Jonathan Clements's Blog, page 403

Lucky One

I OFTEN WONDER: How did I manage to retire early, at age 58? I wasn’t born with a silver spoon in my mouth. I never earned a large salary. I wasn’t a very good investor. I didn’t start saving for retirement until I was in my late 20s.

My future did not look bright. I graduated from college at age 23 with a degree in history. There were not many job openings for a history major. But I had luck on my side. I was born at the right time:

I entered college in 1969, when the cost of an education was inexpensive. I was able to pay my college expenses by working part-time and graduated with no debt.
I found a job in the 1970s with an aerospace company, at a time when manufacturing jobs were still plentiful in the U.S. It was an entry-level job, but there were plenty of opportunities to move up the ladder.
In the beginning, I belonged to a union that negotiated wages and benefits on my behalf. I received yearly raises that helped my salary keep up with inflation. Today, membership in unions is far less widespread.
Companies were still offering pensions and I was eligible for one. Also, I had affordable health care up to age 65. Now, companies rarely offer pensions to new employees. They have also cut back other benefits.
I lived through some of the greatest bull markets. During my years of investing, I have seen the Dow go from 831 to the latest high of 26617.
I retired in January 2009, when the stock market was deeply depressed. I took part of my pension as a lump sum and invested a significant amount in stocks, thus taking advantage of the next bull market.

Yes, I was a lucky one. But along the way to retirement, I also earned my opportunities:

I worked hard and took advantage of every break that came my way. I got my work ethic from my father. He would get up early for work and come home late every evening. I also found myself working long hours and many six-day workweeks.
I learned from my father about saving money, too. He would say, “It’s not how much money you make. It’s what you do with your money that counts.” I bought an affordable condo and retired there. I kept my cars until it didn’t make economic sense to repair them. I learned that, if you were a good saver, you didn’t have to be a good investor to reach your financial goals.
I stayed relevant and current. I went to school at night, while working fulltime, and earned an MBA. I also earned all the certifications required to stay current in my job.
I took advantage of a host of tax-favored saving opportunities: traditional IRAs, Roth IRAs, Roth conversions, 401(k) plans, 401(k) catchup contributions.
I received many promotions during my career, thanks to hard work and social networking.

Unfortunately, future generations may not be as lucky as I was:

Today, college education is unaffordable for many people. According to the Los Angeles Times, “Student loans are now the second largest category of household debt in America, topping $1.4 trillion and trailing only mortgages at $9 trillion.”
Many individuals and families struggle to pay for health care. According to eHealth, the average total cost of health care in 2016 for an unsubsidized customer, including both premiums and deductibles, was more than $8,000 for an individual and almost $18,000 for a family.
Good-paying manufacturing jobs, which allowed many in previous generations to join the middle class, are harder to find. According to the Bureau of Labor Statistics, the U.S. lost some five million manufacturing jobs between 2000 and 2014.
The stock market may not produce the sort of gains for future generations that I enjoyed as an investor. In an interview in October 2017, Vanguard Group founder John C. Bogle forecasted that, over the next decade, stocks would return 4% a year and bonds 3%.

All I was looking for, when I was young, was an opportunity to succeed.  I got that opportunity. I hope future generations will have the same opportunity—but I worry that they won’t.

Dennis Friedman retired at age 58 from Boeing Aerospace Company. He enjoys reading and writing about personal finance. His previous blogs include Friendly Reminder, First Responders and Truth Be Told.

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Running in Place

THE FEDERAL GOVERNMENT today released an inflation measure that’s closely watched—for no good reason.

At issue is CPI-W, the Consumer Price Index for Urban Wage Earners and Clerical Workers. In July, it stood at 246.155. August’s level, which was released this morning, was 246.336. July and August’s levels are two of the three months used to calculate the annual cost-of-living increase for Social Security retirement benefits. The CPI-W for September will be the final factor in determining 2019’s benefits increase.

