You don't have to be an expert to manage your money and prepare for life's unexpected twists and turns
If you're like most people, your New Years Resolutions have already expired. You haven't lost 10 pounds, you're not going to the gym five days a week, and when was the last time you called your mother?
Chances are, your financial goals have fallen by the wayside too. I don't want to discourage you from paying down debt, saving a downpayment for a house, or any of those big goals that you may have set for yourself at the beginning of the year. But if you sort of tuckered out on the big things (or even if you're still going strong--go you!), maybe it's time to set some more achievable goals. Here are ten things you can do in an hour or less apiece to make yourself--or your household--more financially sound.
1. Join Mint I'm an unabashed fan of the site, and not just because they do some great data-mining on their blog. (Don't worry, all at the very aggregate level). It will track and aggregate your spending for you, showing you where the money is going, and what's happening to your net worth over time. If you have sort of complicated finances--as I do, living in a two-journalist household--then it's an absolute godsend at tax and expense time. And in the last year they've added goals, allowing you to set your spending, saving, and debt-reduction goals and then track how you're doing with a thermometer. It's surprisingly motivating, and it's free.
I probably spend 20 minutes a week in Mint, categorizing our expenses and monitoring our financial position. But even if you don't put in that kind of time (and most of you don't have to keep track of which meals are tax-deductible), it's still incredibly helpful at tracking the broad outlines of your spending.
2. Get your papers together If you die, someone is going to have to clean up the financial aftermath. Make it easy on them by putting everything in one place where they can find it. Dave Ramsey calls this a "Legacy Drawer", and suggests putting in a cover letter and letters to your loved ones as well as the financial papers. But we're trying to keep this under an hour, so the notes are optional. Here's what it should contain:
A list of every financial account: loans, bank accounts, investment accounts, 401(k)s, whatever. Security experts will kill me for saying this, but I'd say this list should have the account numbers, the PINs, and the passwords.
Deeds and titles to any property you own (cars, land, etc)
Birth certificate and social security card, if you have them
Information about your will/estate plans: who has them, who the executor is
Funeral instructions (if any; mine are "cheapest coffin you can find")
A list of your major recurring expenses (so people know which bills to pay)
Start by putting this in a drawer; eventually, you should move this to a safe-deposit box, and tell whoever's likely to be taking care of your final details where to find the key. This should only take you an hour--if it takes you longer than that, well, you really needed to get these documents while you could find them anyway.
3. Buy life insurance If you're single, you don't need this unless you have a kid or someone else depending on you--your job usually offers you enough to bury you. If you're married, I think you do need a little, even if you don't have kids. Married life is usually built on the expectation of two incomes: a mortgage (or lease), the cars, all sorts of other recurring expenses. At a minimum, make sure your partner will have enough to bury you and pay off any outstanding debt--including not only mortgages and cars, but credit cards and student loans in their name alone, if you own property. You don't want to have to hassle with someone coming after their half of the house or car to pay off their unsecured debt. Obviously, if your partner is at home, or makes very little money, you're also going to want to replace some of your income.
You do not want "whole life" insurance, "return of premium" or any other product that promises you to give you some or all of your money back--all this is is a savings vehicle with bad rates of return, bundled with expensive term life insurance. Buy a simple term life policy for 20 or 30 years--long enough for you to accumulate enough assets to take care of your partner if you die. You can compare rates online or mosey down to your local insurance office, but either way, this shouldn't take you too long provided that you resist the blandishments of insurance agents who will attempt to upsell you "features" you don't need. Stand firm, buy term.
4. Cancel stupid recurring expenses Remember when you thought you'd try Stamps.com? How about that credit monitoring service you signed up for eighteen months ago? The dual subscriptions to Netflix left over from before you moved in together? For many of you, I am sad to say, your gym membership also falls into this category.
