What You Shouldn't Live Without...

If you guessed health insurance, you are correct. In the grand scheme of things, I'd group life's needs into a pyramid: The first and most critical level includes food, clothing and shelter (including utilities). The second level contains health insurance, renter's or homeowner's insurance and disability insurance (but if you have to choose one it should be health). The third level includes useful wants like cell phones, car, gym memberships, cable/Internet, etc. The fourth and final level consists of fun -- vacations, wine and dine, special clothing, gear, gadgets and the like.

The problem is that too many people forgo health insurance. There are a myriad of excuses -- "I'm healthy," "I'm young," "it's expensive", etc. If you can afford anything in my level 3, you should most definitely have health insurance. (So if you have a car and cell phone but not health insurance, your priorities are very misaligned.) Obviously there are some who do not have the buying power to get past level 1 and unfortunately that is outside the scope of this post.

Most of us now receive health insurance through our employers, who are typically paying a surprising dollar amount to cover us. But it hasn't always been this way. During World War 2, employers started offering it as a benefit to attract employees and get around wartime wage controls. This can make it difficult to leave a company or lose a position.

If you are self-employed or not currently working, you need to find the best plan for you. In general, it's a spectrum -- the most flexible plans are the most expensive (think PPO) the managed plans are less so (think HMO) and high deductible policies, which cover only catastrophic problems (think hospitalizations and major diseases), typically cost the least. Different plans offer varying levels of services and have specific policies regarding co-pay, deductible, coverage, maximum out of pocket, and premiums.

The key with choosing the right health insurance is figuring out the best option for you given your circumstances including budget, health, and any pre-existing conditions and discussing the policy fine print. If you have a working spouse, it is often possible to be added on to his/her policy. If you are solo, you may be able to get discounts through a member organization such as the small business administration, a credit union, university, etc.

It definitely pays to shop around when researching health insurance. A good place to start is this site, which offers a range of plans for individual, family and small business shoppers. Make it a major priority to attain health insurance if you're one of those LMF4HMW readers who has a closet full of shoes but would be devastated by a hospital admission for a broken leg from tripping while wearing stilettos.

Disability Insurance Primer

Insurance. A less than fun topic with potentially debilitating consequences for avoiding it. Anything involving "what if" scenarios is tough given the normal human desire to avoid challenging topics and tendency to think that "it won't happen to me".

While uncomfortable, insurance discussions are both necessary and should provide a sense of relief given the act of creating a solid plan that answers those "what if" questions. Disability insurance covers you in the event that you become disabled and unable to work. Sometimes a disability is temporary (i.e., there is an illness or accident but recovery is possible); at others it fundamentally alters your lifestyle and ability to work in the future.

The main question to ask is could live without a pay check if you became disabled? And for what amount of time? For a reader who has a hefty trust fund or is supported by her husband's lucrative job, the answer is likely "no". (Although her husband should most definitely answer yes.) For many LMF4HMWs, however, disability insurance is a both a necessary evil and a very smart move.

The good news is that many employers offer a policy as an additional benefit. Sometimes it is automatic; at others you need to opt in. If you are covered, the next step is to figure out the amount of coverage, which is often less than you would truly need -- for example, 60% of your salary. With a supplemental policy, you can cover more, closing the income gap, but no policy will cover 100%. (This would remove any incentive to recover, right?)

Another important aspect of a disability benefit is the coverage time frame, which is typically a set number of years or until retirement. You should also figure out if there is a tiered system whereby you have short-term coverage for the first weeks or months and then long-term coverage, and what the payment differences are, if any. The amount of time for which you are seeking additional coverage will affect the policy premium, so if you have adequate short-term through work, there is no reason to double up with supplemental.

For the pioneering self-employed, the only option is an individual policy. You'll want to be sure it adequately addresses short-term needs, if any (perhaps you have cash savings which could cover these), and long-term benefits.

Below are some websites on which to do some initial research:
http://4-disability-insurance-quotes.com/
http://www.disability-insurance-update.com/

In closing, I may be pointing out the obvious, but the time to seek coverage is before there is a problem -- while you are healthy and working!

WINE PAIRING: How about a zippy Garnacha, A.K.A. "Grenache", the most widely planted grape in Spain and a major contributor to Rioja. With black fruit flavors and toasty notes common from oak aging, they are usually best enjoyed in their healthy youth.

Program Interruption...

DISCLAIMER: If you aren't mad when you watch the below linked video, you are seriously deranged. And may suffer from "over feeling syndrome", lack of logical reasoning, and general inability to separate ideals from reality.

This week I'm supposed to focus on disability insurance. While it's an important topic, I just can't shake one of the more stupid and shocking comments I've heard from a reporter in the last year. While driving to a meeting listening to Portland area's more conservative (yes, that's a rarity on the West Coast) morning radio show, a "financial reporter" commented that he "wasn't sure how to read the economy given conflicting data. He went on to offer surprise that "despite gains in the Dow Jones, housing foreclosures are at a high".

There are so many flaws with this report that I'm not sure where to begin. First and in general, economic reports tend to be backward looking -- i.e., they report on findings, or what has been viewed in the past, so therefore they aren't necessarily indicative of future performance. Second, he tries to base economic outlook on two uncorrelated measurements -- the DJIA, a poorly constructed index measuring performance of 30 stocks (hardly representative of the US economy), and housing foreclosures, a problem exacerbated by over zealous lending policies and... you didn't guess it... uber liberal policies that increased in the Clinton era but began years earlier... (FYI, I don't post this link as a political statement, just providing some background and another angle that by the way never was and never will be reported in the mainstream media).

As someone who has lived abroad in one of the world's more liberal countries -- France, I'm still dumbfounded on an almost daily basis when I watch French News and see a less biased, more fact-based reporting style in the media. Now I'm not blaming the US media for problems -- that's too generalist and doesn't recognize the good reporting that is done, but I am arguing that politically, we tend to have one view and that anything else is "fringe" and relegated to the Fox network.`

I'm not blogging as a politico but I am suggesting that we all take responsibility for the news and educate ourselves so that stupid, uneducated reporting -- whether it be on conservative, non-partisan, or liberal channels be recognized as such.

WINE PAIRING: Nada. we all need to sober up to this problem. Why is it that math, science, art and English are required but that someone can be graduated from high school and college without any financial education?!!

Life Insurance

I recently heard yet another story of a family's tragedy being compounded due to lack of life insurance coverage. In this terrible story, a father committed suicide, leaving his wife and son without a policy and piled high with debt. I don't want to get into a post about the morality of suicide, but I do want to use this example to highlight the importance of insurances in a several part series. Today's post is on life insurance.

