How A Kid Saves $100 Per Week

Bogus BasinThe fact that $100 per week from age 12 to 30 equals $150,000 (at 5% compounding) caught my wife’s eye. She asked me to explain how one of our kids could save $100 per week.

My assumptions:

  • Colorado minimum wage is $8 per hour
  • The habit I want to support is investing 50% of net earnings
  • 15 hours a week gets us to $120 gross

Now, 15 hours a week is a lot. Most kids would learn that they need to start a much lower, say 3-7 hours. That’s OK with me – it’s the habit, not the quantum that matters.

What would they do?

Right now we spend significant money/time on childcare, cleaning and yard work. All of these are up for grabs, if there’s interest.

In my wife’s case, she spent her childhood swimming – there wasn’t surplus time, or energy, for much work. Her payoff was an out-of-state athletic scholarship, a biology degree and a life-long habit of healthy choices.

Up in Canada, I started working early and continued through university. I paid local tuition, had an academic scholarship and graduated in four years. My family’s payoff was reduced financial support and a financially secure adult (with an advanced finance degree). My healthy habits came a lot later!

The offer I’d make to my kids is dollar-for-dollar matching with their saved earnings. I’d start them with the second-grader portfolio (90% equity). Here’s the Second Grader Book link – highly recommend it to adults!

Creating an early habit of working, and investing, will have a far greater return than ANY alternative uses of funds.

In effect, I’m setting up a program by which my children earn financial support and learn the skills to manage money when I’m gone.

As the kids gain experience, I can teach them about investing, personal taxation, compound interest, financial accounting and asset allocation – with their own assets.

By allowing my family (and my family council), to follow along, everyone learns the skills required when I’m gone.

Helping Kids Hear

Vail MountainI was back at preschool community night last week and we were chatting about the issues that face parents. A biggie…

How can I make my kids listen to me?

I can’t.

What I can do is create the conditions where my kids might hear me, and use behavioral psychology to increase compliance.

Key things that I’ve noticed:

Space to comply – when the kids are running around being kids, it can take a LONG time for me to understand what my wife is saying. In fact, it can take so long that she might get frustrated with me, even when I hear her. I’m guessing that a three-year old has a similar comprehension lag.

Solution – ALWAYS count to three in my head to give the kid time to hear, and time to comply

Don’t Scare My Children Witless – Am I creating an environment where my kids are able to understand me? Not always.

Never Repeat – the moms at the preschool meeting HATE repeating themselves. My solution is to observe how many times I repeat myself.


Because our kids don’t need to listen if we’re always repeating!

By the way, it’s difficult to ask the kids not to repeatedly ask me for stuff if I’m always doing the same to them. Be the change.

Talk To My Eyes – when my house is full, I spend most my time with sensory overload. I get so fried I can’t think, write or function. Once I’m fried, everyone needs to talk directly to my eyes. It takes a little extra effort but then they don’t have to repeat. 🙂

Finally, is it worth listening to what I have to say? Are my expectations reasonable? What’s my ratio of positive-to-negative interactions?

When I turn the issue on it’s head, I’ve found myself lacking in many relationships – not just with my kids.


Money, Marriage, Kids, Family

Back in July, I caught myself fantasizing about my life in the year 2030, when my youngest graduates from high school.

Longing for a better life in the future is a sure sign that I need to make changes in the present!

My dream, of 2030, was an example of the main excuses that I give myself:

  1. Money – If only I had more…
  2. Marriage – I can’t do that, I’ll damage my…
  3. Kids – The trap of giving to the point of self-neglect and external resentment…

To the list above, I’ll add “Family” – I hear others say that they can’t do XYZ because of family considerations.

While it helps our own happiness to serve another, resentment happens when we feel bound to serve.

I know from my own experience that a resentful grandson, son, father or husband isn’t much help at all. I’m awful to live with when filled with resentment.

My antidote with relationships is straightforward.

  1. Empower each other to say “no”
  2. Always be part of the solution – much better than seeking to be THE solution!
  3. Respect other people and let them solve their own situations
  4. Consider every interaction a gift, rather than an obligation – point #1 is essential for this mindset

Now, with money, the antidote is more complicated. My best advice: start by ditching people, situations and things that makes you feel envy.

Envy distracts me from my true needs.

Recently, I spent six years working myself out of financial squeeze and wanted to share the process. When I’m not sure what to do, I start with a clean sheet of paper.

Blank Sheet Living…

Based on where I am today, where would I like to be in five years and what’s it going to take to get there?

Six years ago, I decided that it was important to reduce my family’s net cost of living. I looked at moving to where I could earn more money (Silicon Valley) and where I could live far more cheaply (Boulder County).

In the end, the US Federal Reserve drove mortgage rates to the point where I moved across town, downsized 50% and achieved my goal.

It took a surprisingly large amount of effort to take the path of least resistance!

So now I’m “there” – I achieved my plan and have the ability to reset my life again.

