by Nolan

A friend of mine got married yesterday.  I wasn’t able to make it, but wanted to publicly acknowledge this happy occasion and offer my best wishes.

And to say this: dude, this is the biggest investment of your life.  Don’t muck it up.

Too many people squander it by making bad decisions after the blush is off the rose.  Bad financially, bad emotionally… and just plain dumb.

Because you are the antithesis of dumb, I don’t worry about you on that account.  But there is something to be said for a perspective that categorizes your marriage and your financial health on the same page.

Once you’ve been poor, you have a new sense of value and a new set of values when fate once again smiles on you.  That goes for money and for love. 

If you’ve known debt you’ve known the sick feeling that is very similar to heartbreak.

And almost always, we look back and legitimately find cause to blame ourselves.

It’s all about maintenance.  About assessing reality.  About prognostication, prevention, repair and the ongoing care and feeding of the investment.

And… make sure you don’t mention to your new bride that you’re looking at her like an account balance.  Not smart.

May all of your debts once-and-for-all disappear and may your days be an ongoing stream of pure growth and bliss.

Just make sure your deposits out-weigh your withdrawals.

Now for today’s thought about short sales.

One of the hardest parts of this nightmare experience is the continuing need to lower your price.

The first thing you have to let go of is the relationship of your asking price to what you perceive to be the home’s fair market value. Or what used to be fair. 

You’re already wrong about that, your equity is history.

Hanging on to an asking price that isn’t attracting buyers is the epitome of insanity.  And you know what they say about insanity, definition-wise.

The reason you need to keep lowering your price is to attract a new stream of prospective buyers.  To lower the bar – the upper price threshold on the part of buyers that determines whether they’ll come look, or not. 

Personal experience bears this out.

After a series of price tags that were above my break-even, with no offers forthcoming, it was time to lower the price into short-sale territory.

At first it feels like a diagnosis of a fatal disease.  You resist, you resent, and finally you cave in to it.

Because the only cure for this type of insanity is getting out from under this thing without a foreclosure on your record.

But guess what… nobody came at that first short sale price.

So I lowered it again.  And still nobody came.

Meanwhile, the tumor of your resentment continues to grow as that foreclosure date approaches.

There is only one solution: keep lowering the price.  Gradually.

Why gradually?  So you can prove to your bank that you did everything you could to get as much as possible.  If you radically lower the price to something really ridiculous (rather than incremental decreases), the bank may decide they can do better on their own with a foreclosure auction.

But if you can prove that the price is right by showing them your efforts to sell it at a series of higher prices, none of which worked, they’ll understand they are facing the same situation.  In which case it’ll make more sense for them to take an offer when it arrives.

And then, you just might be surprised.

We’d lowered our price five times.  The second to last price was $649,000.  Zero offers.  Not even any real shoppers.

Then we lowered it to $599,000.  It felt like a betrayal to all that was good and hopeful about the American dream (because, way back in the beginning before the crash, the market value of the home was north of $1,300,000).  But the bank needed an offer, and I needed hope.

As it turns out, that ridiculous $599K price was the sweet spot. 

It was the price that attracted a whole flood of lookers who, it seemed, couldn’t believe their eyes.

Within two weeks we had four offers.

All four of them were above our asking price.

True story.  We received offers of $605K, $610K, $629K and… get ready for this… $650K.  A grand above our previous asking price.

You might be muttering… go figure.  Or, holy sh*t.  I know I did.

If you lower it, they will come.

When you hit that sweet spot, everything changes. 

People who wouldn’t otherwise show up will now come.  And if they fall in love (which they will because, after all, in their minds as well as yours it’s still a $1.3 million home), they’ll stretch their budget to make sure they get it.

All four offers now rest on the desk of a negotiator at our bank.  If it doesn’t happen here – the shortfall is only 15 percent of the amount owed – it wasn’t meant to be.

Inquiring retirees want to know.

And now for the oxymoron of all time: there’s good news for retirees who are also taxpayers.

Or used to be taxpayers.  And perhaps, who no longer wish to be.

It’s actually not exactly news, which implies something has changed.  No, this one is simply a realization that many newly retired folks sometimes don’t hear about right away.

Understanding this translates to a worry-free cash flow that allows you to balance your social security benefits, any earned income you may generate and the rate at which you withdraw funds from your I.R.A.  

All with a view toward avoiding or minimizing a tax bill.

