Get Ready Millenials – Mom and Dad are Coming Home, to your Home


Hey millennials, glad that those in your generation, who came home after college and stayed another ten years, are finally getting their own place.  Sure, Mom and Dad are footing the down-payment, but at least you’re finally starting to venture out on your own like your parents probably did when they were 18 or maybe 21.  I’m sure that plenty of you also moved out and got a modest apartment when you graduated college or high school like your parents did – it is unfair to stereotype an entire generation – but there are more millennials living at home at age 28 than there were in any of the past generations, at least since about 1950.  There are also a lot of 30-somethings who still have their parents paying their phone bills or helping with other expenses, even when they are adult children living mainly on their own.

Many of us in GenX were worried about this development of delayed maturity.  The hashtag, #adulting, is truly assinine.  Note that Jack Daniels started his brewery at age 14, so it is possible to become self-sufficient and even do some pretty remarkable things way before you turn 25.  We wondered what would happen when your parent’s generation started to retire and people were needed to do all of the important jobs that they had done.  I’m sure your grandparents were also worried about who was going to pay for their Social Security if no one was working.  Also, what would happen if your generation never grew up and moved out before your parents retired or died and were no longer able to take care of you.  Solar Charger, 8000mAh 3-Port USB and 21LED Light Solar Power Bank Portable Battery Cellphone Charger, Solar Panel for Emergency Outdoor Camping Hiking for IOS and Android cellphones (Black)

But this morning I realized that we were worrying about the wrong people.  I’m sure that while 35 is the new 20, eventually those student loans will be paid off and you’ll be working your way up the corporate ladder.  I know that many of you are just waiting for your parent’s and grandparent’s generation to retire and get out-of-the-way so that you can advance.  I’ve also got to believe things like having kids will make you want to get your own space and a refrigerator on which to hang artworks from your elementary schoolers.

The real issue is your parent’s generation.  They don’t have anywhere near enough money to continue to live on their own all the way through a 30 or 40-year retirement that the are expecting to have.  To generate a $50,000 per-year income, which is probably about what it would take for them to continue to live in their home and continue to live about how they are now, they will need to save up about $1M by the time they retire.  Really they should have about $2M since there are also medical bills and a lot of retirees want to do some traveling when they retire.  The trouble is that the average person approaching retirement has about $135,000 saved up.  And that is the average, which includes some people who have several million saved tipping the scales.  There are a lot of people who have $50,000, or $20,000, or $2,000 saved beyond their home.

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In the past, many in their situation would have had the option of selling their home and moving somewhere cheaper.  If they were to move to a small apartment in a safe but unspectacular neighborhood, and not a condo on the beach or in a high-rise in downtown, that would help them get maybe a decade or more before they ran out of money. The issue is that a lot of them still don’t own their home.  They refinanced their mortgage and took out money to put you through college, or upgrade the kitchen, or pay off your student loans or credit card bills.  Many people bought bigger homes in their late forties or fifties and started all over again with a 30-year mortgage.  That means their home won’t be paid off until they’re 80, and they’ll only have maybe 20-30% equity when they hit retirement age since you pay mostly interest at the beginning of a loan.

So what happened with your parent’s generation that didn’t with your grandparent’s?  The issue is that your grandparents had a pension plan where their employer put money away for them and paid them less in salary.  Because they had a lower salary, they had smaller homes, took fewer vacations and cheaper vacations, and cook at home most meals.  Your grandmother is probably a much better cook than your mom, and that is because she has had 30 years of practice.  She didn’t do take-out unless it was a casserole she took to a church potluck.  Your grandparents also probably didn’t have two cars, the expense of two sets of work clothes, the daily lattes, and the cost of childcare.   They also had college tuition costs of about $3,000 per year in today’s dollars since they could not afford any more than that so universities kept frills to the minimum and didn’t ask for high tuitions.   In exchange for this more meager living, they had a pension plan waiting for them at retirement.

Your parents instead got higher salaries with the expectation that they would then save up for their own retirement.  This was actually a better deal since the returns on pension plan investments aren’t as great as returns one can get investing for oneself since the pension plan manager needs to be conservative (and get lower returns) all of the time to ensure there is enough money to keep the payments for current retirees flowing, but an individual can be aggressive during the first 30 years and then shift to a more conservative mix near the end.  The trouble is that your parents used the extra salary to buy bigger houses, take more lavish vacations, pay high college tuition costs and living costs for their college students, and eat every meal out.  Retirement was always something that they would worry about later when they didn’t have this need or that crisis to take care of.

