Should I get a job with benefits?

Dan Danford receives questions from viewers who see his podcast on Dad's Divorce, a web site for men going through the divorce process. He recently addressed a question from a viewer who wanted to know if he should close his small business and take a job with benefits, including health insurance. Get Dan's take on it below.

And by the way, Happy New Year! Set some strong financial goals for yourself for 2010. Don't let the recession be an excuse not to address financial issues.

Don't exceed FDIC limits

One day each week, we answer a question from a reader. We'd love to have your questions. Please post in the comments section.

QUESTION: I am in my 70s and have significant savings of $625,000. I have it all at one bank. Is that dangerous? Should I spread that out? What if the bank fails?

ANSWER from Dan Danford: Dangerous probably isn't the right word. It's not prudent to exceed the FDIC limits because, if the bank fails, you are at risk for losing any amounts over the limit. So, most advisors would recommend that you split this money among several different insured banks. A good advisor could help you do this within one insured brokerage account. We have a number of clients who own multiple FDIC-insured CDs within the same account.

The bigger question, and the one you didn't ask, is whether having significant amounts in bank deposits makes any sense at all. I know what you are gong to say; you are too old to take any risks with your money. My answer to that question is that the biggest risk facing retired folks today is that they'll outlive their savings. Inflation is a continuing force, and bank deposits don't keep pace with inflation. Simply, a new car's worth of money today won't buy a new car ten years from now, even with the banker's interest added in. Or, at least, it never has in the past.

Unless you have health issues I don't know about, you could easily live another fifteen to twenty years. The investment approach you are using leaves you exposed to the biggest risk of all. And the FDIC won't help you with this one.

A few ideas for last minute tax planning

By Dan Danford, MBA, CRSP®

It's not too late to put a few strategies in gear to save money for the 2009 tax year. You can still fund an IRA, of course, which shaves off some of your taxable income. Here are some other strategies, which I'll be discussing and sharing in depth on KMBC in Kansas City on Wednesday, January 30, in the 7 a.m. and 8 a.m. hours.

College 529 Plans: 2009 Missouri or Kansas Tax deduction for contributions to a 529 plan.

Charitable gifts: Write a check today or tomorrow for your favorite charity, and take a 2009 deduction.

Medical expenses: Only deductible above certain levels, but – if you are there this year – stock up on contact lenses or other allowed stuff. Go on a medical buying spree today!

Defer Income: Tell the boss to pay your 2009 bonus in January. Less 2009 income means less tax in April.

Take gains or losses on investments: Sell mutual funds tonight or tomorrow to balance gains/losses. Again, less 2009 income means less tax.

Don't worry about tax breaks, just save

One day each week, we post a financial question from a reader and answer from Dan Danford. This week's question is about retirement savings for those with significant incomes. If you have a question, post it in the comments section.

QUESTION: I am a physician. I make too much to qualify for a Roth IRA, and I am considered a highly compensated employee, so I’m very limited in what I can contribute to our work retirement plan. I don’t really understand why I am so limited. Do I have any options for retirement savings?

ANSWER FROM DAN DANFORD: Our government punishes high earners with limitations on how much they can contribute to retirement plans. It's a throwback to day when managers conspired to keep workers out of plans, while funding their own to the max. Now, people at the top a the wage ladder face face daunting rules about deductible deferrals or contributions. Once you've met those limits - and I assume from your question that you have - there are just a few options left to you. Depending on where you work, you might try a deferred compensation plan. These are often funded by an insurance product, but they can be created by your company as a benefit for a select group of managers. This type of program is often used to augment qualified retirement plans for highly compensated employees.

As an individual, you could look into buying an annuity product though an insurance company. I don't often recommend annuities because most feature high costs and limited flexibility (including surrender charges, which I hate). But, they are a way to set aside money towards retirement when you are maxed out on retirement plans.

Last, just set money aside in an investment account and don't worry so much about the tax breaks. Only dividends and interest are taxable as income, and it's easy to minimize those on an annual basis. Gains will be taxed at favorable rates, so that's a benefit, too. Importantly, you have maximum flexibility with accounts of this type. No tax penalties, and you can spend whenever and however you like.

From Kiplinger's: Gift ideas that save the recipient money

So we're all a little tight on funds these days. Here's some terrific ideas from Kiplinger's that help save the recipient money. What a wonderful idea. Make sure the person you're buying for will really use the items you're giving though. Gifts that really say that you know the person and their taste are the best received.

http://finance.yahoo.com/banking-budgeting/article/108399/12-gift-ideas-that-save-money-for-the-recipient?mod=bb-budgeting

Frugal by nature

By Robyn Davis Sekula

In the past few years, my income has increased. In fact, it’s more than tripled. It’s been terrific. But I have spent so many years not making all that much that I’ve developed some thrifty habits. And even now that I’m making much better money, I’m not willing to let go of most of my frugal ways.

Why? Mainly because I enjoy getting a bargain. Plus, I believe that most items in the world are overpriced. Children’s clothing is among the things on the top of my list. Since my first daughter was born, and I wasn’t making much money, I picked up most of her clothes at yard sales. I then passed those on to my twin daughters a few years later. To this day, they still wear hand-me-downs. It doesn’t make one bit of difference in their lives. I find that coats, sweaters and fancy dresses are among the most overpriced and the most under-used by children. I regularly pick these up in almost new condition and pass them along to my children. Or I buy new clothes at the end of one season and use them a year later. But I never, ever pay full price for any clothing. It’s just about never worth it.

Books and toys are also just as good used as they are new, for the most part. I buy books for myself, my husband and my children second-hand. They read just the same and can be less than half the price of new. They’re essential in my home for all five of us.

However, one of my frugal habits has gone by the wayside. Now that I need to dress professionally, I do not buy second hand clothes for myself or Greg. Adults are hard on clothes. We keep them for a long time and wear them for years. I’ve gotten picky about my clothes. I buy quality items, usually from Land’s End, Talbots (actually an outlet they have in Lexington, Ky.) and Coldwater Creek, which is a wonderful catalog company. The clothes wear well and stay with me for a long time. Also, fit matters, and you simply can’t try on clothes at Goodwill or yard sales. I do buy the occasional item at a yard sale, but not often, and only if it’s very cheap. If so, and it doesn’t fit, I donate it to Goodwill and move on.

I’ve also given up the routine eating out that tends to drive the lives of those with small children. Now, Greg and I go to nice restaurants and hire a babysitter. It’s an expensive evening out, but extremely valuable to us. We spend money now on things that mean something.

