Do I Need A College Degree What to do with my life?

My experience at CampMustache – Working on early retirement

June 16, 2014 | A life worth living, Investing, Tools, Your Future | Permalink


As I have mentioned in the past, I am a big fan of the Mr. Money Mustache Blog. When I heard a group of Mustachians (as the followers call themselves) in the Seattle area were organizing a weekend retreat, I really wanted to go.

I figured I could do two things if I made the effort to get out there from Florida.

1)See how others have managed to retire early (some in their 30’s).

2)Get my wife to embrace early retirement also (Lets just say she was somewhat of a skeptic).

I was able to do both with rousing success.  The retreat was held at a lakeside camp with around 60 – 70 like minded people of all types that were all trying to figure out how to retire early.  There were several breakout sessions on topics such as Goals to Financial Independence, Bike Commuting and Repair, Investments for Income to name a few.

The best part though, was the endless discussions of a liked minded group trying to figure how to get off the Hamster Wheel of living for work.  It was just a great time and I cannot thank the organizers enough for the great event they put together.

Here are some varied items and links that you may find useful from my time there:

Bloggers I met at CampMustache who are worth reading.

Mr Money Mustache – Follow Pete to see how early retirement can be done and some great tips on construction, budgets and everyday subjects.

JD Roth – He was the original Author of Get Rich Slowly but now produces a blog under his own name.  He covers all types of topics along with some great stuff on how to get out of debt.

Retire By 40 – Joe is probably one of the most open Bloggers I have followed.  He writes almost daily and is very open about his finances to let you see how it can be done.

Life Reengineered – Brandon is a pro at Travel Hacking.  He managed to get around $7,000 in flights for free last year.  Sign up or his Blog and he sends you a PDF book on how to do it.

It was a pleasure to meet these 4 individuals in the flesh and have a chance to hang out and ask questions.  All 4 have managed to retire early and have great ideas and stories to tell in their Blogs.  I highly recommend giving each a look.

Ideas and Links I gathered that help to answer early retirement questions.

4% Rule – How much do I need to retire?  The 4% rule allows you to withdraw 4% of your investments per year in order to not draw down your principal (if invested in a Stock Index Fund for instance).

This was one of the main questions on everyones mind at Camp.  I do not think it was answered for most people since the yearly amount is based on everyones individual needs.  Find out how much you need per year and divide by .04 to get a rough idea.  If your number is $40,000, you probably need $1,000,000 invested to produce $40,000 per year for the next 30 years.  Follow the link to Wade Pfau’s update to the Trinity Report to get more a more in depth analysis on the 4% rule.

cfiresim – This website allows you to make all kind of assumptions to calculate how much you need invested in order to retire.  It takes into account how long you will live, other sources of income and different investments (split between stocks and bonds) you can make.  It then runs the number against the same time periods for the Stock Market since 1871 to show you what chance you have of running out of money based on past history.  It is a very interesting test and came out much better for my own personal situation then I would of thought.

Crossing Wall Street – Eddy Elfenbein is one of the highest rated Buy and Hold Bloggers on the internet.  I really like his Blog and easy to follow investment style.  He buys 20 stocks and holds them for 1 year.  He then replaces 5 of the stocks once every year.  Very simple and regularly beats the averages.  I am currently averaging in one of my accounts to put it on autopilot.

Vanguard ETF’s – Vanguard is one of the lowest cost Fund Management Companies around.  I prefer ETF’s since they trade like a stock (Over Mutual Funds) and you can find all types for any investment style.  Want to invest in Emerging Markets, try VWO.  Want to invest in Healthcare, try VHT.  Take a look at Vanguards site for all the information you could possibly want.

FINVIZ – Great free site for stock and ETF screening. Lots of data you can sort by.  I use this all the time for basic research.

Budgeting – Wife and I are currently tracking our expenses and income in order to see where we stand.  Over the next 6 months we will look at where we spend, what will be gone once we retire, what we can cut back on and then formulate a budget going forward.  Having a budget once the income drops is a very important step to making your money last.  Try Mint, Quicken or the numerous Apps available.

Health Care – This is probably one of the biggest concerns anyone has who will retire early.  I hear all the whining about the Affordable Care Act (Obamacare), but personally I think it is one of the best things to come along in a while.  Now people who want to retire early get cheap coverage but may also get a subsidy as their income drops.  It stays with you and you cannot be denied due to pre-existing conditions.  The lack of Health Care options was one of the biggest reasons we stayed in our jobs.  Got to to see what options are offered.

