Personal Finance 

Net Worth By Age Is Meaningless

Net Worth By AgeNet Worth By Age charts are mere entertainment at best and misleading at worst.

Check out this CNN Money charting tool in which you enter in your age and your annual salary and it calculates some fun facts and figures. It takes your age and gives you what the median net worth figure is for each age group; it also takes your salary and gives you what the media net worth figure is for each age group. And with two numbers, you’re expected to figure out if you’re doing well, doing poorly, or just plain doing. Except you can’t.

There are simply too many variables.

Take someone who is between 25 and 34 and think of all the life changes that occur in that time period. If you didn’t go to college, you’ve probably been working for at least half a decade by the time you turn 25. Someone who did go to college likely will be a couple years into their first job by the time they hit 25. Can you compare the two? Can you honestly compare that against the median of $2,125? What if you’re 25, married and have two kids? What if you’re 25, not married, don’t have kids… is it even fair to compare the financial situation of the two 25 year olds? No way. Age is the least significant part of that equation.

What about salary? $50,000 annual salary means you should have a net worth of around $109,975. Well if a 25 year old’s net worth is around $2,125 and a $50,000 annual salaried person’s net worth is around $109,975… which is it? Which number is one supposed to believe? I know that at my first employer, someone with a bachelor’s degree in engineering could command a $50,000 salary in 2003. That person was likely younger than 25, so should they have around $2,125 or $109,975 in net worth?

If you play with these tools and find yourself ahead, that’s great. If you play with these tools and find yourself behind, you might consider it a shot across the bow if you have no extenuating or mitigating circumstances. Chances are you don’t fit into the cookie cutter scenarios so don’t get too high or low on yourself.

Net worth by age tables are fun, but take them with a ton of salt. 🙂

What do you think of these surveys and tools? Useful? Deceptive?


Converting Series I Paper Bonds into Electronic Bonds

Savings BondsSince I couldn’t buy electronic Series I bonds in time because of user error, I went to the local bank and purchased paper Series I bonds instead. The next step is to convert the paper bonds into electronic bonds and the Treasury Department makes that pretty easy.

Why Convert?

I’m converting because I don’t want to lose the certificate. If you lose the bond, you can always replace it by filling out Form PDF 1048 Claim For Lost, Stolen or Destroyed United States Savings Bonds but if the conversion process is easy, why risk it?

Another good reason to convert is that you’re able to redeem the bonds in any increment, you aren’t restricted to the increments you converted. The only rule is that you must redeem at least $25 and what’s left can’t be less than $25, which shouldn’t be an issue.

Lastly, after thirty years, the bonds are automatically redeemed. There’s no chance you’ll find the bonds in the attic somewhere in sixty years, after missing out on thirty years of interest. (there are more reasons and I just realized they have them listed on the SmartExchange site, so check them out there if you’re not convinced)

How To Convert

The system TreasuryDirect uses is called SmartExchange. Anyone with a TreasuryDirect account can convert paper bond certificates into electronic bonds (if you don’t have a TreasuryDirect account, open one… it’s easy but it takes a week or two to get everything all set up).

The next step is to log into your account and use their Contact feature to notify TreasuryDirect that you’d like to convert your bonds. Then, after a few days you’ll receive this email confirmation:


You can now create your own conversion linked account by following these steps:

* Access your TreasuryDirect account.
* Click the ManageDirectsm tab.
* Select the “Establish a Conversion Account” option from the Manage My Linked Accounts menu. The Establish a Conversion Account page will display. Review the information.
* If you wish to create a Conversion Linked Account, click the Create Account button

The next few instructions are just as the email describes except instead of looking for a “Establish a Conversion Account” you’re actually looking for “Establish a Conversion Linked Account.” On that next page, click on Create Account and with that, you have created a Conversion Linked Account! (* Welcome to your new Conversion Linked Account! You may begin converting your paper bonds at any time. Yay!)

