Demand for mortgage loans increased last week as a troubling economic outlook led to a decline in rates, according to the Mortgage Bankers Association (MBA).
The market composite index, a measure of mortgage loan application volume, increased 1.15% for the week ending July 29, after falling for four consecutive weeks to the lowest level in more than two decades.
The refinance index rose 1.45% last week compared to the previous week. Meanwhile, the purchase index grew 0.97% in the same period.
However, compared to one year ago, borrower demand is weak. The MBA data indicates that, in comparison to the same week in 2021, the market index fell 62%. The refi index was down 82.6% in the same period, and the purchase index was 15.8% than this time last year.
“Mortgage rates declined last week following another announcement of tighter monetary policy from the Federal Reserve, with the likelihood of more rate hikes to come,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Treasury yields dropped as a result, as investors continue to expect a weaker macroeconomic environment in the coming months.”
The Fed raised the federal funds rate by another 75 basis points, to 2.25%-2.50%, on July 27, bringing more concerns about a recession in the U.S. economy.
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Consequently, purchase mortgage rates dropped to 5.30% last week, from 5.54% in the previous week, according to the PMMS survey from Freddie Mac.
The MBA’s estimate also shows that rates are falling. The average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) decreased to 5.43%, from the previous week’s 5.74%, the largest weekly decline since 2020. Jumbo mortgage loans (greater than $647,200) went from 5.32% to 5.06% in the same period.
“Lower mortgage rates, combined with signs of more inventory coming to the market, could lead to a rebound in purchase activity,” Kan said.
According to the Black Knight’s monthly mortgage monitor report, June had the record-low home price appreciation and the largest single-month increase of for-sale inventory in 12 years, showing a cool down in the housing market.
The MBA data shows the refinance share of all mortgage activity remained almost the same, from 30.7% the previous week to 30.8% of total applications this week.
The Federal Housing Administration’s (FHA) share of total applications fell 11.9% from the previous week’s 12.1%. The Veterans Affairs’s (V.A.) share of applications increased to 10.8%, from 10.6% and the United States Department of Agriculture’s (USDA) share held steady at 0.6%.
The share of adjustable-rate mortgages (ARM) applications declined from 9.1% to 8.4%. According to the MBA, the average interest rate for a 5/1 ARM decreased to 4.55% from 4.67% a week prior.
The survey, conducted weekly since 1990, covers 75% of all U.S. retail, residential mortgage applications.
The Traditional IRA and its offshoots (SEP, SIMPLE, rollover and Roth IRAs) play a leading role in helping millions of U.S. taxpayers invest for retirement. However, many IRA owners are unaware of the opportunity they have to consolidate their multiple IRAs by using a “Super IRA” strategy (most common is a rollover 401k).
An IRA consolidation strategy can lead to reduced fees and increased buying power. I’ve had several instances where an individual has had several old retirement plans from previous employers. That has included defined benefit plans, 401k’s, TSP’s, 403b’s and Keough plans. The paperwork alone was cumbersome, and consolidating has made tremendous sense.
If you like this article, please be sure to also check out 401k Tips: What Not To Do, Rollover IRAs Offer a Wide Range of Benefits, 7 Things To Know About The 2010 Roth IRA Conversion
IRA Consolidation Case Study
The following is a common scenario involving a worker (Patrick) who has changed jobs several times throughout his career. He has been diligent about saving for retirement, but his assets are scattered. An IRA consolidation strategy is suggested, and the section concludes with a three-step action plan for investors like Patrick.
Patrick’s Profile:
Frequent job changer, age 62, is approaching retirement.
He has lost track of his numerous retirement savings arrangements.
He turns to his advisor for help with simplifying his financial affairs.
During his career, Patrick has accumulated various retirement accounts but has lost track of the status of each. He is 62 years old and is thinking of retiring from his current job. He has three retirement plans with former employers [a profit sharing plan, a target benefit plan and a 403(b) plan], four Traditional IRAs, a SIMPLE IRA, two Roth IRAs, an Individual(k) plan he established when he owned his own business, and a Thrift Savings Plan he now has as an employee of the federal government.
He is also the beneficiary of his deceased wife’s nonqualified deferred compensation plan and her Traditional IRA. In an effort to simplify his life, he turns to his financial planner for help. This is a strong case for implementing the “Super IRA” consolidation strategy.
How to implement the Super IRA Consolidation strategy
Step 1: Understand the Rules
A person who owns multiple SEP IRAs and Traditional IRAs can combine them into one “Super IRA” at any time.
If the person also owns a SIMPLE IRA, he or she can transfer or roll it to a “Super IRA” after participating in the SIMPLE IRA plan for at least two years. The two-year period begins when the first SIMPLE IRA plan contribution is made to the individual’s SIMPLE IRA.
A “Super IRA” can receive ongoing SEP plan contributions and annual Traditional IRA contributions.
Ongoing SIMPLE IRA plan contributions must first be contributed to the participant’s SIMPLE IRA. If the individual has participated in the SIMPLE IRA plan for at least two years, he or she can transfer or roll over the SIMPLE IRA into one “Super IRA.” (Note: special rollover rules may apply.)
A “Super IRA” can receive rollovers of eligible assets from all types of qualified retirement plans [e.g., 401(k) plans, profit sharing plans, defined benefit plans, etc.], 403(b) plans, 403(a) plans and governmental 457(b) plans.
A Roth IRA cannot be transferred or rolled over into a “Super IRA.” Multiple Roth IRAs can be combined to create a “Super Roth IRA.” Under the Pension Protection Act of 2006, effective in 2008, participants in qualified plans, 403(b) plans and governmental 457(b) plans can directly roll over eligible plan assets to Roth IRAs if conversion rules are satisfied.
Spouse beneficiaries of qualified plans and SEP, Traditional and SIMPLE IRAs generally can consolidate their inherited accounts into their own “Super IRA.”
Step 2: Consider the Potential Benefits of a “Super IRA” Strategy
Increased buying power, which allows for more sophisticated investment strategies
One fee vs. multiple fees
Simplified investment tracking
Beneficiary organization and consolidation
Consistent service
Streamlined paperwork
Simplified retirement income planning
Step 3: Work With Your Advisor
Investors should work with their advisors to determine whether a “Super IRA” asset consolidation strategy makes sense for them.
In our scenario, Patrick’s planner asks him the following key questions:
Do you have the most recent statements from each of your retirement accounts?
What type of investments do the plans hold?
Are any of your retirement plans invested in employer securities?
Is your goal to consolidate your accounts as much as possible?
How long has it been since you first participated in the SIMPLE IRA plan?
Patrick’s goal is to consolidate as many of his retirement accounts as he can into one “Super IRA.” He obtains copies of his most recent retirement account statements to review with his advisor. He first participated in the SIMPLE IRA plan a year and a half ago. He does not hold employer securities as a plan investment.
After reviewing the statements, Patrick and his planner determine he could combine the following retirement accounts into a “Super IRA”:
Profit sharing plan
Target benefit plan
403(b) plan
Five Traditional IRAs (the four he owns outright and his inherited IRA)
Individual(k) plan
In another six months (two years after first participating in the SIMPLE IRA plan), he could transfer or rollover that balance to his “Super IRA” as well. Patrick cannot combine his two Roth IRAs into his “Super IRA,” although he could consolidate them into one “Super Roth IRA.” And he cannot roll over the nonqualified deferred compensation plan. Although he could combine the plans as outlined above into one “Super IRA,” it would be best for Patrick and his planner to carefully examine the types of investments currently held by the various plans to see if a rollover is the wisest course of action from a taxation standpoint.
For example, special tax rules apply to distributions of employer securities from qualified retirement plans. This would be case of NUA or Net Unrealized Appreciation. Keep in mind, a consolidation strategy may not always be suitable. An advisor, or a tax or legal professional, can help identify the best course of action to incorporate the best investment services.
Generally speaking, value stocks are shares of companies that have fallen out of favor and are valued less than their actual worth. Growth stocks are shares of companies that demonstrate a strong potential to increase revenue or earnings thereby ramping up their stock price. The terms value and growth refer to both two categories of stocks and two investment “styles” or approaches of investing in stock.
