Q&A III: Vamos




An original painting by Alex Ferrar

On display at his restaurant Sobremesa, Antigua, Guatemala

Welcome to the third in this series of posts featuring questions and answers from the comments that have accumulated during my recent travels. As with the first two, it is named after the featured painting above.

As described in the last two posts, Q&A I: Gaijin Shogun and Q&A II: Salamat , 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 this leads to a backlog of great comments and questions waiting for a response.

So in this series of Q&A posts as I work thru all these comment/questions, answering them in the posts where they were made, I’m also going to select a sample of the most interesting and reproduce them as posts in their own right. I see four 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.

Hope you enjoy them!



Why I can’t pick winning stocks and you can’t either


Hello Jim,

I love your articles and agree with most of them. I’m on the fence on this particular one.

I’m currently following AAII’s model shadow stock portfolio which has worked great for me since I started following it in the past couple of years.

I’m young and have been investing only a few years in the market and I’ve been seeking the answer to this question – should I invest in individual stocks or index funds.

AAII’s shadow stock portfolio’s return since inception in 1995 has been 17.9% vs S&P 500′s 9.43% for the same period. It seems to me that their model certainly seems to be working. I would like to know your thoughts as well. Do you still believe it’s better to invest in VTSAX vs just shadowing AAII’s model stock portfolio?

Hi VK…

Glad you love what you are finding here and hope you continue to read more.

This post is really at the core of what I believe and discuss here. It is not just my opinion, but the conclusion of an ever increasing body of research. Even Warren Buffett, perhaps the best stock picker of all time, is on board with the concept of indexing.

I am unfamiliar with the AAII model you mention, but there are countless investments out there striving to out perform the market. Some do for some periods of time, and they are endlessly creative in presenting their track records in the most favorable light.

But every prospectus carries this warning: “Past performance is not a guarantee of future results.”

The are both the truest words in these documents and the most ignored.

It is easy to look back and find the funds and portfolios that have outperformed in the past. It is impossible to predict which will do so in the future.

That said, it is great AAII has worked well for you so far and I completely understand the temptation to continue. It just seems so reasonable. It took me years to accept how vanishingly difficult it is to outperform the market and how rare and fleeting those that seem to are.

For more, check out my story of CGMFX at the end of this post: What we own and why we own it

Good luck!


cat food eating

Social Security: How secure and when to take it.


Excellent article.

I have heard that if the income limit on SS taxes was removed, the cash in/cash out future problem with the SS trust fund would go away.

Of course the “richer folks” would get socked with a big tax increase that they have not had to bear for years and years and years, as the “poorer” folks have been doing since the “poorer” have been paying the SS tax on all of their earnings in most cases.

Another plus for the SS fund would be that since there are fewer “richer folks”, there won’t be a rich-baby-boom bubble to deal with.

Two other points, SS is also a disability insurance program, and pays survivor benefits to children and widows if the worker dies. So, it is more than just a retirement fund. It’s a mixed bag with heavy social overtones.

And it still is a financial floor on which one can build on with their own savings plan.

Secondly, as to early retirement, another reason to take the money and run, is that you may still be “young” enough to want to do and enjoy many things that down the road ten years or so, you won’t care so much about doing. Or your physical situation will have gone down hill as is the case with older folks (two heart attacks + for me), and as such, doing some things will be out of the question. For example, it’s hard to paint or do needlepoint with shaking hands. And doing most things requires the ability to be able to walk, and walk a lot, and go up and down stairs or pathways. So, if you can’t walk much, or you get dizzy, etc., plan to stay home a lot.

Lastly, SS is an insurance system by which workers save for their future via the SS tax on their earnings, so that if or when they die, get disabled, or get old, society won’t have to pick up the tab for their or their family’s full support.

I used to work for SS many years ago, and have no work connection with SS anymore. My views and opinions are mine alone.

Thanks John…

Glad you liked it, especially as someone who used to work there. I appreciate you adding your perspective. Great points!