Key Takeaways

A)    It was amazing to meet so many people in their 20’s and 30’s who had real plans to retire in the next 5 years.  I really give them credit for living frugally and banking money (way faster than I did at that age) with a goal.

B)    Retirement does not mean you have to stop working.  You can work part time, volunteer or get rid of it all and take your show on the road.  Options abound once you get off the Hamster Wheel (tick, tick, tick).

C)    Come up with a plan.  List what your priorities and goals will be for the next 5 years.  Create a budget and start tracking your expenses.  Now is the time to start.

D)    Live below your means.  2 people can live comfortably in 1,000 sq ft.  Imagine how much you could save if you could make do with 500 sq ft.  Forget the 1.5 hour commute.  Move closer to work or change jobs.  Make getting rid of debt a priority.  It turns people into slaves to an income.

E)    Start by reading one of the Blogs I listed above.  You will find examples of people who have really managed to retire early in order to enjoy life now.  If you go to the Forum on the MrMoneyMustache site, you will see other Mustachians getting together.  Check it out and go meet some like-minded people.  If you are like me, the Hamster Wheel seems like a waste of time after a while.

Some good books recommended by Mustachians (If you click-through the link, I get a little piece of the action from Amazon – but try your library first)

Will your next interview be with an Algorithm?

December 23, 2013 | College Alternatives, Jobs, Your Future | Permalink

The future of finding a job

I was riding in my car home from the airport the other night and as usual listening to NPR (my favorite station, need to donate more) and a story came on about Xerox hiring for their call centers.  The first thing that made me pay attention was, Xerox is in the call center business?  I thought they had gone bankrupt and disappeared like Kodak.

Turns out they are still around and have 175 call centers (you may talk with them when you have a problem with your Verizon bill) in the US employing 50,000 people.  The company that started the coping business does call centers now?  OK, I am listening.

They were having a problem hiring and retaining employees.  In the search for solutions, they began using a company called Evolv.  Evolv uses Algorithms to sort through potential hires survey answers to help narrow the field.  Xerox said it has helped tremendously even though they never gave any statistics.

Then they had a person named Michael Rosenbaum from Pegged Software come on and he said something that really floored me.  And I quote “We find zero statistically significant correlation between a college degree or a master’s degree and success as a software developer.”

So here are companies using data and algorithms to search through your resume. job history, Social Profile and Survey’s to see if you fit.  Really started to make me wonder if the new graduates should be concerned.

Time for a search

When I get something in my head it makes me want to search out and get answers (drives my relatives crazy).  After doing a few quick searches I came up with an interesting story.  It seems one up and coming startup,, also provides the same kind of service for finding Programmers.

Gild scours the web to come up with evidence that a potential programmers skills match what is on their resume.  They even go one step further and actually go out looking for programmers based on the type of code they produce and how much it is being reused.  Go read this article in the New York Times about how they found and hired Jade Dominguez as a programmer even though he was not looking for a job.

So what does it mean?

From the searches I did, this seems to be a trend that is slowly catching on.  My guess is it will be something to watch in the near future.  With all the data we produce in life and on the web, our lives are becoming an open book for anyone able to collect and process the data.

It is becoming more and more important to be careful of what we post and allow online.  If Call Centers are willing to use it for $9 an hour jobs, you can bet that Engineers and Sales People are going to be sorted the same way.

Next time you are updating your resume you may want to do some searching to see what potential companies may be searching for in the field you are interested in.  You also might want to think twice about that post on Facebook you are about to hit the enter key on.


Baltic Dry Index and Shipping Stocks

December 8, 2013 | Investing | Permalink

Baltic Dry Index

Baltic Dry Index is up over 30% for the month!

But Shipping stocks have only gone up 10 – 15%. Go to Finviz and check out the following stocks:

  1. BALT
  2. DSX
  3. DRYS
  4. GNK
  5. VLCCF (8.9% Dividend Yield)

If the BDI stays at or increases from these levels, Shippers will be reporting some nice earning increases for the first quarter of 2014. I am by no mean an expert in stock picking, but with China's commodity demand starting to pick up and the US economy showing signs of life, these stocks (in my opinion) could be setting up for some great gains.