What I’m talking about here is how any withdrawals from your I.R.A. account may affect the potential taxability – or liability – of your social security benefits.

And how any money you may actually earn may — or may not – have the same impact.

Social Security Benefits and Wage-Earning Tax Filers

You probably already know that if you have no other earned income (the key word there being earned, as in, reported to the I.R.A. via W-2 or Schedule C), mostly likely your social security benefits will not be taxable.   Your benefits have a separate line on a Federal form 1040, which in effect separates them from other types of income.

Key words there are most likely.  When it comes to taxation, take nothing for granted.

You probably also already know that if you do earn a paycheck while you’re also receiving social security benefits, there’s a limit on how much you can earn before you cross a line the I.R.S. uses to determine if they can now tax your social security income.

Earn too much and your social security benefits become, to an escalating extent, taxable.  Up to fully taxable if your earned income is high enough.

Tax exposure on earned income is a given, and obvious.  Whether you actually do end up paying taxes on it depends on other factors (exemptions, deductions, etc.), but the money is technically taxable the moment you earn it. 

If you earn too much you need to talk to your tax professional. 

Because at some point every dollar you earn above that nasty threshold will result in a proportionate amount of your social security benefits to suddenly – unexpectedly perhaps – become taxable, as well.

Probably not what you had in mind when you took that part-time job at Baskin & Robbins scooping cones to help fund your next cruise.

So where is that threshold?

I’ve asked around, and I’ve surfed around in the internet looking for that answer.  And because, a) I’m not a licensed tax professional, b) I’m not in the market to become liable for anything in the way of misleading information, and c) I’m not completely sure, even after all that research…

… allow me to generalize. 

Many folks I’ve talked to, some of whom are in this situation, say it’s around $14,000 in earnings.  After that, some portion of your social security benefits may become taxable.

If you have a larger income, at some point all of your social security benefits become just as taxable as your earned income.

A nice problem to have.  Unless your goal is to avoid paying taxes altogether and the double taxation (on your earned income and your social security benefits) reduce your net pay on that part-time job to something like fifty cents an hour.

Do the math before you sign that timecard.

But here’s that good news. 

When you withdraw funds from your I.R.A. account – which may be and probably will be tax-exposed dollars, the destiny of which also depends on other variables on your tax return – that money does not count as earned income.

That’s what you need to keep straight.  Earned income and I.R.A withdrawals are labeled and treated separately for tax purposes.

Which means, in theory, you can withdraw a huge chunk of change from your I.R.A., and while that may or may not result in a tax liability on those funds (probably will, but you didn’t hear it from me), it won’t expose any of your social security benefits to tax liability as a result.

Too much earned income, yes.  I.R.A. withdrawals, no. 

Which means, you can still afford that cruise and avoid writing a check to Uncle Sam if you fund it from your I.R.A. instead of a part-time job.  Provided all the other numbers align toward a tax-free April.

A quick example.

Let’s say you received $12,000 a year in social security benefits.  You have a part-time job earning $6000 a year.  And, because you want to maintain that country club membership, you withdraw $36.000 a year from your I.R.A.

Here’s how that probably looks on your tax form.

The six grand from your job?  Taxable.  Just like anybody else with a job.

But because, in this case, your earnings were well under the threshold, your social security benefits remain tax free.

And because that $36K withdrawal doesn’t impact the tax liability of your social security benefits, your benefits are still tax free.

What isn’t tax free, however, is that I.R.A. withdrawal itself. 

Like your earnings, the I.R.A. withdraw is exposed to tax liability, and when added together the sum becomes your total taxable income.  Your social security benefits are not included in that number… unless your earnings are too high.  In this example, not to worry.

It is from that number – which, again, doesn’t include your social security benefits – that you juxtapose exemptions and deductions and other variables to come up with your bottom line tax bill.

Which is why we have C.P.A.s and even tax software.  Both are well worth the investment.

Naturally, no article with the word “tax” in it would be complete without a Big Fat Caveat advising you to consult with a tax professional.  

Nolan is not a tax professional, he’s just trying to help a brother out.

As if there’s not enough to worry about once you toss your tattered hat into the short sale arena, there’s a seductive and easily-missed little trap that awaits. 

It’s tucked neatly into the paperwork, all of which qualifies as fine print, and all of which you need to read.

It begins like this: someone makes you an offer. 

The number is good.  For them, at least… it’s something the bank just might accept.  The only thing you’re getting out of this arrangement is your freedom, and something short of a clean-slate, credit-wise.