Additionally, I have a wonderful spouse that empowers me to do ANYTHING.

There is deep wisdom in empowering another to choose to love, and serve, us.

I’ve lost all my excuses.

It can be terrifying to lose my excuses!


Goal: Strategy, Tactics

Serenity: Time Alone, Weekly overnights to the high country to explore in solitude

Connection: More Monsy, Share experiences with my spouse and strengthen my marriage, which is my best asset

Long-term Health: Use My Drive For Fitness, Exercise twice a day, watch the booze and carbs


Serenity, Connection and Long-term Health => What’s Your List?

Ten Lessons From The Great Recession

pawneeFor my family, September 2014 marked the the end of the Great Recession, which (for us) had started in October 2008. Navigating the recession took a year longer than my worst case assumption of five years.

I wanted to share my lessons as I can feel the temptation to ignore them returning!

#1 – You can’t know your partners – I’ve lived with friends for up to six months at a time and had no idea about their personal situation – my favorite quote here is one about knowing your marriage… “if you’re lucky then you might know 50% of your marriage, YOUR half.”

#2 – Burn rate kills – Between October 2008 and March 2009, I lost 100% of my net income. Without significant changes, I knew the loss of income would screw up our family finances. I would have really freaked if I knew that interest rates were going to zero! Staying variable enabled us to cut 90% of business expenses and 50% of household expenses – these were gone by April 2009. The lesson here is to be very careful of building up long-term financial commitments.

#3 – Real Estate, even prime, is only liquid in a bull market – there is an urban myth that real estate is a low volatility asset class. Until 2009, there were many national markets that had NEVER gone down! I will not be able to time the market – I should always be willing to sell early – future purchases should only be made for assets that the family is willing to hold for more than 25 years.

#4 – For my core capital, my benchmark return is zero – there is a portion of my family balance sheet that would be very painful to lose. Don’t risk capital for tiny yield – examples here are constantly pedaled by brokers (foreign currency deposits, derivative-linked investments, highly-leveraged investment schemes, alternative assets, growth stocks).

#5 – I’m a better man when I’m constrained – This applies in all areas of my life. At the peak of the boom there was tremendous ego and waste in my life. I’m very fortunate that life gave me a kick in the butt and I had to make choices. I don’t have the emotional maturity to be unconstrained in action, maybe someday!

#6 – Create plans B, C and D – ring fence different aspects of your life, and finances – NEVER guarantee another person’s obligations (see #1 above). In 2014, my life has a series of fallback plans to deal with potential setbacks – I spent the recession taking steps to protect myself, my wife, my kids, and my family.

#7 – Investment properties should avoid furnished rentals, anything with a material housing association payment, and anything with a cost to hold (vacant) that’s greater than long term interest rates – I made good money by investing in real estate through the bottom but would have done better by focusing on properties with a lower cost to hold.

#8low-cost passive index investing gives me what I need. The best gamblers I know take a profit-share on other people’s money and use non-recourse leverage.

#9 – stop trying to win – I misallocate energy, money and time when I forget that a simple life is a good life. Reaching for external success and excessive financial wealth leads to poor decisions and choices. I make my best choices when I measure wealth in terms of health, controlling my schedule and sharing time with people I love.

#10 – don’t capitalize luxury expenditure – particularly, second homes and depreciable assets – stay variable!

My errors and misjudgments persist across cultures and generations!

Choose Wisely


Moving Into An Equity Position – Lump Sum

We sold our house in September, the market is at an all-time high, interest rates remain near an all-time low…


My existing portfolio mix is 60/40 equity/debt. I’m happy with that position so will ring fence those assets and continue to rebalance quarterly.

With the new money…

  • 40% Intermediate Bond Fund
  • 30% Short-term US Government Bond Fund
  • 30% Equity (20 US / 10 Int’l)

I came at the equity number because I could live with the impact of a 20-50% equity market decline (6-15% of total portfolio) if a big drop happened the day after I invested. Considering greater exposure to a drop was too painful.

To move my allocation from 30% equity to 60% equity:

  • Take 130 weeks to do the move
  • Move equal amounts each week by exchanging short-term bond fund for the two equity funds that I use (VTSAX/VTIAX) – set up an automatic exchange on Vanguard
  • Track the individual purchases (automatically via Vanguard) to create options for tax efficiency – if you track your cost based on specific purchase IDs then you can specify the exact shares that you want to sell/exchange at a later date
  • Review quarterly
    • 20% drop in the market will trigger a 10% increase in equity weighting
    • 30% drop in the market will trigger another 10% increase in equity weighting
    • 40% drop in the market will have me shift to my goal weighting of 60% equity

My strategy (30% equity to start) is more usual for an investor older than me. It is particular to my own situation and not advice for you.

For expert advice, check out All About Asset Allocation by Richard Ferri.

Here’s my original article, about buying equities, from March 2014.