Are you age 22 and have $10,000?

Question: I am 22 and have $10,000 to use for whatever I want. What could I do? My first reply was to say contribute $3000 to a Roth IRA. If this gets an average of 7% per year and you make 40 contributions of $1.20 each, (in other words, never contribute any more money) you will have just under $45,000 at age 65. In addition, the $3,000 will meet many minimum mutual fund investments. (1-3 funds, depending on fund custodian.) 

Use the remaining funds to get a passport and go on an adventure. At 22, you could make $5-7k last a few months, traveling either in this country, or overseas. (Depending on inflation and your chosen lifestyle.) Check out books and stories like http://www.oneweekjob.com/,  or volunteerism. If you prefer not to leave the US, there are many ways to learn, earn a stipend, and make contributions to society. Visit this site for more details: http://www.nationalservice.gov/serve-your-community/how-get-involved . A stipend from Americorps can be used for additional education.

Photo by Gustavo Fring on Pexels.com

If you are not a high school graduate, get yourself to a community college and find a degree or certificate program you can afford. In two years or less, you can graduate from high school, and get an associate’s degree and/or industry certification in order to support yourself with a better than minimum wage job in the very near future. Then do some traveling. With a college degree, or on a gap year between semesters, your can often arrange to take a break for work, love, education, or public service.

Photo by Element5 Digital on Pexels.com

This answer is predicated on you not owing any money to anyone personally , and that you “are free to travel”. The reason I say place some funds in a Roth IRA is in reply to a question “Is this is a good age for you to set aside funds for your long term well-being?” Absolutely. Keep a journal and track what you learn. Exposure to people different than you in the US or abroad will only help you get your next job. (A version of this answer was originally posted on Nerdwallet’s Ask anAdvisor page.)

“I think you travel to search and you come back home to find yourself there.”

Chimamanda Ngozi Adichie, novelist.

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Handling Your Financial Monsters

Join me behind the reinforced walls of Office Nomads for
a glass-in-hand look at financial monsters and how to OUTSMART them.

We all know that tackling our finances can take lots of preparation, and sometimes, a little wine to grease the wheels. So does the Zombie Apocalypse. That’s why I’m hosting a tax-season recovery event to turn you into a Financial Apocalypse Prepper – Zombies and Zinfandel.

Zombies and Zinfandel is Thursday, April 21, 2016

Come at 6:45 to mingle with other Zombie Fighters. Art courtesy of Michael Adrada

Together, we’ll talk about survival through planning (for your tax refund), creating strong safety nets (like managing credit), and the allies you’ll need (just as much as those fences) to preserve your resources.

Although this is a fun excuse to hop on the zombie zeitgeist bandwagon, it also strikes at the heart of my mission at Twight Financial Education – to empower clients to break through money taboos and meet your financial goals on your own terms. This is the third class in my wine series, after Mutual Funds and Merlot and Riesling and Retirement. Please pre-register here through Brown Paper Tickets.

Don’t like zinfandel? No problem – there will be some alternative beverages on hand.

This just in! Office Nomads is now accessible via light rail. The entrance to the Capitol Hill Station is 3-4 blocks from Office Nomads. Additional parking details at the event site.  Reserve your spot in the shelter before it’s too late!

Shoutouts

Thank you to my main collaborators Christopher Mathias, Andrea Carey, along with Casey Middaugh.  Seattle artist Michael Andrada designed the really cool poster you can see here.  Also to Chateau Diana (creator of Zombie Zin), who gave us some giveaways.

After Mutual Funds & Merlot

German wine humor!

Mutual Funds and Merlot was so much fun last Friday. We drank a great Merlot from Columbia Crest (Grand Estates). Topics included your objectives for your investment funds and how those should match up to your mutual fund choices. We looked over the Vanguard portfolio allocation charts (seen here) from 1926-2014 to learn how asset allocation adds to or decreases average return.
One question asked,”what would it look like if the Depression (1930’s) years were left out”? Those years have the largest declines. Declines were pretty dramatic in 2008, a popular Standard and Poor’s 500 fund from Vanguard (VFINX) was down 37.02 that year. When looking at mutual funds returns now, be sure to check the ten year as well as the five year returns; as the 2008-2009 numbers have dropped out of the five year averages.

We also reviewed fees and terminology (no-load, load etc.) and I shared that when I began in this business (mid 1980’s) the highest front end mutual fund charges were 7.75%!

