Q&A I: Gaijin Shogun


Gaijin Shogun

An original painting by Alex Ferrar

On display at his restaurant Sobremesa, Antigua, Guatemala

Traveling without a computer, as I do, provides a wonderful break from the relentless onslaught of non-stop connectivity that is the mark of our modern world. For a brief few weeks it gives me the chance to return to the more peaceful time of not so long ago when our days were more fully our own. But there is a price to be paid.

Returning from this latest trip to Mexico and Guatemala I have over 100 comments and questions waiting for a response here on this blog. That’s just counting the ones that actually require a response.

I love getting questions and comments here and, when I’m around, look forward to them each day. On a daily basis, it is relatively easy to keep up. But left to build for a few weeks they become an intimidating task. Catching up can easily overwhelm the time normally allocated to writing new posts. And, of course, new posts are also thin and rare while I travel.

When readers take the time to comment I am very appreciative and if they ask a question or two I very much like to be able to respond. But buried in the comments section of whatever post they’ve chosen, our conversation is unlikely to be seen and enjoyed by other readers. In fact, when answering I can’t really even be sure the original commentator has subscribed to the comments and will see the response. It is tempting to blow off these questions and simply move on to writing new posts more readers will see.

But the calibre of most of the questions I get here is excellent and, as I’ve often contended, the comment section on this blog has some of the best, most interesting content. So here’s my plan. I’m going to start working thru all these comment/questions, answering them in the posts where they were made. In addition, I’m going to select several of the most interesting and reproduce them in a series of posts — starting with this one. I see three benefits:

  • It will get responses to readers who were kind enough to comment.
  • It will get the flow of new posts started.
  • It will introduce readers who don’t currently bother reading the comments to some of the content to be found there.
  • It might even introduce you to some older posts you’ve missed so far.

OK, that’s four. Works for me! Hope it works for you, too.

Oh, and I’ve named this post after the featured painting above. Enjoy!


gates foundation building

How to give like a Billionaire 


I don’t know how many times I’ve thought about a charitable trust fund. It’s been on my someday wish list. However, it’s my understanding that any money in the fund can only go to qualified non-profit or tax exempt organizations. Is that correct? Or can the money be used to help individuals in need? We give 10-12k a year to people rather than churches or organizations. I also prefer giving anonymously which calls for some creativity and using people out-of-state to help. It would be nice to have some of the advantages of a charitable trust fund.

Thanks for addressing this topic! Now to read your other blogs.


Welcome WH…

Correct. Your fund can only contribute to qualified, established charities. I suspect this is because, since it is tax-deductible, the same rules for IRS charitable tax deductions apply.

As it happens, like you, I frequently prefer to give directly to individuals and small organizations that may not qualify.

So what I do is occasionally fund my charitable trust with larger donations that get me over the IRS standard deduction for the tax benefit. This money is then distributed over the next several years.

At the same time the money I choose to give anonymously and to places not qualified I give randomly and without concern for the tax break.

Hope that helps.


Thanks for replying and everything you’re doing to help us (me)!

I don’t care about the tax advantages per se of a charitable trust but the anonymity would be great.


Just to let you know that you can open a charitable gift account at Fidelity for $5000 while you are waiting to build a bigger stake


Good to know, bookaunt.

But for smaller sums like $5000 I would just distribute the cash directly to the charities of my choice without bothering with a charitable trust.

Such trusts, in my view, are better at providing an immediate tax advantage for a larger donation that will be distributed over time.

For instance, unless you have other deductions $5000 will be under the standard deduction amount and no tax benefit will be realized.

But if you fund your trust with 25k and then distribute the money over five years at 5k per year, you get a very valuable 25k deduction in the year you fund your trust.

Make sense?


There are times when even a $5k charitable fund can be useful. It worked for us a couple of years ago when we wanted to sell some stock that had a significant capital gain. By funding our gift fund with that stock, we were able to shield the profit from taxes – worthwhile to us even though the amount was not much over $5k (but we did have other deductions).

Also – when looking at setting up one of these funds, note that both Vanguard and Fidelity charge an annual cost/maintenance fee.



Stocks — Part V: Keeping it simple, considerations and tools


I love this blog and am making my way through this series avidly.

I was wondering how much of this applies to international investors? I live in Australia. Does “the market always goes up” still apply to the Australian market? It seems to historically, however since it’s such a small slice of the international market I was doubtful it was as secure.

I would like to simply invest in VTSAX, but the vanguard situation is different over here.


Most of those charge a fee of 0.70% or .090%, and they track the Australian share market, not the US.

However there are also ETFs listed at Vanguard Australia – these appear to have much lower pa fees. There is one which is the “total US market” for 0.05% pa! Is buying such an ETF the same as buying VTSAX in the US, or am I missing something?


I’m sorry if this is confusing, I guess I’m just wondering the best way to attempt to emulate your strategy of buying the total US stock market whilst living in Australia

Welcome Stephen…
Sorry for the delay in responding. Hopefully you read the part about my disappearing to Central America for a few weeks.
“The market always goes up” refers to the US stock market, which has the advantage of being such a large and dominant player on the world stage. The same would apply to the world markets overall. I would be hesitant applying the idea to Australia as the economy there is far smaller. I encourage investors outside the USA to consider investing in World Index Funds that include the US market.

VTS, in the second link you provided, is indeed the equivalent of VTSAX and the ER of .05% is great. Be careful, however. Since it is an ETF you might well face commission charges when you buy or sell.

Since you’ve been working your way thru the blog, perhaps you’ve already come across these two posts:



You’ll especially want to read the comments in both those posts. Several Aussies have weighed in with their ideas and experiences.

Cheers, mate and good luck!

Hi Jim,

Great information and thank you for sharing all this.

I can tell you that with all the career emphasis most folks have, we just don’t seem to wrap our minds around the investing logic until it’s late in the game.

I’m retiring in May this year when I turn 62. I have a pension that will “just cover” my monthly expenses. I plan to ‘not’ take my social security benefit until I reach full 66yr status. I also have an employer 401K with sufficient funds that is managed by Vanguard. I will likely need to tap into earnings to bridge the gap until I reach age 66. 81% of my holdings are currently invested in company stock (oil) and I’m considering utilizing your “4 tools” advice.

Any advice on how to arrange dividend/earnings income withdrawals and whether to roll into an IRA?

Also I notice you state the rule of thumb for Stock/Bond ratios, but then you say…doesn’t matter. Can you explain why?

Thanks, Rich


Hi Rich…

Thanks and glad you find it useful.

Were I in your position I would be VERY concerned about having 81% of my assets in just one stock. Even if I loved that stock.

If this holding is in a tax advantaged account I’d promptly shift it into the broad-based index funds discussed in the post. If not and assuming you have a large capital gain, I’d begin shifting as rapidly as possible consistent with limiting the tax hit as best you can. This, of course, will take a careful analysis of your full tax picture; something well beyond the scope of this blog.

Structuring withdrawals can be almost anything you choose. For us, we first spent down the various investment “mistakes” I’d accumulated. Now we pull what we need each month from our joint VTSAX fund in our non-tax-advantaged account. In our IRAs we have more VTSAX along with the bond and REIT funds described above. The dividends from these I have reinvested. We also shift some each year to our Roth IRAs to reduce the amount we have once we hit age 70 and the Minimum Required Distributions (MDRs) kick in. The idea is I’d prefer to pay up to 15% now than 25%+ later.

Once I have to take the MDRs, those will provide our living expenses and our joint VTSAX fund in our non-tax-advantaged account will be left alone to grow again.

As you can see, this is all unique to our situation and needs. It may or may not be useful to others.

But I would suggest not worrying about just spending your dividends and interest. Better to look at all your investments as a whole, limit yourself to total withdrawals of 4% or less and take those withdrawals from wherever it makes sense at the time.

I don’t recall saying stock/bond ratios don’t matter. They are a tool for smoothing the ride. Once you stop working and start drawing on your investments, this is important. But while you are still working and adding money to your investments, I suggest toughening up and accepting the wild ride for the greater return stocks provide over time.

Brian Boatman:

I LOVE YOUR BLOG! I have a question for you. I’m 37 years old and work for a Governmental Agency with a Pension. On the side, I contribute some money into a 457(b) plan. I currently have $67,000 in there in a Vanguard Target Date Fund, 2045. The Expense Ration is .18. Now, I understand that this ER is great, but I had a thought…can’t I invest in each of the three index funds that make up the 2045 Target Date Fund and save some on the ER? Am I missing something here!?

Thanks for your blog and for your willingness to share your wisdom with us young, dumb people!



Thanks Brian!

And no one who asks questions is dumb. I wish I’d been smart enough to ask more back in the day.

Anyway, your thinking is spot on. You can absolutely replicate any target date fund using a selection of index funds, and with lower ERs (expense ratios) to boot. You’ll just have to remember to do the rebalancing on your own, something the TDF does automatically for you.

In fact, I just did our annual rebalancing of the three funds described in the post last week. Easy peasy! And fun. At least for me.


Hacienda Cusin

Chautauqua 2014 Preview

Man, that chautaqua sounds sweet. We’ll be somewhere in central America but I don’t know if we’ll make it that far south to Ecuador. Maybe I can rearrange our itinerary some. I’d love to meet some of you guys (well, all of you guys). I think we’ll be somewhere in the Caribbean during the FinCon this year so 2015 might be the earliest I’ll meet all these other online personalities I’ve interacted with. Salud!

It would be great to meet you one of these days, Justin. Enjoy your travels and who knows what little dive we might stumble across each other in?

house in iowa


I’m actually in much the same boat as Jim was, but without the $300 rent coming in.

We bought my mother-in-law a condo and pay the HOA for it to the tune of $350 a month plus debt service of course. We also pay for cleaners to come in once a month, because she is an awful housekeeper.

She, of course, has zero savings, doesn’t work, and lives on social security of around $750 a month.

Fortunately our association is the opposite of the one he describes – the HOA hasn’t gone up in three years, and there are no special assessments. As with many condo boards they’re a bunch of kooks, but they’re very careful with the money. One of them wanders the pool area over the summer yelling at people who leave the outdoor shower running too long.