Each style has pros and cons. When value investing, investors can buy shares or fractional shares of a company that has strong fundamentals at bargain prices. However, investors must be careful not to fall in a “value trap”—buying stocks that appear cheap, but are actually trading at a discount due to poor fundamentals.
What Are Value Stocks?
When investors hunt for value stocks, they are looking for stocks that are relatively cheap, unfashionable, or that they believe aren’t receiving a fair market valuation. Value investors try to identify value stocks by examining quarterly and annual financial statements and comparing what they see to the price the stock is getting on the market.
Investors will also look at a number of valuation metrics to determine whether the stock is cheap relative to its own trading history, its industry, and other benchmarks, such as the S&P 500 index.
For example, investors often look at price-to-earnings (P/E) ratio, which is the ratio of price per share over earnings per share. Some experts say that a value stock’s P/E should be 40% less than the stock’s highest P/E in the previous five years.
Investors may also look at price-to-book, which is the price per share over book value per share. A stock’s book value is a company’s total assets minus its liability and provides an estimate of a company’s value if it were liquidated.
Value investors are hoping to buy a quality stock when its price is in a temporary lull, holding it until the market corrects and the stock price goes up to a point that better reflects the underlying value of the company.
What Could Make a Stock Undervalued?
There are a number of reasons that a stock could be undervalued.
• A stock could be cyclical, meaning it’s tied to the movements of the market. While the company itself might be strong, market fluctuations may temporarily cause its price to dip.
Recommended: Cyclical vs Non Cyclical Stocks
• An entire sector of the market could be out of favor, causing the price of a specific stock to dip. For example, a pharmaceutical company with an effective new drug might be priced low if the health care sector is generally on the outs with investors.
• Bad press could cause share prices to drop.
• Companies can simply be overlooked by investors looking in a different direction.
What Are Growth Stocks?
Growth stocks are shares of companies that demonstrate the potential for high earnings or sales, often rising faster than the rest of the market. These companies tend to reinvest their earnings back into their business to continue their company’s growth spurt, as opposed to paying out dividends to shareholders. Growth investors are betting that a company that’s growing fast now, will continue to grow quickly in the future.
To spot growth stocks, investors look for companies that are not only expanding rapidly but may be leaders in their industry. For example, a company may have developed a new technology that gives it a competitive edge over similar companies.
There are also a number of metrics growth investors may examine to help them identify growth stocks. First, investors may look at price-to-sales (P/S), or price per share over sales per share. Not all growth companies are profitable, and P/S allows investors to see how quickly a company is expanding without factoring in its costs.
Investors may also look at price-to-earnings growth (PEG), which is P/E over projected earnings growth. A PEG of 1 or more typically suggests that investors are overvaluing a stock, while PEG of less than one may mean the stock is relatively cheap. PEG is a useful metric for investors who want to consider both value and growth investing.
Investors jumping into growth stocks may be buying a stock that is already valued relatively high. In doing so, they run the risk of losing a potentially significant amount of money if an unforeseen event causes prices to tumble in the future.
How Are Growth and Value Strategies Similar?
While growth and value investing are two different investment strategies, distinctions between the two are not hard and fast — there can be quite a bit of overlap. Investors may see that stocks listed in a growth fund are also listed in a value fund depending on the criteria used to choose the stock.
What’s more, growth stocks may evolve into value stocks, and value stocks can become growth stocks. For example, say a small technology company develops a new product that attracts a lot of investor attention and it starts to use that capital to grow its business more quickly, shifting from value to growth.
Investors practicing growth and value strategies also have the same end goal in mind: They want to buy stocks when they are relatively cheap and sell them again when prices have gone up. Value investors are simply looking to do this with companies that are already on solid financial footing, and hopefully, see stock price appreciation should rise as a result. And growth investors are looking for companies with a lot of potential whose stock price will hopefully jump in the future.
Using Growth and Value Strategies Together
The stock market goes through natural cycles during which either growth or value stocks will be up. Investors who want to capture the potential benefits of each may choose to employ both strategies over the long term. Doing so may add diversity to an investor’s portfolio and head off the temptation to chase trends if one style pulls ahead of the other.
Investors who don’t want to analyze individual stocks for growth or value potential can access these strategies through growth or value funds. Because of the cyclical nature of growth and value investing, investors may want to keep a close eye on their portfolios to ensure they stay balanced — and consider rebalancing their portfolio if market cycles shift their asset allocation.
The Takeaway
Growth and value are different strategies for investing in stocks. Investing in growth stocks is considered a bit riskier, though it also may provide potentially higher returns than value investing. That said, growth stocks have not always outperformed value stocks.
As a result, some investors may choose to build a diversified portfolio that includes each style so they have a better chance of reaping benefits when one is outperforming the other.
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Have you considered your apartment neighbors this holiday season?
Whether it’s a token for the season or “welcome to the neighborhood” timing, a small gift given in friendship can create warm feelings between neighbors, especially at this time of the year.
Check out these ideas about gifting for your good neighbors!
Your good neighbor policy
What makes good neighbors in your book? It might be the neighbor you trust to come into your apartment when you can’t be there to walk your dog or water your plants. Maybe it’s a neighbor who gets the mail when you’re out of town or who shares some of the cookies they bake with you. A good neighbor might just be a friendly face you see regularly, the person who smiles and waves and makes you feel like a good neighbor yourself. Whatever your criteria, make a mental note as you encounter these people that you’d like to show your appreciation with a small, seasonal gift.
Holiday gestures
For many, the holidays are the time for swapping all kinds of gifts with a generosity that may not show up during the rest of the year. Your holiday gift list for good neighbors might include:
None of these items need cost too much; the gesture itself conveys the sentiment of good cheer.
Liquid sustenance
In a cold season, why not share the warmth of a hot drink? Give your neighbor a hot cocoa set complete with good-quality hot chocolate and cheery mugs. If a drink with a bit of a kick feels appropriate, consider a bottle of wine (not too expensive!) or a tasty liqueur.
Welcome presents
When a new resident moves into a community, there’s so much to do to settle in. Meeting the neighbors might not be their first priority. So, whether it’s the holiday season or not, why not share an inviting spirit with folks who move in near you in the community?
Prepare a simple gift to introduce yourself and let them know you’re glad they’ve arrived. You can make something as simple as a batch of baked goods, adding a bundle of ribbon-tied brochures as a list of resources your new neighbor might like to know about. You can share info about local spots from schools and libraries to your favorite restaurants and movie theaters. Gift cards and coupons are thoughtful, as is the housewarming staple, a live plant. You could also assemble a decorative pail of cleaning supplies. Just about any act of thoughtfulness might brighten the day of your new neighbor and communicate your welcome!
Just because!
The nicest gifts are often those given “just because” — no belief, creed or annual celebration necessary! If you’re out shopping and find something that you know your neighbor would enjoy – something that would really complement her and her apartment — bring it on home to give! Flowers or vegetables from your balcony or patio garden make wonderful spontaneous gifts, as well. The gift of your time is another valuable thing you can share — especially if you are close friends with your neighbor.
Good neighbors are who they are because it’s their instinct — they certainly don’t expect anything in return. That’s why it’s so important to thank them in small, but personally meaningful ways. Share your holiday spirit with a present that says, “I’m glad you’re my neighbor!”
Photo credits: Shutterstock / Subbotina Anna, Amir Kaljikovic, Gayvoronskaya_Yana
Over the weekend while attending my town’s Friday night football game, I struck up a conversation with an acquaintance of mine, and we started talking about the market. The fellow I was talking about was a believer in the market, and knew that the current crisis that we are in would eventually pass, and the market would continue to strive as it usually does. What he found most peculiar was with some of the sediments of his fellow co-workers, who were participating in the 401k. His co-worker’s belief was that with the market being as bad as they were, they were going to no longer defer to their 401k, and refrain from taking advantage of the pre-tax contributions into their retirement plan. They were giving up free money! He was stunned by his co-worker’s remarks, and as equally as I, and compared that to a conversation that I had, with some other workers from another local employer. It prompted me to write this blog in regards in to things you should not do when it comes to your 401k.