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With $130,000 in savings, living in a standard home even without a mortgage, they’ll probably be able to eek out 5-7 years before they’ll run out of money.  This is assuming that they don’t have any major medical expenses, don’t travel the world, and that the stock market cooperates to a good extent.  A bear market, a mortgage payment, or a big medical bill could cause them to run out much sooner.  And what will happen then?

The most likely thing is for them to give you a call.  At that point you’ll be over at their place, having a big yard sale to sell off all of the stuff they’ve collected over the years (some of it will end up at your house), then they’ll be moving into that home office, guest bedroom, or workout studio you’ve made at your home.  Maybe you’ll still be living at your parents home, so you’ll just take over the mortgage payments and the grocery bills.BarksBar Original Pet Seat Cover for Cars – Black, WaterProof & Hammock Convertible (Standard, Black)

It will be nice to have them around to help out with watching the kids, assuming they’re interested in that.  But the house will suddenly feel a lot smaller, and there will be the inevitable power struggles and in-law struggles that come with multi-generation households.  Meals out will become a lot more expensive, as will vacation since you’ll be getting extra hotel rooms and tickets.  This is not a terrible arrangement, with many advantages such as your children getting to really know their grandparents, the ability to share some of the household chores (assuming your parents don’t decide it is your turn to take care of everything), and an easy transition when they become old enough to need a lot more help with things.  It is actually very common in Asian countries, especially in areas where housing prices are astronomical, and was the standard in the US for many families when most people were farmers.

Still, you had better start thinking in terms of how you will handle having a full household, both in managing expenses and living arrangements.  In the next post, I’ll go into some steps to take to get ready, starting with having a frank conversation with your parents about their finances.

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Have a question?  Please leave it in a comment.  Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Endless Nights of Fun with Friends for $3.75


Finding money in your budget for investing is tough, particularly when you are young.  Unfortunately, that is exactly the time that you should be investing since a) you need to start building up a wealth cushion to protect you from Mr. Murphy and b) every dollar you put away now will be worth something like $500 when you retire, versus each dollar being worth about $4 if you start saving and investing at 45 when you have a larger income.  Think about that – the $2000 you sink in an IRA when you are twenty years old could be worth $1 Million when you are 65 – enough to pay you $50,000 per year without ever touching the principal.  The trouble is scraping together $2000 when you are twenty.

Probably the thing that makes saving money the most difficult when you are young – other than the fact that you probably don’t make a whole lot – is that a lot of the social scene at 20 centers around going out to places and spending money.  Going to movies, going to clubs, and as you get older, drinking a lot of alcohol at $5 per drink.  (A liquor license costs a bar something like $100,000 per year.  Imagine how much money the bars are making off of you twenty-somethings each Friday and Saturday night to cover this hefty tax.)

One thing I discovered in college, however, was that one of the best ways to socialize was to simply have some friends over.  We would invite a couple over, make some tea (for some reason we drank a lot of tea), and pull out the cards.  Rather than being at a loud club unable to hear each other talk, paying $10 at the door, $40 each for drinks, and $10 for parking, we were having a great time with great conversations for almost free.

One of the reasons was the purchase of a little book called “Official Rules for Playing Cards” by the US Playing Card Company.  The book only cost about $1.50 back in the 1990’s because the company was more interested in selling cards than they were in selling books.  The book has rules for over 250 great games, including Canasta, Rummy, Bridge, Pinochle, and even poker.

I couldn’t find that particular book for sale anymore, but I found the Bicycle Official Rules for Card Games for $2.75.  I’m sure that it is the same book since the US Playing Card Company bought the Bicycle Card brand several years ago (they make almost all of the cards made in the world, I think).  Just buy the book and a pack of cards from the dollar store (ok, maybe three or four packs so you can play canasta) and you’ll be ready for a lot of fun.  All for something like $3.75.

