Build A Real Retirement Strategy

by Stanley Bing

When you're planning your endgame, it pays to make yourself hard to fire.

You may be one of those who like the mental image of sitting in the sun in some far-flung location with a drink that's under the same kind of umbrella you are, laconically perusing a big fat book on a dead president and lots of the same in your wallet. Not me. I want to be one of those guys who 30 years from now say, "Gah!" and keel over with a look of surprise on their face and the bit between their teeth. So naturally I'm thinking about how to preserve my size and power as I reach the age when I really should be taken out and shot. I think I've ascertained the key strategy: You have to avoid doing stuff that's going to get you fired the wrong way. To that end, let's look at just a very few historic fubars and see what lessons may be learned.

Nero burns Rome to improve the value of his real estate holdings. Immediate consequences: zero (for Nero). Lesson learned: It's good to own the business if you're going to do crazy things. Conclusion: Don't engage in criminal activity unless you own the business.

Secret Service agents visit hookers in Colombia and get caught when stupid dude stiffs the service provider. Immediate consequences: dire, both personally and professionally. Lesson learned: Pay the service provider, moron! Conclusion: Nothing you do anywhere stays there.

Tiger Woods runs into the business end of a golf club brandished by his wife. Immediate consequence: Woods is fired from pro golf for a period not to exceed the attention span of the media. Lesson learned: Don't engage in behavior not consistent with a credible corporate image, unless such behavior is integral to your brand, like Donald Trump.

News Corp. International (NWSA) is found to have hacked into the cellphones of athletes, politicians, and a murder victim. Immediate consequence: Middle management is decimated. Lesson learned: In a crisis, middle management is the first to go, so get out of middle management! Quick! Conclusion: If you have stock and options, cash in regularly.

Relatively new Yahoo (YHOO) guy is stripped of his stripes and tossed overboard by perpetually flailing company after his résumé is discovered to have been (cough) amplified. Immediate consequence: inelegant defenestration with extreme prejudice. Lesson learned: Being easy to fire makes you fireable. Had the company been doing better, it would have at least taken a few minutes to cook up a cover story. Conclusion: Be harder to fire.

At J.P. Morgan Chase (JPM), CEO Jamie Dimon is called upon to explain a loss of $2 billion. Immediate consequence: none so far, aside from the kind of mild discomfort one would experience from a nasty dog bite. Lesson learned: If you're going to fail, do so at a very high level, and with some flair. Other lessons: (1) Always look your best in distress. Dimon has the best hair in all of banking, and uses it to good effect. (2) Raise your profile when others would be shrinking theirs: At this point the beleaguered executive is as ubiquitous as Justin Bieber. (3) Never lose your message track. While in the midst of the greatest apology tour since Hugh Grant, Dimon has never retreated from his core assumption of what a bank should be allowed to do -- i.e., bet for profit with your deposits. He is sincerely sorry about that lost money, though.

Ultimate conclusion: The great ones fail up. In my business, there's a guy I will not name because one day we may have to smile at the same photo op. He quite literally destroyed the company of which he was the steward. Yet this famous loser is being considered for CEO at a big firm. He may not get this top slot. But one day he will surface -- and not in middle management either. With boldness, craft, and utter lack of shame, he has leveraged disaster into a launch pad. In short, he has made himself too big to fail. Now that's what I call a retirement strategy.

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Tax Refunds Could Be Delayed in 2013: IRS Watchdog

Tax refunds in 2013 could be delayed if the U.S. Congress fails to address major fiscal policy questions soon, said the Internal Revenue Service's in-house champion for taxpayers' rights on Wednesday.

National Taxpayer Advocate Nina Olson said in a report that "the 2013 filing season is already at risk" due to inaction by Congress on tax laws that have expired or will soon expire.

"An aura of uncertainty prevails as the IRS and taxpayers wait for word about what will be the law," she said in the mid-year report by the Taxpayer Advocate Service that she heads.

Ahead of the Nov. 6 elections, Congress has been unable to agree on what to do about the Dec. 31 expiration of the tax cuts enacted in 2001 and 2003 under President George W. Bush.

Other open questions include dealing with 60 tax breaks that expired at the end of 2011 and 41 more expiring at the end of 2012, such as deductions for mortgage insurance premiums and state and local taxes, as well as approving another "patch" to prevent the alternative minimum tax from hitting millions more taxpayers.

The Taxpayer Advocate Service takes up tax cases for people who face challenges in dealing with the IRS.

Last-minute congressional action on tax laws in 2010 forced the IRS to push back to February 2011 the start date for filing tax returns. Normally, taxpayers can begin filing in January.

Olson is expected to testify before a congressional panel on Thursday at a hearing about taxpayer identity theft. Her report said identity theft and tax fraud were top issues for taxpayers in fiscal 2011, which ended Sept. 30, 2011.

The Taxpayer Advocate Service handled 21,743 identity theft cases through April 2012, a 62-percent increase over the same period in fiscal 2011, the report said.

Does the Global Economy Need More Money Printing?

by Shai Ahmed

The global economy can only return to growth once looser monetary policy is employed by both Europe and the United States, including more quantitative easing, said Bob Parker, senior advisor at Credit Suisse.

“Growth seems to be a major problem not just in Europe but also in the States where it appears to have stalled. In the last two months the real worry has been the slowdown of the German economy,” he told CNBC, “I think to kick start growth you are going to see some measures this weekend such as deficit targets being delayed by one year and infrastructure projects.”

European Union heads of state meet in Brussels to discuss such measures to tackle the euro zone debt crisis. The European Commission has already granted crisis-hit Spain an extension to a deadline to reach tough deficit targets.

Some EU member states have indicated they are also prepared to give Greece some leeway in achieving deficit targets.

“It probably means in Europe, an interest rate cut by the (European Central Bank) and eventually (a third round of quantitative easing) by the Fed. One of the key themes for July and August will be another round of monetary easing,” he added.

Two previous LTROs launched in December and February saw the ECB lending money at a very low interest rate to euro zone banks.

The central bank hoped that banks would use the injection of cheap money to buy higher-yielding assets and make profits, or to lend more money to businesses and consumers — which could help the real economy return to growth as well as potentially yielding returns.

