| Reader Profile: SB Posted: 13 Dec 2011 12:45 PM PST The following is the latest post in my "Reader Profiles" series. Each post in this series details the financial situation and challenges of an FMF reader. The purpose of this series is to help us all identify with people like us (in similar situations -- not all will be, of course, but eventually I'm sure you will find someone like you here), get to know the frequent commenters on the site, and hear some financial wisdom/challenges from people other than me.
If you're interested in contributing to this series, then drop me an email. The series seems to be very popular with readers and I need a steady stream of new ones to keep it going.
Next in the series is FMF reader SB. He answered my questions (in red below) as follows:
Please tell us a bit about yourself.
We are a couple that have been together over 17 years now (one 50 and the other 45 years old), have a house, 4 dogs and a live-in step parent. We both have stable jobs working for a major university (non-profit) and while we don't make a great income, we have incredible benefits. Between the 2 of us, we gross around $99k/year. We work together making financial decisions and both have similar goals in that respect, which helps a lot. We're also both savers, which helps, too. Even though we don't make that much money, we have managed to grow our wealth considerably over the years, despite having been unemployed for almost 2 years. We managed to keep up with our bills, 3 mortgage payments, and even managed to contribute to savings during that time. I guess we were well positioned to face the recession and are very thankful for that.
Describe your financial situation (who works in your family, how your income is (general), how your expenses are, etc.).
Currently, our financial situation is as follows: - Our current house has a mortgage of $1181/mo, which we round up to $1300, not including taxes and insurance, which add about another $250/mo to this.
- A rental house with a mortgage of around $850/mo, which we round up to $900, including taxes and insurance adds another $250/mo to this. We receive $1000/mo in rent for this property.
- We have no credit card debt, but do use our cards as much as possible as they're reward cards and we earn anywhere from $400-500/year using them correctly. These are paid in full every month.
- I currently contribute 27% of my salary to my 401k and my partner contributes 20%, both of these are matched with 9% from the school.
- We contribute $420/month to 7 DRIP plans that we've been a part of, along with $25/mo to a straight savings account.
- We max out our Roth's at $11000/year ($5000 and $6000/yr).
- We also collect another $775/mo in rent from a basement apartment that we keep rented out to college students.
- We have 2 vehicles, one a 2000 and the other a '98, both paid for. These will need to be replaced at some time, but we could probably pay cash for these items.
- Current value of taxable investments is roughly $110k
- Current value of 401k's is about $139k
- Current value of Roth's is about $77k
- Current value of rollover IRA is about $136k
- Current balance of liquid savings is $9400
- I don't include any home equity as that's evaporated with the housing collapse.
What are the current financial issues you're facing (saving, paying off debt, etc.)?
Currently our only financial issue is saving more for retirement. We figure we'll need to amass roughly $2M to comfortably retire, but have another 15+ years to do so. We're also looking at trying to purchase a retirement home in Florida and use it as rental property until we're actually ready to retire at which point most of the mortgage should be paid off. We're not looking at anything grand down there, something below $100k would be more than adequate and comfortable, especially as depressed as prices are currently.
What are your plans for the future (retire early, build your career, etc.)?
While we have no real plans to retire before me reaching 65, it's nice to think about spending our golden years being beach bums. I've already got a Master's degree, so additional education isn't in the picture. The possibility of starting some small business appeals to us, but we are unsure at this point, especially with the economy in the state it's in.
What's your best piece(s) of financial advice and/or your general philosophy on personal finances?
Definitely, the best advice for anyone to live by is to spend less than you make and pay yourself first. Another important piece of advice is to take advantage of dollar cost averaging your investments and understand the time value of money. 
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| Tipping for the Holidays Posted: 13 Dec 2011 07:45 AM PST Consumer Reports lists a chart on how people tip, who they tip, and how much they tip during the holidays. Their findings:
Cleaning Person - 39% tip nothing
- 49% give cash, check or gift card
- 12% give a gift
- Median value of gift: $50
Child's Teacher - 51% tip nothing
- 11% give cash, check or gift card
- 38% give a gift
- Median value of gift: $20
Hairdresser - 56% tip nothing
- 36% give cash, check or gift card
- 8% give a gift
- Median value of gift: $15
Manicurist - 62% tip nothing
- 35% give cash, check or gift card
- 3% give a gift
- Median value of gift: $10
Barber - 63% tip nothing
- 32% give cash, check or gift card
- 6% give a gift
- Median value of gift: $10
Newspaper Carrier - 65% tip nothing
- 29% give cash, check or gift card
- 4% give a gift
- Median value of gift: $20
Pet-care provider - 65% tip nothing
- 25% give cash, check or gift card
- 10% give a gift
- Median value of gift: $10
Gardener - 68% tip nothing
- 22% give cash, check or gift card
- 8% give a gift
- Median value of gift: $25
Mail Carrier - 78% tip nothing
- 13% give cash, check or gift card
- 8% give a gift
- Median value of gift: $20
Garbage Collector - 88% tip nothing
- 7% give cash, check or gift card
- 5% give a gift
- Median value of gift: $20
What's interesting to me is that I've done this list for several years now (2010, 2009, and 2008) and in almost every case, either the percentage giving nothing has gone up, the amount given has gone down, or both. Either people are getting tired of tipping (perhaps the service is not there to warrant a tip) or the economy is hitting tippers where it counts.