And, it’s a clean offer, they aren’t asking you to replace the doorknobs or sharpen the blades on your garbage disposal, things they might ask for in a normal sale.

Your realtor writes up a nifty counter that, while accepting the offered price, clearly states that this is a short sale, and that not only will the seller (you) not incur any closing costs (those will be borne by your bank, which is, in effect, the true seller in this case), but also that the sale is contingent upon that lien holder(s) releasing you fully from any future liability.

In other words, they can’t chase you into the grave attempting to collect the short-fall.  They accept it, they write it off, and then they write you off.

Not every contract has these words.  Unless you like living under a black cloud that looks a lot like your banker’s frowning mug, you should.

This is worse than a divorce.  More like a funeral.  Don’t expect a Christmas card, either. 

Anyhow, you might have missed that little trap back at the initial offer stage.

It’s a date. 

Specifically, the date of closing.

It’s easy to miss because everybody involved in this transaction knows that the bank will select the closing date, not the seller. 

In fact, everybody knows that it can and almost certainly will take orders of magnitude longer than the normal 30 to 60 days until you sign on the dotted line and the nightmare ends.

And yet, that’s precisely what your buyer will put into the contract – a closing date that’s from 30 to 60 days out.

Your bank, of course, will totally ignore this date, they couldn’t care less when your buyer wants to close.  The ball – which they own – is in their court, and they get to make that call.   Which they will when they’re darn good and ready — they’re busy with other people just like you — and not a moment sooner.

Which only comes after they’ve either accepted or renegotiated the terms of the short sale contract.

Here’s where it gets sticky. 

The language in the sales agreement, and in the Short Sale Addendum — which always accompanies a short sale offer and your counter; if it doesn’t the brokers don’t get it – seems to undo all those assumptions.

But it doesn’t.

In fact, in Part 4 of at least one Short Sale Addendum (mine), the legal jargon clearly states that the buyer can, in fact, pull out of the deal at any time prior to the bank-defined closing date.

Which means, granted, that you no longer need to be sitting at a prayer vigil asking for your bank’s approval of the deal prior to your seller’s requested closing date.

That’s history, and was laughable from the moment it hit the page, anyhow.

No, now you’re sitting there – same prayer vigil – hoping on bended knee that your buyer will wait this out.   However long it takes.

Two months, four months, even 12 months.   Sound crazy?  It’s not.  I have a real estate broker friend with a short sale contract for a client that’s entering its twelfth month without the bank either approving or shutting it down.

Somehow that buyer is hanging in there.  Proof positive that those prayer vigils work.

Bottom line: the buyer can walk.  At any time.  Or, they can wait.

It’s their call, not yours.  Which sucks.

Unless it’s not.  Which means, unless you have wording that says otherwise.

Ask your realtor about this.  See if there is a negotiable approach that commits the buyer (and their earnest money) for the whole waiting period, just like you.

It’s like a date.  One party is expected to pay.  The other is expected to put out.

Which of those roles you assume as the seller is up to you.  If you want your suitor to be there in the morning, get it in writing.

The last few days I’ve been riding around in a nice Lexus SUV…

No, it’s not mine. I’m borrowing it while my fiancee took our car for a few days.

And it’s weird…even though I could now easily afford a Lexus, heck, any Lexus really, I just feel funny driving it. Maybe the feeling will change after a few days, but I don’t think so.

You see, I still “think poor”. Even though I’ve got a healthy emergency fund, and my car is paid off, and my income is great…I still “think poor” a lot. When I’m at the grocery store, I still get a little anxious buying the nicer fruit or an extra treat.

And it’s not a bad thing at all. In fact, I think a lot of wealthier people “think poor”. I think alot of wealthy people weren’t always wealthy and once they “made it” they don’t turn into Lexus-buying Gucci-wearing consumers.

Anyway, I haven’t “made it” buy any means. But I’m very happy. I sleep well at night now. I have a wonderful partner (and future wife!), and I have lots of fun opportunities in life to pursue.

One thing I’ve found that helps me not get carried away when I have money in the bank is to never keep more than 2-3K in my checking account. Any amount over that gets put into my online savings account at ING or SmartyPig. That little technique keeps me in check.

Also, I have a fun post coming up about a pretty large investment that I made about 6 weeks ago. It’s taken some time to get setup, and so far it’s going well, but I’m at a point with my savings now that I need to start putting some money to work outside a savings account.