A LMF4HMW reader may or may not have a need for life insurance depending on the stage of life she's enjoying. When I was single, without children and had no debt, I had no need for life insurance. (My 401(k) assets would have covered my debts and funeral costs.) Since I am now married (still no kids) and contributing to a household, I should consider a life insurance policy if my husband would suffer financially should I pass (i.e., his income alone wouldn't cover the mortgage, etc.). At this point it still doesn't make sense for us, but every situation is different.

The time to truly consider life insurance is when a family welcomes a child so that should the unthinkable happen, there are ample funds available. (There are exceptions if a significant amount of wealth has already been accumulated -- i.e., the child has a trust fund, but for most people that's sadly not the case!) Another case would be having a dependent who isn't a child such as a sibling or parent. There are a multitude of myths surrounding life insurance, one being that you "should get life insurance while you're young" since it's less expensive. While the statement is technically true, on this note I would have paid into a policy for the past 10 years which would have easily rendered any savings in my 30's moot.

There are two basic types of life insurance, whole and term. Whole is a combination of insurance plus an investment. Upon the death of the holder, the contract will pay the stated amount. The investment portion may be borrowed against or used in other ways. Term life insurance has a duration limit on the policy period and pays the amount unless it first expires. Some term policies will let you renew. The key with all types is to evaluate your particular situation and needs -- here's a good starter article.

Many insurance purveyors will try to sell you whole policy stating that having an investment plus insurance policy is a better benefit. The truth is that these are much more expensive policies and that insurance needs change over time. The key is buying what you need - not what someone is trying to sell you. For most people, term life insurance is all that is needed.

Dave Ramsey, a bright and straight-talking radio show host, has a website recommending endorsed local providers. Check it out and call someone this week to discuss your needs:
http://www.daveramsey.com/sa/insurance/

Next we'll cover disability insurance.

Another Mark of Brilliance!

"... Raising taxes at any time risks economic damage, but never more so than during recessions. Higher taxes shrink the return that investors and workers receive in exchange for their risk-taking, creativity, and productive efforts. So the inevitable consequence of higher taxes is less investment, entrepreneurship, and work.

During normal or booming economic times, growing demand from consumers -- and investors' eagerness to invest -- means that higher taxes are more easily endured. It's not that raising taxes even during boom times doesn't discourage some risk-taking and entrepreneurship; it does. But the general good health of the economy is often sufficient to swamp the ill consequences of higher taxes.

In bad economic times matters are very different. Businesses are losing customers and investors are sitting on the sidelines. Higher taxes, by cutting even further into businesses' falling profits, only fuel more economic pessimism. During recessions, there's no general economic vibrancy to balance out the profits lost to higher taxes. So raising taxes only amplifies entrepreneurs' and investors' pessimism.

Indeed, raising taxes during a recession likely does more than amplify producers' pessimism only for the duration of the downturn. By signaling to entrepreneurs and investors that the government is economically tone-deaf -- by revealing the government to be desperate to maintain its revenue stream even when many of the rest of us must struggle with reduced incomes -- raising taxes during a recession tells the world that the tax-addicted government is especially unfriendly to markets...

As the late Nobel economist Milton Friedman pointed out, 'No one spends someone else's money as carefully as he spends his own.'"

This sheer brilliance came from Donald Boudreaux in the Richmond Times Dispatch. I certainly can't say it better so I'll offer a brilliant wine pairing: a cool, crisp New Zealand Sauvignon Blanc, brilliant yellow straw color, perhaps with some lime green tints, and a refreshing taste of citrus, grapefruit and perhaps white flowers!

Want to Stimulate Job Growth?

THEN CUT CORPORATE TAXES! Who reading knows what the U.S. corporate tax rate is these days? Are you guessing 25%? maybe 30%? Wrong.

Next question: how high is our rate relative to other similar competitive and developed countries? Think it's comparable? Guess again.

Out of countries belonging to the OECD, the Organization for Economic Co-Operation and Development, the U.S. has the second highest corporate tax rate at 39.1% after Japan's 39.54%! Nearly 40% in taxes just to create jobs, goods and services!

Lots of talk these days about "stimulating the economy", but mostly action that is doing just the opposite. Keeping corporate taxes high, or disincentivizing job creation, for one. Interestingly, most OPEC countries, even the most socialist leaning, have been cutting their corporate tax rates. That, along with allowing ours to creep up, is how the U.S. ended up on the wrong side of the spectrum.

Further, there's lots of talk in our country right now about NEW taxes, and not so much about lowering taxes. Most often, the debate is about which sized "man" to tax -- the "big man", the "middle class man" or the "least advantaged man". Who's looking out for the very large companies that are paying the bulk of the taxes in the country (i.e., much more than individuals relatively)?!!

How can you continue to raise taxes on the very people creating jobs and ask them to create more? In the great words of Will Ferrell, "I feel like I'm taking crazy pills!"

Wine Pairing: Grab a Gruner (i.e., Gruner Veltliner) -- these crisp, citrus prominent Austrian white beauties are not only delicious, but support a country with a much lower corporate tax rate of 25%!

You Know it's Bad When the French...

are making fun of your tax policies! Today, I read an article in France-Amerique, "To promote tourism, the Americans want to... tax tourists".

The Travel Promotion Act of 2009, currently a Senate bill, would tax each U.S. visitor $10 and then use the funds to promote the U.S. as a choice tourist destination. To help them, since I'm a marketing professional, I've offered a complimentary sample advertising campaign below:

Scene imagery: Goofy, fat American in jeans and tennis shoes pictured at one of our finest cuisine destinations, a drive-thru.

Copy: "Hey all y'all foreigners, we really want your tourism dollars, so please come visit! Be sure to speak English 'cuz if you don't, we'll just talk louder. Also, try not to be shocked at how big we are -- we're not fat, we're just big boned.

You're going to have so much fun here. Oh yeah, one more thing -- we've designed a program to promote our country that, well... you're going to pay for. See you soon! "

This is like me invoicing my clients for my marketing and promotional costs. Very, very stupid. Shocking, in fact. What could possibly be more stupid than taxing the very tourists you're trying to attract?!! The only explanation that I can muster is a "miscommunication." Perhaps the conversation went something like this:

Senator X-D: "My constituents are suffering decreased business and civil revenue due to a decline in tourism. We should figure out a way to increase tourism... so I can get re-elected. Uh... did I say that last part out loud?"

Senators Y-D, Z-D, A-D and B-D: "Yeah, we just heard our favorite word, 'increase'! This is perfect: we can raise tax revenue without taxing our constituents! What could be wrong with that?"


I love how the article author writes (translated, of course), "The US Travel Association doesn't find it ironic that it's trying to finance a campaign with dollars from the very people it's trying to attract. Instead, it insists that other countries are doing it so they should, too." Did anyone actually determine if this worked in those countries before proposing it? Possibly consider offering any value-add to those coming here? Here's the scarier question: do they even care?