Anyway, here's where we stand on each of these: - Cleaning Person -- We don't have one.
- Child's Teacher -- Our kids are homeschooled.
- Hairdresser -- My wife goes to a friend of ours who we cover with a gift.
- Manicurist -- As you might imagine, we don't have one. ;-)
- Barber -- My wife is my barber.
- Newspaper Carrier -- We give a $20 gift card to a local superstore.
- Pet-care provider -- No pets, no added expenses. BTW, it was interesting to me that the percentage giving a gift to their pet-care provider bucked the trend and went UP.
- Gardener -- My son does not get a tip for this -- though he does get paid for mowing the lawn. ;-)
- Mail Carrier -- We give a $20 gift card to a local superstore.
- Garbage Collector -- Nope. Service isn't good enough to receive a tip.
A few other thoughts: - I get a gift (usually a nice tin of cookies) for the workers at my pool.
- Cleaning people are the only ones that get either cash or a gift from 50% or more of the people.
- Cleaning people are by far the best off concerning the amount of the gift ($50 versus $25 being the next highest). Is this because this person usually performs a higher-costing service? Or maybe because the cleaner is more trusted/considered more a part of the family?
How about you? Do you give a holiday tip to these people (or any others) who provide services to you during the year? 
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| The Value of a College Degree is $1 Million -- Can Be Much More if You Work At It Posted: 13 Dec 2011 05:00 AM PST MSN says that the value of a college degree is $1 million. The details: The Census Bureau has taken a new stab at answering the age-old question: Just how much is a college degree worth? The answer: $1 million.
That is a rough average, of course, but data collected in an extensive Bureau study suggests that a college degree is worth about $1 million in additional lifetime earnings compared with a comparable worker with only a high school diploma. This is for a bachelor's degree. Advanced degrees earn more: A master's degree typically adds about $500,000 to lifetime earnings, according to the report, while a professional degree in medicine or law can easily add another $1 million on top of that. For those interested, here's the entire study. Their summary: The results of this analysis demonstrate that there is a clear and well-defined relationship between education and earnings, and that this relationship perseveres, even after considering a collection of other personal and geographic characteristics. Note that this is an analysis of income differences only. One thing it appears they DON'T factor in is the cost of the degree (it appears they do factor in the time lost in school where the non-college grad can continue to work/earn, but I could be mistaken), so college expenses need to be subtracted out. Still, this gives a pretty compelling case for the value of a degree.
That said, these are AVERAGE results. Who wants AVERAGE results? Not me. I'd prefer well above average results, thank you very much. How do you get them? I'm glad you asked. ;-) Here's what I would suggest: - Go to a good school (not a "great" one, whatever that is anyway) that offers a history of strong post-graduate salaries in your field. In other words, a good payback given the cost.
- Try to minimize costs/debts while in school by getting scholarships, working, graduating early, etc. If you want specific suggestions, see Examples of How to Pay for College Without Borrowing.
- Get a degree in a field that pays well (or at least has decent salaries). Doing what you "love" is over-rated. I contend that very few people actually "love" what they do anyway -- otherwise they would do it for free (this, by the way, is called a "hobby".) I suggest you instead get a career that you like -- one that's a good fit for you AND lets you earn a decent income. Now if doing what you "love" can make you some good money, then go for it. But my experience is that things people "love" doing don't pay very well.
- Once you graduate, you then work at growing your career to maximize your lifetime earnings. Doing this will make the difference between earning the average lifetime income and one that is millions of dollars more than that.
That's how you make way more than the average for a college graduate. Then, if you want to become wealthy, add these steps: If you do all of these things, the odds are dramatically in your favor that you'll end up quite wealthy.
Feel free to pass this article on to a high school or college student you know. ;-) 
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