So, what do you think? Do you “Think Poor”?

You likely saw in my earlier post that we’ve begun planning for the kids’ college with Mint.com’s planning tool. Planning, but not actively saving until we finish our debt payments.

Realizing that our oldest is seven years from college is a little terrifying. She’s a kid for heaven’s sake!

Thankfully, she “gets it” when it comes to the money needed for college, and knows “money math”… you know, the part that says “early money is the best money.” Figuring in tuition appreciation, we’re expecting to need $80,000 to get her through four years of a state school, and $126,000 for our youngest. We hope they will attend a junior college for two years like my husband and I did, but we want the money to be there so that they can get through college without the debt I had to take on.

That said, there’s another kid in the family and possibly more in our future. How are we going to be putting thousands away every month for education?

Our daughter’s plan of attack (this is four our 12-year-old)

• We’ve located a list of scholarships that elementary school children are eligible for (link) and are attacking it with a vengeance.
• She is also saving part of her money for college (she deposited $6 this week).
• Building savings with hard work! She plans to build and sell birdhouses to sell to raise additional college money. We have a load of recycled barn boards that we got for free, that should make about 30 birdhouses.
• Mom and dad (my husband and I) funding an ESA at $2,000 per year (the maximum) plus additional cash in a high-yield savings account.
• Two years of junior college for free (books only) as part of a college-in-the-high school program available to all students in our state, which will reduce her funding need to $40,000. This of course requires that she maintain her grades at a high level in school.

Now, I know there’s a few of you out there wondering if this kid will be able to go to college, or even want to? That’s ok with us, but we belong to the school of “better safe than sorry.” Once the money is saved, it can always be there for her if she wants to go back later, or use it to educate her own kids one day. Do you feel that? The cozy, calm feeling? Yep, that’s financial peace. It’s all going to be ok!

by Nolan

Color me cynical.  But I no longer love my bank.  And they no longer love me. 

In fact, I’ve come to realize that they never loved me, they were only in it for the money.

I used to think that one’s relationship with one’s banker was a key element of a happy adult life (the key to a happy childhood being one’s relationship with one’s blankey), but now I liken it more to a marriage in which the partner is of the what-have-you-done-for-me lately school of interpersonal expectation.

That only-in-it-for-the-money context applies in both cases, by the way.

And while I’ve changed both banks and domestic partners more than once, I’ve also learned how to recognize when the relationship is going south — it coincides with my credit score — and when to cut and run.

I’ve also learned why that happens.  Because both banks and life partners are capable of lying through their teeth when it serves them.

Here’s five common untruths you will hear if you visit your bank often enough.  You’re on your own regarding your co-signer.

They need to put your check on hold.

No, they don’t.  And you can get around this by challenging that assertion.

Let’s say you’ve just sold your car, and you arrive at the bank with a personal check – even a cashier’s check at some paranoid banks – for, say, $17,ooo.  A lot of money, that.

This gets worse if you’ve just sold a house and have a check in excess of six figures.  (Then again, this is 2010… sorry, I reminisce… that’s not gonna happen.)

You’re not asking to have the check cashed, to walk out with a grocery bag full of bills.  No, you just want to deposit the thing into your checking or savings account.

There’s a significant chance your bank, via the just-out-of-training teller, will tell you they need to put a hold on the check.  That your deposit won’t become available to you for as many as 17 days (I’ve encountered this four times recently, as I’ve sold off everything I own to stay afloat, and have been given hold-times of 3, 11, 15 and 17 days.)

That little policy seems to change weekly, depending on which branch you go to.

The thing that’s wrong here is that checks – any check that doesn’t come from someplace like Kirgizstan or Caracas – no longer take 3, 11, 15 or 17 days to clear.  They clear that night.  Or if you show up too late in the day, it clears the next night. 

Literally.  The computers of the cashing bank and the issuing bank connect in the dark of the digital night to canoodle and reconcile their respective balance adjustments, which includes the availability of funds in the issuer’s account.

This decision to hold your check can be overridden by the bank manager. It happens daily.  So don’t be afraid to ask.  If you’ve had an account with them for a while, and your record is voidof fraudulent check cashing activities, don’t leave until they waive this ridiculous, inconsistent policy.

If they don’t, get a new bank.  Because yours sucks.

They need to charge you a fee for your checking account.

No, they don’t.  Virtually every bank has free checking, and some don’t even require a minimum daily balance.