I look at the condo when I’m visiting, though, and I wonder how long until she starts complaining about the ancient carpet and other things – but the carpet was in very good shape when she moved in. Add in a woman who flat out doesn’t clean, her piggy 12-year-old grandson and two cats who pee everywhere, and things don’t stay nice for long.

She has occasionally said things that make me think she believes this arrangement is somehow to our financial advantage. Of course, she hasn’t made a sound financial decision in her whole entire life, so there’s that…

My strong suggestion is to NOT buy your parents’ housing. Go ahead and subsidize it if needed but it’s not a comfortable place to be.



Your situation sounds much worse than mine!


Next time she suggest the condo is to your financial advantage, suggest she move somewhere else if she can find a better deal. And if she can’t find a better deal, you expect a sincere “Thank you” or she can move out anyway.

My mom and dad taught me not to put up with passive-aggressive excrement (or any other kind!) from anyone.


pickpocketduckPickpocket at work

Stocks Part VIII-b: Should you avoid your company’s 401k?


HI Jim, GREAT post, GREAT video. I am really enjoying having my eyes opened. I always thought I was good at watching the fees in my 401k.

I am lucky enough to have Vanguard options in my 401K which I utilize. My boyfriend on the other hand has an awful 401K (in my opinion). I tried picking the “best” of the options available but I feel lost.

He has JP Morgan and Putnam funds available to him and all have annual expense ratios of 1.04%-1.38% and all are Actively Managed accounts so the Load Charge is anywhere from 5.25% to 5.75% per fund. I think this is just outrageous.

My question is, is it best to just pick one fund with an outrageous fee or spread the money and diversify? Does it cost more to have all your money in one bad fund or many bad funds?




Holy crap, Ally….

Those options he has really do sound ugly. “Outrageous” doesn’t seem strong enough a term. pastedGraphic.pdf

Are there no choices without the loads?

As for your question: The only reason it would cost more to have the money spread around is that some of those funds are even worse than the others. Other than that, more funds are just more hassle in keeping your allocation choices in balance. Given those loads, he should be sure to do that with new money rather than buying and selling shares.

Personally, I’d look for the lowest cost fund offered. It is likely to be the index fund if they offer one, and that’s what you’d want anyway.

But if all the funds have fees as intense as what you describe, I’d be tempted to skip it all together. I’d certainly hesitate before funding it beyond the company match. (Please tell me there is a company match!)

If he is feeling ambitious, he might also campaign for better choices with his HR department.

Read Addendum #1 very carefully and walk thru the Mad Fientist’s math as it applies to your boyfriend’s situation, and then decide.

Good luck and please keep us posted!


My 401k includes the following Vanguard funds – is there any reason to choose something other than the mid-cap index fund? Just want to make sure I’m navigating these correctly!

Mid-Cap Index (VIMSX) Prime Money Market (VMMXX) Target Retirement 2010 (VTENX) Target Retirement 2020 (VTWNX) Target Retirement 2030 (VTHRX) Target Retirement 2040 (VFORX) Target Retirement Income (VTINX) Total Bond Market Index (VBMFX)


Hi Jeff…

The mid-cap index fund is likely your lowest cost fund choice, but it is also very focused on one type of stock: Mid-sized companies.

If you have other investments outside your 401k you can balance this with large cap and small cap index funds. I’d shoot for about 70% large and 15% in each of the small and mid cap funds. This will roughly duplicate the Total Stock Market Index fund like VTSAX.

If you don’t have other investments, one of the better diversified Target Retirement funds would likely be a better choice for you, even with the bit higher expense ratio.



Why your house is a terrible investment


Mr. Collins:

Another terrific article where you provide a compelling argument mixed in with a “single finger salute” ( f-u money’s second cousin, twice removed) to tired conventional wisdom.

Of course, many of these “experts” that dispense this advice are broke and/or leveraged. I wish I would have “met” you years ago but sure enjoy your work now. Thanks for what you do.

By the way…I’m a satisfied homeowner yet don’t claim be a real estate baron by any means.


Thanks Jon…

Glad you liked it and glad we’ve “met” now. Also glad to meet someone who can be both a satisfied homeowner and still appreciate the concepts in the post. I’ve owned them myself for 28 years.  


I don’t mind renting, but I don’t know how much is my “F-You Rent.” That is to say, how much money do I need to:

1) Rent in pretty much any area I like2) Rent as much space as I need3) Have the option to renovate or decorate as I please4) Not worry about getting evicted


Welcome Nickster….

The best way is to simply take your annual rent and multiple it by 25. That is, if your monthly rent is $1000, you’d multiple 12k x 25 = $300,000. In turn, 4% of 300k = $12,000. It is the same formula as for figuring your FI number: http://jlcollinsnh.com/2012/12/07/stocks-part-xiii-withdrawal-rates-how-much-can-i-spend-anyway/

Only you can answer your questions 1 & 2. Once you do you should be able to figure the rent needed.

As for #3, most landlords will limit your ability to move walls or paint the place in the exotic colors of your choice. At the very least, you’ll be expected to return the place to it’s original and presumably more rentable condition.

It is the same as if you owned the place. Come time to sell you’ll need/want to walk back any exotic renovations you’ve made. Even the most tasteful updates can simply go out of fashion by the time you chose to sell. Unless, of course, resale value is not a concern.

As for #4, most landlords are looking to keep good tenants not evict them. But if you plan on behaving badly, owning might be the better choice. It is much tougher for your neighboring owners to get rid of you than a responsible landlord.

Posted in Money, Stock Investing Series, Travels | 6 Responses

Top 10 posts

Image 17

With any luck at all, by the time you read this I should be sitting in the cafe in Antigua that affords this view

Since I’ve learned how to schedule posts to publish automatically (at least I think I have), I thought I’d put this one together to appear while I’m gone. Maybe it will give you something to read here until my return and new posts begin to flow. Something perhaps you might have missed.

Compiling it proved a bit more interesting than I might have guessed. For me, anyway.

Here is the Top Ten over the last year:

  1. The Stock Series
  2. What we own and why we own it
  3. How I failed my daughter and a simple path to wealth
  4. Why your house is a terrible investment
  5. Stocks Part I: There’s a major market crash coming and Dr. Lo can’t save you
  6. Stocks Part VI: Portfolio ideas to build and keep your wealth
  7. Why you need F-you money
  8. Rent v Owning your home: Opportunity cost and running some numbers
  9. Stocks Part II: The market always goes up
  10. Stocks Part V: Keeping it simple — Considerations and tools

As you can see The Stock Series and posts from it dominate, snagging half of the top ten. In fact, if we stretched this out to the top 20, stock series posts would take six of the next ten slots too. Not surprising as this series has become what the blog is most famous for. So what does it look like if we strip those out?

Here’s the Top Ten sans the Stock Series:

  1. What we own and why we own it
  2. How I failed my daughter and a simple path to wealth
  3. Why your house is a terrible investment
  4. Why you need F-you money
  5. Rent v Owning your home: Opportunity cost and running some numbers
  6. Manifesto
  7. About
  8. Ask jlcollinsnh
  9. The bashing of Index Funds, Jack Bogle and a Jedi dog trick
  10. The Smoother Path to Wealth

What is interesting to me here, and that I would not have expected, is that 6, 7 and 8 are all what are called “Pages,” those buttons found across the top of each page.

With 6 & 7 it seems before investing too much time folks want to get idea of what this is all about around here. Makes sense.

As for Ask jlcollinsnh, this is basically a collection of mini-case studies that illustrate the principles discussed in action. No surprise it draws readers.

But what about if we pull those three?

Here’s the Top Ten sans the Stock Series and “Pages”:

  1. What we own and why we own it
  2. How I failed my daughter and a simple path to wealth
  3. Why your house is a terrible investment
  4. Why you need F-you money
  5. Rent v Owning your home: Opportunity cost and running some numbers
  6. The bashing of Index Funds, Jack Bogle and a Jedi dog trick
  7. The Smoother Path to Wealth
  8. Dividend Growth Investing
  9. My path for my kid: The first ten years
  10. The Monk and the Minister

That last one is my very first post!

In addition to all these, at the top of the right hand column on this (and every) page you’ll find a list of some of my personal favorites. Several are on these lists, but some are not.

If you are a regular reader here, there is a good chance you’ve read many, maybe even all, of these. For you, here’s my final list. None are on the lists above; they’ve been far less popular for reasons that escape me. But I like ‘em. You might too.

In no particular order:

Ok, that’s enough. I’m off to have una cerveza.

Posted in Random cool things that catch my eye | 10 Responses

Cafe No Se

Magical Antigua, Guatemala

So I am here in Antigua, Guatemala hanging out in one of my favorite dives, Travel Menu, drinking beer and eating some awesome food and talking to my new pal Lito.

The talk turns, as talk will do, to other worthy dives here in town and he asks if I’ve made it to Cafe No Se yet. Of course I have. I’ve been here six days after all.

Anyway, this is a unique and tough to describe place. Fortunately, I don’t have to — Lito already has. Here’s his piece on it. I think he’s a hell a writer, but be warned. Stop here if you are easily offended.

The Medicine Man

Guest post by Lito Croy:

You Don’t Se?

Well you certainly should.

Cafe No Se. It’s the first Antiguan bar you could hope to stumble into and the last one you’ll want to stagger out of. Tuck yourself into this hole in the wall, fill up on some free popcorn and soak in the live music jammin’ every single night.

Pushing this creaky door aside sinks you straight into what I like to call “The Real Deal.” You took the red pill, hombre. If what you’re looking for is the back alley cultural melting pot, then this is it. No Se is the real deal; like the bastard child of a Wild West saloon and an old pirate hideout. It’s dark. It’s dingy. And it’s exactly where I want to be.

Simmer down, saddle up and step on in. You won’t have to search for the blasphemy here. It’ll bite you in the face. It’s the kind of stuff you couldn’t buy in Vegas and can’t burn off once you’ve gone. It’s hanging on the walls, it’s etched on the tables, and it’s served hot on a plate: Grilled Cheesus sandwiches. Only Q15… Or your eternal soul. Either way, it’s pocket change.