So where does our money go? This year, I made $25,000 extra over last year’s income. I made a point not to blow it. I paid off our van, which had $10,000 in debt, and put away $5,000 each for us in Roth IRAs. I also doubled our payments to our second mortgage, and at the end of the year, doubled the amount we’re putting away for the kids’ college funds and through Greg’s 403 (b) at his work. I’ve also built up savings. We did splurge on a new TV, but not much else.

The point is this. I simply LIKE being thrifty. After 15 years of working in professional jobs where I made sometimes as little as $15,000, I have gotten into frugal habits that stay with me. I now can afford some things of quality, and I buy those things when I need them. I probably won’t ever start shopping at Gymboree for all of my kids’ clothes. Yes, they sell great stuff, but good gracious, $50 for a kids’ dress is nuts. It pains me to pay that and know that it will be stained and outgrown in a matter of a few weeks. What I really love about being frugal, too, is that I’m going to pass these habits on to my kids. They are having a happy childhood, thank you very much, doing simple things like baking cookies and playing dressup, and reading books with us. It’s all they need.

I don’t really like expensive jewelry (too flashy) and cut flowers just die. Want to get to my heart? Buy me an iTunes gift card. Nothing means more to me than permission to buy music.

We dumped cable TV this year because we realized we really don’t watch $60-some worth of TV each month. Instead, we have Netflix, and their wonderful Roku watch-instant player.

The best thing you can do for your family’s budget is find the things that you’re spending on that really don’t matter to you. Do you read the magazines that come into your home? Do you actually watch much TV? How often do you take out that boat? Where is the fat in your budget, and what happens if you trim it?

I’d love to hear your own stories of frugality. Post in the comments section.

Congratulations to Dr. Jason White

By Dan Danford

Sometimes we need to take a moment to just appreciate the folks around us. I want to take a moment here, publicly, to thank Dr. Jason White for his guidance, particularly during this past year. Jason is our director of investments and he was recently recognized by his hometown, Raytown, and inducted into the Raytown Alumni Hall of Fame. What a terrific, well-deserved honor. Here's the full article.


Jason White inducted into Raytown Alumni Hall of Fame
Dr. Jason White, Director of Investments at Family Investment Center, is one of the newest members of the Raytown Alumni Hall of Fame. He was inducted into the Hall on November 1 as one of only five other inductees and was honored for his accomplishments in the fields of investment management and economics research. White, the youngest ever Raytown High School inductee, was recognized as a dedicated teacher and community member, successful entrepreneur, portfolio manager, and financial consultant.

"Jason has made really strong contributions to the university, to our firm and to the community as a whole," said Dan Danford, Principal and CEO of Family Investment Center. "He absolutely deserves this honor and we're so pleased to see him recognized for his hard work, particularly at such a young age."

The Alumni Hall of Fame is a program that pays tribute to alumni who have achieved a certain level of distinction in their lives and careers and also celebrates the rich heritage of education in the Raytown community. The school district's nominating committee selects individuals of noteworthy success in areas such as business, visual or performing arts, community service, academics, athletics, or military service.

White has received numerous other awards, including the NWMSU Alumni Association Distinguished Faculty Award, Sam Walton Free Enterprise Fellow, Mortar Board Teaching Excellence Award, and the Melvin and Valerie Booth College of Business Dean's Teaching Excellence Award.

Handling student loan debt

I think it's safe to say that the majority of college graduates have some sort of student loan debt when they graduate. It's almost commonplace. If you've chosen a private school and financed the entire education, the debt can easily be in the six figures, and if you've gone to graduate school on top of that, you could be talking about $150,000 or more. It's a huge, incredibly daunting figure.

In this episode of Dan Danford's podcast for Dad's Divorce, he shares tips and ideas for handling student loan debt. Remember, as your children choose an educational institution, encourage them to choose a lesser cost school if they'll be incurring debt. It can make a huge difference in their lives down the road. The less debt they have, the more freedom they have in their careers. Watch Dan's podcast below for more advice.

Risk without regret

Investments carry risk. It's just part of the deal. Our friends at Yahoo! Finance explored the idea of calculated risk and interviewed our Dan Danford for the piece, which was published today on Yahoo!.

Our thanks to Yahoo! Finance and the writer, Sheyna Steiner.

http://bit.ly/6wq4Zm

Monday question: Why not just savings account?

On Mondays, we answer a question from a reader. If you have a question for us, post it in the comments section or DM us on Twitter @family_finances.

QUESTION: My wife and I are retired, both of us in our mid-70s. We lost a good bit of our retirement account in the past two years. Given the problems with the stock market, does a savings account paying 3 percent sound like a good place for our money? We find it difficult emotionally to stay in the market, and my wife especially is losing sleep over it. We have less than $100,000 in retirement savings.

ANSWER FROM DAN DANFORD: Well, I'll eat my hat if you can find a saving account paying 3 percent today! Even CDs - where you "lock up" your money for a lengthy period - aren't that high. This is a very unique investment period, and the only redeeming value of cash or bank accounts is that you won't lose money. In the long run, of course, you will because money rates are insufficient to offset inflation. That's why most advisors recommend a diversified retirement portfolio.

The past several years, indeed the past decade, have been very tough on investors. Remember, though, most folks don't buy stocks because they want to, they buy them because the need to. Simply, no other asset class has the demonstrated potential to beat inflation over time. Retired people (you are a great example) must look forward to several decades of future life expectancy, and "keeping money in the bank" hasn't historically fared well against that scenario.

There is a middle ground, though. We advise clients to maintain diversification at a tolerable level. In other words, keeping just 30 to 50 percent in stock market mutual funds is enough for a solid inflation hedge. It's tolerable for most families because the downside risk is mitigated. If the stock market falls by 40 percent, and you've limited your portfolio to 50 percent in stock funds, then you maximum exposure is a 20 percent slip in total portfolio value. Most people can tolerate a temporary dip like that to maintain buying power throughout their investment period.

In investing, you must focus on future goals and needs. Turn off the television market pundits because they yap about the next 15 minutes or 15 weeks. And they don't know anyway. Sleep comes easier when you ignore all the bad news. I've been doing this now for 30 years and there has never been a moment when the doomsayers were quiet! In thirty years. It's not rocket science, but it's not Armageddon, either.

New laptop in your future? Here's a guide

Many folks turn to computers this time of year as a great present. And it is. But one note: those popular netbooks that you see floating around yes, are sleek and small, but they'll be limiting if you try to get by with just that. Instead, think about a more lasting purchase: a full-size laptop.