Disclosure: I am long GNK, BALT AND VLCCF.

Commitment to a Life Worth Living

December 8, 2013 | A life worth living, Your Future | Permalink

Nelson Mandela passed away last week at the age of 95.

Nelson Mandela


He was the personification of commitment to ideals, beliefs and a better way.  Whether you admired the man or not, you have to give him credit for the changes he brought about through his work and sufferings.

27 years of his life he spent in prison for his beliefs and came out to see the end of Apartheid and a new Constitution.  Mandela was the first elected President under the new Constitution.  Even though under South Africa’s electoral system, this is done by the Parliament (not by the people), he was so popular they had no choice.

Quite an amazing life for 1 man.  To see more of Nelson Mandela’s history, go watch the PBS documentary:

A Boy from the Transkei.  You can go to the link here.

Education leads to change.

Nelson Mandela on Education

Nelson Mandela believed in the power of Education to affect the course of the world.  It has been proven time and time again that Education is the path to change.

So, in celebration of the passing of a Great Man, we should all strive to continue to learn throughout our lives.  It will allow us to question those in power and change the situation when we do not agree with the current path.


Rotary International Peace Fellowship

November 21, 2013 | College without the Debt, Your Future | Permalink

Do I Need a College Degree

is not about not going to college.  It is about making the right choices and staying out of debt so you do not become a slave to your bills.  This post is about a very interesting way to not only get a unique Masters Degree, but have it fully paid for at the same time.

I am a member of the Stuart Sunrise Rotary Club in Palm City, Florida.  We are a small group of business people trying to help give back in a number of ways.  To see what we do, take a look at our Club Website here.

Rotary International was a Not-For-Profit started in 1905 and one of its driving goals has been the elimination of Polio.  That is not the only goal, to see what else Rotary does take a look at this site.

One of the things Rotary offers is 50 fully paid Masters in Peace Fellowship at 5 Universities around the world each year.  When I say fully paid, it includes Room, Board, Transportation, the works.  50 is not a very big number, but it is just one more of the opportunities available if you are willing to look.

To apply, just go to this site – Rotary Peace Fellowship.

At the bottom of the page you will see the application.  You can submit it through any Rotary Club or just drop me a line at and I will submit it through our club.  If nothing else, stop by a local club and see what Rotary is all about.



Why don’t you do a little disruptive innovation on the worlds banking and money system?

November 14, 2013 | Investing, Jobs, Tools, Your Future | Permalink

What will your Bank and Money Transfer look like in the (near) future.

Banks have always been this place you went to deposit your money, get the kids a lollipop and write a check when you have a bill.  ATM’s came along and you did not have to actually go in the branch but you were charged if you used some other banks Machine.  Now you can take a picture of a check you get and deposit it without even going to a Bank.

Why do we need Banks at all?  You (the younger generation) may have never gone in a bank.  You can go online and get Mortgages, Loans, Invest, Deposit and any of the other services Bank used to offer.

So why should I give a crap about this?

Good question.  We are way behind a lot of the world in how money is money is moving between people.  Banks in the US do not really like seeing this since they have historically controlled the money flow.  By doing that, they were able to charge you a fee to “help” you move your money.  The current changes have got to be scaring the crap out of them since a lot of the fees are shrinking and about to go away.

The other part of this is the government likes to regulate this flow since they tax a big piece of it.  Just think of Amazon when you buy something online.  If it is from out of your state, sometimes you are not charged Sales Tax.  You still owe it but it is a lot harder to collect from 100 million people then from 1 (Amazon) so the enforcement is lax.  Don’t think the States and Federal Government have forgot though, they just cannot agree or do not know how to figure it out.

There are some real changes coming that are not quite mainstream and if you can somehow get in the middle of it, could become very wealthy and live anywhere in the world.  Here is what I mean:

1)Bitcoin – This is an electronic currency that is traded on exchanges or you are able to pay anyone else who will accept it.  It is currently very speculative but can be cashed in for Euros, Dollars and a bunch of other currencies.  Imagine you have money in Brazil or India and need to transfer it to US dollars.  Either of those countries will charge you a significant fee to do that.   With Bitcoin, you buy it with Brazil Reals and just sell them for dollars.  This currency has a bit of a past though since it was developed for the drug trade originally.  The biggest problem is the world governments will have something to say in the future since they do not like competition for their currency.

