Last Friday I had the good fortune of winning tickets, through my company’s ticket giveaway program, to see Bill Cosby at Wolf Trap in Virginia. I, like many in my generation, am huge fan of the comedy icon that is Dr. Huxtable so seeing him live was a real treat. What was also nice was that because they were corporate tickets, we had access to the Encore Circle. The Encore Circle consisted of a few tents and a cabin beside the amphitheater and it was really nice to have a place to hang out an hour before and half an hour after the performance. They had complimentary coffee, tea, lemonade, soda, etc. and the tickets came with some free cocktails too. After the performance, they even had cookies!

Seeing Bill Cosby live was incredible and seeing him do stand-up (though he sat most of the time) for two and a half hours was unreal. The man is less than two weeks from his seventieth birthday and he was doing stand-up comedy for two and a half hours. At one point he was on his hands and knees giving some folks in the front row a nice grilling about parenting that had the crowd rolling.

His comedy is definitely for the older crowd, versus the just out of college crowd, but it was hilarious. If you ever have the opportunity to see him, snatch it up, he’s pretty good and the man is a legend!

I wanted to reach out to all of you again to see if you could spare it in your budget to send a few dollars to the Make A Wish Foundation. My buddy Scott is organizing the third Ghent Bar Tour benefiting the Make A Wish Foundation and FMF and I have agreed to match dollar for dollar donations up to $1000 for anyone who donated and let us know. Right now, to my knowledge, only one person has taken us up on that (much link love to No Credit Needed and his generosity!); so please, if you can spare it, any amount would help the cause!

You could always jump on the $250 American Express business card promotion and take a part of that and send it to MAW. I think you’ll want to act quickly because the $250 Chase Freedom card promotion was available and gone very quickly.

Now, onto this week’s roundup…

• As if you really needed it (if you do, then read this article), but here are five reasons you need to care about your FICO score.
• Use your turn signals in Virginia or suffer the wrath of a $1,050 fine! This law in Maryland, if enforced, would net the state billions.
• I guess a million doesn’t buy you much anymore these days, according to Jonathan Clements, it won’t set you up for a comfortable retirement either.
• Looking for ways to cut vacation costs? FMF lists five ways.
• Flexo answers a reader question about timing credit card payments.
• SVB looks at the Google Doodler and proclaims it the best job in the world!
• At Money Smart Life, read about the power of marketing and the power of Victoria’s Secret. “Fairly regularly, they send people a certificate for a free pair of underwear – no strings attached. When we use it, though, reciprocity tells us we should really probably buy something else.” So true, so true.
• Lazy Man is running a pretty juicy contest (his first!) where you can win a $200 high end leather briefcase.
• Do you have anything against Wal-Mart? I personally don’t but you’re welcome to share your thoughts with Golbguru.
• Sun talks about his mid-year adjustments, which is always a smart move. Personally I think that once a year is a bare minimum but when you only course-correct once a year, you might miss something or react too slowly; so give your stuff a once over.
• Jeremy points us to a free personal finance course at UC Irvine, sounds interesting!
• At my Home Insurance Guide, I outline the importance of comparison shopping for homeowner’s insurance, though it applies for everything. The difference is staggering.
• Do you have lots of free time? Check out these 30 free ebooks about personal finance over at Mint.
• At Roth IRA Explained, I discuss when Roth IRA contributions can be made.
• Curious about reverse mortgages?

I think there is still an overwhelming belief in American society, despite how far we’ve come in gender equality (19th amendment, women’s suffrage, is less than a hundred years old), that the male is the breadwinner and the female is the homemaker – which leads to some consternation when the female out-earns the male. Despite the gender neutral title, I think this question is more acute if you’re in a heterosexual relationship and you’re a guy who comes from a more fairly traditional family with a single breadwinner, your father. (I don’t know the dynamics of homosexual relationships, but it would be nice if someone from Queer Cents could share their two cents on this)

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You’re going to be poor forever, you suck at life, and you’re a terrible father/mother/brother/sister/husband/wife/whatever. Okay, now worship every single word I say because I just gave you a wake up call. You didn’t know that you were going to be poor forever, but since I have a microphone, you have to listen to me. You didn’t know you sucked at life either, but thankfully I was here to clue you in because I am the expert on people who suck at life, right? Worship me!

Who the hell is Dave Ramsey? When I read his quote on Money Musings about car payments:

Car payments are the mantra of the middle class. As long as you keep a car payment, you’re going to be mediocre in your finances. It’s just stupid. Avoid that. Pay cash. Save up and pay for whatever you do.