1. Do not stop contributing to your 401k no matter what.
Just because the markets are down does not mean you should not contribute. In fact if there was a time ever to contribute, this would be the time. The simplest reasons is that right now despite the market’s turmoils, currently the market is at a discount, and what that means is that there are a lot of great companies that exist out there, that are currently “on sale”. This is a time to buy stocks, at a cheap price in hopes to benefit from the appreciation in later years. This strategy can also be called dollar cost averaging, which means as long as you are contributing on a consistent or periodic basis, you’ll take advantage of buying shares at a lower price in down markets, and compare that to buying shares at a higher price in up markets, which should then all balance out for a dollar cost average.
If the market has you completely terrified, then consider changing all future contributions to short or intermediate bonds. At least that way you’re money is making a little interest while the market tries to figure itself out.
2. Do not put all of your 401k into the money market.
While I understand the disbelief in the markets right now to where you want to shift all of your money into the money market, by doing this would be a great mistake. If you believe that making money in the market is to buy low and sell high, then by shifting your money into the money market from your other investments, it would be the exact opposite; buying high and selling low. If you’ve seen your 401k depreciate in the last several months, the only way to get that back is by staying exactly where you’re at. Now, I understand for those nearing retirement, that this can be a compromising situation, but if you visit the rule of 72, meaning that you take 72 divided by the interest rate on your investments, and that will tell you how long it will take to double your money. That also, too, will give you an indicator how long it will take you to recoup the losses that you have incurred. By shifting to the money market, chances are, you are making somewhere in the 2% interest rate, which means it would take you almost 20 to 30 years just to double your money, and to recoup your other money that you’ve lost, would be a great time.
3. Do not borrow against your 401k.
This can be said in an up market or down market, but I had to throw it in there. Borrowing against your 401k is never advisable, especially in a down market. Look to start an emergency fund of some kind so that you can have that to fall back on in case of an emergency. If you don’t have an emergency fund, start one now. There’s no sense in contributing to your 401k if you have to pull it out just pay the bills.
Many airlines, hotels, theme parks and cruise lines pay year-round tribute to those who serve our country with various discounts and benefits. Sometimes these deals are available only to active-duty military personnel, and sometimes the perks extend to U.S. military veterans and their families as well.
Related: The best credit cards for active-duty military members: Get waived annual fees
No matter the form these travel benefits take, they all reflect the gratitude the travel industry feels toward those who have sacrificed so much to protect our country.
Here are the perks that military members can take advantage of on their travels.
Marriott Bonvoy and its many brands have discounted federal, state and local government rates available to government and military personnel. To access the discounted rates, choose the “Government & Military” option from the “Special Rates” drop-down menu when searching for a stay. You’ll get a list of all the Marriott Bonvoy properties in your chosen city that offer special rates and their eligibility requirements.
Hilton
Federal and U.S. military employees are eligible for military rates and discounts at participating Hilton properties. When searching for rooms online, check the box labeled “Government/Military Rates” to see the applicable rates. Plus, there’s a discount on leisure stays for active and retired military members and their families at participating hotels and resorts (though the rate is not valid for official government or military travel).
Best Western
Best Western properties across the U.S. offer discounted rates for veterans, military members and government personnel.
Plus, Best Western’s Service Rewards Program — the hotel chain’s award program tailored to members of the military and armed forces — unlocks even more member benefits, including an automatic upgrade to Gold status and bonus points on qualified stays.
Hyatt
Veterans, active-duty members and their immediate family members are eligible for a discount of 10%-15% off Hyatt’s standard rate at participating hotels. To get the discount, use the offer code MILVET while booking.
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Wyndham
Participating Wyndham properties offer discounts of up to 15% off their best available rate to active and retired military personnel, veterans and their families. Plus, qualifying military personnel and their spouses get automatic Gold-level status when they enroll in the Wyndham Rewards program and bonus Wyndham Rewards points for qualified stays.
B Hotels & Resorts
To honor military members, B Hotels & Resorts is offering an exclusive “B Saluted” discount of 15% off regular rates and two welcome drinks per stay to military members, veterans and their families. B Hotels & Resorts has locations in Orlando, Fort Lauderdale and Marathon, Florida.
IHG
The hotel chain behind such brands as InterContinental, Holiday Inn, Crowne Plaza, Kimpton and others offers a “Military Leisure Rate” at participating locations across the U.S., Canada, and Central and South America. It applies to active-duty military personnel, veterans, retired military personnel and their families.
Choice Hotels
Choice Hotels — which includes brands such as Comfort, Sleep Inn and Quality Inn — extends a discounted rate for official and leisure travel to active-duty and retired military personnel, their dependents and members of several military associations. Plus, active-duty military members, veterans and military spouses are eligible to join the Choice Privileges rewards program at the Lifetime Gold Elite level and receive a bonus 2,500 Choice Privileges rewards points after your first qualifying stay.
Motel 6
Motel 6, along with its sister extended-stay brand Studio 6, offers active and retired military personnel and their families a discount of 10% off standard rates.
Red Roof
Active-duty military personnel and veterans — in addition to government employees — are eligible for a 10% discount on official travel at any U.S. Red Roof location. The hotel chain also has a 10% discount on leisure travel for all government employees and military members, veterans and retirees.
Military airline benefits
BRUCE BENNETT/GETTY IMAGES
Southwest Airlines
There are special fares for military and government travelers, but you must call the airline to book them. Additionally, military members traveling on active duty (in or out of uniform) can board between the A and B groups and are exempt from the limit of two pieces of checked baggage.
American Airlines
American Airlines offers government or military fares in some markets, while veterans and their families can access reduced fares by enrolling in the VetRewards program.
Active-duty military personnel are also allowed Group 1 boarding privileges; they can bring up to five free checked bags when traveling on orders and up to three free checked bags for leisure travel (weight restrictions apply).
U.S. military personnel traveling in uniform on a same-day American flight can enter Admirals Club lounges with their immediate family — defined as a spouse, domestic partner and/or children under 18 — or up to two guests at most Admirals Club locations except for Airspace Lounge at San Diego International Airport (SAN) and JAL Sakura Lounge at Honolulu’s Daniel K. Inouye International Airport (HNL).
Delta Air Lines
Active-duty U.S. service members can call Delta Reservations at 800-221-1212 for discounted fares unavailable to the general public. Delta also offers priority boarding and free checked baggage to active-duty military members. How many bags you are allowed is based on the type of travel and fare type, and you must adhere to the specified size and weight restrictions for baggage.
United Airlines
United offers an additional checked baggage allowance and United Club access to active-duty military members traveling on official orders (immediate family may access the lounge, too). U.S. military veterans, active-duty military, National Guard and Reserve members and their families are also eligible for a 5% discount on United-operated flights through the Veterans Advantage program.
Alaska Airlines
In some markets, Alaska Airlines offers military fares to active-duty military personnel and their dependents when you call Alaska Airlines at 800-252-7522 to purchase your tickets. Active-duty U.S. military personnel can board early, check up to five bags for free, receive 15% off inflight food purchases and receive complimentary day passes to visit an Alaska Lounge when traveling in uniform. All other active-duty military personnel can purchase a discounted day pass for $30. Flight discounts are also available through Veterans Advantage.
JetBlue
Active-duty military personnel not traveling on orders get a 5% discount off the base fare by calling 800-JETBLUE. In a separate offer, JetBlue offers a 5% discount to U.S. active-duty military members, retired military members, veterans, National Guard and Reserve members and their families who are enrolled in Veterans Advantage. Those who enroll in Veterans Advantage also get two free checked bags for leisure trips and up to five when traveling on duty.
Frontier Airlines
Frontier typically charges for carry-on bags and checked baggage. However, active-duty armed forces, National Guard and Reserve members receive a free carry-on bag, two free checked bags and one free personal item. Note: These baggage waivers apply only to active-duty military personnel. Families or traveling companions are not eligible.
Allegiant Air
U.S. active-duty and reserve military members, military veterans, members of the National Guard and their dependents get up to two pieces of checked baggage for free through the Allegiant Honors program. Also, the airline waives its typical fees for oversized checked baggage, a carry-on bag, getting a boarding pass printed at the airport and seat assignments. Qualifying service members can also board their flights early.
Spirit Airlines
Active-duty U.S. military members can check two bags for free and bring a carry-on item on board their flight for free, in addition to the already free personal item.
