Top 5—Low-hanging fruit of financial management

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Most people want to increase their net worth.  The problem is that it’s not always easy.  Here is a look at the five “easiest ways” to increase your net worth, either by spending less, making more, or increasing your investments.

5.  Insurance: By definition, buying insurance is a money-losing proposition.  Insurance companies make money by relieving us of the financial risk of our lives.  And that’s fair. 

The problem is so often we make decisions on insurance at one stage of our lives and then “set it and forget it”.  After a few years, what was appropriate then might not be appropriate now.

A several years back Foxy and I got life insurance.  Based on our net worth and overall situation, it made sense.  Since then, our net worth has increased many fold, and if the EXTREMELY UNLIKELY event of our death happened, the survivors would be fine.  Is that worth $100 each month?

We picked the appropriate coverage on our car insurance four years ago.  Now our cars are four years older and worth substantially less.  Do we still need those levels of coverage today?  If the answer is “no” we could probably save another $30 per month.

4.  Revisit monthly expenses:  It’s easy to put your finances on auto-pilot as you make it through this crazy journey called life.  Yet, as fast as things are changing, especially technologically, it’s easy to have prices creep to too-high levels when you take your eye off the ball.

Our family has two cell phones (we refuse to cave in to getting our 10-year old a phone) and that costs about $60 per month.  Our internet is $35 per month. 

Yet, I can’t tell you how often I talk to families about their finances and expenses and when those items come up they’re paying two-, three-, four-times as much.  That’s not to say you should go without, but there are a lot of expenses where there are great alternatives at deep discounts from what you’re paying right now.

3.  Ask for a discount:  It’s amazing what we can get if we just ask.  I was working with a couple who had a pretty normal financial picture with pretty normal debts—car loans, mortgage on a second home, loan for a boat, student loans.

On a lark I suggested they call the various companies that held the loans and just ask if it was possible to get a lower rate.  Wouldn’t you know, they were told “yes” more often than “no”.  Sure, some places said no, but that happens.  The ones who said yes were able to offer better terms for the loans that amounted to hundreds of dollars in lower payments each month.  Who knew?

2. Balance transfer on credit cards:  Obviously having credit card debt is a bad thing and should be avoided at all costs.  If you do have credit card debt, eliminating that should be your top financial priority.

However, in the here and now, if you do have credit card debt that you’re working on paying off, getting a new credit card and transferring your balance could result in hundreds of dollars in savings on interest. 

Many cards offer 0% introductory rates for purchases or balance transfers.  Taking advantage of this could be a huge boost.  $10,000 of credit card debt at 20% rate is $170 for interest alone each month.  If you could take 20 minutes to apply for a new card with a teaser rate, that could save you a ton of money.

Of course, you still need to pay the debt off.  But doing so with an introductory rate can really help speed things along and save you a ton in the process.

1. Refinance your mortgage: Mortgages are often the largest expense that families have, yet it’s one of the easiest to impact.  Right now, mortgage rates are at historic lows. 

The Fox family just refinanced ours at 2.6%.  Many people could probably also get a lower rate, especially if you have a conforming mortgage (we don’t) or can swing a 15-year mortgage (we did 30).  Us going from 3.5% to 2.6% will save us about $500 per month for the next 30 years.  That adds up to some serious money.

Awesomely, the effort required to do this isn’t very much at all, especially compared to the upside.  With about 2-hours of internet searching, filling out forms, and talking to a few people, you can figure out if you can save money with a refinance.  If you can, then it’s probably 10 more hours of getting all the forms together and signing a bunch of stuff.  A dozen hours of work for an annuity worth hundreds of dollars a month is about as good as it gets.

Obviously there are the “meat-and-potatoes” way of increasing your savings.  Spend less.  But that requires a trade-off and sacrifice.  Here are some examples where hopefully that trade-off is the most painless.

Inflation raises the stakes

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The financial story of the past six months has certainly been inflation.  After many decades of unprecedentedly tame inflation, starting this April inflation shot up and is now at over 6%.  Four years ago I even made a pronouncement that “Inflation was dead”.  How could I have been so wrong?  Or was I?

To put things in perspective, let’s go back to 1992, after the US had “recovered” from the first Iraq war under the first President Bush.  From then to last year, 1992 to 2020, 28 years, a generation, a lifetime in the investing world, inflation averaged 2.4%.  Over those 28 years there were just six years where inflation was higher than 3%.  Frankly, I think we got a bit spoiled.

How will this affect my investments?

But really, who cares about inflation, per se?  What we really care about is how it impacts our investments and our retirement plans.  When it’s all said and done inflation isn’t all that bad if your investments grow faster than inflation. 

This year, inflation is at about 6%, but the stock market is up about 20-25% (depending on the day you look—wow it’s been a crazy market the last few days).  That means the real return (stock return minus inflation), how much more “stuff” you can actually buy, is up about 15-20%.  That’s an amazingly good year that investors will always take.

Typically when inflation is high that’s bad for the economy.  There’s a lot of deep water there and economists much smarter than I are debating that all the time.  But the chart below shows over long periods of time it’s not that simple.

Stock returnInflationReal return

The 1970s had the highest inflation, and that was a terrible time for the economy and therefore for stocks.  But the 2000s were also a horrible time for stocks even though inflation was very low. 

Inflation makes your portfolio riskier

As someone investing for their future, the problem with inflation is that it forces you into stocks.  Stocks are a natural hedge against inflation because you don’t own pieces of paper with green ink (cash), or the promise to get pieces of paper with green ink in the future (bonds). 

Rather you own “stuff”—real estate, buildings, patents, factories, etc.  As the price of things go up, the very definition of inflation, the prices of those things you own also goes up.

But we know that stocks are much more volatile than bonds.  That’s the rub.  That’s what makes high inflation hard for investors. 

