As you may already know, this week is National Save for Retirement Week. In that spirit, I want to spend some time today discussing the peace brought on by having a sound financial plan.

It should come as no surprise that planning for the future and saving for retirement can bring a great deal of peace to those who do it. Unfortunately, many Americans are so mired in debt that they can’t make any progress toward their long term goals.

You don’t have to have $500k in the bank to achieve financial peace. All you need is a solid financial plan. This will serve as a springboard for eliminating debt, building your savings, and getting you back on the road to a comfortable retirement.

“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”

-Brian Tracy

Financial peace may be closer than you think…

When I say “financial peace,” what comes to mind?

You may have answered with one or more of the following:

• No more creditors calling
• No credit card debt
• A paid off mortgage
• Freedom from overdue bills
• A bunch of money in the bank
• Maxed out retirement contributions
• A diversified investment portfolio, etc., etc., etc…

While all of these are necessary pieces of the financial peace puzzle, most of them will probably take awhile to achieve. Wouldn’t it be cool if you could gain a great measure of financial peace in just a week or two?

Actually… If you follow the simple outline below, you will very quickly find yourself on solid footing and on your way to increased financial peace and prosperity.

The uneasiness of financial uncertainty

Only a fool thinks he can properly plan for everything. Much the same, it is foolish for us to walk through life with no financial plan at all.

“Life is full of uncertainties. Future investment earnings and interest and inflation rates are not known to anybody. However, I can guarantee you one thing… Those who put an investment program in place will have a lot more money when they come to retire than those who never get around to it.”

-Noel Whittaker

Consider the runner. Though he can never prepare for all the “what ifs” a race may bring, there are a few things that he can be certain of. For example, he cannot control the weather, but he can be prepared for different types of weather. He cannot control the length of the race, but he can know how long the race is and prepare accordingly. He can pace himself based on his knowledge and preparation and, at the very least, save enough of his energy to reach the finish line.

It’s much the same with our finances. We can never plan for every situation that may befall us, and only a fool would try to do this. What we can do is start with a few basics, take inventory of what we have, decide where we want to go, and develop a plan to get us there.

Once you finish planning, you still have to execute your plan to reach your goal, but… Once you have that plan, you can rest easy knowing that now it’s just a matter of follow through. There is peace in planning!

A simple plan for achieving financial peace

Does planning overwhelm you? Then start simple and refine things over time. Remember that “a journey of a thousand miles begins with a single step!”

Use the following outline to start forming your plan to gain control and peace over your financial situation:

• Get to know your debt and get angry. You’re never going to formulate a plan until your establish a proper relationship with your debt. One of the best things I ever did was to figure out how much interest I was paying on my debt. Simply take an inventory of your loans, and calculate how much interest you pay toward your debts each and every month. Once you figure out how much money you’re paying in interest, you’ll be motivated to move on to step two.
• Focus on needs and stop spending foolishly. Sure, you’ve made bad decisions in the past, but that’s behind you now. Start differentiating between needs and wants, stop buying things you don’t need, and focus your available funds on true necessities. Take it one step further by applying wisdom to your necessities. Food is a great example. Instead of simply buying everything you want, employ these grocery hacks to help cut corners.
• Start an emergency fund. Sell unneeded items, stop going out to eat, use your grocery savings from step two and save at least $1,000 as quickly as possible. This step can be accomplished much faster than you think, and will bring you a great deal of security and peace all by itself… And it only gets better from here!
• Keep a spending journal. Do this. Don’t skip it. I’m serious. If you’re like me, then even now you’re probably making excuses as to why you don’t need to do this. Knock it off. Keeping a spending journal is the cornerstone of living on a spending plan (a.k.a., a budget.) The cool thing about a spending journal is that it’s way easier to start than a budget. A budget is a living document that will take months to get into working order, but you can successfully implement a spending journal right now! Stop making excuses, get a small notebook, and keep it on you at all times. I carry mine in my man purse. Yeah you read that right… I carry a man purse – get over it.
• Start budgeting. As I mentioned above, this is something that will take time, so don’t feel like you need to master it in your first go-round. Now that you’ll be keeping a spending journal, this will be much easier than you think. Begin with a very simple budget and tweak it both in accuracy and completeness as the days go by.
• Repay high interest debt with your new found excess. Trust me. If you’ve followed the steps from above you will have quite a bit of extra money each month to help repay your debt much faster than expected. Whatever you do, don’t be tempted to spend it! Instead, use it to repay your debt ASAP. If you’re like me and you find it necessary to save while focusing on debt repayment then you can follow the 75/25 debt repayment and savings plan. Die hard Dave Ramsey fans will disagree, but this has proven to be a wise choice for my wife and I several times over.
• Build your emergency fund to 3-9 months worth of expenses. Now that your high interest debt is gone, you’ll want to build up your emergency fund. My wife and I plan to save enough to cover 6 months worth of expenses. You’ll want to keep this money in a place where you can easily access it, like a high yield savings account. This money is not an investment. Rather, it should be viewed as personal emergency insurance against unexpected events.
• Begin saving for retirement. Once consumer debt is gone and you’ve built up your emergency fund, use your newly developed financial discipline to begin saving for retirement.

There… Doesn’t that feel good?

“A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”

-Brian Tracy

Even though you haven’t saved a dime more than you had before creating your plan, you can walk away from this article with confidence, optimism, and a new found measure of financial peace concerning your future.

One last piece of advice – make sure you follow through!

Now that you have proper direction, all you need is determination, patience, and a little hard work. It’s amazing how a simple plan can have such a huge impact!

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“It is an unfortunate human failing that a full pocketbook often groans more loudly than an empty stomach.”

-Franklin Delano Roosevelt

One of the greatest threats to an increase in income is simply the passing of time. Without proper awareness and discipline, slow and steady salary increases can go virtually unnoticed, and most definitely underutilized.

An example

Barry and Bonnie Bernstein are your typical middle-class couple. Both attended college and earned bachelor’s degrees in their respective fields of study. After college, Barry successfully landed a good job and has been slowly but surely working his way up the corporate ladder. Bonnie also landed a decent job straight out of school, and has taken on more and more responsibility, and thus has enjoyed a steadily increasing income.

The Bernstein’s are not financial experts by any stretch of the imagination, but over the years they managed to buy a nice home and save enough to go on nice vacations, purchase decent automobiles, and enjoy a stable financial existence. However, as time went by and their salaries steadily increased, those extra wages never seemed to make a noticeable impact on their savings.