2)M-PESA - (M for mobil and PESA for money in Swahili)This is a transfer system being used in developing countries for people who have cell phones but no bank (only a couple of Billion people).  It was started as a way to distribute micro loans and now 70% of households in Kenya use it to transfer and store money.  It is in Egypt, India as well as a host of other countries.  A site called SOKO (something like ETSY) will accept it for locally made Jewelry.  Technologies like this will have a huge impact on standard of livings throughout the world.

You should give a crap because……..

A)We have nothing like this in the US.  Design something that will work on a smartphone with very low fees that is simple to use and you might have a winner.  Allow people to exchange currencies for low fees and you can go after the world.  Paypal is huge but has very high fees for accepting payment especially from a foreign currency.  Square is trying to simplify receiving credit card payments and has done a good job, but is not as widely accepted.

B)Borders will start to not matter.  Want to move to Chile but transferring money is expensive and a real hassle?  A readily accepted world currency would make moving anywhere to live and do business a breeze.  Imagine people not agreeing with the way their Government works.  Just take your money and leave – no country, no taxes, no government.

These types of technologies have the potential to really change how we live.  If you can come up with or somehow get involved with an existing one, you will be on the leading edge.  I do not think governments or banks will let this happen without lots of resistance (so be warned).  Local and world commerce will force the issue in order to gain new customers and lower their costs of business.

I sometimes feel we are just starting to see the ripples of a much bigger wave.  If a Masai Herdsman in Kenya can sell his Goats 200 miles away for more money using his cell phone, how come I cannot transfer money to my Daughter 1,000 miles away in the most developed country in the world?  Can’t you feel the wave, hope you know how to surf!






More thoughts on needing a College Degree for the future.

November 2, 2013 | College Alternatives, College without the Debt, Jobs, Your Future | Permalink

The Arguments

Getting my Degree.

There is no question that having a College Degree can potentially pay off for the future.  Numerous studies show the earnings potential and job category growth in the fields that require a degree exist.  One such article that clearly articulates this was written by Isa Adney entitled “Opinion: Don’t be fooled by the ‘college is not necessary’ talk“. 

Isa has great some great points she makes, especially “no student should graduate from High School without a clear understanding of why college is worth attending”.  Which is the heart of my argument of college not being the only option in life.

People should get college degrees when they see the value and are ready to devote the time and energy.  They should not go into debt in order to do it unless the payoff is for real.  To many times these ideas are considered as they are walking down the aisle to get the diploma.  Would you sign the papers to buy a house and then 4 years later try to figure out how to pay for it?  Didn’t think so!

If you have thought about these items, there are numerous ways to pay for your degree.  Investigate colleges that offer Free Tuition or some form of financial assistance.  Here is a list of 100 Colleges that offer 100% tuition.  Look into free Online Courses, work for a company that will pay the tuition, join the military and use the GI Bill, or just apply for every Grant you can find.

Just plan ahead.  Don’t base your choice on the “10 best party schools”, what a waste of time and money.  Think about the degree you want and what you would like to do with it.  Look into the best schools that offer that program and what the job prospects will be when you get out.  See if you can reduce the time it takes to graduate.  There is no law you need 4 years to complete your degree.

This will be one of the largest investments you will make.  Invest some time in the beginning to really maximize what you get out of it.

What’s behind Door # 2

So you have done some soul-searching and really do not want to spend 4 years and $200,000 to get a degree.  What are the options now?  You can invest $3 into my e-book “100 Alternatives to College” (I know, shameless plug) or make a list of the things your passionate about and would like to do more of.

I know it sounds like all the other self-help crap out there, but it does help.  It takes work to come up with a plan in life so you do not bounce from one job to the next.  The sooner you get in the habit the better.

One of the other things that I have found to be a big help is having a Mentor you respect.  We all have mentors in life, sometimes we just do not realize it.  For me it was an 80-year-old salesman in my first job.

Adolph was a real character who dressed in the same clothes he had for 40 years.  I learned more from that man in a year than I ever did in four years of college.  At the time I did not realize it, but often think back to how he handled customers and situations.  You have one too, don’t be afraid to ask them for advice and guidance.

Starting your own business is one of the best options to college right now.  It has never been easier with the tools available that are available.  Get online and search for people who are currently doing it.  There are tons of Blogs available that walk you through step by step of how to get a business started.  It really does not take that much to earn $3,000 a month.