The average for those three months will be compared to the same three-month stretch in 2017, when CPI-W averaged 239.668. The cost-of-living increase will be based on the difference between those two averages. If September’s CPI-W matches the average of 246.246 for July and August 2018, the cost-of-living increase for Social Security in 2019 will be 2.7%. Got that?

Why am I bothering you with this arcane nonsense? There are two reasons.

First, it makes clear that increases in Social Security are determined by a formula spelled out by the law, and not by a decision made every year by politicians in Washington. In the past, retirees have blamed modest increases on the current president or Congress. That’s simply not true.

Second, the purpose of the cost-of-living increase is to keep pace with inflation, not to get ahead. If the increase in benefits is modest, it means price increases have also been modest, so retirees are no worse off.

All this highlights a major problem: Misinformation about Social Security abounds. On my own site, I devote a lot of time to correcting this misinformation. Let’s face it: Unless we stick to the facts, we can’t have an honest discussion about the program’s future.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous blogs include Tortoises Needed, That’s Rich and Sharing the Load. Follow Dick on Twitter @QuinnsComments.

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No Touching

RECENTLY, I STARTED advising three entrepreneurial brothers who are the controlling shareholders of three companies with several hundred employees. All of their companies are presently short of operating cash and unable to borrow from banks or other conventional sources. Without quick infusions of funds, they’ll likely go under.

They won’t be able to pay skittish suppliers who refuse to extend additional credit, even if the brothers guarantee payment. Nor will they be able to meet payroll for employees. Many of these workers are high salaried and possess skills that are hard to replace in a tight job market. The ones who jump ship will readily find work with competing companies.

While my future clients were foraging for funds, they encountered a person I’ll call Curly, someone who recently ended a stint as a low-level White House staffer. Curly continually touted his tax expertise and ties to politicians.

The brothers were so awed by their new acquaintance that they gave him a high-five-figure payment for a strategy that he’d imparted to lots of other cash-strapped businesses: Have their companies pay employees their net salaries, but not remit hefty amounts of withheld income taxes and Social Security taxes to the IRS. Instead, use that money to satisfy suppliers. After all, as Curly assured the brothers, just as soon as business inevitably picks up, the companies can repay what they had “borrowed” from the IRS.

First though, my new clients sought my blessing. I demurred. All I had to do was rattle off long-standing rules set forth in Internal Revenue Code Section 6672. Those rules empower and encourage the IRS to act firmly and swiftly against companies that withhold taxes from paychecks, but fail to pass them along in a timely manner.

Like lots of other business owners who are unaware of Code Section 6672, my clients may think they’re doing nothing dishonest when they dip into the withholding kitty to make up temporary cash shortfalls. But many thousands of individuals who’ve played games with withheld taxes have been stunned to discover that their failure to pay such taxes made them personally liable—and that the IRS could grab funds in their bank accounts and retirement plans or seize other personal assets.

They belatedly learned that the IRS routinely assesses penalties equal to 100% of the amounts due against the people who are responsible for collecting or paying withheld taxes, and who “willfully” fail to collect or pay them.

That portion of my homily prompted the brothers to ask whether they’d be  considered responsible persons. I told them that there can be no two opinions about whether they would be. After all, who else would decide which creditors to pay and when?

Worse yet, they’d also be jointly liable for the entire amounts owed. This would hold true even if, despite their controlling interests, they were somehow able to establish that other persons were more responsible than they were for the collection, accounting and payment of the missing taxes.

How does the IRS define “responsibility”? Let me count the ways. Responsible persons include:

Officers or employees of corporations
Members or employees of partnerships
Corporate directors or shareholders
Members of boards of trustees of nonprofit organizations
Other individuals with authority and control over funds to direct their disbursement

How does the IRS define “willfulness”? It only requires a conscious, voluntary act, not intent to defraud. The act doesn’t have to be one of commission. It can be one of omission, as when a person fails to investigate or correct mismanagement. What if you file for personal bankruptcy? That does not relieve you of responsibility for your company’s failure.

