career. With his support and encouragement, I moved to the U.S. in 1988 to pursue an MBA. That was when I met my first husband, Jeff.

I married Jeff in 1990, six months before graduating from business school. Jeff and I made very little money when we started out. I was employed fulltime at a small mortgage broker, while he was finishing his bachelor’s degree while also working part-time. We split rent and shared a mobile home with my then sister-in-law. We saved as much as we could. After a few years, we had enough for a small down payment and bought a home.

After we purchased the house, I accepted a job as a financial analyst at Associates Financial Services, which later became part of Citigroup. I quickly moved up to senior financial analyst and began managing a team of analysts, all of which brought more income. I maxed out my 401(k) plan and started a college fund as soon as my son was born in 1996. We traded our old car for a new, expensive SUV. The monthly payment was $450, quite high back then.

While my career prospered, my personal life didn’t. Jeff and I separated, and I found myself a single mom. I didn’t get a good lawyer and was intimidated by the divorce process. I just wanted to get it over quickly. I made two crucial mistakes: I waived child support payments and gave up the house, our only big asset. My ex later sold the place at a large profit.

Financially, I was starting over at age 33. I had about $5,000 in cash and $20,000 in my 401(k). I also had a big legal bill and was stuck with a large car payment. I moved into a small one-bedroom apartment with my toddler son. I got rid of the $450 car payment and bought a modest sedan that reduced my payment to $200 a month. I still managed to max out my 401(k) contributions and set aside college savings. Thanks to my father’s example, I’ve always been frugal, so it wasn’t a big deal to cut back on eating out and spending on clothes. I visited garage sales, looking for children's clothes, shoes and furniture. Almost all of my furnishings were used or passed down from friends or relatives.

After my divorce was finalized in 1998, I continued to excel in my career. In fact, I leaned on the office as a haven from the chaos in my personal life. My salary before bonus grew to $75,000. But I put in a lot of hours, sometimes 70 or 80 a week. During budget time, I often worked overnight, while the company paid for a babysitter. After a few years, I was burnt out. Once, when I asked for time off to take my son to a doctor, I was told I had to choose between being a mom and having a career. I took a few months’ break in 2011, living off stock options that I cashed out. Later that year, I got a job as a financial analyst with Countrywide Financial, which was later bought by Bank of America. At $50,000 a year, the salary was lower but the work-life balance was better.

At Countrywide, I faced the harsh reality of gender discrimination. My first inkling: I found out that a male colleague received a year-end bonus, but I didn’t. He had lesser qualifications and less experience, and there was no difference in our performance. I was angry. But as a single mom, I couldn’t afford to cause a ruckus for fear of losing my job.

I was seen as a go-to analyst—but useful only in a supporting role, marginalized as the “smart Asian woman with an accent.” My work contributions were ignored or claimed by my manager as his own. I often wasn’t invited to important meetings with senior managers and executives, even when I did most or all the work. I was the only female analyst in the group and was often excluded from social and team-building events because my male manager was “uncomfortable.” I was subjected to demeaning and sexually harassing comments.

Near the end of my career, things got better: I was fortunate to work for excellent managers who treated men and women equally. While I eventually thrived and was even promoted to vice president of credit risk management before retiring in 2018, no review of my money journey would be complete without mentioning the unfair and unequal treatment I received. It’s a part of too many stories for women and minorities. That I was ultimately successful doesn’t excuse a system that continues to discriminate.

Meeting Jim. After four years as a single mom, my girlfriends encouraged me to try online dating. Being frugal, I wasn’t about to pay a year’s subscription for something I wasn’t sure I’d use. I skeptically signed up for a free 30-day trial. Just before the trial period ended, Jim and I connected online. I laughed so hard at his profile that I had to meet him. It was January 2002.

As it turned out, he was also funny in person, in part because of his take-nothing-too-seriously attitude. He was a divorced single dad with a son 11 months older than my son. After dating for more than a year, we bought a modest house in May 2003 and moved in together. We were married a few months later.

We didn’t know how exactly to merge our two families, but we agreed on some basic principles. We set out to live within our means, save as much as possible, and focus on providing the boys with an excellent education. We began a period of minimizing expenses and maximizing savings. It was more difficult for Jim than for me. I was already used to a frugal lifestyle. I didn’t mind packing my own and the boys’ lunches, and cooking at home every evening. Jim had a harder time resisting the lure of restaurants. We ended up compromising. We would dine out if I could find a discount coupon or we’d go to cheaper, more authentic hole-in-the-wall restaurants.