Since SS payments are at least somewhat tied to contributions made, I wonder how that would be handled if the income limit were removed. If the payouts were still capped at the current levels, SS would become more of a simple income redistribution scheme.

Depending on one’s viewpoint, that may or may not be a good thing. But I think it should be part of the discussion.

As for SS and early retirees, check out: Go Curry Cracker: Social Security and Early Retirement

I think you and my other readers will find it interesting and useful.



The College Conundrum


This is an old thread, but I’m hoping my question will get answered!

Of course I’ve read a lot about the subject, but I’m wondering your personal belief regarding student loan debt and investing. Unfortunately my parents didn’t school me in the “value” of education, nor did they school me in the (EEK!) terrible side of debt.

Anyways, I have no other debt except student loans and live very frugally. I also make a decent salary and have a good retirement fund going. Should I focus on paying off my student loans before building up anymore retirement funds? What are your thoughts? Or does anyone else have opinions/experience in this situation?

Super big thanks!

Hi Meghan…
And I’m hoping you are still tuned in for an answer!

Basically, I would apply my rule of thumb for paying off a home mortgage. If the interest rate is:

6% or more, focus on paying off the loan.
4% or less, focus on building your investments.
In between, follow your heart.

Since I despise debt that last for me would mean focusing on paying off the loan.

If you do decide to focus on the loan, pay the absolute maximum you can each month.

The good news is, by the time you’re done, you’ll have a very strong habit of sending that money off. So it will be easy to then channel it into your investments and watch them build! You’ll be amazed at the progress.

Good luck and please keep us posted!


eye of god

How not to drown in the sea of assholes


I’d add a third thing to this list…

3. Empathy/Perspective. Unfortunately, some days for one reason or another I am the asshole.

Good point m!

While this was written from the point of view of dealing with the assholes around us it is worth remembering that we are all, at times, the asshole in question. :)


  thought experiment

What Poker, Basketball and Mike Whitaker taught me about luck

Scott W:

Great article Jim. I’m a big believer that people create some of their luck but I think its important if you are doing well to be appreciative for some of the good fortune you may have had along the way.

Unfortunately many people who make bad decision after bad decision blame their lot in life on bad luck. I have a good friend who has a terrible attitude and he is convinced his lack of success is 100% bad luck when it is actually his attitude holding him back.

Thanks Scott…
Sorry to hear about your friend, but all too many people seem to fall into that trap. It becomes a vicious cycle and a self-fulfilling prophecy. Help if you can, but be sure not to get drawn into the vortex.



The. Worst. Used. Car. Ever.


I had an illness in the late 70′s and early 80′s that caused me to use my student loan money to purchase a TR3A ( a lot of it in boxes), then I traded a perfectly good Pontiac for a Spitfire with the rocker panels completely rusted out because it looked so cool. Of course it had the identical self destructive engine as yours.

Then, during my first job out of college I bought at TR6 with a credit card. (Still had TR3 in the yard not running) It broke in two one day while driving over a railroad track. I had paid 2300 for it, 400 in welding the frame back, and sold for $4500. I guess that financed my losses on the other two.

Moral of the story, you need to buy a couple more Triumphs, kind of a dollar cost averaging thing. (What I learned in college with the rest of the student loan money)

“It broke in two one day while driving over a railroad track.” 

Ha! That got coffee sprayed all over my keyboard!

Too damn funny! And I’ll bet those reading who have never owned a Triumph (lucky devils) think you exaggerate. Ha, again!

So, I should DCA into a couple more, you say? Mmmmm. Spoken like a man who has a couple to unload…


Princess Diana BB

Beanie Babies, Naked Barbie, American Pickers and Old Coots


This post sent some shivers down my spine, because my husband just started collecting bank notes – hey, this stuff will be worth millions some day, and yes, we will send our kids to college on them.

Shipments from ebay arrive daily to our home – some with old notes costing several thousand $$ per pop. Sad thing is that I am sure the ebay value of these things already has taken into account the note appreciation (if any) and they are selling at net present value.

