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This article is by staff writer Kristin Wong.

The first time I felt the intimidating pressure of adult responsibility, I was three months out of college. It was my very first job interview, and I was wearing an old sweater and a pair of ill-fitted slacks, sweating. My would-be boss, the man sitting across from me, was only five or six years older than I was, which made me even more nervous. I’d never met someone in my age group who was that confident and self-assured. It was distressing.

He led me through a series of noisy workshops filled with strange smells and industrial machinery. He managed a small engineering firm, and I was applying to be their technical writer, which I was excited about because, if I got the job, I’d be a writer (technically).

The interview was going pretty well; but at the end, he asked me one final, bottom-line question:

“Are you confident you could write a thorough instruction manual for this piston?” He pointed across the workshop to a piece of equipment that looked like a prop from a Ridley Scott movie.

“Yes,” I lied. “Definitely.”

Surprisingly, I got the job, and, even more surprisingly, a few months later, I did write a thorough instruction manual for that thingamajig. (I was more formal in the manual).

As with most intimidating things, I’ve found that, after you attempt them, they’re not nearly as terrifying as they seem. Here are some things that terrified me at first but turned out to be pretty simple, actually:

  • Driving downtown

  • Moving across the country

  • Parallel parking

  • Investing

Investing intimidated me for a few of reasons. First, it seemed like a really, really boring topic. Two, some well-meaning people told me it was like gambling. Three, there was just so much jargon (see Reason #1).

But I treated it like I did the technical writing. I didn’t understand it, but I broke it down into a series of small bites to digest and that seemed to help in terms of how overwhelming it was. There’s still a lot of stuff about it I don’t understand, but I’m much further along with it now than I was even a year ago. Here’s how I started, step by step.

Searching for my lost 401k

Two years after I quit my job and moved, I decided to look into my old 401(k). On the plus side, I was at least smart enough to take advantage of my company’s match. But for two years, I had no idea what to do with it or even how to access it. In that time, I undoubtedly incurred high fees and missed out on better returns.

When I started getting my finances in shape, I realized I needed to do something with that old 401(k), which was my money, parked in some mystery location. I emailed my old employer, got the necessary info and decided I should continue saving for retirement. That meant rolling it over into an IRA.

Now I just had to find out what an IRA was.

Opening a retirement account

At this point, I needed to know a couple of things:

I learned that there were two main types of IRAs: traditional and Roth. We’ve written about this topic at length, but if you’re unsure of the difference, start here. To sum it up:

“The biggest difference between a Roth IRA and a traditional IRA is the tax treatment of contributions and withdrawals. With the Roth, contributions aren’t tax-deductible, but withdrawals are tax-free (as long as you follow the rules). For the traditional IRA, contributions might be deductible; investments grow tax-deferred, but withdrawals are taxed as ordinary income — the highest rate possible.

The conventional wisdom is that a traditional IRA is better if your tax bracket today is higher than what it will be in retirement.”

I decided to roll my 401(k) over into a traditional IRA with Vanguard. It just seemed easier, and I felt like it was more important than anything just to start saving. Vanguard talked me through the process. I learned that I had to specifically initiate a rollover. I couldn’t just take the money out and then open an IRA separately; that would mean all kinds of crazy taxes and fees.

(Lately, I’ve been thinking about switching to a Roth, or opening one up separately because I appreciate the idea of tax-free growth.)

But — yea! I opened an account, and it was time to start investing and saving.

Learning about index funds

About two months after I rolled over my 401(k) and saved a little bit in my new retirement account, I decided to look at the earnings. “What’s going on here?” I thought. “Nothing has changed.” There were no earnings, no real action whatsoever. I called Vanguard.

“Your funds are in a money market account,” they told me.

“Oh! Okay.” I said. “Now, what exactly is that?”

I learned that a money market account is basically a glorified savings account. My money was parked there, not really doing anything for me — not exactly the way investments are meant to work. It was time to pick my actual investments. This was much easier when I had a company-sponsored 401(k). They gave me a menu; I pointed to what I wanted.