Bow under the halfling door and you’re on sacred soil, now. Welcome to The Mezcal Bar. Time to pay the piper. But only the penitent man will pass. So drop your elbows to the bar and PRAY, brother! Grab an Oferta for Q44 and Randy will swing you a Vicky and a shot of the Joven. A quick glance at the sign: “Two Shot Minimum” and you reevaluate. Better make it two.

Mezcal. Some call it the Mexican Scotch. I call it delicious. “Ilegal” brand Mezcal is served from what appear to be funny looking shot glasses. But a second nip, a double take down the barrel and the joke is out. There’s a cross on the bottom. On all of them. They’re sacramental candle holders. Add this to the photos of lusty nudes and it’s the kind of sacrilegious irony I could only dream of in Catholic school. Will this be the bite-sized evil that keeps me out of Heaven… Or am I already there? I still have half a shot left. So I take another swig to find out. Waste not. And oh yeah – Amen.

Take a look around. There are some real characters here. It’s the kind of place you’d hope to see Tom Waites growl or Kerouac scribbling away. Sometimes I scan the flame-lit faces, just to check. If you get the chance, buy one of the regulars a drink. I chose Pete. He’s a part-time wordsmith, full-time Mezcal worshiper. Fill his glass and he’ll fill your head. Stories, sonnets, shamanic songs; he knows them all. Make sure to check out his latest literary work, available in the sober hours at the adjoining bookstore.

But he’s not alone. Drinking here are intense personalities from all over the world. The cream of the grime. And they’re not all pretty. Most of them are dreamers, and a few of them are real assholes. This ain’t Applebee’s. And no, we don’t all have to get along. This is the black sheep herd, and they’re chewing up the moonlight.

But there’s no reason to get your panties in a bunch. There’s no need to wear panties at all. No Se is a place for everyone. Where anyone can show up, drink, and say exactly what they feel. Even the walls speak their mind. Ask them and they’ll dish out their favorite one-line philosophy. There’s plenty of fading Sharpie to write the book, but one quote says it all. And it’s enough to throw you tits first into their boiling brains.

“Today is not for thinking.”

I can drink to that.

Chewing up the moonlight.

In this bar, your sins are never forgiven, they’re only forgotten. Until the next nearest moment of clarity, that is. Old dreams wither and new ones are drunk away. It’s Cafe No Se. It’s the bottom of the barrel. It’s the end of the road. It all drops off from here. But that’s all right. It’s okay. Because every dive needs a town.

Posted in Travels | 21 Responses

Chautauqua 2014 preview, closing up for travel and other random cool things that caught my eye of late.

Hacienda Cusin

Hacienda Cusín

Well, I’ll be back in Ecuador this summer and the coolest part of that trip is going to be the same as last time:

Chautauqua 2014!!

We all had a blast last year and the finishing touches are now being put on Chautauqua 2014. The biggest news is that this year there will be two.

August 9-16 is the one I’ll be attending and it will be modeled on the first, as I described here:


Hacienda Cusin 2

The view over the Hacienda rooftops

We’ll be returning to Hacienda Cusín because, well, everybody who attended loved this place!

Plus we got to party with people like these:

Chau - Pete's house party

And we got to skim off a big chunk of the revenue to help local people like these:

 Chau family by Rich

And go visit cool places like this crater lake:

Chau - crater_lake-300x170

Cheryl, Mr. Money Mustache and I will all be returning as your hosts and presenters. Joining us will be Jesse Mecham from youneedabudget.com. Jesse was an attendee last year and having met him, and having seen his presentation at FinCon last October, inviting him to join the 2014 team was just too obvious.

This also freed up JD Roth to move over to the second Chautauqua August 23-30. Along with Cheryl and JD, David Cain of raptitude.com will host and present. Damn, I’m gonna hate to miss that one…

Last year’s event was truly extraordinary, and this was my take: Chautauqua-2013-a-week-of-dreams

Here are still other takes on this event:

Mister Money Mustache

JD Roth

Johnny Moneyseed

One life, many adventures

Carlos reports on the ERE forum

Anyway, for more details as they develop check out: Above the Clouds Retreats. That’s also where you can register should you decide to join us, and I hope you do. As before, this event is limited to only 25 people and last year it sold out in three weeks.

As for now, by the time you read this I’ll be in Mexico. We are returning to San Miguel after about 25 years. My pal Jeremy put this idea in my head with an invitation to stay at his $1000 a Month Home. But at the time, we had already booked our tickets to Guatemala for Christmas. And now he and his wife Winnie have moved on to Taiwan.

Screw it!

Going is still a good idea and while there we’ll get to catch up with Karl, one of the attendees at last year’s Chautauqua and a new friend. He lives and works in Queretaro which, as luck would have it, is the city we’ll fly in and out of. We even get to be there on his birthday, February 26th. All together now: Happy Birthday, Karl!!

Both these guys were key reasons behind our choice to go to Guatemala in December. Karl with his tales of the place and Jeremy with his classic post They will kill you for your shoes!

We had a grand time, so good in fact after our week in Mexico I’m headed back and will be there for the month of March. A few pictures will give you an idea as to why.


 Guatemalan children about to kill a tourist for her shoes. They even shared their orange, trying no doubt to create a false sense of security.

Gua street

 Gua street 2 Gua woman Image 5

When the risk to your shoes gets to be too great, this sign conveniently shows the way out.

Image 17  Gua lake  Gua two women Gua rest

Gua sunset

Gua girls

One more reminder of what those kids look like. Keep your eyes peeled.

Scary, but I’m going anyway…

…and, as regular readers know, I travel without a computer. Therefore the blog tends to go a bit dark while I’m gone. My phone will allow me to approve new comments as they come in, but the tiny screen and my lack of skill will keep all but my shortest replies on hold until my return.

No new posts or detailed answers over on Ask jlcollinsnh for a while either. Still, if you haven’t already, there are lots of mini-case studies to read over there. Plus may I suggest:

The Stock Series

The Case Studies

How I lost money in real estate before it was fashionable

Podcasts and Guest Posts 

Here are some thoughts on figuring the number you need to retire:

The number you need to retire safely?

The Rule of 300

Withdrawal rates: How much can I spend anyway?

Over 20 years ago Billy and Akaisha Kaderli hung it up and embarked on a saga of long-term slow travel across the world. They are still at it and as luck would have, we caught up with them in December in Guatemala. They are as fascinating as you’d expect, and we plan to meet up again on my return.

Since then, they have asked me to adapt two of my posts for their blog Retire Early Lifestyle:

One on My way of travel: Esperando un Camino

Another on Why Your House is a Terrible Investment

For more on Billy and Akaisha, check out their interview with the Mad Fientist.

And in case you missed it and on the off chance you’re interested, the Mad Fientist interviewed me, too.

So did Johnny Moneyseed: A man with F-you money

Since I’ll be traveling, why not you? Here’s the New York Budget’s wacky and wild Cheap Travel destinations for all 50 states. Maybe you’ll find a few to add to your bucket list.

Finally, here’re some random cool photos:

fawn rescue

Orangutan spear fishing



Other cool villages in Europe


Ancient Cart Ruts

Norilsk, Russia

 Norilsk, Russia

China houses

Houses in China


What the sky would look like if the Andromeda Galaxy was brighter.


Seems the Chautauqua has sold out for 2014. It took two weeks from the date of this post. Last year, it took three.

Cheryl is accepting people for the waiting list just in case a spot of two opens up and I believe there is still space available in the second one, but I won’t be there for that one.

We limit the number of attendees to 25 so we all have the chance to really spend time with each other. But unfortunately that means not all who want to get to come. Hope you’ll plan for next year!

My thanks to all who have taken the leap of faith and will be joining us. I look forward to meeting you. If it is anything like last year, we are in for a very cool time together!

Posted in Chautauqua, Random cool things that catch my eye | 20 Responses

Case Study #10: Should Josiah buy his parents a house?

house in iowa

No! No, no, no. A thousand times, No!

Or maybe, just maybe…

For this blog, two great things about the Ask jlcollinsnh posts are that they help me understand the real world concerns of my readers and they provide ideas for a steady steam of great Case Studies. These are ideas and topics I would have never thought of on my own.

But today’s is a little different. This one gives me a chance to share a story I’ve had pending in the files for over two years. Josiah is contemplating a move quite similar to one I made long ago and his asking about it was just the spur I needed.


Hello Mr. Collins

I have loved reading your website! It is the exact information that I have been craving in regards to where the heck to park my money.

My wife and I are on the road to FI. We have a few more miles to go (10-15 years) but we are on our way. My goal is to never “have” to work a day after my 42 birthday.

With all that being said, my parents are 50 and 53 respectively and are not destitute but pretty poor. They have jobs that are a bit above minimum wage but absolutely nothing in the realm of savings or pensions.

My wife and I have realized that we will be ultimately responsible for them in roughly 30 years as my brother is not in the best boat financially and has expressed disinterest in taking care of them, because of different family issues.

I am going to help them get a Vanguard account and put a bit of money aside for them each month. The big problem is that they are currently spending 600 dollars a month in rent in the middle of Iowa, which is normal if they had kids living with them, but as my brother and I are gone, it’s a bit much, especially with them making just over ends meet.

My question is would it be prudent to buy a cheaper property and rent it to them so they could cut their rent in half, and then after it is payed off when they are in their 80′s that expense will basically be non exist? There are plenty of houses in their community that could be had for around $50K-$70K.

I have read your post about how real estate is not the best investment and I am realizing that I really don’t want to make a habit of getting rentals, but I am wondering since you have owned a house before, is it worth the extra costs that will be associated with owning a home, to provide that stability for them, or should we just find them a cheaper rental?

Thanks for all you do,


Welcome Josiah…

…and thanks for the kind words! Glad you found your way here and thank you for the question. I have actually long been planning a post about the time I did exactly what you are considering. It was a major mistake and I’ll share that story with you, along with some thoughts as to how you might evaluate the decision for your unique circumstance.