He added that most policymakers would prefer a higher rate of inflation without getting out of control with “3 percent as a desirable objective.”

Marc Ostwald, strategist at Monument Securities, agreed that most countries would like to inflate their way out of the current stagnant growth position.

“They’d all like to try and inflate their way out unfortunately the accumulated liabilities that are there are now so large that the inflating your way option will just get rid of a bit,” Ostwald said.

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Eight Ways Grads Can Manage Debt Without FICO "Hangover"

by Katie Little

It’s that time of year again — colleges across the country have unleashed a new wave of graduates to cut their teeth in the real world.

But as student loan debt levels continue their rapid ascent, today’s grads face tasks more daunting than crafting the perfect resume or nailing an appropriate business-casual look.

According to a recently released study by the Federal Reserve Bank of New York, the average outstanding student loan balance per borrower has edged above $23,000 - a daunting figure on a starter salary.

So what exactly should you be doing to protect your FICO score - a critical measure that many lenders use to assess credit risk - while also paying down student debt?

We scoured the web in search of sites that can provide useful information for loan holders. And we also went to 'the source,' FICO's Anthony Sprauve, who manages consumer and media relations for MyFico.com to assemble tips for today’s borrowers.

Graduation Debt: How to Manage Student Loans and Live Your Life (CliffsNotes)

Get Organized

The first step to paying student loans is to know the who, what, when and where of your payment schedule. Keep detailed records of the balance, repayment status, grace period and lender contact information for each loan, advises the Project on Student Debt website.

The National Student Loan Data System provides access to federal student loan information, along with a terms glossary and extensive frequently asked questions page. If you do not see a loan listed, it is probably a private one.

“For those, try to find a recent billing statement and/or the original paperwork that you signed,” the project’s website said. “Contact your school if you can't locate any records.”

Pay Your Bills on Time

FICO scores do not emphasize how deeply into student loan debt you went for that diploma, but they are concerned with how you repay the loans. Very concerned - in fact, payment history makes up the largest chunk of an individual’s FICO score at 35 percent.

“Paying your student loan bills on time is the most important thing anyone can do (along with) managing your other debt,” Sprauve said.

Stay in Touch With Your Lender

If you have ever received past residents’ mail at your own home, you probably realize the importance of this tip. Lenders will not know whether you have switched addresses until you shoot them a “we’ve moved!” note. This oversight can easily end up costing serious cash and leave a lender seriously annoyed.

Defer - Don’t Default

Maybe that dream job doesn’t exactly come with a dream salary. It happens. Starter salaries and high rent can be a tricky combination for paying your student loans on time.

Rather than become delinquent or default on your loans, reach out to your lender to request a deferment, which will be granted in certain specific situations, such as unemployment, economic hardship or reenrollment in school. During a deferral, interest will not accrue for subsidized loans but will on unsubsidized loans. The Department of Education shares additional information here.

Pay Highest Interest Rates First

Not all student loans are created equal. If you have extra cash, chip away at the loans with the highest rates first, whether they are student loans or credit-card ones, while also paying the lower-rate ones as dictated by your payment schedule.

Credit-Card Debt Matters More

Having and using a credit card is not necessarily a bad move. Racking up large debts without paying them off each month is where borrowers get into trouble. Sprauve emphasized that credit-card debt carries more weight positively and negatively than student loan debt. Therefore, it often makes more sense to dedicate extra cash for additional payments on credit-card debt rather than student debt.

“Credit card debt is a bigger factor in your credit score than student loan debt so to take a grad gift and pay down your credit-card debt could potentially help your score,” Sprauve said.

Open New Credit Only When Necessary

New grads can feel like they’ve won some sort of credit-card popularity contest since companies often throw cards at college students and recent grads in the hopes of scoring life-long customers.

While consumers should work hard to establish good credit and should open a line of credit, they need to choose the sources carefully, Sprauve said.

“If you’re in Banana Republic or Anthropologie, you’re buying some stuff and they offer you the ability to save 10 percent or 15 percent by opening one of their cards, it’s not prudent to do that because it will hurt your credit score,” he said.

How to Wipe Out Your Student Loans and Be Debt Free Fast: Everything You Need to Know Explained Simply

For the Lucky Ones - Get Loans Forgiven

If you work in certain fields or for certain types of employers, you may be able to hit the student loan jackpot - loan forgiveness. Among the groups that qualify are volunteers for AmeriCorps and the Peace Corps in addition to borrowers who serve in the military or in public interest or non-profit positions. For more extensive information about those who qualify, check out FinAid.org’s website

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Can You Have Too Much Credit?

by Gerri Detweiler

"Too much of a good thing can be wonderful," said film star Mae West. But what about too much credit? Is having a lot of credit a wonderful thing as well?

When most people think about having too much credit, they are thinking of one of three things:

1. Too much debt
2. Too many accounts
3. Too much available credit

There are a couple of different ways to look at each of those items. The first, of course, is how that factor will be considered when a credit score is calculated. Will it help or hurt your credit score? The other is how a lender might view that individual factor. Remember, lenders can supplement scores with their own standards. When you get a mortgage loan, for example, the lender will likely look at your credit scores and your debt-to-income ratios.

Let's look at each of those three factors a little more closely.

$100k income! No big deal anymore, Inflation Makes It Smaller

by Craig Guillot

One hundred thousand dollars. Since the 1980s, the magical "six-figure" salary has been a benchmark for financial success. Not too long ago, that income often meant two nice cars in the garage of a large house, fun family vacations and plenty of money left over to save for retirement and college tuition.

But times have changed. Not only has standard inflation steadily eroded the real value of a $100,000 income, but the cost, of housing, health insurance and college tuition have risen dramatically in recent years. Consider the rising costs of food, energy and the necessities of a middle class life, and that six-figure luxury quickly turns to six-figure mediocrity.

Less than 20 percent of American households even break the six figures. But many who earn incomes near the mark find that their prized incomes don't take them as far as the hype. Many say that while breaking the $100,000 annual income mark may still be an impressive milestone, it doesn't exactly roll out the red carpet.

