2015.JulybProtecting yourself from Identity Theft is like the weather: everybody talks about it, but nobody does anything about it. When it rains, everything gets wet so you put on a raincoat. When your identity is pilfered from a database you cannot prevent it from happening. But… you can discover the theft early-on by reviewing your credit card, bank, and investment statements online and regularly. You can limit your credit cards to a single provider you feel will best help you recover from physical loss or theft. You can change the access passwords to your bank and investment accounts regularly. You can add an encryption feature to your emails, to thwart thieves who hunt among them for account numbers, lifestyle clues, and your friends’ identities. You can build a separate email account to use with anything you purchase, subscribe to, enroll in, or report to online… and keep that account’s Contacts folder empty. In short, you can think like a thief every time you spot or touch your plastic money, set up a cash transfer, write an email, enter your computer, or share your Social Security Number. It’s like putting on a raincoat in a rainstorm… not perfect, but definitely helpful.


appleThe Garden of Eden is as much a state of mind as it might have been an actual place. Dining on forbidden fruit does tend, as the story goes, to change one’s perception of what life is all about. Adam and Eve were expelled from their Eden; their son Cain wandered away to some place “east of Eden” after he killed his brother. The story implies that we humans are prone to stray from our vision of Eden but eventually we would like to retire there. If you envision a move to a nice place, either right now or “later,” know that after you settle in your children, nieces and nephews, classmates, old army buddies and their families will probably want to visit you. You won’t have to go anywhere ever again. This makes great sense in your elder years. If you have planned well and are blessed with the ability to choose the location of your Eden, make sure it offers good shopping and hospitals and theater and wi-fi. And… see if you would choose to go out of your way to visit the place just to spend time with old folks like we all shall become.

Your Financial Roadmap

Whatever you aspire to is happening beyond the hills. Pretend you are the bird and are looking at the other side; describe what you see yourself doing there, to include family, career, home, and recreation. The river can carry you most of the way to this ideal place: what do you need before you can start? What do you need to take with you? What do you need along the way? How long will it take to reach the hills? The hills represent a few major obstacles that keep you from completing your trip: describe the obstacles and then describe how you intend to get past them.

Locate a pen and paper for taking notes as you build your map. Jot down items or questions that come to mind as you re-read the text above, then go back and fill in a few details for each item or question. If it becomes a fun project, go back yet again and fill in a third level of details. If you are excited by the challenge, decide if you could use some help planning the trip; if so, you will have a map to share with someone you trust.

Rubbing Elbows

2015.April.459x657Invite the six year old who still lives within all of us to stand facing a wall just close enough for the fingertips of your outstretched arm to touch the wall. Then bring your hand to that shoulder and rub the bent elbow with your other hand while chanting “Shorter… shorter… shorter.” At an appropriate moment bring the hand back toward the wall. And it won’t touch.

That’s the way things really happen for us humans; they generally turn out the way we tell ourselves they will. Even the Dow Jones Industrials Average responds to investor invocations every market day. Scientific data helps, to be sure, but there are now so many variables we basically just rub elbows to make the market change. Look at the list of stocks you like and chant “Higher… higher… higher” every day: you will be right 50% of the time if you do it long enough.

Better still, find an advisor who applies an investment strategy you understand and ask for his or her help. If your investments rise in more than 50% of market sessions, you will be glad you did.

I know what you are thinking: …rubbing elbows is more fun.

Contribution or Conversion?

contributionWhatever you are allowed to contribute to your IRA account, you can contribute to a Roth IRA account instead. Eligibility depends on the amount of your Adjusted Gross Income, line 37 of your Form 1040 tax return.

If you are not eligible to contribute, you can still convert existing IRA value into Roth IRA value: that counts as a withdrawal, fully taxable as ordinary income and you would be wise to pay the tax with money you have set aside outside your IRA.

Is converting some of your IRA value into your Roth IRA worth the tax cost? The answer hinges on your answers to three questions:

  • Do you believe future tax rates will increase (which would make paying the tax now more attractive)?
  • Will the annual taxable Required Minimum Distributions (RMDs) that start at age 70 cost you a great amount in taxes during your later years?
  • Is it better to have your retirement money accumulate tax-deferred, with both earnings and principal fully taxable upon future withdrawals… or to have your retirement money accumulate tax-free and be available tax-free in your later years?

Sometimes conversion is really worth doing; this is a good time to find out.