Their extra money that came from regular salary increases was always absorbed by the “this and that” of life – car repairs, shopping trips, nights on the town, etc. In fact, over the course of 10 years, the Bernstein’s combined salaries increased by nearly $40,000 but they had little to show for it.

What Gives?

“If you would be wealthy, think of saving as well as getting.”

Benjamin Franklin

No change goes more unnoticed than slow, steady change. The Bernstein’s story is all to familiar. Add the American culture of spend before you earn to a lack of deliberate financial discipline, and you have a delicious recipe for false prosperity. This philosophy is sweet in the mouth, but bitter in the belly. Human nature dictates that, unless we make diligence and discipline a part of our daily financial decisions, our excess will be piddled away almost without trying.

So what’s the answer?

“My problem lies in reconciling my gross habits with my net income.”

-Errol Flynn

In short, awareness and discipline are your best friends when it comes to proper money management. Below are some specific steps you can take that, if consistently utilized, will go a long way toward solving your problems.

Beware of lifestyle inflation

As always, the first step is admitting that we have a problem. As I stated above, unless you are deliberate with your money, you will most likely succumb to the pressures of culture and advertising. Carry this knowledge with you throughout each day, and consider it whenever you’re faced with a financial decision. Remember… We’re creatures of desire and, left unchecked, those desires typically get the best of us.

My wife and I fell victim to lifestyle inflation for the first four years of our marriage. It wasn’t until six months ago that we recognized the problem and worked to implement a plan to curb it.

Maintain a long-term perspective

It’s impossible to overstate the importance of setting personal financial goals. Consider trying to run a race with no idea how far away the finish line is. You can’t devise (or adjust) the proper approach without a full understanding of what your end result is.

No matter your age, income, or debt level, make sure you consider where you would like to be down the financial road. Do you want to retire early? Set your goals accordingly. Do you want to gain financial independence so you can pursue your passions without worrying about money? Set your goals accordingly.

The latter is my long-term financial goal.

Set a target savings % — not an amount, but a percentage

Instead of (or in addition to) setting a goal to save a certain amount of money over a specific time frame, you should set savings goals based on a percentage of your income. If you easily reach your target, increase it. The power of the percentage is that your savings automatically increase along with your income.

The first savings percentage goal I had was to save 5% of my income. I have successfully reached that and have since reached farther. Now my wife and I are striving to reach a 10% savings mark. Once we reach that point, we’ll increase it further. We’ll repeat this cycle until we’re saving as much of our income as possible.

Automate your savings

“Pay yourself first.” “Set it & forget it.” “You won’t miss it.”

There’s a good reason that you’ve heard these tips many times over… They work! An automated savings plan is an incredibly powerful way to help you reach your goals. Trust me, once you set up the automatic transactions, you’ll never regret it. You also won’t believe how fast your money accumulates. Combine this with the targeted percentage approach (above) and you’ll be well on your way.

My wife and I use the “Automatic Savings Plan” feature offered by ING Direct to automate our savings plan. If you’re not already a customer of ING Direct, I highly recommend them.

Work to reduce expenses as your income increases

Lastly, don’t forget to practice frugality. Frugal living will help you to reduce expenses, and reducing expenses is arguably better than getting a raise. Once you either get a raise, or successfully eliminate an expense, make sure you follow through on your financial goals by adjusting your savings goals accordingly.

I make sure I go over my income and expenses each time I review my budget. This ensures proper allocation of newly freed up monies and provides the follow through you need to successfully reach your goals!

Just do it

Don’t be like the Bernsteins! Practice these deliberate, goal-oriented financial tips to curb your lifestyle inflation and set yourself up for long-term success.

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This is a guest post by J. Money of Budgets are Sexy. If you like what you see here, please consider subscribing to his RSS feed.

The financial snapshot. It’s a new trend, baby! Okay, maybe not… At least not yet… But if it were, I guarantee that people would be in a MUCH better shape these days. If you know where your money’s coming from and going to, you’re going to make much smarter financial decisions.

So what, exactly, is this “Financial Snapshot“? According to The Dictionary of J.:

Financial Snapshot [fi-nan-shuhl snap-shot] noun: A spreadsheet that lists all of your debts, all of your savings, your net worth, and most importantly your budget – all in one spot!

A real-life snapshot

Check out my own financial snapshot. It gets updated a couple of times a month, and makes my life a helluva lot easier. You’re more than welcome to download the blank template (xls) and play around with it. I like using Google Docs for accessibility, but you can use pretty much any program as long as stick with it.

Now, for the sake of keeping this short (and not boring you to death), I’ve listed a few easy steps below just to get you started. Whether or not you keep reading, just remember that the main point here is to have a clear understanding of your financial situation. That’s it! Once you’ve gotten a firm grasp on that, it’s all downhill, my friend.

1. Get your mind right. Let’s face it, if you’re not in the mood to talk finance and get all budgety, it’s just not gonna happen. We’re all human, and if we don’t wanna do something, then we usually don’t do it. Unfortunately, organizing your finances is usually one of those things you don’t wanna do. But if you set aside little bits of time, and update thing when the mood is right, you’ll find that it goes much more smoothly.
2. Start with the quick and easy stuff. If you take a look at the template, you’ll see there’s room for all sorts of numbers to fill out (don’t worry, once you do it the first time, it gets much quicker). The easiest place to start (in my opinion) is with your credit card balances and income. You can easily get this info by logging into your accounts and copying/pasting these numbers over.
3. Tackle your “net worth.” Your net worth is basically all of your assets minus all of your liabilities. So things like savings, 401(k) accounts, Roth IRAs, stocks, bonds, etc. all get recorded in the assets department. Then we put things like credit card debt, loans, etc. in the liability section. Gather it all up and record the info in the right spots to find out your net worth. And remember, there are no right or wrong answers here – just the facts.
4. Create a simple budget. This is my favorite part. Go back a month or two and track down where all your money went. Look at your checking accounts, savings accounts, credit cards, etc. Add everything up by category (e.g., mortgage, cable TV, food, etc.), and then divide by the number of months you’ve tracked. This will give you a solid estimate of how much you’re spending in each category on a monthly basis.

Now, plop these numbers into your spreadsheet, and voíla… You’ve got yourself a budget! I always advise keeping the numbers intact for the first month (or pay period, or whatever length you want to budget for) so that you can get used to balancing it. But after a month or so, start chopping away at the numbers and challenge yourself to spend even less! You’ll be amazed at what you can accomplish once you have a game plan in action.