Ask.  Shop this one.   A better deal is out there. 

And it might include such features as free ATM transactions and no-fee checks, not to mention straight answers to your questions from someone who still has to bring their lunch to work with them everyday.

They pay a competitive interest rate.

No, they don’t.  In fact, the rates paid by banks on interest-bearing checking and savings, included Certificates of Deposit for 90 days or a year, are laughable.

Shop this, too.  A better deal is out there, probably in the form of a new account incentive or simply a better deal from a smaller, hungrier bank.

Big isn’t better when it comes to banking.  In fact, read the news, the biggest names in banking are the bad guys in many of the economy-sabotaging events of recent years.

It isn’t like the old days.  If your daughter wants to marry a banker, call in a counselor.

Your money is always safe with them.

Then again, the Big Boys probably aren’t going anywhere.  They will continue to get bailed out and sucked-up to by lobbyist-appreciative legislators who will ensure their ongoing profitability.

Still, bank failures are at an all-time high.  Two words: Washington Mutual.

The feds continue  insure your money through FDIC, but there’s a real chance you’ll have to reprint your checks before your kid graduates high school.

A merger by any other name is still a bank failure.

They care about their customers.

Right.  You can take that one to the bank.  Which, if you’ve been paying attention, is the problem.

Rest assured, the moment things get rough and your credit score tanks, you bank will reduce your credit limits, shut down your line of credit and generally act like you are trying to abscond with their office furniture.

How long you’ve been with them makes absolutely no difference.  This isn’t a family business, never has been.  And it’s all about them, not you.

Take care of yourself first.

The banking industry has changed significantly since your parents opened that college fund for you back in the day — back when real estate and the stock market were a sure thing over time – and not just with the advent of Saturday banking and the ability of an ATM machine to everything just shy of a foot massage.

One of those changes is the proximity of viable consumer options.  No longer are you stuck with the First National Bank of We Own Your Sorry Ass, there are small banks and alternative savings vehicles available through insurance companies and credit unions.

The latter of which actually might still care that you walk out their door confident and satisfied.  At least until one of the bigger banks swoops in with a merger offer they can’t refuse.

Nolan has been banned from the lobby of several nationally-known banks for disrespecting the 28-year old recent M.B.A. who manages the branch while attempting to put a hold on his checks.  He now banks online where he is not recognized as anything other than a number.

by Nolan

The great irony of the current Short Sale phenomenon in real estate is the fact that many of those forced into this prone position find themselves under this bus because of the stock market.

We got blind-sided.  The bottom fell out.  We lost our jobs.  Duplicity ensued to the extent that we can no longer lay blame at the feet of anyone specifically, but almost everyone wearing a suit, collectively.

Including ourselves.  We were over-leveraged and under-funded.  And now we’re munching at the banquet of consequences the markets are ramming down our throats.

And let us not forget, the same banks that are sitting in pious judgment of your short sale application are the ones who significantly contributed to this mess by giving you that easy loan in the first place, then selling it to someone with the ethics of a mafia enforcer and the financial acumen and foresight of a Boy Scout troop treasurer.

Now we can’t afford our mortgage payment without gutting our retirement funds – which have been eviscerated by half – and we’re suddenly, after two years of trying to at least break even, attempting to sell our homes for less than we owe.

That’s called a short sale, of course. 

A term that, if you have been involved with the stock market in the past, rings familiar. 

And perhaps confusing (in addition to being ironic), because the term means something completely different when it comes to your upside-down mortgage.

In the stock market, a short sale means you are selling stocks you don’t own to someone you don’t know.  You do this because you think the price will go down in the near term, and you want to profit from that demise. 

You want to stick it to that other schmuck, make some dough from his bad decision to buy.

The dark side of the American dream, that.

And so the industry contrived a way to get that done for you.  If you have a margin account at a brokerage house (you probably don’t these days), you can actually borrow – literally – someone else’s stock and then sell it on the open market. 

To the aforementioned schmuck. 

Then, later, you’ll need buy it back so you can repay that loan (the borrowed securities), hopefully at a lower price.

If you’re right and the stock tanks, you make money.  If not, you fund the difference from that margin account, putting you in the hole on the trade. 

Sounds easy, doesn’t it.  Especially lately.  Everything’s gone down.

One of the ironies at hand is that hardly anybody took advantage of this strategy as the market crapped out in ’07 and ’08. 