Just hoping we can resell those notes some day for what he paid for them.

And your comment sent shivers down mine, Jen.

Hope you have a plan “B” :)

If not, it will be character building for your kids to pay their own way… ;)



Stocks Part XIII: Withdrawal rates — How much can I spend anyway?


Hi Jim. I’ve spent the past week reading almost all your blogs and it’s been wonderful! A friend helped me find MMM and he lead me to you. I thank all of you for posting all this great advice to help me achieve freedom as soon as possible! And for free!

I understand the principles of 4% and calculating what I need my net worth to be but I’m struggling with details. Based on our current spending I’d like our retirement expenses to be about $40k. That means I need to save $1m before we are free. But, how is inflation calculated? I understand I need $1m in today dollars but if we can get there in 10 years do I keep tracking to $1m, or will this number go up as the years go by? Because in 10 years we will need more than $40k due to inflation.

My husband and I are in our early 30s and while we have saved a lot over the past 10 years it all hasn’t been invested, earning maximum returns for us. We’ve stepped up the rate and I hope to get there in 10 years I’m just struggling with the details of calculating what my “freedom fund” needs to be.

Thanks for the help!!!

Welcome Elisabeth…
Glad you found your way here.

There are a couple of ways to approach your question.

You could estimate the rate of inflation and plug it into one of the many on-line calculators and let it figure how much you’ll need to replicate the spending power of 40k when you retire. The problem, of course, is that inflation will likely not unfold as you predict.

Better, it seems to me, to simply aggressively build your freedom fund and track how much it can throw off at 4% each year as it grows. At the same time you can assess each year how much you’ll need/want when you retire.

Over the years, those numbers will come together. When they intersect, you’re there!

That’s what I did anyway! :)

But if you want to get a bit more technical, Eric Bahn also just put up a nice post you might find helpful: Calculating when you can say: F-you

Good luck!


esperando un camino

Travels with Esperando un Camino


I am a bit late to the party with this comment but I have been reading through your site and loved this post. It describes very well how I would like to travel the world.

I recently traveled to Thailand, it was fun and a great learning experience as my first international trip. But the trip, taken with and largely planned by friends, suffered from some of the very issues you describe. I had small bits of experiences as you describe, but I would enjoy having even more genuine travel experiences.

How do you do it? From my little bit of experience I can tell it will take a lot of research and planning. Unlike your daughter I traveled little as a kid and am not sure how to go about travel and having experiences like those you describe. Simply flying to a foreign location and going from there does not seem like it would lead to experience such as you describe.

Sites/sources such as lonelyplanet seem have been ruined by commercialism/tourism. Any recommendations? Perhaps the answer is simply experience.

How do mesh the competing goals of f-you money/financial independence and expensive travel?

To the last commenter… I would say that the lack of planning is what makes the types of experiences Jim describes most likely. 
Hi ak907…

No worries being late, glad you made it!

I think AJ nailed it, a lack of planning is the key and it sounds like your trip to Thailand suffered from a bit of over-planning. I tend to just show up, wander around and see what happens.

Now that I’m older and have gone soft,  I do book the hotel for the first night or few  before I arrive and I like to arrange for a driver and car to meet me at the airport. There is nothing like stepping off a plane after a long, tiring flight and finding someone there with a smile holding up a sign with your name on it.

If I know someone who has been, I’ll ask for their recommendations for a hotel. And since I like my hotel centrally located and an easy walk from places, I’ll check the location on their website. This is exactly how I found the place where I stayed in Guatemala last month.

For what it is worth, I don’t use the travel guides like Lonely Planet or sites like Trip Advisor. Nothing against them, just never felt the need. And, as I think about, I guess I’ve always kinda figured they’d be out of date by the time I got there and would lead me to places that were by then overrun.

Once there, I just ask people where to go and what restaurants are good. Other travelers are easy to talk to and happy to help. When I find a good place to eat, I’ll also ask the owners where else they’d recommend. Figuring this stuff out gives you a reason to engage people in conversations. Which is one of my key goals.

