Saturday, December 12, 2009

Why Enough is Never Enough

A short tale on leg space, social status and the irony of human nature

Pressing up against the window trying to create some space between himself and the man sitting next to him, Joe Aspiring kept wondering how great it would be getting around by taxi. The redundant meeting he had just left only served to increase his frustration. Never ending travels by bus were one of his less desired pastimes. One more year of internship and my status will change, he kept encouraging himself.

The luxury of taxis on the company’s expense did cheer him up, for a while. It was a refreshing change sitting back on black leather, enjoying the leg space. Looking at the windows of the adjacent bus he took some pleasure in the fact he had moved up in life.

The never-ending meetings frustrated him. I wish I could have worked on the international client, he had pondered. I could use a change of scenery. How did those guys get on the international team at the first place? Probably strings were pulled on their behalf. Spending every other week abroad must be fantastic.

The taxi that drove him to the airport was taken for granted. “Could you please turn down that music?” he angrily turned to the driver. These drivers are a menace, he thought. Next time I’ll insist on a proper ride. His senior team leader, traveling with him, had told him they’d probably only meet only at the baggage area at Heathrow since he was flying business.

The check in was a nightmare, as always. Endless lines and tiresome airport security personnel took their toll on him. Stepping slowly down the aisle he lovingly caressed the wide spaced sofas of business class. Perhaps one day, he thought. Inching further he had hoped and prayed. It took an eternity to get to his seat, waiting behind what seemed like a horde of people insisting on bending the laws of physiques by squeezing huge trolleys to tiny overhead spaces. Slowly raising his eyes he exhaled deeply, 42J was right between a 10 year old and an elderly woman. He cramped himself between his fellow passengers, legs, again, tightly squeezed against the seat in front of him. Someone should look into the relationship between leg space and social status, he thought. There must be a deeper reason than economy. Perhaps a constant reminder of your worth, he had bitterly thought.

He could stand the flights no longer. His surprising upgrade to business class was nice but left a bitter taste. He felt awkward among veteran business class travelers. An accidental upgrade is just that, he thought. Look at all these people; they must be wealthy and successful, groomed by their companies. When I’ve earned the privilege of routine business class I’ll know I’ve made it in life.

When his assistant handed him his e-ticket for his upcoming conference in Rome he was disappointed to see his miles weren’t enough for a first class upgrade. Those young executives with their constant laptop tapping and blackberry staring are impossible to travel with. Sitting in the lounge he eyed the door to first class’ part of the lounge. I wonder what kind of food they serve their. It has to be better than this bagel, and the wine is terrible, what happened to the service here?

First class was his dream coming true. Such comfort, such service, I could get used to this, but who are all these Nuevo rich surrounding me?

Related Posts:

How Japanese manage personal finance, 2009 page turners and the lure of store credit cards @ the RoundUp

As always I try to bring in my roundup the more interesting articles and posts I've encountered over the past week or two.

From leading magazines:

Carnival of Personal Finance #234 – Weirdest Toy Crazes Edition was hosted by Suburban Dollar. My post on The Dangers of Excess Frugality – Budgeting and Balanced Living was chosen as Editor's Pick! Recognition always gives me a warm fuzzy feeling. Here are some of my favorite posts from the carnival:

More from fellow personal financier bloggers:

Saturday, December 5, 2009

The Dangers of Excess Frugality – Budgeting and Balanced Living

"Virtue, then, is a state of character concerned with choice, lying in a mean… Now it is a mean between two vices, that which depends on excess and that which depends on defect; and again it is a mean because the vices respectively fall short of or exceed what is right in both passions and actions, while virtue both finds and chooses that which is intermediate." Aristotle, Nicomachean Ethics.

A Zen Garden

The dangers of excess frugality – The slippery slope of budgeting

The first steps in budgeting are usually a real eye opener. For the first time income and expanse are laid bare before our eyes more often than not resulting in surprise and disbelief as to the proportion of expense relative to income, the volume of different expenses and usually the inadequacy of income.

A little later on the potential hits. As with any new endeavor a significant portion of the benefit can be taken advantage on early on. Potential savings and sources of money leaks are easily identified and several quick and significant measures can be taken to materially improve the family's financials.