Who’s the schmuck now?

This process is as old and established as it is easy – the mechanics of it never enter your field of vision as an investor, you just place a “short” sell order and treat it like any other trade, though you need to remain mindful that you need to “close” the short by buying the stock back at some time in the future.

Still looking for that irony?  Here it is.

This is the dictionary-definition paradigm regarding a “short sale” that investors had stuck in their numb heads when the real estate market crashed. 

Suddenly the term “short sale” was being kicked around as frequently as Bernie Madoff’s reputation… and because the two definitions have virtually no common ground, stock market types were – and still are – a bit confused.

When someone first suggests a short sale of your house, you may begin wondering who you’re going to sell it to at a doomed price so you can buy it back later at a lower one, which you already know you can’t afford anyhow.

Of course, one phone call with your bank will erase all confusion on that count.

As you’re talking to the ten-bucks-an-hour clerk with whom, you suddenly realize, rests your entire financial future, you also realize that it doesn’t matter if you get it or not.

Because your stock market trading days are over, that margin account is dead and buried and your former stockbroker is now bagging groceries at Ralph’s Superstore.

Irony is a beautiful thing.  Now if we can just get Madoff’s children to return that 80 billion dollars they claimed they earned fair and square, the universe will have righted itself.

Meanwhile… start packing.

Nolan realizes that the point of this post is as elusive as it is ironic, and he wants you to know he doesn’t care.  Ranting is good for the soul.  He just hopes you’ll stop kidding yourself that you can get out of this mess by finding a stock that will go to the moon – in either direction – before they come for your house keys.

Credit: NASA

Nobody who isn’t lunching regularly with someone in Washington D.C. is throwing any real money at the stock market these days.

And if they are – if you are – then you need to be aware that the game has changed.  All because of the recession.

And because of the aforementioned fact.  Most of us are in debt, or we wouldn’t be here.

In case you’re not, and in case you’ve forgotten, the stock market runs on two things: the relationship between supply and demand, and the future probability of corporate profits.

Both are in the tank lately.  After you pay those CEOs their annual 8-figure bonuses – some get millions for chalking up record losses – there’s precious little left for the folks who really own the place.

Never has the American dream looked more like something directed by Tim Burton on a bender.

Too true: there really isn’t a current demand for stocks.

Which is why the market is stuck in a rut the size of the Marianas Trench.

The excess of demand over supply is precisely what makes a stock price rise.

Or at least it used to (and you thought it had something to do with actual earnings… how quickly you forget the tech bubble that eviscerated your 401K or IRA).   In the absence of that once reliable force of fiscal nature, we are left with only one thing: the remote prospect of future earnings.

Good luck with that.

Newsflash: earnings are at an all-time low.  As are P/E ratios.  Meanwhile, back at bankruptcy court, Chapter 11 filings are at an all-time high, particularly with new start-ups and thinly traded companies.

Never mind all the small businesses going under.  For a reminder of that, all you have to do is pay attention next time you drive down any busy street that isn’t a freeway.

All of which means there’s nothing much out there that will move heaven and earth to cause your stock to go up in the foreseeable future.

Oh sure, there are still a few day traders bleeding from the ears in quest of the occasional “steenie.” – a move of 1/16 of a point – which, less commission, puts the earnings potential of this still ridiculous profession on a par with the guy selling pretzels on the corner.

At least nobody’s laughing at that guy.

It gets worse from there.

Back when, on the day you skipped class instead of schlepping your hungover ass to Stock Market 101, they revealed that the whole stock thing is really a futures market that goes by another name.

Which means, any prospect of future earnings is already priced into the market.  And the people who find out about it in time – the ones out to lunch in Washington – do so long before you or I get a whiff of an improving the bottom line.

Two words: institutional investors.  They turn more capital in a day than the sum of all the individual trades in a year.  The stock market responds to them, not us.  And they already know what we don’t about the stocks we’re looking to buy.

This, in turn, means the only way your mid-to-long term stock investment stands an incumbent Democrat’s chance in hell of going up is the somewhat unlikely prospect that the company you’re investing in will actually exceed forecasted earnings.

Other than senior execs leaking the news to their golf buddies, this is always a pleasant or nauseating surprise to the market, depending.

That much hasn’t changed.  Apart form the daily swings of the Dow, which really don’t mean much (“… the market is down a hundred forty points today on the news that domestic production of breath mints was off by two percent last quarter…”),  the market reacts only to breaking news.  Something that contradicts the current forecast in either direction.