Whatever it is, if you haven't used it in three months, cancel it. Cancel it whether or not you think you should be using it. You can always rejoin the gym after you've developed a burning desire to actually go. With the hundreds of dollars you will save between now and then, you will easily be able to afford any re-initiation fees.
5. Ramp up for retirement Unless you are already at the legal maximum, increase your 401(k) contribution by 1% of your income. Unless you are already pinching pennies so hard that Abraham Lincoln is actually screaming in pain, you can afford to put an extra 1% of your pre-tax income into your 401(k). Then every time you get a raise, you increase your contribution by another 1% until you hit the legal limit ($16,500) or 15-20% of your income. Almost painless, and you'll feel a lot safer in retirement. (Of course, if you want to save faster, you can--try 2% or 3%).
6. Start Saving If you don't have an emergency fund, you need one. Here's how to do it so that you almost won't notice: set up an automatic transfer into your savings account from every paycheck. Figure out how much can you afford, but even if it's only $25, transfer it from every paycheck, and resolve not to touch that money unless it's an actual emergency. (Emergency: my car won't start. Not an emergency: I really need a break, so I'm going to the beach for a week.)
The ideal way to handle this is to have a separate account that isn't linked to your other bank accounts, and to have the transfer done as part of your auto-deposit. That way, you never see the money--and I think you'll be surprised to find that you don't much miss it. But if you don't want to go to the trouble, you can do this with your regular savings account, as long as you're resolved not to touch the money in that account for anything but an emergency: just use online banking to do a recurring transfer on the same day as your paycheck hits the account.
Over time, increase the amount that you're saving. Eventually you'll have a tidy nest egg, and because the money was never in your checking account, you won't have been tempted to spend it on incidentals.
7. Rebalance your portfolio If you already have substantial assets, it's time to make sure they're correctly structured for your priorities. Are your mutual funds allocated the way that you want them, or over time, has one grown faster than the others, leaving your portfolio lopsided (many companies now automatically rebalance, but you should check.) You should also be thinking about your portfolio's life-cycle. If you're in your fifties, you should already be transitioning some of your money to bonds.
I know what you're going to say: you'll never be able to retire at those kinds of returns. My response is a piece of wisdom that I picked up from my driving instructor: "If you left late, you're going to get there late." Trying to flout that simple equation only gets you in trouble. Just as it's a bad idea to race through red lights in the hopes of making up the lost time, it's a bad idea to leave your assets in 100% equity because you're hoping that higher returns will still let you retire in comfort at 65. Risking destitution now is just compounding your earlier planning errors.
8. Make a Will If your finances are pretty simple, you can do this in half an hour with something like Quicken Willmaker, which took Lifehacker half an hour. LegalZoom will also do it for you for a pretty modest fee. If your finances are complicated--well, okay, this won't take under an hour, and you need a lawyer. But if your finances are complicated, you really need a will. If it freaks you out too much to meditate upon your own death, pretend that you are preparing this will so you can drop out of sight and assume your new identity as Agent 007 of Her Majesty's Secret Service.
9. Fix your withholding Are you looking forward to a nice big refund from the IRS this year? Don't look so happy--that refund means that you made the government an interest-free loan for most of the year. And if you're like many freelancers, and you owe the government a hefty chunk, then you may be liable for interest and penalties.
The easy way to fix either problem is to adjust your withholding. HR can help you do this. If you're getting a big refund every year, raise your exemptions; if you're having to pay, lower them. (If they're already as low as they can get, look at what you owe this year, adjust for what you'll owe next year . . . and start making estimated payments every quarter.)
10. Shop for better deals Can you get a better interest rate on your credit cards? How about your bank accounts? You don't have to follow through, if you decide thePITA factor isn't worth it. But it's worth taking fifteen minutes on the web to find out. Also worth doing: threaten to cancel your cable. You don't have to actually do it--though with Netflix and Hulu and Amazon Prime's new subscription service, it's possibly worth it. But if you call to cancel, they'll usually offer you a better deal.