So that’s it my friends – the “Financial Snapshot” as your boy J. Money sees it. As with everything in life, it’ll take a bit of work to get things rolling, but… If you stay on top of things and keep your head up, you’ll have no else where to go than up!

Ya just gotta start baby…

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This morning I wrote about the high cost of hurricane insurance. Since today is the first day of hurricane season, I thought I’d follow that up with a list of tips from the National Hurricane Center on preparing for and surviving a hurricane.

While some of these tips are hurricane specific, others make good sense in the face of just about any natural disaster.

• Take steps to protect your home against unnecessary damage.
• Talk to your family about the types of hazards you might face.
• Identify a safe room, or at least the safest areas in your home for each hurricane hazard. If there is no suitable location in your home, you might need to rely on a community shelter.
• Determine the best escape routes from your home as well as safe places for you and your family to meet.
• Identify an out-of-state family member or friend to serve as a single point of contact for your family.
• Develop a plan for what to do with your pets if the event of an evacuation.
• Post all applicable emergency numbers near your phone and make sure your kids know how/when to call 911.
• Double-check your insurance coverage to ensure that hurricane damage is covered, and that you also have flood insurance (if necessary).
• Stock up on non-perishable supplies and create a disaster supply kit.
• Get a weather radio and be sure to replace its battery every 6 months (along with your smoke detector batteries) to keep them fresh.
• Take First Aid, CPR, and disaster preparedness classes.

You might also want to check out Matt’s list of tips for preparing for a power outage, as you’re likely to be in the dark for at least awhile after the storm passes. If you have any tips of your own, please share them in the comments.

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I recently ran across an interesting brochure that was put out by the Certified Financial Planner Board of Standards (CFP Board). This is the group that grants the Certified Financial Planner (CFP) certification. In the brochure, they list ten questions that you should ask when choosing a financial planner.

Ten questions to ask your financial planner

1. What experience do you have?
2. What are your qualifications?
3. What services do you offer?
4. What is your approach to financial planning?
5. Will you be the only person working with me?
6. How will I pay for your services?
7. How much do you typically charge?
8. Could anyone besides me benefit from your recommendations?
9. Have you every been publicly disciplined for any unlawful or unethical actions in your professional career?
10. Can I have it in writing?

My thoughts

This list is a great start, as it gets at issues such as whether or not the advisor’s experience and philosophy are appropriate for your needs, as well as whether or not their fiduciary interests are in line with your own, etc.

I would, however, add at least one question to this list… As uncomfortable as it may seem, I would ask a bit about their personal financial situation. Most importantly, are they currently carrying consumer debt?

While some might view that question as out-of-bounds, or perhaps even judgmental, I’m not particularly interested in taking advice from someone who isn’t “walking the walk.” Of course, you might not get a straight answer when you ask, but you can tell a lot by how they react.

What do you think? Does this list cover all the important bases?

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I’ve talked a lot in the past about emergency funds — why you should have one, how big it should be, etc. Today I thought I’d ask you guys about your emergency funds. More specifically, I’m curious how many months worth of expenses you keep on hand. Given the current state of the economy, I’m also curious to hear if any of you have had to dip into your emergency fund in recent months to get by.

Note: RSS readers might have to click through to view and participate in the poll.

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Last week, while busily bullet-pointing how to prepare for a power outage, I noted that my wife and I were considering going “off the grid” one day a week as a way to save a bit of money and to spend more quality time together.

Although my wife thought it was a great idea at the time, she grew skeptical a week later when it was time to throw the breakers. After some prodding, however, she agreed to participate. This article is a story about what we learned from our initial experience, and where it’s leading us…

Going off the grid

Going off the grid one day a week was easier than you might expect. Don’t get me wrong, it’s completely different and does take effort, but once you adopt the mindset, it’s not a big deal. We ended up leaving the breakers on, and just made a conscious effort to avoid using electricity. We watched zero television and kept the lights and furnace off, but did continue regular use of our water, gas stove, and sewer. As such, this first run was far from true off the grid living!

After the experience was over, we decided to continue this exercise each Saturday for the foreseeable future. We expect to save a bit of money (perhaps as much as $20/month) with our little experiment, and have already noticed growth in our relationship. We’ve also found that flirting with these concepts has motivated us to become more self-sufficient, and less reliant on grid living.

Before we go any further, I feel as though I should define what “off the grid” means to me. When I say “off the grid,” I’m referring to a simpler, more self-reliant lifestyle for my family. In no way do I mean to imply that our goal is to become recluses that completely shun modern conveniences and fail to contribute to society at large. What I really want to do is to practice preparedness and frugality by becoming less reliant on our existing infrastructure.

Five lifestyle goals

Here are five important lifestyle changes we are hoping to adopt and embrace as we become more comfortable moving “off the grid”:

• Self reliance. We’d like to reduce our dependence on societal systems such as sewer, water, power grids, gas, etc. If those utilities were ever to cease to function, we’d have alternative options at the ready.
• Cost control. If utilities prices were to skyrocket — as we’ve already witnessed over the past couple of years — we’d be less dependent on them and could reduce our costs.
• Simplified living. Less dependence on modern systems means we could return to a less stressful, more basic way of life. This is very attractive to us.
• Learning old-world skills. We’ll exercise our creativity, handiness, and ingenuity as we build our knowledge and competency in things like gardening, canning, building, etc.
• Focus on relationships. We’ll build and strengthen family relationships by tuning out or turning off outside technological influences and focusing on people instead.

A little history, a loose plan, and a looming problem

In reading so far, you might have envisioned my wife and I living on acres of country land with chickens running around, cattle in a pasture, etc. In truth, none of these are part of our current lifestyle, though I’d very much like to make vision reality! Let me paint you a more accurate picture of me, my background, and my relevant situation.

While I didn’t grow up in the holler, my daddy wasn’t a coal miner, and I don’t fly a rebel flag or drive a monster truck, I’m a country boy at heart. As such, I have a strong desire to lead as independent and self-reliant a life as possible. As a child and young man, I:

• Grew up on 20 acres
• Was basically a lumberjack – we heated our home with a wood stove
• Raised chickens, cows, and horses
• Was first employed by the farmer down the street as a hay bailing grunt

As a young adult, I moved away from my country boy roots and sold my soul to the real estate devils when I moved into the suburbs where I now:

• Live on 0.17 acres
• Have an 80% efficiency furnace to heat my home
• Raise nothing but blood pressure, and maybe a few herbs
• Work as an IT Manager

Though my wife and I are currently suburban DINKs, we’re planing on getting back to basics and are counting the days until we find our “dream home” in which we’ll start a family. As of now, we envision a self-constructed dome home complete with a wood burning stove to provide heat during the cold Michigan winters. This dream of ours is not going to happen overnight, and it’s going to require a lot of patience and sacrifice. To make it happen, we’ll need to cut spending, reduce our debt, and save a lot of money.