But first, congratulations on having your feet firmly on the path to financial independence! And for being clear-eyed enough to see that your parents are not and that this is likely to become your problem. The good news is you will have positioned yourself well to help.

Here’s my tale:

Back in ’79 I was young, single, renting, making good money and very foolish.  I bought my mother a condominium, for reasons much the same as yours. It was just about the worst decision I could have made, both financially and psychologically.

My father died in 1974 and in 1976 my mother sold their house and moved to Florida to escape Chicago’s winters and to be closer to her retired brother. She took the proceeds from the house and invested in some dividend paying stocks to supplement her Social Security. She found a lovely apartment near her brother and settled in.

Unfortunately, her stocks failed to keep pace and her rent continued to rise. By 1979 she was expressing grave concerns.

Now, with the benefit of hindsight I can see her concerns were greatly overblown. But at the time I got swept up into them, as us good sons are prone to do. Plus then, like now, (like always, really) the vested interests in the real estate business were relentlessly pounding the drum of how wonderful owning property is.

On a visit I rashly told her I would solve her problem by buying her a condo. I gave her a budget of 40k, a fairly hefty sum in those days, and told her whatever she found in that price range that she liked was fine with me. We agreed she would pay me her current rent of $300 a month and I would absorb the difference and all future cost increases. Not surprisingly, this worked exceedingly well for her. For me, as we’ll see, not so much.

She found a beautiful 2-bedroom, 2-bath unit in a very nice complex. It was a step up from where she had been and it came in under budget. It looked like a pretty neat, if expensive, solution.

To see just how expensive, let’s run the monthly numbers:

$390 — Mortgage payment (interest rates were much higher in those days)

$125 — Association fees

$50 — RE taxes

$565 — Total

So I knew going in I would be supporting mom to the tune of $265 a month. And I was good with that.

But there were two big things I naively hadn’t counted on.

First, I was now her landlord and as such she turned to me for improvements on the property. Not all at once, but over the years:  New appliances, carpet, painting and other costly stuff I don’t remember. Maybe because they paled in comparison the the second thing I hadn’t counted on…

men at a table

The Association

See, this was a building owned and operated by geezers who were retired and had cash on hand. They wanted to keep their money in their own pockets as long as possible and so were loathe to pay a little extra each month to build a contingency fund. The monthly assessments covered only the monthly costs.

So about once a year, sometimes twice in the bad years, I’d get a notice announcing a “Special Assessment” had been approved to re-pave the driveways or re-roof the buildings or some such, and telling me my share. Typically $5-6000. Oh, and by the way, it is due next Tuesday.

Now this is a perfectly fine way to do things for retired folks with money in the bank. But each notice sent me into a mad scramble to pull the cash together in time. At least the first couple of times. After that, I created my own contingency fund.

My mother lived there for about seven years, until 1986. Each year, of course, these costs marched ever higher. Fortunately so did my income, but the cash hemorrhaging was always a shock. Meanwhile, Florida went into one of its routine real estate collapses, just in time for my sale of the property.

So it was financially ugly. But expensive as it was, that would have been OK. It did solve my mother’s problem. But then there was the psychological factors that came in to play. Those started before the condo was even bought.

The Saturday after I returned from my trip to Florida, the one where I had told my mother I would do this, I got a call from one of my sisters. She was not happy.

She got it into her head that somehow I was exploiting our mother and that I was going to make a financial killing on this condo. Now I had no idea at the time just how financially ugly it would get (had I known I would have run for the exits) but I could certainly see that there was no monetary killing to be made.

When she got done yelling at me (and this took a while) I told her I really didn’t want to do this at all (I didn’t) and if she wanted to I would be happy to step to the side and out of her way. Unfortunately, she said she couldn’t afford it. She later suggested we buy it together but, after all the harsh words, I was uninterested in a partnership. That might have been my only smart decision in this sorry affair.

My other sister was considerably more financial savvy than either of us. She could see both the hole I was digging for myself and the way it would ease her share of the burden of providing help to our mother.

Now here’s where the psychology gets really interesting. My mother was a smart woman. She understood intellectually that I was supporting her to the tune of hundreds of dollars each month, thousands each year. But she never saw that money. What she saw, and felt emotionally, was the $300 check she wrote and mailed to me each month. Wrote and mailed to (cue me twirling one end of my imaginary handlebar mustache) her landlord.

Meanwhile, when my sisters would visit once or twice a year, they’d slip her $100 to “help with the extras.”  A kind and generous gesture that she very much felt emotionally. And, of course, when I’d visit I would get to hear in detail just how kind and generous my sisters were and what a blessing in a mother’s life such children are.

Now, a better man would not have been bothered by this. I am not that better man. I was the guy doing the heavy lifting.

As a postscript to this story, and in fairness to my sisters, when my mother took ill and moved back to Chicago for the final two years of her life I was living in Cleveland. The heavy lifting of her care fell to the two of them. In retrospect, mine was the easier burden.

So that’s my sad tale. What should I have done instead? That’s easy. I should have said to mom on that trip: “Don’t worry about your rent increases. Just let me know and whatever the amount over the $300 you are now paying I will send to you.” Much cheaper for me. Better psychology, too.

Oh, and then I’d’ve had plenty of spare hundred dollar bills around to slip her on my visits. You know. To help with the extras.

So, enough about me, Josiah. You can decide for yourself how much of this little tale potentially relates to your situation. But here are my thoughts for you….

First, buying your parents a house is likely to turn out to be much more expensive than you might anticipate. While you won’t have association assessments, you will have an endless parade of repairs as all houses require. If your parents are unable to handle these repairs or arrange for them to be done, those efforts will fall to you. As will the costs.

And, of course, the house will have all the drawbacks I describe here: Why your house is a terrible investment.

So why isn’t my answer a simple short and sweet:

Don’t do it!!?

The $600 rent and the houses available for 50-70k you mention is why. This suggests rentals are thin on the ground and pricy, while houses are easily and cheaply available.

You may have read this post: Rent v. Owning, opportunity costs and running the numbers. If not, please do. In it I describe just how to evaluate your choices and compare them financially.

In my experience, renting is most often less expensive. But not always and, from the rough numbers  you’ve shared for where your parents live in Iowa, maybe not for you and them. So run the numbers and see where you stand. Owning just might be the less expensive choice.

But for me, the financial case for owning would have to be very compelling before I’d accept the downsides in this situation. When I’ve owned houses they were expensive indulgences I could afford and the benefits made me willing to pay the costs.

In your case, supplementing your parents rent might be the expensive indulgence. Only the numbers will tell. But if renting proves more costly, personally I be willing to pay a fair amount to avoid the hassles and pitfalls.

One final thought.

You mentioned your intention to open and fund a Vanguard account for them. This is a fine and generous idea, but I’d keep it in your name. Unless your parents are willing and able to embrace your style of fiscal discipline, and that doesn’t appear likely, in their name such a fund would be at too great a risk of being dissipated. Plus, if held in their name, upon their death your money will go to the heirs they choose.

Held in your name you retain control and your parents are spared the responsibility while still enjoying the benefits. Perhaps this is the greater kindness.

Good luck and keep us posted.

More Case Studies

Addendum #1:

At the same time as buying my mother’s condo I was buying one of my own. You’ll find that little adventure recounted in this series of posts: How I lost money in Real Estate before it was fashionable.

Posted in Case Studies, Homeownership | 36 Responses

Case Study #9: Lars — maximizing some good fortune and considering “dollar cost averaging”

college leaving

When I was first out of college and back in Chicago, it took me two years to find my first professional job. I filled the time trying and failing to launch an advertising agency and working for a landscaper. The first gave me something to put on my resume, the second put some much-needed money in my pocket.

That first professional job, when it came, paid the princely sum of $10,000 per year. They had originally offered $8500. Despite being bold enough (and that was pretty bold given I had no other prospects) to negotiate the higher salary, I still sat at my desk the first week or so wondering what I could possibly do for this company that would be worth ten thousand dollars!

Around this time I became friends with John P, a guy about my same age. From his grandfather, John had inherited a portfolio of stocks that produced an income of just about my salary: $10,000 per year. I remember thinking what a beautiful thing this was. Here was a guy who had all his living expenses covered and who was completely free to choose whatever path appealed, unburdened by the pedestrian need to earn money for food and shelter.

I lost touch with John when he moved to New York City. I often wonder how things turned out for him.

But as for me, his situation planted in my head for the first time the idea of having investments to do the heavy lifting of paying for life’s expenses. It would be a few years yet before I came across the term F-you Money and had a name for what had become my ambition.

Since I was groping blindly about in the dark and index funds were just being invented (and even once the news reached me I would still stupidly reject them for years), reaching this goal took far longer than it should have. Far longer than it will for the astute readers here.

But I’ve always wondered what it would have been like to have John P’s head start. Like him, would I have been smart enough to follow his grandfather’s advice and live on the investment returns, using the inheritance as a platform from which to build? I like to think so. It is certainly the advice I’d give to someone on the receiving end of such luck. Someone like Lars.

Just as I have little use for people who whine about not getting the breaks they think they should, I have even less use for those who fail to appreciate those breaks that come their way.

But Lars recognizes his good fortune and, as you’ll see, is busy making more of his own and is ready to work at making both pay off. Plus he presents an interesting scenario to explore.

Lars and his questions showed up in Ask jlcollinsnh last week. Here is our conversation:



I love your blog. I’ve read every single part of your “stocks” series, and send them to friends who ask me questions about investments.

I am a mid-20s man about to enter a very good financial situation via marriage to a great woman, also in her mid-20s.

We are both fairly thrifty and are completely debt-free. We have college degrees and steady jobs. We each have reliable, working cars that are paid-in-full. Our annual combined salary is about $125k, but will probably drop to $70k as we have children in the next few years.

Because a family member started a successful company years ago, we will receive about $6-7k per quarter in cash dividends.

We have already saved about $100k in combined 401k/IRA retirement savings (in VTSAX and index funds, thanks to your blog) and are maxing out our 401K/IRA accounts every year.