It creates this precarious balance between hedging against inflation and having the proper asset allocation.  It’s like you’re driving on a mountain road but now instead of the cliff just being on one side, it’s on both sides.

What to do?

The jury is still out on this, but things look precarious.  I always tend to be more aggressive with asset allocation, so I’m 100% in on stocks, and that’s how I’ll keep it.  But we’re in our mid 40s so we still have decades to ride out any nasty storms.  If I was in my 60s it would be a much tougher decision.

Kids investing in stocks–Part 2

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Last week I told you how I try to instill strong financial habits in my two cubs.  Obviously this is a sensitive issue because, sadly in my opinion, openly discussing money, especially with the little ones, is a bit taboo in our society.

That said, I think, early and open discussions on money are important.  As you know, financial literacy rates in our country are abysmal.  I truly believe that “early intervention” is tremendously helpful here.

Once you teach your cubs about earning and saving money, I think then the next thing is to teach them how to invest.


I am a super nerd when it comes to investing and personal finance (as you’ve probably figured out based on this blog).  So I am more than happy to dive in to deep topics like tax optimization and asset allocation.  But I can think of no quicker way to get the cubs’ eyes to glaze over and lose all interest.

For me, the hook to get them interested about investing is to sell it as a way to “get rich”.  Most cubs like the idea of being rich, so this fits nicely.  While keeping things age appropriate, I do tell them that our family’s net worth was a lot of hard work and savings, but then it grew several times that size because we invested it.  Putting it that way seemed to pique their interests.

As far as telling them what stocks are, I try to keep it as simple as possible.  A share of stock gives to a part of the company—if the company does well the stock goes up, and if it does poorly the stock goes down.  That’s it.  I don’t talk about bonds or dividends or anything else. 

Buying actual stocks

Once I got the cubs excited about stocks, I opened up two brokerage accounts with Vanguard.  First, all our family’s money is with Vanguard so that was the natural place to start.  Second, and this is important, Vanguard offers free stock trades.  As you’ll see in a second, frequent trades are important to keep the kids excited and engaged, so it’s nice that you don’t have to pay $15 each time you go in and out.

Since my cubs are minors, the account is actually in my name (to set it up for a kid is a monumental hassle).  Once they were opened, I funded each with $1000.  And we were ready to go.

I asked the cubs the simple question, “What stock would you like to buy?”  They wondered what their options were, and that’s where it became really cool—all sorts of companies have stocks.  We walked around the house looking at stuff we have that they like, and most of those were made by companies with stocks.

Mini Fox’s first investment was in Duke Energy since they’re our electric company, and ‘Lil Fox’s first was Edwards Lifesciences since I had done some consulting work there.  I bought $1000 worth of each stock and they were stockowners.

I tried to follow up by having them fill out a worksheet on each company so they could learn about it—the name, the headquarters location, what they make, how much revenue they get each year.  This worked at first, especially because we started in the summer, and they needed stuff to do, but I got lazy and they stopped doing it.  But I definitely think something like this is a good idea.

After a couple weeks I would ask them what the next stock they wanted was.  Obviously, in the real world I would never invest like this—individual stocks and very short time horizons.  But this really isn’t investing as much as it is education.

We’d go around the house again and pick another stock.  We’ve had Disney, DuPont (Mini Fox was obsessed with chemistry for a while), Vail (since Dad goes skiing every winter), and a bunch of others.  Right now Mini Fox is in Facebook because they own Oculus Quest 2 which he loves, and ‘Lil Fox is in Hasbro.

Celebrate the wins

A key to keep the kids engaged is to show them how they’re doing.  Obviously it’s more fun for them if the market is going up (dollar cost averaging is not a concept to teach right now 😊).  Fortunately, since we started this last summer, the stock market has been on a tear, up about 40%, so there have been a lot of wins.

Every few days I show the cubs what their stock is at.  Ironically, they don’t seem nearly as interested in how their stock is doing as much as “Did mine do better than my brother’s?”

Early on, ‘Lil Fox was rivaling Buffet.  He picked Valvoline (we got our oil changed there), Exxon (where we get gas), Toyota (I drive a 4Runner), and Pulte Homes (they built our house) all did tremendously well.  I’d call him a stock picking genius, and he had a lot of fun telling his friends that.

Mini Fox didn’t do as well (he invested in Tesla early but missed their huge run up) but made some good picks with Catepillar, Microsoft, and DuPont. 

As of today, ‘Lil Fox is up on his brother, but they’re pretty much in line with the market.  That said, it’s a few hundred dollars in profit, and that gets them really excited, and that’s kind of the whole point.

Who knows if this is a good approach or not, but I think it’s important that the cubs dip their toes in.  This is how we do it.  What do you do?

Teaching kids about money—Part 1

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Wow!!!  We’re going for the throat on this one.  Teaching kids about money is one of the hardest and most complex and most controversial and most personal of tasks facing parents and society at large.  But that’s never stopped us before.  Let’s take this topic on and see how many readers I can piss off.

As a kid I remember home economics class.  This was in the early 1990s and the shadow of “this is really a class for girls” still loomed, although that was definitely changing.  Reflecting on it now, that was probably the most important class I ever took in school and I blew it off.  Skills like how to prepare a healthy meal, balance a checkbook, plan a large purchase, do a load of laundry—those are important.  Want to know what knowledge I haven’t really used a lot as an adult: trigonometry (and I’m a huge math nerd), the generals of the Civil War, how to diagram a sentence, which colors complement a blue background for an art project.

The point is, the most important life skills aren’t taught very well in school these days.  That’s a topic with a lot of deep water and could consume hundreds of blog posts.  But in the here and now, we reynards and vixens (did you know that’s what adult male and female foxes are called?) need to teach the cubs about money and managing their finances.

I will be the first to admit that I’m not perfect at this.  I am constantly learning and tweaking what I do, but here are a couple ways I try to pass these lessons on to ‘Lil Fox and Mini Fox.  If you think my approaches are good ones, feel free to steal them; if you think they suck, feel free to give me some pointers.


