It took 70 years, but the Dionne quintuplets’ makeover is finally complete

Some people hate corporate retailers on principle, thinking it would be more efficient and somehow more fulfilling to buy their clothes, groceries, office supplies and software from different mom-and-pop shops. Others hate corporate retailers for a more legitimate reason – residual anger from childhood, at being informed of back-to-school sales weeks before classes actually began.

Bart Simpson (upon breaking his leg): Now I’m gonna miss the whole summer.
Homer Simpson: Don’t worry, boy. When you get a job like me you’ll miss every summer.

Or you can rely on passive income in your adulthood, which makes summers even better than they were in childhood. Ah well, to each their own. Buy our book for elaboration on what we’re talking about.

Let’s shake things up a little this week, eat dessert first. West Point graduate and retired Army officer Jason at Hull Financial Planning made the 1st round of cuts for Who Wants To Be A Millionaire? If he gets on the show, we hope the questions he faces are no more challenging than:

Which of the following traffic lights means “go”?

a. Red
b. Amber
c. Green
d. Fuchsia

…because he’s committed (committed, it’s on the internet and everything) to donate half his winnings to the Wounded Warrior Project.

Also, Jason? Here’s a little something we picked up at Guitar Center recently:
What, you don’t have one? All the cool kids have one. This is maybe our 20th or so. It’s hard to keep track, given how common they are. We can’t walk down our street without stepping over one.

No, you’re thinking of “baboushka,” which is one of those head coverings old Russian women wear. It’s become so identified with them that it’s often used colloquially to refer to the women themselves.

No, that’s “balaclava.” British English for the kind of ski mask that white people wear in the ADT commercials (and that they then remove, so you know they’re white.) Ah well, better luck next time.

While millions of educated people her age are paying off student loans, Pauline Paquin is going in the opposite direction. From deep in rural Guatemala, the cash-flow-positive Frenchwoman behind Reach Financial Independence is taking her site’s title to heart and offering scholarships to 2 girls in her village. Even better, one of the scholarships is reserved for a trade school. The world needs barbers far more than it needs philosophers, unless those philosophers are particularly adept at brewing coffee.

(This is going to be one of those no-filler CoWs. We can feel it already.)

New kitten adoptee and defending CYC Woman of the Year Paula Pant at Afford Anything asks if you should ever borrow money to buy a car. Knee-jerk financial advice says no, of course not. Second-level thinking says measure it against the alternatives. Paula’s boyfriend could have gotten a car loan with a zero real rate of interest, or close to it. But the psychological high of not having a car loan trumped math and he ended up paying cash instead. Paula retaliated by yelling at him for never emptying the dishwasher. The boyfriend accused her of flirting with her personal trainer. Their exchange got louder, household objects were broken, the police were called, and we wrote this sentence and the previous couple just to entice you into visiting Paula’s site. (Also, any woman who says non-facetiously that her dream car is 7-9 years old and has 70,000 ± 20,000 miles on it is alright by us.)

(Post rejected because we have a streak to maintain.) 

For some entrepreneurs, the thought of long hours and multiple bosses (i.e. every client, as opposed to a single 9-to-5 supervisor) is more than made up for by the famed ironclad Rule #1: Pay yourself first. The problem occurs when novice business owners never stop paying themselves. Sandi Martin at Spring Personal Finance points out that business profits are business profits, officer salaries are officer salaries, and you need a business plan that extends beyond write-offs and tax breaks. Sandi also makes the most obscure pop-culture reference in the history of the CoW, assuming that Canadian breakfast cereal esoterica counts as pop culture:

People, the money your business makes is a real, finite resource. The operating account for Joe’s Plumbing isn’t an endlessly renewing cup of Red River Cereal like that one you made on that camping trip last year but didn’t add enough water to, so every bite you took was rapidly replaced and you despaired of ever finishing the stupid stuff.

When you invest with as sound a strategy as Dividend Growth Investor does, you end up with problems that are good to have. Such as, a portfolio that’s weighted too heavily toward undervalued companies. Poor fella. So instead of hitting Philip Morris and Chevron ever harder, he’s created a list of major players with low price-earnings ratios, high dividends (of course), and growth potential. Still, he won’t move into a company of questionable quality (even if its price is attractive) just to attempt to make a buck.