Military train travel discounts
Amtrak
Active-duty U.S. military personnel, their spouses and their dependents are eligible for a 10% discount on the lowest available fare in select fare classes. During your ticket search on Fare Finder, select “Military” for each eligible passenger. Amtrak also welcomes uniformed military personnel to the front of the ticket line.
Brightline
Active-duty military members traveling in uniform can ride Brightline for free with a reservation. Visit a guest services counter at any Brightline station to receive the discount. Additionally, active-duty military members not traveling in uniform and veterans can receive a 10% discount on fares. Both discounts are for the Smart fare class and cannot be used for Premium fares.
Military theme park ticket discounts
DAVID ROARK/WALT DISNEY WORLD
Universal Orlando Resort
Universal Orlando is currently offering a Military Freedom Pass promotional ticket to all active-duty and retired service members. Ticket prices start at $199.99 for unlimited admission between now and Dec. 24, though blackout dates apply. Each eligible service member can purchase up to six promotional tickets, and they must buy them through a participating authorized military ticket and travel office.
Universal Studios Hollywood
Universal Studios Hollywood offers discounted tickets to active-duty and retired military personnel, 100% disabled veterans, Medal of Honor recipients, active Guard and Reserve members, and the spouses and dependents of the people in these categories. Ticket prices vary based on date, and tickets must be purchased at participating military ticket offices.
Walt Disney World
Active and retired U.S. military personnel are eligible for discounted hotel rates and specially priced theme park tickets at Walt Disney World. Blackout dates apply. Hotel stays can be booked by calling 407-939-7830. Tickets must be purchased at a participating U.S. military base ticket office.
Disneyland
Disneyland honors active and retired U.S. military personnel with discounted three- and four-day Park Hopper tickets. The Disney Military Promotional Park Hopper Ticket includes access to Disneyland and Disney California Adventure each day of your ticket, excluding blackout dates. Pricing starts at $245, and you must purchase tickets at a participating U.S. military base ticket office. Hotel discounts are also available by calling 844-776-0015.
Silver Dollar City
Silver Dollar City offers a 30% ticket discount to U.S. active or retired military, veterans and military reservists, along with their spouses and dependent children (ages 4-17) living in their household. In addition to discounted tickets, Silver Dollar City invites all military members and veterans to help raise the American Flag during the park’s daily opening ceremony. Service members are also given a red, white and blue ribbon to wear during their time in the park, allowing employees and guests to thank them for their service.
Busch Gardens and SeaWorld parks
Through the Waves of Honor program, all U.S. SeaWorld, Busch Gardens, Aquatica and Sesame Place parks offer discounted tickets to active-duty military members and veterans.
Dollywood
Dollywood offers discounted tickets stand annual passes to U.S. active or retired military, veterans, military reservists, spouses and dependents. The savings amounts to about 30% off the regular ticket price.
Military cruise benefits
DANNY LEHMAN/NORWEGIAN
Carnival Cruise Line
Carnival Cruise Line shows its appreciation for active and retired armed forces members with discounted cruise rates, onboard credits and reduced deposits. Additionally, every Carnival sailing has a Heroes Tribute Lounge and holds a military appreciation gathering for service members and their families.
Norwegian Cruise Line
Norwegian Cruise Line’s Military Appreciation Program extends exclusive benefits to military members, veterans and their spouses. Members of the program receive a 10% discount on all cruise fares.
Disney Cruise Line
Disney Cruise Line offers special rates to all military members, active and retired, as well as their spouses. Discounted rates are only available on select sailings, and prices start at $185 per person, based on double occupancy.
Margaritaville at Sea
Margaritaville at Sea honors active and veteran military members with a free two-night cruise through the Heroes Sail Free program. The offer is valid only for ocean-view and interior cabins, and you must be sailing with at least one paying guest in the same cabin. Taxes and fees still apply.
Celebrity Cruises
Active and retired military members can save $25 on inside and ocean-view cabins and $100 on veranda cabins and above on select sailings. This discount applies to the first and second guest in the cabin.
Princess Cruises
Veterans and active, retired and disabled military personnel can receive up to $250 free onboard spending money on select Princess sailings. You can use this onboard credit for specialty dining, onboard boutiques, shore excursions, spa treatments and more.
Royal Caribbean
Royal Caribbean offers military rates to active and retired personnel, veterans and their spouses. The discounted rates also apply to friends and family members staying in the same cabin as the eligible service member. The best way to access the discounted rate is by booking through a travel agent or booking directly with Royal Caribbean over the phone.
MSC Cruises
MSC Cruises offers discounted fares to all active and retired U.S. military personnel, plus family members traveling with them. You can receive a discount of 5% on interior and ocean-view cabins, 10% on balcony and suite cabins and a “kids sail free” promotion on select sailings.
AmaWaterways
AmaWaterways offers active and retired service members a special military discount of $100 off a river cruise when you use the code MIL100 at the time of booking.
Bottom line
A host of benefits await travelers who serve or have served in the U.S. military.
Because these benefits, their requirements and the eligibility of family, spouses and dependents vary, carefully research each military discount offer to avoid any surprises. Many airlines, hotels and other businesses might ask for proof of eligibility, so don’t leave home without the military ID, veteran ID, dependent ID, orders and/or other documentation you’ll need to take advantage of the many travel offers.
Remember the good old days of whistling while you work in regards to your 401k? Your company used to have a very nice match to your 401k. Your balance was at an all-time high and retirement seemed like just over the horizon.
Then 2008 came along and the whistling turned into more of a whimper. Don’t worry, I was whimpering, too. For those that are 59 1/2 and still working, I might have a reason for you to whistle again. The reason behind it is called the 401k in-service distribution.
I took a call from a client recently whose employer was getting ready to switch 401k providers again (3 times in the last 5 years) and was frustrated with the new investment options.
He is over 59 1/2 and had heard that he might be able to rollover his 401k to an IRA and also continue to fund his 401k. I was excited to share with him that he, in fact, could do this and that the procedure was called an in-service distribution.
Rules on 401k In-Service Distribution
First things first, you HAVE to be 59 1/2. No matter how much you dislike your current plan and you want to withdrawal it all, it’s not an option until then.
This doesn’t just apply to 401k’s. Any type of retirement plan will work, too. This includes 403b’s, 457″s and pensions, too.
Be sure to rollover the money to an IRA if you don’t need it. By doing a 401k in-service withdrawal you will be taxed.
Reasons to Do a 401k In-Service Distribution
An in-service distribution allows you to rollover your vested balance from your profit sharing plan to an IRA. You will have to determine first if you are eligible. Some plans may restrict from doing so. Here are some reasons that you might want to:
Control— Who doesn’t like control? With an IRA, you are the account owner and have more control over your assets, free from the restrictions your employer-sponsored plan can impose.
Diversification — Many employer-sponsored plans offer limited investment options. In contrast, most IRAs typically provide a wider range of investment choices across virtually every asset class. This flexibility can help you better diversify your retirement assets to meet your individual investment goals.
Beneficiary options — Typically, IRAs allow non-spouse beneficiaries to “stretch” an inherited IRA over their lifetimes. This type of beneficiary distribution option is not available in most employer-sponsored plans, which may limit distribution choices for your beneficiaries.
Disadvantages of 401k In-Service Distributions
With every advantage, there may be disadvantages. Please consider:
Age limitations — In qualified plans, the age 55 rule allows participants who stop working at age 55 or older to take distributions without the 10% IRS premature distribution penalty. In an IRA, you may not take distributions until age 59½. For this reason, if you plan to retire early, you may want to preserve penalty-free access to your retirement funds by not moving all of your 401(k) assets to an IRA before retirement.
NUA — Net Unrealized Appreciation (NUA) tax treatment is not an option for distributions from IRAs. Therefore, if you hold highly appreciated company stock in your employer-sponsored plan, the rolling of that stock to an IRA eliminates any ability you may have to take advantage of NUA tax treatment.
Creditor protection — While IRAs now have federal bankruptcy protection, other IRA creditor protection is still determined by state laws. Qualified plan assets continue to have broad federal creditor protection.