We did not cover all of the types of mutual funds; only open-ended mutual funds and index funds (a subset of open-ended funds). I also reviewed a decision tree of sorts:

• Money to Invest (how long)
• Tax Treatment (Taxable or non-taxable)
• Diversification (individual issues or pool of securities e.g. mutual fund)
• Objectives for your funds (growth, income, combination)

My next class will be Riesling and Retirement

(February 3, 2016)

German wine grapes in June 2015 by DCT

Rock, Paper, Scissors (and your finances)

When you handle your finances, are you playing, Rock, Paper, Scissors?

Rock-paper-scissors chart (Photo credit: Wikipedia)

Let’s recall the game!  “Rock” beats scissors, the “scissors” beat paper and the “paper” beats rock.

Rock: When your money comes in, do you beat it into submission? Do you beat yourself up with guilt or shame? This could include shopping to make yourself feel better, attacking the bills with a vengeance, making a list of needs, wants and savings. In the game rock always wins, but please read on…

Conversations About Money: Vacations

What kind of vacations did you take while growing up? My family did a lot of hiking, backpacking and skiing. I’m not sure that we ever took ‘normal vacations’, but I look back on them fondly. They were full of variety.

We got to hike and backpack when you could drink the water from the trailside streams and rivers. I had my own Sierra Cup that hooked into my belt. (wish I still had it!) My parents brought eggs to hide one Easter weekend up in the Olympic Mountains and there was always coffee for them. (I did not yet imbibe.) One hike along the beach was a disaster because there was grilled steak for dinner and “someone” [not me], failed to pack the steak knives. So we ate it with our fingers. My brother and I were cool with that.

Costs of these weekend outings were generated by: gas, freeze-dried and real food, paper topographic  maps, a battered copy of Trips and Trails by Bob and Ira Spring, the occasional purchase at REI Co-op (my dad had a very low membership number), and maybe a hamburger at the XXX Root Beer Drive-In on the way back. I was a cheap date (plain hamburger-no condiments). My family didn’t drink soda back then.

The Kendall Katwalk Trail along the stretch of the Pacific Crest Trail in the Alpine Lakes Wilderness. (Photo credit: Wikipedia)

We hiked in the real mountains, on the Pacific Crest Trail, in the Alpine Lakes Wilderness, in Mt. Rainier National Park.

While in high school-I did get to a fake mountain-the Matterhorn.

Disneyland (Photo credit: CAHairyBear)

My high school band director entered my name for the McDonald’s All-American HS Band and I was one of the 100 musicians selected.

The band made two trips to march in parades at Disneyland and in New York City! Cost to me: free, save for the missed homework. (Oops, there was the family investment in the private music lessons-but as a teenager, I wasn’t bearing that cost.)

Like many families with children, we began to travel for athletic events. I distinctly recall the trip we took to a swim meet in Santa Clara. I was the spectator and my mother was the competitive athlete, however. (Masters Swimming!) My brother went to her swim meet in Toronto.

While many of my peers travelled to Hawaii while I was in high school,  I didn’t get there until I was over 30! (Cost of that trip: airfare for two, shared meals and entertainment, thank you gift to the owners of the time-shared condo). Loved visiting a coffee plantation on the Big Island.

big island of Hawaii (Photo credit: Wikipedia)

Eventually I went to Europe when I was older. The 3-week trip was  paid up ahead of time due to our DINK status (Dual Income, No Kids).

In summary, we didn’t take extravagant vacations while growing up, we didn’t know what we were missing,  and I have some adult habits that have served me well. (see them below)

In the Mood: Music for your Money “Workout”

What gets you in the mood…for money management?

Money Money Money Mooooney (Photo credit: Ahmed Rabea)

Blues for budgeting?
Polkas for planning?
Rap for retirement funding?

Jason Zweig has a great list here .  My personal list also includes a few titles not on Zweig’s list.

• For a calm session of financial sorting, filing and shredding, how about “To Everything There is a Season” by The Byrds?   
  

• When thinking about the Great Recession, there are many versions of “Brother, Can You Spare a Dime?” I enjoyed the late Daniel Schorr’s impromptu version on NPR, and am also fond of the song as sung by Broadway and TV star Mandy Patinkin. Here’s a link to a  rendition on David Letterman .

• This lively song “Money, Money, Money” (I prefer the Meryl Streep video) reminds us despite the movies, a rich man may not be the best solution.

• Last but not least, listen to some classic Aretha

Aretha Live at Fillmore West (Photo credit: thejcgerm)

to remind us it is good to:

spend your money in line with your values,

respect the hard work of others

and above all, respect yourself with  your spending.