Newly discovered personal finance enthusiasm usually leads, then, to further interest and reading which in turn leads to discovering the power of finance and compound interest. The affects of saving early are empowering and goals are set to allocate a more significant portion of the budget to saving.

Frugality often follows. Each expenditure is carefully weighted and considered against the future alternative benefit which, when compounded over time, amounts to hefty sums. Considerations such as "This $1,000 vacation has an alternative cost of $1,800 in 10 years using a 6% interest rate" are not uncommon.

Retirement planning takes up more and more of one's time as a result. Thoughts of early retirement are fascinating with seemingly small sacrifices made on the way. Slowly but surely present time is replaced with imagery of retiring at 40.

Without noticing money becomes the object rather than the means. "I only need so and so much more and I'm settled". The present soon is sacrificed for the future.

Sacrificing the present for the future

The real danger of the slippery slope presented is sacrificing the present for the future. The American public as a whole is in no real danger of this happening and the future has already been sacrificing several times over on the altar of consumption. Still, many personal finance enthusiasts quickly find themselves torn apart when it comes to spending money.

Frugality, in its moderate form, is probably a good trait. However, any excess (or deficiency), as Aristotle had so eloquently put, lead us away from virtue. Virtue or sense, in this case as well as others, lies in the middle.

Excess frugality will usually results in forgetting our original goals altogether, abandoning them to the accumulation of wealth with no real purpose. The inheritance will surely benefit the next generation but our lives are ours to live, not to pass on (again, reasonably).

The problem with sacrificing the presence for the future is the unavoidable frustration. Any extreme behavior takes its toll on the person as well on the surroundings. Being happy in such circumstances isn't easy.

I should note I obviously do not suggest sacrificing the future for the present. I am only recommending a more balanced approach.

How to achieve Balance?

Balance will be represented, in this case, by the ratio of saving to consumption. In economics permanent income suggests a person wishes to average out his or her income over one's lifetime in such a way as to not consume to much in the present or, on the other hand, consume too little (by saving too much – There is such a thing).

The rule of thumb suggests middle class households should consume 75% of their income. The rest will serve as either an emergency fund for non-expected expanses and big planned expanses (which can be expected as I've elaborated on in Budgeting for unexpected expenses) or as long term savings (equally weighted).

If you're consuming less than 60% of your income or over 85% than an evaluation of income vs. expense is in order. Some circumstantial aspects obviously exist as dual income families with no kids would present higher levels of savings while others may present less available funds for savings.

Still, the rule of thumb serves as an indicator that something may be off. In higher income levels the ratio of saving out of income is obviously higher while in lower income levels saving money is something one can only dream of.

To some the idea of spending when you can save may sound careless. I argue the good mental health and happiness include the satisfaction of everyday needs. Stoic willpower may enable one to retire early but what of the years past? Usually the best years in life.

The illusion of having compounding interest working for you

There's a reason why the 30's are considered the consumption era in one's life. Investing in education, raising a family, buying a house and other significant financial obligations put a damper on any attempt to really save for the long run.

True enough, saving throughout 20's and 30's will result in compounding interest working for us but who of us has managed to save significantly without sacrificing our present? Amassing a considerable amount of money requires many concessions, maybe too many.

The illusion of saving early is frustrating since saving at such an age is extremely difficult. For one's good mental health savings should be balanced with consumption. The 40's and 50's are considered periods of wealth accumulation and will serve the purpose of amassing wealth as well (considering you are not intent on retiring at 40 – another illusion of you ask me).

A more balanced life and balanced goals will help achieve inner peace and acceptance that money is truly a means and not an end. This takes work and time. I suppose on cannot escape the slippery slope I've presented but understanding the need for balance early on will save considerable frustration and contribute to early happiness.

Related posts:

Saturday, November 21, 2009

Blame the Models? Take a Good Look in the Mirror

Is financial modeling to blame for the recent crisis? As always the fault does not lie with the tool but rather with the user. When was the last time you took a look at the validity of Net Present Value or Option Pricing?

The recent, or ongoing, financial crisis has been attributed, amongst other things, to over reliance on quantitative financial models which replaced good business judgment instead of supporting it.

The reason behind the failure of models wasn't simply poor modeling, for the most part. The main reason was poor business and risk management processes which placed blind faith in the models.