For cubs as old as ours are, the allowance is the central element of the cub economy.  I pay each cub one dollar per work day (weekends not included).  This is payment for all school related work which Foxy Lady and I purposely call their jobs (“You know how Dad and Mom have jobs that make money?  Well, school is your job.”).

Additionally, the allowance pays for chores that they need to do.  We’ve been working on expanding this list, but admittedly we aren’t great about that.  Some times it’s easier to do it ourselves than work with a 7- or 10-year-old to get it done.  That said, taking in the dumpsters after trash day, taking dishes to the sink, cleaning their rooms, and putting away their backpacks and shoes are their main chores.

Every Friday is payday and I give each cub $5 for the week of work.  I go to the bank every couple of months and withdraw $100, all in singles.  Each cub gets five one-dollar bills.  This was purposeful because I think getting a bunch of bills has a bigger impact than just getting a five-dollar-bill.  Maybe I’m right on this, or maybe I’m wrong.

Spending it

I feel I am probably over-paying for the allowance, but then I am pretty mean when it comes to what the cubs need to buy, so I figure that balances things out.

With their money they have to buy: Slurpees, any toys that are not birthday or Christmas gifts, gifts for their friends if they are invited to birthday parties, their season passes to Carowinds, and any video games.

It’s funny when we go out and I stop at a gas station to get a soda.  Mini Fox ALWAYS asks if he can get a Slurpee.  When I tell him he has to pay for it, he really thinks about it.  Sometimes he says “yes” and other times “no”.  That’s really the whole thing I want to accomplish.  If they can understand that if they want something it costs money, and that money comes from their hard work, then I think I’m winning. 

Also, we’ve had a lot of conversations at Wal-Mart about something they want to buy but they don’t have the money.  This leads to good conversations about them saving, and how long it would take (If it costs $22 and you have $8, how much more do you need?  If you get $5 each week, how long will it take?).  Also, the two of them can strategize about pooling their money, but then they have to share it and only pick something they both want.  That seems like parenting wins there.

Saving it

Obviously the other big concept is saving.  For us this is equal parts conceptual and physical.  Conceptually, we talk about those things above—if you want something you need to save to get it.

Physically, we talk about where the cash goes.  Remember, they are getting five one-dollar-bills each week, so it adds up.  I bought them little plastic storage units for screws and nails and things like that from Lowes.  They keep their money in those, and we call it their banks.  When we go out they need to carry their banks with them in case they want to buy something.

I also set up bank accounts for them.  Most banks allow something for kids which waives all the low balance fees.  That’s what we did at Bank of America.

For the bank, that’s a bit of a ritual where I take them and make sure they handle the transaction.  They have to take the cash out of their bank, count it, and give it to the teller.  When they’re done, they ask for a receipt with the balance on it.  It’s important to me that they physically handle everything so they understand it all.

Generally, they hate going to the bank because that means they “don’t have their money anymore for toys at Wal-Mart”.  That’s a bit of a miss and a concept we’re working on. 

I also try to stress that banks keep their money safe.  This became real for Mini Fox who lost his bank with about $70 in it.  He was sloppy with it and not paying attention and lost it.  Yikes!!!

I have a feeling I know where it is, but I’m content to let him painfully stew on this one for a while.  Hopefully he’ll remember this feeling and see the value of protecting him money at a bank.

Dang.  This one is already at a thousand words.   Why don’t we split this into two posts and later in the week we’ll talk about how I have introduced stocks to the cubs.

See you then.

Now it’s cheaper to be rich

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After you do all the smart things with investing and become rich, you then have to show others how you’re better than they are.  Afterall, what’s the point of amassing wealth if you can’t feel good at the expense of others.

Early in my life (the 1980s and 1990s) this was easy.  You could buy expensive stuff, conspicuously display it, and you were set.  Life was easier back then—the more expensive something was, the better it was, and the better it made you.

However, in my adult lifetime (let’s say starting in the 2000s), it seems that centuries-old, tried-and-true concept has been thrown on its head.  Those outward appearances of wealth, namely expensive things, have become less reflective of your wealth (or what you would like others to think your wealth is).  Some of it is technological advances, some of it societal changes, some of it changes in taste.  But it’s undeniable that it has become cheaper to be rich.


Growing up, a Rolex was wealth and success in its purest form.  As far as watches go, they are beautiful but not the greatest timekeepers.  A mechanical watch can’t keep time near as well as a quartz or digital watch.

Yet, when I was a kid, if you saw someone wearing a Rolex and another person wearing a Timex, it was clear which one was, or at least seemed, richer and more successful.  Of course, that wasn’t necessarily the case (see, The Millionaire Next Door).

For me personally, my parents gave me a Rolex as a gift when I graduated from Pitt.  They were giving me a watch but so much more.  It was a sign of my accomplishment, my achievements to that point, and their confidence of my future successes.  Congratulations to Rolex’s marketing department.

Today I still have that Rolex but I never wear it.  Rather, I wear a smartwatch.  Despite being rich, I choose to “show off” my $150 Apple watch instead of my $6,000 Rolex.  Certainly for me it has a lot to do with functionality: my Rolex tells me the time and date (and those not very well), while my smartwatch tells me those plus emails, texts, my calendar, a stopwatch, the weather, and on and on.

People can always choose function over fashion, but I think even with fashion the smartwatches have eclipsed the expensive timepieces.  If you got 100 millionaires in a room, do you think you’d see more smartwatches or Rolexes?  I think smartwatches in a landslide.

The point is, if you’re rich, you don’t need to have a four-figure watch on your wrist.  You’d more than fit in at a small fraction of that.


Clothes have always been a fashion item, and that continues to this day.  It boggles my mind that some jeans can cost $20 and what looks to my uneducated eye as the exact same thing can cost $300.  Whatever.