I smell yet another typical big government, big spending move to create yet another office employing people who aren't compensated based on performance. They just spend -- they don't have to create a budget and likely have no accountability for results.

Bottom line: I stand by my recommendation that all running for office (i.e., using our tax dollars) should have to have taken and earned an A in accounting, finance and economics before becoming eligible.

Wine pairing: French rosé, of course! It's hot and this is the perfect summer sipper. Pair it with some olives, Parmesan cheese and a pretty sunset.

Business Meal Tax Deduction Increase - Bill Introduced

There is potentially good news for small business owners and the restaurant and travel and tourism industries. Yesterday, Representative Neil Abercrombie (D-Hawaii) and Senator Daniel Inouye (D-Hawaii) introduced a bill to increase the business meal tax deduction to 80% from its current 50%.

Doing so will allow business owners to gain back more of this tax break which before 1993 was fully deductible. The bill is especially important for small businesses, who often use restaurants as mobile "offices" since many work out of their homes (some 52% including me). Furthermore, it will stimulate much needed economic activity in two sectors that have been hit hard by this tough section of the economic cycle.

Why should a LMF4HMW reader care? It is important to remember that small businesses, defined by the US Small Business Administration as having fewer than 500 workers, employ more than half of the private sector. These firms have generated 60-80% of the jobs created in the last decade. And they represent nearly 100% of the businesses in the U.S.!

Besides, people get tax credits for having kids (assuming they don't "make too much money). As long as we have this system (I'd vote for an across the board 10% flat tax where we do away with all deductions, thousands of forms and the majority of the expenses of running our current set up), we should be figuring out ways to help small business, not tax them out of business.

Your Biggest Asset and Foe When Dealing with Matters Money

Any guess as to what it is? Whether you have a high paying job? Trust fund? Good or bad childhood? Nope! It's your ATTITUDE.

I just read a truly shocking article about an ex-accountant (see picture) who stole millions of dollars from her employer winery in Canada. During the trial, she had the audacity to blame the winery for allowing her to do so given her gambling addiction and alcoholism. She even blamed the casino for allowing her to gamble!

Wow. Disgusting. Yet so prevalent in less malicious forms in our society given the move away from personal responsibility and toward entitlement. Her lawyer argued she should be excused given her issues. I argue she should be held fully accountable and given extra punishment for blaming everyone but herself.

So how does this relate to the point I'm proving? This woman chose to steal, lie and blame. Many other people choose to ask for help or simply stop being jerks. With matters money -- just like everything else in life, how you operate is largely a choice. You can choose to have a less emotional, more planned approached to the way you spend and deal with it. Or become a victim full of excuses who refuses to plan and then complains about things "happening" to you.

Instead of spending time worrying, complaining and stressing, I urge you to choose to confront your financial situation head-on in a business like matter. This is what I've been blogging about for nearly two years -- creating a plan, sticking to it, and working towards continuous improvement. While this does force you to take personal responsibility (likely my most treasured value) for your financial situation, it also frees you from the negative forces of "things happening". And the very good news is that if you face life like in this manner, you won't have problems quitting smoking, exercising, eating healthy and accomplishing the things you set out to do.

Each day we make plenty of choices. Make yours mindfully and then accept responsibility for your actions, financial and other.

Wine pairing: pick a bottle that's on sale made from a grape you've never tried before.

A Super and Simple Idea for Congress

STOP SPENDING BEYOND YOUR MEANS!!!!!!!!! (And then moping about it and blaming the rich.)

Why is it that so many businesses and individuals are able to self-regulate? Revenue and income goes down, spending decreases. Revenue and income increases, spending can increase.

I'm so unbelievably tired of all of the dire talk about "our economy in the toilet". Ever been to South Africa and seen a shanty town? Visited Mozambique, Ethiopia and Chad? Or hell, lived in Europe and paid over 50% in income taxes?

I'm still seeing people out and about -- fat (i.e., overfed) people, mostly, which is another post entirely but with a similar theme of moderation. I'm not saying it isn't "tough"out there, nor do I dispute the data regarding employment figures. My point is is a broader, longer-term societal thought.

Has anyone ever read a history book? Studied economic cycles? Bothered to think about the fact that the economy isn't a linear and positive trajectory?

I'm not arguing that things aren't tougher. My point is that the U.S. is still a damn fabulous country. I also have a few ideas that can very simply and cheaply save our country money:

1. Put a cap on medical malpractice lawsuits. (I'd rather send all ambulance-chasing "attorneys" to Mozambique or even Spain, but then we'd have to foot first-class tickets.) This is the elephant in the health care room. Physicians already have to spend about $200k NOT INCLUDING college to become licensed. It takes 10+ years from 18 to become a doctor. These folks didn't get in the business to be sketchy. No one ever said medicine was math. It doesn't always work out. This will decrease health care costs and prevent the USG from trying to make things "fair" (see thinking in idea #3 if you're skeptical).

2. Make health insurance like car insurance. Not dealt with or sold by employers or the government. Just something required and with private companies providing choices. If you want a higher deductible and lower premiums, great. If you smoke or choose to be obese, you pay more. If you choose not to pay for it and have a "lifestyle", then there are consequences. (Those truly in need can go with a temporary government style plan akin to Welfare or unemployment, with an expiration date, of course.)


3. Create a flat tax system of 10 or 20%. Period. Then be done with it. No more thousand page IRS docs. No more arguments about fairness and what is and isn't middle class. Or deduction after deduction after deduction. Why should people who rent be penalized? And why should people who have child after child be incentivized? The USG can't even adjust the AMT rates for inflation or cost of living index, so they shouldn't be trusted with defining "middle class". Everyone pays the same percent. Those with more income pay more. As fair as can be.

4. Make serving the USG an honor. Not a career. You serve a term. And you get back to doing what good Americans do -- contributing to society in something other than taking tax-payer money legislating for a "living". No black-tie affairs. No jets. No pomp and circumstance. US taxpayers should not be charged with paying for government parties. If they want to have a party, they can pay for it out of their own pockets. This is not a private company with profit and loss responsibility -- it's a "firm" that takes more money when it's losing.

5. Create incentive-based pay for government employees. Ever been to the Social Security office or post office. Enough said. Or hell, go out on a limb and PRIVATIZE everything.


Happy 4th of July! I urge you to be POSITIVE. Since sentiment also drives the market we can all do our part in taking off the party-pooper hats.

WINE PAIRING: South African Chenin Blanc.

The Dow is falling! The Dow is falling!