Here's a good, short guide to Windows laptops we ran across on Yahoo! Finance. Remember, your best purchase isn't always the cheapest option. It's the option that will last the longest and give you the best value.

http://customsites.yahoo.com/financiallyfit/finance/article-108342-3446-3-4-loaded-laptops-for-600-each-html?ywaad=ad0035

Pay attention when remodeling

By Robyn Davis Sekula

So let's say you want to remodel your house with hopes of selling it and gaining back most of that investment. Be careful how you spend those rehab dollars, reports Remodeling Magazine. It matters what you do and how you do it if it's important to you to get that money back.

The photo I posted with this article shows my renovated attic, which we turned into an office in January 2007. Adding space by remodeling an attic or basement is one of the better choices, MSN says. "You get more bang for the buck putting money into a basement or attic upgrade than adding a wing to the house," the article states. "Some of the highest-return projects include a deck addition and quick, conservatively priced replacements of old siding, entry door or windows."

Here's a summary of the article and more great information on MSN.com:

http://realestate.msn.com/article.aspx?cp-documentid=22621710>1=35000

On the Right Track

Jason T. White, MBA, Ph.D.
Director of Investments
Family Investment Center

Celebrating its 125th year, the Bureau of Labor Statistics (BLS), the data crunching arm of the U.S. Department of Labor, gave the nation an early Christmas present with its December 4 release of the latest employment statistics. The news was good!

The unemployment rate fell from 10.2 percent to 10 percent for the month of November. Job losses essentially slowed to zero, with a reported 11,000 job decrease in nonfarm payroll unemployment, the lowest job loss total since the recession officially began in December 2007.

From Fall 2008 to late Summer 2009, the economy was shedding jobs at a rate of over 400,000 per month, with the most severe monthly losses approaching 800,000 jobs in the Winter of 2009.

The economy is picking up steam, and I would not be at all surprised to see the December report be our first month of job GROWTH since December, 2007 – a welcome sign of rebounding employer confidence and general economic hope.

Even with this good news, the jobless picture is still sobering. There are 15.4 million Americans who are unemployed. BLS defines unemployed as those looking for work but unable to find it. The jobless total was 7.5 million, and the unemployment rate 4.9 percent, when the Great Recession began in December 2007.

The November unemployment rate among the “major worker groups” as defined by the BLS were as follows:

Adult Men 10.5%
Adult Women 7.9%
Teenagers 26.7%
Whites 9.3%
Blacks 15.6%
Hispanics 12.7%
Asians 7.3%

Job losses continued in the construction, manufacturing and information industries, while temporary labor and healthcare posted job growth. Of those individuals classified as “long-term” unemployed (those jobless for 27 weeks or more) rose by 293,000 to 5.9 million, and the employment-to-population ratio was unchanged at 58.5 percent.

It is clear to me that the economic recovery is gaining solid footing, and this is be reflected in the improved jobs picture. Look for the labor market to show increasing strength as we enter 2010.

Energy measures could save you taxes

With the end of the year coming up, we're all beginning to think about taxes. Here's an interesting story worth following on proposed new tax credits for those who purchase energy conserving appliances and take other measures that save energy. Be careful not to over-buy just to get a tax credit - but if you plan to purchase a major appliance soon, it makes sense to pay attention to this news.

http://money.cnn.com/2009/12/08/news/economy/president_energy/index.htm

Dad's Divorce: How to handle an inheritance

Every now and then, something great happens: you get unexpected money. It's a terrific position to be in. On Dad's Divorce.com, Dan Danford provided an outline of how to spend the extra money. Dan provides a weekly podcast for the site.

Steer away from company stock

Every Monday, we answer a question from a reader on our blog. This week, we're answering a question from a connection on Facebook. If you'd like to pose a question to us, post it in the comments section or DM us on Twitter. We're @family_finances.

QUESTION: How often should we rebalance the investments in our 401(k)? I wrangle with this a lot and I know many people who just dump everything into their company stock and sit back. (Good luck.) What's the right strategy?

ANSWER from Dan Danford: Company stock is a terrible choice. I once worked at a bank where almost everyone "directed" their profit sharing balances into bank stock. Long-time regional banking group, with a decades-old record of paying "rising dividends." Eighteen months after I started there, the bank failed (no fault of mine, though!) and employees I know lost their entire retirement savings. Sounds like Enron, right? This nasty scenario repeats itself every few years, and employees, managers, regulators, and legislators all scream in anguish!

But in every case, a brief discussion with any competent advisor would have navigated those portfolios into a diversified model. There are just too many variables beyond your control to hitch your entire retirement savings to one company's wagon. Five to 10 percent in company stock would be the max I'd recommend.

Instead, build a diversified portfolio using index or other low-cost funds, and keep buying no matter the current market environment. Most investment performance comes from the mix of investments in a portfolio. So, most advisors advocate asset targets tailored to an investor's situation - say, 80 percent stocks and 20 percent bonds for an aggressive long-term portfolio. However, that exact mix changes daily as the markets fluctuate and new deferrals are added. So, it pays to re-visit the portfolio occasionally and re-balance if desirable. Some 401(K) plans have the technical ability to do this automatically each month, quarter, or year. Occasional re-balancing makes good sense, and we typically do it with our client portfolios on an ongoing basis (as an advisor judgment, though, without any "automatic" feature).

Strip away the jargon and re-balancing is actually a shift of assets away from the best-performing sectors into the worst. Not everyone wants that, and there is powerful debate within the professional community about the proper frequency and benefit. If a plan offers it, some employees will probably use it. It might even be beneficial during certain periods. For larger balances, though, I prefer some human input into those decisions.

Many 401(K) plans offer "lifestyle" or "target date" portfolios. This is a simple auto-pilot choice where the fund is automatically adjusted for your age and risk tolerance. I recommend them, especially in early years where balances aren't too large. Let professionals adjust the asset targets for you.

Be aggressive, and stick to it. Most people, given their own choices, are too conservative with retirement investments. These accounts are long-term in nature, and aggressive investing is rewarded over lengthy periods. Make aggressive choices, stick to them through thick and thin, avoid tinkering, and conduct a thorough review every two to three years. You'll be amazed how much you can accumulate effortlessly.

Collaboration: Vicious group-think with a point

Editor's note: We're re-posting this, as it has been popular with our readers and we wanted folks to find it easily. Enjoy!

By Dan Danford, MBA, CRSP

The great manipulation technique of this decade is “collaboration.” This horrendously popular business term has been deployed in all areas of American life.

We hear it constantly at work, and now it is now worming its way across the nation like some dreaded crop blight or tree disease. A recent Google search yielded some 83,000,000 hits in under a quarter-second. That’s five times more than “synergy” and four more than “paradigm.” We’re talking the World Series of inane business terminology, here.