Costs eat away at benchmark

According to the U.S. Census Bureau, only 6.03 percent of individual over 18 and only 19.9 percent of households had incomes of $100,000 or more in 2010. In fact, the median annual household income for 2010 was $50,046, just more than half of the six-figure benchmark. The overwhelming majority of Americans still look up to a $100,000 income, but the expectations of what comes with that income are rapidly slumping.

According to Labor Department statistics, the average inflation rate for 2011 was the worst since 2008, with consumer prices rising 3.1 percent, compared to an average of 1.6 percent in 2010. Much of this was fueled by energy costs (up 15.2 percent for the year) and food costs (up 3.7 percent for the year). Just to keep up with standard inflation, a $100,000 salary in 1990 would have to be $172,103.29 in 2011.

"What would have cost you $100,000 in 1976 would cost you $381,000 today. That's just the inflation, and there are so many other things that have grown very expensive," says Mari Adam, Certified Financial Planner and president of Adam Financial Associates in Boca Raton, Fla.

Adam points to health care as a major expense that has grown almost twice the rate of inflation. The Kaiser Family Foundation, which tracks the costs of health insurance, found in 2011 that insurance costs had increased by a whopping 134 percent since 2000. The total cost of health insurance now averages $5,429 per year for individuals and $15,079 for families. Adam says college costs have also grown tremendously in recent years. According to the College Board's annual "Trends in College Pricing" report from last year, published tuitions at four-year public universities are up 42 percent in five years, the largest increase of any five-year period since the 2007-09 school year.

"These are things that everyone spent money on 30 years ago, but the percentage of what was going out of their paycheck is a lot higher now. More of the income is being taken away to pay for a lot of these things," says Adam.

The cost of housing has also played a major role in diminishing the power of a six-figure income. In many parts of the country, housing prices have outpaced wage growth for almost a decade. The Housing Affordability Index, which compares the cost of housing against median family income, dropped considerably between 2000 and 2007. In 2000, the median family income was $50,732, and the median home price was $139,000. While median income grew to $60,831 in 2011, median home prices skyrocketed to $229,299 in 2007 before leveling off at $166,200 in 2011. In those 11 years, median home prices had risen 19.6 percent while median incomes had risen 16.6 percent.

"Without a doubt, the housing situation is the biggest thing that eats into our income," says Brian Neale, an investment manager from Westminster, Md.

Money doesn't go far

Neale, 33, says he surpassed the $100,000 mark last year but says that between mortgage payments, the high price of heating fuel, gas, food and everyday items in life, his salary doesn't go as far as he thought it would. Neale is married with three children and says that his extracurricular real estate and investment activities help them buy the extras in life.

"Now that I've made (a $100,000 salary), it's not all it's cracked up to be. We make sacrifices. It's not like I tell my kids we're going to have to eat peanut butter and jelly every night. We live well, but I wouldn't consider it anything extravagant," says Neale.

Many now consider $250,000 the new $100,000 income. Adam says that level of income is typically required to provide what many have before expected of a six-figure salary. Adam also points to other expenses that are not necessities but are considered part of a middle class lifestyle -- things like cellphones, high-speed internet access, vacations, karate lessons, iPods, laptops and digital cameras.

"What you might think people deserve for a person that has a reasonable income is excessively high. Add in all the other expenses, and there just isn't anything left and that's part of the reason why a $100,000 income isn't going that far," says Adam.

Geography and lifestyle factors

With the cost of housing typically the largest expense for a family, location is one of the most important factors in dictating the power of a $100,000 income. While that level may not go far on the coasts, it may still provide a fairly comfortable lifestyle in much of Middle America. Jeff Eschman of Brazos Financial Advisors in Houston, says that in much of that state $100,000 income earners can enjoy very comfortable lifestyles.

"I don't see many families who are at the $100,000 income level currently making a lot of sacrifices. Families at that income level should be able to afford a very nice lifestyle in this area," says Eschman.

In cities like San Francisco; Manhattan, N.Y.; Los Angeles; San Jose, Calif.; and Washington, D.C., the cost of housing alone can take a major bite out of a $100,000 income.

The Council for Community and Economic Research's Cost of Living Index, which compares typical family and individual expenses across hundreds of cities shows that. According to the Index, for 2012 Q1, a typical family earning $100,000 per year would need to earn around $228,300 in New York City and $166,500 in San Francisco to maintain that same lifestyle.

In low-cost areas, Eschman says that people at that income level tend to run into financial problems when their lifestyle outpaces their income. While this is a problem for many Americans in all income levels, top figure earners are not immune from it. Adam says she has even seen people with incomes of up to $300,000 having trouble covering their expenses.

Choice is yours

Bryce Danley, a Certified Financial Planner and advanced financial adviser with Ameriprise Financial, says the real power of any income is all about perspective and choices. He says buying too much house, spending too much on automobiles and having too much debt is commonplace with families in the $100,000 income level and largely responsible for the six-figure pinch. In one example Danley uses a household that earns $100,000 a year, owns a $375,000 home, leases 2 vehicles for $450 each per month and pays $250 per month on credit cards. After that household pays the mortgage, car notes, debt and takes out social security and federal income taxes, it has spent 75 percent of its income.

"This is a very typical situation for someone in that income range. And we wonder why average Americans don't save any money -- it's because of the decisions they made in housing, cars and debt," says Danley.

While the real power of a $100,000 income has been drastically diminished, it highlights that the burden of increasing costs on those making less is even more profound. Danley says that regardless of income level, Americans' penchant for debt, consumerism and outspending themselves is what ultimately causes financial disappointment or stress.

"There is still only a small percentage of people making this income. It points out that for your average person in your average job, this is becoming an increasingly hard country to live in," says Adam.

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IRA Rules Get Trickier

by Kelly Greene

Uncle Sam is about to get a lot tougher on individual retirement account mistakes—and that could trip up investors who aren't careful.

The government lets millions of dollars in tax penalties on IRAs go uncollected each year—$286 million in 2006 and 2007 alone for missed withdrawals and contributions that break the rules. The reasons range from bureaucratic hurdles to tax forms that don't provide enough information, according to a report by the Treasury Inspector General for Tax Administration, the federal tax watchdog.