The biggest problem we’re currently facing is that, like so many other Americans, we’re upside down on our house. We bought our house with no money down, and are now faced with the realization that we owe much more than it’s currently worth. Fortunately, when we purchased our current home two years ago, we limited our monthly payments (including taxes and insurance) to 23% of our net income. Thus, we’re not saddled with onerous mortgage payments.

To get started we’ve decided to wean ourselves off things slowly, and have likewise begun planning for the implementation of alternative ways of life while still living in our DINK laden suburbanite neighborhood.

Some interesting additions

Since I first mentioned the idea of going off the grid, we’ve committed to starting a garden and purchasing canning supplies. We’re planning on starting to grow a lot of the produce that we would otherwise purchase throughout the year, and we’ll be purchasing both a pressure canner and a hot-water-bath canner that will help us store our bounty. As an aside, here’s here’s a link to a great guide on when to use a water-bath vs. pressure canner.

Concluding thoughts

After everything was said and done, my wife and I were both quite happy with our little “off the grid” experiment. We’ve also been a bit surprised by the shockwaves that it’s created in our life. Not only will we be saving a bit of money and spending some nice time together, but we’ll also be learning a ton of great new skills, and growing more and more self-reliant as time goes by. We’re most excited about our vision for the new home and lifestyle that we have set our sights on. Now it’s just a matter of pushing forward and maintaining discipline.

Have you ever considered going “off the grid”, or otherwise changing your lifestyle to reduce your dependence on modern conveniences? Do you have any other ideas for simplifying life, improving your self-reliance, and/or saving money by “downshifting.”

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Yesterday afternoon, I received the following e-mail from a reader named Carol:

My son died suddenly on May 15, 2008. His (tax) rebate came in the mail today. What do I do with it? Are we, his parents, entitled to it? He is single with no children.

This is an interesting (and tragic) question, and I’m not entirely sure of the correct answer. I’m far from an expert on this topic, so I can only speculate. My best guess is that it’s her son’s money, so it rightfully belongs to his estate. As such, it would go to his heirs.

He was single with no kids, and I’m not sure if he had a will (I sure didn’t when I was at that stage of life). Assuming that he didn’t, then I would imagine that his estate would go to his closest living relatives, though this might vary by locale.

In writing this up, I found this tidbit of related information over on MSNBC:

Q: If a person passes away in Sept. of 2007 will they still get the extra check?

A: Technically, no. The IRS will not issue a check to someone who is deceased. The rebate will be paid to the estate of the person who died, to be distributed according to the terms of that person’s will.

Assuming this to be true, I guess the question is whether or not they can deal with the check as written, or if they have to get it re-issued to his estate. Of course, in any situation like this it’s best to consult with a bona fide expert such as an estate attorney, or even the IRS.

Does anyone have any further insight?

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This is a guest post from David of MyTwoDollars. If you like what you see here, please consider subscribing to his RSS feed.

It was September of 2006 when I finally gave notice at what was turning out to be a dead-end corporate gig. While it paid handsomely, it was so incredibly boring that it was sucking the life out of me. I am a curious learner by nature, and to have days go by with nothing but paperwork to push around was killing my spirit!

So after 4 years at this job, casually collecting my big paychecks, I quit cold turkey. I gave them a month’s notice so I could assist in any transition, but guess what? There wasn’t one, because they never got around to hiring anyone. Believe me, it was not a healthy environment. But back to how we survived.

As it turns out, I quit without having another job lined up. Most people said I was stupid, an opinion that was shared by many of my readers. But while I did not have another gig lined up, I did have a plan, and it has paid off rather well.

We learned a lot about planning when we moved to the beach and our rent tripled (while our income didn’t), so… For months before I quit, my wife and I started shoveling money into a savings account. This would be the account we would live off if I wasn’t able to make money for a while. Within a few months, we had enough put away to equal a few months of my salary, so we felt comfortable with moving forward with our plan.

One month before I quit, I had my resume professionally redone. The end product was worth the money, but the funny part is that I have not had to use it yet. We also started talking to all of our friends and colleagues to let everyone know that I was going to be out of work in a few weeks, and I started contacting old employers to see what they were up to.

So now, let’s talk about the day I walked out the door for good. I left my back problems, my anger issues, and my lack of interest in my job at my desk that day when I went home. What a glorious feeling! That was a Friday, and (thanks to a friend of mine) I had a part-time job as a web designer on Monday. And that job, which started off as a temporary, twenty hour per week gig, is still going strong. Granted, I still only put in 20-25 hours for them a week, but it keeps me honest.

The rest of my income has come from my online ventures. I run MyTwoDollars as well as a website on environmental and sustainability issues called The Good Human. I also design, implement, and maintain several other websites and weblogs for people. All of the income from these other sources balances out the hours I put in for my “employer,” and I get to do it all from home on my own schedule — I never had to go back to a corporate gig. It’s been a great 15 months so far and I would not trade it for the world.

The key for us was to plan in advance, even if that didn’t involve having a job lined up. I wasn’t sure that I wanted to go back into the corporate world, so we saved a ton of money and talked to everyone. We cut back on eating out and other entertainment prior to my last day. We lived even further beneath our means than we normally do, because we knew we had to sacrifice for me to be able to leave my job.

And even knowing now what I didn’t know then, I would still do it the same way all again. I’ve been working for 14 years now since I graduated college, and the last 15 months of all those years has been the most rewarding and most interesting of all. I hope I don’t have to ever trade it in and go back!

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I frequently find myself musing about the possibility of an retiring early. It’s not that I dislike my job. Rather, I’m just really, really attracted to the idea of total financial independence. While we have four relatively young kids, and thus have a few more obstacles than the average family, I’m still a big fan of running the numbers to see where we stand and how far we have to go. To this end, I wanted to point out yet another calculator that I recently ran across…

It’s called the Capital Needs Analysis spreadsheet, and it allows you to plug in a number of variables including years to retirement, years until retirement, current portfolio amount, inflation rate, investment return, and income required at retirement. It then spits out four different answers, ranging from how much you’ll need such that you’ll run your portfolio down to zero at the end of your projected retirement to how much you’ll need to maintain the same inflation-adjusted dollar amount in your portfolio throughout retirement. Keep in mind here that we’re really talking about net investable assets, and not true net worth.

