Daily Archives: April 18, 2020

For the concept of independence from another person for support, see Dependant.

Financial independence is the status of having enough income to pay one's living expenses for the rest of one's life without having to be employed or dependent on others.[1][dead link] Income earned without having to work a job is commonly referred to as passive income.[citation needed]

There are many strategies to achieve financial independence, each with their own benefits and drawbacks. To achieve financial independence, it will be helpful if you have a financial plan and budget, so you know what money is coming in and going out, have a clear view of your current incomes and expenses, and can identify and choose appropriate strategies to move towards your financial goals. A financial plan addresses every aspect of your finances.[2]

The following is a non-exhaustive list of sources of passive income that potentially yield financial independence.

If a person can generate enough income to meet their needs from sources other than their primary occupation, they have achieved financial independence, regardless of age, existing wealth, or current salary. For example, if a 25-year-old has $100 in expenses per month, and assets that generate $101 or more per month, they have achieved financial independence. They have no need to work a regular job to pay their bills.

On the other hand, if a (for example) 50-year-old earns $1,000,000 a month but has expenses that equal more than that per month, they are not financially independent, as they still have to earn the difference each month to make all their payments.

However, the effects of inflation must be considered. If a person needs $100/month for living expenses today, they will need $105/month next year and $110.25/month the following year to support the same lifestyle, assuming a 5% annual inflation rate. Therefore, if the person in the above example obtains their passive income from a perpetuity, there will be a time when they lose their financial independence because of inflation.

If someone receives $5000 in dividends from stocks they own, but their expenses total $4000, they can live on their dividend income because it pays for all their expenses to live (with some left over). Under these circumstances, a person is financially independent. A person's assets and liabilities are an important factor in determining if they have achieved financial independence. An asset is anything of value that can be readily turned into cash (liquidated) if a person has to pay debt, whereas a liability is a responsibility to provide compensation. (Homes and automobiles with no liens or mortgages are common assets.)

Since there are two sides to the assets and expenses equation, there are two main directions one can focus their energy: accumulating assets or reducing their expenses.

Accumulating assets can focus one or both of these approaches:

Another approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence. This can be done by focusing on simple living, or other strategies to reduce expenses.[3][4]

Excerpt from:

Financial independence - Wikipedia

After a decade of saving over half of his income, Justin McCurry quit his engineering job in 2013 and retired at 33. His wife, Kaisorn, left her 9-to-5 a few years later and joined him in early retirement.

Their portfolio has been as high as $2.3 millionin December 2019. Now, it's closer to $1.6 million. In March 2020, when the coronavirus pandemic rocked the stock market, their net worth dropped by a staggering $298,000.

McCurry, now 39, was relatively unfazed by the massive dip. "In terms of our long-term plans, nothing has changed," he tells CNBC Make It. He's confident that their portfolio will last through retirement, even if the markets don't fully recover. That's because they worked strategically for years to get to a comfortable financial place that would be able to sustain a major downturn. Plus, they've been sticking to a conservative retirement budget of about $40,000 a year.

As for the FIRE (financial independence, retire early) movement overall, which embraces the concept of saving the majority of your income in your 20s or 30s so you can retire in your 30s or 40s, McCurry doesn't think that the pandemic will wipe it out.

However, it does highlight the risks involved in retiring early and relying on your portfolio and savings to last you a certain number of years, rather than consistent income. The economic impact of the pandemic is "going to reintroduce the idea that there are risks and you have to address those risks," he says.

McCurry, who does a bit of early retirement consulting, encourages his clients to think about what a massive downturn would mean for them. "What would you do if you wake up and, suddenly, your portfolio has shrunk by 30%? Or even 50%?" he asks them. "If you go from $1 million to $700,000, are you going to be OK with that? Can you still get by on that or is it going to make you panic?"

What would you do if you wake up and, suddenly, your portfolio has shrunk by 30%? Or even 50%?

Justin McCurry

early retiree

If you can maintain your lifestyle amid market turmoil, that's a good sign that you're in an OK position to retire, McCurry says. But if you crunch the numbers and realize you'd be in financial trouble if you unexpectedly lost 30% of your portfolio, you need to save more before settling down, he says.

"I think that risk is going to become a lot more real for people that have started investing after 2009, just because they haven't lived through [a major economic downturn] before," McCurry says. "It may be the first time they're really internalizing, What does risk mean? What does volatilitymean? What does it feel like to lose 30% of your portfoliovalue in a very short period of time?"

The best way to address the risk of retiring early is to over-prepare and create a conservative plan based on reliable numbers, says McCurry: "Make sure your plan is airtight and that you're OK retiring with the amount of money that you have."

McCurry left his job when his portfolio reached just over $1 million. He was comfortable with that amount for a few reasons: First, he used the"4% rule,"which states that in most cases you can safely withdraw 4% a year from your retirement savings, to determine how much he needed saved up to begin with. He knew going into retirement that he could safely withdraw $40,000 a year without running out of money.