Now the Internal Revenue Service, which has been cracking down on secret foreign accounts and beefing up audits of high earners in recent years, is turning its attention to IRA snafus.

Some 46 million U.S. households, or two out of five, hold a combined $4.9 trillion in IRA assets, according to the Investment Company Institute. The more-aggressive enforcement means those investors need to make sure their accounts are in order—quickly.

The agency will report to the Treasury Department by Oct. 15 on how to go after taxpayers who make contribution or withdrawal errors, according to spokesman Eric Smith, who declined to provide details. The possibilities include additional paperwork that IRA owners would have to file with their tax returns and stepped-up audits, mainly matching up distribution reports from IRA custodians to individuals' tax returns.

"It's a wake-up call for anyone who has an IRA," says Martin Censor, a manager at the American Institute of Certified Public Accountants. "The government needs money.…This is low-hanging fruit."

What People Really Do When They're 'Working From Home'

by Venessa Wong

A new survey by Citrix, the Fort Lauderdale (Fla.) company that designs technology for employees to work remotely, shows that many people sneak in other activities while working from home.

Based on a survey of 1,013 American office workers, conducted in June by Wakefield Research, 43 percent watch TV or a movie and 20 percent play video games while officially working from home. Parents are more likely than those without children to partake in these two activities, which aren’t work-related.

Employees might not even be sober: 24 percent admit to having a drink. Twenty-six percent say they take naps. Others are distracted by housekeeping: 35 percent do household chores; 28 percent cook dinner.

Yet despite all the distractions, telecommuters are actually more productive than their peers in the office, according to preliminary findings from Stanford University’s study of a Chinese travel agency.

Jack M. Nilles, founder of management consulting firm,JALA International, says in an e-mail, “If an employee is doing the work and producing the desired results, what difference does it make if he/she includes a nap or cooking or a school play in the so-called work day?” He adds: “The whole point of teleworking, from the employee’s point of view, is the ability to fit one’s work into the rest of one’s life, not the other way around, as is the case in the ‘traditional’ office. The point of teleworking, from the employer’s point of view, is that its bottom-line benefits (productivity gains, space savings, employee retention, etc.) far exceed any feared risks of losses.”

Sharon Davis, who runs the website 2work-at-home.com and does other work from her home in Fort Bragg, Calif., says, “Whether it’s expected or O.K. [to do other things during work hours] depends on the arrangement you have with your employer and what their expectations are. If they give you complete autonomy to get your work done and don’t care if you hold certain hours, go knock yourself out.” Davis, who did a phone interview with me in her pajamas while watching morning television, says she takes advantage of the flexibility that working from home provides, especially when it comes to caring for her children. Still, she warns that turning on the TV can easily become a big time waster.

Half of survey takers say their bosses oppose the practice of working from home. Kim DeCarlis, Citrix’s vice president for corporate marketing, says in an e-mail that it’s not surprising that workers allow themselves to get distracted at home. “It speaks to the fluidity with which people are moving between work and life today,” she says. “Work no longer happens just between 9 a.m. and 5 p.m. from Monday through Friday. Life is no longer squeezed in on the weekends and evenings. These days, it’s more a question of who hasn’t checked and responded to a work e-mail on a weekend or while attending a child’s sport activity.”

Citrix’s survey revealed other workplace habits. For example, the top reason employees sneak out in the middle of the day is to exercise, followed by “changing clothes,” “getting hair done,” and “taking a nap.”

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Five Surefire Tips for Saving on Summer Air Travel

by Jean Chatzky

Americans are planning to spend more on summer travel this year – 53% of you say you'll spend upwards of $1,500, compared to 39% last year -- and I'm betting more of you will also be taking to the friendly skies. Or perhaps we should call them the not-so-friendly-and-sometimes-downright-maddening skies. You'll pay extra for nearly everything but the pleasure of a security pat down.

The biggest U.S. airlines pulled in $3.4 billion in baggage fees alone in 2011, according to the Department of Transportation. The Wall Street Journal reported that on Spirit Airlines, the average passenger paid $51.68 in non-ticket revenue for each flight segment, or a total of $103.36 above the ticket price. 

As you might imagine, all that nickel and diming makes it hard to set a budget. So the best strategy, it seems, is two pronged: Shop smart, then avoid extras whenever possible. Here are five foolproof tips:

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Options for Savers Seeking Better Rates

By Tara Siegel Bernard

If you’re a saver, you’re probably frustrated, even angry. There’s nothing worse than being punished for good behavior, and that’s exactly how it feels if you’re trying to amass a pile of cash before making a big purchase, particularly when banks pay interest rates that don’t come close to keeping pace with inflation.

That frustration is precisely what prompted Mark Sweeting, a high school history teacher in Portland, Ore., to pull his emergency savings fund out of an online savings account at ING Direct. It had lured him two years ago with an annual rate of 1.25 percent that has since dwindled by more than a third.

“It just seemed so obnoxious,” he said, adding that he recently moved his money to Barclays, which is paying 1 percent. “The more money I had in my emergency account, the less and less it made.”

He said that he was well aware that his new rate might eventually sink, too, but that he would continue playing the rate-chasing game.

Other consumers are tempted, or at least curious, about potentially riskier options beyond the world of federally insured savings — perhaps short-term bonds or dividend-paying stock funds. But what sort of trade-off does that entail? And are there any safer alternatives?

I asked several advisers how comfortable they were with the risk of options that might pay a little more.

Some were slightly more cautious, but most offered similar advice: if you’re more concerned about the return “of” your capital, then you probably shouldn’t get too ambitious with the return “on” your capital, as advisers like to say, particularly if you expect to tap the savings in five years or less.

Beyond the Tried-and-True: Generating Cash in Later Life

by Simon Constable

A look at five atypical ways to boost income in retirement.

These days trying to find high-quality income-producing stocks or bonds—ones yielding better than a measly 2% or 3%—can be as frustrating as trying to tie your shoelaces with one hand.

Don't despair: There are ways to boost income in retirement that go beyond the usual suspects—sometimes way beyond.

Here are five ideas:

1. Grow Trees

If you live in an area where people routinely burn wood to heat their homes, you might consider buying some woodland. Not only can you use the wood to heat your home, you can sell logs to others.