Running the numbers

While this is a completely deterministic calculation (i.e., it assumes perfectly equal returns over years, and thus doesn’t take into account potential variation in market returns), the answers are still enlightening (and a bit daunting). For example, assuming 4% interest and a 7% return on our investments, then…

If I continue working to the typical retirement age and assume a 30 year retirement period (taking me to age 95), then we’ll need just under $7.5 million dollars to support a withdrawal rate of no more than 4% and still maintain income stream equivalent to $100k in today’s dollars. The calculator then tells me that we’ll have to save $4,329/month to get there. But…

If I push things back to an early retirement at age 55 (and increase the retirement period to 40 years), then we’ll need to amass a nest egg of just over $5 million. This strikes me as somewhat odd, in that the required nest egg is lower here than with the later retirement. But perhaps it’s because these numbers account for inflation, so our required income won’t have to be as high in 2026 dollars to give us $100k in spending power? Regardless, we’ll have to get there in less time, so it’ll cost us much more per month to make it happen — nearly $8,300/month.

If I push things back even further, resulting in a retirement age of 45 (with an increase in the retirement period to 50 years), I learn that we’ll need a bit over $3.4 million at retirement, and that we’ll have to save just shy of $21k/month to get there. Yikes!

The answer? It depends…

Of course, these answers are all highly dependent on the variables that you plug in. For example, is 4% inflation realistic? Or perhaps your cost of living is increasing more rapidly? What about a 7% rate of return? Too generous or too conservative? And will we really need $100k/year, considering that our house will almost certainly be paid off prior to retirement, and that the numbers above assume no further investment contributions and no outside earnings?

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I recently ran across an interesting article by Ric Edelman in Bottom Line/Personal (no link, sorry). In it, he ran down a list of the biggest lies that you’ll hear from a financial adviser, and how they could cost you money. What follows is a synopsis of that article, along with some thoughts of my own. While it may be a stretch to call some of these things “lies,” they certainly can be misleading.

You should rebalance your portfolio once a year.

In truth, Edelman argues that once per year isn’t enough. Because market fluctuations can knock your portfolio allocation out of whack, it’s important to periodically rebalance it. But if you blindly choose a specific date, Edelman worries that it might wind up being the wrong time of year, or that you might have waited too long to react to a significant shift in the market. Rather, you should rebalance as soon as any investment category shifts by a predetermined amount. The example that Edelman gives is a target allocation of 10% in small caps. If your portfolio drifts to the point that you’re now holding 8% or 12% in this category, you should consider rebalancing to get back to the 10% target.

All in all, this makes sense, and it helps to ensure that you are selling high and buying low. The only real ‘gotcha’ here is to be aware of the potential tax consequences. In particular, rebalancing by buying/selling in a taxable account could result in a nasty surprise come tax day. An alternative strategy would be to simply shift your contribution amounts such that you are buying more of one class and less of another until things get back in line. Another option would be to use so-called Target Retirement funds, which automatically adjust to track an age-appropriate allocation.

You should shift all of your accounts to more conservative investments as you approach retirement.

Instead of using your retirement date as the guiding force, you should focus on when you expect to start tapping into a certain account. This makes sense to me because retirees are living longer than ever before, and shifting to an overly conservative mix too soon could easily cause you to run out of money before you run out of days. According to Edelman, you should maintain a more aggressive investment mix in accounts that you won’t be tapping for seven or more years, whereas you should to an increasingly conservative mix after that until you’ve achieved the desired conservative stance about three years before the anticipated withdrawal dates.

The stock market will crash between 2017 and 2024.

The logic here is that when baby boomers start retiring in droves, they’ll start liquidating their stock holdings. According to Edelman, however, there’s no reason to think that this batch or retirees will be too different from those that have gone before them. Thus, he expects them to gradually liquidate holding as needed, rather than staging a massive sell off.

Retirees who focus on investment income should focus primarily on interest-yielding bonds and CDs.

According to Edelman, this strategy causes your income to fluctuate too much, depending on the vagaries of interest rates. If rates fall, you’ll have less cash coming in and will have to scale back your lifestyle. While creating a CD ladder can help smooth out interest rate fluctuations, but if you spend out the interest every year then you’re exposing yourself to inflationary risk (i.e., your principal won’t increase, so your interest won’t increase even though prices will).

Edelman recommends adding dividend-paying stocks the income portion of your portfolio. If the resulting income isn’t sufficient, you’ll be able to sell a portion of your assets that have (hopefully) appreciated. Of course, there’s also the risk that your stock won’t appreciate, and you’ll be stuck in the same pickle.

Try to have enough saved up to pay for college based on the projected costs based on when your kids will matriculate.

The danger here is that college costs will continue to rise while your kids are in school. Thus, if tuition is $30k/year when your child starts school and prices continue to increase at 7%, the total cost will be $133,198 rather than $120,000.

Of course, this assumes that you want to pay for your kids’ (or grandkids’) college in the first place. But assuming that you do, it’s something to keep in mind.

[Source: The Truth About Money by Ric Edelman, Bottom Line/Personal Vol. 28, No. 22]

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As important as your saving and spending habits are, being truly financially responsible involves much more. To this end, I’ve put together a list of ten ways to cover your ass(ets)… This list is by no means exhaustive, but it’s a good starting point.

(1) Buy life insurance. Of course this really only applies if someone depends on you for support. I’m a big fan of term life insurance — as they say, buy term and invest the difference! And don’t just rely on the insurance that you get through your employer… The base coverage may not be enough for your needs, and it’s also tied to your employment — lose your job and you’ll lose your insurance. Also, if you’re young and in good health, you can probably get a term policy for less money by shopping around instead of buying additional group through your employer.

(2) Buy long term disability (LTD) insurance. For the average Joe, the odds of suffering a debilitating injury are considerably higher than the odds of dying young. What if you couldn’t work? How would you get by? Long term disability insurance covers your butt in the event of that you suffer, well, a long-term disability (duh!).