Julian Block writes and practices law in Larchmont, New York, and was formerly with the IRS as a special agent (criminal investigator). His previous blogs include Doctor’s Orders, In Your Debt and Moving Costs. Information about his books is available at JulianBlockTaxExpert.com. Follow  Julian on Twitter @BlockJulian.

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Tortoises Needed

I HAVE A FRIVOLOUS routine. I buy $40 in lottery tickets on the first day of each month. Many years ago, this was part of my retirement plan—the years when I was young and foolish, or maybe just foolish.

For as long as I can recall, I’ve had a premonition of receiving $14 million, either from a long-lost relative or from the lottery. Time is running out, however. That relative appears to have forgotten about me. Meanwhile, I’ve given up on the big lottery prize and would happily settle for a modest $5 million.

Maybe it’s a good thing I maxed out my 401(k).

My controlled addiction to a fast lottery buck is hardly unique. Still, I find it fascinating that many people will play the lottery in search of easy money, but fail to invest prudently for fear of losing money in the stock market. When I “invest” that $40 each month, I know I’m virtually guaranteed to lose it.

“According to Bloomberg research, the average lottery player in America loses roughly $0.40 for every $1 in tickets purchased,” opines a writer for the Motley Fool. “Talk about a bad return on investment.”

If you divide total spending on lottery tickets by the U.S. population, you get an average spend of $207 per capita. But it varies by state. Massachusetts is the highest at $735 per capita.

About half of adults play the lottery, including 40% of those earning less than $36,000 per year. Nationwide, people who make less than $10,000 spend an average $597 on lottery tickets, equal to 6% of income. That’s hard to believe. These gamblers are among the people we assume to have no money to save and invest. It seems the allure of quick wealth overpowers our ability to weigh risk against reward. It also highlights our fondness for instant gratification.

Indeed, while less affluent Americans pour money into lottery tickets, they shun the financial markets, where folks regularly make money, rather than losing it. Barely a third of families in the bottom 50% of earners own stocks, according to the Federal Reserve. In all, just 54% of Americans are invested in the market.

It would appear many Americans would benefit from reading Aesop’s fable of the Tortoise and the Hare. “Do you ever get anywhere?” the Hare asks with a mocking laugh. For too many Americans, the answer is “no”—because they don’t have the discipline of the Tortoise.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous blogs include That’s Rich, Sharing the Load, Family Resemblance and Late Start. Follow Dick on Twitter @QuinnsComments.

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Any Alternative?

THE STOCK MARKET recently hit yet another all-time high. But instead of unalloyed glee, many investors are struggling with mixed emotions. They’re thrilled at their gains. But at the same time, they’re hesitant to put more money into a market that has already gained so much.

Result: Folks have been asking, “Isn’t there anything else I can buy?” Often, this leads to questions about alternative investments. Below is an introduction to the topic, along with my recommendations.

What are alternative investments? In simple terms, an alternative is any investment that isn’t a stock or a bond, the two pillars of a traditional investment portfolio. Alternatives include commodities (such as corn, livestock, crude oil and precious metals), real estate, stock options, futures contracts and other esoteric investments.

In addition, the investment industry uses the term alternative to refer to any investment structure which differs from a traditional mutual fund or exchange-traded fund. The best known are private equity, venture capital and hedge funds, all of which are generally structured as private partnerships.

What benefits do alternatives offer? There are two reasons you might consider alternative investments. First, you might expect better returns. For instance, if you’re worried that the stock market is due for a breather after rising for nearly 10 years, you might look to alternatives.

The second reason is diversification. When you add alternatives to your investment mix, you’re looking for things that will zig when the rest of your portfolio zags. In mathematical terms, you’re aiming for things with a low correlation to stocks.

Do I need alternatives? Diversification is usually a good thing. But before you jump headlong into alternatives, take some time to evaluate what you already have. Though you may not have thought about it in these terms, it’s possible that you already have alternatives exposure of one kind or another. If you have a rental property or own a business or your job provides a pension, you already have assets that are not closely correlated with stocks. These assets may provide all the diversification you need.