"An awful lot of people in the Northeast use wood for fuel because they can't afford anything else," says Robert Maloney at Squam Lakes Financial Advisors LLC in Holderness, N.H.

The usual quip, however, is that wood will heat you twice: once when you cut it and once when you burn it. That's also a way of saying that this method of earning extra income can be hard work.

The labor starts with weeding out trees for harvesting. (Trees can take decades to reach maturity, so you don't want to cut them all down at once.) The thinning lets the remaining trees grow bigger and provides room for saplings. The felled trees then must be left to dry, which can take more than a year. Finally, the trees need to be cut into logs before they can be sold.

The returns you generate will depend in part on how much of the labor you are willing and able to do yourself and how much you pay for the land, says Theodore E. Howard, professor of forestry economics at the University of New Hampshire in Durham, N.H.

Woodland in New Hampshire is going for around $1,500 an acre, and a cord of wood commands about $115 once it has been cut, according to the New Hampshire Timberland Owners Association in Concord, N.H. A sustainable level of production is about a cord an acre a year.

If you determine firewood doesn't offer a big enough return, there are other possibilities for woodland income. These include leasing the land to hunters, leasing out maple-syrup taps (if you live in a Northern state) and selling timber.

2. Make Loans

You're probably getting less than 1% on your bank deposits—but your bank, using your money, can get as much as 15% for an unsecured loan. Suddenly lending seems appealing.

If you have ever co-signed a loan for a friend or family member, you have come close to being a lender. As a co-signer, you're on the hook for the money if the primary borrower doesn't make the loan payments. The difference is, you don't get any interest.

If the person who needs the loan co-signed has decent credit, it might make sense to make the loan directly. Before doing so, draw up a contract that could potentially be used in a court of law, says Farnoosh Torabi, personal-finance expert and author of "Psych Yourself Rich."

If the idea of lending to family gives you hives, consider lending via a peer-to-peer network such as Prosper.com. That website boasts returns of more than 10%. If you do so, make a variety of loans to different people of different credit quality to help diversify risk, Ms. Torabi says.

Women's Financial Confidence Falters

by Hadley Malcolm

A year after women started to close the financial literacy gap with men, their financial knowledge and confidence are waning again.

Women are especially falling behind when it comes to managing money and investing, says a study released Thursday on the financial literacy gender gap by education firm Financial Finesse.

From 2011 to 2012, women became disproportionately less likely than men to pay their credit card balance in full each month, have an emergency savings fund and have a general understanding of stocks, bonds and mutual funds, the survey found. The gap between men and women widened by at least 6 percentage points in each of those cases.

The survey results are particularly worrisome given women's longer life expectancy, combined with the fact that they have less income on average over time from being out of the workforce longer to care for children and subsequently less Social Security to fall back on, says Financial Finesse CEO Liz Davidson.

"You put all these factors together, and we should actually be ahead of men in order to even reach parity in financial security overall," she says.

And particularly with investing — where women widened the gap the most between 2011 and 2012 — women tend to be risk-averse, which affects their financial confidence, says Pat Seaman, senior director of National Endowment for Financial Education.

"That plays into reluctance to make decisions in investing," she says, because investing has "proven to be volatile and a way of losing a lot of money. Women are very averse to losing money."

The survey data show women are considerably less likely to be confident their investments are "allocated appropriately between cash, bonds and stocks," with 29% of women saying they were confident vs. 45% of men.

But women aren't lagging on everything. Survey results show them on par with men when it comes to retirement planning. Almost equal numbers of men and women (more than 90% for each) said they participate in their companies' retirement plans or contribute to an IRA (26% of women and 27% of men).

But why are women backsliding overall after showing improvement in financial literacy in last year's survey?

"There's a little bit of complacency in the fact we're past the worse of our economic troubles," Davidson says. "Women as caregivers will do things for their children and for their families that may be costly and expensive and may be not even necessary and end up sacrificing the future, but in the moment it feels like the right thing to do."

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Generation Z Worries About Paying for College, Getting a Job

by Hadley Malcolm

The next generation of young adults gets it: College is going to be expensive. Saving money is important. The job market isn't very promising.

Much of Generation Z, or those roughly ages 13 to 22, show a high understanding of those financial and economical truths in a survey out Wednesday on the financial habits and concerns of Gen Z and their parents by TD Ameritrade.

Both Gen Z and their parents listed jobs and unemployment first when asked to identify their biggest concerns about the economy, mentioned by roughly a quarter of both groups.

"They are doing a nice job understanding the challenges they may face," says Carrie Braxdale, managing director of investor services at TD Ameritrade, adding, "It was impressive and surprising to see how well aware they are around the importance of money."

When asked about specific topics, 39% of Gen Z said they are concerned about affording college and having student loans, though the top concern was having their identity stolen, indicated by 40% of Gen Z respondents.

Caleb Hawkes, 17, says going to college has always been important to him, but he is worried about paying for it. The high school senior says almost all his income from jobs as a lifeguard and mowing lawns at home in Madison, S.D., goes into his savings account, but that even with help from his parents, he knows "a student loan is almost inevitable."

But not all of Gen Z has Hawkes' same awareness. Even though they indicated being concerned about student loans, when asked how they currently pay or expect to pay for college, only 25% of Gen Z said they rely on or will need assistance from student loans, the survey shows.

In reality, two-thirds of college seniors in 2010, the most recent year for which there are data, graduated with student loan debt, according to the Project on Student Debt.

"They are very optimistic," Braxdale says of Gen Z. "A lot of this could be a bit influenced by the span of time between where they are now and when (college) would become a reality for them."

The most concerning survey results were Gen Z's credit card habits, Braxdale says. While Gen Z kids are good savers — more than half have a savings account and 76% say it's important to save money at this stage in their life — there isn't the "same diligence" when it comes to credit cards, she says.

A little more than a quarter of Gen Z indicated having a credit card, but more than half of those carry a balance on the card for at least six months.

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28% of Americans Have No Emergency Savings

by Blake Ellis

Most Americans don't have nearly enough money stashed away for emergencies and more than one-in-four don't even have a single penny saved.