The obsession with the Dow Jones Index is ridiculous, much like Chicken Little's gloom and doom view about the sky and it's trajectory. The media loves to spout off reports "on the 10" regarding its every movement: "Up 2.. down 288...big gain of 100... big loss of 220..."

The wave of numbers is never ending. And it's quite common to get the movement without the total number. If the Dow Jones was 100 and it lost 50, this would be a major movement. But if it's at 10,000 and loses 50, not so interesting.

More importantly, the Dow Jones is a poorly constructed index. It is based on the trading

prices of the 30 included companies. 30. Thirty. Hardly representative of the US stock market! Five hundred companies. Furthermore, the companies trading at higher prices have a greater relative effect on its performance. Regardless of the number of shares outstanding.

A better index for measuring US stock performance is the S&P 500. It is comprised of the largest 500 equities and is based on market cap weights. This means companies are given weight based on how many shares are outstanding -- not the trading price.

The media's not too interested in delving into the S&P -- it is trading somewhere around 900 these days (versus the Dow in the 8,000 range) so the reported numbers are smaller and therefore much less interesting.

Making Money

With investing, the amount of money you make is your return -- i.e., your personal ROI or return on investment. When looking at your portfolio over a specific period of time, your amount of gain or loss constitutes your rate of return. It's rather obvious that we all want a higher rate of return. What may not be obvious are some of the factors affecting your actual or net rate of return:

1. Defining that period - some of us are as obsessed with our return fluctuations as we are with our weight. The majority of us don't need to look at our investments, especially those set aside for retirement, much more often than once or twice a year to monitor and rebalance. That's because the best practice is set a strategy of buy and hold. Daily Dow Jones fluctuations make for talking head fodder and not much else. (In next week's post I'll explain why the Dow is not even a good index.)

2. Factor in expenses - this is one of the primary reasons I'm an index fund lover. If your overall rate of return was 10% but your asset manager charged you 3%, you actually only booked a 7% gain. And if you're holding a taxable (i.e., not a retirement account), any trading you do increases this number as well. Yet another reason to buy and hold. (If you don't believe me, have you ever heard of a guy, Warren Buffet?)

3. Account for inflation - From the example above, the 7% return is truly 5% if inflation rose 2% during the year.

4. Benchmark - it's important to define your benchmark so you have something against to gauge your success. A 10% return sounds great, but if your benchmark index returned 15%, you're actually lagging. The beauty of index funds is that the index itself becomes the benchmark. Since you're guaranteed to perform as the index does net a small fee, you'll always be on benchmark.

WINE PAIRING: For some reason a rosé just seems to have a fantastic rate of return. They're rarely more than $20, many between $10-15, and offer a refreshing bang for your buck. I associate rosé with warm days, sunsets and fresh flavors. They're best enjoyed chilled, outside and with some nibbles like olives, nuts and Parmesan cheese. There are some absolutely delicious Spanish rosés, typically made from Garnacha (Grenache). Try one!

TVM: Key Concept in Finance

TVM stands for time value of money. It is a basic finance principle stating that a present amount of money is worth more now than it will be in the future. My economics professor often used the following expression: "One dollar today is worth more than one dollar tomorrow."

The reason for the TVM is because the money you hold today has the ability to earn interest. You'd rather receive that dollar today so that you could put it in an interest bearing account and let it grow. For example, I receive $100 dollars and deposit it into a savings account earning four percent interest. A year from now, I'll have $104. So given the choice between receiving $100 today or a year from now, I definitely want it today!

Extra credit: TVM explanations like the one above are often simplified and do not take into account inflation or deflation. If, in the above example, inflation were also four percent, it would intensify the TVM concept because the $100 received in the future would actually only be worth $96.

Wine pairing: TVM can be a funky concept, so try something really different, like a Pinotage from South Africa. Pinotage is a cross between the grapes Cinsault and Pinot Noir, and often has gamey and earthy aromas and flavors mixed with bright cherry fruit. Some more available brands are Fleur du Cap, Fairview and Ken Forrester.

The Economy is not the Market

I hear a lot of people confusing the U.S. economy with the U.S. stock market. For example, two gentlemen at my gym were talking and one said, "The economy sure is unstable with these 200 point gains and losses." The other responded, "Yes, I sure wish it would recover." To a finance geek like myself, this conversation is part funny (ha, ha, he thinks the economy is the market)and part scary (so do a lot of people).

The economy is a broad collection of factors related to the production of goods and services. Its health is typically measured by economic growth (or recession) numbers, which by the way, tend to be backward looking. When measuring the real economic growth rate, we're looking at the nation's GDP (gross domestic product) from one period to another. GDP is made of of consumption (C), government spending (G), investments (I) and net exports (exports minus imports, NX). In fact, G=C+G+I-NX. (Note that I should not be confused with the stock market -- it is the measure of business spending on capital.)

The stock market is made of up of shares of publicly traded companies -- i.e., those who have sold stock to finance their businesses. The return for investing in companies is return on the investment, or the share price rising due to higher valuation. There are many different markets -- for example, based on company size (i.e., Nasdaq for smaller) or nation (Tokyo exchange). The stock market is not a measure of the economy. Stocks can do poorly in times of economic growth and well in recessions.

Wine Pairing: try a Semillon with mussels and then a Syrah with lamb. They're both very different pairings. Remember this next time you're about to confuse the economy with the market!

Save on Travel Costs

Ever since I planned a high school senior year Spring Break trip to... you guessed it, Cancun, I've been obsessed with deals on travel. In March of 1996, our group paid $700 each for round trip airfare, rooms at the Cancun Palace, and all inclusive food and beverage. While that charter flight was not the most professional or timely, the package included alcohol, so we basically flew and stayed for free!

While what constitutes a vacation for me has certainly changed in the last 13 years, the booking principles are the same: shop around and book in advance. There are of course last minute deals to be found, which is great if your travel plans are flexible, but for the purposes of this post I'm assuming they're not. (I did once book a $1300 week-long trip to St. Martin on Expedia 10 days before I left that included airfare from SFO and lodging.)

The first step is to plan your trip budget. Then how you will you spend it. Are you happier eating fabulous meals and staying in a less-than-stellar hotel? Or do you prefer upscale accommodation and like to bring take out to your room? Will you be in a place like the beach where you won't spend much time in your room, or does the property and/or location matter? What will you need? Does an apartment or home rental make sense, or is the best bet a hotel.

After you've answered these questions, you're ready to use Google to find a deal. Google might lead you directly to a booking site, or perhaps to a rental property manager. When getting price quotes, be sure to ask when payment is due, what the deposit amount is, and what extra (hidden) fees there might be. Be up front about your lodging budget -- i.e., help them help you.