According to Webster, to collaborate means 1) to work jointly with others or together especially in an intellectual endeavor, 2) to cooperate with or willingly assist an enemy of one's country and especially an occupying force, or 3) to cooperate with an agency or instrumentality with which one is not immediately connected.

Of those three, happy “collaborators” likely prefer the first, which sounds noble, but the bell which rings true today is the second; that is, to cooperate with or willingly assist an enemy (emphasis mine). That’s because collaboration is usually suggested by the strong as an effort to manipulate the weak.

Think about it. Do cries for collaboration ever rise up from the peasant classes? Not so much. They nearly always reign down from above. “Go, therefore, and collaborate on the issue of diminishing widget sales in the direct distribution channels of our Northsouthern region,” declares Mr. Puffy, the CEO. “Help them see why I think we should close that plant.”

In the community, it’s “let’s gather a group of social agencies to collaborate about neighborhood floral disintegration. Perhaps we could jointly commission a study to determine possible solutions,” intones Pansy Marigold, owner of the International Floral Studies Group. Blah, blah, blah, blah.

I loathe manipulation. Manipulators think they are smarter and sneakier than all the rest of us. They devise grand schemes to feather their own nest, and then coerce others to pay. They are bullies with velvet gloves. Collaboration is their tool of choice. “Everyone gets a say,” they’ll explain, but results are known far in advance to anyone with a brain. Ask around the office; manipulators think they are smarter, but they’re not.

There’s a sign on my desk declaring “none of us is as dumb as all of us.” The simple fact is that collaboration is often a management technique designed to exploit group dumbness. Most times, the lead collaborator has an agenda and a desired result. Others in the process are unwitting co-conspirators. They show up, hoping they can add data, or resources, or wisdom (or, with any luck at all, humor). Wrong. They are, in fact, adding dubious credibility to both the agenda and result.

Collaboration as intellectual endeavor? Maybe it could happen. When two university scholars gather at Starbucks to discuss research. Or when Bobby Flay and Rachel Ray conspire to create some new dessert for the Food Network. On ESPN commentators engage lofty discussions over the merits of a Wildcat offense in the NFL. (Though a friend just emailed that last weekend he heard a broadcaster suggest that two bruising linebackers "collaborated" on a tackle. I kid you not.)

Intellectual? Not today. Collaboration is a transparent and weak management tool. The suits want us to think we have input, so they put us in a group and guide us to their goal. But we have a secret weapon. Any of us are smarter than that group of us. As a tool, collaboration is dull, clumsy, and ineffective. Manipulators beware: we’re on to your hollow game.

Responding to commonly-asked questions

"Our communication approach is different because our relationship with clients is structurally different."

Founder Dan Danford Responds to Common Thoughts and Questions

Family Investment Center is pretty well known beyond St. Joseph and Missouri.

That's very true. We've been in a lot of industry journals and several national magazines and newspapers. The day I was quoted in the Wall Street Journal was a big one for me! Recently, Jason White talked about retirement investing in Business Week. The past two years, Medical Economics magazine named us as one of the nation's 150 top advisors for physicians - the only Missouri advisory firm west of St. Louis.

What's the main challenge facing Family Investment Center today?

Our firm plays on a national stage, yet we're pretty quiet in the local market. We manage almost $60 million for our clients, and we're very active in the community. But our corporate visibility remains relatively low and a lot of people don't know enough about us.

Why is that?

One reason is that we tend to work with people who already have some money. If you mainly work with people who have sizable portfolios, how many people is that in St. Joseph? Our client base tends to be deep and narrow.

Why talk about marketing, then?

There are a lot of people here who will need our services at one point or another in their lives. They will retire and cash out their 401(k), or they will inherit money from a relative. Where will they turn for quality help? And, of course, there are others in our neighborhood that might be frustrated with their existing broker or bank.

Obviously, St. Joseph has a number of investment firms.

We have a different idea about investing, that's all. There are really just two structural approaches to managing portfolios. The traditional method is that you manage it yourself with the aid of a broker. The broker provides ideas and information, and helps you buy or sell securities. Some larger investors use multiple brokers to gather more ideas.

The other approach - our approach - is to hire experts to manage the portfolio for you. This has been around for a very long time, too, but was limited to wealthy individuals and institutions. Through first-rate technology, Family Investment Center brings that approach to all our clients.

How unique is that business structure?

Well, we're kind of unique in this marketplace, but similar firms are very successful throughout the nation. In fact, SEC-registered investment advisors are one of the fastest growing segments in the investment world. Registered investment advisors have been around since the 1940s, but their original focus on large foundations and wealthy individuals kept them out of the public eye. Until recently, that is.

Why is that better?

Well, it depends on the investor, of course, but I've found that most people aren't well suited to evaluate a broker's recommendation. There are a lot of moving parts, with numerous variables. It's uncomfortable to decide on things you don't really watch on a daily basis, or completely understand. When someone shows a better way, people take it.

Our investment approach is academically sound. We build diversified portfolios and monitor them on an ongoing basis. We use institutional research and top-notch managers from around the world. It's a proven system and it really works.

What do you do best? What separates you from others?

Two main things, I think. Our attention to proven investment strategies and vehicles keep our clients in the mainstream of investing. We don't get cute and we stick to solid investment basics. We do things that have worked in the past and trust that they will work in the future, too. So far, that's been the case.
Our communication approach is different because our relationship with clients is structurally different. We don't sell anything except our expertise. We educate and explain, and we're pretty good at it. We are knowledgeable consultants, and clients appreciate our objective judgment and insight.

Any investors who don't fit your model?

If what you want is someone to hold your hand or stroke your ego, we're probably not the right firm for you. If you want a proven process with high odds for success, we're your guys.

How is Family Investment Center regulated?

We used to get that question a lot, but now that we've been around since 1998, it's less of an issue. We are registered with the United States Securities and Exchange Commission (look up our SEC file number #801-63744) and all client portfolios are held at a non-related investment firm. Clients get monthly statements directly from their custodian to verify portfolio holdings, prices, and balances. It's a very good system.

Change habits for better 2010

Periodically, we get inquiries from journalists writing about personal finance. Often, they're seeking advice for readers and viewers. Recently, we got an inquiry from a reporter wanting to know what new advice is out there for their readers. Dan Danford had a great response, so I'm posting it here. --- Robyn Davis Sekula

By Dan Danford

There's almost nothing new under the financial sun. But that doesn't mean that we can't learn something new every day. For 2010, some of us need to incorporate some new behaviors based on these past few years. One lesson might be to turn buying inside out. In earlier years, we used a credit card to buy things today and pay for them with future earnings. A newer and better approach is to put money aside today so we can buy things later. It's inside out.