Shortly after we got married, I took over the family finances. We opened a joint checking account and completely merged our financial lives. Jim had $17,000 in credit card debt, but his car was paid off. I still had car payments but no credit card debt. My first priority was to pay off Jim’s card debt. Next would be my auto loan. After that was paid off, we made extra payments every month on the mortgage. I never liked being in debt. Owing money to others gives them control over you—something I abhor.

Being in the financial services industry, especially credit risk management, I knew the importance of credit scores. Having excellent scores gave us the power to negotiate and to choose the best financial products with the lowest costs. I managed to get Jim’s and my credit scores up to 800-plus, out of a possible 850. They’ve remained there ever since. When we refinanced our mortgage, I was able to get a very low rate. We then used the extra savings to pay off our mortgage even faster.

Because I had taken a salary cut and Jim had a modest teacher’s salary, our combined gross income was under six figures. To afford a home, our total mortgage payment had to be right at the maximum recommended 28% of income. I was concerned about committing to a house purchase. Having been a single mom for almost five years and having just recovered financially, I was wary of taking on more debt. I even suggested that we could all move into Jim’s rented townhome, but Jim disagreed.

Being a teacher, he was more aware of the better schools in the area. We settled on a modest house in a great school district. It was less expensive than most nearby homes because the house had never been upgraded and, indeed, still had the original 30-year-old central air-conditioning system.

Jim and I have different spending habits. I comparison shop before committing to buy, while Jim is more impulsive. Still, we share similar outlooks when it comes to living simply. Neither of us insisted on spending a lot of money to renovate the house. We liked the old-fashioned wood cabinets, the original big-tiled Spanish floor and the simple white-tiled bathroom. They were functional, good quality and built to last.

We didn’t spend a lot of money on home decor. All our furniture was secondhand, either passed on to us by relatives or found at garage sales, thrift stores and even on the sidewalk on bulk trash pickup days. We bought an entire living room sofa suite, including a couch and full chaise lounge, for $300 at a garage sale. The boys’ bedroom furniture set was grabbed from the sidewalk when a neighbor put out his child’s like-new furniture.

While we didn’t devote much money to home decor, we did spend to make the house more energy efficient. We installed attic insulation ourselves. The house came with a pool and hot tub. It was already beaten up and needed a lot of year-round maintenance for just two or three months’ use. We had the pool and hot tub filled in, installing a brick patio instead. Between the insulation and pool elimination, which cost $10,000 all told, we saved $200 to $250 in energy bills every month. We also made a few other updates to the house—and we did them as a family. We installed our own flooring. The boys built shelves for their rooms.

While our combined income wasn’t huge, our savings rate was. The Great Recession of 2008-09 offered a wonderful investment opportunity, and we took full advantage by maxing out our retirement plans and choosing all stock funds. While Jim didn’t get paid much as a teacher, his employer match was generous. We also maxed out our contributions to Roth IRAs and invested in 529 plans for the boys’ college costs. During this time, I bought a small rental property at a foreclosure auction with my youngest brother. That continues to provide us with a modest rental income.

When I got a raise or a bonus, or Jim earned extra from teaching summer school, we socked away the money, instead of splurging on, say, a new car or new TV. But we also didn’t starve ourselves or skip family vacations. If Jim worked during the summer, we used some of the money to take a vacation. I knew it was inexpensive to travel in Thailand and the rest of Southeast Asia, especially if we didn’t stay at tourist resorts. We would visit my parents in Thailand and then explore the region, visiting Vietnam, Cambodia, Singapore, Malaysia and elsewhere.

Even though we were raised half a world apart, Jim and I grew up with similar values. Both our families invested in education, something we also wanted to do for our boys. We were lucky that the boys got the message that school matters and that it would pay off later. My son got a full academic scholarship to university and even a small stipend. As a result, we only had to cover his living expenses, which were about $6,000 a year. That allowed us to help him in other ways on his path to becoming an actuary.