But now I actually had to find out what made up these menu items and build my own portfolio. So I did what anyone does when they need to understand something that’s way over their head: I Googled it.

Of course, I also looked through Get Rich Slowly’s massive investing archive, and I found that index funds were the way to go. From our intro article on index funds:

“With active investing, an investor tries to pick stocks that will outperform other stocks. With passive investing (also known as index investing or ‘investing in index funds’) an investor simply uses mutual funds to buy all of the stocks in the market. The basic idea is that with greater diversification and lower costs, a passive investor will generally do better than someone who buys actively-managed mutual funds.”

That sounded good … I guess? I had no idea what half of those words meant, and I spent a lot of time looking up definitions while reading that article. It took me at least an hour to get a grasp on even the basic definition of an index fund.

But in that hour, I digested a bit of information that would benefit my finances enormously. I also learned that there were different types of asset classes in which to invest, namely stocks and bonds — and there were index funds for those too. Since I already had Vanguard, I decided to go with their funds.

Figuring out how to diversify

After learning that diversification meant investing in different assets, I needed to find out how to do it.

There are a lot of different resources and calculators you can use to figure out how to diversify your investments. I started with a basic allocation of 80 percent stocks and 20 percent bonds, but I’ve tweaked it a bit since then. Honestly, it’s something I’m still learning. I’ve found that Personal Capital’s investment checkup tool is pretty helpful. It actually tells you how your current portfolio is invested and how they suggest you invest based on the information you give them.

A lot of people would scoff at that oversimplified 80/20 allocation, but the bigger point was that it started me in the right direction.

Investing beyond the standard IRA

As a self-employed writer, I no longer had the luxury of 401(k). And IRAs have contribution limits. I was determined to save more than that, so I started learning about retirement options for self-employed people. I read “The Money Book for Freelancers,” per El Nerdo’s suggestion. They listed all kinds of options and, after doing more research, I decided to go with a SEP-IRA.

After a while, the earnings in my retirement accounts were so good that I wanted to invest my non-retirement savings too. I wanted to make big returns on my regular savings, without having it locked up in retirement. So I opened up a taxable brokerage account and I started to invest in index funds within that account as well.

Understanding taxes

Finally, I learned that there are those investing accounts that are taxable and those that are tax-advantaged. Ideally, you want to invest in tax-advantaged accounts first, to take advantage of those, uh, “advantages.” Common tax-advantaged accounts include:

  • IRAs

  • 401(k)s

  • 529 college savings

  • HSAs

But if you have a savings goal, maybe you want to put it in a regular taxable account, like I did. Either way, it’s important to understand how taxes work when you invest. I learned that when you sell your investments, if you earned money on them, that money is called a capital gain and it’s taxable.

Separately, stocks earn dividends and bonds earn interest. Those are taxable too.

Sure, there are a few things I could have done differently. After opening my taxable brokerage/savings account, I learned that you can withdraw your contributions from a Roth IRA, penalty free. (Only contributions, though). So I guess I could have opened a Roth IRA and used it as a place to park my savings.

To recap, the steps I took to get started with investing:

  1. Find my abandoned 401(k).

  2. Learn about the different types of IRAs and open one.

  3. Roll over my 401(k).

  4. Learn what index funds are.

  5. Figure out how to diversify my investments.

  6. Pick some index funds to invest in, based on that diversification.

  7. Find other ways to invest aside from standard IRAs.

  8. Understand how taxes work in regards to my investments.

Of course, this is a very basic overview, and I’m still learning — but that’s kind of the point. Investing is something I never thought I’d understand or even care to understand. But now, by jumping in and taking small steps, I’ve found it’s actually not that hard. I actually understand what people are saying when they talk about their portfolios and stuff. And, more important than that, my finances are the better for it.

This article is about Investing, Planning, Psychology, Retirement

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This article is by staff writer Holly Johnson.

I have two second cousins who serve in the military — both brave young men I am proud to call my family. We don’t always talk much, though. The age gap can be a roadblock and those boys are always traveling around, serving overseas and living on bases in order to fulfill their military duties and finish school.