While the general rule of thumb is to have an emergency fund that will cover at least six months of expenses, only 25% of Americans have that amount saved, research released Monday by Bankrate.com finds.

About 49% of Americans don't even have enough money saved to cover three months of expenses -- slightly worse than the 46% of Americans who reported having less than three months worth of savings last year.

And 28% don't have any cushion whatsoever -- up from 24% last year, according to the report, which was based on a survey of 1,000 adults.

"Incomes are largely stagnant, so it's difficult for people to make significant headway on savings when household expenses are creeping higher but incomes are not," said Greg McBride, senior financial analyst for Bankrate.com. "Prolonged unemployment has also depleted the savings of many people who at one time had a more appropriate cushion."

While the overall saving situation has gotten slightly worse in the past year, Americans are saving more this year than they were six years ago. In 2006, Bankrate found that 61% of Americans didn't have enough emergency savings to last three months.

"Relative to a year like 2006, the needle has moved a little bit, but this is more of an indication of how woefully undersaved Americans were during the 'go-go days' of the housing boom," said McBride.

While some may argue that they don't have enough money to contribute to an emergency savings account, McBride said it's just a matter of getting into the habit.

"The biggest barrier to saving is not being in the habit of saving," he said. "By establishing that habit, even if an unplanned expense comes up and wipes out what you've accumulated, you're only one paycheck away from restarting the saving process."

To start saving, he recommends setting up a direct deposit from your paycheck or checking account into a dedicated savings account and to keep track of your spending so that you funnel as much extra income as possible into your savings account each month.

Ally Bank Online Savings Account

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Four Ways Investors Can (Still) Find Yield

by Stephen Gandel

With interest rates near zero, attractive dividend-paying investments are harder than ever to find. Here are four areas for income-starved investors to look.

If you went looking for a high-yielding investment a few years ago, you might have stumbled upon something called a revertible. The Wall Street concoction, also called a reverse convertible, seemed like easy money. Revertibles offered extremely high yields, as much as 13%, without having to bet on companies with lousy credit or lock up your money for years. The bondlike investments had maturities of a year or less and were tied to the stocks of well-known companies like Apple and Johnson & Johnson. Over $15 billion of revertibles were sold in 2007 and 2008 alone.

There was, of course, a catch. In the event that the blue-chip stock on which your revertible was based fell 20% or 30%, depending on the terms of the deal, your high-interest-paying bond would disappear. In its place you would receive stock worth 20% to 30% less than what you had invested. And in late 2008 and early 2009 when the market tanked, that's exactly what happened to revertible investors. Many of them sued, claiming that brokers sold the high-yielding revertibles as near-riskless investments. Last year brokerage-industry regulator FINRA fined Wells Fargo and Santander Securities $2 million each for unsuitable sales of reverse convertibles.

Since then, the search for yield has only gotten dicier. A slow recovery, coupled with worries about Europe and a general sense that global economic growth is faltering, has caused investors to flood into the relative safety of U.S. Treasury bonds. That's driven yields on government bonds to their lowest levels in history. Factor in inflation, and these days Treasuries look like a money-losing investment.

The result is a global search for yield that has driven the price of nearly every traditional income-generating investment up, and yields down. Highly rated corporate bonds have an average yield of 3.8%, compared with an average payout of 7.7% over the past 50 years. Real estate investment trusts, a traditional favorite of yield lovers, are paying only 4.4% in dividends, vs. an average of 6.4% over the past two decades. That's not bad compared with Treasuries, whose yields dipped below 1.5% on 10-year bonds in early June. But in REITs you also have to shoulder a number of other risks, including further economic slowdowns, which could hurt rents, and higher interest rates, which would boost financing costs. High-yield bonds do still offer relatively good payouts -- nearly 8% on average -- but there, too, you have to trust that the economy won't get much worse, affecting the ability of less creditworthy companies to make their debt payments.

Rewriting the Golden Rules of Retirement Investing

by Adeline Ee

Secure, steady and safe.

Those three words once associated with retirement investing no longer hold true, as many retirees have been forced to assume more risk to make up for the deterioration in their portfolios in recent years.

What's more, experts say using one’s age to determine the optimal asset allocation mix — the golden rule of retirement investing — has become a thing of the past.

For one, ultra-low interest rates for instruments like certificate of deposits, money-market and savings accounts have been generating lackluster, if not marginal, fixed income returns for years.

“The old model has flipped flopped,” says William Fisher, a financial advisor with Summit Advisors based in the San Francisco area.

With CD rates and government bond rates in the tank, retirees are left with fewer re-investment options as those instruments mature, notes Fisher.

Wealth managers agree that retiring in today’s investment environment is about as bad as it could be — much like the long bear market of the 1960s and 1970s — with individuals living longer and purchasing power shrinking.

Many financial advisors are now questioning the relevance of traditional investing strategies that follow the 60/40 stocks-to-bonds mix and long-term, buy-and-hold approaches, a nationwide study by Natixis Global Asset Management showed.

Among the 163 advisors surveyed, 80 percent say their clients are torn between increasing returns and keeping their investments safe.

Wealth implosion: It's not just housing

by Tami Luhby

Americans' net worth collapsed in recent years, but don't blame the housing market for it all.

A CNNMoney analysis of new Census Bureau data shows that if you strip out the effects of the housing collapse, median household net worth still fell by 25% between 2005 and 2010. The decline was driven largely by the plummeting stock market, which devastated Americans' portfolios and retirement accounts.

Overall, median household net worth declined 35% to $66,740 in 2010.

The median worth of stock and mutual fund portfolios fell 33%, while the median home equity value dropped 28%.

"One of the significant factors is housing, of course, but it's not that alone" said Alfred Gottschalck, an economist with the Census Bureau. "It's how business conditions affect stock and retirement accounts."

Eight Easy Ways to Slash Your Food Bills by $2,000 or More

by Selena Maranjian

When you buy a tub of popcorn at your local movie theater, you know that you're overpaying for the treat -- significantly. In fact, a lawsuit was recently filed against a theater chain, accusing it of overcharging.

Odds are, though, that you overpay for food much more often than you realize. According to Ziplist.com, a grocery-list-making service and app, Americans pay thousands of dollars a year more than they need to.