We have about $75k in combined cash savings. We don’t own a home or any other noteworthy assets. We live fairly frugally, and save about 40-50% of our after-tax income, and we plan to continue to do so in marriage.

Here are the details again in bullet form:

Total debt (student, credit, mortgage): $0
Combined annual salary (before tax): about $125k
Annual cash dividend: $25k (or $6-7k quarterly)
Current combined retirement savings: $100k
Current Cash savings: $75k

I know we have too much cash on hand, and I want to invest it. We’re not interested in buying a home soon, we would rather rent for a while. How would you invest our current cash on hand ($75k) as soon as we get married and how would you continue to invest $6-7k quarterly?

Any other investment allocation or other life-planning advice is MUCH appreciated.


good fortune Budah

The Good Fortune Buddha:

Shall we rub his belly or invest?


Welcome Lars…

…and thanks for the kind words and for passing the blog on to your friends. That’s the highest praise of all.

One of my pet peeves is people who look at the asset building strategies discussed here and dismiss them as accessible only to those who are very lucky.

You certainly appear to have been luckier than many who write me. But to your credit you are not squandering the luck that has come your way. Far too many would, followed by their complaints of how unfair life is.

So kudos!

The biggest risk I see for you is the lure of lifestyle inflation.

So my first suggestion would be to cap your spending at 35k, half the income you’ll have when the kids start coming. Or, if you are feeling really badass, live solely on that ~25k dividend and invest all your earnings. Then let your lifestyle expand only at the pace those investments grow.

That said, it sounds like you’ve already nailed my nine steps as described here: How I failed my daughter and A Simple Path-to-Wealth

Well done!

If you haven’t already, take a look at this: My Path for my Kid: The First 10 Years

While it seems you’re hitting most all these already, it never hurts to review as an aid for staying the course.

The 75k in cash I’d put into VTSAX. With your dual incomes and cash flow you can afford to have little or no emergency fund. This is especially true since you don’t own a house. Since houses require a relentless parade of often expensive repairs, they are the single biggest generators of the need for emergency cash.

While I am blissfully back to being a renter now, I’ve owned houses for over 3o years. In each case, I’m glad I did. But only because I wanted the lifestyle at the time. They are an expensive indulgence and as such should only be bought if and when that indulgence is worth the price and the price is one you can easily afford.

That may well be when your kids are around school age and school districts become critically important. But be sure to read this first, if only to be sure you enter homeownership with your eyes wide open:  Why your house is a terrible investment

Then to be sure you fully understand the financial ramifications in your particular situation, run the numbers as explained here: Rent v Owning, opportunity cost and running the numbers.

VTSAX is also where I’d put your investable cash flow, either from those dividends and your saved income or from all your income as you live on the dividends.

First, of course, fully fund your 401k and deducible IRA accounts.

Congratulations on your upcoming marriage and the awesome financial start!


Awesome advice Jim, thanks for the attention. Love your idea about living off the dividends.

Clarifying question: would you invest the $75k in VTSAX in one lump purchase, or would you space it out somehow using dollar cost averaging? If so, is there a DCA time-segment strategy you would use in our case? (i.e. $5k every month for 15 months).


purse overflowing

Glad you like the living off the dividends idea, Lars. That’s what I’d do personally and it is what will get you to financial freedom fastest.

As for DCA (dollar cost averaging), I am not a fan. For three reasons:

1. It messes with your allocation. Initially with DCA you are way too cash heavy and then over time the balence shifts. Better to simply decide what allocation works best for your situation and then implement and maintain it.

2. You have a 50% chance of it working against you. If the market rises while you are DCA you’ll be paying progressively more for your shares. Of course, it could work the other way and by choosing DCA you are betting it will. So basically you are predicting the direction of the market in the short-term. That’s market timing and market timing is a loser’s game.

3. Since you are in the wealth building stage, as you invest new money over the months and years you are in fact stuck with a de facto DCA situation. This one you can’t avoid, but no sense adding to it with your cash on hand.

Make sense?


I’ve never heard that reasoning against DCA, but it helps me feel better about dumping the money into VTSAX as a lump sum. It’s basically a bet that the index will be higher in 20-30 years than it is now. I’ll take that bet.

Thanks A TON for your help.


Yeah, DCA is one of those popular things designed to make people feel more comfortable without fully understanding the implications. This might help: Investing in a Raging Bull

It is far better in my view to take a little time to understand the market and how it really works.

Addendum #1: For more on luck and good fortune….

You make your own luck by JD Roth

What poker, basketball and Mike Whitaker taught me about luck

More Case Studies

Posted in Case Studies | 12 Responses

Case Study #8: Ron’s mother – she’s doin’ all right!

Yesterday I got a call from a good friend from whom I haven’t heard in a while. He’s a fan of the blog and, after a bit, he gently chided me for the infrequency of posts lately. It is always nice for a writer to hear readers complaining that there should be more.

Of course, I had many excuses. Other projects (some involving the blog!), re-certifying with the IRS and VITA, disappearing to Latin America and generally goofing off.

goofing off royalty-free-office-clipart-illustration-37094

But one of the more legitimate reasons is that as the blog has grown, so have the comments and questions. I’m grateful to receive them, but I’m also finding that much of the time and energy I have for writing here gets absorbed in responding. Not a complaint, but an observation. And a reminder, as I’ve said before, some of the best material to be found here is in the comments.

A while back I created this new section: Ask jlcollinsnh. There is fresh stuff up there almost every day now. So, if you haven’t already and are looking for more jlcollinsnh to read, check it out.

It is also a fine source for my Case Studies Series (see “categories” in the sidebar) including today’s.

This recent question appeared there and especially appealed to me. Ron’s mom, at 73, is certainly not an early retiree. In fact she didn’t even choose to retire. After 35 years her firm kicked her to the curb, with a lousy 12 week severance no less. It can happen to anybody. It has happened to me.

Fortunately, she was financially prepared and as it says in the song, she’s doin’ all right.

Her son writes:

Hi Jim,

My mother is 73.5 years old and was just terminated after a 35 year career as a legal secretary in Manhattan. She has saved pretty well and I just want to throw some numbers at you to see what you think.

She has 491K in a traditional 401K from her job. My brother has been managing those investments fairly conservatively within the plans offered and he made an 11% return last year.

She has 225K in a traditional IRA and her friend’s son has been managing the money and charging her .75% annually. He did not do as well and probably lost 1 or 2% on top of his fees last year.

He is also managing about 61K in a Roth for her as well. He is a bit of a pessimist and has her in gold among other hedge type investments.

Her expenses have been about $3K per month although that may rise with extra time on her hands. She has a pension of $900 per month and collects $1600 per month from social security.

She owns her coop apartment outright. She has 12 weeks severance and can then collect unemployment. She will now be responsible for her own health insurance.

How would you invest this money to keep it safe and make it last another 20 years?

Thanks so much,


My reply:

Hi Ron, and welcome!

To start off, your mother is in excellent financial shape.


Her annual expenses are 36k. She has 30k in income from her pension and SS, and 777k in invested assets. Using the 4% guideline these assets can provide another 31k, for a total of 61k in potential annual income. Far more than it seems she needs, even if she were to dramatically increase her spending by, say, 33% to 4k per month.

Using VTSAX as a benchmark, let’s first look at how her managers did. This is the total stock market index fund and it returned ~33% in 2013. Of course, 100% stocks is way too aggressive for your mother, but it is a useful point of reference.

  • Your bother’s 11% return suggests to me he is managing your mother’s assets very, very conservatively, likely with a heavy bond concentration.
  • Your friend’s son, based on your comment and his negative 1-2% return in last year’s raging bull, suggests he is investing for Armageddon. A very poor strategy should Armageddon fail to arrive.

If you haven’t already, please take a moment to read “The Wealth Preservation and Building Portfolio” which is the second half of this post: Stocks –Part VI: Portfolio Ideas to Build and Keep Your Wealth.

In it you’ll find my reasons for the funds I’m going to suggest. You’ll also notice my suggested allocation percentages for your mother are much more conservative than those suggested in that post. My sense is you and she will sleep better, and with her assets she doesn’t need to pursue performance.

This is what I’d do were she my mother:

389k/50% VBTLX -bonds – current yield 2.2% = $8558 annual income
194k/25% VTSAX -stocks –  current yield 1.8% = $3492 annual income
194k/25% VGSLX -REITS – current yield 4.2% = $8148 annual income

Total annual income of $20,198, without touching principle.

This also represents a very conservative 2.5% withdrawal rate on her 777k. In addition, she’ll have bonds as a deflation hedge and real estate as an inflation hedge. If we do have a financial Armageddon, it will likely take one of those two forms.

This boosts her annual income from 36k to 50k, a 39% increase. With only a 2.5% withdrawal rate her portfolio will also continue to grow, likely leaving a substantial legacy for her heirs.

Hope this helps!

Ron’s reply:

Thanks so much Jim. My brother has read your response and is on board. We are firing the financial adviser and opening up new Vanguard accounts.

 More Case Studies

Posted in Case Studies | 15 Responses

roundup: Some random cool things


It’s Better in the Wind

Guest posts I’ve done lately:

Retire Early Lifestyle: Esperando un Camino and Why Your House is a Terrible Investment

And an interview: A man with F-you money

How Warren Buffett got his start. 

How state taxes influence where people choose to live.

Crazy House in Vietnam

Strange Houses

Cliffs of Dover

Cliffs of Dover


29 more scientific facts


Old cigarette ads

serpent docean loire nantes Huang Yong Ping  7

Giant Serpent off the coast of France


thor harris

How to live like a king for very little


little girl as flemmish painting
Looks like an old Flemish painting, right?
Spain somewhere
This is somewhere in Spain. Anyone know where? I don’t.
This is sunrise somewhere on Mars
sea stack
Posted in Random cool things that catch my eye | 14 Responses

Stocks — Part XXI: Investing With Vanguard For Europeans


Who knew?

Certainly not I.

This all started when I wrote a series of letters to my daughter about financial stuff I felt was important for her to understand. Stuff she wasn’t yet ready to or interested in hearing. (I’m still waiting, Sweetie.)