New contributions to your existing plan — Taking an in-service distribution may affect your ability to contribute to your employer-sponsored plan. Be sure to consult with your plan administrator before implementing this. Learn more here about Roth IRA contribution limits.
Cost — Fees related to having your own IRA could be more costly than the investment options inside the 401k.
After-tax dollars — After-tax dollars are generally segregated in a qualified plan, and can often be distributed separately. However, after-tax dollars complicate things if rolled to an IRA. If you move after-tax money into an IRA, that money becomes part of the non-deductible “basis” of the IRA and will not be separately accessible. To avoid paying tax again on your IRA “basis” when you take an IRA distribution, you must maintain careful records of the “basis” in your IRAs. This can become more of an issue in regards to doing a Roth IRA Conversion.
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*Restrictions, penalties and taxes may apply. Unless certain criteria are met, Roth IRA ownersmust be 59 1/2 or older and have held the IRA for 5 years before tax-free withdrawals are permitted.
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Okay, you are reading this because you are overwhelmed with the fact that your kids have everything (or the kids you want to buy gifts for).
That is a tough situation to be in.
In today’s society, kids are quick to get anything and everything they want. There are a million different reasons for that. But, that is the reality our society lives in. In fact, research proves overindulged kids may experience lifelong consequences.
So, what do you get for kids who have everything?
You have to really search and put some thought into finding an awesome gift – even better a gift that is not a toy.
Maybe it is the year to consider a no gift Christmas?
Kids who have everything may seem like they have it all, but there are still gifts that will surprise and delight them.
Let’s dig into these cool gifts for kids who have everything.
What do you get a kid who has everything?
You need an off-the-wall gift that is out of this world.
In order to hit a grand slam, you must really know the kid you are purchasing a gift for.
And honestly, most of the best gifts are gifts of time – specifically experience gift ideas.
What to get a kid that’s not a toy?
If you are looking for non-toy gift ideas for kids, there are many options to choose from. You need to turn your mind off the traditional gift giving and think outside the box.
Great ideas include anything personalized, educational classes, sports gear, or experiences like ziplining.
Whatever you choose, the important thing is that it is something the child will enjoy and cherish.
Lifesaver Ideas to Turn To – The 4 Gift Rule
The 4 Gift Rule is a guideline to help you find the perfect gift for someone. It suggests that you should give something that the person needs, wants, or may not have already. Since we have determined that “something they want” is already taken care of, here are the other 3 gift rules to consider.
Something they need: Think about school, sports, and activities – what is it that they need? Do they play baseball and outgrown their catcher’s gear? Interested in robotics, but don’t have the computer subscriptions to keep learning? There are many unique options available as this is personalized to them.
Something to wear: Even if your child has a closet full of clothes, there are always new fashion trends and styles that come out each season. They may also need new shoes or accessories to go with their outfits.
Something to read: Books make great gifts for kids of all ages. If your child is into sports, you can get them a biography of their favorite player. If they’re into history, look for a book about a topic they’re interested in. Right now, graphic novels are the big hit!
Whether you’re looking for a unique gift for a loved one, or need some helpful ideas for yourself, check out some of these amazing options.
Need Creative Gifts?
Here are the best places to find creative gifts.
If you’re looking for creative gifts, turn to Etsy! It offers a wide selection of handmade and vintage items that will surely provide hours of fun.
Need something quick, check out these Amazon gift guides.
Unique Gift Ideas for Kids and teens – Specifically Gifts for Kids who Have Everything
Everyone loves gifts, and kids are no exception.
However, when you are on the hunt for cool presents to buy your child that they won’t get tired of playing with or using over and over again, you may find yourself coming up short.
This is where we come in!
We have compiled a list of 35 cool gifts for kids who already have everything or are just too young to know what they want.
These gifts are sure to make your shopping experience a breeze and will keep you from having to hear the dreaded question, “What do I get them?”
Subscription
One option for a kid who seems to have everything is to get a subscription to their favorite magazine or TV show. This will keep them entertained and give them something new to look forward to each month or week.
Great options include Amazon kids or Kindle Unlimited.
Subscription Boxes
There are so many reasons why subscription boxes are so much fun. They are a way to try out new things without committing to anything. Plus, they come with a lot of great discounts.
You can also find boxes that are perfect for specific interests.
Kitchen Science Kit
The Kitchen Science Kit is a great gift for kids who love to know how things work and want to learn more. It comes with plenty of pieces that your child needs to start testing their experiments. This kit will help your child learn life skills like patience, organization, and creativity.
Coding Games
There are many great coding games that make excellent gifts for kids who have everything.
One option is the Bitsbox coding subscription box, which is designed for kids ages 6-12 and provides them with a variety of STEM education activities.
Another option is the Booleen Box, which is a computer building game that is perfect for kids who are interested in technology and engineering.
Both of these games are great ways to get kids interested in coding and help them develop important skills for the future.
Time Capsule
Time Capsules are a great way to preserve your memories and experiences. You can store anything in a time capsule, such as photos, articles, and notes.
The recipient can open the capsule in the future and experience the memories stored inside. Get your time capsule container!
Spa Day Kit
If you are looking for a unique and thoughtful gift for a child in your life, look no further than the Spa Day Kit. This kit includes everything a child needs for fun and relaxing spa day, including a bath bomb, nail polish, and hair treatment. The easy-to-use instructions make it perfect for kids of all ages, and the kit makes a great gift for moms on any occasion.
Scientific Explorer – My First Mind Blowing Science Kit
The Scientific Explorer My First Mind Blowing Science Kit is perfect for kids who are just starting to learn about the scientific method. This kit comes with a lot of different materials that help kids learn about science. It’s a great way for kids to learn about science and see how it works.
Customized Journal
Customized journals are a great way to show your personality and interests. You can choose the cover, the paper, and the layout of your journal. You can also add your own photos and drawings.
This will be something special that the child can use to document their thoughts and experiences. Pick your design on the customized journal here.
Customized Planner
There are a lot of different things that you can get a kid that doesn’t want toys. One idea is to give them a customized planner.
This will help them stay organized and be able to keep track of their school work, extracurricular activities, and social events. Design your customized planner here.
Lego Chain Reactions Kit
This is a great gift for kids who like to build and experiment. The portable craft studio is easy to carry and organized by item type and color group.
If your kids seem like they have outgrown Legos, check out Gravitrax! Hours of wonder and fun for preteens and teens!
ABC Mouse
The ABC Mouse is a great gift for kids of all ages.
It features age-appropriate games and activities, as well as family-friendly shows that kids can watch. You’ll have peace of mind knowing that your kids are engaged with awesome content when you give them the ABC Mouse.
Customized Jewelry
One option for a unique gift for a kid who has everything is customized jewelry. You can find stores that will let you personalize items like necklaces, bracelets, and earrings with the child’s name or initials. This makes the gift special and something they can treasure for years to come.
Amazon Glow
Amazon Glow is an interactive entertainment and video-calling system designed for children. A great way to keep in touch with grandparents.
It has a huge 19″ touchscreen that let’s kids be kids, and an interactive video call on a tablet or smartphone. Amazon Glow is designed for children to learn and play with each other, making it the perfect gift for your tech-savvy kid.
The service requires an Amazon Kids+ subscription, which automatically renews every month. For just $4.99 per month, you can give your child access to a wide variety of toys that they are sure to love.
Craft Supplies
When you give someone a craft supplies as a gift, you are giving them the opportunity to create something special. This could be anything from a new piece of jewelry to a painting.
Craft supplies are also a great way to show your appreciation for someone.
Gift Basket
Kids love to get gifts, but it can be hard to come up with something unique and special. If you’re looking for a gift that your child will love, you should consider building a gift basket.
This is a great way to combine different types of gifts, and it’s a fun way to spend some time together.
For example, my daughter got a princess-themed gift basket when she was little.
Non-toy gift idea for kids: Experiences
Experiences make great gifts for kids because they can be educational, fun, and memorable.
Some great ideas for experiences to give as gifts include museum visits, sporting events, Broadway shows, dinner at a fancy restaurant, science exhibits, art exhibits, theme parks, comedy clubs, acting classes, and dance classes.
Master Classes
Master Classes are a great way for kids to learn from the masters.