McCurry also has some income coming in each month from his blog and the early retirement consulting work he does in his spare time, which gives him more of a buffer.

Finally, he understands that the markets go up and down, and he's willing to be flexible when it comes to his retirement budget.As he told CNBC Make It in 2018: "You may have to spend less if the markets go down. Or, you may be able to spend more than what you originally budgeted for. ... As long as you're OK cutting back on some of the wants if your portfolio goes down, then you can still cover your needs without worrying about depleting your assets prematurely."

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39-year-old retiree shares how the coronavirus pandemic will change the FIRE movement - CNBC

Due to COVID-19-related school closures, parents are stretched thin. And while it may not be possible to follow your child's lesson plans to the letter, having your kids at home more

Due to COVID-19-related school closures, parents are stretched thin. And while it may not be possible to follow your child's lesson plans to the letter, having your kids at home more than usual provides a chance to show them how you make day-to-day financial decisions.

The in-home isolation can be difficult. But games, activities, family competitions and even just honest conversations can impart crucial life skills kids will need as they get older and gain greater financial independence.

Pocket change is a powerful learning tool. Even very young children can learn the name and appearance of each kind of coin. As they get older, they can begin putting combinations of coins together.

Michele Hansen of Arlington, Virginia, uses coins to teach her 6-year-old daughter.

'She emptied out our piggy bank of spare change and made a dollar with different combinations of coins,' she says. 'We also did a little foreign exchange with coins left over from past trips. Using coins made it easy for her to visualize it.'

Even if you shop online now for meals or groceries, or leave your kids at home when you go to the supermarket, you can use the experience to teach budgeting and comparison shopping, while reinforcing math skills.

Deanna Hurn, founder of Miracle Math Coaching in Fairfield, California, recommends letting your kids pick a meal they want this week and having them create the shopping list. Set a budget and have them peruse your grocery store's website. But don't let them put items into a shopping cart and have the website do the math for them just yet " instead, ask them to write down each item and its price. Encourage them to compare brands and tell you why they're picking one brand over the other. Once their list is complete, they can manually add up the total cost of all the items.

Your kids will learn how to identify the cost per unit, how to maximize a budget, and even how many items to buy to last a certain amount of time. If you have more than one child, have them compete to see who can come under budget by the highest margin. At the end, put all the items in the shopping cart and see what the final price is once taxes and delivery costs get factored in.

A few years ago, Hurn turned a too-high water bill into a budgeting lesson. She showed the bill to her children and explained the fixed costs (taxes and fees) and variable costs (water use). It led to a discussion about what actions they could all take to lower their water usage.

But it also introduced a lesson in identifying ways to save money. While your rent or mortgage payment may stay the same, you can try to reduce your electricity use by turning off lights when you're not in the room, or your grocery bill by shopping carefully. 'If you know what you can control and what you can't control, you know how to budget,' Hurn says.

'One important thing to remember is that kids are watching you when you think they aren't,' Ng says. They can see if your bills pile up, they can hear if you fight about money. Being honest with kids in age-appropriate ways can provide reassurance when times are tough. You don't have to be a money expert to be a positive example for your kids, either.

'It's totally OK not to have the answers and to learn together,' Ng says. 'It's good for your kids to see that learning about finances can be a lifelong thing.'

More From NerdWallet

Sara Rathner is a writer at NerdWallet. Email: srathner@nerdwallet.com. Twitter: @sarakrathner.

The article How to School Kids on Money Lessons During the COVID-19 Outbreak originally appeared on NerdWallet.

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How to School Kids on Money Lessons During the COVID-19 Outbreak - Kinston Free Press

I tweeted this on May 15, 2013: "More news on coronavirus. I think this is our next black swan."

Now, seven years later, I'm sadly proven right. Why did I say this and how did I know? How did it change what I recommend people do about their financial well-being?

Many financial careers are built on predicting the future. If someone makes a lucky guess and gets the timing right, they become famous and people pay incredible sums to hear their prognostications. A booming stock market whips people into a frenzy and they go all in to make as much money as possible.

Sometimes the wrong people get sucked into the hysteria, specifically, those who need to use their money such as retirees. In their zeal for high returns, they take on too much risk. When a crash occurs, they do not have the financial resiliency to withstand the pain and incur significant losses to get the cash they need to pay bills.

More from Invest in You:A beginner's guide to investing during the pandemicOur overreliance on the Fed compromises millennials' futures7 quarantine saving habits to get your through this year

The coronavirus and the stock market are good examples of "complex adaptive systems" we can't predict how small events can throw the entire system out of whack. People think they can predict the future, but they don't know what they don't know.

The coronavirus has been around a long time it is a cause of the common cold. However, there were a few coronavirus cases in the Middle East in 2012 that resulted in a serious pneumonia and a high death rate, just like we are seeing now. These were the cases I tweeted about.

But that strain of coronavirus was not very infective, meaning it was difficult for one person to spread it to another. Many of us realized it would take just a tiny mutation to allow aerosolized transmission and with a slight sneeze, we would have a pandemic on our hands. And here we are.