Meanwhile, when Jim went through his divorce, he opted to leave his investment accounts to his ex-wife to help pay for his son’s future college tuition. That money grew over 18 years and was enough to cover most of the tuition at a private university. Jim’s son is now a software engineer. When the boys graduated, we still had more than $60,000 in college savings accounts. We gave some to the boys as a gift, while keeping the rest in 529 accounts. We plan to use it for our own tuition, as we return to graduate school, and also hope one day to pass some of it on to our future grandchildren.

Arriving early. In 2016, two years after our sons headed to college, we realized that it was a seller’s housing market in our area. Our excellent school district now gave us a second benefit. Businesses and their executives were moving to Dallas in droves, and that growth drove property prices to record levels. Our house, which we’d bought in 2003 for $200,000, sold for $340,000. After paying off the mortgage, we netted close to $240,000. We bought a smaller townhome for cash, leaving us mortgage-free just 13 years after we first bought a house together.

And with that, we were on the cusp of financial independence. After our sons graduated college, Jim and I retired at ages 57 and 53, respectively. Though it wasn’t our goal to retire early, we got there in 2018, just 15 years after we married. We quit our jobs, rented out our townhome and moved to Spain for what turned out to be three years. We’re now back in the States, happy to be closer to our sons. Because of our financial control in the past, we have power today—the power of choice.

My personal strategy of maximizing control has served me well, at least financially, but it came at a cost. My constant focus on money caused a lot of self-induced stress. For instance, when we were on vacation, I worried about staying within our budget. I didn’t want to do certain activities if they cost too much. I sometimes carried a small notebook, recording every expense. Along the way, I robbed myself of some of the vacation’s enjoyment.

I tend to see things in black and white, looking for what I can control. Jim likes to point out the gray areas—the absurdity of life and the illusion that we can control it. He makes me look up from my tallying notebook to take in the beautiful view or to laugh at it all. With Jim, I’ve learned to let things go when they don't go my way.

It didn’t happen overnight. Instead, it’s taken getting older and having more experience, combined with more than 20 years with Jim. I have slowly learned to embrace ambiguity—the grayness of life. Jim and I have an inside joke. In tennis, you shouldn’t hold the racquet too tightly, especially between points, or you may get hand cramps. We often tell each other to “loosen the grip” when either of us is wound up by a situation. As I’ve discovered, loosening the grip means less stress—and greater freedom to just be.

Jiab Wasserman, MBA, RICP®, has lived in Thailand, the U.S. and Spain. She spent the bulk of her career with financial services companies, eventually becoming vice president of credit risk management at Bank of America, before retiring in 2018. Head to Linktree to learn more about Jiab, and also check out her earlier articles.

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Time for a Pep Talk

ARE WE HAVING FUN yet? I take no pleasure in seeing my portfolio shrink, but I love buying stock index funds at discount prices and I’m always amused by the hand-wringing in the financial media.

Two years ago, we were hiding out in our homes, fretting over a global pandemic and worrying about an economic collapse. Today, COVID is still spreading like wildfire, but vaccines have helped slash the number of hospitalizations and deaths, the unemployment rate is just 3.6%—barely above the 50-year low of 3.5%—and folks are spending so merrily that we’ve ended up with 8.6% inflation. Clearly, all is not right with the world, but that doesn’t seem to justify today’s widespread pessimism.

In fact, you can count me among the optimists. Worried about your investment losses? Keep these four ideas in mind:

Expectations. The financial markets already reflect what’s happened and what the consensus expects. Will the news in the months ahead be surprisingly bad—or not quite as bad as feared? If it’s the former, the stock-market sale will likely last a few months more. If it’s the latter, we’ll look back and wistfully wish we’d bought in June 2022.

History. If we include the Great Depression, the average bear market decline is 38%. The  S&P 500 is currently down 18% and it was down as much as 24% earlier this month. If this is a typical bear market, we’re roughly halfway through. My contention: It’s too late to be selling.

Intrinsic value. As stocks have tumbled in 2022, the yield to investors—in the form of stock buybacks and dividends—has climbed from under 3.5% to perhaps 4.2%. That higher yield suggests the intrinsic value of stocks is also now higher. On the other hand, intrinsic value may have fallen because investors are now discounting the cash kicked off by corporations at, say, 10% rather than 8%, reflecting today’s greater uncertainty.

