Smart Stuff
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Photograph by Louis Self: South Padre Seagull
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What we tell you young people
People wonder how we can afford to go on four-month kiteboarding trips. In a nut shell, we economize, do some planning and did a few smart things when we were younger.
What we tell you young people (and almost every kiteboarder is younger than us) is:
- Without exception live on less than you make. That means absolutely no debt of any kind
- Do some planning and investing
- Retired life will be good to you, and so will life in general.
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Favorite talk show hosts
Surround yourself with good quality people who match your standards and goals. Listen to people who know more than you do. That is why our favorite radio talk show hosts are:
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The Clark Howard
Show - available free as podcasts (Theo & Kate do website 8/10)
Call in 1-4pm ET M-F (404) 872-0750 or (877) 872-5275
(Neal Bortz 8:30am-1pm ET M-F (404) 872-0750 or 877.310-2100)
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The Dave Ramsey Show
- available free as podcasts
Call in 2-5 ET M-F (888) 825-5225
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The Doctor Dean Edell Show
Call in 1-2pm PT M-F (800) 548-8255
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Bob Brinker's Money Talk
- available as podcasts
Call in 4-7pm ET Sa-Su (800) 934-2221
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Leo LaPorte, the Tech Guy
- available free as podcasts
Call in 11-2pm PT Sa-Su (888) 827-5536 or (800) 520-1534
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Handel On the Law
- the most disgusting but entertaining legal talk show ever!
Available free as
podcasts. Call in 6-11am PT
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The Computer Corner
- available free as podcasts
Call in 12-2pm MST Sa (602) 277-5827
Bob Brinkers Basic Rules of Investing
- Pay yourself first - invest at least 10% what you make
- Work toward owning your own home - Don't borrow against it!
- Dervisy your investments to spread your risks
- Have a long-term mindset for your investments: 10, 15, 20 years
- Include inflation-protected securities (a recent development)
- Take advantage of no load, exchange-traded and index funds
- Eliminate emotion from your investing decisions
- Stay away from the sharks who will tell you anything to get your money
- Educate yourself with Bob's reccommended reading list
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Online Resources
Budget help to get you organized - easy, mostly automatic, free and all three are highly recommended!
Mint.com
Rudder.com
Thrive.com
Excellent summary of reputable low-cost investment funds
Vanguard Star Fund: Good balance of investments; $1000 minimum to open
Schwab Total Stock Market Index Fund - $100 min. to open; VERY low expenses
Fidelity Four-in-One Index Fund: Excellent balance of funds
T. Rowe Price: Adjusting Allocation Fund: adjusts as you approach retirement
Graphical Investment Calculator, Monthly Contributions
Graphical Investment Calculator, Yearly Contributions
Basic Investment Calculator
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Sugested Ratios for a non-stressful life.
- Your monthly housing (rent/mortgage, taxes & insurance) should not be over 25% of your monthly income
- The total of all your student loans should not exceed your anticipated earnings for your first year out of college.
- You should invest 10-15% of your income for retirement
- The expense ratio for your investments (annual expenses) should be well below one half of one percent (.50%).
- You will lose over half of your retirement savings with just a 2% higher yearly expense ratio (2.25% vs .25%), which amounts to about $1 million with 50 years of regular investing (see the financial calculators above.
- There should be zero fee for investing your money (no load)
- There should be zero fee for withdrawing your investment money. Do check the tax implications.
- To qualify for financial asssistance for college, each year a student is exppected to spend 20% of their resources and their parents, 5% of their resources on college expenses (as of July, 2009), so in most cases, it is better for parents to NOT save college money in an account owned by the child.
- The value of all your vehicles (cars, suvs, atvs, boats etc) should not be over half your annual income.
- The most expensive way to have a car is to lease it.
- Repair your car if the repair cost is less than 50% of the car's value.
- Most insurance companies total your car if repairs are expected to exceed 80% of its value.
- At the end of a vehicle lease the dealer can expect to get 20% of the vehicle's trade-in value (check kbb.com). This figure is a good place to start negotiations with the dealer when buying the car at the end of the lease. Note: leasing is the most expensive way to have a car.
- If your annual premiums for comprehensive and collision auto insurance exceed one tenth of the value of the car you should drop those coverages. You can check out the value of your car at
Kelly Blue Book or
N.A.D.A.
- Eighty percent of millionaires drive used cars.
- Repair a major appliance if the repair would cost less than 50% of a replacement.
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Credit Reports: Your Credit Report is available for free once a year from each of the three credit reporting agencies. The ONLY lagadimate source is annualcreditreport.com. Others will rip you off even when they say it is free. Your FICO is the only credit score that you should get. That is what the lenders use.
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Bargains to stretch your dollar further
Thrift Stores are fun to browse, awesome and an amazing way to save mucho mula.
Zenni Optical - Single vision prescription glasses under $10, including frames. I got all the coatings, photosensitive tents and progressive lenses at an amaazing price.
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Retiring
Collecting SS (Social Security)
In spite of what the Social Security Administration might tell you, unless you are in financial straits you do not want to start collecting SS early unless you intend to die young. If you wait until you're 70 instead of 62, your monthly SS check will be about 70% higher. It would take you about eight years to make up what you lost at the lower rate, between ages 62 and 70. The rest of your life it would be gravy, as they say.
We started taking our SS at about 62 at the recommendation of our SS advisor (big mistake). Now it would cost us about $80k to pay back what we have received so far in order to reapply for retirement at age 70 and get the higher rate. Since we do not have the 80 grand laying around, we'll probably just stick tight and spend the rest of our life kiteboarding and with the puny SS payments. Hind sight is always 20/20! (The above information was current as of 2010)
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Miscellaneous
Arizona Lou's Pie Theory applies to almost every area of business. Instead of spending our energy fighting over our share of the pie, we could be working together to increase the size of the pie. As the pie grows each will get more pie. In the case of kiteboarding shops, we need to get word to people who have not yet heard of the sport.