The process from here is simple and mechanical with detailed instructions available on the TreasuryDirect site in the ManageDirect page. You will essentially create a list of bonds, print out a manifest, and mail in the bonds (there’s no point in me republishing the actual details, they give step by step instructions). The process takes about three weeks once they get the bonds and you can track it by viewing your electronic manifest through ManageDirect. Use that to track the status of your bonds.

As an aside, having logged into TreasuryDirect about a million times in the last few days, I have to say the security access card is a pain in the rear. Luckily if you fail too (3?) many times (I kept forgetting to pick a serial number), they report that you failed but don’t actually lock you out. You can just keep trying, great security!

(Image by joan_thewlis)


Series I Savings Bonds vs. Treasury Inflation-Protected Securities

I recently purchased a bunch of Series I Savings Bonds because of the favorable fixed interest rate (1.20% if you managed to score some in April 2008) and the favorable future inflation-pegged interest rate (~2.4%). The Series I is popular because you do get to lock in both a fixed rate plus an inflation based rate. The fixed portion is set when you buy it and the inflation portion is pegged to CPI-U. If you can get protection against inflation through a Series I, why does a Treasury Inflation-Protected Securities (TIPS) even exist?

(Click to continue reading…)

 Personal Finance 

Cavalcade of Risk #54

If only managing risk were as easy as playing a game, we’d all be experts and life would be safe and predictable. Unfortunately, risk comes in all shapes, colors and sizes, so we must always be diligent in our management of it. But, if we ever need a diversion, the Parker Brothers’ classic is always there. 🙂



Not Investing (Real Estate, Insurance, etc.)

  • NtJS presents Some Advice To a Friend about a recent business proposal he received. “My friend had been hit with a business proposal by some colleagues. It didn’t sound like a terrible deal – no pyramids, or get rich quick deals. The ones who had proposed it had a well thought out plan. They had run the proposal past lawyers and industry professionals and had gotten the thumbs up from everyone. The real details aren’t important here, but there were a couple that set off the alarms in my head.”
  • Henry Stern, LUTCF, CBC presents Biting the Hand That Feeds (An Update) posted at InsureBlog. “Just last week, we learned that the MVNHS© had successfully killed off another beneficiary (citizen) via the clever method of denying that “free health care” that we’ve heard so much about. Never fear though, dear Brits…”
  • Dan Melson presents Why You Want The Lender to Assume Pricing Risk posted at Searchlight Crusade. “By forcing the lender to assume pricing risk, you are far more likely to end up with a better loan out of the process, because they have to tell you about the real costs and the real rate that they have reason to believe you will qualify for. If they don’t, the difference comes out of their pocket, not yours, whereas in any other pricing scheme, who do you think is going to get stuck for the difference? For this reason, I’ll recommend any guarantee that forces the lender to assume pricing risk over any loan quote that does not.”
  • Jason Shafrin presents Mandatory Seat Belt laws posted at Healthcare Economist. It’s Jason’s contention that we shouldn’t have mandatory seat belt laws because it draws enforcement resources from other tasks, which I disagree. I think that if someone were to do a study, they’d find that police rarely stop drivers only because they are not wearing seat belts. It’s usually for something else (speeding, broken lights) and then an additional citation for the lack seat belt use.
  • Louise of Colorado Health Insurance Insider writes “What Drives Health Insurance Premiums.” Health care is a necessity. And the health care industry is very aware of that fact. If money is tight, you might forego buying a new car or going out to dinner. But if you’re on kidney dialysis, and taking a handful of medications with every meal, you don’t really have a choice about whether to continue your treatment when the budget is lean.
  • Over at the 3Gen blog, Jenna wonders of new grads run an increased risk of job burnout.
  • Blogging at ISACA Sacramento, M.P. Schmidt disses federal government efforts at IT risk management.

The next Cavalcade of Risk will be hosted by Colorado Health Insurance Insider on July 2nd, please get your entries in as soon as you can!