Another good idea is to treat your home mortgage like a very good friend. Some folks hate debt and focus a lot of attention on "paying it off soon." Maybe a better way is to maintain it like a vintage car, and lavish attention on maintenance and repair. Keep current with the payments, refinance when desirable, and only pay it off when no better option for investing exists. There is almost always a better option for long-term money.

My take is that many people think they are doing the right things, but they are not! We learn financial things from our parents, grandparents, and friends, and much of it is twisted by myth and self-interest. Tough times create an opportunity to learn some better things for ourselves.

It's the most expensive time of the year

We've already warned you of the dangers of being one of those parents who just HAS to have the most in-demand toy of the Christmas season for your child. It's silly, and most of the time, by January 1, your kid has forgotten completely about whatever must-have you've procured. People pay way too much for these items and even get into violent fights over the toys. Definitely not worth it.

If you'd like to have a fun look through must-have toys of Christmases past, here's an interesting story from Esquire.

http://bit.ly/6L8Hn8

Saving goals and financial recovery

Every week, Dad's Divorce, a web site for men going through the divorce process, posts a podcast with Dan Danford of the Family Investment Center. It's a great platform for delivering information in a succinct, simple way and we feel it helps many people. Of course, the information doesn't just pertain to men. It's great advice for anyone. This week, we tackle a subject that has been on many minds: saving goals and financial recovery. We'd love your feedback.

It's ok to get a tax refund

On Mondays, we answer a question on the blog from a reader. If you have a question, please leave it in the comments section.

QUESTION: I usually get a large tax refund every year. I use it to pay off debt or buy something I want. Is that a mistake? Am I letting the government borrow my money for free?

ANSWER from Dan Danford: I hear stuff like this all the time. Yes, the government is "using" your money all year long and then sending it back to you at tax time. But, really, would you rather save it yourself and write them a big check each April? My experience is that people hate writing that check and most prefer an annual refund. From a pure financial standpoint, the best case scenario is that your withholding taxes match exactly your tax due. That isn't likely to happen, though, and psychology suggests a refund is more palatable than writing a check. After thirty years in the investment business, I've discovered that psychology trumps math for almost everyone!

Thanksgiving: Nothing financial today

By Staff of the Family Investment Center

We spend a lot of time on this page discussing financial matters. But today, we want to do something different.

We want to take the time to thank our clients and customers for their business. We want to thank our families for supporting us in our work. We want to thank the readers of this blog for reading this blog, linking to it and contacting us on Twitter.

We want to thank you for your trust. It's been a year of ups and downs, and you've stuck with us.

Thank you. And may you feel thankful today for your own families, friends and other blessings.

A charity that's run like a business

This time of year, we all look for opportunities to give to non-profits. I ran across this story today on the CNN web site of a well-managed non-profit that applies business principles to its operations.

It's run by an ex-Silicon Valley executive, Tom Hogan, who wanted to bring basic services to the Baja region of Mexico. This quote caught my attention: "Every one of our programs runs off spreadsheets with specific dollar amounts. We can tell our donors 'for $55,000, you can give potable water to these three tribes,' or 'for $6,000, you can sponsor two health fairs.' Donors, especially the high-end folks like venture capitalists, love it. It's very specific and precise."

When you're making your gifts to charity, especially if you are giving large amounts, make sure that the charities have responsible plans in place. Look at the 990s for the non-profit. Many non-profits post those forms, which are required by the IRS, on their web sites. Ask about their plans for the future. Think of it as an investment. Read on for more of Hogan's plans and thoughts on non-profit management.

http://money.cnn.com/2009/11/25/smallbusiness/comunidad_para_baja_california/index.htm

Set a budget, stick to it

By Dan Danford

This Friday, hoards of shoppers will head out in the wee hours, still stuffed with turkey, to plough their way through the crowds towards bargains. There probably are some good bargains out there. But the problem with this day of shopping is the same as how many Americans treat everything else: they don't plan.

Your plan for Black Friday shopping - and holiday shopping in general - should include some common elements.

Decide what you want to spend overall. If you have a Christmas Club account, congratulations, you've planned and have your budget for shopping. To determine how much you can spend if you don't have that tool, look at what is in savings, how much extra you have in the budget and what big expenses you have coming up. If you're self-employed, make sure you've set aside money for taxes BEFORE you make this determination. Do not factor in any credit card spending, unless you're prepared to pay it off immediately.



Decide who you're going to buy for. Immediate family first, and then make your way down the list. Are there people you've always bought for out of habit who you really don't speak to that often? Maybe it's time to trim the list, or cut back on what you buy.

Divide the money you have available to you among the people you've got on your list. Spend more on your immediate family, if that's your custom.

Decide what you want to buy, and look around online. Can you buy what you want with the money you have allocated? Don't let anyone pressure you into buying somethinng that costs more than you can afford, whether it's a child or adult. It's a gift. Their job is to be grateful for getting it, not dictate what you buy.

Write all of this down. Take your list with you shopping. Treat it like a grocery list, and mark people off as you shop.

The problem with Black Friday is that people see sales that they believe are bargains and they decide to spend more than they've planned due to the bargains available. Don't buy your brother that $450 computer at Wal-Mart if you're only prepared to spend $300 on him, even if he does need it and it is a good deal. Make a plan. Stick to it. And avoid using credit as much as possible.

A wonderful Christmas gift

On Mondays, we answer questions from a reader. Here's this week's question, which has an eye already on the holidays.

QUESTION: I would like to give my grown children a significant cash gift for Christmas this year. I’ve had a good year with my business. However, I don’t want them to incur any sort of tax on it. Is there any sort of guideline for how much I can give and the best way to give them the gift?

ANSWER: Gift rules are simple, but confusing. You can give up to $13,000 to anybody each year without any tax consequence. You and your spouse can give up to $26,000 to anybody each year. No taxes for the recipient, and no tax consequence for the giver(s), either.

If you exceed that amount, you are required to file a gift tax return (no taxes due, though) and keep track of the cumulative amounts given. Eventually, those amounts (total gifts exceeding the annual limit) could impact the size of the giver's estate, and how much estate tax will be due upon death. But, most people won't have a taxable estate anyway, and few givers regularly exceed the annual limits. Basically, keep the gift value below $13,000 per person for 2009, and there's no impact for anyone.

Cash is always a welcome gift, but the annual limit is based on "value." Many advisors recommend the gifting of appreciated assets (stocks or property with a low tax basis) because that avoids a capital gains tax for the giver, and moves those values out of the future estate. Similarly, things that are growing in value very quickly - again, growth stocks or other appreciating assets - are a nice shift, too, because the value today could be much higher when the estate settles eventually.