That said, a couple decades ago it was a lot more expensive to dress like a successful person, especially at work.  My professional career started with Medtronic at the very end of the 1990s.  That was just when corporate America was transitioning from suits to business casual. 

Of course, if you were rich, that meant you had a good job, and if you had a good job you had to dress the part.  A typical work outfit would be a suit ($300—and these are moderate prices, you would certainly go much, much higher), a dress shirt ($30 plus dry cleaning), and tie ($20).  Compare that to a business casual outfit of the same caliber which would be a button-up shirt ($30) and chino pants ($30).

That’s a difference of $350 compared to $60.  And that doesn’t account for the little extras on a suit that could accentuate how rich you are like cuff links or a tie clip.  Plus, it’s even more expensive in that back then you needed both the suit and the casual clothes.  So your total cost was $410. 

Today you don’t really need the suit at all and can just get by with the business casual.  You’d look just as rich as before but just have to spend a lot less money.


Cars are another way to really show off how rich you are.  There have always been cars to get you from A to B.  But it seems there’s been a real change in how we perceive them.

As a kid, I remember that Mercedes or BMWs represented the cars that rich people drove.  Sure, there were Yugos and Civics and Chevettes that did the same thing, but they clearly weren’t driven by rich people.

That price difference, back then a top of the line was $80,000 and a lower-end car was maybe $9,000, made a huge difference in perception.  I am sure it happened, but I couldn’t imagine a millionaire choosing a car like the one we had (haha!!!) over a Mercedes with every bell and whistle imaginable.

A young Stocky standing in front of our Chevette.

Today, I think brands like Prius and Tesla have turned that logic upside down.  A top-of-the-line Mercedes or BMW costs about $130,000 and a Ferrari or Lamborghini is in the $250,000.  Compare that to a Prius at $25,000 or a Tesla at $40,000.

At least for me, if I saw a Prius lined up next to a Mercedes S-class, I wouldn’t necessarily think the Mercedes owner was richer than the Prius owner, rather I would think they were different.  One was more ecologically conscious, and that could very well correlate with wealth.  Back when Foxy Lady and I lived in LA (in the early 2010s) Priuses really took of and I felt at the time they were every bit as fashionable as a BMW 7-series, maybe even more so.

The point of all this is that as society has evolved over the past 20ish years, fashions for the rich have changed.  They have changed in a way that makes those really expensive outward appearances of wealth less important and less closely linked to how rich you actually are.

To me that’s a great thing.  I’m a millionaire but I am also EXTEMELY cheap (cut to Foxy nodding in agreement).  It’s looks like I’ve finally become fashionable. 

Top 5: Things to do with your finances when you’re just starting out

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Love must be in the air. The past couple weekends I’ve run into a few young couples who either just got married or are about to get married.

It got me to thinking about what are the most important things to do in the world of personal finance when you are just getting started.  For the soon-to-be newlyweds, here is my Top 5 list:

5. Figure out your debt situation: If you’re lucky, you won’t have a lot (or any) debt.  For most of us there is some out there, and that isn’t necessarily a bad thing.  List out every debt you have (student loan, mortgage, credit card, car payment, etc.), the balance, and the interest rate.

On a spreadsheet (see #4) rank them in order of interest rate.  As a general rule I use a cutoff of about 6%.  If your interest rate is above that pay those off right away, starting with the highest interest rate debt first.  If your interest rate is below that, that might be okay to keep that debt and just make the normal monthly payments.

If you have any debt (especially credit card debt) at any rate higher than 10%, that’s a “debt emergency”.  Really look at every purchase you make—if it’s not critical to your survival (food, shelter) then pass that up until your debt is paid off.  The only exception to this is #1—funding your 401k.

You can get creative with your debt by consolidating high interest rate cards onto a lower rate card or one that offers a low teaser rate.  That could save you a ton of money, and you should probably look into that, but ultimately, you’ll need to pay that sucker off.  So just hitting the grindstone of paying off your credit cards is a must.

4. Make a budget on a spreadsheet: Take a spreadsheet and put a quick budget together that includes your income, your expenses, and the difference between those two.  This can be simple at first (and it should be simple at first).  Over time, you’ll add more and more sheets to the spreadsheet for things like your mortgage, investments, kids’ education, and other things.

But at the beginning, you need to get a sense of where your money is going.  The budget will give you an aspirational view of this.  After your budget is done, you can track your spending with a website like  This two-step process lets you figure where you want to spend your money, and then also look at where you actually spend it.

Of course, this is an iterative process, and as you close a month and look at your expenses, you can see if you’re spending more than what you budgeted.  This isn’t a time to beat yourself up (being too hard on yourself is a sure way to stop looking at your finances closely, and that’s a REALLY bad thing), but a time to ask yourself why you spent more and if it was worth it.

As an aside, using a spreadsheet is a really good skill in general.  I was really good at spreadsheets and it’s hard to overstate the incredible impact it had on my career, as well as the incredible wealth those skills gave me and my family.  And really, my experience with spreadsheets started in college when I was creating a financial budget.

3. Educate yourself on investing: At a young age, educate yourself on investing.  Obviously, this blog is the universally acknowledged best place to learn about investing, but I have heard rumors there are others. is a great website that looks at personal spending and his early posts had a tremendous impact on my outlook.  A Random Walk Down Wall Street is a book on investing that really defined my investing strategy; I read that as a 19-year-old and still think about its insights today.

There are a lot of websites written by millennials about spending and personal finance that might resonate even more.  A few are:,, and  Most are about reducing spending and budgets and that sort of thing, but there are some on the nitty gritty of making investing choices.  You’ll want perspectives on both.

The whole point is that you need to know what you are doing here.  Spending 20 hours early in your life to figure out basics like asset allocation, tax avoidance, and fee minimization as well as a general attitude towards saving early can easily lead to hundreds of thousands or millions of dollars.  That comes to about $50,000 per hour—not bad.

