Money Magazine – April 2007

Money Magazine logoThe April issue of Money Magazine arrived in my mailbox a few days ago and unfortunately stood by itself on my kitchen table for a couple days. I finally opened it – and it was worthwhile. Here are the ten things that really stood out at me from the issue:

A nice rule of thumb for comprehensive and collision auto insurance. If your car is worth less than ten times what you pay each year for collision and comprehensive insurance, drop them. They’re not worth the money on an older car. (p. 18)

If you’re depressed, buying stuff doesn’t help. It took me a lot of years to figure this out, but the things that really bring me joy don’t cost very much at all – reading a book, sleeping, exercising, playing with my son, listening to old records, blogging – why should I spend a lot of money? (p. 28)

Should you ask for a prenup? The magazine offers a guide to asking for one, but what about when two people go into a marriage with almost no assets? It’s hard to predict what’s going to happen and a prenup is a blind guess that may end up causing really unfair situations later on. On the other hand, if one or both people come in with assets, a prenup is a good idea as insurance against the unexpected. (p. 38)

If your children expect you to hand them money, something needs to change. I’m in favor of an allowance system with very clear responsibilities, and if the child doesn’t meet those responsibilities, they don’t get the allowance. The article advocates a similar system. (p. 44)

Wine is becoming a strong long term investment. One big problem: if I had a case of 1982 Burgundy in my basement, I’m sorry, I would simply be unable to avoid enjoying it. (p. 63)

Four blue chips have increased profits for twenty straight years. Home Depot, General Electric, Wal-Mart, and Walgreen have all shown profit growth year in and year out for two decades – they’re about as steady as you’re going to find. (p. 74)

If you’re 35 and want to retire at 60 and assume you’ll have no pension and no job in retirement, you need to already have 1.6 times your salary in savings. I’m 28 and my total retirement savings is about 0.75 times my annual salary. I am definitely on pace to beat that target number for age 35. (p. 82)

GTD works for tax preparation. David Allen gives a bunch of useful advice on how to get your papers organized for tax season. Basically, just store everything that might have tax consequences in a folder and deal with it in April. Simple – just like GTD. (p. 115)

Price matching guarantees rip off the lazy. Generally, if you see a “price match guarantee,” the price is actually inflated. This way, some people will buy thinking they’re getting a “deal” without actually doing the legwork and others will buy with the deal in hand. The two balance each other and overall the seller just sells even more at, on average, the price point they wanted anyway. (p. 129)

Quote of the month (p. 97):

There’s a big cocktail party on Martha’s Vineyard. Someone comes up to this writer, I think it’s Joseph Heller[author of Catch-22], and says, “Joe, see that guy over there? He’s a hedge fund manager, and he made more money yesterday than you made on all the books you have ever published.” Heller looks over, pauses, and says, “Yeah, but I have something he’ll never have: enough.”

Ask yourself this: do you have enough? It’s an interesting question to think about, actually.

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  1. Wil says:

    Personally, even without any assets in the beginning, I’m in favor of pr-nup’s, and so is my wife.

    I can also agree somewhat with people who are afraid that they can be married for longer periods of time and after a divorce, they have no protection.

    My advice: Have the attorney draw up the document so that it fades away after several years, in a tiered fashion. My thought is, if you are willing to stick through it for 25 or more years, you deserve SOMETHING!

  2. Tina says:

    My husband and I have often used the term ‘enough’ to describe our own financial goals. Enough income to pay the bills and enough emergency savings for an unexpected vet bill or car repair. We haven’t even started on retirement yet, because we’re still working on having ‘enough’. :(

  3. Gal Josefsberg says:

    Does equity I have in my house count as part of my savings toward retirement?

  4. Nice summary of Money articles. Now I won’t have to get the magazine. Do you ever find that these publications have a lot of emphasis on advertising for investments and retirement plans? Do you ever think there is a point when you are saving too much for retirement?

  5. Bill says:

    I wouldn’t count home equity, especially if where you live doesn’t have much diversity in employment.

    Look at the change in home values in Texas from the early 1980s (oil boom) to the late 1980s (oil bust,

  6. Shadox says:

    My car is worth less than 10 times the cost of insurance coverage on my cell phone… :-)

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