In this post I begin to explore the reasons why financial modeling increased the severity of the recent crisis and more importantly, what are the lessons we can implement to our personal finances?

The need for Financial Modeling

With the development of computing power advanced mathematical models enabled the creation of complex new financial instruments and professions such as financial engineering. Mathematicians and statisticians found their way to investment banks and hedge funds due to the increased demand and profitability of these endeavors.

These financial instruments included, for the most part, new underlying assets, that require complex financial models to model their pricing and behavior. Financial models which sadly broke during the recent crisis.

That is not to say that financial engineering and the use of models have been proven unsuitable for the financial markets. Much on the contrary, financial engineering and complex financial instruments help, in many cases, to increase the level of perfection in the market and ease the transfer of undesirable risks from one party to the other.

Models as a Representation of Reality

A Model, by its definition, is a representation of reality. Economics, for example, as any 1st year student knows is based on very simple models of production, supply, demand and price. The strength and importance of these models is their ability to explain economic behavior even under very simplistic assumptions.

Think of the prisoner's dilemma in game theory or Nash's equilibrium which are very simple models that won their authors Noble Prizes. The beauty of the model is its ability to represent reality with a very limited framework.

As modeling advances assumptions are slowly removed creating more and more complex models which require a better understanding of the mathematic complexity. The reason is simple, the more "free" parameters the model needs to explain the higher the complexity.

Naturally, when dealing with financial instruments and their fair value pricing, models need to explain as much of the price as possible to adequately represent the fair value of the instrument. As such, models have grown quite complex as room for assumptions is very small.

What went wrong?

Before we get too judgmental let's consider the simple, commonly used model of Net Present Value. Net present value is a model used to determine how much a certain stream of cash flows is worth today – or, the present value of the cash flow.

Net Present Value is commonly used to determine the economic sense behind undertaking certain projects and investments. All those in the finance profession, as well as personal finance enthusiasts have probably tried to determine the net present value of a certain undertaking. The problem starts when you dig deeper into the model.

Most people are not aware Net Present Value assumes the following due to the very central role of the cost of capital in the model (further reading on NPV is available here):

  • The existence of an efficient financial market – In order to price correctly an efficient financial market is required. NPV cannot be turned into value in the present if an IPO cannot be performed or valuated correctly.

  • Access to financial markets– Without access to an efficient financial market the entrepreneur, again, cannot transform NPV to value in the present.

  • The existence of diversified investors – Adequate pricing of the cost of capital can only be performed by ignoring the specific risk of the investment. A diversified investor, in finance, sees only the market risk when investing (the reason being a diversified portfolio will stay diversified even after investing in this particular project, for example).

When was the last time the Net Present Value calculation you had performed met these requirements? My guess is never.

The model is a helpful tool but the underlying assumptions and limitation cannot be ignored.

The reason behind why many of the financial models broke has to do with the assumption of liquidity and volume in the markets. Pricing models are built to price instruments under a normal market environment, as part of the normal course of business. When stressed scenarios occur the assumptions behind the models cease to exist and the model breaks.

  • Black and Scholes model very commonly used for option pricing assumes normal distribution of returns (Not true, obviously).

  • The CAPM Model (Capital asset pricing) which is a corner stone in asset allocation is based, again, on normal distribution of returns but also assumes, amongst others, the following highly debatable assumptions: Perfect availability of information, No taxes or transaction costs and a market portfolio which includes all types of assets (!).

With no liquidity in the markets strange phenomenon start to take place, phenomenon which cannot be analyzed through modeling but rather through good judgment and independent thinking.

The Importance of an Adequate Process

The role of an adequate risk management process cannot be overstated. Financial modeling is a tool, nothing more (and nothing less).

Like any tool the one who uses it needs to understand its capabilities and its limitations. Model limitations are inherent as they are, and only can be, a representation of reality.

Financial modeling will not go away. The need is too strong. What does need to happen is the implementation of robust risk management processes which will continue to remind what are the assumptions and limitation of the models and what the proposed mitigations against these limitations are.

The wisdom of the ancient Greek philosopher Socrates is a fitting quote: "I know that I know nothing" he said, not because he knew nothing because he didn't claim perfect knowledge. A humble state of mind is a very good start.

