"Keep only those things that speak to your heart," Marie Kondo, Japanese organizing consultant and author. (1984 - )
BY JULIA ANDERSON
Marie Kondo’s book, “The Life-changing Magic of Tidying Up,” will be delivered this week to my doorstep. I’ve watched three episodes of her eight-part Netflix series, “Tidying Up.”
I am intrigued by her mantra, “Does this object bring you joy?” If not, say thank you and goodbye.
Over the weekend, I decluttered the guest bedroom closet and a cupboard in the laundry room. I know, Kondo wants you to start with clothes, but I decided to start small. For me the experiment worked!
I let go of the big-shouldered ‘80s gold silk blouse with the black swooshes across the front that I wore at my 40th birthday party. I thanked it for the joy it had brought me and said goodbye. My 40th is so far in the past it isn’t even in my rear-view mirror.
I said goodbye to a couple of business suits I still held on to from nearly nine years ago when I left the 9-to-5 newsroom job. My thinking: I might need a classy business suit again someday. Not going to happen.
De-cluttering hangs like a guilty fog over many in my Baby Boomer generation. We look around our houses and see sentimental connections to the past in our furniture, our dishware, art and certainly our family photos. Never mind all the stuff we’ve picked up here and there.
After 18 years of living in the same house, every closet, all shelf space and every cabinet is full. I need to tidy up.
Kondo’s technique asks us to organize according to preference. This is somehow freeing. I can let go if I say thank you. I can let go if it no longer “sparks joy.” The process worked with the blouse from my 40th.
And it worked with the laundry room cabinet space where I have stashed stuff without any thought to category or why it went there. With nothing of high priority, items went either to the trash or to the downstairs shop with the rest of the paint supplies. Most of the laundry shelf space is now empty, a happy (if not unsettling) result.
These small steps feel good. Maybe I can work my way to clothes in the over-stuffed master closet and to the big bin of “collectible” T-shirts from rock concerts that is hidden in the attic.
According to media interviews, Kondo is shocked by how much stuff Americans have and how emotional we get when we unburden ourselves by letting go and throwing away.
Her KonMari Method challenges us to ask the simple question, “Does this spark joy?” If not, goodbye.
She breaks the de-cluttering process into categories, not by place: (Oops, I already violated that rule.)
Those categories in order are:
Miscellany (How about bathroom cupboards?)
Mementos (photos, scrap books etc.)
She asks you to pile ALL your clothes in a big pile in a one location. Then ALL your books. ALL your kitchen stuff, and so on. Then you address each item in each pile by holding it and asking yourself, “does it spark joy.” If not, discard. She recommends discarding first, then storing later.
Once the discarding is finished, designate a place for each thing that you keep.
This worked for me with the closet and the cupboard. At least I tiptoed into the experience.
But Baby Boomers may need a new revised book from Kondo. This new book would cover de-cluttering but also suggest how to handle the dispersal of tangible assets of real value (art, jewelry, books, dishware, cars). The new book might suggest a process for finding out what your heirs want. And a process for organizing a list to avoid fights later.
Her new book might suggest how to off-load items of value such as art pieces that no family member wants, rugs that are too big for Millennial apartments, valuable furniture and collectibles. I can’t just give this stuff to Goodwill.
For me, the pressure is growing. In her early 90s, my mother turned to me one day and said how sorry she was about leaving her house full of stuff for me and my sister to sort through. Her house was definitely full from top to bottom. Fortunately for me, my sister moved into the house. I only asked for a few things.
My issue now with my own home is not so much clearing out clutter because I am not totally over-run but letting go of sentimental treasures. The clock is ticking. I don't want to end up with regrets, like my mother's.
My pledge to myself this year is to:
- Sell something on eBay.
- Sell something on Craig’s list.
- Invite all family members to tour the house and make a list of items they someday might want. Then update the tangible asset distribution list and give a copy to everyone affected.
- Give away to charity certain items of value that might raise money for a worthy cause.
According to Kondo’s book web site, she’s sold 5 million copies of “Tidying Up,” worldwide. Bless you, Marie.
For her book at Amazon.com, click here.
My SMART MONEY show regarding tangible assets
BY JULIA ANDERSON
During our Smart Money video conversations, co-hosts Joe Smith, Pat Boyle and I have covered many money-related topics. The short videos are distributed by TVCTV, the public television operation in Beaverton, Ore.
Some shows include guests such as Alan Edwards from the Social Security Administration or J.D. Roth at www.getrichslowly.org. These have been great fun and are hopefully giving viewers useful information.