Most people face little impact at all from a gifting program. For people with a lot of wealth, these can become complex estate planning matters. The simple answer for most folks is that giving away up to $13,000 per year per spouse is a way to be really appreciated by your kids and grandkids. And that Uncle Sam doesn't care at all!

Small business financing

Dan Danford regularly provides financial advice for fathers going through the divorce process on a great site called Dad's Divorce.

Here's his latest podcast on small business financing.

Need extra cash? This is prime time for a second job

By Robyn Davis Sekula

All of us would like to have more savings and pay off debt. Sometimes, the only way we have to get ahead is to increase our incomes. I’ve done that during the past five years by changing my day job and building my own business, and I’m really pleased with how that’s gone. I’ve also pursued a few simple side businesses that I think virtually anyone could do if they’re willing to take the time and energy to do so. Between now and December 25, opportunities abound for those who need extra cash, and I’m going to outline a few options here.

Here’s a key thing to remember as you read: Everything that makes a strong profit requires knowledge and research. And everything adheres to the general economic principle of supply and demand. You have something that someone else wants, badly. They’re willing to pay a lot for it. The key is knowing what the items are and placing them for sale in a public market place.

But there’s nothing here that’s rocket science. You can do this, too, if you’d like.

I sell items on eBay. Every time I tell people this, they want to know what. Mostly it’s things my husband has picked up at yard sales. Sometimes, he’s bought things that have done very, very well. He pays very little for these antiques, sometimes, as little as $1 to $5 each.


Our best sellers are Art Deco items and things that I’d refer to as “old house parts,” meaning certain types of doorknobs, faucets, bathroom accessories, light fixtures, glass shades, and so on. We also look for antiques that pertain to a certain town but that are far removed from that town. Souvenir porcelain pieces commemorating a particular town park or building were common in the 1920s, and they are highly collectible. Every now and then I get stuck with one (anyone want a vase from Reedsburg, Wis.?) but for the most part, they do well. One I bought three years ago for $7 sold for $302 and returned to its hometown in Florida. There are things that I do price low because they simply will not go. I have a set of 1960s vases in a pale green color that look like they walked off the set of Mad Men and I cannot sell them. But I guarantee you Greg didn’t pay more than $1 for it, so I’m OK with that.

My friend Kate sells items on Amazon. I don’t want to give too much detail because she’s in better physical condition than me and she might really hurt me if I tell you too much. I became a partner with her this summer in picking up items that we could resell on eBay for a large profit. There was a certain type of Crest toothpaste (Lemon Ice, if you must know) that Crest discontinued, and it began showing up at discount stores. I started hunting for that, and then a few other things in the health and beauty area, for Kate. We’d buy the toothpaste for $2 per tube and sell it for $20. She paid a modest fee to Amazon for the listings and we’d split the profit. During the fall, she stocks up on hot toys for the holiday season. How does she determines what’s hot? She goes through the entire Sunday ad of a mainstream toy retailer and runs each and every item through Amazon to see if they’re selling strong and if the item is selling at a higher price than they are in the stores. If so, she buys it when she can, places it on Amazon, and sells it. In almost every instance, she finds that with enough determination, she can buy and resell desirable toys for a large profit margin. “Just about every year, I can find every hot toy with just some determined looking,” Kate tells me. She profits from her knowledge, research and determination, and really, from the other side of it, which is someone’s lack of determination. And yes, I’ve been on both sides of this. I’ve ordered from Amazon and sold with Kate on Amazon. Which side are you? There’s no right or wrong here. If you have a high-paying job where you are paid by the hour, it may in fact be a better deal for you to pay the profit margin to someone like Kate than to spend your time driving from store to store in search of presents for your family and friends. Convenience has a price, and it’s perfectly fine to pay it.

My friend Elizabeth sells on etsy.com, a site for crafters. She buys certain types of old board games, magazines and other items inexpensively and then combines items in packages to sell to crafters and scrapbookers all over the world. I’ve found a few things for her here and there and given them to her to divide up and sell.

My neighbor Chris does handyman jobs, cuts down trees and yard work for extra cash year-round. In fact, he’s scheduled to cut down a tree in our yard and clean the leaves up with this giant leaf-sucker machine soon. Since we have an acre yard and three kids six and under, having him do the yard is a bargain.

Other people refinish furniture, paint, or repair lawnmowers for extra cash. There are all kinds of options – and anything you can do where you work for yourself will make you a lot more money than if you work for someone else. The UPS box-throwing job at nights is good work, and so are the retail jobs you can score this time of year. But those are not jobs that require knowledge or skill. Stay away from the multi-level marketing gigs such as Mary Kay. Those are not side jobs. The people who are good at MLM jobs spend all day, every day on it.

So – what do you do to make extra money? Post it in the comments section.

It's too risky to skip health insurance

On Mondays, we answer a question from a reader. If you have a question, please leave it in the comments section.

Q: If I lose my job, should I keep the health insurance through COBRA? It seems expensive.

Answer from Dan Danford: COBRA is a continuation of the employer's health plan after termination. The reason it's so high is because the terminated employee is now paying the entire premium cost whereas before that the employer paid some portion. Under the Stimulus Plan, for a limited period of time, the government will pay 65 percent of COBRA premium costs for most terminated employees. Actually, as I understand it, the employer pays the 65 percent and then gets reimbursed by our government. Of course, health plans differ from employer to employer, so exact cost, terms, and benefits for one person are often different than another.

Whether to use the COBRA provisions from your former employer should be decided based on your circumstances. People who are young and in good health may be able to find an individual of family health policy cheaper than the COBRA costs. Older workers may not be able to find better or cheaper coverage, especially with the 65 percent reimbursement. Whatever your circumstance, it's probably wise to check into buying another policy, just for comparison's sake.

In all circumstances, it's very hazardous to run without health coverage. The cost of even minor accidents or illnesses is enough to sink most family boats. At the very least, find a high deductible policy that protects against catastrophic events. Without one, a lifetime of savings could disappear in a moment. The risk is too high to go without.

FICO scores, demystified

Having a good credit score is mandatory for the world we live in today if you want to maximize your income. We spotted a great article with lots of useful information about how credit scores are calculated on www.creditcards.com today and wanted to post it for everyone to read. Here's a link:

http://www.creditcards.com/credit-card-news/fico-credit-score-points-mistakes-1270.php

Watch gift card fees when buying

By Robyn Davis Sekula

You have to admit that gift cards are wonderfully convenient. Walk into a store, purchase a stack of them and you can ship them in a matter of minutes with no extra postage. For those of us who have a lot of relatives flung far and wide, it's wonderfully easy.