If intrinsic value has climbed, it means stocks are better value than six months ago. If the discount rate has increased, it means investors are now demanding a higher return as the price for holding stocks. So, which is it, better value or higher future returns? I have no clue—but I’m good with either.

Time horizon. As shares tumble, investors’ time horizon shrinks. Suddenly, all many folks can think about is whether stock prices will rise or fall in the days ahead, and their best guess drives their trading decisions.

This is where savvy investors get their edge. It’s tough to outsmart other investors. But we can play a different game—by focusing not on next week but on the next 10 years. Does anybody doubt that a globally diversified stock portfolio will be worth more a decade from now? When we play the long game, figuring out what to do becomes a whole lot easier.

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Home Sweet Whatever

I PURCHASED MY FIRST home in 2005. At the time, I was a Major League Baseball prospect with the New York Yankees organization. I had always been taught that homeownership was part of the American dream. Looking back, I���m now much more skeptical.

Purchasing a home on my salary was difficult. Minor leaguers don���t land big contracts like their counterparts in the major leagues. In fact, I had multiple years when I made less than $10,000 as a professional baseball player. I was only able to afford the house because I also worked other jobs.

I bought my first home for $106,000. It was a discounted foreclosure property and only required a 5% down payment. The house was relatively new and the bank had done some renovations while it was in foreclosure. It was 1,573 square feet, with three bedrooms and two bathrooms, and sat on a 0.28-acre lot.

I stayed in the house for almost 12 years and sold it in 2017 for $180,000. This might seem like a great investment. If we only look at price, the value of the property appreciated 4.51% a year. But we can���t judge the investment return by price alone. We also need to consider cash flow.

My original mortgage was for 30 years at 5.25%. I paid roughly $980 a month, including taxes, insurance, interest and principal. In 2011, I refinanced with another 30-year loan at 4.25%, cashing out $20,000 in the process. Even with the cash out, my monthly cost dropped to $870.

I also made home improvements. I bought new wood floors that cost $5,000 and built a patio that cost $3,000. These expenses need to be considered as well.

When I sold the house in 2017 and paid off the mortgage, I pocketed roughly $86,000. When I consider the total cash outflow during the time I owned the place, I calculate an internal rate of return of -5.08%���and the return would have been even worse if I adjusted it for inflation. That isn���t the sort of performance anyone would want on an investment.

At first, I wondered if I had done something wrong in my pursuit of the American dream. After all, conventional wisdom says that a home is a great investment. But I suspect my experience is pretty typical.

My contention: Many homeowners don���t realize how expensive owning a home can be from a cash flow perspective. To be sure, you get to live in the place, and that���s undoubtedly valuable. But what about a home���s value solely as an investment? Depending on how long you stay in the house, you could see cash flow returns that are flat or even negative.

I suggest that we rethink the notion that homes are investments. I would argue that they should instead be treated as places to live. Someone can build net worth in their primary home, but they shouldn���t view it as a growth asset, like they might view stocks or bonds.

I had an epiphany after selling my home in 2017. If I, the seller, didn���t make a positive return on the home���and if the buyer���s return was also uncertain���then who���s really benefiting from this version of the American dream? Cynically, I think we all know the answer to that one: the banks and the real estate industry.

Kevin Thompson is a former Major League Baseball player and now CEO of 9Innings Capital Group LLC . He is a Certified Financial Planner �� and Retirement Income Certified Professional ��. Kevin graduated from the University of Texas at Arlington in 2011 with a degree in finance. His previous��article was Big League Lessons.

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Just What I Needed

I MENTIONED IN an earlier article that my wife and I were planning a trip to the U.K. Before we went, I thought I better see my primary care physician. I didn���t want any medical surprises. We���ll be gone for five weeks. A lot can happen to a 71-year-old during that time.

My doctor retired a few months ago, so I decided I���d go see my mother���s old doctor. He specializes in geriatric medicine. I thought he���d be a good fit for my aging body.

He asked me if I had any concerns. I told him I wasn���t sure about my cholesterol. My previous doctor thought it was fine because I had a lot of good cholesterol. He said, ���It���s not just the cholesterol levels you look at. You also have to factor in your age, blood pressure and glucose level.���

He put all my data into a formula. ���This is your number,��� the doctor said. ���It���s outside the acceptable range. You need to be on cholesterol medication.���

I also told him I was uneasy about taking the trip. When I���m traveling, It seems like I���m always looking for a restroom. He prescribed medication that will help me manage the issue���one a lot of older men have.