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
“Here is what I would like for you to know: In America, it is traditional to destroy the black body—it is heritage.”
Last Sunday the host of a popular news show asked me what it meant to lose my body. The host was broadcasting from Washington, D.C., and I was seated in a remote studio on the Far West Side of Manhattan. A satellite closed the miles between us, but no machinery could close the gap between her world and the world for which I had been summoned to speak. When the host asked me about my body, her face faded from the screen, and was replaced by a scroll of words, written by me earlier that week.
The host read these words for the audience, and when she finished she turned to the subject of my body, although she did not mention it specifically. But by now I am accustomed to intelligent people asking about the condition of my body without realizing the nature of their request. Specifically, the host wished to know why I felt that white America’s progress, or rather the progress of those Americans who believe that they are white, was built on looting and violence. Hearing this, I felt an old and indistinct sadness well up in me. The answer to this question is the record of the believers themselves. The answer is American history.
In 1992, the neuroscientist Richard Davidson got a challenge from the Dalai Lama. By that point, he’d spent his career asking why people respond to, in his words, “life’s slings and arrows” in different ways. Why are some people more resilient than others in the face of tragedy? And is resilience something you can gain through practice?
The Dalai Lama had a different question for Davidson when he visited the Tibetan Buddhist spiritual leader at his residence in Dharamsala, India. “He said: ‘You’ve been using the tools of modern neuroscience to study depression, and anxiety, and fear. Why can’t you use those same tools to study kindness and compassion?’ … I did not have a very good answer. I said it was hard.”
New data shows that students whose parents make less money pursue more “useful” subjects, such as math or physics.
In 1780, John Adams wrote a letter to his wife, Abigail, in which he laid out his plans for what his children and grandchildren would devote their lives to. Having himself taken the time to master “Politicks and War,” two revolutionary necessities, Adams hoped his children would go into disciplines that promoted nation-building, such as “mathematicks,” “navigation,” and “commerce.” His plan was that in turn, those practical subjects would give his children’s children room “to study painting, poetry, musick, architecture, statuary, tapestry, and porcelaine.”
Two-hundred and thirty-five years later, this progression—“from warriors to dilettantes,” in the words of the literary scholar Geoffrey Galt Harpham—plays out much as Adams hoped it would: Once financial concerns have been covered by their parents, children have more latitude to study less pragmatic things in school. Kim Weeden, a sociologist at Cornell, looked at National Center for Education Statistics data for me after I asked her about this phenomenon, and her analysis revealed that, yes, the amount of money a college student’s parents make does correlate with what that person studies. Kids from lower-income families tend toward “useful” majors, such as computer science, math, and physics. Those whose parents make more money flock to history, English, and performing arts.
Most adults can’t remember much of what happened to them before age 3 or so. What happens to the memories formed in those earliest years?
My first memory is of the day my brother was born: November 14, 1991. I can remember my father driving my grandparents and me over to the hospital in Highland Park, Illinois, that night to see my newborn brother. I can remember being taken to my mother’s hospital room, and going to gaze upon my only sibling in his bedside cot. But mostly, I remember what was on the television. It was the final two minutes of a Thomas the Tank Engine episode. I can even remember the precise story: “Percy Takes the Plunge,” which feels appropriate, given that I too was about to recklessly throw myself into the adventure of being a big brother.
In sentimental moments, I’m tempted to say my brother’s birth is my first memory because it was the first thing in my life worth remembering. There could be a sliver of truth to that: Research into the formation and retention of our earliest memories suggests that people’s memories often begin with significant personal events, and the birth of a sibling is a textbook example. But it was also good timing. Most people’s first memories date to when they were about 3.5 years old, and that was my age, almost to the day, when my brother was born.
For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?
1. Youngstown, U.S.A.
The end of work is still just a futuristic concept for most of the United States, but it is something like a moment in history for Youngstown, Ohio, one its residents can cite with precision: September 19, 1977.