Related Posts:

Carnival of Financial Planning - Edition #116 - November 20, 2009

This is a guest post by The Skilled Investor – A great source for Personal Finance, Investment Management, and Financial Planning Articles.

Welcome to the November 20, 2009 Edition #116 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

This edition is arranged by subject heading, so that you can browse efficiently.



I do not normally feature any submissions. However, this one, which was submitted to the Miscellaneous category, deserves to be featured. The title alone warrants that accolade:

Sustainable Life Blog presents The High Cost of Being a Moron posted at Sustainable Life Blog, saying, "Perfect example of how a small mistake can cost you big bucks when selling a car."


Four Pillars presents Get Out Of Debt With YNAB – You Need A Budget Financial Software Review posted at Quest For Four Pillars, saying, "Indepth review of You Need a Budget software."

Susan Saverton presents Personal Budgets posted at Family Financial Planners, saying, "When you don't understand how much you spend and how much you save and invest, you do not have a financial plan. This dramatically increases your family’s long-term financial risk."


Emily Simmons presents How to Make a Budget That Works posted at Be In Health Now, saying, "A budget is the foundation on which financial freedom is built. Learn the basics here."

Estate Planning

The Financial Blogger presents Estate Planning: 5 Reasons Why You Should Have A Professional Among Your Liquidators posted at The Financial Blogger, saying, "managing an estate is more complicated than simply writing a few checks! Fortunately, for those who can afford it, you can name a professional among your liquidators."

Jeff Rose presents Your Estate Planning Checklist posted at Jeff Rose.

Financial Planning

David Carlson presents Eight Reasons Why Its Hard To Get Rich posted at Dual Income No Kids, saying, "This post describes eight different reasons people do not become rich. When you take these eight reasons into consideration, you can overcome the various roadblocks that prevent people from becoming wealthy."

Roshawn Watson presents Are Wealthy People Dishonest? posted at Watson Inc, saying, "Are the wealthy dishonest? While it is certainly a fair question, it is also a polarizing one. The typical dichotomy is that there are some who feel like there is absolutely no way for honest people to get ahead financially while the wealthy often feel maligned for their prosperity."

James Carter-Truman presents 4 “Must Have” Precious Metals Investment Tips posted at Buy Gold Secrets, saying, "James Carter-Truman is an expert about gold and he writes to share his knowledge about Gold investment"

Susan Saverton presents Financial Advisor Pasadena California posted at Pasadena Financial Planner, saying, "Appropriately setting your personal asset allocation in line with your personal risk tolerance is a critical decision for every investor. The percentages that are allocated to various asset classes tend to change slowly over time, so it is important to get it right at the outset."

Amanda L. Grossman presents The Lazy Person's Guide to Financial Success posted at Frugal Confessions, saying, "This article is all about simplicity and automation in personal finances. Set a plan, automate that plan with specific amounts of time for each step detailed in the article, and leave it! Let compound interest and automatic withdrawals take your finances to the next level."

jim presents Conduct a Financial Fire Drill posted at Blueprint for Financial Prosperity.

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, "whether it is running a business or individuals’ investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.

Finavigation presents The Right Mindset for Financial Success posted at Finavigation, saying, "For many people, the main thing holding them back from achieving the things they want in life is the way they think. People who are able to build wealth and accomplish the goals they set for themselves continuously think about the world differently than people who are complacent and find themselves stagnant instead of accelerating toward the life they want."

Financing a Home

Joe Manausa, MBA presents How The Cap And Trade Bill Affects Real Estate posted at Tallahassee Real Estate Blog, saying, "I believe that if the American Clean Energy and Security Act of 2009 is enacted, new home construction costs will go up, and home affordability will decline. It appears as if a “national building code” will be created, thus usurping some of the rights of State’s to control building quality as they see fit."

Evolution Of Wealth presents Return On Equity Is Always Zero posted at Evolution of Wealth, saying, "Do you ever wonder what the return on your home equity is? Not your house but the equity that everyone tells you to build up. Well it's zero."

Roshawn Watson presents Should You Buy A House Outright? posted at Watson Inc, saying, "Suppose you find yourself in the somewhat unique predicament of having the resources to purchase your house outright without a mortgage. Is it then financially-wise to make the purchase?"