Still, social media makes it easier than it used to be, and emails are a quick and painless way to stay in touch. So I wasn’t surprised to receive an email from my cousin, Michael, asking for advice on his future financial goals.

So, what’s the deal? As part of his military compensation, Michael will soon start receiving $2,124 per month for housing and wanted ideas on how to parlay that money into long-term wealth.

Buying rental property, and getting rich slowly

But it wasn’t random; he contacted me for a specific reason. He and his wife are toying with the idea of buying a property to live in temporarily, then rent out. And since he knew I own rental properties myself, I’m pretty sure he expected me to support this idea wholeheartedly.

Boy, was he in for a surprise.

Too dumb to be afraid

It’s not that I think he’s too young. Truth be told, my husband and I bought our rental properties when we were just a few years older than my cousin (at ages 25 and 26). It’s been almost nine years since then and we’ve learned a lot in that short amount of time, including the fact that we were not prepared to be landlords when we first started out.

I’ve said it before and I’ll say it again — when we bought our rentals, we were too dumb to be afraid. We were too young and inexperienced to understand the many things that could go wrong, and what those things really meant for us. Simply put, we were ignorant.

Asking the right questions

So when my cousin asked what I thought about his aspirations to be a landlord, I had a ton of questions to ask — the same questions I wish someone had asked me before I got started. After a short introduction email, here are the questions I sent in reply:

  • What is the average price for housing where you live?
  • What is the average rent where you live?
  • Why do you want to buy a house?
  • How long do you plan to live in Maryland? One year? Five to ten years?
  • Would you plan to keep your rental property for the long term? If so, what is your plan to manage it from a distance?
  • Would you get a 30-year loan?
  • Would you hire a property manager? Have you factored that cost into the equation?
  • Do you have considerable savings to take care of home repairs?
  • Do you have the money to pay for multiple repairs and vacancies all at once?
  • Do you have a down payment? Do you plan on paying PMI?
  • Have you factored property taxes into the equation? How high are taxes where you live?

After talking through instant message for quite a while, I got answers to most of those questions. First, they planned on living in the house for a few years and intended to rent it out after that. He hoped to hire a property manager to manage the home while he moves elsewhere in the country. And since he could qualify for a VA loan, he didn’t need to worry about paying private mortgage insurance (PMI).

However, I could tell he hadn’t considered many of the other factors I mentioned — including a savings cushion for those inevitable repairs.

“No, I don’t have the savings currently,” he told me, after some prodding.

The truth about being a homeowner

Kristin Wong recently asked whether homeownership is still a good measure of financial success and examined why the appeal of owning a home is currently on the decline in some groups, including Millennials.

“Ownership is a sign of financial stability and freedom, but it seems like a lot of people are questioning the rush into that,” she wrote.

In my opinion, waiting it out seems like a good idea.

I spent my 20s watching shows like “House Hunters,” “My First Place,” and “Property Virgins,” and believing every word. While entertaining, they would have you believe that the housing market always goes up and that there are no bad investments — only good, better, and best.

That was before the housing crash of 2007-2008, a time when people believed that real estate could never go wrong.

Now we know better.

Where things break down

But fluctuating real estate prices aren’t the only reason homeownership isn’t attractive for everyone. Let’s talk about repairs.

Over the course of eight years in real estate, I’ve replaced a roof and two air conditioners, paid nearly $10,000 for interior and exterior drainage and sump pumps to be installed in the yard of a property with a water problem, and repaired $6,000 worth of damage left behind by a tenant.

Most of those repairs were paid for from the profits I brought in from our rental properties or insurance, but not all of them. Unfortunately, being a landlord (and a homeowner) means shelling out some of your own money for repairs from time to time.

The fact is, things break. Often. And as a landlord and homeowner, it is your sole responsibility to fix them when they do.

Far too many people rush into homeownership without realizing the financial implications of doing so, and it is generally to their detriment. Most experts recommend having an emergency fund of three to six months to take care of unexpected expenses, including home repairs.