(3) Buy health insurance. When you’re young and in good health, you feel invincible. But even a relatively minor health problem can prove to be a major setback if you’re uninsured. And a major health problem can be catastrophic. Even when I was young and dumb (and otherwise uninsured), I carried a major medical policy. It was only $50 or per month for a policy that covered accidental injuries and illnesses requiring hospitalization. While it didn’t cover things like the kidney stone that I had (and passed – ouch!), it did cover the stitches that I needed when I took a line drive off the noggin while playing slow pitch softball.

(4) Buy a personal liability umbrella insurance policy. Carrying personal liability insurance is particularly important for homeowners and/or those with substantial personal assets. Standard homeowner’s, renter’s, and auto policies provide a degree of liability protection, but a personal liability umbrella policy picks up where these other policies leave off.

(5) Write a will (or have one written). We finally took care of this at the end of 2006. Prior to that, we had a do-it-yourself will that was written back before we had kids #3 and #4. Bottom line: Having a will greatly simplifies the process of disbursing your assets after your death, and can go along way toward easing unnecessary burdens on your loved ones during an exceptionally difficult time.

(6) Name guardians for your kids. If you don’t, the court will. Hopefully they’ll make a good decision, but there are no guarantees. We took care of this along with our wills.

(7) Write a living will (or have one written). If you have specific wishes when it comes to healthcare decisions that might need to be made while you’re incapacitated, then you’ll want to arrange to have a like-minded person at the helm.

(8) Grant power of attorney (in writing) to someone you trust. If you’re ever incapacitated, someone is going to have to make financial decisions on your behalf. Wouldn’t you like to be the one who chooses who this will be? Same goes for healthcare power of attorney.

(9) Update your beneficiaries – If you don’t name beneficiaries, your investment accounts, IRAs, life insurance, etc. will go into your estate and will have to be probated. In our case, my wife and I have named each other as primary beneficiaries, and our testamentary trust as secondary beneficiary.

(10) Keep everything updated, and re-assess your needs periodically. This is an incredibly important point. If you don’t re-evaluate your situation periodically, your hard work will be all for naught, as your needs will change over time. For example, we bought term life policies in the summer/fall of 2005 but, after a number of major changes in our life, we needed to increase our coverage just one year later.

So there you have it… Ten (relatively) simple ways to cover your ass(ets)!

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Here’s Part IV of my thoughts on Consumer Reports’ ten steps to simplifying your financial life. Today we’ll be covering steps 9-10…

(9) Safeguard your financial identity. Put your outgoing letters in a post-office collection box instead of leaving them in your mailbox for pickup. A thief might beat your mail carrier to the door. Get your name removed from offers for preapproved credit cards and insurance by going to www.optoutprescreen.com or calling 888-5-OPT-OUT. (You will have to provide your Social Security number, but the service, operated by the major credit bureaus, is legitimate.)

Don’t carry your Social Security card in your wallet. Photocopy the front and back of every card that you do carry. Keep your copies in a secure place in your home. If you lose your wallet, you’ll be able to cancel those cards quickly.

(10) Draw up a durable power of attorney. Your financial life might be the very picture of simplicity while you’re healthy enough to make your own decisions. But all of your hard work could blow up if you don’t take this final step and hire a lawyer to draft a durable power of attorney for you. A DPA will permit someone you trust to safeguard your assets and pay your bills if you get sick and can’t manage your own money.

My thoughts on these:

(9) Great advice. See also my tips for protecting your privacy and protecting yourself against identity theft.

(10) Done. I would also recommend writing a will. While you won’t be around if/when it comes into play, it’ll certainly simplify your finances for whoever has to deal with what you leave behind. And if you have kids, you should seriously consider setting up a testamentary trust.

See also: Part 1, Part 2, Part 3

[Source: ConsumerReports.com]

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Now that we’ve had a chance to put our estate plan together (finally!), I though that I’d share some details on how we set things up. Hopefully this will help others who are trying to figure out the same sorts of things. Or maybe it will inspire those who have been putting it off (like we did for too long) to finally get things taken care of. Anyway, I digress…

As far as our wills go, everything is pretty straightforward. My wife is my primary beneficiary, and vice versa. In the event that something happens to one of us, the other one gets it all. But the real driving force behind all of this was our desire to make sure that our kids will be taken care of if anything were to happen to the two of us. Thus, we named guardians to take care of our kids in our absence, and we also set up a testamentary trust to hold our assets on their behalf until their old enough to handle things on their own.

Before I go any further, I should probably set the stage… We have four young kids ranging in age from two to nine years old. While we’re doing everything we can to raise them right and make sure they have good heads on their shoulders, we don’t really want them inheriting a substantial (at least to them) sum of money with no strings attached the moment they hit 18.

While this sounds simple enough, there are actually a lot of things to consider when trying to make things as fair as possible between our kids. Fortunately, our attorney has been through this numerous times before, and was thus able to provide a good bit of advice on the ins and outs of setting things up.

So here’s what we did… (The legalese spans several pages – this is just a synopsis.)

If both my wife and I ‘pre-decease’ our children, then our ‘Residual Estate’ will go into a testamentary trust. The Trustee (whom we selected) is allowed to disburse funds as necessary for the benefit of our kids (e.g., healthcare, education, or general support). Once our youngest child hits the age of 21 (at which point he’ll be done with college, or very nearly so) the trust will be divided into four equal subtrusts. As soon as they turn 25, they receive 20% of their subtrust free and clear. At age 30, they’ll be able to collect 30% of the funds remaining in their subtrust. And at age 35, the balance of their subtrusts will be distributed. Because our oldest will be 28 and our second oldest will be 26 when our youngest hits 21, they will both get their first 20% free and clear when the subtrusts are created.

The point of all this isn’t to control out kids from beyond the grave. Rather, we just want to be sure that there are checks and balances in place in case one or more of our kids turns out to be less responsible as a young adult than we’re hoping. The Trustee will, of course, retain the flexibility to disburse funds from their subtrusts as he sees fit (over and above the set payouts). Thus, they’ll be able to (for example) tap into their subtrust to get married, buy a home, start a business, etc. But they won’t be able to take it to Vegas and put it all on red. Hopefully they wouldn’t want to, but you never know.

If these any of these sorts of ‘encroachments’ occur on behalf of our older kids before our youngest hits 21 (and thus before the trust is split), that amount will be deducted (with simple interest) from their ultimate share. In other words, our oldest can’t snooker the trustee into bankrolling his latest (and greatest!) business venture at the expense of his younger brothers.

So there you have it… The ins and outs of our estate plan. We also had the attorney draw up durable general powers of attorney, healthcare powers of attorney, and living wills. But since those are fairly standard fare, I won’t go into details about them here.