If your trip requires airfare, my favorite site is Kayak. Here you can compare deals on all flights available and specify time windows. You can also set up a travel "alert" if you travel frequently to a particular area -- for example, I have one set up between Portland, OR and Oakland, CA since I'm often en route to California for work. The one thing to note is that Southwest Airlines does not display, so I advise you to check the airline site directly to see its rates as well.

If your trip is bringing you to a particular city, check out its associated travel and tourism site. For example, this site has fantastic deals in the Portland area. There are pre-pay hotel discounts that include parking, breakfast and a $75 gift card. The packages change but the idea is the same -- take advantage of deals designed to lure tourism. If there are particular sites or museums you want to visit, chances are there will be coupons included, and you can always ask.

Travel can be fun and exotic, just like a Chilean Carménère, which is this post's wine pairing! Carménèreis a "noble variety" in Bordeaux but is almost always a minority part of the blend. In Chile, it is arguably "king". Carménère is a medium-bodied wine with red fruit, spices and softer tannins than in a Cabernet Sauvignon, for example. This Casillero del Diablo is a great value from one of the bigger producers, Concha Y Toro and costs less than $10.

Planning a Wedding: the Budget

Last week I discussed wedding budgeting from the guest's point of view. Today's post is for the engaged or soon-to-be engaged LMF4HMW. According to this site, the average wedding costs roughly $20k, but the happy couple often plans to spend 50% less -- i.e., they go way over budget. You can thank "bliss", "competitive bridezilla moments", "have-to-have-it-don't-care-about-cost" lapses in judgement. And poor financial planning and management, of course.

I advise newly engaged couples to enjoy that engagement bliss before bungee jumping into the wedding planning mode. That's tough to do since everyone's second question (after "How did he propose?") is always, "Have you set a date?". Try it anyway, for at least a month!

Some couples know where they want to get married. Others are more flexible with regards to location. In either circumstance, picking the location is an important first step, as it will affect all other costs. Just as a company would get a few quotes to find out which vendors are competitive, a bride-to-be owes it to herself and her man to seek bids for all major expenses throughout the process. (A great wedding planner can be worth her weight in gold in this arena. Make sure she is really good at budgeting when you interview her!) It is common to need a deposit of up to 50% to hold a location. And so the spending begins. But before you go sending checks, create a budget. Without an overall view of the costs, you're setting yourself up to make poor financial decisions throughout the process.

Spreadsheet savvy types should open Excel and get started; for others a Word doc will do.
A line item for each cost should be inputted in the horizontal rows. Common line items are as follows: location, caterer, alcohol (if not included in the catering charge), decorations; rings, attire, entertainment, photography and videography, invitations, travel costs, honeymoon, civil ceremony costs, and wedding planner.

Other important headings should occupy the vertical columns: vendor name, point person contact information, deposit due date and amount, final payment date and amount, and notes. The beauty of Excel is that you can set up equations to the amounts paid and due, and have these cells give you a total cost.

The point of pulling together a total estimate is to get a reality check. In the bid gathering process, you are gathering information, not making major wedding decisions. Only when you have this information will you be able to choose what items are more or less important together as a couple (versus arguing about it), and create a realistic spending plan. Remember, you're spending against a budget... not adjusting the budget to fit your spending habits.

Next week I'll discuss from where this money will come and how to create it. And tips for saving.
Wine pairing: a bubbly, fresh, citrus-packed Prosecco, an Italian sparkler named for the grape that won't break the wedding budget bank.

How to Avoid Financial Drain from Weddings

So you've been contributing to (and hopefully maxing out) your 401(k), building up that emergency fund and staying out of credit card debt. Summer is coming, which for many LMF4HMW is"wedding season". Which means some serious cash outlays.

In addition to being fun celebrations, weddings can be a serious drain on your financial pockets. For attendees, there are travel costs, gifts to buy, bridesmaid frocks, shoes, jewelry and other items. For the person(s) paying, it's often an incredible investment -- the average wedding budget is $20,000. So either the the bride and groom or the family of the bride (becoming less common) are in need of some serious budgeting and financial planning.

In today's post, I'll cover the topic from the vantage point of a guest; next week I'll discuss planning and budgeting for your own wedding. (I've attended 30+ weddings in the last 8 years and paid for mine a year ago, so I know a fair amount about them.)

Between 2005-2007, I attended over 20 weddings, two of which were international! I figure I spent an average of $1000+ on each to pay for travel, gifts, and gear (you know, the bridesmaid dresses you'll never again wear). So this amounted to $20,000 in a two year period. Just for comparison sake, had I put this cash into an index fund with a 6% annual return, by 2027 I'd be sitting on $64,000.

The above figure is not mean to scare you or suggest that you stop attending weddings. (I obviously chose to spend the money on good times.) I'm simply stating the real cost of attendance. Each LMF4HMW reader will have her own set of needs and goals. The point is to approach being a wedding guest like you would smart financial planning. Know your costs, have a goal and budget, and spend wisely.

Whether or not to attend a wedding depends on a number of factors, including how close you are with the bride and groom, distance and associated travel costs, the total number of invites you receive, and of course, your particular financial situation. If you divorce yourself from the personal relationship, going into debt to attend a wedding just doesn't make sense. Sometimes, this isn't possible, so if you're going to finance wedding attendance with a credit card, just be sure to have a pay off plan. And consider this within the context of all of your other expenditures and income in that year.

Even if you do decide to attend, think about ways to cut costs. It seems that brides these days have an engagement party, shower, bachelorette party, and a wedding. Not to mention gift registries for all of them. Only a bridezilla would expect you to attend and gift for all of these, so perhaps pick the most important event if attending all of them doesn't make sense. (And if you get any grief, perhaps you should perform a friend reality check.)

If all events are local and do not require travel costs, maybe decide to buy one nicer gift and let the bride and groom know your intention. The important thing is to consider everything in context versus just saying "yes" to all and buying gifts for every occasion without adding up what you're truly spending.

To mitigate my wedding attendee costs, I did one main thing: I did not attend any bachelorette celebrations.

I'm sure there were friends who were offended or miffed that I didn't make their bachelorette parties, but I just didn't think about it. (Brides tend to get a little wrapped up in themselves so I chalked it up to "me" focus and figured it would pass.) Attending all of them would have required an average outlay of an additional $1000+ dollars for each bride. (This would have doubled the cost to attend and made my investment comparison figure $128,000!) With the number of weddings I was in and attending, it just didn't make financial sense. Period. I made it "fair" by applying my no-bachelorettes policy consistently and gently let the bride know that I was saving to attend her wedding.

The above represented my biggest cost savings. I also booked travel in advance through sites like Kayak.com and Priceline.com and avoided attending associated wedding events that weren't local. For example, if a shower was in another city, I stayed put.