Before I turned 70, I wasn���t on any medication. I was so proud of myself. All my other friends were carrying around pill boxes. Now, I have my own pill box.

But you know what? I���m glad I���m taking medication for my health issues. It���s made the trip more enjoyable. I enjoy my meals more. I���m eating food I wouldn���t have eaten. Of course, you still have to eat sensibly. I���m also not looking for a restroom as often.

I feel a lot younger. This medication has turned back the clock. I always thought the best time to travel is before you retire, and it is. But I feel like I got a second chance.

I found it takes more than money if you want a comfortable retirement. You also have to have your health. At my age, I���m not concerned about running out of money. I���m more concerned about how aging will affect my quality of life.

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Sell in May?

AN OLD WALL STREET adage tells investors to ���sell in May and go away.��� If you���ve been around long enough to remember that phrase���and you heeded it this year���you���re probably feeling pretty smug, having sidestepped the ugly, unforgiving bear that���s lately been roaming Wall Street.

But such pearls of investment wisdom often make better cocktail chatter than they do an investment strategy, and for good reason: The advice can���t always be counted on. Then again, sometimes it can. Like this year.

"Sell in May and go away" is based on what the��Stock Trader's Almanac��has called the "best six months of the year."��The data backing it up are stock returns over rolling six-month periods. Historically, the best six-month period for stocks has, on average, been from November through April.

A few months back, you���d be hard-pressed to find any talking head suggesting investors sell all of their stocks by the end of April and forget about investing again until this fall. But if you���d done so, you���d be yahooing instead of fretting about the direction of stocks. At the end of April, the Dow Jones Industrial Average closed at 32,977.21. By yesterday���s market close, the Dow was at 30,483.13, or 8% lower.

How much credit should we give to investing quips such as ���sell in May���?��In a nutshell, the answer is not much. Let me explain: Once upon a time, way before the beginning of this century and the advent of the internet and all that it brought with it, investing wasn���t a 24-hour, seven-day-a-week, 12-month, press ���send��� to place your order kind of ordeal. Instead, Wall Street was more of a gentleman���s world���and those guys liked taking the summer off. Maybe it���s no surprise not much happened to share prices during those months.

The upshot: While the ���sell in May��� theory is a worthy historical read, the markets are a far different place now than they were even 20 years ago, let alone 80 or 100 years back. Today, people are looking to make money all year round and there���s no longer a seasonality to investing.

But suppose you did indeed sell at the end of April. What now? There���s always been just a handful of things we can do with our savings: Leave it in cash investments, buy bonds, invest in stocks, keep it in a can buried in the backyard, or wrap it in tin foil and stash it in the freezer. Whatever our choice, or combo of choices, all require one thing���that we take risk.

The funny thing about stock market risk is that it somehow disappears from our mind when share prices are going up and up. But the minute they head south, you���d think that risk was a concept we���d never before heard about.

Now that Mr. Market has ripped off our rose-colored glasses���as he does every few years���what can we do, given current market conditions? Well, our choices are simple: We can do nothing and ride this storm out. We can take a look at the type of stocks we own, as well as our mix of stocks and bonds, and perhaps alter it by, say, rebalancing. We can add money.

Or we can take money off the table, just like the folks who sold in May and went away. Right now, that might seem like the wisest strategy. But it raises all kinds of thorny issues. Is it smart to sell when the S&P 500 is 22% below its early January all-time high? What about the tax bill that selling might trigger? How will you know when to buy back into the stock market?

My suggestion: Stick with stocks���and look at things that offer a reinvestment opportunity, such as dividend-paying stocks and mutual funds. Money can grow fast when we���re regularly investing and reinvesting.��You didn���t sell in May and go away? How about sticking around���and taking steps now to ensure your stock portfolio soars when this bear market ends?

Back in the day, Dian Vujovich was a nationally syndicated mutual fund columnist, wrote a handful of books about investing and retirement, and was a luxury travel writer who won a few awards for her work. Today, she���s grateful to still be able to string a few sentences together and create a story where there once was none. Dian lives in sunny Florida and is quick to tell anyone who cares to listen that living a long life has now become obscenely expensive.