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In late November, I wrote about the fact that we were finally putting together an estate plan. Well, last Friday, just before everything shut down for the Holidays, my wife and I finally put the whole “last will and testamentary trust” thing to rest… And not a moment too soon, as this was one of our New Year’s Resolutions dating back to January 1, 2006. Even though it took 11.75 months to get it done, it still counts. Right?

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Nearly eleven months into 2006 (and almost a year and a half after I first wrote about this), we finally took a solid step toward fulfilling one of our New Year’s Resolutions… Putting together an estate plan. I actually debated about using LegalZoom to put together our wills, but we ultimately decided against it. Instead, my wife and I met with a local attorney yesterday morning to set the wheels in motion. And no, it wasn’t the $100 guy — something about him just didn’t sit right.

Our situation is pretty straightforward, but with four young kids in the mix, we don’t want to cut any corners and risk unnecessary complexities in the event of our deaths.

We’re doing mirror-image wills that name each other as primary beneficiaries along with a testamentary trust (to take care of our kids; more on this later) as the secondary beneficiary. We also took care of naming guardians for our kids, choosing a trustee to oversee the testamentary trust, and choosing an executor. As it turns out, these three positions are all being filled by my brother and his wife (actually, the two of them are the guardians, whereas my brother alone is serving as the trustee and executor). While some people might be concerned about possible conflicts of interest in combining guardianship of our kids along with trusteeship, we set it up this way for a variety of personal reasons, and we are comfortable with our decision.

Our initial consultation was basically an information-gathering session. The attorney will now draw up our wills, send them to us for inspection, and then we’ll head back into his office for the signing. The only thing that will remain to be done at that point will be to change the beneficiary designations on our life insurance policies, retirement accounts, etc. to name the testamentary trust as the secondary beneficiary.

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It goes without saying that an incredibly important aspect of saving for retirement is figuring out how much you’ll need. The problem here is that it’s tough to accurately predict how much you’ll need when there’s no good way of predicting how long you’ll live. Thus, it’s probably best to err on the side of caution, and to over-prepare for retirement. But here again we run into a similar quandary… How can we over-prepare if we don’t have a good idea of what it takes to be properly prepared. Hmmm… Let’s start by figuring out how long we can expect to live…

Our first stop is the University of Pennsylvania’s Life Expectancy Calculator. Go ahead and run down the list and answer everything to the best of your abilities — don’t worry, I’ll wait… Next hit the ‘Calculate Life Expectancy’ button and… Voila! You’ll receive an estimate of how long you’re expected to live. Interestingly, this calculator not only gives you a point estimate of your life expectancy, but it also provides an idea of the precision of this estimate in the form of upper and lower quartile values. In my case, I have a life expectancy of 84.38 years with a lower quartile value of 77.12 years and an upper quartile of 94.48. (Of course, I might also drop dead tomorrow. Or maybe I’ll beat the odds and live to 100.)

Now that we have a rough life expectancy to work with, lets head on over to the Retirement Planner from Dinkytown.net. This is a cool little tool that lets you specify a variety of parameters, including current age, existing retirement assets, income, expected rate of income increase, retirement savings rate (go ahead and include your company match), expected investment performance (both before and after retirement), expected inflation rate, and the percent of your income that you wish to receive in retirement. They even let you include/exclude Social Security when running these calculations.

When I plugged in my particulars (age, income, existing assets, and percent savings), but otherwise left the default values in place, I found out that I won’t run out of money until age 100. And that was without Social Security. Adding in Social Security sends my retirement savings off the chart (there’s a minor inflection at retirement, but otherwise it just keeps on growing).

But who wants to work until full retirement age? Not me. So what happens if I reduce the retirement age by just three years? Wow. It has a huge effect. If I retire at age 62, I’ll run out of money at age 85 (that number increases to 97 with Social Security). Time to get cracking on those retirement contributions!

Obviously, these sorts of calculations are only as good as the assumptions upon which they’re based. In other words, you shouldn’t take anything like this as gospel — but it can be an informative exercise.

So… What’s your life expectancy?

And… Will your retirement savings plan be sufficient?

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The other day I dropped by our insurance agent’s office and, on the way back to the car, I noticed that he’s located directly adjacent to an attorney’s office. So, on a whim, I popped in to get a rough idea of how it would cost to have a will prepared. It’s been over a year since I first wrote about needing to update our wills, and we’re still sitting on our hands.

To be fair, part of the delay was due to our recent relocation — once we knew that we’d be moving across state lines, we thought that it might be best to hold off. But now I’m on a mission…

Our needs are pretty simple — my wife and I just need wills naming each other as beneficiary, naming a guardian for the kids, and setting up a testamentary trust in the event the we both die while our kids are young. When I inquired about ballpark pricing for this sort of work, I learned that he handles simple cases such as ours for just $100 apiece ($200 total). Needless to say, I was a bit surprised by the price… I was expecting to be quoted something in the $500 range.

This all got me to thinking… While I don’t want to cut corners on something as important as a last will and trust and end up with a worthless document prepared by a half-wit, I also don’t want to unnecessarily blow a bunch of money. So am I right to think that $100 is awfully cheap for getting this sort of thing from a real, live lawyer? Obviously, I’ll be checking around with friends and neighbors for recommendations before we settle on a course of action. But never having had these sorts of documents prepared professionally, I’m still a bit uncertain as to how much we should expect to pay.

Another thing that I’ve been looking into is LegalZoom. They offer exactly what we need for just $69 apiece with a $10 discount if your spouse wants a ‘mirror’ will. Here again, I want to be sure this is done right, as opposed to simply selecting the cheapest and/or most convenient option. I’ve heard good things about them when it comes to things like setting up an LLC, but I’ve never dealt with them myself.

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At long last… I finally got around to reading “Crash Course in Estate Planning: The Essential Guide to Wills, Trusts, and Your Personal Legacy” by Michael Palermo. I first mentioned this book over the summer, but didn’t get around to picking up a copy and looking through it until recently. In very general terms, this book is a good, non-technical reference on the ins and outs of estate planning.

The book is organized into four sections, including:

Part 1: Understanding the Estate-Planning Basics
This section gives a rundown of various types of property (probate vs. non-probate, etc.), the different tools out there (wills, trusts, durable power of attorney, living wills, etc.), an overview of the probate process, the role of the executor, etc.