Your wedding attendee situation may differ from mine -- if you live in your hometown and all events are local, participating in more of them may not substantially drive up your costs. The main point of the post is to consider the full contextual cost of attending a wedding and make sure you don't go into debt to get there!

PR Skills Applied to Your Credit Card

A tenet of effective public relations is developing mutually beneficial long-term relationships. In addition to having the ability to network and connect, there are two elements critical to securing results in the PR process: 1) create consistent, compelling positioning and messaging; and 2) promote the message continually and clearly with proof points.

Interestingly, the above advice can be used to save you money. How? By taking a measured approach to negotiating your credit card rates and loans. Read the two below scenarios and choose your plan accordingly:

Scenario 1:
Call your credit card company and demand a lower rate. Provide no justification other than "my debt is out of control" and "I'll never be able to pay this off". Get frustrated and start whimpering when the phone call is looking like a dead end. Before slamming down the phone, lament about "evil credit card companies". Get nowhere. Or perhaps get a minor reduction.

Scenario 2:
Approach attaining a lower credit card rate like pitching a great story. First you'll engage in preliminary research to determine the best rates the company is offering and gather data about your account. Then, you develop talking points for your call including the following: 1) an introductory statement; 2) brief account history with number of years as a client; 3) proof points for your being a good customer like number of bills paid on time, automatic payments you've set up and increase in your credit score; 4) casual mention of competing offers received; 5) ask for a specific reduced rate or "the company's best offer for great customers"; and 6) plan if you're request isn't granted.

Make sure to call when you are at least somewhat relaxed and after having taken a few deep breaths. As soon as she answers, repeat the customer service representative's name and immediately thank "Sally" for her time. (You're getting her on your side and creating a connection.) Go through your talking points in a calm, firm tone. Ask "Sally" if she has any questions. Then reiterate that you "want to remain a good customer" and are "interested in securing the best possible rate" given your relationship.

Synopsis:
Sally is much more likely to come back to you with an offer in Scenario two than number one. When she does, thank her again.

If she doesn't, or gives you a rate that is higher than you expected, ask her what you can do to improve your standing and when would be a good time to call back. Have her document the call and do so yourself. Follow up.

***Notice that part of approaching the rate pitch like a PR pro involves coming to the table with proof points -- your history, payments made on time, credit score enhancement, etc. If your "proof points" aren't there, work on those diligently for six months before you start the negotiation process.***

A Rock Solid Read, And Quite Possibly the World's Only Personal Finance "Beach Book"

I was recently sent the revised edition of Beth Kobliner's Get a Financial Life. Since I created this blog purely for the pleasure of writing about finance and don't accept advertising, I have zero pressure to promote. (I do that enough in my day job running a marketing communications firm.)

If there was ever a work about personal finance that could be described as a "beach book", Get a Financial Life would be it. Beth's style is zippy (my definition of to the point and fun), easy to follow and free of the financial jargon that puts even the most devoted LMF4HMW readers to sleep. This is not to say that Beth is talking down to her readers -- she well navigates the fine line of providing great explanations for key financial terms and avoiding unnecessary diatribes. From budgeting to mortgages and investing to insurances, Beth well covers all of the financial bases. And it's a fun read.

Get a Financial Life is about "personal finance in your twenties and thirties". It certainly puts Gen X and Y on a great track; however, it's also applicable to those who've been around the block a few more times. First, it covers health insurance immediately, which many personal finance books omit or cover after most readers have fallen asleep never to return again. We all need health insurance -- perhaps not the same type, but baseline high deductible coverage is crucial. Health insurance is a financial issue because without it, even your best efforts can be wiped out with a single emergency or severe illness.

Other highlights include actionable advice, crib notes and financial cram sessions. Many books tell you what you should do, but don't offer a road map regarding how. Beth does this very well, and by implementing her suggestions, you can easily pay for the cost of the book and save yourself some serious money. For example, she writes about negotiating better loan and credit card rates (yes, you can do this -- it will be the subject of an upcoming post). And provides financial work sheets like the monthly statement so that you can better understand the in- and outflows of your money.

The "crib notes" are another favorite: chapter one provides an overview of the most important items and allows those perhaps wary of financial reading to be drawn in. (I know I'm biased given my finance "hobby", but anyone who puts the book down after page 11 is really doing herself a disservice.) These crib notes continue in the form of "financial cramming", or summaries of the key points at the end of each chapter. I recommend reading the book actively, and using these cramming bullet points as check-lists (see my December 2008 posting about "Fail to Plan...) as you progress along your road to financial security.

If I had to choose an absolute pinnacle, it would be Beth's explanation and recommendation of index funds (check out my March 2008 posting professing love for them). They're cheaper (you're paying a lower expense ratio given passive management) and over time, tend to perform better than actively managed funds. She talks about finding the "index fund religion" (maybe that's why I like them so much -- they're downright spiritual in their simplicity) and puts it best when she proclaims, "The bottom line: Go with index funds."

The only area of the book I would debate is the discussion of risk and dealing with fear of loss in a 401(k). Beth acknowledges that it's "easy to panic" in a bad market with investment losses, and that timing is tough (if not impossible -- hence my borrowed saying, time in the market; not timing the market). This is true. But she offers that a reader who "feel(s) like" she's taking "too much risk... can shift to money market funds".

Moving money out of fear is not the best strategy. Doing so is basically like trying to time the market -- you think it will get worse, so you pull out. This locks in your losses, and suggests that you'll know when to re-enter. Then you're risking missing out on gains. And so an all too common mistake happens again: "Sell high; buy low". So I revert to my prior postings about hangin' tough, investing like a distance runner, making risk your BFF and most importantly, having a strategy, not a reaction based on feelings.

The above being said, Get a Financial Life is a must read for LMF4HMW readers and their male counterparts. In fact, the only people who shouldn't read it are: 1) boys who've stood you up on dates or not called when they said they would; and 2) the guy who dated me while hiding a fiancée in an emerging market.

Pair this read with an equally zippy, crisp and fun Sauvignon Blanc or Albariño. I like the Martin Codax which is easy to find (imported by Gallo) and light on Beth's budget worksheet at around $13. Both the book and the vino will be a treat oceanside!

To the Hackers Who Suck Productivity Out of Our Society

As the LMF4HMW blogger and small business owner, I have a tremendous appreciation for the benefits afforded to our world by marketplace activities. Businesses create jobs, responsibility, valued products and services and opportunities for advancement in society. They also pay taxes, which fund programs, maintain operations, and help the less fortunate. (I'm resisting the urge to be negative re federal and state spending here.)