Good luck with that, too, these days.

If you can pick the company that exceeds their earnings estimate in this nightmare of an economy, you’re either lucky or on the take.

So why invest in the stock market at all?

Good question, that.  And perhaps irrelevant, because unless you’re selling something for a tax loss, chances are you don’t have any new money for that, anyhow.

Your grandpa told you that two things were certain over time: real estate and the stock market.  They’re always gonna go up over time.

Right.  That’s why grandpa is living in a trailer in Sarasota, and why he’d prefer a check for his birthday instead of a new Tommy Bahama shirt.

Sure, you can argue that the market has taken its hit, and while many are predicting another belly flop, the fact is that weak companies and strong companies alike are already priced as such.

Everything is back to normal.  The future has been bought and paid for.

Which brings us back to that old Talking Heads lyric, “same as it ever was.”

In the stock market you’ve got to be right when everybody else is wrong.

It’s always has been that way, always will be.

You’ve got to see what nobody else sees – including the guys with MBAs and decade-old BMWs who are paid to sniff out before you can do it.

Once again Good luck with that.  Chances are, you’re gonna need it.

Way more than Grandpa did.

Nolan is an ex-stockbroker who had to sell his decade-old BMW to fund his last IRA contribution.  His opinions do not reflect those of management, most of whom have, over the years, fired him before he could do any real damage.

from www.freedigitalphotos.net

And we’re on again. The progress is happening, and we have an anticipated debt free date of the end of the year.

The total outstanding debt is $6721.01 and the Lending Club loan of $4961. The minimum planned debt repayment this month will be $1300, but more than likely closer to $2300, it just depends on if all of my clients pay on time this month or not. (Some are paying slow.)

We could pay a little bit more this month, but we elected to go ahead and have our little daughter’s adoption re-finalized (it isn’t a necessary step until she turns 18, but it will make it easier for us to file taxes and get her social security number, etc). That will be a cost of $270, plus travel to court which we’re doing out of town to save on court costs. We’re also going to spend the $300 to get the serpentine belt in my car repaired and the transmission flushed.

Once our daughter’s adoption is finalized, our agency will refund us our $500 adoption deposit, and that will be used for the dental work that she needs to have done with her regular checkup in August.

Last month we didn’t make as much progress as we had hoped because of an unexpected homeowners insurance bill and we were sloppy about budgeting. On our refinance last year, the insurance was supposed to be put into escrow, and it was not, so we thought it was paid, and it was actually overdue. Thankfully, our insurance company is understanding and kept our coverage intact and let us pay it promptly without penalty.

With summertime vacations, my husband is getting lots of overtime hours at work, and my business is growing with costs remaining low, so we expect our income to stay fairly high (About $2200/mo higher than this time last year). We had a family meeting this week and recommitted ourselves to budgeting every penny. We haven’t been super-careful about budgeting since April.

I’m glad to be back on the wagon. My next posts will be about planning for the future… now that the end is in sight, we’re starting to look at what happens at the end of the road.

For the past two years or so, I’ve been using Mint.com to keep an eye on my money. It’s a free financial aggregator where I can see all of my financial accounts (debt, investment, etc).

A while back Mint implemented the budgeting tool that allows me to see progress towards our monthly budget amounts and sends alert when we go over budget or get too close.

But now, they’re also helping me to plan for the future. Getting out of debt, going on vacation, retiring, and sending the kids to college.

My kids are both having birthdays this summer. They will be five and twelve. In my world, this makes me think I have plenty of time to figure out their college plan. I decided to take a look and see what it takes to get my oldest through school, since we’ve just got six or seven years left to plan for her.

Take a look at what I’ve learned and give the goals feature a try for yourself when you have a chance!

It took me about three minutes to establish a goal (in this case, saving for my daughter’s college) in a quick, easy three-step process.

Step 1. Establish the goal

Step 2. Name your goal

Step 3. Link accounts

Next steps

Going forward, Mint offers suggestions (check out 509 plans, etc) but otherwise, I’ll have to spend my energy saving like a crazy woman!! For just one of the kids to go to school I’ve got to be forking over more than 1,000 now! DANG!! (Tip: My next post will be about how a child is never too young to apply for scholarships!)

Oh, and we’ll be regularly checking back at Mint.com to see the cute thermometers tell us how we’re doing in terms of progress towards college savings.