They provide a unique experience that can help kids learn about anything (almost). Master Classes can be a great gift for kids because they can help them learn new things and improve their skills.
I remember and treasure all of the master classes I took growing up.
Spa Experience for Kids
One way to give the gift of a spa day to kids is to buy some bath bombs, nail polish, and hair treatments. Another way is to set up a little home spa kit.
Finally, you can spend some quality time together and have fun!
Grab all of your spa experience supplies here.
Tickets to a favorite play or concert
One option is to get tickets to the child’s favorite play or concert.
This will give them an experience they will enjoy and remember for a long time.
Every time Imagine Dragons come to our city, I always hear the kids practicing their lyrics.
Tickets to Sporting Events
There are a lot of great sporting events happening throughout the year that your kid would love to attend.
Whether it’s a professional game or a college game, sporting events make for great memories. And tickets aren’t as expensive as you might think!
Head to the Theatre for a Broadway Show
Do you have a family member or friend who loves to go to the theatre?
Perhaps they’ve seen a show before and are always looking for something new to see. Head to the theatre for a Broadway show!
Broadway shows are often full of excitement and suspense. Your loved one will have a memorable time and you’ll get to go out with them!
A day of sleeping in
One idea is to give the child a day of sleeping in especially popular with middle schoolers and high schoolers.
This can be a great gift for kids who seem to have everything and are always on the go. It can also be a chance for parents to spend some time alone or with other siblings.
A day at a zoo
One idea is to give the child a day at the zoo. This can be an all-day experience or simply a visit to see the animals.
It can be fun and educational, and it’s something different that the child may not have done before.
Game Night
Kids love the game night! It’s a great way to bond with friends, have some fun, and learn new things. There is a lot of fun non-toy gifts you can give your kids for a game night that will make it even more enjoyable. Here are a few ideas to get you started:
Set up a board game or card game in your home and let the kids play with you.
If your child is a competitive type, give him or her an incentive to win by offering a small prize for the winner of each game. This will make the game night more exciting.
If you are playing a card game, make sure to have plenty of snacks and drinks on hand in case anyone gets thirsty or hungry while playing the game.
Check out the latest games on the market!
A day of cooking with a celebrity chef
One unique gift you could give to a kid who has everything is a day of cooking with a celebrity chef. The child will get to learn how to cook their favorite dishes from the best in the business, and they will get to eat their creations afterward.
Great for the aspiring chef!
Theme Park Excursion
If you’re looking for a unique gift for a kid who has everything, why not take them on a day trip to a theme park?
A day at a theme park could be a great non-toy gift idea for kids. Kids would love the chance to go on rides, explore the park, and enjoy the company of their friends. .
They’ll get to experience all the fun and excitement of a theme park while spending time with you (and their friends).
Splash at a water park
A day at the water park can be a great gift for kids who have everything. They will enjoy hours of fun in the sun and get to cool off in the water.
Plus, they will be able to play with their friends and make some new ones. Maybe even consider a season pass?
Flight Lessons
If you’re looking for a unique and cool gift for a kid who has everything, how about flying lessons?
There are many different programs that offer this experience, and it is sure to be something the child will never forget. They will get to fly in the cockpit of a private jet or airliner, and may even have the opportunity to take the controls!
They may even make a career choice out of this gift.
A day with a celebrity
Could you imagine if this kid got a chance to hang out with Dude Perfect or Ninja Kidz all day?!?!
They would be on cloud nine.
That would be one unique and cool gift for kids who have everything.
Course at a local college
One idea is to give the child a day of learning by taking him or her to a local college for a course of their choice.
This will allow the child to explore new interests and learn something new in a fun and stimulating environment.
There are plenty of classes to choose from.
Kid’s Choice Dinner
One great gift idea for kids is to give them a Visa Gift card. This way, they can “pay for dinner” and have a fun experience doing it.
Also, you could also give them a gift card to a grocery store so they can cook their own dinner. This would be especially beneficial if you teach them how to cook their own dinner as well.
A day of doing nothing
When it comes to finding a unique and interesting gift for a kid who has everything, sometimes the best option is to give them nothing at all.
A day of doing nothing can be just what they need to relax and enjoy their birthday or special occasion.
Can adults have this one too, please?!
Dinner at a Fancy Restaurant
A dinner at a fancy restaurant can be a great gift for kids.
Kids will love the experience of trying a different cuisine and sitting at a high-end table. Plus, spending a special night out with friends can be a memorable experience.
A day of service at a local charity
One option for a kid who has everything is to give them a day of service at a local charity.
This will allow the child to spend time giving back and helping those in need, which can be just as rewarding as any material gift.
In fact, this is why mission trips are so popular!
Some other fun experience gifts for kids include go-karting, theme parks, and escape rooms. These experiences are exciting and new, and they’re something that the kids can enjoy together.
The Ultimate Gift Idea for Kids: Cold Hard Cash
Giving cash as a gift is a good idea because it is a tangible gift that can be used immediately.
It is also a great way to avoid any possible clash of interests with the child who might receive the gift. Cash is a low-key way to show your appreciation for the child, and it is also a way to avoid feeling obligated to give a gift.
Also, it helps kids to realize the value of money and how to manage it. Those life lessons might be well worth it!
Or a Gift Card
When you don’t know what to get a kid who seemingly has everything, a gift card is always a safe option.
With so many different stores and places to spend them, gift cards let the child choose what they really want. This way, you know they’ll be happy with their present.
Unique Fun Toys or Eyes to See the World?
Now, you have a decision to make…
Will you go with: unique fun toys or experiences? The choice is yours.
Just remember… one will leave a longer impact on the recipient than the other. That is why many families are opting for Christmas experiences over traditional gifts.
Which Creative Gifts Will You Get?
If you have a child that seems to have everything, it can be hard to know what to get them for gifts. However, there are still some great options out there.
It is proven that experiences bring more happiness than traditional gifts, so why not lean to towards those ideas.
There’s no need to spend a fortune on a gift for a kid who has everything. With a little bit of creativity, you can find a gift that will be sure to put a smile on everyone’s face.
Review our list and see what takes your fancy!
If you’re looking for a gift for a young person who has everything, our list of 35 cool gifts is sure to have something for everyone. From non-toys to clothing ideas, there’s something for everyone on this list.
So, what are you waiting for? Get shopping!
You probably need inexpensive gifts for the woman who has everything, right?
Need More Christmas Gift ideas?
Know someone else that needs this, too? Then, please share!!
I’ve recently decided to start a new series where I interview people who are doing extraordinary things with their lives. First up, I have JP Livingston, who retired at age 28 with a net worth of $2.25 million. And, her net worth is still increasing!
Of that total, 60% of her net worth came from saving, while 40% came from growing her money through investing. This is why investing your money is so important, and it’s how you really allow your money to grow for you!
JP grew up listening to stories about financial insecurity during her parents’ upbringing. The freedom that early retirement brought really appealed to her, and who doesn’t want to retire early anyways?
She is now retired at the young age of 28 and says that she still lives “an incredibly luxurious life.” And, she managed to retire early while living in one of the most expensive places in the world – New York City.
Related articles:
I asked you, my readers, what questions I should ask JP. And, make sure you’re following me on Facebook so you have the opportunity to submit your own questions for the next interview.
So, below are your questions, along with some of mine.
Here is how JP Livingston retired at the age of 28 with over $2,000,000. You can follow her on her blog The Money Habit as well.
1. Tell me your story. How did you manage to retire at 28?
I have wanted to retire since I was about 12 years old. My parents grew up poor. I am talking eight people living in a one room apartment poor. My father’s father passed away when he was 18, and his mother who had previously been a homemaker was only able to find a job at a cookie factory. Her dream for my father was that he would be a busboy and eventually work his way up to be a cook in a restaurant.
My mother’s father passed away when she was in middle school; her mother found work as a seamstress at a large garment factory to support a family of six children.
I grew up on stories of their financial insecurity.
When I started thinking about the future, my parents’ refrain to me was that I could be anything I wanted to be, as long as I had a way to financially support myself.
In middle school, we took a survey on our interests and read about different jobs. I loved to write and wanted to be a writer. When I found out how unsteady the income was for a writer, though, I was demoralized. I decided that if I couldn’t support myself financially by being a writer, I would find a way to retire instead, Then I’d have the freedom work on whatever I wanted, including all the writing I could handle. So I started reading personal finance books.