Today, I was forced to abandon my small business -- the needs of my clients, following up on proposals written for future revenue, and my personal advancement goals (which included exercising, maintaining calm and running two important errands).

Instead, I spent the last 10 hours trying to fight off a variety of Trojan horse malware viruses installed on my computer by who knows what group of a**holes. The first hour phone call went to my cherished tech support person, who advised me to contact my Trend Micro Antivirus software. The second two hours were spent on hold and speaking to this tech team who determined that particular virus rendered them helpless. The remainder of the hours were spent on four separate calls to Microsoft where a number of scans were run and an incredible amount of support rendered. Approximately 9 hours and 45 minutes after my first phone call, I finally have access to my computer.

I figure the cost of lost productivity and potential business, lost benefits for clients (if I'd made two PR calls and generated two stories, that would represent a big promotional push for them) and my personal time is valued at approximately $5000. And there's no guarantee that the problem is fixed.

So to the people who find it entertaining to create problems for those of us who are trying to create value, I have this to say: There is no punishment strict enough. And there is a special place in hell for all of you. Just because no LMF4HMW reader would spend a moment even considering you -- I just feel hackers must be dorky men, does not give you the right to steal from us.

To my LMF4HMW readers, let this be a reminder to back up your data with a portable drive and online, have anti-virus and malware detection installed, run updates automatically if you're on Windows. Unfortunately, even if you do all of that as I did, you still may get hit. In that case, open a bottle of wine -- I'm enjoying a Dr. Loosen 2007 Riesling which is going down very smoothly -- something a little sweet to combat the tech nightmare I've just endured.

Hangin' Tough - Investment Advice from the Original Boy Band

Usually, the title of a post comes to me after I'm done writing it. But in this case, it came to me during a conversation yesterday with my neighbor, "Carole", who happens to be a very successful business woman in the tech industry.

Carole had come over to ask for help moving a piece of furniture, and we started chatting about her career. She told me that for the first time in her life, she was laid off. It is a frustrating situation, but she's not nearly as worried as I would have imagined, especially for a single mother.

This is because Carole has been maxing her 401k for some time, has plenty of emergency fund savings and a number of interviews already set up. She's been living below her means as a matter of financial course -- Carole is a veritable LMF4HMW rockstar! In fact, her main fear right now is taking her daughter out of school should she need to move for work.

I complimented her on being such a prudent financial manager, and she said, "well, if I were so good, my investments wouldn't be so far down right now. (Sigh.) I just feel like I should pull out of the market before it gets worse, but I know that this move would just lock in my losses."

Carole put it very well: 1) she feels bad (out of control, frustrated, afraid, etc.), but 2) knows changing her strategy would result in an even poorer outcome.

As a woman with 20 plus years until retirement, a strong portfolio of retirement and emergency fund savings, and a strong career ahead, Carole should take her advice net of the feeeeelings: stay put. Or as I so eloquently put it, "hang tough". Selling now will not only lock in her losses but prevent future gain.

For some reason, people can not seem to remember that they own shares in the form of funds or individual stocks (in the case of equities), and that just because the portfolio value is down, does not mean that it can not rise.

Carole doesn't have the luxury of continuing to contribute to her 401(k), but for those LMF4HMW out there who do, it's time to BUY.

Stimulating Stupidity with Socialist Style "Solutions"

It would be funny if it weren't so scary. The government handing out big stimulus checks to states and corporations who are habitually overspending and being inefficient. The government putting a moratorium on foreclosures. The government maintaining the asinine steep regulation for mark to market accounting which requires financial institutions to assign a "fair value" to assets that can be below the actual cash flow they bring.

So what exactly are we supporting and stimulating? Over spending. Propping up companies that should likely go through an extreme overhaul or fail. Artificially supporting individuals who were not good home loan candidates in the first place. Encouraging the very behavior that got us in trouble to begin with.

And why are we doing it? To avoid the unavoidable. Unfortunately, the tough part and the beauty of a free market (although it's getting less so) is that it works its kinks out. Sometimes there is a painful period afterwards. Often ugly things happen. But more often than not, a stronger reality ensues.

This type of "stimulation" is basically giving a drink to a drunk. Or handing another credit card to someone in Shop-aholics Anonymous.

I'm not exactly sure when it became okay to give everyone a participation medal. And make sure nothing uncomfortable or bad ever happened. But this mentality is digging our debt hole deeper and deeper and deeper.

The Unthinkable!

An empty glass of wine?!! Stain on your new outfit? No, it's worse... a missing or stolen laptop. According to Entrepreneur Magazine, business travelers lose 12,000 laptops annually while on the road. I know of three people to whom this has happened. A former Vice President and boss left one in a bar in NYC and luckily got it back. A colleague deplaned without his laptop and thankfully remembered after a few moments. And a small business owner left hers on a plane -- and unfortunately, it was never recovered.

While these three instances represent a mistake on the part of the laptop owner (probably due to the exhaustion of business travel lifestyle or too much beer), theft is another problem. Losing business data, exposing your personal information and major psychological and financial hassle all result. So what's a tired traveler to do? Prevent it -- there are a few good choices:

1. Adeona is a free open source software developed by WSU that can be installed on your system to track it. It's free of charge and they are about to launch a new version incorporating improvements.

2. Companies like Absolute Software and Brigadoon offer paid tracking services with annual fees.
3. Manufacturers like PCLocs sell actual leashes that may be used when in a hotel or cafe.

Wine pairing: Hmm... a safe wine? A technological wine? Nothing really comes to mind so I'll splurge on a Gigondas from France's Rhone Valley. Peppery, fruit forward, and deliciously complex. It can be a little on the pricier said, say around $20 or so, but you've potentially prevented a loss of $1000+ with laptop security so go for it!

Purchasing Power

My how we all wish we had more of it! Unfortunately, there's no quick fix for enhancing your purchasing power -- doing so requires good old fashioned hard work (education or performance for a raise or better job) or a windfall like an inheritance. There is, however, one concept every LMF4HMW reader should understand with regard to her purchasing power: inflation.

Have you ever heard people talk about the "good old days" when bread was $1 and gas was 90 cents? Even if they don't realize it, these folks are discussing inflation, or the increase in general price levels. When price levels rise, your purchasing power falls. So if you continue to make the same amount next year, but your rent or food prices rise by 3%, your purchasing power will decrease accordingly. What's most important is the relative rise in wages, not the price level per say. So if you get a 5% raise and inflation is at 3%, you're actually ahead by 2%.

Inflation is measured by an annual percentage rate and is reported in the consumer and producer price indexes. (Both are available on the Bureau of Labor Statistics website.) You might think that inflation is "bad", but it's normal in a growing economy. If there is none, there is either economic stagnation or weakening.