Topics range from reverse mortgages to writing a will, selling a business to buying a franchise. We have discussed marrying after age 60 and how to keep your kids happy while doing it. Financial elder abuse and downsizing.
Below are YouTube links to some of these shows.
Why women should approach Social Security differently than men.
Why have a will.
Timeshares: Buying and selling. What to watch out for.
Social Security 101
How to Hold a family money meeting.
May to December relationships require special planning.
Reverse Mortgages: Questions to ask.
Charitable giving in Retirement
Evaluating an Early Job Buyout Offer
Should you buy a franchise in retirement?
These are just a few of our shows: For More:
Visit TVCTV public television, Beaverton, Ore.
By JULIA ANDERSON
U.S. stock markets are taking a beating with the Nasdaq now into bear market territory, down 20 percent from its August 2018 high. Apple forecasting lower earnings. The Dow Jones and S&P 500 are off 16 percent and 18 percent respectively from their highs. This week, we saw the biggest stock market sell-off since 2008.
This, my friends, is good news!!! Stocks are going on sale. As Warren Buffett says, "Be fearful when others are greedy. Be greedy when others are fearful."
With share prices down, investors have a buying opportunity not available during most of the past 10 years. That’s because since the Great Recession, markets have been steadily marching higher…the longest bull market in history.
Trillions of dollars floated around the world in the past decade, thanks to easy money from central banks. It makes sense that a great place to park money has been in the U.S. stock market. The money has flowed in, pumping up share prices. Over the past 10 years, the value of many individual shares more than doubled. The S&P 500 (the 500 biggest U.S.-based publicly traded companies) has increased by about 300 percent. That’s even with two corrections, the first in 2011, the second in 2016 when the S&P declined 14 percent.
Now, those who study the big picture, say we are over-due for a pull-back. Bull markets do not go on forever, even this one. They take a breather. They sell off when company shares are over-bought and over-priced. In other words, buyer enthusiasm out-strips performance. Reality must eventually set in as it is right now.
Share prices will more accurately reflect true value as they relate to earnings and profitability. It’s called a free market tied to honest (rule-by-law) quarterly reporting.
This year, volatility returned to markets. Up 500 points one day, down 600 points, the next. Graphically, this looks like the edge of a saw with jagged, sharp pointy ups and downs. News flash: This is typically how bull markets end.
Investors in their 20s, 30s, 40s and 50s should be celebrating the pull-back because this means quarterly dividend money reinvested inside their 401(k) and IRA tax-deferred funds will be buying more shares at cheaper prices. More shares mean more returns going forward as U.S. publicly traded companies continue to pump out earnings. The miracle of compound interest (dividend reinvesting) LIVES!!!
Those nearing retirement or who are in retirement must embrace a more complicated strategy:
Rule No. 1: Don’t try to “time” the market by pulling all your money out. It’s too late and besides you will miss the rebound.
Rule No. 2: Keep most of your nest egg in stocks or stock funds. Don’t touch them. Let the dividend returns reinvest. Hopefully, you have enough cash and/or income to live on while you ride out the downturn.
On NPR this morning, a young economic analyst gave me the impression that people who are nearing retirement should move their money into more secure savings such as CDs or money-market funds. Hogwash! If you do that you will run out of money before you die.
There’s nothing wrong with the American economy or its stock markets. We are just adjusting to higher interest rates (a good thing), a cooling housing market (another good thing) and more reasonable returns from corporations.
We are coming off the biggest bull market in history. It makes sense that volatility will return to markets, that we will see a sell-off in over-bought shares such as Facebook, Amazon and Google. Let’s see earnings in line with operating costs, let’s see Price-to-Earnings ratios at 20 to 30 points rather than 70.
By the way, ignore what’s going on in Washington, D.C. Warren Buffett said he never made an investment decision based on what happens in Washington.
Question: Where am I putting my money in 2019?
Answer: Individual corporate stocks such as Idaho Power, Duke Energy, MMM and McDonalds. Along with substantial amounts in S&P 500 index funds, a telecom index fund and a contrarian stock fund, all inside my tax-deferred 401(k).
I am NOT selling or trading any of these holdings. Even though I am required to withdraw cash from my 401(k), I am doing it out of a small cash fund. I have the rest reinvesting for the long-term.
The outlook for the U.S. economy remains positive, if not more normal. A 3 percent GDP growth rate is good. Job growth is good, consumer spending is positive. Inflation remains tame thanks to cheaper energy…. gasoline, oil. The Fed’s ability to raise interest rates is a good thing.