I learned that you don’t have to be a genius or have special skills to retire early. A habit of making small and regular improvements trumps even the most gifted people who only apply themselves sporadically.
The tactics I’ve employed include optimizing for pay raises and promotions, living a very minimalist and frugal life, focusing on investing skills, and building analytical skills such as understanding how to build and use spreadsheets to support my investment ideas. I found there was an 80-20 rule to different improvements I could make in my money life: 20% of the improvements accounted for 80% of the results. I’ve been trying to outline those major needle movers on my blog so people don’t waste their time as I did on the things that don’t really matter.
All those incremental improvements stacked up into a humming, healthy machine. When I retired at 28, I had a net worth of $2.25 million and it’s still climbing.
2. How did you reach $2,250,000 in savings by the time you were 28? When did you begin saving?
60% of my net worth came from saving and 40% came from growing my money through investing.
My saving habits started in childhood, which isn’t surprising given my parents’ experiences. But what really upped my game was branching out from a few good habits and awareness to trying to find unorthodox ways to save.
One savings move that went against the grain was graduating college in three years. I earned scholarships to attend a state school for free but I chose a private college which I felt would offer broader opportunities. That private college was incredibly expensive though. So in compromise, I graduated a year early.
The savings from that move was not just the tuition costs, but also a full year of missed earning opportunity. My first job was in finance and paid $60,000, with a promise that that if you stuck it out through the entire year you got a bonus that was almost equal to your base. So that one decision to graduate early caused a nearly $150,000 net worth swing.
That kind of savings so early in life, growing at market rates for 20 years would yield $800,000 by the time a person were 42. That’s enough for some people to retire through one decision alone!
Related: How I Paid Off $40,000 in Student Loans in 7 Months
3. What made you want to retire early?
The freedom is really what appealed to me.
I had a very potent reminder of how important freedom was and how little time I had to enjoy it the year before I retired. There were several deaths and major health scares amongst my loved ones. That made me realize that given my family’s history, I had about 15 to 20 really good years of health that I could count on. Did I want to spend even one more of those years stressed out while working?
4. What sacrifices did you have to make in order to reach this milestone?
I’ve rarely thought of my financial decisions as sacrifices. Rather, they were decisions to purchase one thing over another. If I took my bonus into the store and were deciding between a cool new phone or a camera, I wouldn’t leave feeling like I had “sacrificed” the one I didn’t purchase.
I wanted to buy back my time and my freedom more than I wanted to buy anything else in the store. In short, I’ve looked at this is as an opportunity, not a sacrifice. That does wonders for your motivation and mental health.
There is an excellent book that I think provides one of the best frameworks to thinking this way. It’s called Your Money or Your Life, written by Vicki Robin and Joe Dominguez. The general concept is this: take the amount of money you make in a year. Subtract out all your work-related expenses. Now take that balance and divide it by the number of hours you work. That gives you the amount of money you are exchanging per hour of your life. With that metric, you could estimate how many hours of your life a purchase would cost rather than dollars.
Once you start looking at your purchases this way, you will want to buy much less. And investing will start to look amazing to you! It’s a magical way to get more of your life back, because those dollars can go to work in your place, earning you money while you sleep.
5. Would you say that you live comfortably?
I think we live an incredibly luxurious life. There’s still a ton of fat we could cut.
6. What career did you have before you retired? Did that career help you to retire earlier?
I was a professional investor at a finance firm and it definitely helped me to retire earlier. I got really lucky that it ended up being so lucrative; I initially planned on it being a two year stint at most. But the work kept getting more interesting and the pay got better. The frameworks we used for investments also helped me think about my own investment decisions for my personal portfolio.
7. What do you have to say to those who may think that they can never earn as much as you can – can they still retire early too?
They can absolutely retire early!
To me this is the whole point of why the personal finance blogosphere exists. None of us have identical circumstances and identical outcomes. Your childhood may have been more or less advantaged than mine. Your lucky breaks might be better or worse than the ones I experienced. But the absolute truth is this: the you that is making consistent, small improvements over time to your money plan is going to easily accumulate 5x the wealth of the you that isn’t.
It’s not hard to retire early in this country because the bar is so low. The average age of retirement in the US is age 63. After 41 years in the workforce the average 63-year-old couple has a total net worth of $174,000 to show for it. That works out to just over $4,000 of savings per year; less if you assume any investment growth.
8. What do you do now that you’re retired?
The best thing I can do is show you. Here was my actual calendar from a recent week:
Broadly speaking, I have one major project – a personal finance site I write to help others retire early – which I work on for about 10 hours a week, then the rest of the time is filled with hobbies, reading, and being out in the city.
It is amazing how enjoyable the mundane things are when you are not too stressed out to notice them.
9. Many people will have this question in the comments of this interview, I just know it! – Can you explain how you will make $2,250,000 last your whole life, even though you are only 28?
That’s a great question.
My plan is based on data gathered by the Trinity Study. This study calculated that if deployed in a portfolio of stocks and bonds, an inflation-adjusted 4% yearly withdrawal rate from savings was optimal to safely retire and not work for a given 30-year window in the history of the United States.
Thus, if your annual expenses is equal to that 4% yearly withdrawal rate, the idea is that it is very unlikely you will run out of money in a 30-year period.
However, I have some concerns about the riskiness of that 4% figure. For one thing, my retirement is expected to be much longer than 30 years. In addition, if you look at stock market performance in the last 20 years, the compound annual growth rate was 8.2%, almost 2 points lower than the CAGR shown in the period the Trinity Study originally measured. For these two reasons, I plan to live off a stock and bond portfolio withdrawing an inflation-adjusted 3%.
3% of my $2,250,000 would give me $67,500 a year. My husband and I currently spend $65,000 a year living in one of the most expensive cities in the world. That means we could support our current lifestyle almost indefinitely.
But one of the hard parts about retiring so early is that you have to plan for chapters of life that could look drastically different than today. Having children, for example. So before I pulled the trigger, I built a projected budget for a family of 4 to calculate how much I would need to support a family. I did this with empirical data, researching what actual families of four paid for the service in the city I was considering.
The nest egg required to support this budget is $2.23 million, which is within our means.
With early retirement specifically, I think it’s also comforting to walk through your other margins of safety that don’t show up in the budgeting process. Here are a few in our case:
Conservative Withdrawal Rate: We are using a withdrawal rate some would argue is half to one percentage point more conservative than needed. That would equate to overstating my nest egg needs by over $400,000.
Extra Buffer: We have an extra one hundred thousand dollar buffer that will grow over time and which will absorb costs we haven’t foreseen (i.e. higher healthcare premiums, poor market performance for a year, etc.).
Full-Time Work: Either of us could go back to work full time.
Income-Earning Hobbies: One or both of us might end up doing a hobby that generates money
Tighten Discretionary Purchases: $9,700 or 19% of our annual budget is discretionary and we could tighten our belts in a particularly rough year just as every other family does.
ACA Healthcare Savings: We have not factored in any ACA subsidies even though our income in this budget would qualify us.
Market Outperformance: Markets could do better than we’ve projected. We require a blended 5-6% return (3% withdrawal, 2-3% inflation). We could easily see market CAGR of 8%+ as evidenced by historical data.
Home Equity Loans/Reverse Mortgage: We can draw cash out through a home equity loan if we have a temporary cash crunch or use a reverse mortgage in our old age.
Profit-Share Grants: My profit-share grants from my previous employer may be worth greater than the $0 we’ve estimated.
10. Do you still earn an income?
Not currently.
I am not ruling out a traditional job one day, but it would be about finding interesting work and less about the money. My goal right now is to create a place that helps other folks get smarter about money and retire faster, so I might do some freelance writing outside of the blog. But I don’t want to have left one job just to jump into another!
As for other forms of income: I do have some deferred compensation from my old employer. And although my husband could retire as well, he likes what he is doing and continues to work.
11. How did you decide on how much you needed to retire on?
I was a professional investor and the way we used to make our investment decisions was to build out various scenarios, observe the outcomes, and attach a probability to each. I did a similar exercise for determining how much I needed to retire. I used three scenarios to triangulate on a target number. There’s a walk through on the three scenarios which anyone can use to determine their own target retirement number over here.