Part 2: Applying the Basics: Estate-Planning Tools for Common Life Situations
This section talks about providing for children, planning for children and grandchildren with disabilities, estate planning for married couples, dealing with subsequent marriages, as well as some thoughts on charitable donations.

Part 3: Preserving Your Estate: Keeping Creditors, Spendthrifts, and the Tax Man at Bay
This section includes a general introduction to asset protection planning, and then goes on to talk about a variety of topics relating to trusts, including spendthrift trust provisions and incentive trust provisions. This section also covers the use of limited liability entities such as family limited partnerships (FLPs) and limited liability companies (LLCs) for protecting your investments.

Part 4: Estate Planning With Retirement Assets
This section covers topics related to the protection of your retirement-related assets, including 401(k)s and IRAs.

As Ric Edelman makes clear in the foreword, this is not a do-it-yourself book. Rather, it’s meant to be used in concert with an attorney, and I think that it would do well in that capacity. Not only does it provide a good overview of the pertinent topics, but it also goes into a good bit of detail in a variety of areas. Admittedly, this book is a bit dry, but that has far more to do with the topic than with the writing. In short, this book got me thinking in the right direction, and helped to crystallize in my mind exactly what it is that we need at this point (a will plus a testamentary trust to take care of our kids). When viewed in the context of billable hours, this book could save you quite a bit of money by helping you sort out exactly what it is that you do and don’t understand before you ever set foot in your attorney’s office. All in all, I’d have to recommend “Crash Course” to anyone interested in learning about estate planning. Despite having picked this up at the library, I’ll probably end up buying it myself, as this book contains a lot of valuable information, and I’d like to be able to refer back to it periodically.

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I just ran across a relatively new book on estate planning called “Crash Course in Estate Planning : The Essential Guide to Wills, Trusts, and Your Personal Legacy” by Michael Palermo. It’s published by AARP, so it may end up being targeted more toward retirees than to people like me (particularly the young kids angle), but it looks like it may be good background reading if nothing else. If anyone has read this, I’d love to hear your feedback. If not, it looks like my local library has a copy. I’ll report back once I’ve had a chance to look it over.

Update: Here’s my review of Crash Course in Estate Planning.

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As a followup to my earlier post about needing a will, I ran across a list of tips for preparing your estate plan. Among the twelve easy steps are…

(1) Prepare a will (duh!).
(2) If you’re 21 or older, make sure that you have a durable power of attorney and a health care proxy.
(3) Use estate planning software to make initial preparations (getting your ducks in a row saves billable hours). Even if you use such software to prepare your final documents yourself, make sure you have your attorney review them.
(4) Get your will notarized with the proper number of witnesses (check local laws) — and don’t have a beneficiary sign off as a witness.
(5) If you already have an estate plan, review and update it whenever you have a change of family status.
(6) Make a list of all assets and liabilities.
(7) Name an executor, and make sure they’re up to the task.
(8) Choose a guardian for your kids.
(9) Have only one set of signed, notarized documents. Keep copies for your files.
(10) Review your estate plan every few years and update as necessary. Even if you situation hasn’t changed, the laws might have.
(11) Don’t keep insurance policies in your safe deposit box — this delays filing for a death benefit.
(12) Make sure you have the right type of joint ownership for jointly owned assets.

I’ve actually heard that #11 applies to things like your will, too. In many states safe deposit boxes are sealed upon the owner’s death, and you may need a court order to open them — the IRS likes to peak inside, too, as stuffing a safe deposit box full of cash is a great way to avoid estate taxes. Locking your will inside slows everything down because there’s no accessible, legally binding record of the executor, etc.

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My wife and I have been making do with a pair of old, do-it-yourself wills that I prepared using an old version of WillMaker (formerly from Nolo Press, now an Intuit product). To give you an idea of just how old this software is, it’s not even Y2K ready — the last time I updated our wills (about four years ago) I had to manually edit the output file to change the year from 1901 to 2001. Anyway, things have changed dramatically for us in the past few years. Both our finances and family have grown. In fact, our two youngest kids aren’t even mentioned in our wills. Thus, it seems like it’s time for an update.

Our current wills are pretty standard stuff… If I die, everything goes to my wife with our kids as secondary beneficiaries. If my wife dies, everything goes to me with the kids as secondary beneficiaries. We’ve named a guardian for the kids but, beyond that, we haven’t done any additional estate planning. I’m not really sure what more we need at this point but, given our dramatic increase in responsibility, it seems to me like it’s time to think about enlisting professional help — if for no other reason than the peace of mind that comes from knowing that all of our ‘i’s are dotted and our ‘t’s are crossed (legally speaking). It’s going to take us a bit to get going on this, but I plan on chronicling the process here once we get the ball rolling.

Got an opinion as to things we should be considering? Thoughts? Advice?

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As a parent, I’ve recently been thinking of all the responsible things that I should be doing to ensure the well being of my family in the (hopefully) unlikely event that I drop dead. Worse yet, perhaps my wife and I will both drop dead, leaving our young kids behind. I’m not overly concerned about this, mind you, but concerned just the same.

You see, I’m essentially the Chief Financial Officer of my family and, although our finances aren’t horribly complex, our money is spread around a bit in multiple retirement accounts, a couple of online bank accounts, a ‘regular’ brick and mortar bank, etc. When you start thinking about all of the account numbers, passwords, and other related minutiae, the information really begins to pile up. Add to that the various legal documents – such as our badly outdated will, the deed to our house, our car titles, life insurance policies, and a variety of other documents that we don’t regularly use, and which I don’t relish having to replace if lost, stolen or destroyed – and even our relatively simple life begins to look increasingly complex. Especially if someone is trying to make sense out of it in the wake of a family tragedy. And the situation would, of course, be compounded if my wife and I both perished, and left the proverbial keys to the castle (along with our kids) to their guardian.

So… I wanted to create a centralized user-manual for my family’s finances but, since such a compendium would be full of very sensitive data, I wanted to store it in a secure location outside of our house. Sure, we have the requisite fire-proof lockbox, but I wanted an über-safe solution. So I stopped by our local bank branch and rented a 3″ high x 10″ wide x 24″ deep safe deposit box. It costs just over $30/year, and it should suit our needs perfectly. It’s plenty large to hold all of the necessary paperwork without having to fold it up and cram it in, as is necessary with some of the smaller boxes, and we’ll have a bit of room to spare for miscellaneous other things, like a video inventory of our house. Now all I have to do is find the time and inspiration to collect and collate all of the necessary information.

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