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Get a Job

WHEN I WAS GROWING up, my mother thought the best way to relieve my boredom during summer vacations was to get a job. She was a valued employee at a local business and she knew the firm was hiring.

I asked if part of the job was to calculate change for customers when they made a purchase. That terrified me. My mother said she wasn���t sure, but that I���d learn to do it if it was required. The thrill of having money to spend outweighed my fear of making change. I took the job and survived the cash register.

That got me thinking about today���s teens taking their first jobs. I read that jobs are plentiful this summer, and there may even be a signing bonus. If they get a job in retail, kids won���t have to calculate change, either. The computer will do it for them.

On top of that, they���ll have other advantages. For starters, they���re unlikely to owe federal income taxes on their summer wages. A dependent child can earn up to $12,950��and pay no federal income taxes in 2022. Social Security and Medicare taxes must typically be paid, however. Seeing those deductions will teach teens a little about the taxes all workers pay.

Fidelity Investments reports that teens know they need to have financial goals. Saving comes up as teens��� No. 2 goal���right after getting a well-paying job. Yet less than half of teens have any savings at all, according to Fidelity���s research.

When saving, a teen might be tempted to take the TikTok money challenge, which involves saving cash in a liquor bottle. The TikTok challenge offers the sense of community and accountability that financial planners say can encourage saving. The idea: Don���t crack open the bottle until it���s full. The liquor bottle challenge, however, does nothing to address inflation. That���s another concept kids need to understand today���that a stash of cash will lose value as consumer prices rise.

With help and encouragement from a parent, relative or family friend, teens might stash some of their summer earnings in an investment account. The gold standard would be a Roth IRA. A Roth account could grow tax-free for life���provided, of course, that they don���t withdraw their earnings before age 59��.

They���d likely need help picking suitable investments. Some good candidates include stock index funds or individual stocks that have a record of paying steadily rising dividends. For non-Roth money, risk-averse teens might try Series I savings bonds.

Teaching children to invest can give them a huge headstart in life. Fidelity makes this easy by offering a youth account for kids ages 13 to 17. It encourages the teen to save, invest and spend with parental oversight, providing hands-on experience along the way. To participate, a parent must be a Fidelity account holder.

As an added incentive for kids, the Fidelity account includes a free debit card with no fees or required minimum balance. There���s also a mobile app linked to Venmo and PayPal. I love the site's education component.

Since only 27% of young adults understand basic financial concepts���and less than a fifth of teachers say they feel competent to teach personal finance���a financial account like this could be a valuable addition to their education. I also wonder whether some parents might gain a wealth of information���pun intended���as they work with their children.

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When It’s Urgent

EVEN THOUGH I���M NOT a doctor, I���ve been around medicine all my life. My father was a general practitioner and I spent my career in hospital administration. I had administrative oversight over three emergency departments of varying sizes. Based on my experience, here are 10 recommendations that may improve your experience should you need to visit an emergency room:

1. If you use the emergency room (ER) for a non-acute medical condition, bring a book. The ER prioritizes based on the severity of the health issue, not on who arrives first. You���d want the same if you were there for a heart attack.

2. Tell the truth. No matter how embarrassing your condition or the circumstances surrounding your accident, the ER staff has heard it all. By knowing the background, the doctors and nurses will be better able to help.

3. Any medical history you can bring will be useful. Arriving with a list of medications, current medical problems, past surgeries and the names of your physicians will speed things along. The longer the list, the more important the information is. If you have advance directives, bring those as well. If all your health care is provided within the same health care system, the ER might have access to your electronic medical records, but don���t count on it.

4. Visit the ER that���s in-network for your health insurance unless it���s a life-or-death situation. Showing up at an out-of-network ER has ���major hassle��� and ���hefty bill��� written all over it, though it may be necessary if you���re traveling. When picking health insurance, think about the emergency room you���re most likely to use.

5. The ER physician and staff don���t know how your insurance works and they don���t care. There are innumerable health plans out there, and each has its own network and limitations. By going to an ER, you���re conveying that you have an acute medical condition. They���re there to solve that problem, regardless of cost.

6. Surprise medical bills are real, but they can sometimes be avoided. The ER physician may refer a given condition to X hospital because it���s 15 minutes closer than Y hospital, which is equally capable. If X hospital isn���t in your network, speak up if you���re able. The same goes for surgeons or other specialists who drop by to consult. To find in-network providers, you might call the number on the back of your insurance card or use your phone to go to your insurance company���s website.