Here's Ziplist.com's list of overpriced foods. As you go through the list take a moment to calculate how much you spend -- and might save -- on these items. Each of us has a different food-and-drink-buying profile, after all.

1. Costly Perks

Coffee is a favorite go-to example in money-saving circles. Brew your own coffee at home, and you'll spend $15 to $40 per month -- about $180 to $480 per year. Buy one or two coffees each day at an outlet such as Starbucks, and shelling out from $3 to $6 or more per day can cost as much as $1,500 per year.

What the Rich Are Reading This Summer

by Robert Frank

Nothing goes with those linen shorts, the house in the Hamptons and chilled bottle of Yquem like a good summer read.

This year there are loads of good books for high-net-worth individuals to relax with on the beach. And as they have every year, J.P. Morgan Private Bank is about to release it’s 13th annual summer reading list. The bank's recommendations have become hugely popular among the wealthy, as much a rite of summer as putting the top down on the 300 SL Roadster and decamping with the family to Nantucket.

This year’s list is as varied as the rich themselves, with weighty tomes on behavioral economics, urban planning, and the history of the world to lighter fare about monarchs and Malbecs.

“Our clients have an eclectic interests and an appetite to explore new trends in business, leadership, the arts and science — this year’s summer reading list delivers that, and more,” said Darin Oduyoye, Chief Communications Officer for J.P. Morgan’s Asset Management division, which includes the Private Bank.

Six Ways to Screw Up Your Retirement Plan

by Marilyn Bowden

Contributing to an employer-sponsored retirement plan is an important step toward a secure future, but experts warn that, like any other financial asset, it takes oversight as well as common sense to reap its benefits.

Avoid these six critical mistakes to improve your chances of having a successful retirement.

Mistake #1: opting out

One of the biggest mistakes is to decide not to participate, says Robert Gordon, senior financial adviser at Miami-based Investor Solutions.

"As the saying goes, 'you've got to be in it to win it,'" he says. "Be it a 401(k), 403(b), 457 or other similarly numbered options, the responsibility is on the employee to take the initiative and complete the paperwork."

In an attempt to encourage more people to take advantage of employer-sponsored retirement plans, the 2006 Pension Protection Act provides safe harbor to companies who offer automatic enrollment that requires employees to opt out rather than opt in, says CFP Artie Green, a professional investment adviser at PWJohnson Wealth Management in Sunnyvale, Calif.

"That has not taken hold to the degree the government was hoping," says Glenn A. Hottin, a CFP at M&H Advisors in New Haven, Conn. "The majority who don't elect to join generally are confused by their choices, and the confused mind does nothing."

Definitely don't opt out if your company offers automatic enrollment. It will also automatically select an investment option for you -- often a target-date fund. Once you're in the plan, take time to acquaint yourself with all its investment options so you can determine if the preselected fund is the best choice or if there's one that better meets your goals, time horizon and risk tolerance.

Ten Things You Must Know about Social Security Benefits

by Jessica Naziri

Social Security Insurance was established in 1935 as a financial safety net for older Americans. Eight decades later, all Americans pay into the system, with Social Security the largest source of income for citizens age 65 and older. 

During 2012, nearly 160 million workers will continue to have 4.2 percent of their pay deposited into the Social Security Trust Fund instead of the usual 6.2 percent, according to a statement from the IRS based on the Temporary Payroll Tax Cut Continuation Act of 2011. 

The program is based on contributions that workers make into the system. While you're employed, you pay into Social Security; when it's your turn to retire you receive benefits. 

You can start your Social Security retirement benefits as early as age 62 or as late as age 70 (if you were born in 1960 or later, your full retirement age is 67). Your monthly benefit amount will be different depending on the age you start receiving it. 

The amount of money you receive from Social Security is based on a number of factors, including how much income you earned throughout your working years, the year you were born, and the age at which you file for benefits. If you claim Social Security early, your benefits will be reduced by a fraction of a percent for each month before your full retirement age. 

Even if you’re not approaching retirement, whatever your age, or income, Social Security is a part of life that impacts us all. Staying aware of the changes in this important government program will help you be better prepared, in both your present and future financial planning efforts. 

The following 10 points are based on best practices recommended by the U.S. Social Security Administration of policy website.

Avoiding ‘Money Death’ - A New Option for Your Nest Egg

by Sharon Epperson

The good news is Americans are living longer. But the worry for many retirees is that they'll outlive their savings.

The average life expectancy for men in the U.S. now reaches 83 years old — and women are living to age 86. Living 20 years or more beyond the traditional retirement age may call for some non-traditional investment moves.

Conventional strategies call for putting more money into bonds and less into stocks as you grow older, to minimize financial risk. Barry Gillman, research director of the Brandes Institute, says market risk should not be an older investor's biggest worry.

The greatest risk is more ominous than market volatility, says Gillman. "For somebody who's at retirement age or fairly soon after retirement age, their real risk is money death."

Seven Costly Retirement Mistakes to Avoid

by Shelly K. Schwartz

Wisdom, they say, is a gift granted to the elderly.

That may be true when it comes to emotional insight, but on the money management front it turns out those 65 and older make just as many missteps as the rest of us — some so big that it puts their standard of living in jeopardy.

Jumping on Social Security

It’s tempting to collect benefits as soon as you’re eligible at age 62.

You’ve paid into the system your entire working life, after all, and you don’t want to get shortchanged if you die prematurely. Right?

Wrong, says Jean Setzfand, vice president of financial security for the AARP, noting the amount you receive when you start taking benefits permanently impacts the amount you will receive monthly for the rest of your life.

“People feel like they’re going to get the raw end of the deal if they delay taking Social Security,” she says. “But it’s the amount of your monthly income that really impacts your standard of living.”

Here’s an example: Assume your full retirement age is 66 and your monthly benefit starting at that age is $1,000.

If you opt to begin taking benefits early at age 62, your monthly check will be reduced by 25 percent to $750 to account for the longer period of time you receive benefits.

Had you waited until age 70, your monthly benefit would be $1,320 — money that can help cover the bills as your living expenses rise.

Too Many Bonds

Another financial faux pas many seniors make is to invest too conservatively.