New submitter this week, with a provocative headline. Matt Becker of Mom & Dad Money asks if you’d be interested in spending half an hour developing an investment strategy that will beat 80% of market players. Long story short, he argues that index funds beat their actively managed brethren over the long haul. It’s been a long time since we welcomed a new contributor who had something worthwhile to say (Sandi at Spring Personal Finance might have been the most recent, and she’s been around for months), so hopefully Matt will be a consistent addition to the roster.

Wait, we forgot about Rob Aeschbach. The former Marine (Yeah, we know: there are no former Marines. Alright, the “current civilian”) answers questions from readers in his direct and non-vacillating style. That the readers might be fictional is unimportant, given how good Rob’s advice is. Especially his assessment of your little punk’s college prospects:

I don’t think a college grad with $35,000 of student debt and a degree in puppetry really has a better future than a debt-free high school grad who is qualified as a diesel mechanic, heavy equipment operator, or HVAC technician.

Another eponymous blogger is Michael at Kitces.com, who avails us of the news that the Internal Revenue Service has now deigned to let you receive an annuity upon your benefactor’s death and then switch to another. Previously, you had to sell the annuity, pay taxes at ordinary income rates, then invest the remainder. It’s only a private IRS letter, and not yet law, but it seems as though the letter will eventually be passed into legislation.

Some people like to touch stuff before they buy it. Depending on the good in question, this might make sense. Daniel at Sweating the Big Stuff has been on this planet long enough to know what he’s in for when he buys most items sight unseen. And even if he wasn’t, he knows how to read reviews. That’s why he buys almost exclusively online, to the point where it’s hard for him to remember when he bought something in a store.

How much money would it take to make a legitimate difference in your life? (If your answer is “I only need family, friends, my health and the smile on my kid’s face, congratulations on making it 1300 words into a post on what’s clearly the wrong website for you.) Evan at My Journey to Millions notes that for him, that mysterious number is forever increasing. And not just as a result of inflation.

Rowan Wellington at The Skilled Investor returns with his curious blend of 1997 GeoCities-era graphics and literal textbook advice. This week, several dry if consistent bullet points on how the securities markets work in the most general of terms.

Don at My Dollar Plan not only overpaid for his 1st house, he overfinanced it. Years later he now rents the house out, and discovered that the rules for refinancing your residence are vastly different than those for refinancing a house you don’t live in.

Last but hardly least, PKamp3 at DQYDJ.net asks one of his classic non-rhetorical questions: Should You Major in Photography? Being PKamp3, he illustrates his answer by way of colorful charts and unambiguous graphic evidence that states that getting professionally credentialed to press buttons and trade out lenses is a fool’s game. (Here’s a general rule: If people do it as a hobby, it probably shouldn’t be a formal area of tertiary study.)

And we’re done. Same time tomorrow.

The -$1,008,000 Man

More on this Wednesday. We were going to do an introductory paragraph on Hunter Mahan, but one thing led to another and it warranted its own post. Instead, the CoW in earnest:

After far too long a layoff, several months, Daniel at Sweating the Big Stuff returns with a vengeance. You know why we love Daniel? Because he can review a credit card and not waste a single word discussing its interest rate; which is by far the least important criterion when selecting a card. Daniel got a Southwest Airlines Rapid Rewards Plus card, paid $69 to receive $820 worth of flights, and then, and this is key:

Since the day-to-day rewards of the card itself are not very impressive, I plan on cancelling the card before the year is up.

Daniel is the antithesis of the bloggers who write variations on “I woke up one day and found I owed $43,000 on my credit cards. I don’t know how this happened.” Daniel pays attention, and read the cardholder agreement, which is why he’s doing well and they aren’t. He’s certainly not Chase’s favorite customer, as it’s costing them money to have him around, but a) that’s hardly Daniel’s problem and 2) they don’t care that much as he’s lost in the shuffle anyway. For every Daniel who takes advantage of the system, there are 1000 imbeciles self-indenturing as we speak.