7. Helicopters are wildly expensive and a huge source of billing surprises. When necessary, they save lives, but understand that they may come with a significant out-of-pocket cost. If a helicopter is proposed, it���s reasonable to ask whether using slower ground transport is too medically risky.

8. The ER staff isn���t necessarily there to provide a definitive diagnosis. Their job is to determine whether your condition will kill you, and then prevent that from happening. If you arrive with chest pains, that might suggest five or so fatal conditions. Once those are ruled out, you���re safe to go home or to an inpatient floor for a follow-up to determine if you have, say, chronic indigestion. Medical problems on TV may be resolved in an hour, commercials included, but the real world often doesn���t work that way.

9. Despite the convenience of 24/7 availability, an emergency room should not be a substitute for your primary care physician. There���s value to your ongoing relationship with your primary care doctor that���s lost in the ER. An ER doctor may head down a diagnostic path that makes sense based on what she sees, but wouldn���t make sense if she had the background your doctor has.

10. We live in a world where we can review ratings for many products and services, and this is starting to be the case for physicians. You don���t have a choice of which doctor you���ll see in the ER. Still, evaluating them by previous patients��� reviews may be shortsighted.

In the 1980s, hospitals started doing patient satisfaction surveys. I decided to share the physician-specific comments we received on our ER survey with each of our ER doctors. One consistently had the lowest satisfaction ratings. As I explored the reasons, I came to understand that he was very introverted and wasn���t one for small talk.

No one ever said he was mean or inappropriate. Meanwhile, the ER nursing director rated him the highest for his medical skills. The other members of the medical staff all said they hoped he would be the one on duty if they arrived with a heart attack.

Hospital administrators would love to only have doctors who are highly skilled and highly personable. Just remember, if your ER physician doesn���t bubble the way you think he should, his previous case may have necessitated telling a family that a child just died. Cut him some slack.

Howard Rohleder, a former chief executive of a community hospital, retired early after more than 30 years in hospital administration. In retirement, he enjoys serving on several nonprofit boards, exploring walking paths with his wife Susan, and visiting their six grandchildren. A little-known fact: In May 1994, Howard was featured���along with five others���on the cover of Kiplinger���s Personal Finance for an article titled ���Secrets of My Investment Success.��� Check out his previous��articles.

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MOO for Me

I'VE WRITTEN BEFORE about stumbling on an unexpected way to save on auto insurance. My education continues: I���ve also learned of a way to save on Medigap coverage.

When I became eligible five years ago for Medicare, I bought Medigap Plan G supplemental coverage from Mutual of Omaha (MOO). Last summer, as my wife was about to become eligible for Medicare, we took another look at Medigap coverage. I was generally happy with MOO���s claims procedures and customer service, as well as the fact that MOO would extend a 12% ���household discount��� if we also got my wife���s policy from MOO. But I didn���t like the fact that my own premiums had gone from an initial $97 a month to $148.02, an increase of almost 53%.

One day, I received a mailer from Omaha Supplemental Insurance Co., a MOO company, which quoted a $115.18 monthly premium for a 69-year-old male nonsmoker, my status at the time. Although my policy was with a different MOO company, United World Life Insurance, I couldn���t understand the significant price difference.

I contacted the insurance broker who had helped me with my original Medigap application, and asked if I could simply switch MOO subsidiaries and benefit from the lower rate. She replied that the lower quote was for ���new business��� and, since I was already a MOO customer, I didn���t qualify.

My broker was retiring, so I found a new broker who seemed very knowledgeable and I repeated my question to him. To my surprise, he said that I would indeed be considered ���new business��� if I applied to a different MOO subsidiary. I next contacted Mutual of Omaha directly and a representative confirmed the good news.

Since I was applying for a new Medigap policy outside the initial open enrollment period���the period when I first became eligible for Medicare at age 65���I���d have to pass medical underwriting. Fortunately, I���m in good health and, after answering a few questions on a form, I was accepted.

My wife���s quoted rates were the same at both my original MOO company and at the new one: $96.41 a month. And my new broker, since he was writing me a new policy, received a well-deserved commission. As for me, going from $148.02 to $115.18 a month is saving me $394.08 a year.