Debt Bloggers in Dan Ariely’s Predictably Irrational

Predictably Irrational by Dan ArielyIf you’re a fan of behavioral economics (think Freakonomics and Undercover Economist), you should pick up a copy of Predictably Irrational by Dan Ariely. I reserved both the print and audio book versions (I didn’t know which would be available first) and have been listening to the CDs in my car as I drive around.

I was delighted to hear, somewhere on the third CD, and then confirm in print, on page 122-123; Ariely mentioned a New York Times article written by John Leland that featured several debt bloggers I know: Tricia of, Stephanie of, Him and Her of, and a blog called We’re in Debt (I thought I recognized the URL but it resolved to a landing page – oops).

Here’s what the passage said, it was in reference to how you could force yourself to save and control destructive consumer spending behavior:

John Leland wrote a very interesting article in the New York Times in which he described a growing trend of self-shame: “When a woman who calls herself Tricia discovered last week that she owed $22,302 on her credit cards, she could not wait to spread the news. Tricia, 29, does not talk to her family or friends about her finances, and says she is ashamed of her personal debt. Yet from the laundry room of her hom in northern Michigan, Tricia does something that would have been unthinkable — and impossible — a generation ago: She goes online and posts intimate details of her financial life, including her net worth (now a negative $38,691), the balance and finance charges on her credit cards, and the amount of debt she has paid down ($15,312) since starting the blog about her debt last year.”

It is also clear that Tricia’s blog is part of a larger trend. Apparently there are dozens of Web sites (maybe there are thousands by now) devoted to the same kind of debt blogging (from “Poorer than You” and “We’re in Debt” to “Make Love Not Debt” and Tricial’s Web page: bloggingawaydebt). Leland noted, “Consumers are asking others to help themselves develop self-control because so many companies are not showing any restraint.”

BLogging about overspending is important and useful, but as we saw in the last chapter, on emotions, what we truly need is a method to curb our consumption at the moment of temptation, rather than a way to complain about it after the fact.

The book is very very good and provides great insight into how predictably irrational we are.

 Personal Finance 

Don’t Carry Your Social Security Card

Every month, go through you wallet or purse and ensure that everything in it has a reason for being there.

The other day, while standing in line at the DMV to take a photo for my driver’s license renewal, I saw a man pull his Social Security Card out of his wallet. As we all know, the Social Security card is no more than a regular piece of paper that, given years in a wallet, is bound to disintegrate. This guy’s Social Security card was in such sorry shape that it looked like it was torn from the Constitution. Years of sitting in his back pocket, for no good reason, had his card about a year away from being dust and there was little reason for him to carry it every day (in fact, new Social Security cards instruct you not to carry it on you).

Besides deterioration, another good reason not to carry the card, or anything you don’t use on a daily basis, is that you could lose your wallet or purse. If that unfortunate event happens, you have the burden of replacing or canceling cards that had no reason being in your wallet or purse in the first place. Added headache without any reason whatsoever.

So once a month, clean out your wallet or purse so Constanza doesn’t mistake it for his.

 Personal Finance 

10 Frugal Hobbies

Royal LibraryIt’s easy to jump into the car and head to the movies if you want something to do this weekend, but it’s mighty expensive when tickets are $9-$10 and gas is $4 a gallon. However, it costs far less if you visit your local library and borrow a movie and watch it at home. It costs far less if you borrow a book or volunteer or do any of the ten hobbies I’ve listed below.

So, this weekend, instead of going for the easier, more expensive, option, try one of these.


Reading is my wife’s favorite hobby and, best of all, it can be one that cost very very little if you have a library nearby (if you prefer to buy books, reading is a very expensive hobby). We were lucky to find a home that is actually right next to the library, a mere three minute walk, so we essentially have a bookshelf of thousands of books, movies, magazines, and newspapers at our disposal. Even if you don’t have one within walking distance, you can easily pick up a month’s worth of books in one trip and then renew them online if your library offers it. Reading is perhaps one of the most frugal hobbies you could have (if you borrow the books!).