I mentioned this to a couple of friends and, at their request, shared the letters. They encouraged me to put them on a “blog” as “posts” so my family and the rest of my friends might read it. And so they could more easily pass it on to theirs. One of them pointed me to WordPress.

I simply never dreamed an audience would develop beyond my little circle of friends and family. That’s not false modesty. I quite literally had no idea blogs could or did have larger readerships.

When I started this one, I barely knew what a blog was. In fact, the first blog post I ever read was my own. Then I began reading James Altucher, one of the first people to encourage me on this path. It was probably six months or so later before I stumbled on ERE. And then MMM. And then, and then, and then…

So as you might imagine, it really rather stunned me to see jlcollinsnh develop an international readership. Boy howdy! Given my love of travel, this remains quite the thrill.  I first noticed it about ten months in and shared my discovery with the post Where in the World are You.

So far this month, there have been 85,706 page views and of those, fully 12,006 are outside the USA. Collectively, the countries of Europe are the second largest market.

But for these readers, the information here tended to come up short. The problem is, the investment tools we have so easily available here in the USA are either very costly or simply unavailable to the rest of the world. And since I know nothing about the specifics of what is available in the rest of the world, other than the core principles of investing described in this Stock Series, there was little here to help.

Not to say I didn’t try. The second half of the post What if you can’t buy Vanguard addresses it a bit. And I am very pleased to see the comments section of that post has become a sort of Forum where my international readers have posted their own experiences and questions.

Fortunately, Mrs. EconoWiser of the Netherlands is here to help. As you might guess from the name of her blog, she writes about living and spending efficiently. But around about March of last year she began reading jlcollinsnh. And she noticed the woeful lack of specific guidance as to how to implement the ideas here. But rather than throw up her hands, she set about figuring it out.

She’s done a brilliant job and, if her name sounds familiar, it might just be because I’ve had the frequent occasion to link to several of her posts in helping my European readers. Her research and insights are that impressive. So much so, in fact, I’ve come to think of EconoWiser as the European division of jlcollinsnh International. Egotistical and presumptuous on my part perhaps, but there you have it.

With all this in mind, about a month ago I asked her to write this guest post summarizing her low-cost index investing strategies for Europeans.

If you live in Europe, this is a must read.

If you live in another part of the world, maybe it will inspire you to follow her lead and figure it out for where you are. (And I’ll have another guest poster!)

If you live here in the USA, read it and appreciate just how easy and inexpensive the options we have here are.

But wherever in the world you are: Enjoy!….


It’s an honour to write a guest post for this wonderful blog. My “uncle J.”, as I like to affectionately call him, has taught me so many things about life and index investing. As a newbie on the index investing topic I decided to check out how this works for Europeans. As I’m a Dutchie myself, I was eager to find out how to make this index investing miracle work for the Dutch and consequently my fellow Europeans. This post will provide a rather general overview of my findings so far.

The Strategy

You should be familiar with J’s strategy if you’ve read the stock series on this magnificent blog. (If you haven’t, you should read the series first and read this blog post afterwards) A summary:

  1. If you can do business with Vanguard, do so as they are the only investment company out there that puts the interests of their customers first
  2. Buy broad-based index funds
  3. Costs matter hugely
  4. Keep it simple

And I’ve got some good news for you: we can apply the jlcollinsnh index investing strategy in Europe as well! Yay!

Investing With Vanguard In Euros

Unfortunately, you can’t open an account with Vanguard in Europe as a private investor. Unless you have €500,000 ready to invest (in which case: well done you!), you’ll have to go through a broker. Yes, let’s envy the American index investors who are able to open an account with Vanguard directly for a moment here and then let it go.

Vanguard Europe currently holds offices in seven European countries. You can contact your Vanguard office in: Denmark, France, Germany, The Netherlands, Sweden, Switzerland and the United Kingdom.  Staff are very friendly and helpful, you can ask all sorts of questions about their products. However, they won’t give you investment advice. If Vanguard doesn’t hold an office in your country I suggest you go to the Vanguard global portal and click on the United Kingdom. Click on individual investors and then exchange-traded funds or mutual funds (I will explain the difference shortly). You will find all the information you’ll need.  I am referring to the British Vanguard website ,even though all European Vanguard website content is in English.

Disclaimer: please bear in mind that when investing with Vanguard Europe you are NOT investing with the American cooperative non-profit organisation. Vanguard Europe is an independent subsidiary. In my humble opinion their philosophy matches the American parent company exactly. However, it is not a cooperative non-profit organisation in and of itself.


Let’s do something useful with our euros instead. http://www.megagadgets.nl/en/euro-toilet-papier.html

Vanguard Mutual Funds Vs. Vanguard ETFs

First things first, you need to decide whether you want to invest in mutual funds or ETFs (Exchange Traded Funds). In this article I will assume that you want to invest in Vanguard ETFs. The reason for my assumption is that ETFs are index funds that trade on the major stock exchanges and are traded like stocks. Mutual funds might be a bit more difficult to buy for some Europeans. Vanguard ETFs have lower expense ratios compared to the Vanguard mutual funds. They can be bought and sold throughout the day instead of once a day at closing prices. As we do not have IRAs or 401(k) plans to take into consideration, ETFs are a great option for European investors. ETFs pay out all dividends which you will need to reinvest yourself, whereas a mutual fund automatically reinvests the dividend for you. However, transaction costs might be lower for mutual funds if you can obtain these through a broker specialised in index investing.

An overview:

Vanguard Mutual Funds Vanguard ETFs
Higher total expense ratio Lower total expense ratio
Can be bought and sold once a day at closing prices Can be bought and sold throughout the day like regular stocks
Might be a bit more difficult to buy Accessible to all Europeans
Option to automatically reinvest dividend Dividend is paid out, which you might want to reinvest yourself
Transaction costs might be lower through a broker specialized in index investing Regular broker fees apply, however there are cheap ones out there
Very interesting for smaller amounts of money on a monthly basis due to brokerage commissions (if available) The higher the amount you want to invest, the more interesting concerning brokerage commissions, great for lump sums

In this blog post I’ll focus on stocks-only. The same strategy applies to bonds (and REITs if you’re investing in dollars).

Here’s the Vanguard ETF selection you, as a European, are able to choose from:

Vanguard exchange-traded funds TER Available currencies ISIN
Vanguard FTSE All-World UCITS ETF 0.25% USD/GBP/EUR/CHF IE00B3RBWM25
Vanguard FTSE All-World High Dividend Yield UCITS ETF 0.29% USD/GBP/EUR/CHF IE00B8GKDB10
Vanguard FTSE Dev. Asia Pac. Ex Japan ETF 0.22% USD/GBP/EUR/CHF IE00B9F5YL18
Vanguard FTSE Developed Europe UCITS ETF 0.15% GBP/EUR/CHF IE00B945VV12
Vanguard FTSE Emerging Markets ETF 0.29% USD/GBP/EUR/CHF IE00B3VVMM84
Vanguard FTSE Japan UCITS ETF 0.19% USD/GBP/EUR/CHF IE00B95PGT31
Vanguard S&P500 ETF 0.09% USD/GBP/EUR/CHF IE00B3XXRP09
Vanguard FTSE 100 UCITS ETF 0.10% GBP IE00B810Q511
Vanguard Government Bond UCITS ETF 0.12% GBP IE00B42WWV65

All hyperlinks link to U.K. factsheets. However, the facts are similar for all European countries (even if there isn’t a Vanguard office in your country).

Obviously, we’re investing in a European currency here. I will discuss investing with dollars later on in this article.

Buy Broad Based Index Funds

If you check out the different prospectuses you’ll quickly come to realise that there’s a one-stop shopping option for all your diversification needs. That would be the Vanguard FTSE All-World ETF at 0.25% TER. Through this fund you’re investing in 2,900 holdings in nearly 47 countries, including both developed and emerging markets. The fund covers more than 90% of the global investable market capitalisation. This way there’s no need to mix U.S., European and emerging markets yourself as the fund has already done this for you. Unfortunately, it doesn’t include small cap. I’m not telling you what to invest in here, do whatever floats your (Vanguard) boat.


Floating boat. Not photo shopped, the water in Greece is just that clear. http://www.mymodernmet.com/profiles/blogs/magical-boat-floating-on-water

Here’s the lowdown on the fund:

Vanguard FTSE All-World UCITS ETF
Greater Europe 27.36%
Greater America 52.25%
Greater Asia 20.39%
TER 0.25%

Find a broker – costs matter hugely

Now that you’ve checked out the different options in mutual funds and ETFs you’re going to find yourself a broker. You’ll need to invest a couple of hours of your time to find out which one suits your needs best. Google is your friend. Obviously, costs are very important. In The Netherlands we have many wonderful online brokers now, which offer accounts at rock bottom costs and will only charge transaction fees. Check out and compare transaction fees, custody fees, membership fees, and service fees. If you’re not charged for opening an account, why not open several accounts with different brokers so that you can also check out their interface and what not? Oh, and phone them. Ask them lots and lots of questions.

Before We KISS, There’s The Tax Thing

There’s this thing called the dividend leakage, and it’s a pain in the backside for investors. Unfortunately, it’s a significant cost for investors. As most of the European Vanguard funds are domiciled in Ireland you need to be aware of the Irish double taxation agreement. A (non-Irish) European investor is charged dividend withholding tax by the Irish government. Whereas the Irish investor can claim this dividend withholding tax back from their government, the rest of us (in most cases) can’t. You can ask your national tax department on your country’s dividend tax treaty with Ireland. The EU does not approve of this tax, but there is nothing you can do about it. You might want to check out investing with Vanguard in dollars. Hey, what a coincidence. I’ll go through that option in a minute. If not, you’re just going to have to suck this one up.

Let’s Keep It Simple, Sweetheart!

If you follow these steps you will have identified which fund(s) you are willing to throw your cash at (on a monthly basis?), have found the best and cheapest broker because costs matter hugely and you will have accepted the fact that there is a dividend leakage (or have tried to work your way around it…or have given up on investing after all…don’t!).