In addition to affecting your current purchasing power, inflation is an important factor in your future ability to spend. If your investments do not outpace inflation, you'll have decreased purchasing power. Most people make the mistake of forgetting about inflation entirely when looking at their portfolio -- the key is to look at the real rate of return (net of inflation), not the nominal rate.

Wine pairing: Gruet sparkling wine from New Mexico (yep!) is a steal at $13!

A Tech Tool that Will Save You Time & Money!

A loss of data is not only frustrating, it can be debilitating. In my business, losing all my client files and documentation would create a major and irreversible problem. Parting with my personal files would also mean the loss of cherished photos, tax information, writing, and not to mention, all the business school files I kept. (Since grad school cost me $40k, it would not be a small loss!)

So I follow a very careful protocol to secure my data that includes weekly transfers to an external hard drive, monthly disc burns for off-site storage, and now, online file storage. I searched extensively for a simply, easy to use and cost effective provider and I'm thrilled with the SOS online back up service I chose. (So is PC Magazine, which has given the company two awards of excellence.) It's simple, easy to use and cost effective.

In the event of a computer crash, fire or complete melt down, I know my data is protected. Check it out today. For $50 or less per year, it will save you sleep and money in the event of a melt down.

PS - hmm, which wine would pair with technology? I'm thinking about the clean branding of Apple, SOS, and many other tech companies. How about a clean tasting, floral and fruity Riesling Kabinett?

Online Coupons

I know, I know -- "coupons?!!" The image that comes to mind is the frumpy woman at the grocery check out with a change purse counting pennies while simultaneously digging through her large coupon bill fold. Very annoying, especially when you're trying to dash out of the store with the evening's dinner.

No worries -- the coupons I write about today are in the e-form, so you won't be "that guy" (or LMF4HMW reader as it were). So many of us are into online shopping -- it's easy, there's no parking, no wondering around, no lines, and it can be done in the comfort of your own home (or office - ha!).

Shopping online with coupons is super simple. Let's say you're looking for a birthday or baby shower gift. STEP 1: Go to one of the popular e-coupon sites like DealCatcher or CoolSavings to see if there are any deals at the moment that fit your needs. (A simple Google search will provide you with numerous coupon sites.) STEP 2: either decide to shop at e-tailers based on available deals or at least know that you've tried to save on your purchase.

Either way, you're a savvier shopper and you might save precious money which may be invested for your future!

WINE PAIRING: How about a nice fun variety like Semillon, which has lemon and fig flavors with a hint of acidity -- perfect for online shopping after brunch. The grape is best known in France and Australia. In the former, it's typically blended with Sauvignon Blanc for a very special treat.

It's "That Time of Year"

Nope, I'm not talking about the supposedly depressing time between the holidays and spring where people are tightening purse strings and lightening intakes to compensate for December's over indulgences. (By the way, is that why Valentine's Day was invented -- something cheery in the middle of the winter doom and gloom?) Nor do I mean it's time to make sure you're keeping those resolutions -- at least another week or so.

By "that time of the year", I mean an annual date with your portfolio to rebalance. Why? Over the course of 365 days, a lot will change. Some investments gain, others lose. Those that gain usually hold a higher than intended percentage of your funds; those that lose a lower amount than you'd like. For example, you decided to hold 50% US and 50% international funds. In this hypothetical year, the US did really well and those abroad declined, so now you hold 60% of the former and 40% of the latter.

Trying to "ride" the better returning assets may seem like a great idea -- why would I sell something that's doing well and re-invest in something that is lagging? The answer lies in risk mitigation. When you unknowingly stray from your intended allocation, or do so to "ride the wave", you move away from your investment strategy. And that's not recommended because it usually means you're acting with emotion -- chasing returns, or trying to avoid normal market volatility. Furthermore, the process might repeat in year two and intensify the effect.

Some advocate rebalancing every 15 months to take advantage benefits associated with sale of long term gain. I recommend every year for two reasons: 1) it's easier to remember; and 2) most LMF4HMW readers hold the majority of our investments in our retirement accounts, so we don't have to worry about tax ramifications until we're receiving distributions.

A lot of retirement accounts have handy "rebalance" buttons where all is done in a matter of a quick mouse click. In others you'll need to send in a fax or make a phone call. But in any case, it's 5 or less minutes well spent and that is time you won't spend eating or spending money!

The 403(b) Plan

Since I have a part-time gig instructing at a community college, I'm eligible for its 403(b) contribution plan. As someone who has contributed to a 401(k) for nearly 10 years, I'm familiar with the way retirement plans work in the private sector, but had to do some research on this new retirement option.

The 403(b) is defined as a TSA or tax-sheltered annuity plan for those working in the non-profit sector, including educational institutions and churches. (I usually cringe at the word "annuity" and nearly left the website as soon as I read this.) Thankfully, my interest in saving for retirement and hope that I might just be able to contribute all of my part-time earnings kept me reading.

There are three possibilities in a 403(b): 1) a retirement account for church employees; 2) an annuity contract through an insurance company; and 3) a custodial account with mutual funds. Number three is my winner! And I was very pleased to find that my vendor company of choice offers index funds.

The 403(b) and 401(k) are actually pretty similar other than the sectors they serve. The deduction is for pre-tax earnings and the contribution limits for 2009 are a cool $16,500 for those under age 59 and $22,000 for those over. In both cases, the investor owns the account -- the institution (or employer sponsor in the latter) only holds the assets and facilitates transactions. Some 403(b) plans allow for employer contributions -- sometimes matching, although sadly, mine does not do so. And just like the 401(k), there are usually penalties for early withdrawals unless the transaction qualifies under the hardship rules. Finally, when you change jobs, you need to decide whether to leave the funds in the plan, roll them into an IRA, or roll them into a new employer's 403(b). (Notice I don't mention the fourth option, taking the lump sum payment. The penalties are too stiff and most importantly, it's a RETIREMENT ACCOUNT, not a bank account! One rare exception is the LMF4HMW reader who has actually reached retirement, and depending on the balance, a lump sum may or may not be advisable.)

So if you're eligible for a 403(b), I'd recommend funding it to the maximum allowable amount. Just know that a LMF4HMW reader who works full-time in the private sector and is already contributing the maximum allowable amount to her 401(k) can not participate in a 403(b). It's a shame, but the USG doesn't want you doing that -- too much lost "revenue" for them, I suppose.

How about a nice Barbera from Italy's Piemonte to warm the soul on the cold winter nights? I particularly like the value in the Briccotondo from Fontanafredda -- a steal for $11! Nice zippy red fruit, earth, licorice and a surprising amount of depth for this price. And the powers that be even scored it at that sooo important 90 point benchmark. (FYI, if I ever open a wine shop it will be called 87 thru 89.)