America’s, and thus Atlanta’s, largest individual landowner is Ted Turner. But that’s for now. Paula Pant is chasing at his heels and can’t sate her voracious appetite for real estate. The genius behind Afford Anything bought a 3-bedroom/2-bathroom house, her 4th. Is it her dream home? No, of course not. It’s as generic as such houses get. Why? Because Paula cares about renting the house out, thus creating income. In other words, making the customer happy, which is how you build wealth. (Sure enough Paula’s already found a tenant, something she wouldn’t have done as quickly if the house weren’t so unremarkable.) Did we mention that Paula just got back from an extended visit to Paris, too? You can do this. Anyone with a brain can do this. Well, a brain, confidence, and the willingness to work hard at something doable but unfamiliar. Those last 2 requirements eliminate most aspirants.

When’s the bond sale coming? According to Michael at Financial Ramblings, sooner than you might think. Interest rates are rising, because 1) it’s about time and b) at 0-¼%, they literally couldn’t get much lower. Higher interest rates mean that newly issued bonds will offer higher returns than their predecessors, which means that to stay competitive the older bonds will have to fall in price. Bonus: the first line of the first comment on Michael’s post was written by a Stalinist.

Dividend Growth Investor has temporarily turned his site into an FAQ: answers to the most common questions from people who don’t know the first thing about dividend investing but want to learn. Dividend Growth Investor can be a little loquacious at times, but it’s more than justified when his answers are as richly detailed as they are this week. Everything you could want to know about dividend investing – what a prudent investor’s investment criteria are, how returns are taxed, why you’d bother choosing particular stocks instead of just buying an index fund – he answers in defensible and logical terms. Read this and learn how to lay the foundation for being rich.

Now here’s the venom and intolerance we like to see. Big Cajun Man at Canajun Finances answers his own rhetorical question, Are Credit Cards Making You A Bad Person? Not just bad, but fat, lazy and stupid. (His words.) We don’t necessarily agree – see Daniel’s opening contribution – but credit cards, like the tools that they are, certainly increase one’s capability for obesity and sloth. (Or for fitness and resourcefulness. As Chuck Berry said, it all depends how you use it.)

There’s frugality for its own sake, which is pointless, and then there’s frugality with a purpose. Pauline Paquin at Reach Financial Independence embraces the latter, with the stated goal of making life easier (and less reliant on active income) decades hence.

Mike St. Pierre at Annuity Rates HQ wants you to buy an…well, what do you think? An annuity, of course.

If you’re looking forward to receiving a pension, or even something less codified such as stock appreciation or continued dividends, Evan at My Journey to Millions reminds you to shake yourself. Nothing is guaranteed, and there are several thousand public employees in the festering abyss that is Detroit who are slowly beginning to realize this. Or not. Evan has a slight flair for hyperbole

[Detroit’s bankruptcy] will have repercussions that will literally affect every single American if not the every single person in the civilized world

but that shouldn’t cloud the message that your retirement is your own responsibility. Also, don’t buy civic debt from institutional economic hardship cases like Detroit, regardless of price. No one knows what’s going to happen re Detroit’s insolvency, but we’ll hazard a guess. Much like General Motors and Chrysler, bondholders will unfairly and illegally lose their place in the creditor hierarchy and get nothing or next to nothing. Detroit pensioners will be made as close to whole as possible, given that they’ll still be receiving pennies on the dollar. The Detroit pensioners who vote outnumber the Detroit general obligation bondholders, and enfranchisement and suffrage are the only currencies that matter in modern-day America.

Enough nihilism. Are You Better Off Than You Were 6 Years Ago? Not a rhetorical question. PKamp3 at DQYDJ.net not only asks it but gives you your meticulously researched answer. The St. Louis Federal Reserve Bank’s numbers indicate that we – the United States, collectively – lost almost ⅕ of our wealth in the last recession. However, we’ve gained it all back and then some. Yeah, we’ve also gained population and experienced inflation, but there’s a narrative to be followed here.

Finally, Jason at Hull Financial Planning reassumes his coveted closing spot. He begins with a quote from cocaine connoisseur and possible mariticidal maniac* Courtney Love, employing his infamous construct Monkey Brain to force home a point: if you’re in debt, you’re an addict and you need to channel that addiction into different, beneficial avenues. Also, the results of donating money to charity are considerably more predictable than tooting a Schedule II controlled substance will ever be.

And we’re done. See you tomorrow.

*In which case, amen. Three of that guy’s out-of-tune albums were enough.