Yes, but…what about the dollar version? Oh, so you don’t want to KISS just yet? Okay, here we go!


No thanks. http://www.theguardian.com/music/2011/aug/16/michael-jackson-kiss-tribute-concert

Investing With Vanguard In Dollars

Again, you want to buy broad based index funds. Of the many Vanguard funds you will be able to choose from through your broker (which we’ll select later on) I chose two different options to illustrate how to go about investing with Vanguard in dollars. You can also buy bonds and REITs through your broker specialised in international stocks. However, for simplicity’s sake I’m referring to stocks-only here. Oh, and make sure you check out Morningstar when comparing funds.

Vanguard Total Stock Market ETF Vanguard Total World Stock Index ETF
Ticker VTI VT
ISIN US9229087690 US9220427424
U.S. 98.35% 53.38%
Greater Europe 1.56% 26.63%
Greater Asia 0.10% 19.99%
Amount of stocks 3609 5109
TER 0.05% 0.18%

Option number one is the Vanguard Total Stock Market ETF, which is as close to J’s favoured VTSAX as we can get. However, as a European investor you’d be investing almost entirely in U.S. stocks. Option number two is the Vanguard Total World Stock Index ETF. This will give you a one-stop shopping experience and all the diversification you’ll need over all markets.  (Also recommended by Malkiel and Ellis in The Elements Of Investing, p. 122)

Again, Find Your Broker

You’ll want to do another research on finding the best and cheapest broker for your dollar stocks. It could just so happen that the best and cheapest broker for your transactions in euros does not fit the requirements for your dollar transactions. Google is your friend, once again. Check out and compare transaction fees, currency exchange fees (very important in this case!), custody fees, membership fees, and service fees. You also want to inquire after the broker’s custodian, which might not find itself in your home country. This shouldn’t be a problem, you just want to know where your stocks are if ever you need to reclaim them if your broker goes bankrupt.

rich guy Bankrupt

Will LTC Bankrupt the Nation?

 Not Another Tax Thingy?!

Yep, another tax thingy. See, the U.S. government will charge up to 30% dividend withholding tax. However, that depends on your country’s dividend tax treaty with the U.S. My country has a cool deal with the U.S. and thus my dividends will be charged with a 15% withholding tax instead of 30%. The remaining 15% withholding tax can be reclaimed by filling in a W-8BEN form. You should renew this every three years. If you’ve found yourself a broker specialised in investing in dollars, they’ll probably know how to handle this. Ask them about the form. My broker will automatically send me a new form every three years which I can sign online. No biggie. You could also contact your national tax department in order to require after the rules that apply to your specific situation.

Currency Risk

You probably guessed that you’ll need dollars in order to invest in dollars. It’s important that you find a broker who will exchange your euros for dollars at rock bottom costs. However, you also need to bear currency risk in mind. As you live in Europe, you’ll probably want to cash out in euros someday. If the dollar has devaluated strongly against the euro  at that point in time, you might be disappointed. Consequently, if the dollar thrives and the euro doesn’t, you could be in for a windfall. Who knows? Maybe it’s also not all bad news when thinking about long-term investors. Come to think of it, when investing in euros your cash is also transferred into dollars but you just don’t see that happening. The base currency of the index will be in dollars anyway. Investing in euros in international stocks does not totally protect you against currency risk either.

Scary stuff, right? Now, there’s a way to sort of insure yourself against this currency risk. It’s called hedging, it doesn’t come cheap (that’s an understatement) and my guess is uncle J. probably won’t be a huge fan either. It sort of comes down to you adding euros to your brokerage account. Instead of transferring your euros into dollars, you’re borrowing dollars against a certain rate. You’d then be paying interest on that loan. As we’re long-term investors this would destroy our profits. So let’s just forget about it. I’ve mentioned it, and that’s that.




Now that you have investigated the different options for investing with Vanguard in euros and dollars you can make your own risk analysis. Take into account things such as currency risk, costs, dividend leakage and broker bankruptcy risk (custodian is important here). Choose your strategy and stay the course for the next thirty odd years or so.


You’ve solved the index investing in euros puzzle! http://www.financialdirector.co.uk/financial-director/research/2201152/rel-working-capital-survey-2012


Or the dollar version! http://www.bestsmallbizhelp.com/2011/08/small-business-funding-tips-borrowing-from-banks/dollar-puzzle/

Good luck!


Mrs EconoWiser

Disclaimer: I am not a professional investor or financial adviser nor do I claim to be one. You are solely responsible for your own financial investment choices. I am not responsible for inaccurate information in this blog post. I am merely sharing ideas and findings of my very amateurish investigation in index investing for Europeans.

Addendum: Want to translate this blog from English to another language? Google Translate makes it easy. Just click on the link, type in jlcollinsnh.com and choose the language you prefer. Click on the link for that language and you’re done!

Posted in Guest Posts, Money, Stock Investing Series | 48 Responses

Case Study #7: What it looks like when everything financial goes wrong

walking the dog

A couple of months back I was walking the dog on a beautiful Fall afternoon. As I sat on a bench enjoying the sun it occurred to me it had been a very long time since I had spoken with my pal Tom.

As I dialed, I really didn’t expect to reach him. Seems while we all have phones with us every moment of every day we never actually answer them. At least I am hard pressed to recall the last time I didn’t wind up in voice mail.

But answer Tom did, barking his last name into the phone by way of greeting and sounding every bit the crusty Marine he once (and by Marine standards still) is. I had forgotten this answering style of his and, were I not as manly as I am, I might have dropped the phone in terror.

Tom’s an interesting fellow. A hard living gun collecting Catholic life long liberal Democrat Marine. A man of faith. He’s a tough guy in the best sense of the term, relentlessly cheerful and there’s not a complainypants bone in his body, as you’ll see. He was a former customer of mine back in the mid-1990s and we’ve been friends ever since. I like my friends eclectic.

Now in his mid-sixties Tom’s had a robust life, filled to the brim with experiences. He’s the kind of guy who, like me, sometimes feels the need to tell people in power to go f-themselves. Unlike me, Tom’s willing to do it without having F-you Money. Working without a net you might say.

Catching up together he told me he had just lost his house to foreclosure, gone thru bankruptcy and almost lost his treasured antique gun collection to the court before scraping together the cash to buy it back. He was laughing while he told me all this. That’s Tom. But the fact that he was also in the process of moving in with his gorgeous Swedish girl friend probably didn’t hurt.

As we talked about all this, I decided his was a story worth sharing. Gracious as always, he agreed and here it is unedited except for adding some illustrations, a bit of name disguising and formatting.

Marine flip

Even a Marine can get thrown…

Tom’s story:

1947 to 1969 -

Lived at home with my brother; children of two, strict Catholic, children of the Depression – to say we were repressed is probably an understatement.

We were both taught to save … I started to work at 13, in a retreat house refectory. I saved every dime in a local savings and loan … it was cool to watch the deposits build up little by little.

I went to a Catholic grade school and an all boys Catholic high school. Both cost money.

In 1965 I started at Wayne State University. I had some help from my folks, but paid for books, transportation, lunches, etc myself. I lived at home and commuted.

I worked every summer as well stashing money away for the next school year. I dated, hung with friends and had an active fun college experience even though it wasn’t at the ivy covered walls of a major university away from home. I thought it, at the time, to be, well, normal.

In 1968 I bought my dad’s used 1965 VW for $500. I finally had “wheels.” When I graduated, I had $2000 in that savings and loan.

In June, I graduated, In August I got married to my little Irish lass, MA. In September I reported to active duty at the Basic School, USMC Training Center in Quantico, VA. Life was good and I was finally on my own.

1969 to 1992 – The “MA” years -

After living that restrictive, home all the time, life with my parents, I was free at last and MA was pregnant. I was going to be a father.

I started to want things my parents would never let me have. A brand new Pioneer sound center complete with amp, turn-table, reel-to-reel, cassette player, top-of-the-line speakers, etc. Found an old oak roll-top desk I liked for $300. etc.

The two grand melted away; but I was an officer in the Marine Corps. I had a regular paycheck of $5,000/year. Saving some how didn’t seem too critical, retirement was 20, 30, 40 years away. I may not live that long.

Pretty soon we had two daughters and we were living paycheck to paycheck. Credit was easy to get and easier to use. We started to build up a little debt, not much, but a grand or two. didn’t seem like any big deal.

Got out of the Corps in 1973, got a great job with M-corp for $12,000/yr. Two grand more than I made as a 1st Lt in 1972 (oh, in 1972 B was born too – I now had two wonderful daughters). Wow, I had this great job back home and I bought a house in Detroit for $20,000.

Did a fine job at work and in 1976 got promoted to Field Development Manager. (wasn’t sure about leaving our friends, family, etc. Went to Chicago, went to mass at the Cathedral one Sunday and prayed to the Lord to ask if this was right for my young family. The usher interrupted my prayer and tapped me on the shoulder and asked if my wife and I would take the offering up at the Offertory. I took that as a sign, as a “Yes.”

Took the promotion and moved to Chicago … still had a little debt … couldn’t seem to pay those damn cards off completely every month. Sold the house in Detroit for $18,000 (learned to buy high and sell low).

Did sign up for payroll savings. Our new old house in Naperville, IL cost twice as much a month as our house in Detroit, $40,000. Mortgage payment was twice as much, and obviously I wasn’t earning twice as much … had to commute into the loop every day. Still, it was a great community, right in the old part of town.


Still, costs were increasing while income wasn’t keep pace. Had kids to raise, had to “keep up” after work, in the neighborhood, etc. Think my payroll savings were about 5% of my income, maybe 6%. Wife decides to go back to school. Had my first college education to pay for.

1979 or 80, I left M-corp to work for V-corp (as Office Manager), visual techniques, a slide presentation house in Chicago with customers like McDonalds, etc., for like $35,000, more than $10,000 more than I was making at M-corp. Sounded like a good deal … I took it; except it only lasted for a year … my first set back.