Don’t panic over the market down turn. Stay the course. Reinvest the dividend money.
Stocks are on sale!!! Buy low and hold on.
"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." - Warren Buffett, business magnate (1930 - )
By JULIA ANDERSON
A woman I met while traveling this fall gave me living proof that you still can retire early.
In her mid-50s, she had left behind a successful career in marketing a year earlier and said she was enjoying every minute of her freedom or as she called it, her “financial independence.”
How did she do it, I asked, as we strolled along Camino de Santiago with our tour group in Spain.
“I realized at an early age that I didn’t want to end up like a lot of girls I knew… out of high school with a baby, in debt with no future,” she said.
At age 13, she began asking her parents about saving money, going to college and getting ahead.
“It really wasn’t that hard…I just stayed focused, saved and invested. I wanted to retire early. Over 25 years of working, I made it happen.”
Listening to her, I heard three key points:
She started early.
She saved, and more importantly invested her savings in stocks and stock funds.
And she was careful about her spending and taking on debt.
She likely has a portfolio worth several million dollars. (I didn't ask). Her investment returns are spinning off enough income that she can afford to travel, manage her money, pay taxes and not worry about running short of cash. She’s starting to investigate nonprofit work as a way to diversify her life.
You might say that this woman is exceptional. How many 13-year-olds do you know who are thinking about their long-term financial futures? Instead of being a victim of circumstance, she set out early to take charge of her life. At 55, she has choices for what comes next.
Let’s start with her focus.
Starting early with saving and investing goals is key. The more time you have to reinvest earnings the more you benefit from the miracle of compound interest in the form of dividend-paying stocks and mutual funds.
For instance, if you invest $600 a month starting at age 25 with an 8 percent annual return, at 65 you will have a nest egg of $1.24 million. That’s inside a tax-deferred investment account. If you invest at a higher rate and start earlier, the outcome will be even more rewarding and you may be able to leave a job sooner.
Investing aggressively also is key. Your money must go into an aggressive stock growth fund, preferably an index fund with low or non-existent fund management fees. On average the American stock market has increased in value 8 to 12 percent a year for 50 years. It doesn’t matter which political party is in charge. You just must believe in the American economy and American ingenuity and the rule of law regarding market transparency and management. The federal Security & Exchange Commission is there for a reason…to keep people honest.Coincidentally, one of my favorite financial columnists, Michelle Singletary, wrote on this topic for the Washington Post recently. She talks about the FIRE movement (Financial Independence, Retire Early). These people hope to achieve their goal of leaving the regular workforce in their 30s by "living on far less than you are earning, then investing what you don't spend."
Singletary sees that as doable by living on less and controlling expenses. "They cut their expenses to the bare bones, saved and invested well enough that they could tell their employers, "Peace out. I'm done."
Women friends of mine tell me that they are afraid of stocks, afraid of losing money and have stayed on the sidelines when it comes to stock market investing. You will never retire early with that risk-adverse thinking. In fact, you might not be able to retire at all.
The other factor for my traveling friend was smart spending. She lived conservatively. Don’t let your debt get out of control. Don’t buy more house or car than you can afford. Pay off credit card debt every month. Don’t live it up now but pay for it later. Saving and aggressively investing for the long-term will get you where you want to go.
Marketwatch.com writer Andrea Coombes offers a five-step plan for finding “financial independence,” early: Reduce spending and put more aside from the start. Do that by figuring out where your money is going. Invest your savings in low-cost index mutual funds along with a few blue-chip dividend-paying stocks. Keep your housing costs down now, and in retirement.
Make sure your health care costs are manageable by using a high deductible health plan. Factor in taxes…federal, state and local. If you are younger than 59 ½, you will pay a 10 percent penalty on withdrawals from a 401(k). Talk to a CPA tax expert about ways to avoid penalties and keep taxes low.
My view: Stay the course. Don’t let month-to-month or even year-to-year markets swings rattle your resolve. Save and invest for the long-term. Remember Warren Buffet’s rule to “Never invest in a business you cannot understand” or his other rule, “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
How about investment guru Peter Lynch’s rule: “Time is on your side when you own shares in superior companies” or “Average investors can become experts in their own field and can pick winning stocks as effectively as Wall Street professionals by doing just a little research.”
As for my woman friend --- She started early, got an education, made some money, saved and invested it and retired early. It CAN be done.
"If you live for having it all, what you have is never enough.” – Vicki Robin, American money book author (1945 - )
BY JULIA ANDERSON
A friend of mine, who recently retired from a management career in corporate human resources, said she, time and again, saw women make a big financial mistake by taking money out of their 401(k) retirement savings plans.