A great Blog post by Tim Ferriss that I recently read walks you through all the steps.  He and Noah Kagan helped Mentor Daniel Bliss on how to sell a product he had come up with (they are Belay Glasses, look it up).  It is short and well worth the read and you can link to it here.

Imagine if you had $3,000 a month coming in that only took a few hours per week to maintain.  Might give you a whole new outlook on life and what is possible.

The Takeaway

Whether you decide college, job, business or just want to travel, just remember you have choices.  You do not have to do what is expected of you.  Just be willing to invest in yourself, be patient and work hard to achieve the goals you set.

Contact me anytime at or leave a comment on this post if you want to add to the conversation.  I appreciate any feedback that comes my way.

The Growing Wave of Crowdfunding

October 26, 2013 | College Alternatives, Crowdfunding, Investing, Jobs, Your Future | Permalink

Crowdfunding is set to explode!

I have been following this phenomena for the past 5 or 6 years.  I became aware of it when looking for a Stand that would charge and hold my Ipad and Iphone at the same time.  In 2012 I backed the Billet Dock to get one of their combination Iphone/Ipad charging docks.  They did not reach their $50,000 goal but still went ahead with the project and offered us a discount if we sent them some money.

After following more and more offerings on Kickstarter, I started to realize that Crowdfunding was starting to grow.  Then the Elevation Dock blew through the $1 million mark in Feb of 2012. Casey Hopkins originally signed on looking for $75,000 and ended up with $1,464,706, who would of thought.  You do not get to own part of the company (like Shark Tank) but you do get the product and the company gets money upfront to get their idea going.

So whats the big deal?

The big deal is a whole new way to raise money and create a Tribe of believers who will (if you come through for them) be the best startup marketing you could hope for.  What company wouldn’t give their right arm to have that for a new product.  They spend millions to launch new products that they hope will not fall flat-out of the gate (think Blackberry’s new phones).

You can go on Kickstarter or any of the other sites that use the Crowdfunding model, list your idea, describe how you will go about it and offer different levels of funding with something in return.  If the funding level you picked is never reached, the money all gets returned but you still end up with a list of people who are interested.

Pretty powerful stuff if you want to try out an idea and not sure of the level of interest in the marketplace.

Who can do it?

Anyone can.  It all depends if you want to sell a product, service or have someone invest in your company.  The donation style was the original way it all started with sites like Kickstarter and Indiegogo where people donated based on a reward or product that they received in return.

The new model is investment crowdfunding where a company or individual offers ownership. This can either be done through debt or equity and you end up with a stake in the business where you may be able to get a financial return (as opposed to a product).  This is the model that Investment Banks and Angel Investors have been using for years.

What do you mean a “new model”

The SEC was supposed to release a new rule as part of the Jobs Act to allow Crowdfunding for “unaccredited investors”.  That means you have less than $1 million in liquid assets as opposed to an accredited investor where you are required to have $1 million in liquid assets not including your primary residence.

The SEC just released the detailed report for Title III rulings.  It needs to go through a 90 day comment period and then a 30 day final rewrite before it is voted upon.  If everything goes smooth, it should be published in April or May of 2014.  Some followers have said that this could increase the current $30 billion market that only accredited investors have been able to participate in, to $300 billion or more.

Investors will only be allowed to invest a percentage of their net worth or yearly income and have to hold the investment for 1 year.  Businesses will only be able to raise up to $1 million and have to disclose who the principles are, financials, use of money, price of securities offered and file reports with the SEC.

So as you can see, this has the potential to be huge for both investors and startups.

Ok, it looks big but how do I get involved?

Here are some of the current sites where you can either Invest or launch a Product or Business based on the two models above:

Donation Model

Kickstarter was one of the first and just handles Creative Projects.  Lots of Music, Art, Design and personal projects  are offered.

Indiegogo is much broader in the approach and will allow just about anything except investment.

Rockethub also does a very broad approach but allows funders to work with the person or group who is doing the offering.

Appbackr is a donation site strictly for mobile app builders and funders. is a  software provider that allows you to start your own donation based site.  You can set up your own community for a specific idea or make it as wide as you want.

Quirky is a donation based site for inventors.  The site allows funders to get more involved in bringing ideas to life.

Crowdrise only deals with causes and charities.  The Points system they have is a good measure of the impact individual members and organizations are making.