While I���ll be on the receiving end of premium increases going forward, starting from this new lower base means I should keep saving every year. After a few years, if my premiums again get uncomfortably high, I���ll start researching whether there���s yet another MOO subsidiary that would be happy to consider me ���new business.���

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Homebuyer Beware

THE MOST GALLING moment came when the notice of a sheriff���s sale was nailed to a tree in our front yard. The message to passersby was all too clear: ���Deadbeats live here.���

Except they didn���t. Our house was in foreclosure���but the debts weren���t ours. They belonged to the people we had bought the house from. How did we escape what turned out to be a two-year ordeal? Three words: owner���s title insurance. How did we get caught up in such a mess? To answer that requires more than three words.

Let���s begin with my trip to our bank, where I planned to collect a cashier���s check to take to the closing on our first house. Cellphones weren���t yet common, so I learned from the teller that my wife had called to say I should turn around and come home. The closing was off.

The title search had turned up both a second mortgage and an IRS lien for $14,000 for a tax debt. That probably explained the frantic move-out by the seller���s family and the garage door���s opener code, which was ���BANKS.���

Our purchase was in limbo. Although we didn���t own the house, it already felt like ours. We had paid a plumber to fix the leaking toilet our home inspector had flagged. I filled dozens of bags with fallen leaves to protect the lawn during our two-month wait for a new closing date. Finally, a week before Christmas, the deal closed, and we owned the house. All the old debts were settled���or so we thought.

Six months later, some legal documents arrived in the mail. They declared that we were defendants in a foreclosure lawsuit to satisfy unpaid debts. We learned that the title search had missed a small mechanic���s lien. That had triggered the foreclosure lawsuit. There also was a much larger promissory note held by the bank that had previously issued the second mortgage to the seller. Both liens involved debts of the seller and related to his solo business. They got missed during the title search���supposedly because they were indexed incorrectly in the county���s property records.

The business that held the mechanic���s lien had won a judgment in court when the seller didn���t show up to defend himself. That business had, in turn, filed for foreclosure on the house���on the same day as our revised closing date. Together, the two debts amounted to some $60,000. They were our problem now, as the new owners of the home.

Our title insurer provided us with a lawyer to defend us in court. When we and the title insurer lost in state trial court, our lawyer assured us there���d be no foreclosure proceedings. He said all the parties involved knew our case would be settled before such a drastic step.

Soon after, I discovered the sheriff���s sale notice in our yard. Outraged, I almost hired a lawyer to keep an eye on ���our��� lawyer. When your lawyer is paid by a co-defendant whose interests diverge from yours, do you really have legal representation?

After a second loss, this time in state appeals court, the title insurance company settled with the two lien holders. We kept the house, and we incurred no significant direct costs and no harm to our credit records.

We did, however, emerge with battered psyches. At times, my wife would collapse in tears, fearful that we���d lose our house and our 20% down payment. I was bitter that, as innocent bystanders, we had been put through the emotional wringer.

Owner���s title insurance saved us. It���s optional coverage. By contrast, lender���s title insurance, which protects the issuer of the mortgage, typically isn���t optional. Most homebuyers probably don���t notice their title policy, or what type it is, except perhaps to ask about the expense as a line item on the closing statement.

There���s a reason for title insurance���s obscurity. Buyers are highly unlikely to need protection from title problems. They arise from longshot occurrences, such as filing errors, undetected liens, missed easements, property-line disputes and fraud. Paying for title insurance can feel a bit like paying for auto insurance coverage against uninsured drivers. It protects you from someone else���s careless or irresponsible behavior.

Most other forms of insurance protect against obvious risks, such as fire or flood. Buying them can provide peace of mind. What about the peace of mind that comes with title insurance? The risks tied to a property title don���t leap to mind, so the emotional relief is minimal. What if you���re among the unlucky few who must make use of this coverage? If our experience is any guide, I wouldn���t count on peace of mind���until the entire ordeal is over.

Joe Kiefer volunteers regularly at his church in Ohio and at an adjoining food pantry, and he enjoys helping friends with personal-finance issues. After a career spent in newsrooms as a copy editor and reporter, he volunteers as an editor for a nonprofit organization and has been helping edit articles for HumbleDollar. His previous article was Aversion to��Income.

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