“When you hit mid-life, say 20 to 25 years into your career, you may change jobs, there may be a crisis with an adult child. Or you might want to buy a new house,” she said. “Women see 401(k) money as an easy way to pay for what they think they need. But people forget the time-value of money. They steal from their future thinking that they can make up for it later.”
Simply put: Borrowing from a long-term tax-deferred savings plan in mid-life can ruin your retirement by undermining the reinvestment growth potential of the account.
Exhibit No. 1 for my friend is a single woman she knows who enjoyed a high-paying career for 40 years. But every time she changed jobs, she took money out of her 401(k) during the transition to pay living expenses, buy a new car or go on a vacation. Now in her 70s, the woman is in ill-health and broke.
“That $15,000 you have saved from the latest job may not seem like a lot, but mid-career is when the miracle of compound interest/earnings begins to kick in,” my friend said. “My advice to women – set-up a rainy-day savings account to get you through the rough patches. Roll your old 401(k) into an IRA. Never borrow money from your future.”
She also recommends taking a hard look at your current life-style. “People think they need a certain standard of living but the reality is that we can live on a lot less,” she said. “Living on less means more money goes into long-term savings and you are not tempted to borrow to pay for something you don’t need.”
Financial advice experts agree. Writers at MarketWatch.com list these reasons for why taking money out of a 401(k) is a bad idea:
You are NOT saving when you borrow from a 401(k). Instead you are Losing Money. (Remember, money makes money)
Time will work against you. Money left untouched in a 401(k) investment portfolio will, on average, double every eight years.
Meanwhile, if you can’t repay the 401(k) loan…you are subject to a 10 percent early withdrawal penalty and subject to current income taxes.
Borrowing from your 401(k) is a RED FLAG that you are living beyond your means.
Borrowing from your 401(k) violates the golden rule of personal finance…PAY YOURSELF FIRST.
You cannot make up a withdrawal.
An estimated 20 percent of Americans with a 401(k) exercise the borrowing option, reports the Employee Benefit Research Institute. The average loan is 11 percent of assets.
When I left a teaching job in my early 20s, I thought nothing of spending the measly $800 accumulated in my retirement account over the prior two years. That was 50 years ago. I could have left the money alone, added nothing more but reinvested the 10 percent annual earnings. The nest egg could have grown over the next 40 years to $36,207 of savings. From $800 to $36,207…not bad. Our 401(k)s do this on a grander scale!
While 401(k)s have come in for criticism because of high management fees, they remain the best way to save and invest for the long-term. It’s not just saving but investing that will get you where you want to be. Stocks and bonds provide growth. Cash-only savings leaves you subject to inflation with not much return.
Additional 401(k) mistakes
Many people fail to put enough money in a 401(k) to win employer matching money…that’s free money that adds to the total. Meanwhile, make sure you and your employer understand what management fees are being charged on your 401(k) account. Higher-than-average fees eat into earnings.
While borrowing from your 401(k) can be a big mistake, trying to time the market by jumping in and out of investments can be equally harmful. YOU CAN’T TIME THE MARKET. Leave your investments alone, let them reinvest at bargain prices when markets are down. More shares mean more opportunity for growth when markets go back up. If you change jobs, roll your “orphaned” 401(k) over into a single Individual Retirement Account set up through a brokerage firm.
Most Americans have held 10 jobs by age 50 and 12 to 15 over a lifetime of work. “Too often, those orphaned accounts are frittered away in high-fee plans,” say writers at Investopedia.com. “Properly invested into a single account, it becomes much easier to choose investments for a (diversified) portfolio that fits your long-term goals while keeping costs down.”
Meanwhile, Congress may change some of the rules related to401(k) to make it easier to borrow from those accounts by reducing the penalties for doing so. I don’t get that.
Americans already have a dismal retirement savings record. Why would we want to make it easier to undermine long-term savings to finance a life-style that we can’t afford?
On the flip side, Congress also may make it easier for smaller employers to pool retirement savings money with a single state-verified retirement fund manager. Oregon is already under way with such a program called OregonSaves. Washington state is setting up the Washington RetirementMarketplace with the same goal.
Bottom line: Don’t borrow from your 401(k). Avoid the need to borrow by having a separate rainy-day fund. Embrace compound growth of your 401(k) over the long-term.
I meet women all the time who face job and money transitions and who want to do them right. It’s about building confidence and taking charge of the future. This is your money. No one cares more than you do!
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