Brandon Laughridge presents 8000 Tax Credit Extended and Expanded posted at Mortgage Loan Place, saying, "Learn what the new tax credit terms mean for you as a first time home buyer or repeat home buyer."

Alex Fotopoulos presents When to Refinance a Mortgage? posted at My Trader's Journal, saying, "Some key points to consider when refinancing your home."

Financing Education

Praveen presents Will Education Follow the Housing Bust? posted at My Simple Trading System, saying, "Tips for students to avoid excessive loans and debt"

Health Care

Patrick @ Cash Money Life presents Open Enrollment Health Insurance Options posted at Cash Money Life, saying, "what you need to know about the common health insurance options available from most employers during the open enrollment season."

Jeff Rose presents What’s the Best Health Savings Plan For You? posted at Jeff Rose.

Patrick @ Military Money presents Open Enrollment Window Open for Some posted at Military Finance Network, saying, "Open enrollment is the only time of the year that many people are able to make changes to their health insurance elections. Make sure you take advantage of this time to select the best health care option for your needs."


Dividend Tree presents Three Companies with Sustainable Dividends posted at Dividend Tree, saying, "Even in soft economic environment, there are companies out there that are continuing to increase dividends for their shareholders. While dividend increase is good, it is more critical to make sure we understand that companies can sustain their dividends."

MoneyNing presents Take Some Time to Make More Money posted at Money Ning, saying, "While savings is important, taking some time to make money is still critical."

nissim ziv presents Informational Interview Questions: Examples| Request for Informational Interview: Tips posted at Job Interview Guide, saying, "Informational interview is not a job interview. The purpose of this meeting is to find out more about jobs and careers rather than getting a job. It is a meeting in which a career seeker asks for advice about a certain career that interests him."


Jeff Rose presents Good to Know Rules and Limits for the Traditional IRA posted at Jeff Rose, saying, "As good as the Roth is, the Traditional IRA still has its place."

Brian Terry presents Are You Ready To Buy Gold Bars? posted at Buy Gold Secrets.

Darwin presents 2009 Stock Market Returns YTD from Around the World – Shocking! posted at Darwin's Finance, saying, "This comprehensive analysis of global stock market returns shows some emerging markets in triple digits year to date and surprisingly, the US is toward the bottom of the heap even following its meteoric rise from the March lows."

Silicon Valley Blogger presents Scottrade Review: Top Brokerage For Small Investors posted at The Digerati Life, saying, "Reviewing an outstanding online broker. Scottrade is great for new investors."

ABC presents Top Down Investment Approach posted at ABCs of Investing, saying, "An explanation of the "top down" investment method."

Jules Wells presents Best Investment Strategy posted at Financial Planning Software, saying, "Personal investing seems incredibly complex, but the best investment strategy also tends to be a more simple investment strategy."

Zach Scheidt presents Blue Nile Reports Growth posted at ZachStocks, saying, "Blue Nile Inc. (NILE) reported earnings growth in the third quarter. The company is growing market share but the stock is simply overpriced. Watch for a 50% drop in the coming months."

MoneyNing presents How to Get Your Wife to Invest posted at Money Ning, saying, "Talk and discuss. Learn how to get your significant other to invest!"

FMF presents Portfolio Recommendation Beats S&P 500 by 9.4% posted at Free Money Finance, saying, "Suggestions on a market-beating portfolio."

Zach Scheidt presents Blackstone Sees Improving Trends posted at ZachStocks, saying, "The Blackstone Group, LP (BX) reported earnings and the stock is trading sharply higher. The environment is improving for the private equity company as liquidity and risk premiums increase."

Frank Vertin presents Low Cost Index Fund posted at Best Index Fund, saying, "Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds."

Praveen presents Just Bought Hyatt Hotels (H) posted at My Simple Trading System, saying, "About Hyatt's recent IPO and why its a good stock."

ABC presents More Exciting Facts About Stock Indexes posted at ABCs of Investing, saying, "Some interesting facts about stock indexes."

Super Saver presents Asset Allocation Investing Based on Time posted at My Wealth Builder, saying, "Here's a strategy that diversifies risk by time."