What if I want more diversification? If, after evaluating your personal balance sheet, you decide you need more diversification, should you invest in alternatives? Unfortunately, the track records aren’t great for most mutual funds that focus on alternative investments. In a 2015 study, The Wall Street Journal found that the single best form of diversification during a stock market downturn—when you need diversification the most—came not from alternatives, but from the simplest of traditional investments: bonds.

Long-term data confirm this finding. Over the past 10 years, bonds have provided far better portfolio diversification than virtually every other type of investment, including alternatives like commodities, private equity and real estate. Bonds have actually demonstrated negative correlations to stocks, meaning that when stocks have gone down, bonds have gone up, and vice versa. While there’s no guarantee bonds will always behave this way, there are logical reasons they usually move inversely to stocks. That is why I believe strongly that a simple portfolio of stocks and bonds (including cash investments, which are really just very short-term bonds) is the most effective way to achieve diversification.

Does this data mean I should never invest in alternatives? The world of alternative investments is vast and diverse, and I want to make an important distinction: The sorts of alternatives that I would avoid are the alternatives funds that are marketed to the public. As I have noted elsewhere, there are definitely hedge funds and other alternatives that have delivered off-the-charts performance. But these funds are rarely available to the general public.

That doesn’t mean you should avoid alternatives altogether. I’m just advising against the retail, mass-market variety. The best opportunities, in my opinion, will present themselves individually. For example, it might be a startup company in your industry or a real estate rental unit in your community. These are the sorts of things that may have outsized potential.

But you’ll need to evaluate each prospective investment on its own merits. In addition to estimating the return potential, you’ll want to consider the investment’s liquidity, costs, tax impact and the track record of the individuals who will be managing it. Most important, ask yourself whether the investment’s strategy passes the commonsense test. The investing genius Peter Lynch once said that he would never invest in anything that couldn’t be illustrated with a crayon. That’s an especially important litmus test when evaluating alternatives.

Adam M. Grossman’s previous blogs include Buy What You Know, Staying Focused, Eight Heroes and Separated at Birth . Adam is the founder of  Mayport Wealth Management , a fixed-fee financial planning firm in Boston. He’s an advocate of evidence-based investing and is on a mission to lower the cost of investment advice for consumers. Follow Adam on Twitter  @AdamMGrossman .

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Striking a Chord

WE CAN GATHER financial facts and research issues. But what we learn will always be tainted by what we’ve experienced.

As I mentioned in last week’s newsletter, anecdotal evidence often proves more powerful than statistics. I’m talking here about the same phenomenon—but writ larger. What we read in articles and books is scant competition for the informational scraps we collect throughout our lives: the comments our parents made, the milieu we grew up in, the stories we hear from colleagues, the adventures we’ve had, the pain we see among friends.

What’s influenced my financial thinking? It’s odd what comes to mind. Often, the incidents were minor and the comments were made in passing. But they struck a chord with me because they said something about human nature or pointed to some financial truth. Here are just eight of the incidents I recall:

1. “You can’t go wrong with real estate.” I remember my mother saying that during the 1970s. Home prices were soaring along with inflation, even as inflation allowed homeowners to repay their mortgages with depreciated dollars. At the time, I thought I was learning some great financial secret. Today, it reminds me of how fickle financial trends are.

2. At age 16, I became fascinated by macroeconomics and read everything I could get my hands on. A book in the school library mentioned that publicly traded companies want their shares to perform well. I had never before given any thought to the stock market and, for months, I puzzled over that sentence. Why should companies care about their stock market performance? After all, hadn’t they already sold the shares and pocketed the proceeds? Clearly, I had much to learn.

3. On Oct. 19, 1987, I was working as a lowly fact-checker at Forbes magazine. We had heard that the stock market was collapsing, but nobody knew precisely how great the damage was, so we headed to the stock market ticker, located in one corner of the building’s third floor. A roll of light brown paper, similar in size to what you might find in the bathroom, rolled through the clattering machine. As I recall, that day the machine spat out just three readings for the Dow Jones Industrial Average: down more than 100 points at mid-morning, down 230 in the early afternoon and, finally, down 508 at the close.