But mostly it just takes showing up, not being tied to a schedule and going with the flow. This can take a few days, so it’s good to have more than a week to play with. Even now it is not unusual for me to hit a bit of a depression in the early days before things begin to come together. So, if this happens to you, don’t be overly concerned.

As for the FI/travel balance, it is a matter of choosing what you want to spend your money on. It is a fallacy, it seems to me, that pursuing FI means you can’t spend money on anything else. You just can;t spend money on everything else. Most people can afford both FI and travel assuming, of course, that they are not also indulging in fancy cars, homes, wardrobes and the like.

Plus, traveling this way can be surprisingly cheap. My hotel in Antigua was about $18 a night. Not fancy, but spotlessly clean, well located and run by incredibly friendly folks.

For more check out: So what does a month in Ecuador cost anyway?

Here’s another great source on the hows and costs: Go Curry Cracker

Oh, and it helps to travel alone. When you are with other people you are less approachable and less likely to approach others.

Good luck and safe journeys!



1st annual Louis Rukeyser memorial Market Prediction contest results


Sorry to be a detail Nazi, but it drives the math nerd inside me wild. You say that your prediction of the high was .013% off. It was 1.3% off or off by a factor of .013. Adding in the percent sign moves the decimal place. Your point still stands, and I greatly appreciate the fantastic content on this site.


No worries, Bryon…

…your correction is very much appreciated

I operate this little blog with no help. No proofreaders or fact checkers. But I am very concerned that what appears is as technically accurate as possible.

So I am always grateful to readers who care enough to point out any errors.

That said, I am not enough of a mathematician to fully understand your correction here. Could you elaborate?




Stocks Part XXI: Investing in Vanguard for Europeans

If you’ve read this far and have concluded that only I have answers around here, it’s understandable. But wrong. Click on the link above for a remarkable guest post and equally remarkable conversations, all in an area where I have little to nothing to offer.



Stocks — Part XX: Early retirement withdrawal strategies and Roth conversion ladders

from a Mad Fientist


“It’s possible though, due to a low amount of income during early retirement, that he won’t have to pay any tax at all on the conversion”

How is this done? Anywhere I have read it is taxed as ordinary income when you do the conversion. Oh, unless you mean his Personal Deduction/Exemption take care of the tax due on the conversion??

That’s pretty much how you do it. Standard deduction and personal exemption = $20k per year tax free for a married couple with zero kids.

With our 3 kids, we can actually convert $31,700 totally tax free. And even more than that since we get the child tax credit (x3). Needless to say, the Root of Good household won’t be paying federal taxes in retirement either.

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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.
  • Vanguard.com


  1. Allen says

    Dear Jim,

    I just finished reading your Stock Series (and most of your blog) and I wanted to write to you to say thank you. I really appreciate your taking the time to share your hard-earned knowledge on the internet.

    I found your blog, like I assume many have, through Mr. Money Mustache. That probably tells you a lot. It’s my dream to become financially independent. I want to live cheaply and frugally, in a tiny house somewhere nice, and to live off of my investments. My girlfriend shares this dream, and we’ve been reading through your blog together.

    For a 24-year-old, I think I’m off to a good start. I’m debt-free and college educated (thanks to my parents). I’ve got my modest savings and I am currently doing some “slow travelling,” as your friend The Mad Fientist would say. I’m living in Hanoi, Vietnam while working remotely for a company back in the States. I have, essentially, outsourced myself–and it’s great! This is really the only way to travel and to experience a culture.

    One of the most important things about slow-travelling is giving myself the gift of plenty of time to read and write. I’m saving money while working on my second novel and I’m hoping I can sell it or my next novel for some F-you money!

    Now I think one of the best tools I have at my disposal is the knowledge I’ve gained from reading your blog. I really appreciate it, and I want you to know how much it means to me.

    Thank you, and keep up the great work. There’s a generation of people out there who need to know what you know.