However, if you're a frequent gift-card giver, as I am, make sure you read the fine print. Cards sometimes have hidden fees, and in many cases, they diminish in value over time.

Here's an excellent review of the gift card business by Sandra Block of USA Today. You can follow Sandra on Twitter @sandyblock. Yes, I'm quoted in it, but I think it's particularly good because she doesn't just cheerlead the convenience - she reviews why some people don't like them and how new legislation will affect gift cards in the future.

Read on here:
http://www.usatoday.com/money/industries/retail/2009-11-13-giftcards13_CV_N.htm

Opportunities still abound in housing market

It may sound like bad news that there are still lots of houses in the real estate market. But whether or not it is bad news depends on which side of this you're on.

If you want to buy, this is a terrific opportunity. It's time to snap up that second home you've always wanted near your grown children. Or, if you're young, it's time to buy your first home, IF you can afford it.

Just remember, it's simple supply and demand. There's always another side to the market. Which side are you on?

Read the latest news on the housing market from Fortune here:

http://bit.ly/2CDkdT

Social Security: Don't count on it.

Each week, we answer a question from a reader in this space. If you have a question for Dan Danford, post it in the comments section.

QUESTION: I’m 52 and looking at what I need to put away for retirement. How should I treat Social Security income? Should I include it in my calculations or plan as if I won’t have it?

ANSWER: The old "social security won't be there when I retire" myth. I hear this all the time, but I don't buy it at all. Social security is - more that anything else - a political issue. No substantive changes can take place because it's politically impossible to make them. We baby-boomers account for 70 million votes, and most of us get a bit indignant when someone threatens our retirement!

My colleague at Family Investment Center, Jason White, Ph.D., did his dissertation on social security and published it as a book. His premise is that the system is much more solvent than generally believed, and his arguments are compelling. As I said earlier, this is a political topic and much that is said is motivated by politics. It's hard to sort out the truth, but Jason does a nice job.

Having said all that, I consider social security to be an augmentation of retirement savings. The best of all worlds is to have enough that you don't need social security, and then to get it anyway. So, my default would be to plan and save as if it's not going to be there. Then, you'll have more than enough when you retire.

Get out of debt on your own

For those who want to get out of debt, those commercials that promise to reduce debt by large percentages by working with your creditors, are tempting. But don't be fooled. The old rule still applies: if it sounds too good to be true, it probably is. If you want to get out of debt, there's no better way to do it than to methodically track your spending and just simply pay down your debts, one at a time. You can do this. You may not want to do this, but you can.

Debt consolidation companies rarely keep their promises, and sometimes, their fees eat up any savings they might promise you. Don't go this route. Commit yourself to going after your debt on your own.

Read more here:

http://www.msnbc.msn.com/id/33627704/ns/business-personal_finance/

On risk: it's there, even if you can't see it

Editor's note: We occasionally respond to media inquiries and I thought this answer from Dan to a reporter was particularly astute. I'm posting it so you can read his thoughts on this - he makes great points. - Robyn Davis Sekula

By Dan Danford

Of all the bits of financial information available to consumers, risk is the least understood. Study after study shows that people routinely misjudge risk, and personal finance is a bad place to mess up. It's hard to see the risk in a rising stock price - until the shares plummet. Similarly, a good job seems stable right up to and until the pink slip arrives. Housing prices in a new neighborhood have never fallen; then they do. I once worked for a bank that had several decades of non-stop rising dividends. Safest bank ever! It failed 18 months after I started working there (not my fault, either!). The point is that most folks are terrible at understanding the risks in their financial lives.

There are several ways to hedge those risks. First, diversify everything. Have two family jobs instead of one. Go to school to keep your skills current or to learn a second trade. Keep emergency reserves in a savings account. Buy ten stocks instead of one, or, better yet, a good mutual fund. Financial advisors work in these realms every day, and they work with dozens of other families and situations. If nothing else, they have a better grasp on family risk than the typical consumer. Let a professional guide you to solid solutions and profitable actions.

You can save a lot of premium money by avoiding health insurance. And you might say that - based on your personal history - there's not a lot of risk in that strategy. But that's not really accurate. You may not see the risk, but it's there all the same. That's true of many family financial issues. Risk may not be obvious, but it's there anyway. Do you want to know now - or later?

Don't listen to anyone who tries to predict market

On Mondays, we answer a question from a reader. If you have a question, please post it in the comments section.

QUESTION: What financial commentator do you like? Who do you think gives good advice?

ANSWER FROM DAN DANFORD: Well, I'd ignore any commentator who professes to predict the markets. There is little evidence that short-term markets are predictable, and those boneheads on television are entertainers, not advisors. Longer-term markets are more predictable, but few viewers care about a five-year prediction! Our website lists a number of terrific books and resources, but Jon Clements' new book "The Little Book of Main Street Money" is a great start. Also, as I've noted before, good spending habits are likely more important in building wealth than investment skills. For more on that, visit my review of Tom Stanley's new book "Stop Acting Rich" Simple answer? Boring works best. Focus on healthy habits and you'll prosper.

Boo! Frightening college costs

Here's something scary: The 10 most expensive colleges in the United States are all above $50,000 per year. For a four year education, you're looking at probably close to $250,000 by the time you've paid books and fees at these universities.

As we've said time and again here, there is no good reason to spend that amount on an education. There are lots (and lots!) of good, solid state colleges and universities. It's what you do with your education that matters. If you are wealthy and you can afford to send a child to one of these universities, hey, have at it. But do not mortgage your home or do anything scary to pay for college for your kids.

Have a look at the list here:

http://bit.ly/1AcvcF

And here's something REALLY scary. If you have a baby this year, and you want to send that child to one of the universities highlighted that's $50,000 a year now, you'll pay $518,641 for their education by the time they're ready for college. If college costs rise at 5 percent a year, your annual cost will be $120,331 (up from $50,000 over 18 years). The total cost for 4 year(s) will then be $518,641.

Here's the calculator we used to get those figures. Use it to look at the cost of your education or your child's education.


http://apps.collegeboard.com/fincalc/college_cost.jsp

New homebuyer credit: could it be renewed?

The tax credit for first-time homebuyers hasn't quite done what government officials had hoped. It's not quite boosted the real estate market as much as they'd like. So there's talk now of extending it and even perhaps making it larger.