2. Start an IRA with $1,000: This is as much about the experience gained as it is about actually investing your money.  Vanguard lets you start an IRA with $1,000 as the minimum amount.

You’ll navigate through their website, figure out how to make choices (like Roth or Traditional IRA—go traditional).  You’ll pick your investments, and then you’ll have something to look at every once in a while to see how it’s doing.

So many people are just at a total loss when it comes to setting up accounts for their investments.  That becomes a real problem once you hit 30 or 40 and you’re starting to get behind the 8-ball; you know you need to do something but are kind of clueless on where to start.  Doing it now lets you get your toes wet in this world and makes the next accounts you need to set up (529, 401k, brokerage, etc.) all the less daunting.

1. Get the company match on your 401k: #2 was more for experience than for investment.  Here is where you should start walking down the path for investments.  At a minimum, contribute the match and take the free money.

This is so important for a couple reasons.  First, you’re getting that free money.  Second, you’re making your first “asset allocation” decision.  When it comes time to pick which fund to invest in, unless you have very unique circumstances for an early-20s person, I would definitely go with a 100% equity index fund.

Third, your 401k is a really powerful tool.  If you had no other investing tool, you could still grow a 401k to well over a $1 million during your working career.  That is enough to fully fund your retirement.

BONUS—Stay poor:  Too many young adults make a huge mistake of trying to mimic the lifestyle their parents provided, once they (the young adults) get out of school.  That first paycheck of $2,000 is going to seem like a ton of money (and it is).  It’s really tempting to decide to buy a new car or go on a kickin’ vacation or upgrade the furniture.  Resist the urge.

Your parents took 25 or more years of working (with pay increases and investment returns) to provide the house and cars and vacations you enjoyed your senior year of high school.  It’s not realistic to think you can have stuff at that level of niceness so early.

A car is a really good example.  In general, automobiles are horrible investments.  To the degree you have a car that can get you from point A to point B, keep it.  A new car will be nice and cool and make your friends gawk, but it’s a horrible use of money.  A couple hundred dollars a month for a car, plus insurance, and maybe $50 for a gym membership, $50 for cable, and $80 for four dinners at a restaurant—those numbers add up.  Those alone could fund your savings in the early years.

Your early 20s are a time when it’s still okay not to have the best and nicest of everything.  If you can embrace that, even when you do have the money, and put that extra money to work in investments you’ll build a very strong financial foundation that will afford you many more opportunities are you reach your 30s and 40s (remember, I did that and I retired at 36).

Refinancing a mortgage

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Sometimes it’s easy to think the way to amass wealth is with grand slams or 80-year touchdown passes (or what ever analogy you want to use for that big move).  In financial terms it’s getting a $500k job or picking the next stock that will double in a month.  But I think the opposite.  Those big wins are rare and people can waste a lot of time and effort and money chasing them.

Rather, the best way to amass wealth is the little wins (the single hit or the 4-yard run up the middle).  In personal finance those “little wins” are things like we talk about here a lot: lowering your costs, saving small amounts every paycheck, making sure you get the 401k match.

Recently, the Fox family got another small win which will add up to something very large.  We are in the process of refinancing our mortgage.  It’ll save us a little bit each month but that will add up to an enormous amount when it’s all said and done.

Two years ago, the Fox family moved to Charlotte.  We bought a wonderful home, and like most people, used a mortgage to pay for it.  Also, as with most people, our monthly mortgage payment is our single largest expense.

Over the past two decades, interest rates have been at all-time lows, and that means that mortgage rates have similarly been at all-time lows.  When I first purchased a home in 2006 my mortgage interest rate was 6% and everyone was talking about how incredibly low rates were.  Fast forward 15 years and rates have been cut in half (or even lower).

To the point, we are in the process of refinancing as we speak, at this very moment.

When to refinance

The decision to refinance really comes down to a decision of taking on a little pain now (in terms of closing costs and other fees associated with the new loan) for a lot of benefit later (in terms of lower interest rates).

For us we had the following stats for our current mortgage:

Mortgage amount$800,000
Interest rate3.65%
Monthly payment$3,781

The simple math tells you that we’re paying about $30,000 a year in interest, or about $2,400 each month.  That seems like a really big number.  Even decreasing that a little bit could really move the needle.

Doing some back-of-the-envelope math, knowing rates were around 3%ish, I could save about $5,000 a year or about $400 a month.  Definitely that seemed worth it, at least to start the process.

I filled out a loan application on line and got bombarded by a ton of people offering mortgages.  After sorting through all the messages and picking the one or two that seemed best, I went through a process that all-in took about 10 hours of work plus sending a bunch of emails.

Ultimately, we got a 3% rate for closing costs of about $6,000.  This is taking candy from a baby.  It’s hard to imagine finding a better deal.  I’ll be charged $6,000 today (and I won’t even really pay it because it will be rolled into my new mortgage), for the ability to save $5,000 this year and every year after.  Easy money.

Going with a shorter mortgage?

We will be refinancing with another 30-year mortgage.  We could have gone with a 15-year mortgage and that would have knocked our rate down to about 2.88%.  Certainly, a lower rate is good, about $80 per month in savings.  However, it requires a larger monthly payment.  We could afford it, but I definitely think we can do better by investing that money.

In fact, that’s the same playbook I used to get my car for free.

So we went with a 30 year mortgage.

Going with an ARM?

The other option we had was to do an adjustable rate mortgage.  The way these work is they give you a really low rate for five years (hence a 5-year ARM), but after that the rate can adjust, almost always up.

We have used these in the past, both in Los Angeles and Greensboro, and it turned out both times that was the right decision.  ARMs make sense if you think interest rates will stay low, or you think you’ll move before the ARM is up.  For us, in the past, we moved before the ARM was up, so taking the lower rate worked.