For much of the 20th century, Youngstown’s steel mills delivered such great prosperity that the city was a model of the American dream, boasting a median income and a homeownership rate that were among the nation’s highest. But as manufacturing shifted abroad after World War II, Youngstown steel suffered, and on that gray September afternoon in 1977, Youngstown Sheet and Tube announced the shuttering of its Campbell Works mill. Within five years, the city lost 50,000 jobs and $1.3 billion in manufacturing wages. The effect was so severe that a term was coined to describe the fallout: regional depression.
The singer’s violent revenge fantasy was intended to provoke outrage, and to get people to talk about her. It succeeds on both counts.
Of all the scandalized reactions to Rihanna’s music video for “Bitch Better Have My Money,” my favorite comes, as is not surprising for this sort of thing, from the Daily Mail. Labelling herself in the headline as a “concerned parent” (a term to transport one to the days of Tipper Gore’s crusade against lyrics if there ever was one), Sarah Vine opens her column by talking at length about how so very, very reluctant she was to watch Rihanna’s new clip. Then she basically goes frame-by-frame through the video, recounting her horror at what unfolds. “By the time it had finished, I wondered whether I ought not to report [Rihanna] to the police,” Vine writes. “Charges: pornography, incitement to violence, racial hatred.”
Gentrification is pushing long-term residents out of urban neighborhoods. Can collective land ownership keep prices down permanently?
AUSTIN, Tex.—Not long ago, inner cities were riddled with crime and blight and affluent white residents high-tailed it to the suburbs, seeking better schools, safer streets, and, in some cases, fewer minority neighbors.
But today, as affluent white residents return to center cities, people who have lived there for years are finding they can’t afford to stay.
Take the case of the capital city of Texas, where parts of East Austin, right next to downtown, are in the process of becoming whiter, and hip restaurants, coffee shops, and even a barcatering to bicyclists are opening. Much of Austin’s minority population, meanwhile, is priced out, and so they’re moving to far-out suburbs such as Pflugerville and Round Rock, where rents are affordable and commutes are long.
The outcome of Sunday's referendum was as much a rejection of an ongoing policy as it was disapproval of the Eurogroup's bailout proposals.
Greece is now in uncharted territory. The final tally of Sunday’s referendum had 61 percent of Greeks voting“no” and 39 percent “yes” on whether or not to approve the current bailout plan from Eurogroup leaders. The outcome was a victory for Prime Minister Alexis Tsipras, who had strongly urged citizens to reject the deal—but now Greece must return to the negotiating table to discuss a new plan with its creditors.
On Monday, Greece’s finance minister Yanis Varoufakis quit, believing that negotiations might proceed more smoothly if he was absent. He will be succeeded by Euclid Tsakalotos, Greece’s deputy foreign minister who also served as the coordinator of the negotiations between Athens and its creditors. Varoufakis posted a statement on his blog that makes clear what Greece is looking for from its creditors: “It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution—to an agreement that involves debt restructuring, less austerity, redistribution in favor of the needy, and real reforms.”
The unwillingness of the former secretary of state to take questions from the press contrasts sharply with Jeb Bush’s marked affinity for public disclosure.
Howard Kurtz reported on Sunday night that the Hillary Clinton campaign has decided to open itself to more press interviews. Kurtz quoted the campaign’s communications director, Jennifer Palmieri: “By not doing national interviews until now, Palmieri concedes, ‘we’re sacrificing the coverage. We’re paying a price for it.’”
Meanwhile Jeb Bush chatted July 2 with the conservative website, the Daily Caller. The Daily Caller interview broke an unusually protracted no-interview period for Bush. It had been more than two weeks since he appeared on the Tonight show with Jimmy Fallon. Bush spoke that same day, June 17, to Sean Hannity’s radio show and ABC News. Five days earlier, he’d spoken to Germany’s Der Spiegel—altogether, five interviews in the month of June. That brought his total, since the beginning of February, to 39, according to the Bush campaign.*