Investment Model

AngelList is a site for startups to find accredited investors.  They now allow other accredited investors to participate in a funding round of a lead investor.  This allows you to piggyback on someone else with experience for a certain amount of $.  In exchange, they get a cut when the deal cashes out (usually 10 – 20% of your gain, if there is any) and you get the benefit of their experience and due diligence.

Somolend only does debt based investment funding to existing small businesses.  Watch for them to be expanding into other types of Crowdfunding once the bill is in place.

Crowdfunder was one of the leaders behind getting the current SEC report out (Kudos to them).  They are geared towards businesses and offer a blend of investment and donation based crowdfunding.  They offer CROWDFUNDx in Us and Mexico cities that connects local entrepreneurs and investors in those cities.


This is just a small cross-section of what is out there.  Expect the choices to increase substantially once the SEC Rule is out.  Trying to get a loan through a bank, relative or credit cards will not go away completely, but will be disrupted in a big way.  You can launch a new business, idea, product or just invest in someone else’s.  Either way it will be a huge win for entrepreneurs and small investors.

My idea personally is to start a company matching up both in the future.  It could be combined with a University or Incubator in the region I live.  Let me know what thoughts you may have and here is hoping to a huge surge of startups and the jobs they bring.  The future looks pretty bright!



40 Companies that are hiring now!

October 23, 2013 | College Alternatives, Jobs, Your Future | Permalink

Ever hear “I can’t find a job” lately?

I truly believe that the economy is doing better than we know.  In my travels around the East and South I see signs all over the place.

Take the City of Miami.  Remember those huge Condo projects that were virtually empty 3 years ago?  Not only are they full, but there are 15 new ones going up.

Travel to Houston or New Orleans and the Oil and Gas industries need an estimated 350,000 new workers in the next 5 years.  Who would have thought after Katrina anyone would have stayed in New Orleans.  Houston seems to be bigger every 6 months I go back.

I even heard this morning on NPR that the average age of Farmers is dropping because of the young (20’s age group) people getting into it.  Can’t find a job, not willing to look harder or move? If you’re sitting on the couch and paging through Monster. com and cannot understand why no one is calling you, get off your ass and go bang on some doors or go to and find a Networking group.

Just the other day I had a guy clean the tile in a Townhouse we bought (and will be downsizing into shortly).  I asked why he was doing it instead of making sales calls.  The worker he was paying $20 per hour quit because he was loosing his Food Stamps since he was making too much money.  WHAT?  Here is a guy paying someone to run a Buffing Machine $40,000 a year (he had plenty of work) and he was having a hard time keeping people.  Granted, it could be boring, sweaty work but you could save some money at that salary.

After hearing other business owners complaining about the lack of help, I decided to do some searching about job availability online.  There are plenty of jobs available right now.  Maybe how the “I can’t find a job” people are going about looking is all wrong.  I really do not know but here are some of what is out there.  Each company name can be clicked on to take you to the job postings.  Good luck and send me my 5% commission if your hired.

1)21st Mortgage Corp

2)AnnieMac Home Mortgage


4)Client Services


6)Bass Pro Shops





11)Groendyke Transport

12)PLS Logisitcs Services

13)Progressive Insurance



16)Safway Services

17)Walsh Construction

18)Spirit Airlines

19)Pioneer Human Services

20)Harden Healthcare











31)Strayer University

32)TJ Maxx

33)Valley Crest Landscaping

34)Senior Helpers

35)Sutherland Global Services



38)Kimpton Hotels

39)Fairway Market



This is only a tiny sample of what is out there.  So get cracking, learn like your life depends on it and don’t ever be satisfied.

One of the best things you can do now for your future – Start an IRA

October 21, 2013 | Payment Planning, Tools, Your Future | Permalink

Don’t put it off, do it today!

Along with things like taking care of your health, keeping your word and finding a your soul mate, starting an IRA is one of the great things to get a jump on early in life. You can start one anytime. It is one of the best tax laws we can all use for our own benefit.  If you are under the age of 18, it will have to be a custodial account through a parent or guardian.

Let’s start with the basics. An IRA is an Individual Retirement Account that can be set up through a Bank, Credit Union, Brokerage or Finance Institution. You put money into an investment now and then start withdrawing when you hit 59 1/2. The Interest, Dividends and Appreciation in Value grow tax-free until that time. That’s what you need to pay attention to – TAX FREE! So if your tax bracket is 20%, that’s a big chunk you are able to leverage your $ by.