Steve Patterson presents Gold: Don’t Fight the Trend posted at - Steve Patterson, saying, "Inflation is also a concern for traders who are predicting a rise in consumer costs as the dollar continues to fall."

Manshu presents S&P 500 ETF List posted at OneMint, saying, "A list of ETFs that track the S&P 500."

Dividends4Life presents 4 Stocks With Higher Dividends posted at Dividends Value, saying, "Investing in Dividend Stocks is a long-term strategy. Frequent buying and selling of dividend stocks can significantly increase your expenses and taxes, thus lowering your returns. A growing dividend is a strong indication of a company’s increasing intrinsic value."

Tomas Escent presents Professional Investment Management posted at Nerds on Wall Street, saying, "Think of this book as sort of a Hitchhiker’s Guide to Wired Markets. There are no robots parking cars for six million years, but there are robots trading millions of shares in six milliseconds, so maybe that’s close enough."

ABC presents “Bottoms Up” Investment Method posted at ABCs of Investing, saying, "A short description of "bottom's up" investing style."

April presents The Roth IRA Made Easy posted at Get Rich Slowly, saying, "Starting a Roth IRA is one of the easiest — and best — steps you can take to save for retirement! A great guide on what they are, the rules that govern them, and how you can start one today."

Zach Scheidt presents China Drug Research Company Reports Stellar Earnings posted at ZachStocks, saying, "Wuxi PharmaTech Inc. (WX) reported strong third quarter earnings. The China drug research and manufacturing company is investing heavily to drive future growth and should see significant earnings appreciation."

The Financial Blogger presents The Financial Blogger » Blog Archive » Canadian ETFs That Pays Dividends – Am I in Heaven? posted at The Financial Blogger, saying, "There are a lot of people that love dividends. There are 2 major reasons why so many investors love them. #1 they are usually issued by very stable companies which mean less volatility in a stock portfolio. #2 they pay quarterly income, which is great for revenue seekers."

Mike presents Living in the Fast Lane posted at Minting Pennies - Personal Finance, Investing, and Microfinance, saying, "How adequate planning and preparation can lead to successful investing."

The Skilled Investor presents Investing Strategy posted at Personal Investment Manager, saying, "Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees."

Tushar Mathur presents Can't Control the Markets? Try controlling the Costs posted at Everything Finance, saying, "As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You're not alone."

Dividends4Life presents 9 Dividend Stocks Sending More Cash To Shareholders posted at Dividends Value, saying, "Looking for the perfect dividend stock? In an utopian world, the perfect dividend stock would be one that is both high-yield and provide a high dividend growth rate. Its share price would appreciate with its increasing dividend. All of this would be driven by increasing earnings and cash flow."

Larry Russell presents NoLoad Mutual Funds posted at Best No Load Mutual Funds, saying, "Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work."

Steve Alexander presents Magic Formula Stocks in Forbes Top 200 Small Companies 2009 posted at MagicDiligence - Optimizing Joel Greenblatts Value Stock Strategy, saying, "Every year, Forbes creates a list of the top 200 best small companies in America. Which current Magic Formula stocks are part of the list, and which ones have been a part of MFI in 2009?"

Managing Debt

The Smarter Wallet presents Use Secured Credit Cards To Develop Your Credit History posted at The Smarter Wallet, saying, "On using secured credit cards to establish credit history."


Tom @ Canadian Finance Blog presents Do You Know If You Are Owed Money From A Bankruptcy? | The Canadian Finance Blog posted at The Canadian Finance Blog, saying, "To help you find out if you are owed money from bankrupt debtors, the Office of the Superintendent of Bankruptcy maintains an Unclaimed Funds Database."

Peak Personal Finance presents 5 Financial Rules for Women posted at Peak Personal Finance, saying, "Good advice for women, and men too!"

Tom @ Canadian Finance Blog presents Do You Know If You Are Owed Money From A Bankruptcy? | The Canadian Finance Blog posted at The Canadian Finance Blog, saying, "To help you find out if you are owed money from bankrupt debtors, the Office of the Superintendent of Bankruptcy maintains an Unclaimed Funds Database."