Car payments are stupid! Don’t get a car that will get you to your job, just walk there or ride the bus until you’ve saved enough money to pay for the whole thing on cash. Ignore the 0% financing for 5 year offers because taking on debt is stupid. This is the same guy who said pay off the smaller debts first because that will give you a psychological boost in your fight against debt. Ignore the numbers you moron, just pay off the smaller one so you can feel better about your miserable self!

Everytime, I see Suze Orman on TV when I flip through channels and her bleached blond hair (so she could fit in with the younger crowd?) chastising someone for being irresponsible, it irks me (because I don’t want to use stronger language). People don’t need to be talked to like children, they don’t need to be scolded by someone who looks down upon debt but then stars in Buick (I think) commercials and 0% financing just to make a buck. Her popularity is akin to Judge Judy’s popularity, but at least the people Judge Judy scolds like children actually broke a law (or were unfortunately both the defendant and male).

That’s probably why I’ll never be on TV, I’m not incendiary enough or downright disrespectful enough to convince people addicted to schadenfreude to watch me flip out on people.

I posted a recap after the first six Devil’s Advocate posts so it only seems appropriate I post a recap now that we’ve added eight more to the set, in case you missed any. In this set we’ve spanned almost the entire personal finance spectrum hitting on investing, budgeting, debt, and even marriage. The Don’t Get Married post led to some fun in the house for me.

Also, I’d be interested to hear what you all thought of the whole Devil’s Advocate series in general – stupid? interesting? gimmicky? fun? Any and all comments, critiques, questions, potential topics, whatever… please let me know!

• Invest In Your Company – You know your company right? You probably know it better than company XYZ, which you may have considered investing in, so why not put a few dollars towards something you at least know?
• Don’t Budget to the Penny – Mostly because it will drive you nuts, make it harder for you to stick with it, and totally unnecessary.
• Pay Cash for Everything – It’s absolutely safer than using a credit card, no one can argue that (no one can steal your dollar and spend $29308423 on it), and your liability is limited to the dollar amount you hand over.
• Adjustable Rate Mortgages Are Awesome! – This was a guest Devil’s Advocate post and it advocates that ARMs are awesome because you pay less and you probably will move out of your house soon anyway.
• Buy That Home Warranty – This one advised that you get a home warranty because right after buying your house, that’s when you’re probably the most cash strapped… so it’s important to have insurance to weather the problems now, when you’re low on funds.
• Don’t Get Married –
• Four Reasons You Should Get A PayDay Loan – PayDay loans, by their very nature, are not evil; it’s when you fall behind that they get you badly.
• You Don’t Need College to Succeed – Oh yeah, I said it; college guarantees debt but does not guarantee success.

One of the classes I’ve been taking involves investing, discounting cash flows, blah blah; and so one of the things we’ve touched upon is retirement savings. One of our recent problems is calculating how much you need to save in during pre-retirement in order to guarantee (based on assumptions) a future cash flow. So, rather than study the textbook and answer problems with very little payoff (yeah yeah, I have a test), I figured I’d create my own problem and submit it to you all to see if I did it correctly.

Q. How much do I have to save each month for the next forty years in order to ensure that I can withdraw $5,000 a month, in 2007 dollars, for the next twenty years?

Assumption #1: No taxes.
Assumption #2: Inflation will be 3% a year for the next 40 years.

Given that assumption, $5,000 in purchasing power in 2007 will be $16,310 in 2047, so you’ll need to have enough retirement assets such that you can withdraw $16,310 each month ($195,720 a year) for the next 25 years. In order to calculate that amount, you’ll need to know the rate of return on your assets during those 25 years, as you draw it down.

Assumption #3: Your post-retirement assets will appreciate at 5% a year.

At 5% a year and drawing out $288,060 a year, you’ll need assets in the amount of $3,848,183 in Year 40. That means between now and year 40, you’ll need to save and appreciate nearly four million dollars in order to retire on $5,000 a month (2007 dollars) for the next 25 years. (if that seems a little high, it’s because you have to discount your rate of return by inflation each year) Scary huh?

So, how much do you need to save? Let’s hit up assumption 4…

Assumption #4: Your pre-retirement investments will appreciate at 10%.

Now, in order to have $3,848,183 in retirement assets in 40 years, how much will you need to save each month if your savings appreciate at 10% each year? (This time we don’t discount for inflation because it’s already taken into account by the payout each month) It’s actually quite reasonable, a mere $8,694.54 a year… or $724.55 a month.

(Someone please check my math!)

There’s an article over at Yahoo Finance, in their retirement section (if you aren’t looking at it today, June 27th, you probably won’t see it on the front page anymore), titled “The High-Stakes Battle Over Automatic 401(k) Picks.” The little blurb underneath reads:

Legislation stalled over what investments should be included in automatic-enrollment plans is causing millions to lose out on retirement savings. What forces are driving the dispute?