Curious as to where things stand? Read on for more information:

From CNN: http://tinyurl.com/ykgxp7v

Don McNay: Just Say "No" to Adult Children Wanting Money

Don McNay writes a regular column for The Huffington Post. His latest shares a key message: don't give large sums of money to adult children. It keeps them from growing up and really doesn't do them, or you, any favors.

Here's his insightful column on the topic.

Don McNay: Just Say "No" to Adult Children Wanting Money

Posted using ShareThis

Roth IRAs may be an option

On Mondays, we answer a question from a reader in this space. If you have a question, please post it in the comments section or e-mail it to robynsekula@sbcglobal.net

QUESTION: I’d like to make a ROTH IRA contribution for me and for my husband - $5,000 each in 2009. However, my husband’s income is about $60,000 and mine will probably be at least $100,000. I’m self-employed. I understand from what I’ve read about Roth IRAs that if your Modified Adjusted Gross Income is $166,000 you can’t make the contribution. If our income comes in at or right above $166,000, does that mean that we won’t qualify? What’s modified adjusted gross income anyway?


ANSWER FROM DAN DANFORD: This may sound like a simple question, but really, it's not. The Modified Adjusted Gross Income is a complex number that depends on many factors, and I don't know enough about your personal situation to tell if you'll be disqualified or not, especially since your income is near the borderline. Here's a link to solid information to read more about it: http://www.fairmark.com/rothira/modagi.htm

Despite the income limitations, Roth IRAs are worth taking the time to do the calculations to ensure that you qualify. Roth IRA accounts differ from traditional IRAs because there's no tax deduction for the annual contributions. In other words, it's money that has already been taxed. The desirable Roth benefit is that you won't pay taxes on the annual portfolio growth or withdrawals in retirement. There are a number of constraints - including family income and early withdrawal privileges - which alter the ability and attractiveness for using Roths.

I'm not going to address the exact Roth tax rules here. You'll need to talk that over with your tax advisor who knows your exact situation including income and adjustments. But some general guidelines might be helpful. First, the younger you are, the more attractive a Roth. Income and tax rates aren't high, so the tax you pay isn't prohibitive. A traditional IRA deduction isn't as meaningful for you. Second, the period for tax-deferred compounding is longer, so that's appealing, too. Third, the older you are, the more likely you are to have existing traditional IRA accounts. Why complicate life with another tier of monthly paperwork?

I'm a fan of Roth IRA accounts in the right circumstances, and your family could be a perfect fit. You've got high income and 401(k) or traditional IRA tax deductions could be more appealing. Also, I'd usually suggest a compounding table to view the actual difference between Roth compounding and traditional compounding, given your age and years until retirement. It's true that you'll pay taxes on withdrawals with the traditional, but most of our clients defer those withdrawals for a very long time anyway. Not sure how much difference the Roth makes for many people.

Overall, I'd suggest you discuss with your tax advisor and keep one eye towards convenience and simplicity. I see too many people with a dozen scattered accounts which include Roth, traditional, old 401(k)s, and an occasional orphaned Tax Sheltered Annuity. Stick to a good long-term plan, and weigh both current and future tax breaks.

Your best plan for 2009 may be to wait until as late as you can in 2009 when you'll know, as a self-employed person, what your gross income will be. Ask your tax advisor to help you figure out your MAGI and see if you'll qualify. Hold on to the Roth IRA money until then, and make the contribution in December if you qualify. If you aren't working with an advisor, you need to be. With your income, you can make some significant progress towards long-term goals if you have professional help. This is an opportunity you don't want to squander.

Collaboration: Vicious group-think with a point

By Dan Danford, MBA, CRSP

The great manipulation technique of this decade is “collaboration.” This horrendously popular business term has been deployed in all areas of American life.

We hear it constantly at work, and now it is now worming its way across the nation like some dreaded crop blight or tree disease. A recent Google search yielded some 83,000,000 hits in under a quarter-second. That’s five times more than “synergy” and four more than “paradigm.” We’re talking the World Series of inane business terminology, here.

According to Webster, to collaborate means 1) to work jointly with others or together especially in an intellectual endeavor, 2) to cooperate with or willingly assist an enemy of one's country and especially an occupying force, or 3) to cooperate with an agency or instrumentality with which one is not immediately connected.

Of those three, happy “collaborators” likely prefer the first, which sounds noble, but the bell which rings true today is the second; that is, to cooperate with or willingly assist an enemy (emphasis mine). That’s because collaboration is usually suggested by the strong as an effort to manipulate the weak.

Think about it. Do cries for collaboration ever rise up from the peasant classes? Not so much. They nearly always reign down from above. “Go, therefore, and collaborate on the issue of diminishing widget sales in the direct distribution channels of our Northsouthern region,” declares Mr. Puffy, the CEO. “Help them see why I think we should close that plant.”

In the community, it’s “let’s gather a group of social agencies to collaborate about neighborhood floral disintegration. Perhaps we could jointly commission a study to determine possible solutions,” intones Pansy Marigold, owner of the International Floral Studies Group. Blah, blah, blah, blah.

I loathe manipulation. Manipulators think they are smarter and sneakier than all the rest of us. They devise grand schemes to feather their own nest, and then coerce others to pay. They are bullies with velvet gloves. Collaboration is their tool of choice. “Everyone gets a say,” they’ll explain, but results are known far in advance to anyone with a brain. Ask around the office; manipulators think they are smarter, but they’re not.

There’s a sign on my desk declaring “none of us is as dumb as all of us.” The simple fact is that collaboration is often a management technique designed to exploit group dumbness. Most times, the lead collaborator has an agenda and a desired result. Others in the process are unwitting co-conspirators. They show up, hoping they can add data, or resources, or wisdom (or, with any luck at all, humor). Wrong. They are, in fact, adding dubious credibility to both the agenda and result.

Collaboration as intellectual endeavor? Maybe it could happen. When two university scholars gather at Starbucks to discuss research. Or when Bobby Flay and Rachel Ray conspire to create some new dessert for the Food Network. On ESPN commentators engage lofty discussions over the merits of a Wildcat offense in the NFL. (Though a friend just emailed that last weekend he heard a broadcaster suggest that two bruising linebackers "collaborated" on a tackle. I kid you not.)

Intellectual? Not today. Collaboration is a transparent and weak management tool. The suits want us to think we have input, so they put us in a group and guide us to their goal. But we have a secret weapon. Any of us are smarter than that group of us. As a tool, collaboration is dull, clumsy, and ineffective. Manipulators beware: we’re on to your hollow game.

Defining a good job

Dan Danford regularly provides podcasts for Dad's Divorce.com, an excellent resource for men going through the divorce process. In this week's installment, Dan addresses what makes a job a good job.

You can watch it right here.