Reporters gathered around the ticker, almost giddy about the market carnage. After the ticker proclaimed the Dow’s 508 point drop, two of the magazine’s more seasoned journalists announced they were hopping into a cab and heading down to Wall Street, to see if folks were jumping out of windows.

4. After the market closed on Oct. 19, I called a stockbroker friend. He said there was sure to be rioting in the city, so he was heading to his New Jersey home to get his car. He was then going to drive back into the city, collect his mother from Queens and whisk her to safety.

5. Early in my career, one of my favorite folks to talk to was Steven Somes, a money manager at State Street. His notion of financial nirvana: having enough money to buy the S&P 500 and live off the dividends. Your lifestyle would be unperturbed by market fluctuations. Instead, you’d own both a portfolio and an income stream that would grow in perpetuity at roughly the same rate as the economy. Tragically, Somes died of heart failure in 1995, at age 37.

6. The early 2000s housing boom was, in many ways, crazier than the late 1990s tech-stock bubble, because it touched so many more people. I recall countless stories from that time. Among them: A colleague from The Wall Street Journal and her husband were moving cities and there was a relocation allowance to be had, which included financial help toward a home purchase.

My colleague described the crazy open houses mobbed by potential buyers. She and her husband would get to walk through a house just once and then—to have any chance of buying the place—they had to make an immediate bid. They knew the market was out of control and yet, reluctant to give up the relocation benefit, they still went ahead and bought, with an offer far above the asking price. Needless to say, it didn’t turn out well.

7. “Recent research suggests that regularly seeing good friends in the local park will bring a greater boost to mental health than having a shiny German automobile parked outside your retirement home,” Andrew Oswald, an economics professor at England’s Warwick University, told me for a 2005 article for The Wall Street Journal. “My candid advice to aging Americans would be to use your hard-earned cash to invest much more in friendships than in material items.” I’ve heard similar thoughts expressed by others, but for some reason Oswald’s words have always stayed with me.

That brings to mind a related comment from my fellow financial author Bill Bernstein: “A BMW isn’t an automobile. It’s an IQ test.”

8. During the fall of 2008—I’m referring here to both the season and the stock market—the sense of panic was palpable. I even got a call from a financial planner, whom I considered a veteran investor, wondering whether he should sell. Until that moment, I don’t think I’d fully realized that knowledge is truly no match for emotion.

Follow Jonathan on Twitter  @ClementsMoney  and on Facebook . His new book, From Here to Financial Happiness, can now be ordered from Amazon and Barnes & Noble. Jonathan’s most recent articles include Tell Us a Story, Bad News and No Place Like Home.

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Starting Over

I WILL NEVER forget that New Year’s Day nearly two decades ago. My life changed forever in a matter of minutes. I received in lightning bolt fashion the devastating news that my wife of nearly 40 years was filing for divorce. Looking back, I should have seen it coming. But at the time, I was totally unprepared. I didn’t know it then, but I was part of the initial wave of “gray divorces.”

No football bowl games that New Year’s Day. I spent the rest of the day trying to deal with my new reality. Emotional damage for sure. I felt hurt and betrayed. But as the hours passed, I began to think in a more reasoned way about all the implications of my new reality—family connections, social and business relationships and, yes, my financial wellbeing. Lifestyle changes were inevitable.

Basically, my carefully crafted retirement plan had been blown out of the water. My life would be greatly different from what I had expected, and had prepared for emotionally and financially. We budgeted throughout our marriage and had managed—or so I thought—to make sound use of our collective money for our children and ourselves.

We both had good retirement plans, including state pensions. I also contributed to a 403(b) plan and eventually opened Roth IRAs for both of us. We were both eligible for Social Security. I was recently retired and yet—thanks to my pension and Social Security—my income was about $2,000 a year more than my university teaching salary. My spouse, younger than me by five years, continued to work fulltime. We owned a nice, roomy condo in a historic district and were within walking distance of a neighborhood shopping area. Things looked great for our respective retirement years.