An allocation that’s overweighted in bonds won’t generate the income you will need to ensure your savings last longer than you do, says Greg Hammond, a certified financial planner and president of Kelly Financial Group in Wethersfield, Conn.

Ten Keys to Financial Independence in Retirement

by Robert Powell

It’s easy for a country to celebrate a day of independence. There’s a clear marker—for the U.S., July 4 is the anniversary of that day in 1776 when the founding fathers voted to declare independence from England.

It isn’t so easy for average Americans to celebrate a day of financial independence. There’s not one marker, but many. What’s more, the markers vary from person to person.

“Part of the challenge is that the definition of financial independence is as unique as the individual,” said Dan Veto of Retirement Spark, a research and consulting firm. “The topic doesn’t easily lend itself to a hard and fast equation.”

Still, experts say it’s possible for those planning for or living in retirement to declare financial independence, provided they achieve most, if not all, of the following goals.

1. Set aside 11 times your salary

You need to set aside at least 11 times your final year’s salary in your nest egg to maintain your pre-retirement standard of living in retirement, according to a recent Aon Hewitt report. The good news? That figure includes inflation and post-retirement health-care costs.

Knowing that you won’t be a burden on your children is of course part of the reason for setting aside this much in your nest egg.

“Not having to rely on my children for financial support is one aspect of financial independence,” said Meir Statman, a finance professor at Santa Clara University. “This was very important to my father who supported his mother- and father-in-law when we came to Israel, penniless, in 1949.”

Don’t fret if you don’t have exactly 11 times set aside. David Laibson, a Harvard University economics professor, says you should be able to get by with 10 times your salary.

2. Match income and expenses

The experts don’t quibble about this: You’ll need enough income to cover your expenses over the course of retirement. “You should have enough income in retirement to maintain your standard of living and, with the proper estate planning, an ability to leave an inheritance to your family or charity,” said Victor Ricciardi, a finance professor at Goucher College.

Put another way: “Financial independence in retirement is not having to follow the performance of the stock market 24/7 or track interest rates on your savings to make sure you can pay your day-to-day expenses,” said Dan Keady, CFP Board ambassador and director of financial planning for TIAA-CREF.

“For many retirees, we suggest figuring out how much money you will need for fixed costs such as food and shelter, and then calculating what Social Security and any pensions will provide,” he said. “Then, annuitize enough of your nest egg to bridge the gap between those fixed expenses and what’s provided by other sources of retirement income. This provides an income source similar to that enjoyed by previous generations, who received payments from pensions that lasted as long as they lived.”

Others agree. “Financial independence is really a surrogate for independence, so this is both a philosophical and societal question,” said Larry Cohen, director of the consumer financial decisions group at Strategic Business Insights.

“Outside of being a pretty poor insulator and fire starter, money in itself has little value, but what it represents is the ability to do things,” said Cohen. “If you have your health, food, clothing, shelter, family, friends, activities, and a support network, and you had all these things but not one dollar, in many ways you are as rich as the richest person, perhaps more.”

Given that what we think of as retirement is drastically changing, perhaps you are talking about a smaller life stage—the stage past career, but before the nursing home. “To feel secure in that stage, you need to have everything set up for the final stage,” he said. “Financial independence for the new ‘retirement’ stage of post-career means enough income to cover one’s costs, enough assets to tide one over for uncertainties and occasional indulgences, enough diversification to protect one from the ravages of the markets and inflation, yet enough simplicity so that it can be managed effortlessly.”

What Financial Freedom Really Means

by J. D. Roth

This guest post from Sue is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want submit your own reader story? Here’s how.

I’ve always been a saver. Even as a child, my pocket money was more likely to end up in my piggy bank than in my purse. I’ll admit that living in a remote English village with little opportunity to make impulse purchases probably helped.) But I’ve often wondered why I saved.

My savings tended to build up and never be spent. I lived within my means. But I never had a use for all the money I was saving; I never knew why I was doing this. Then, last Christmas, I discovered what financial freedom really means.

My younger brother has been ill for as long as I can remember. From birth, he had complex medical needs, as well as physical and learning disabilities. He spent much of his first few years in hospital, and was frequently rushed back in with serious infections, or deterioration of his medical conditions. Over the years, these emergencies became less frequent, partly due to advances in medical care, and partly because we were better at managing his health out of hospital. However, I always knew that the call might come.

Last year, my brother became increasingly unwell. He was on antibiotics a lot of the time, and his quality of life was decreasing. Although we didn’t want to think about it, we knew that he was nearing the end. In November, he was admitted to hospital with a severe infection, needing more intervention than he could get at home.

What is Financial Freedom?

by Scott H Young

Financial freedom isn’t the same as being rich. Although people often confuse the two, they are completely separate goals. One person could be completely financially free earning $15,000 per year. Another person could be trapped, even with millions of dollars.

Last week, I touched on the topic of financial freedom. I wrote about my goal to build an emergency fund with a year’s worth of living expenses in savings. This would give me the freedom to make drastic career or business moves without feeling the effect on my bank account for an entire year. But this is just a first step towards financial freedom.

What is Financial Freedom?

I define financial freedom as not needing to worry about money. Money shouldn’t be a dominating force in making decisions in your personal or professional life.

A good way to view financial freedom is another type of freedom most people in the Western world enjoy: freedom from hunger. As a human being, I need to eat to survive. But the relative abundance of food in my life has meant hunger is never a driving force in my decisions. If food were scarce, getting enough to eat would probably occupy all of my thoughts.

Being financially free, is the same as being free from hunger. Money will always play a role in your life. But you are free when it no longer becomes the dominating influence on your goals.

Financial Freedom is More Important than Wealth

With food, there is an upper limit to the amount you can consume. Once you reach a minimum threshold, freedom from hunger is basically guaranteed. But there is no upper limit for spending money. That’s probably why there are far more people free from hunger, than those free from money.

Wealth is only part of the picture. If your spending outpaces your income, it doesn’t matter whether you are rich or poor: you aren’t financially free. Pursuing wealth is a noble goal, providing you do it by contributing value. But it doesn’t guarantee the peace of mind and satisfaction associated with financial freedom.