If you read that strictly as its written, it sounds like Congress is causing innocent Americans to lose millions of dollars because of their deadlock on what should be the automatic pick in auto-enrollment 401ks. It says that because that’s eye-catching and it’ll lead to a click from the reader, but ultimately it’s not Congress’ fault, it’s the employee who is losing out on retirement savings’ fault. If everyone was clued in enough to enroll in their employer sponsored 401k plan, Congress wouldn’t have to waste time on the issue, there are plenty of other issues to waste time on.

You are responsible for everything that happens to you, including your retirement savings, whether you like it or not. The moment you think that you aren’t responsible for your own life you can just pack it up and call it a day.

Enroll in your 401k, put it in something intelligent (warning: you might have to read something), and ask your legislative representative to do something useful like clean up the environment.

As some of you may know, I’ve branched out a little and written several other blogs (grilling! it’s summer!) to cover some other topics that I felt were outside the scope of this site, which I try to keep mostly about my personal finance. One of those sites is one about home insurance and is called Home Insurance Guide (very clever, I know!). At first it was just posts of me going over various parts of my insurance policy, trying to figure out what everything meant, and it soon expanded to several other topics – all ultimately related to home insurance but all of which were pretty much outside the scope of this site.

For example, just recently I did a whole little mini series on fire extinguishers including articles on the different types of fire extinguishers and how to use a fire extinguisher. I also did a write up about safes which included articles on burglary resistant safes and fire resistant safes.

So, if you’re thinking about home insurance, renters or homeowners, and it makes you dizzy, you might find some useful information over there that you won’t find here.

Over the weekend I had Empire Today and M&S Carpet come in and give me quotes on berber carpeting for my basement. If you recall, last year about this time I asked Empire to come out and they stood me up, this time they didn’t. (I called them only because I wanted to see their quote) They came in at a whopping $1,900 for the space whereas M&S cost only $1,000. The funny part was when the Empire salesman went through the whole ’special discount’ routine going from $3,200 all the way down to $1,900 because even he didn’t really believe in the $3,200 part. The moment he said $3,200 he immediately jumped in on himself and said “but wait, there’s a special discount of 50%” and somehow reached $1,900 (which is not 50% of $3,200, as my astute fiancée pointed out). Yeah okay buddy, nice try.

Rosemary at M&S quoted us $1050, no special one-time one-week only discount, just straight up $1050, no BS, we can come out in two days. (They’re coming on Saturday) I like working with people who don’t BS me and get to the point quickly. So, the final price was $1050 + tax for a basic berber with a 6 lb. padding for approximately 500 square feet, including moving furniture, clean up, etc. That works out to approximately $2.10 a square foot, a pretty good price for installed carpet. The carpet itself isn’t the nicest of nice stuff (it’s only $2.10/sq. ft. installed, you can’t expect the world!) but it’ll be going in the basement where I don’t think we really want super-nice carpet anyway. All it takes it one sump-pump disaster and you can kiss that carpet good-bye.

Well they came out two Saturdays ago and it took about two and a half hours to install. The guys worked efficiently, which was a plus, and cleaned up the whole place afterwards – very professional and exactly what I expected. In fact, they even repaired a bit of carpet that I had messed up but wasn’t installed by them. There’s a little 4′ x 4′ carpeted area in front of the door to the basement that had been a bit damaged by some water. We had tossed the padding because it had gotten wet (the carpet itself was fine, thankfully) and those guys just installed some new padding underneath, no questions asked (Rose had said it wouldn’t be a problem, just let them know).

There was some carpet left over and Rose told me to bring it in, tell them what sizes we wanted, and they’d make them into little rugs, no extra charge. Ultimately, I think that while we could’ve shaved a little more off the price if we kept looking and looking and looking, dealing with M&S was great and I’d certainly go back if I wanted more carpet.

Last week I asked whether investment newsletters were worth it (the jury is still out), but when I talked to some people about it yesterday (the same co-worker), I had a revelation. When you sign up for an investment newsletter, what you’re actually doing is outsourcing the job of manager for your personal retirement or investment fund.

If it’s only $199 for the subscription to the Motley Fool’s Hidden Gem newsletter and you’re planning on putting $10,000 into it, you’re looking at an actively managed fund with a minimum expense ratio of 1.99%. Once you start adding in your own trading expenses, that numbers gets bigger, but essentially that’s your expense ratio (especially if you start trading with Zecco, thus taking out the buying and selling fees) if you want to compare it to some actively managed funds.

While it won’t compare to the low low expense ratios of an index fund but remember that you’re not really comparing your newsletter fund with an index fund, you’re (well, the newsletter is) actively managing its holdings.