I know what some of you are thinking – playing cards sounds kind of lame.  Just try it once or twice with some good friends and I think you’ll find yourself laughing and having a great time.  A much better time than you had last weekend at the bar without the cover charge and the chance at a DUI when the liquor gets the better of your judgement.  Then take that $100 you would have spent at the bars and send it into your mutual fund or your IRA account.  Just do this about twice a month and you’ll have that $2,000 socked away, growing tax-deferred before you know it.  And if you really need to drink to have fun, pick up a twelve pack of beer for about $10 to drink while you’re playing.  It will still be a lot cheaper.

What do you do for fun that doesn’t cost a lot?

Please contact me via vtsioriginal@yahoo.com or leave a comment.

Follow me on Twitter to get news about new articles and find out what I’m investing in.  @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

It’s Time to Confuse Target


I do not have a Facebook account.  I feel that it is creepy for people I barely know to know a lot about me.  This is especially true in the world with cheap computer hardware capable of storing a lot of information and accessing it quickly.  There are various websites that compile the information you leave about yourself on the web.  A robber who knows you just bought a new TV from a conversation in a chatroom can read that you are on vacation from a Facebook post, or just know when you’re at work, and head over to your house to rob you.  Now your stalker can even get a picture of your house from Google maps and know you have a big bush hiding the front door, usually from a  link on your online phone listing.

I have also always been reluctant to get the store discount cards and fill out surveys.  I rarely send back the registration cards for products and software I buy, despite the warnings that doing so will deny me future benefits and information.  I worry that companies are building up a dossier on me that will be used for marketing, and later by a shady government group to tax me for the poor decisions I have made.  The Ding Dong tax is coming – just you wait!

I’m not paranoid, they’re just out to get me.  They’re out to get you too.  No, really!  There is now proof.  Recently it has been disclosed that Target Store tries to determine which customers are pregnant so that it can market brands to them.  They have found that if they can hook people while they’re all full of hormones and emotional over a new baby, they can get customers for life.

Other stores try to do this too.  If Target waits until you actually have the baby and the news becomes public record, they have found out that they are too late since there will be a lot of companies also marketing to you for your business.  They want to predict when you (or your wife) is in the second trimester and start hitting you up then.  To do this, they actually build up a file on each person who shops at, or even just contacts their customer service, and watches for telltale signs of a pregnancy.

So what if you’re like me and don’t want Target to be sending you coupons for diapers before you even tell your parents?  What if you don’t want to get coupons for laxatives just because you picked up some prune juice at the store?

Maybe you could try to limit the amount of information you put out there.  You could forego the sales prices and not get the shopper cards.  Maybe you could avoid the surveys.  Maybe you could never give your right name on a comment card.  Unfortunately this will not stop stores like Target that save your actual buying history in order to find the patterns in your spending.

The best way to thwart pattern recognition programs is not to limit information release, because they will always build up a dossier as you leak info little by little over time.  What you need to do is to put out a lot of information – some of it bad.  Make it impossible for them to sort out the good information from the bad.

Fill out every survey you can get your hands on.  Sometimes make $500,000 per year.  Other time, make $20,000.  Sometimes have a mansion in Malibu.  Other times, live with your mom in Wisconsin.  (Note, don’t take any loan offers that come because you say you’re a millionaire – that would be fraud.)

You must do this with your shopping too.  Some companies have learned that you may lie on surveys, but when you spend your money you must be serious.  If you own a cat, throw in a bag of dog food once in a while into your cart.  If you are underweight, buy a few cases of Slim Fast every now and then.  Buy some baby clothes and lingerie together, just to make them wonder what you’re up to.  Get a subscription to Guns and Ammo and Field and Stream, but then also become a member of PETA.  If you’re  a forty-year-old guy, get a subscription to Seventeen and Cosmo.   Keep them guessing.

If you really want to flood their file servers, swap shopping lists with your neighbors every so often.  Not only will you help keep your privacy from marketers, you can learn somethings about those who live around you.  If you are an 18 year-old college student, maybe see if the 90-year old lady down the street would like you to pick up some things for her at the store.  Be sure to put it all on your shoppers card.

Let’s start a movement to set marketing back 50 years.  Together, we can have all of our in boxes full and our privacy intact.

Like this post or strongly disagree?  Please, Please, Please, Please leave a comment or write me at vtsioriginal@yahoo.com.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Photo Credits: Steven Goodwin,  http://www.7rains.com , downloaded from stock.xchng.