There are two types, a Roth or Traditional IRA.

Under a Roth your contributions are done after taxes. When you earn $100, if your tax rate is 20%, then you are able to contribute $80. At the age of 59 1/2 you are able to start withdrawing money tax-free.

Under a Traditional IRA the contributions are all done before taxes. If you earn $100, you can contribute the $100 and it reduces your income by that much. So if you made $20,000 you only pay taxes on $19,900 that year. When you hit 59 1/2 you will start to pay taxes on anything you withdraw at that time.

So, the big difference is do you want to pay taxes now or in the future. It is all about whether you think your tax rate will be higher now or when you retire. I went with the Traditional since I feel my tax bracket will be much higher now than in 10 years. I will run comparisons later on to show how this decision affects the potential outcome in the future.

The main thing is to get started early as you can to let the effect of Compounding Interest work in your favor. Both of my Daughters started theirs when teenagers. This will be a huge jump in life if they continue to contribute. You can put any amount up to $5,500 per year (for the 2013 tax year) and $6,500 if you are over the age of 50.

Start with something, say $200 per month and have it automatically withdrawn from your Checking Account so you get used to a regular pattern. Don’t say you can’t, since everyone spends that a month on crap of some sort (Beer, Cigarettes, Drinks in a bar). Bring your lunch to work 3 days a week and put away the $30 a week you would have spent. You will eat healthier and put away almost $8,000 plus interest in 5 years. Invest it in Verizon and you will get a 4.2% Dividend plus whatever the stock goes up, all tax-free.

Some of the ways you can invest are:





Morgan Stanley

US Savings Bonds

Bank Money Market Fund

Lending Club

Go to this link for a more complete list since the options are endless. Start with something simple and educate yourself to raise your comfort level. In my opinion, putting your money in the Stock Market is the best you will do over time (40 – 50 years if you get an early start). You can buy individual stocks or go with an ETF for a certain category or country. If you want to be passive use an ETF that invests in all the stocks that make up the S&P 500. You will automatically be diversified since your risk will be spread over 500 different stocks. For ultimate safety, just buy US Savings Bonds or a Money Market fund since your principal will never go down.

The longer your time frame, the more risk you can take on. Just learn some basics so you can judge the risk you are willing to take on. It never ceases to amaze me that people with $100,000 in an IRA will trust someone else to watch it but get all excited to get a Groupon for $20 off. A 1% change in interest can get you an extra $1,000 per year.

Most of the brokerages like TDAmeritrade or ETrade will let you link your checking account directly so you can make the automatic transfers directly into whatever investment you choose. Just don’t procrastinate since if you glance at the two charts below you will see how waiting 5 years can affect your returns in the future. The number gets bigger and bigger the younger you are.

IRA Savings Chart

Chart of $200 per month saved at 5% from age 22 to 65.


$200 per month saved from age 27 to 65

Chart of $200 per month saved at 5% from age 27 to 65


5 years makes nearly $100,000 difference, so start now.


My parents never had to think about this problem. They were all covered by some type of Pension that was set up by their Company or Organization. Someone else set it up and they just had to work 30 or 40 years to eventually move to Arizona and collect for the next 20 years if they were lucky. Those days are over! In fact the people who retired after working for the City of Detroit (currently in Bankruptcy) may lose what they thought they had. If you do not take care of your future no one else is going to worry about it.

I worry most about the group that are currently in the 50 to 60 age group. A lot of them have no Pension, Savings or Retirement at all. They will get Social Security but that will only amount to $1,100 to 1,500 per month. Try living on $13,200 a year. And that will happen only if Social Security survives the next 20 years which remains to be seen. They better have good health so they can keep working till they die.

A better plan is to start early, get an IRA set up and fully funded, live below your means and save like a fiend. One family that has done it and pushes the lifestyle is Mr MoneyMustache. He and his wife have managed to retire in their 30’s to live in a great style off investments and other side incomes they are able to bring in. His Blog is a great follow to see how they have done it and how you could follow in their footsteps. It is possible, you just have to make some choices early in life.

So the Moral to this story is get going because retirement is but a blink away.  The IRA Tax Laws are one of the best things Congress did for us in the past 30 years.  I believe in doing it and I hope you will to.