Community Center Classes

Our local community center shares the same building as the library and so we often check the schedule for any interesting classes. The courses are often quite reasonably priced but the downside is that many of them occur during the workday (it doubles as a senior center too). For a few dollars a class ($5-20), you can learn all sorts of cool hobbies.


When I was younger, I volunteered at the children’s center of the local hospital. The children’s center was a large room filled with toys and our responsibility was to play games with the children who had been admitted. My friend Raymond and I had a great time playing board games with the kids and learning all about them and their conditions. It was amazing how resilient and fearless they were given their medical conditions, but it was a great way to spend a few hours on the weekend (plus they gave us lunch vouchers!). Consider volunteering to a local organization such as a hospital, soup kitchen, or something of that nature – they will greatly appreciate it (and you can deduct the driving).

Bird Watching

Heading over to your local park is a great way to spend a leisurely afternoon enjoying the sights and sounds of the wilderness without spending a lot of cash. If you have some spare change, you could always pick up a pair of cheap binoculars from your local sporting goods store or a thrift shop. If not, you certainly don’t need one to enjoy the birds. Visit the local Department of Natural Resources (DNR), or their website, for your county and see if they have any recommendations.


While you’re at the local DNR, look for a pamphlet or brochure on good hiking trails in your area. You can often hike regular trails with little more than a pair of sneakers and you might want to spring a little extra for sunscreen and bug spray, depending on where you live.


Think of geocaching like hiking, except the purpose isn’t necessarily to reach a summit or a great view, but to find a little hidden package in the ground. It’s like a walk in the park but with a defined purpose. This is probably one of the more expensive of the hobbies on this list because you’ll need a GPS unit (~$100) but I wanted to bring it up because it sounded so interesting. There are hundreds in my zip code alone… now I just need a GPS unit. 🙂

Disc Golf

Golf is expensive. Disc golf… practically free (you’ll need a frisbee though). Disc golf is like golf except you throw a frisbee-like disc and try to get it into a basket or hit a post of some kind. Another huge difference is that you don’t have to spend thousands on clubs and hundreds on green’s fees because discs are inexpensive and the “courses” are often on public parks (PDGA’s course search tool). Enjoy the outdoors and consider this burgeoning sport! (they have a tour and championships!)

Card Games

All it takes is a pack of cards, some friends, and you have yourself a card game. Learn classics like Gin, Rummy, Bridge, Hearts, Spades, or even Go Fish. Avoid games like poker, as they can expensive if you’re bad. 🙂


A pair of sneakers and a $20 basketball (and at least one friend, preferably in even numbers) is all you need for a game of pickup basketball. You can usually find a court outside near your local high school and it’s a great workout.


How could I not list blogging as a frugal hobby? It’s like scrapbooking but for all the Internets to see and you can do it absolutely free. There are plenty of services like Google’s Blogger and where you can start one up for free. And who knows, maybe you can learn to become a problogger and earn a little money off it!

(Photo by cuellar)


No Credit Needed in CNN Money

Big props to NCN (I guess he’s okay with people knowing his first name is Jason!) on being profiled by CNN Money! For those who don’t know who NCN is, he’s the mind behind No Credit Needed. He’s also the first person I think of when you talk about people overcoming debt, especially credit card debt (despite what the article says, it was more like $7-$8k of credit card debt). He’s a nice guy to boot.

I personally don’t agree with his approach towards credit cards, he never ever uses them, but that’s the beauty of personal finance and blogging. Personal finance is an area where there is no right answer, there’s just a right for you answer. I don’t buy junk food like BBQ potato chips because I know I will eat the whole freaking bag in a day, he doesn’t have credit cards because he doesn’t want to surrender all he’s gained – that I can understand and respect.

Either way, it’s a great accomplishment to have overcome such a debt and being profiled is icing on the cake!

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