But landlords need far more than that. Owning rental property generally means having multiple furnaces, air conditioners, and roofs to take care of, and more money to go with it.

Sometimes your best route is to think long term

After nearly scaring my cousin to death with all of these issues, I gave him the best advice I could muster.

“Rent the cheapest place you can while you’re young,” I said. “Put all of your money into savings and investments and don’t look back. One day, when you have the money to own a home, and perhaps rental property, you can reassess.”

“Sometimes progress means taking it slow,” I added.

That advice may sound funny, but I’ve found it to be true.

When I was 25, my thoughts on making progress in the wealth department were entirely different than they are now. In those days, progress meant taking huge risks and making moves. Progress meant doing something and making things happen — not just waiting to let things happen to me.

But now that I’m older, I realize that the opposite approach usually works best. I don’t regret buying our rental properties or becoming a homeowner, but I also realize that I wasn’t prepared at the time. We would have been better off if we had more savings ahead of time, for example, and done a whole lot of research. Instead, our success can mostly be attributed to luck … and good timing.

The truth is, sometimes progress is boring. Sometimes the best thing you can do for yourself is literally nothing, except to see where life takes you and make the best decisions you can with the information you have at the time.

One of the best decisions you can make is to keep saving because, as we all know, having money means having options — the option to stay put and rent, the option to buy a home or even to become a landlord if that’s what you really want to do. Especially when you’re 25 years old, the more options you can give yourself, the better.

Are you building wealth by taking risks or are you taking time to plan your investments more carefully? Has your idea of making progress on building wealth changed over time? Do you regret any of your financial decisions?


This article is by staff writer April Dykman.

Several years ago, my husband and I were planning to build a house. We bought the land and cleared the build site. We then started working with an architect, which is how we lost $12,500 in a matter of months.

Here’s how it went down.

Losing thousands

When I hired this architect, whom I now refer to as He-Who-Must-Not-Be-Named, I thought I’d done my due diligence. The guy was profiled as one of the top architects in green building. He specialized in the type of house we wanted to build. We met with him, we toured two homes he designed, and we met with one of his past clients.

After a couple of meetings to discuss rough sketches and photos of the design elements we wanted, we seemed to be on the same page. So we signed on the dotted line and sent him the first payment.

Things went well at first. He sketched a design that was almost what we wanted, but not quite. “No problem,” he said. “I can make those changes.”

Weeks later, we got back a new design. It looked nothing like the first design. Everything was different, from the elevation to the square footage to the room layouts.

I told him that I actually liked the very first design; we just wanted those few changes we’d discussed. I got back a third design that looked nothing like the first two.

It was pretty bizarre. Some of the weirder changes included replacing a staircase with an attic ladder and designing a tower that actually leaned, like some sort of purposeful Pisa or something. My dad, a stone mason with 30+ years of construction experience, was dumbfounded, and losing his patience.

Still, I kept my emails to the architect civil and professional, trying to work with him so we could get some finalized plans.

Finally, he sent over the finished plans. Again, they were completely different than what we’d discussed. And they were incomplete. We took them to a contractor, who verified this. As it turned out, the contractor actually knew He-Who-Must-Not-Be-Named by reputation, and the reputation wasn’t good. My stomach sank.

When I tried to talk to the architect, he got defensive. He insisted that the plans were complete, and he said that our changes were the reasons that the plans were so wildly different from one round to the next. Now, I do get that one change can necessitate other changes. Only, he didn’t actually incorporate the changes we’d requested. The plans were just different. It became clear that we weren’t getting anywhere, and then he started copying an attorney on his emails to me.

So, things ended badly. We were already $12,500 in the hole, and I refused to send him the final payment without complete plans. He threatened to put a lien on our property, so I consulted an attorney in my family. Basically, the attorney said that if The Dark Architect tried to put a lien on our land, we could do something about that. But as far as getting our money back, he said we’d have to go to court, and he didn’t recommend that course of action. Apparently it would open us up to greater liability, and it wasn’t worth it for $12,500.