Now, we are pretty well settled in our home so we don’t plan on moving until Mini Fox graduates high school (10 years away).  Also, it seems very unlikely that rates will stay this low.  Most people, me included, expect rates to go up.  For all those reasons, we didn’t do an ARM.

That left a traditional 30-year fixed mortgage, and that’s what we went with.

To pay points or not?

The final decision was whether we should take the normal rate or “pay points” to get a lower rate.  What this means is we could take the 3% rate and pay the normal closing costs ($6,000).  Or we could pay extra closing costs (about $7,000 extra, making the total closing costs $13,000) and get a rate all the way down to 2.65%.

This may seem more complex but it’s still a fairly straight-forward calculation.  Just doing the regular refinance would reduce our monthly costs about $400 per month, so we’d “pay off” our closing costs in a bit over a year.  No brainer.

By paying the extra points, we lowered our rate an additional 0.38% or about $150 each month.  Of course that cost us $7,000, so it would take us about 46 months to “pay off” the extra points for the lower rate.

Four years may seem like a long time, but then you remember that it’s a 30-year mortgage, and it doesn’t seem that long.  Even if we sell in 10 years, we’re still well ahead of the game.

That’s our story.  We’re going with a 30-year mortgage with closing costs of about $13,000 but that will lower our monthly payment about $600.  Like I said, taking candy from a baby.

And if you really want to nerd out, if I assume that I can invest that $600 each month in the stock market at historic averages, after the 30 year mortgage is done, I’ll have a tidy $730,000!!!  That’s almost as much as the mortgage itself.  Not bad.

Top 5 thoughts on the Covid stock market

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I know, I know.  I periodically test your patience by taking extended leaves from writing the blog.  I’ll use the excuse that everyone seems to be using right now: “Blame it on Covid.”  After almost two years of having to homeschool the cubs due to school shutdowns, I think I’m finally in the clear.

It has been a pretty wild year or so with so many things to talk about.  I’ll get to them in due course, but I wanted to cover what I think are the five most interesting/surprising/paradigm shifting thoughts that have emerged lately.

Here goes:

5.  US stocks are still the place to be.  Long time readers know each year I think about which stocks will do better, US or international.  Going back to 2013, US stocks have out performed international stocks.  Every year I think that this might be the year that international stocks turn the table and every year I’m wrong; US stocks come out on top.

A ton of people have written reams on this issue (me included), and there are a ton of complexities that I won’t attempt to cover here. 

But just looking at the numbers, US stocks have GREATLY outpaced the international stocks again.  In 2020, in the teeth of the corona virus and it’s impact on markets, US stocks were about 10% higher than international.  In 2021so far, it’s a similar story with US stocks about 12% higher.

This is certainly a curious phenomenon, and the stock market more than probably anything else forces reversion to the mean.  So we should expect international stocks to do better, but it certainly hasn’t happened yet.

4.  Covid gave us the greatest V recovery of all time.  Back in March of 2020, it was a crazy time for the stock market.  Things were in freefall, and we were comparing that market slide to some of the worst ever—the dot-com bust, the Great Recession, and the grandaddy of them all The Great Depression.

In the space of about 30 days, the stock market plummeted over 30%.  That’s crazy and steeper and faster than the Great Depression or the Great Recession.  At the time it was easy to think things could really go to hell.  Even the most optimistic (me included) thought we’d be in for a long recovery.

Yet, stocks completely recovered about four months later.  As crazy fast as the fall was, that recovery was even crazier and faster—totally without precedent.  Bear in mind, it took 25 years for stocks to recover after the Great Depression.  For the Great Recession it was five years.  This was four months.  Wow.

3. Politics don’t matter in finance as much as we think.  Last November Americans voted out President Donald Trump and elected President Joe Biden.  Obviously they are very different men with very different policies.

Yet, for all of that, and I’m really going to sound like a bitter old fox here (and maybe I am), has the country really changed all that much between the two administrations?  More to the point of this blog, has the stock market?  In the four years starting when Trump was elected the US stock market increased about 15% per year.  In the year since Biden got elected it’s increased about 35%.

Those are pretty heady numbers that speak to the fact that the US economy and publicly traded corporations are incredibly durable, despite what is happening in Washington.  A few years back I wrote a post to this very point; the stock market does great no matter who is in power and this is just the latest example.

2. Inflation.  This is probably the biggest unknown right now for the stock market.  Starting in April inflation crept up to about 5-6% and has been hovering there since.  This is a huge change from what has been a really long streak of exceptionally tame inflation.  Before this year, the highest inflation has been this millenium was back in 2008 when it hit 3.8%.  Now it’s over 2% more than that, and that’s a lot.  In fact, you have to go all the way back to 1982 to find a time when inflation was this high.

That’s all well and good, but what’s the “so what”?  All the official people are saying the inflation is temporary and it’s just a matter of the supply chain disruption kinks working their way out of the system like a snake eating a pig or something.  Of course, you’d expect President Biden and Jerome Powell and Janet Yellen to say that.  That sounds much better than: “Wow, we really screwed up and inflation is going to spiral out of control, so get ready for bad economic times like in the 1970s.”

We’ll see how this plays out.  If it’s temporary, then it won’t be a big deal.  However, if 5-6% becomes the new normal, that has HUGE implications on our personal finances.  We’ll see over the next several months.

1.  Innovation just keeps on trucking.  We know the stock market has done well, really well, through the corona virus.  There are a lot of things we can point to like government spending and such.  But I think it’s mostly just the meat and potatoes of the stock market—strong earnings driven by amazing innovation.

At the beginning of the pandemic, I mentioned five areas that I thought would really benefit from the changes.  Some of those were right and others not.  But the constant was that our incredible economy is thriving and innovating.

Just yesterday, Tesla stock rose to become the fifth company worth over a trillion dollars.  And that’s just driven by amazing innovation.  Same story with Apple and Amazon and a million others.  If you’re a stock owner, that’s made you rich.  If you’re a human, that’s made your life better.  We’re living in awesome times.