Conflict with the two owners, they didn’t like the direction I was taking the office. I scrambled and M-corp took me back. They were more faithful to me than I was to them. Still, they knew I was talented and hard-working. I was now the Advertising/Sales Promotion Manager at $27,500. They even bridged my time so I didn’t lose my ability for vesting.

In 1983, a couple of months short of my 10th anniversary at M-corp (and vesting), I was pursued and wooed by R-corp in Bridgeport, CT. They treated me like a king, MA and I loved the area, the job was a new challenge, seemed like the right thing to do.

I even had another sign from God that it was the right move. A rainbow this time.


Courtesy of http: hdwallpaperia.com

Sold the house in Naperville for $60,000. Off to New England in 1982. Bought a house for $85,000 in Newtown, CT, used the $20 grand as the down payment. Loved it.

Job lasted two & 1/2 years, R-corp went bankrupt due to asbestos litigation. Bummer. Still, that year (1984) I got a call from a friend who worked at RR-corp. He wanted to know if I’d like to talk to a recruiter in New York about an opening as a VP at RR working on the C-corp business. I said sure. In 1984 we headed back to Detroit.

Bought a home in upscale Birmingham, MI for $120,000. Wife now had a job at DT-corp as an auditor. RR helped get her transferred to Detroit as well. We were on our way.

Two jobs, nearly $90,000/yr. Wow! Things went well, girls graduated high school, went on to MSU, now had two college educations to pay for, work was hard, wife and I hardly saw each other, etc. In 1987, my dad died; in 1989, my mom died.

In 1990 MA asks for a divorce. What? She said I was mad all the time (maybe I was just sad). Didn’t know what I was I guess, except i didn’t want the divorce, like a man has any say in that. Anyway, after the dust cleared I still had a job, had to sell the house, didn’t get much more than we paid for it (those were recessive years), and I walked away with about $24,000 left in my personal nest egg after she took her half, we paid the lawyers, etc..

I put the money left in 4 diverse money market funds and let ‘em alone. In 1990 I met A at work. 23 years my junior. She loved me, I rented a house in B’ham and she moved in. We had a ball. Life was good again.

In 1990, RR took me off C-corp (where I was happy) and put me on new business because I was “so good at it.” I hated it. In 1991 I asked for some time off, I was burned out and I wanted back on C-corp. They said “no,” I said I quit. A and I loaded up a ’89 Jeep Cherokee and set off to see the back roads of America. We traveled all of 1992, camping and back-packing. I do it all again.


1992 to 2006 – The “A” years -

a new young lady, a mate for the rest of my life. That’s what I thought. The year off taught us a lot about each other, we loved each other, we knew we’d make it. No job, but who cared, we’d find something, and finally in 1993, we did.

By then A was pregnant with our first son, A, I found a job with an old buddy rep-ing auto parts and pickup truck bed-liners in Baltimore. We bought an end row townhouse in Towson, MD, and settled in. G was born  and all seemed well, until my boss said he couldn’t afford me and my $30,000/yr salary anymore.

No problem, I found a new job at a little ad agency in Winchester, VA. Sold the house in MD and rented one in VA. Good move, because that $40,000/yr job only lasted a year.

Did I mention, I had to cash in my money market funds one at a time between 1992 and 1996 to survive, for down payments, etc.?

It’s now, 1995, I find a great new job in Ohio at  U-corp calling on an old RR client, FM-corp.  I knew this was going to last, so I bought a nice house in Cuyahoga Falls. And, oh yes, Z, my second son was born there. happy we were … until 1997 (P.S. I’m 50 now and starting to worry about retirement;-).

I couldn’t stand my boss and the owner of U-corp anymore. I started looking again. Thank the Lord, I earned a $20,000 bonus in 1996. Money in the bank … paid off credit cards, etc.

Guess who wanted me back in Detroit. Good old RR. Off we go, one more time. Motown here we come. Back on C-corp, back with our friends (A’s and mine), happy we are … we buy a house in 1998 in Milford! Wow, my home from 1998 until 2013. Longest place I ever lived continuously. Used what was left of the U-corp bonus as the down payment.

Everybody was making money and life was good. I got back to the ad agency grind and A stayed at home and raised the boys … until 2002 or so when she starts back to college at Eastern … another college education … no problem, we’ll just refinance, the house is appreciating.

A buddy of mine from BB-corp becomes President at YR-corp and he wants me to join his team as a VP … an honor and more money. Off I go to YR, well that lasts two years until he gets canned and of course all “his people” get the ax too. Out of work in 2001. Takes me almost a year to find a new job.

When I left BB and went over to YR, following my buddy M who became CEO of the Detroit office, I took around $40,000 in 401K money. In 2 years or so I managed to add another $50 or $60K. On M’s advise, I invested that $$$ with a money manager for one of the big investment companies. In a couple of years he lost about $80,000 of my money. That hurt. He kept telling me it was just a blip in the market, it would come back (e-boom and bust time period). Anyway, easy come, easy go;-) (jlcollinsnh: another reason I don’t like money managers)


80Gs down the drain. Thanks for the professional advice.

Spent money I had set away for retirement. Now 55 with a young wife, two sons and no nest egg. Guess where my new position is? back at BB, but this time as a lowly Account Supervisor. I am being punished.

They put me on the C-corp business. I work hard and help build the business. They finally promote me to VP again in 2003. Making $80,000/year, $1,400/year mortgage, helping A through school. She graduates in 2006 and guess what … she files for divorce. takes half of what I have in my 401K, I think the house is appreciating, I keep that, buy her out of her half. Pay lawyers, etc. Child support … life gets kinda sucky.

To make things worse, in 2008, the bubble bursts, I’m screwed, C-corp goes bankrupt, fires all their vendors, sticks everybody with debt and now I’m 61 and no one wants or needs a 61-year-old account man. I’m saddled with debt, get deeper in debt, house depreciates, can’t sell it.

I hang in with part-time jobs, Michigan State Unemployment Insurance until 2012 when the answer hits the proud old Marine officer … I have to file for Chapter 7.

I take my SS at 62, since I can’t wait until 65. I collect a small VA benefit of $132/month for hearing loss during my USMC years. I also have a $400/month pension from RR.

The C years -

farm henry-ford-museum[1]

I find the Swede, fall in love again, find a part-time job at a museum and historical farm as a historical presenter working on the farm and life is good again. Since I don’t have $$$, I have learned not to worry about it.

I have my health (and VA Health Benefits), great friends and relatives, wonderful kids and grandkids, a job I love that gets me outside and provides plenty of exercise, a roof over my head and a woman who loves me. What else do I need?

I make about $2,500/month with my PT job, my VA benefit, my RR pension and my Social Security. I’m a lucky guy.

Here are the numbers:

Pension  - $ 400

Social Security               – $1500

VA Compensation          – $ 132

Part Time Job                 – $ 500 + or – (some months $750 or more/some months [winter] $300 or less)

Total                                 $2500 or $2600 – average

jlcollinsnh’s take: 

What we have here is a talented guy with solid contacts and strong career performance who found himself without a chair when the music stopped and he was past the age employers prefer. Add in a couple of expensive divorces, multiple kids, a disastrous run with a money manager, the implosion of 2008 and growing debt and you have a guy reaching the finish line just as his financial world collapses around him. It’s enough to drive a man to drink.

Or not.

Where in many such a run would trigger an intense wallow in the complainypants mud pit, in Tom it simply rolls off his shoulders as he cheerfully moves on. Tom knows he has what is truly important in life: “…my health, great friends and relatives, wonderful kids and grandkids, a job I love that gets me outside and provides plenty of exercise, a roof over my head and a woman who loves me.”

My guess is he has all those things because of his attitude. Tom’s a guy you want around. As a friend, as an employee and, at least in the case of the beautiful Swede, as a lover.

He’s had a full and varied life. A life that accumulated a little pension, a bit of VA comp and SS. Along the way, he’s learned that stuff just ain’t that important. And once you no longer value stuff, the good life just ain’t that pricy.

Something to think about the next time you are worried about the 4% rule working out or having gotten a late start on retirement planning. By all means plan, save and invest for your future. But keep in mind mental toughness, the ability to roll with the punches and lifestyle flexibility are where true security lies.

 Addendum 1:

While I didn’t think about it as I prepared this post, several readers commented below how financially damaging home ownership proved to be in this story. A real life illustration as to Why your House is a Terrible Investment.

Addendum 2:

thor harris

How to live like a king for very little

Addendum 3: From the comments below…


Great story and some very worthwhile advice from all involved. I love the points about living with less and focusing on relationships over “stuff”. I’m also amazed by Tom’s ability to live such a mobile life with a family in tow. Hard to do that with lots of unnecessary possessions on hand. Reminds me of the wisdom in one of David Cain’s recent posts on raptitude.com (“Everything In It ‘s Place, Now and Forever.” )

So as not to armchair quarterback Tom’s decisions in an effort to apply lessons to my own life, I’d love to hear what advice he has based on his story. Above and beyond his very wise comment about the value of relationships over material desires, that is. With all the forks in the road that he faced, I’m sure he developed at least an unconscious list of rules to live by that have helped him maintain such a positive outlook and ability to attract quality people in his life. I say this based on both his successes and his failures, as lessons obviously can be learned from both.


Hey, Tom here. In response to Deacon’s request, I have a few rules I live by …

#1. Seek the truth; there is a lot of deception in the world. Learn to find out what is true and what is false. It takes some effort, but it’s worth it.

#2. Get outside everyday and breathe fresh air, get some exercise, even if it’s just a nice long walk.

#3. Look everyone in the eyes when you talk to them; it will instill trust in both parties and you will learn to read others’ responses.

#4. Tell the ones you love (family and partner) that you love them.

#5. Simplify, simplify … Thoreau was right. We sure can’t take all this stuff with us.

#6. Work at a job you love and put your all into your work. That being said, don’t take your work home with you. Take time to unwind.

#7. Eat healthy, have a drink daily, but don’t overdo either.

#8. Be thankful for the things money can’t buy.

#9. If you have kids, take them fishing, camping, whatever. Show them there is another world out there that has nothing to do with electronics or stuff.

#10. Take the back roads in life, stay off the freeways.

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