In the following weeks, and increasingly during the 17-month separated-but-not-divorced period, financial reality set in. As we divided our marital assets, the legal fees mounted. I also had moving expenses—635 miles to another state. It was clear early on that my net worth was shrinking by the month. I ended up both losing the condo and having to pay off the remaining mortgage. I also lost our newest car. When the divorce was finalized, I had an estimated loss well in excess of $50,000 in my personal net worth.

Shortly after, I began to think more optimistically. My net worth bottomed out and better times seemed to be on the horizon. It was clear that my income was significantly exceeding my annual expenses. My wisest decision, I feel, was preserving my annuity income, mutual-fund distributions, future freelance earnings and other income streams, while sacrificing things like the condo, the newest car, and lots of furniture and furnishings. I insisted on keeping my ’93 red Miata, though. My least wise decision, undoubtedly, happened years earlier—the “innocent” comingling of personal assets, such as cash gifts, with marital assets.

Within a year, I was once again a homeowner. I managed to pay off the new mortgage in five years. I focused on long-term investing and have seen a significant increase in my net worth during the post-divorce years. I also drew up a new financial plan for retirement. When will my expenses exceed my income? My latest calculations put the crossover point at age 112.

Dennis E. Quillen is a retired economic geographer and university professor. A fan of blackjack and long-term investing, his previous blog was Getting Comped.

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That’s Rich

I FEEL WEALTHY. I spent the morning in an upscale shopping mall where, as you stroll along, you can see Bentleys on display. Even the store clerks are a bit snooty. Once I was shopping for a gift and the clerk asked if I could afford the handbag I was considering. I guess, on that occasion, I didn’t look wealthy enough.

When I go shopping with my wife, I don’t feel wealthy. Instead, all I see are items we shouldn’t buy. Shopping seems to have a different meaning for my wife and me. I go to buy something. I walk in the store, head for the item, buy it and rapidly leave.

When my wife goes shopping, she walks into the store and immediately stops at the first display she sees. She came to buy mascara. Why is she looking at shoes? Between the entrance and the cosmetic counter, there are any number of stops. “Just looking,” she claims. I wish.

The meandering doesn’t stop. We end up on every floor in the store. How is buying something on sale, which you don’t need, saving money? Whenever I hear the word “shopping,” I enter my cheapskate mode. But guess what? The urge to buy more than just the necessities is strong in everyone. It’s why many people can’t afford to save. It’s why the $20 co-pay at the doctor’s office is often described as “unaffordable.”

This morning, I passed two people on the street asking for money. I felt too wealthy, even guilty. How you feel about money and your wealth, especially what you have or don’t have, is important. It affects how you feel about yourself and about others, and how you manage your money and your life.

Tomorrow, I may not feel wealthy if the stock market takes a dive. I need to follow my own advice, and stop looking at each investment and at my 401(k) so often. “Stop telling me how much money you lost today,” my wife cries. “You didn’t lose anything.”

When I was working, I got to hang around wealthy people, the kind who order a custom yacht and belong to several country clubs. I didn’t feel wealthy then. At times, I felt rather like a failure. When I was younger, I hoped I would never get a hole-in-one on the golf course, because I couldn’t afford a round of drinks. Spending time with some of these folks also taught me money isn’t everything. Really wealthy people have money, but also class and dignity. I always viewed being wealthy as being financially secure, even in the face of emergencies, and not so much about having lots of stuff. Being wealthy meant the ability to purchase stuff, but resisting in favor of higher priorities.

When I’m sitting on the deck at my vacation home, I feel almost wealthy. Then I drive to a waterfront section of town with mega-mansions and I feel poor. Given that I just mentioned owning a vacation home, even using the word “poor” is highly inappropriate. But it points out how our feelings about money hinge on how we stand relative to others.

