I have always thought that the parenting sub-genre of personal finance was a bit odd. Yes, I recognize that for many of us kids are a big part of life, and anything that is a big part of life is a big part of personal finance. But there is more to it than that.
The parenting sub-genre is not just about saving money on school supplies. When people talk about their offspring and personal finance there is at least a subtext of teaching the next generation valuable lessons that, it is implied, will keep them from being as screwed up as their elders. Good luck with that.
A case in point is an overwrought piece at the WSJ Is It a Harmless Gift…or Is It an Indulgence? Now, for the sake of argument, I am willing to concede that there could be such a thing as a harmful gift for a child. For example, a shotgun or a bottle of bourbon, or both, for somebody too young to appreciate the dangers of misuse could end very badly.
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A reader sent me a link to a tool published by ING. Ingyournumber.com asks for six simple inputs and spits out, with clever animation, your “number,” that is, the dollar amount you will need at the start of retirement.
The six inputs are your current age, martial status, current income, planned age of retirement, desired annual retirement income, and through what age you want to have income. (In other words, how long you expect to live.)
I can immediately see why they need the last three, but the first three are mysterious. My Money Blog wrote about this tool in September and attempted to reverse-engineer the inputs. His theory on the current age input is that it is used to work out how many years you have until retirement, which is then used to adjust your retirement income needs for inflation. Apparently, all inputs are assumed to be in 2010 dollars.
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The latest manufactured outrage to fill the media and blogosphere is that Social Security will not have a cost of living adjustment in 2011. This is only the second time this has happened in the 35 years that cost of living adjustments (COLAs) have been in place. The other time was in 2010.
The AP led off its reporting on this tragedy with:
More than 58 million retirees and disabled Americans will have to go another year without an increase in their Social Security benefits, the government is expected to announce this week.
The blog WalletPop, always a little more colorful, started its post thusly:
The prediction from scholars that the Social Security Administration will announce zero cost-of-living adjustment, or COLA, to Social Security recipients in 2011 is a blow that many older and disabled Americans can ill-afford.
I think that they meant that the lack of a COLA, not the prediction of one, is an ill-affordable blow. But apparently, it is an even wider problem.
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Time to follow up on a few topics I have written about in the past and mention a few more tidbits not worthy of entire posts.
On Friday, the Consumer Product Safety Commission recalled another half million electrical DIY books to add to the million or so recalled from the same publisher in January. Some of the books were originally published in the 1950s. No explanation of why this batch was overlooked nine months ago. Also still no word on what, exactly, is wrong with them.
I had some fun with this in January, but darker thoughts are now creeping into my head. Is it just me, or is anybody else uncomfortable with the idea of a government agency recalling “dangerous” books?
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Yesterday WalletPop posted 10 Dumb Reasons to Take Out a Loan. Oh, how I like list posts. Ideas homogenized into orderly little chunks. It’s like blog dim sum. Or sushi. Or maybe Chicken McNuggets.
I am too much of a fussbudget not to point out that three of the listed items are not dumb reasons to borrow but dumb ways to borrow. Still, I think I can come up with ten easy-to-digest responses. Here goes.
1. Buying a Timeshare. I have to agree that buying a new timeshare, that is, from the developer, is probably always a bad idea. (On the other hand, buying one used, from some other sap who bought new and now will take any reasonable offer, sounds like an interesting idea to me. I’ve never done it.)
But does borrowing the money to buy a timeshare make it worse? I don’t see how. Indeed, once you set aside the foolishness of buying the thing, a loan to do it seems quite reasonable. The developer may provide financing on special terms and I think that under some circumstances the interest is tax deductible.
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