I hope you enjoyed this.  Did I get the list right?  Is there anything you think I missed?

Ronin matter—the simple answer to Dark Matter

As a true nerd, I have spent way too much time thinking about a scientific question that has absolutely no bearing on my life—dark matter.  It’s probably the #1 mystery in astronomy right now, and I am excited to announce that I have solved it.  I look forward to receiving my Nobel Prize.

I am calling my theory Ronin matter.  If you don’t want to read all of this, here is the answer: Dark matter is rogue-planets floating between solar systems and galaxies.


While we don’t know what dark matter is made of, have never observed it, and overall are generally clueless about its nature, there are some things we do know.  Any theory regarding dark matter has to fit into these facts. 

  1. There is a lot of it—based on our estimates of how much gravity is needed for galaxies to behave the way they do and how much gravity is produced from the stuff we know is out there, there is about five to six times as much dark matter as regular matter.
  2. It is not evenly distributed—dark matter is lumpy, meaning that there are some places where we know there is a high density of dark matter and other places where we know there is a low density or none at all.
  3. We can’t see it—dark matter does not emit light (for the purposes of this paper, whenever I say “light” I mean any radiation along the electromagnetic spectrum).  Nor does it reflect light. 
  4. We can feel it—dark matter creates gravitational fields that we can observe, both by the impact that it has on the motion of celestial bodies that we can see.  Also, it creates gravitational lensing that impacts the light that passes by/through it, similar to the impact that other known celestial bodies would have.
  5. There isn’t any in our solar system—the movement of the planets, moons, sun, and everything else in our solar system are perfectly described by the gravity created by the things we can observe.  There’s no need to create a plug with some unaccounted-for gravity.

And that’s pretty much all we know. 


I contend that dark matter is made up of regular matter that is floating through space between the solar systems and galaxies.  I’ll call that Ronin matter. 

It would be a lot of little pieces, mostly smaller than Jupiter.  There needs to be about five times the mass of our solar system of this stuff for each solar system.  That could be about 18,000 Saturns.  Or, if variety is important it could be: 4,500 Saturns, 430 thousand Earths, 35 million Moons, and 850 million asteroids.

This Ronin matter would not be part of a solar system anchored by a shining star.  They are floating in the vast space between stars.  Therefore, none of our methods to detect exoplanets work.


Ronin checks all the boxes that we know about dark matter.  Plus, it holds up better than other theories that are the scientific community’s best efforts to explain dark matter.

Let’s look at that list of what we do know about dark matter and how it holds up:

  1. There is a lot of it—We just mentioned how much dark matter we’d need to “offset” our solar system.  That’s a lot of Saturns and Earths and Moons and asteroids, but there’s no reason to think they couldn’t be out there.
  2. It is not evenly distributed—No problem here.  Observable matter is distributed unevenly around the universe.  Why shouldn’t that also apply to rogue planets.
  3. We can’t see it—This is where it starts to get interesting, and this is where most of the criticism is going to be leveled.  If there is as much dark matter as must be out there and it’s composed on planet-sized objects roaming through the galaxy, then why can’t we see it?  Much, much more on this below.
  4. We can feel it—This works too.  That quantity of planet-sized objects for each solar system would create the extra gravity we observe.
  5. There isn’t any in our solar system—If there were any additional Saturns and Earths and Moons in our solar system we would know.  There aren’t, but there also isn’t any need for dark matter.  So it works here too.

Another major benefit of the Ronin theory is it is simple.  It relies on matter from the Standard Model we already know about. 

Currently, the most popular hypothesis in the scientific community for dark matter is WIMPs—weakly interacting massive particles.  The problem here is this is such a radical departure from everything we currently understand.  WIMPs don’t fit with anything in our Standard Model, so it would require something completely new.  That seems like a pretty big leap.


Criticism of Ronin theory fundamentally comes down to the fact that we haven’t observed anywhere near the necessary amount of matter.  How can there possibly be 18,000 Saturns floating around between each solar system and we’ve never seen any of them?

Space is really vast–First, we need realize that the space between solar systems is really, really vast.  The scale is truly beyond our brains’ comprehension.  The sun is about 1.4 million kilometers in diameter; the solar system is about 9.0 billion kilometers wide (Neptune’s orbit); and it’s about 4.4 light years to the nearest star (about 41 trillion kilometers).  Those numbers are so big they cease to have meaning.

Let’s scale things down.  Assume that the Earth is the size of a dime.  The sun would have a diameter of 1.9 meters, the height of tall person.  Saturn would have a diameter of about 16 centimeters, a bit smaller than a volleyball.  The solar system would have a diameter of about 12 kilometers.  The next closest star would be 55,000 kilometers away, about 1.5 times around the Earth. 

Using that same scale, the area of the empty space between our solar system and the next closest star is nearly 10 billion km2, equal to about 58 Pacific Oceans.  That’s a lot of empty space.

Planets aren’t very bright—Obviously we can see stars, even very dim stars very far away.  But we can’t see stuff that doesn’t emit light or reflect it from something that does.

Nearly every celestial body emits some radiation.  However, there is a huge drop off from stars which host nuclear fusion to planets and smaller bodies.  Saturn is the third “brightest” item in our solar system after the Sun and Jupiter, and it emits about 33 million times less energy than the Sun.  Earth emits about 20 billion times less energy than the sun. 

There is an obvious correlation between size and brightness.  Objects even smaller than Earth like the Moon or asteroids emit no measurable radiation.

We can’t see anything other than stars—We know that there are exoplanets.  But we only know they’re there because of their impact on what we can see, their star.  The exoplanet’s gravity makes the star wobble, or the exoplanet blocks the star’s light when it passes in front.

We aren’t very good at seeing celestial objects on their own.  We really only see them when they interact with their host star in some way.  Ronin aren’t near bright stars, so there’s no really good way we could observe them.