    • jlcollinsnh says

      Thanks Allen for your very kind words!

      Glad the blog is helping and it sounds like you are off to a fine start and a great life adventure.

      My pals Billy and Akaisha are currently in Vietnam, the latest stop in their 20+ year around the world trek: http://retireearlylifestyle.com/old_saigon_new_saigon.htm

      Good luck with your novels, I look forward to reading one (or more!)


  2. AJ says

    Hi Jim,

    Thank you so much for taking the time to write this very informative blog. I started with the stock series and then voraciously read through many of the other posts. Due in large part to your blog, MMM, Get Rich Slowly, and a couple of others, I’ve made a concerted effort to get on top of my finances.

    My question has to do with short term savings, and apologies if you’ve discussed this in a previous blog that I missed. My situation is admittedly pretty good: I’m 29, have no debt or dependents, and alone make a salary that is more than double the median U.S. household income. I’ve maxed out my 401(k) and my IRA each year for the past couple, and am able to save about half of my after-tax income all told. I’m also lucky to work for an organization that offers a pension.

    I have about $40k that’s currently in an online savings account that makes 0.9% interest, not great I know. I add to this account each month and it’s earmarked as a house/condo downpayment fund. I know you don’t advocate home ownership, but I live in a high cost city (Washington, DC) where housing is fairly safe and rent is insane. I expect that I’ll dip into this fund within the next five years, and for that reason I’m wary of tying it up in equities. Sure I could do better in an index fund, but is it worth the downside risk?

    • jlcollinsnh says

      Hi AJ…

      Sounds like you are making great progress and I’m delighted to hear this blog has helped in some small way.

      For money you intend to use in the next five years or so, a savings account is the safest place. A stock index fund like VTSAX is for long-term investing as measured over decades.

      But, as you point out, savings account interest rates these days are dismal.

      If you are willing to take on a bit more risk you might look into Betterment: https://jlcollinsnh.com/2013/12/16/betterment-wants-to-give-you-25/

      They allow you to specify both your goal and time frame. Once you input that info they use metrics to create a portfolio designed to give you the best results. Moreover as your goal grows closer the allocations change to reflect the shorter time frame. Pretty slick and I have an account with them now doing just this.

      Of course, there are no guarantees and the risk is greater than simple savings account. On the other hand, the greater potential gains just might get you to your goal a bit quicker. It is a very personal choice.

      One last thought. I’m not against home ownership. I’m merely against blindly buying into the concept that it is a great investment and inherently better than renting.

      Before you do anything, run the numbers: https://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/

      Once you do, you’ll have a better understanding of the financial decision you’ll be making. Should the house prove less expensive than rent, your choice is easy. Should it prove more expensive, you’ll know that and can then decide if the extra cost is worth it to you.

      Good luck!

  3. ak907 says

    Thanks so much for the through response Jim. Your articles and investing and life are an inspiration, I really enjoy reading them. I will be doing more travel later this year :).

  4. Luke says

    Hi Jim,

    I’m making my way back through the rest of the blog now that I’ve finished the Stock Series. At some point I’ll start that over as well. Let’s not pretend like I absorbed all the information after one time through.

    At the beginning of this post you said,

    “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”

    I absolutely agree that everyone needs to break away from technology when they can. For a shorter break I highly recommend trying (at least once) a sensory deprivation tank. Also called a float tank. They’re less of a tank and more of a bath. There is ~1000 lbs of epsom salt dissolved into water so you naturally float on top, the water is warmed to average body temp, there are no lights (although there is a switch in case someone feels the need to flip on the lights), and you wear ear plugs so there’s no noise coming in. All you do is lay there for an hour. Total body reset.

    The handful of times I’ve done this I’ve slept like a baby for the next 3-4 nights. It does wonders for the mind and body.

      • Luke says

        It is definitely worth trying out! The actual experience is quite boring. It’s just you and your thoughts for an hour with (almost) no external stimuli. But the benefits after the experience make it worth it.

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