I recently had dinner with friends who give the appearance of being quite well-off and have for many years, but who told me they applied for property tax relief. I’m not sure how I feel about that. In prior years, they told me they didn’t believe in stocks and bonds or any of “that stuff.”

I met a young lady while having coffee and we began talking. She was looking for a new job to boost her income and advance her career. In the course of talking, we hit on that old paycheck-to-paycheck thing and she mentioned she is lucky to have $8 in the bank at the end of the pay period. You can imagine how I felt—I had just finished telling her about my last trip to Europe. Sometimes, a good sense of another person’s financial reality is just what we need to stay grounded.

The median household income in the U.S. is around $59,000. But that’s income. What about wealth? Do we even know what wealthy is? Americans say it would take $2.4 million to be considered truly wealthy, according to a Charles Schwab survey. In reality, only 5% of Americans come close to that definition of wealthy. Many more just live like they have that much money.

Oh well, time to check my 401(k) balance. I wonder how I’ll feel today?

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous blogs include Sharing the Load, Family Resemblance and Late Start. Follow Dick on Twitter @QuinnsComments.

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Job One

USING HIS CONTACTS and connections, our son landed an interview with a New York City health-care system. He was hired as a business analyst and started work in August 2016.

Along with his roommate—also a graduate from the University of Pennsylvania—our son chose to live in Jersey City, N.J., because it’s cheaper than Manhattan, plus his roommate’s job required that he split time between Newark, N.J., and Manhattan. The rent on their 600-square-foot apartment was $2,500, of which our son paid $1,200, since his room was smaller.

He had finished college with $1,600 in his bank account. But that wasn’t enough for the security deposit and first month’s rent, so we loaned him $3,000, which he agreed to pay back after he received his $5,000 signing bonus in September.

A $55,000 salary for a first job would be good money in North Carolina. But it makes for some tight budgeting in the New York metropolitan area. Our son’s $14,400 annual rent constituted 26% of his gross salary, slightly under the suggested maximum of 30%. On top of that, his monthly PATH (Port Authority Trans-Hudson) train pass and a New York City subway pass cost $209 a month.

Food, on the other hand, is actually quite similar in price to North Carolina—as long as you don’t buy it in a restaurant. Our suspicion is that he ate out more than he should have. But it’s quite tempting for a single, 22-year-old to avoid the kitchen, especially if his friends are also avoiding kitchens.

As of today, he and his friend are still roommates. They just moved to their third apartment. (After moving him from North Carolina to his first apartment, the prospect of moving two additional times—hauling furniture up and down four flights of steps—isn’t appealing to me, but it hasn’t deterred him.) Now, they are living in Manhattan. He can easily walk to his office and area grocery stores, and he has a $15-a-month subscription to Citi Bike, so his transportation costs have been significantly reduced.

How has he fared, now that he’s handling his own money? Here’s one indication: Shortly after graduating in 2016, his credit score was an excellent 810. In June 2017, it was 808. Today, it stands at a still healthy 791.

As many have discovered before us, parenting never really comes to an end. But these days, we don’t dispense financial advice—unless our son asks.

Al an Cronk retired after spending 32 years in the newspaper industry as a marketer, editor and writer at the Winston-Salem Journal. This is the seventh and final part of a series about his and his wife’s experience educating their son about money. Previous blogs include Baby Steps, No Laughing Matter, Generating Interest, Getting Carded, No Use and On His Own.

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August’s Hits

LAST MONTH saw more folks visit HumbleDollar than ever before. What were you reading? These were the seven most popular blogs:

Ten Commandments
Low Fidelity
Non Prophet
Bad News
My Favorite Word
Eight Heroes
Two Grandpas

August also saw a slew of readers for a blog that first ran in July, Not So Predictable, as well as for HumbleDollar’s newsletters from early August and mid-August.

Want to help improve HumbleDollar? Please take this brief 11-question survey, which asks about both this site and a new venture I’m working on.

Follow Jonathan on Twitter  @ClementsMoney  and on Facebook . His new book, From Here to Financial Happiness, will be published Sept. 5 and can now be preordered from Amazon.

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