12. If you were starting back at ground zero, what would you do differently from the beginning?
Two things:
Put Momentum First: I would focus on building momentum more than trying to muscle my way through things with sheer discipline. Most people’s initial reaction to starting a new project is to throw themselves all in. I get emails asking me what book I’d recommend people buy to turn their financial lives around. But think about how you got into your other hobbies. Did you run out and buy a book about proper free-throw technique to get into basketball? Were you consulting a textbook to get into yoga? If the key to millions of dollars is showing up every day and making small improvements, then the key to your success is figuring out how to build momentum in those early days that will get you showing up regularly. That means less of a focus on running out and buying dry, boring textbooks and more effort on joining blogs or forums with bite-sized, regular content where you can start to get your bearings and get interested.
Tackle The Right Steps In The Right Order: There are four steps to early retirement, and tackling them in the right order really accelerates your progress. I wish I had thought deliberately about how the levers in front of me were changing and better prepared myself for the different stages. I’ve missed a lot of great opportunities because I was so focused on the things that had been working for me in the past that I didn’t look up and think about the new opportunities open to me as my wealth accumulated. For example, I wish I had understood the math behind investing in high-appreciation real estate markets year ago. If I had, I would have bought a house in NYC years ago and be $500k richer.
13. Is retiring everything you thought it would be or not as you planned? Do you ever miss work?
It is a hundred times better than I thought it would be. I will admit there was a learning curve at first. But these days, I often tell my family that I am living a version of my dream life. If you had known me before I retired, you would have found that statement astonishing.
If there is one thing I miss about work, it’s regular interaction with smart and thoughtful people. Since I started the blog, though, I’ve gotten quite a bit of that back. So overall I’m quite happy!
14. Lastly, what is your very best tip (or two) that you have for someone who wants to reach the same success as you?
Ask questions. Be the active commenter on a blog or the vocal one at the cocktail party. Be courageous enough to cold-email the people you know have the answers you need. You can learn so quickly if you’re willing to put yourself out there. People are generous with their experience if you show you’ve done your homework and ask them specific things that make it easy for them to help you.
“Why?” is your most powerful tool. If someone tells you investing in X is the way to go, ask why, and pepper them with all the potential concerns you can think of. Then go find another smart person and ask them why X is a good or a bad idea. Go back to the first and pose the second person’s counterargument and ask them to respond. Introduce another expert. Repeat until you feel you understand the issue backwards and forwards. This is hands down the best way I’ve found to master a concept.
Focus on habits and systems, not results. You can make yourself feel really good by muscling through a one week sprint with discipline and admiring what you accomplish. But really impressive results take weeks and years of focused effort. I have seen a lot of amazing people in college and at my old employer, and the thing that separates the average from the incredibly successful is really just who has figured out how to put out consistent effort. No one has discipline to last in a marathon like this without building the right systems and habits. Show up every day and do one small thing to improve the thing you’re measuring. If you do this, you will be among the top 5% of achievers. Over time you will build a system that will trump any specific lucky breaks or windfalls, and it will get you to financial success you deserve.
Are you interested in retiring early? Why or why not?
Real estate doom and gloom articles are going to ramp up big time in coming months, if they haven’t already.
You’re going to hear that the second biggest housing crash since the Great Depression is upon us.
It’ll all be super scary and negative and panic-inducing. You’ll be led to believe that it’s 2008 all over again.
Except, it’s not. Nor will it be. Interestingly, this latest housing downturn, or “correction,” was manufactured by the Fed.
The same Fed that basically orchestrated the housing frenzy that preceded it. The good news is it’ll likely be short-lived and really nothing like the Great Recession.
Why Are Home Prices Falling?
First, let’s talk about why home prices are beginning to stall, and gasp, even go down.
Long story short, home price appreciation was absolutely out of control over the past couple years since the pandemic got underway. We’re talking a 50% increase in prices.
A combination of limited supply, cheap money (i.e. record low mortgage rates), and the sheer desire to own property propelled home prices to new heights.
Not only did home prices hit all-time highs, but monthly and annual gains hit records as well.
We were seeing consistent double-digit gains in property values, which we all know simply can’t be sustainable over time.
The Fed saw this happening and basically decided to pump the brakes. They discovered that recent home price gains were driven by excess demand, not just short supply.
As such, they knew that raising their own interest rate (fed funds rate) and stopping their Quantitative Easing (QE) program would eventually increase mortgage rates.
Maybe they didn’t foresee just how much they’d rise in such a short period, but mission accomplished either way.
It’s pretty much a foregone conclusion that home prices have peaked, and now after months of slowing appreciation, we’re facing actual declines in nominal prices.
In other words, a lower price than the month before, and eventually the year before.
How Much Will Home Prices Go Down?
The next logical question is how much will home prices go down. It’s important to differentiate between nominal prices and real prices, the latter of which are adjusted for inflation.
This is especially pertinent with inflation running super-hot at the moment, at 8%+.
Now high mortgage rates alone don’t necessarily lower home prices, but once you throw in a significant increase in unemployment, they do.
Per Wharton’s Susan Wachter, home prices have never fallen without “a substantial rise in unemployment,” other than during the Great Recession.
This is not the Great Recession – the mortgages underwritten at that time were utter garbage.
We’re talking 100% financing, no doc, stated income, outright fraud, and dangerous adjustable-rate mortgages like the option ARM.
Today, it’s plain vanilla, boring old 30-year fixed mortgages. And the majority of homeowners with them have absurdly low interest rates. We’re talking 2-4%. Locked in until the year 2050.
These folks don’t really care if “home prices go down” because they’ll keep paying their super-low monthly mortgage payments and let time get their home price back to new heights.
Even if they do lose their jobs, they can sell for a profit or rent out their properties and cash flow positive.
Meanwhile, a combination of a recession, increased unemployment, and much higher mortgage rates will likely push nominal home prices lower.
But how much lower? While this is really always a regional question, not so much a national one, chances are home prices will only fall 5-10%, at least if you believe Wells Fargo economists.
And when you look at how much they went up since just the year 2020, it’s a drop in the bucket.
For example, the median existing home price was $300,000 in 2020, $357,000 in 2021, and expected to be $385,000 this year.
It is then forecast to fall to $364,000 in 2023, a 5.5% decline. Because nominal home prices don’t often fall, headlines will be grim.
It’ll technically be the second worst drop in home prices since the Great Depression way back in the 1920s/1930s. And the media will love to point that out.
Sure sounds awful, doesn’t it? In reality, it will be theoretically even worse with inflation eroding the dollar and real prices falling even more.
Real home prices could fall as much as 25%, which sounds pretty bad, but again would basically put us back to the year 2020.
Home Prices Could Bounce Back as Soon as 2024
I’ve long circled the year 2024 as the date of the next housing market crash. Or at least the peak. It appears to be coming a tad earlier than expected.
But still not too far off, especially when you consider the many years of excess seen the past few years.
It would have been easy to call a housing market top a few years ago, or even earlier than that. But yet it kept rising.
Anyway, all the major pundits are now basically in agreement that nominal home prices will drop. And due to inflation, real home prices will fall even more.
But when will they recover? Or stop falling? Well, Bill McBride over at Calculated Risk sees real home prices falling +/-25% over the next five to seven years, with much of that due to inflation.
In other words, limited nominal price declines, though as noted still potentially 5-10%. But as mentioned, 5-10% isn’t much when home prices effectively doubled in preceding years.
Anyway, McBride sees a longer timeline to recovery than Wells Fargo, though not that long. And nothing like the “cascading price declines” seen during the Great Recession.
At that time, he notes that “nominal prices fell 62% in Las Vegas, 56% in Phoenix, and 51% in Miami.”
He doesn’t see that this time around largely because supply is low, underwriting is sound, and distressed sales likely won’t be a big factor.
Turning back to Wells Fargo, they expect an even faster recovery thanks to future Fed rate cuts.
Once those happen, mortgage rates should follow suit, allowing for “a modest improvement in sales activity.”
This could “reignite home price appreciation heading into 2024,” with the median existing sales price rising back to $376,000.