I was angry and sick to my stomach. That was no small sum to us. It took a lot of time and sacrifice to save our money, and now we had nothing to show for it. The plans were worthless.

Losing millions

Although we lost what was a significant amount of money to us, to others, it’s pennies. For instance, entrepreneur and author James Altucher has written about his experience with losing a million dollars a month until he was eventually flat broke.

After James sold his first company for $15 million, he lived it up. “I bought an apartment for millions,” he writes. ”I rebuilt it. Feng Shui! I bought art. I played a lot of poker. I began investing in companies. A million here. A few hundred thousand there. One IPO I put $2 million in at $20 and watched it go to $0. They made wireless devices for deaf people. Huge market.”

He started a company; he invested in companies. Then came the bubble burst. “From June 2000 until September 2001, I probably lost $1 million a month,” he says. “I knew nothing about stocks or valuations or anything resembling rational thought. I doubled down. Then quadrupled down. Then 8-upled down. I couldn’t stop. I was an addict.”

His account balance was spiraling toward zero. “I felt like I was going to die,” he writes. “That zero equals death. I couldn’t believe how stupid I had been … I was going to zero and nothing could stop it. There were no jobs, there was nothing. “

He lost his house, he couldn’t sleep, he dropped down to 130 pounds. “I went from feeling immortal to feeling dead all over,” he writes. “There was never a moment when I didn’t feel sick. I had let everyone down forever.”

Finally, he decided he could either wither away and die, or he could feed his family. So he focused on his health and well being, and eventually, he was making millions again. Which he lost, again. And then he made it back a third time.

“And I hope I can keep building,” writes James. “I hope I don’t revert to my addictive tendencies. I think this time I learned. Every day without fail I focus on physical, emotional, mental, and spiritual health.”

It’s quite a story (and worth reading in its entirety). [Editor's note: This link to James Altucher's story requires that you confirm your email address in order to read the story.]

An expensive lesson learned

As for the conclusion to my own story, the architect never tried to put a lien on our property. It was just an attempt to scare us into making another payment. And while I’d love to say that I let it go long ago, the truth is that I rarely talked about the situation because his name brought up feelings of anger and frustration for years, hence the He-Who-Must-Not-Be-Named moniker.

“Unless you’re Mark Zuckerberg, who, while he lost several billion on the day of the Facebook IPO still was worth billions of dollars, a significant financial loss is going to hurt you, financially, emotionally, and spiritually,” says Jason Hull of Hull Financial Planning. “Address all of the aspects of the loss so that you can move on.”

Today, I have moved on. Time has passed. And more significantly, my priorities radically shifted when my friend Frank passed away last year. I just don’t care about losing that money or feeling suckered anymore. And in many ways, we were lucky. Losing the money didn’t put us out on the street — it just sucked, was all. So now I’m able to chalk it up to a very expensive lesson in one of our GRS tenets: No one cares more about your money than you do.

Readers, what’s the most amount of money you’ve ever lost? How did you react, and what did you learn from the experience?


This article is by staff writer Lisa Aberle.

I’ve been cooking for years. Although, if you ask my husband, I’ve been screwing up fried eggs for just as long. (His secret: Fry them on low to avoid cooking the egg too quickly.) So I am no genius in the kitchen, but I am getting better.

Flexible cooking

I used to follow recipes exactly, afraid to deviate at all. (Didn’t have all the ingredients? Find another recipe!) But then I discovered a recipe in a cookbook that had the same basic ingredients (meat, pasta, diced tomatoes), but the recipe authors gave suggestions on how to use different spices (chili powder or Italian seasoning) and cheeses (mozzarella vs. sharp cheddar) to totally change the taste of the dish.

Since then, I have been trying my hand at doing a little kitchen experimentation. And I came up with “Flexipes” or flexible recipes. (Uh, at least I thought I coined the phrase. I guess not.) Flexipes are recipes that allow you the flexibility to create delicious, delicious dishes while using up what you have in your pantry.