Dorian Wales presents A Temple Restaurant and a Clearing House for Tickets – Two Observations of New York City posted at The Personal Financier, saying, "New York City is my favorite destination in the world. Any opportunity to visit again, whether on business or pleasure is a joy. With each visit a new light is shed on some other aspect of the city. I'd like to share two such spotlights with you." (Editor's note: Dorian is right about Peter Luger. Best steakhouse around.)

FMF presents How to Buy a New Furnace and Air Conditioner posted at Free Money Finance, saying, "Keys steps to buying a great furnace and AC unit at a great price."

Frank Knight presents Identity Theft Prevention posted at Personal Financial Planning Software, saying, "Financial Planning and Identity Theft Prevention -- Identity theft prevention is a key, but often overlooked, component of a prudent financial plan."

No Load Bond Funds presents Low Cost Bond Funds posted at Bond Index Fund, saying, "Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. The best bond fund buying strategy is to pick only very low-cost no load bond funds."

Patrick @ Cash Money Life presents Netflix Review - Online DVD Rentals posted at Cash Money Life, saying, "Netflix is a great way to save money on movie rentals, especially with the $8.99 unlimited plan that comes with unlimited DVD rentals and unlimited video streaming. Check it out with a free trial if you've never used it."

Susan Saverton presents Personal Financial Strategy posted at Family Financial Planner, saying, "When pursuing optimal financial planning and investing strategies and controlling your costs and capital gains taxes, you also need to establish a time-efficient system to monitor, adjust, and adhere to your financial plan."

Retirement Planning

FMF presents The World's Best Places to Retire posted at Free Money Finance, saying, "One way to make your retirement savings go farther is to retire overseas."

Top Stock Index Mutual Funds presents Stock Index Funds posted at Top 10 Index Fund, saying, "To build your retirement portfolio, buy some of these top 10 very low cost no load S&P 500 index mutual funds directly. You do not have to pay the heavy added expenses of buying through a stock broker, financial adviser, investment adviser, or investment counselor."

Frank Knight presents Roth IRA Retirement Planning posted at Financial Planning Software, saying, "Roth IRA Retirement Planning -- Deciding between traditional retirement plan contributions and Roth retirement plan contributions"

Risk Management and Insurance

Patrick @ Military Money presents COBRA Benefits 2009 Economic Stimulus Recovery Act posted at Military Finance Network, saying, "The 2009 Economic Stimulus Plan includes additional COBRA and unemployment benefits."

Evolution Of Wealth presents Do You And Your Child a Favor posted at Evolution of Wealth, saying, "Do you depend on your child? That's what life insurance is for, to protect those that depend on you. What about the people you depend on?"

Patrick @ Cash Money Life presents Save Money on Auto Insurance Rates posted at Cash Money Life, saying, "Tips on how to save money on your auto insurance rates, including multi car discounts, multi-line policies, defensive driving courses, and more."


The Smarter Wallet presents HSBC Direct Review: Top Savings Account posted at The Smarter Wallet, saying, "Reviewing an online savings account"

KCLau presents Are You Rich in Internal Assets? posted at KCLau's Money Tips, saying, "pay attention to the internal assets"

Four Pillars presents $8,000 Credit For First-Time Homebuyers Extended 6 Months – Not Increased To $15k posted at Quest For Four Pillars, saying, "Home buyers credit extended 6 months."

KCLau presents Caring for the Elderly posted at KCLau's Money Tips, saying, "Problems faced by the elderly"


Jeff Rose presents How to Qualify For a Tax Deduction on Your Traditional IRA Contribution posted at Jeff Rose.

Jacqulyn Richey presents First Time Home Buyer Tax Credit Extended posted at Las Vegas Real Estate News, saying, "A breakdown of the extension of the First Time Home Buyer Tax Credit. Now current homeowner may qualify for a credit under the new bill."

Super Saver presents End of Year Tax Planning - Deductions posted at My Wealth Builder, saying, "For me, October is a good time to review my 2009 financial status for tax return filing purposes. It gives me a few months to make any changes that can lower my taxes."

Mike Piper presents Tax Diversification: Roth IRA vs. Traditional IRA posted at The Oblivious Investor, saying, "Sometimes the best answer to "Roth IRA or Traditional IRA?" is "a little bit of both.""

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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