We have discovered rogue planets—Despite the difficulty of finding rogue planets, we have found a few (less than 20).  Nearly all the ones we have found are very large (several times the size of Jupiter).  That makes sense because it’s easier to see big things.

This should make us optimistic for two reasons.  First, there are such things as rogue planets.  We have observed them, even if not very often.  That alone is a huge advantage over WIMPs where we have no observations of them, despite considerable searching.

Second, the rogue plants we have found are really big.  If there are big ones, there are absolutely smaller ones too.  A prevalent feature of the universe is that there tends to be more small things than big things.  It’s very easy to conclude that there are a lot more Saturn- and smaller-sized rogue planets out there than the few multiple-times-larger-than-Jupiter sized ones our limited technology has been able to observe.

Our solar system is third generation—That means at least two rounds of supernovas occurred to make us.  After the big bang, matter coalesced to make first generations stars.  Those ultimately exploded in a supernova sending matter in all directions.  Some of that matter coalesced to make second generation stars which then also blew up in a supernova sending matter in all directions.  Some of that matter coalesced to make our solar system.

A lot of the matter from those supernovas went in directions where there wasn’t a critical mass to form a star massive enough for fusion.  All that matter could be floating around the galaxy as Ronin.

Old stuff fades away—Stars, just like everything else, grow old and ultimately fade away.  A few die in supernova explosions but most just quietly burn out.  Definitely planets and smaller bodies that emit radiation see their radiation output fall. 

This is important because the universe is about 15 billion years old.  That’s a long time for smaller and dimmer stars from the first or second generation to have faded away.  Maybe they have faded below our threshold to detect them.

This potentially opens the door even wider for the Ronin theory.  Right now, I set the limit for Ronin at Saturn sized.  Our very limited experience (limited to a single observation) shows that larger planets like Jupiter emit a lot more radiation; Jupiter is about twice the mass of Saturn but emits 33 times the radiation.  But that is now.  If Jupiter was a couple billion years older would its radiation levels fall to below Saturn’s current levels?  How about brown dwarfs?

If these larger bodies see their radiation emissions fade, then it’s reasonable to assume there are a lot of larger Ronin from the first and second generation that are floating out there but whose emission levels are below our observational thresholds.


You’ve stayed with me for about 1600 words so let’s put a bow on this.

The Ronin theory just works.  It’s simple and doesn’t require a total redo of the Standard Model which is the fundamental basis for our understanding of the universe right now.

Also, it is reasonable that we haven’t seen this stuff because it’s hard to see.  Imagine looking for 18,000 volleyballs (Saturn-sized Ronin) in 58 Pacific Oceans (the area between solar systems).  If we can’t see those objects because they don’t emit radiation and they aren’t close to anything that does, that makes it even harder.  That said, we have found some very large rogue planets so we know this concept does in fact occur, it’s just hard to find.

I hope you’ve had fun and been a bit entertained by this.  I’d love to hear your comments.  Otherwise, I’ll see you in Stockholm.

Making a savings account with a bond fund

The 7 Best Bond Funds for Retirement Savers in 2019 | Kiplinger

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Last week I said that savings accounts were for suckers, and that instead you could use bonds to accomplish pretty much the same thing, but make a lot more in interest.  A couple readers asked how that worked in a little more detail.

“Hey thanks for the finance blog… What bond funds do you recommend (ETFs) and do you just hold them in a normal brokerage acct to be able to sell them?”  –JS

How liquid are Bonds? Say I need a quick 5K for a new HVAC unit or some other unforeseen expense. Should I keep any money in a traditional savings account?”  –CW

If we like the concept of using bonds instead of a savings account, let’s dive into how we would actually do it.

1. Open a brokerage account with Vanguard (or Fidelity—we have money at both, but more at Vanguard and have been with Vanguard longer.  Both are excellent.  I’ll write this for Vanguard but in parenthesis I’ll put the information for Fidelity).  You want to make sure it’s a regular brokerage account and not an IRA or something like that.

As a “savings account” you’ll want be able to pull out money when you need it.  A brokerage account allows you to do that, but an IRA account would not.

2. Link your Vanguard account to your checking account.  This is very secure and I have never had an issue with it.

Online you’ll put in your checking account routing number and account number.  A few days later you’ll see two little deposits (think something like $0.21 and $0.09).  This allows Vanguard to ensure that it’s your account.  When you see those amounts, you’ll go back to Vanguard’s website and enter them.

Once you’ve confirmed those, then you’re Vanguard account will be linked to your checking account, so you can transfer money between them very easily.  Sadly, there’s no free lunch and Vanguard will take those two little deposits back.

3. Pick your bond fund.  Vanguard has a ton of options (as does Fidelity).  I want to keep it simple so I pick an index fund to minimize fees.  Also, I want to go as broad as possible to maximize diversification.  Basically, you can go one of two ways—either buy a bond ETF like BND or buy a bond mutual fund like VBTLX (for Fidelity it’s FXNAX).

ETFs are a lot more flexible and I think we’re entering a world where mutual funds will slowly go extinct in favor of ETFs.

4. Buy your BND shares.  Take what ever was in your savings account and buy shares of BND.  It’s a pretty easy process.  Depending on how much money we’re talking about, you might want to break it up into a couple purchases, although statistics say you should just dive in with a single purchase.

5. When you go to buy the shares, it will ask you how you want to fund them.  You’ll pick your bank account that you just linked and it will all work.

When you need to take money out of your savings account (like when CW’s heater goes bad), you just do the opposite—sell the shares and when it asks where you want the money you select your checking account.  Generally it takes about two or so business days to complete the transaction, so just make sure you plan a little ahead.

These ETFs are extremely liquid so you can sell them whenever the market is open.  In fact, you can also sell or buy them when the market is closed.  It will just fill the transaction at the next possible price, when the markets open next.

Easy peasy, lemon squeezy.