And how does cleaning out your pantry help you from cleaning out your wallet? Wasting less food, fewer last-minute trips to the grocery store, maybe even relying less on eating at restaurants. Because once you gain confidence in your own meal creation skills, you may prefer the challenge of creating a delicious meal out of random parts, so to speak.

I often rely on skillet dinners (dinners that can be cooked entirely in one pot) to feed my family. And sometimes this means I give myself points for fewer dishes to wash later.

If you’re just starting out with flexipes, a skillet dinner is an easy place to start. Much like a universal muffin recipe from Amy Dacyczyn’s “The Complete Tightwad Gazette,” here is one of mine.

Lisa’s universal skillet recipe:

Around one pound of meat and/or beans Because I’m trying to cut down our meat consumption, I will usually use half a pound of ground beef, along with a cup or two of beans (black, cannellini, and pinto beans are favorites).

Vegetables If I have onions (which I usually have since they’re cheap and store well), I use them in all my skillet creations. Diced tomatoes (or a can of salsa), celery, frozen corn, garlic, sliced cabbage, bell peppers, green chiles, and greens have all had their turn. Denser items like carrots and potatoes may need to be chopped into small pieces and precooked or added at the beginning.

Pasta/grains While I haven’t branched out too much beyond macaroni and brown rice, I see no reason why quinoa, couscous, or other grains wouldn’t work. Another original recipe called for Minute Rice, which cooked right in the pan. Dried macaroni also can cook in the pan if enough liquid (water or tomato juice) is present. However, if I am using something that takes longer to cook (like brown rice), I cook the rice separately (creating another dish to wash) and add it at the end.

Extras Depending on the flavor I’m going for (and what I want to use up), I may add some sliced olives, green chiles, or cheese — but it’s usually cheese.

Herbs/spices Chili powder, Italian seasoning, crushed red pepper, salt and black pepper are just to get you started; but the sky’s the limit when it comes to spices, as long as they’re complementary (which is not to be confused with complimentary: My, paprika, you’re looking good today.)

A flexipe example

Here’s how a recent meal went down.

I had about half a pound of a ground-beef-and-black-bean mixture left over from another meal. To that, I added some brown rice, chopped up a very ripe tomato, added another can of diced tomatoes and green chilis, some Mexican blend cheese, salt, pepper, chili powder, and a couple of diced bacon strips (because bacon makes everything better). I served this with corn tortillas and it didn’t taste at all like leftovers. Sophisticated? No. But it was good, gave us some fiber, protein, and veggies for a quick and easy meal.

Other dishes that make excellent flexipes are soups. Vegetables can easily be swapped in soups, along with the liquid base and different types of proteins.

Egg dishes like quiches and frittatas can easily be manipulated, depending on what you have on hand. Use a basic quiche recipe and then create a spinach and artichoke version. Have tomatoes to use up? How about a tomato and basil quiche? Stratas use bread, eggs, milk, cheese and, sometimes, vegetables to make a delicious meal.

Meeting flexipe challenges

One of the challenges with flexipe cooking is finding flavors that do complement each other. Since I discovered Leanne Brown’s Eat Well on $4/day cookbook through one of April’s recent articles, I have been (literally) devouring it. Her recipes lend themselves to flexible cooking, and she also gives tips on adapting the recipes.

When you’re just starting out, you can also look for inspiration in the restaurants and recipes around you. This is a very simple example, but I see mushroom and Swiss burgers everywhere. So this morning, when I sauteed some mushrooms and added some scrambled eggs, Swiss cheese was thrown in, too. Simple and delicious.

And that’s the thing. These meals probably won’t bring gushes of admiration from your dinner table diners, but if simple and delicious peasant fare (check out the comments on this excellent article) is what you’re going for, this will probably be enough.

Now if you’ll excuse me, I have a refrigerator to raid…

My ideas are undoubtedly influenced by my farming/Midwestern background, so I am interested to see how this is received in other areas. Can you create meals from your pantry, fridge, and freezer that don’t follow a recipe? What are some of your favorite flexipes?


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