When I began this blog I originally intended to make the site live on November 12. We beat it by six days! As you can see, we are now online and have been since last night.

Why November 12? Usually it takes 14 days to create a habit. I figured that if I could post for 14 days I would know that I could commit to it. However, I have found that each day I can’t wait to write my posts…. why keep it in the dark any longer? Why not share it with you, the reader?

Of course there is still some work to do to make everything work just right. Let me know if you see anything that needs attention! Feel free to give me any constructive criticism.

I’m glad you made it here and can’t wait to begin sharing financial tidbits with you. Take a look around. Read about me! Drop me a line. Better yet, subscribe to get updates delivered to your email box each time I post.

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Posted November 7, 2007 in Uncategorized by Madison | Comments?

I recently covered how to open a 529 college savings plan. I revealed that we have multiple plans for our children. We currently have six accounts in five different states. Here’s a summary of which states we have an account at and why:

• The UNIQUE Plan in New Hampshire. This plan has an attached credit card that earns 2% cashback deposited directly into the account. However, while we were grandfathered in, the credit card has since been downgraded to 1.5% cashback for new cardholders.
• The College Savings plan in Iowa is a low cost recipient of automatic Upromise contributions.
• The Edvest plan in Wisconsin is for the purpose of state tax deductions for us and grandparents that are contributing.
• Finally, the College Advantage plan in Ohio, which is my favorite because of the investment options and low expense ratios. This plan holds the majority of our investment dollars.

In addition to our own children, we also have opened accounts for family members that we contribute to on their birthdays and holidays at:

• The Scholarshare plan in California. This plan features a low cost to open, without needing monthly contributions to avoid maintenance fees and often features sign-up bonuses. We have opened roughly a dozen accounts here and received many gift cards to Target.

I look at all the accounts for our children as one portfolio and manage our asset allocation accordingly.

For more information on these and other state 529 plans see savingforcollege.com.

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Posted November 6, 2007 in Uncategorized by Madison | 6 Comments

The friends and family that I work with have various levels of financial skills. I decided to rate the strategies I have here with beginner, intermediate or advanced categories to help filter those topics which are appropriate to each person’s skill level.

Hopefully it will allow the beginners to work on their financial plans without feeling overwhelmed by posts that seem too complicated. It will also provide the more seasoned readers a way to avoid posts which may be ordinary knowledge for them. It will allow me to write about topics on all skill levels serving a wider audience.

Let me know if you see any that you think should move up or down in skill level.

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Posted November 4, 2007 in Uncategorized by Madison | Comments?

As a mom of small children who spends time with other parents of small children, I’m often asked how to open a college savings account. Below I’ve put together a step-by-step plan to open a 529 plan. I’ve tried to keep it simple, as I often find the reason for not doing anything is because we are overwhelmed with too much information.

1. Review the definition, advantages and a disadvantages of a 529 plan to make sure it is right for you.
2. Determine which state plan you will select. This step has been made overly complicated for investors because each state has a plan (or many plans). The state plan you select will be personal based on the following considerations:
   • Home state plan: do you receive a state tax deduction?
   • What are the investment options?
   • What are the expenses of the plan and underlying investments? I prefer to use a combination of plans to achieve our investment goals. However, in general I prefer index funds with low expense ratios. In the absense of a good home state plan with tax benefits, I currently use the Ohio plan for the majority of investing for our children.
3. Determine the asset allocation. Do you want to set it and forget it? Or manage the money routinely? For most people, I recommend picking one of the age based portfolios. The age based portfolios will adjust the asset allocation as your children get closer to college. If you are using the Ohio plan, they offer excellent low expense Vanguard age based options in conservative, moderate and aggressive portfolios. If you do not know your risk tolerance, there is a helpful questionaire to determine which one is most appropriate.
4. Determine how much money you want to contribute. This is a personal decision based on how much of your child’s education you want to fund. Here is a good calculator. Do not get hung up on this number and let it stop you from opening a plan. Something is always better than nothing. Start small and add to it later.
5. Sign up. This is easily done online. Most of the time you can link the 529 plan to your checking account and have money taken out automatically.

For more information about 529 plan investing see: Saving for college.

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Posted November 3, 2007 in Uncategorized by Madison | Comments?

So you don’t want to work until 62, 65, or 67? Many people are interested in retiring early, but do not know where to start. It is much easier to get there once you know how much you will need.

In general, to determine how much you will need:

• Calculate your yearly expenses in retirement.
• Multiply by 25.
• This is the total nest egg you will need to begin retirement.

This uses what is commonly referred to as a safe withdrawal rate of 4%. For example, a $1 million portfolio will provide $40,000 of income per year forever.

In general, this is a very simplified approach. If you’d like to more details, here are some of my favorite resources dealing with early retirement:

• Early Retirement forums discuss many topics including safe withdrawal rates.
• Firecalc is a calculator that can help you determine if you are ready for retirement and if your money will last.
• Retire Early Home Page has many articles including a great spreadsheet to download detailing year by year savings.

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Posted November 2, 2007 in Uncategorized by Madison | 3 Comments