For predictions to be worthwhile, the prognosticator also has to get the timing right. And therein lies the problem. I had no idea when the coronavirus would mutate. Likewise, we all know markets go up and down, but no one consistently knows when crucial events will occur.

You may get lucky on when to sell, but when do you get back in? After the 2008 downturn, many missed years of earnings when the tide turned in 2009.

What is an investor to do? Instead of trying to beat or time the market, the key is to only take the amount of risk you can afford to take financially and psychologically. There are four important principles to follow.

First, figure out how much money you require for your expenses and create a financial plan to understand what is needed for financial independence. This involves breaking down your "needs" the cost of housing, food, transportation, and health care and your "wants," such as toys, entertainment, unnecessary clothing and any other expenditure not needed to live.

People who plan on working at least five more years should fund a money market account to cover at least six months of required expenditures. People in retirement or within five years of retirement should have at least 10 years of cash flow covered by Social Security, pensions and conservative investments such as bonds and money market accounts.

No one knows what the future holds, but by living life fully and reducing complexity, we can more easily face the upheavals that occur.

Carolyn McClanahan

director of financial planning at Life Planning Partners

Next, create an "investment policy" you will stick with no matter what the stock market is doing. This determines what percent of your money will be allocated to risky investments, such as stocks, and to conservative investments such as bonds. An allocation of at least 50% bonds is often more appropriate for those starting retirement.

When the stock market is doing great, it is important to rebalance your account to sell the winners and buy more bonds. Likewise, when the stock market crashes, as painful as it seems, it is important to rebalance again sell your bonds and buy into stocks. Having an investment policy to guide you takes the emotion out of making investment decisions.

Third, put in the building blocks to create resiliency for whatever life throws your way. Carry the appropriate disability and life insurance. Prepare your estate plan so your family can take over if you become incapacitated or have an untimely death. Take care of your health to reduce potential medical expenses and to live a better life in general.

Finally, simplify life and live fully in the present. No one knows what the future holds, but by living life fully and reducing complexity, we can more easily face the upheavals that occur.

By Carolyn McClanahan, certified financial planner, M.D. and director of financial planning at Life Planning Partners

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Op-Ed: Since you can't beat the market, the key is to only take the risk you can handle - CNBC

Rutuja Sawant knows the value of hard work. This spring, the senior media studies major juggled three campus jobs in addition to a full-time course load.

When UB announced its transition to distance learning, Sawants bosses at Interdivisional Marketing and Communication had to give her remote hours. The Office of Admissions couldn't.

The centers were forced to cancel all upcoming events following Gov. Andrew Cuomos March 22 executive order limiting all non-essential gatherings of individuals of any size for any reason.

As a result, Sawant is one of approximately 3,000 student workers affected by statewide regulations ordering non-essential workers to stay home. Campus-wide layoffs left thousands unemployed and some unable to pay for food or rent across the state. While campus employers like University Libraries and the School of Engineering and Applied Sciences are paying employees to stay home, private corporations, like Campus Dining and Shops, are not.

Some students have turned to jobs at essential businesses like pharmacies, grocery stores and restaurants in the greater Buffalo community after being laid off, but many international students and students living with sick relatives cant work off campus. This leaves many student-employees like Sawant, some of whom rely on campus jobs as their primary source of income, struggling to maintain their financial independence.

Sawant, who is originally from Mumbai, India, cannot work off-campus due to her student visas work restrictions. She now worries shell have to ask her parents for support.

I cover my own living expenses and I am worried that because of [the pandemic] I will have to ask my parents for money, Sawant said.

I prefer to be independent because being an international student at UB is already really expensive and I want to help lessen the burden on my family. I also have younger siblings who we need to save up for, so I try to cover as many [of my own] expenses as I can.

On Feb. 22, UB received $100,000 from the Gerstner Family Foundation and the Heckscher Foundation for Children to increase its emergency funding to temporarily assist students struggling to remain enrolled in school. But UB officials expect the number of students who need aid to rise as lay-offs continue.

Unemployment and underemployment rates have more than doubled since Cuomo announced the state of emergency in March, with traffic for the state departments unemployment website rising nearly 900% between March 23 and March 28, according to statistics published by the New York State Department of Labor on April 2. During the week ending on March 28, 366,403 New Yorkers had filed for unemployment up 286,404 from the week before, according to the same announcement from the NYSDOL. College students, however, are usually ineligible to receive unemployment checks because taxing authorities count students under the age of 24 as dependents of their parents. UB students who are employed by SUNY, however, are considered state employees, which means they are eligible for state employee funding.

Jerome Machynski, a junior business major, does not qualify as a state employee because Ellicott Food Court where he works is privately owned and managed by Campus Dining and Shops.

On March 23, CDS emailed student workers announcing that it would no longer employ students at its dining halls.

Machynski, who started working at Ellicott in August, said his campus dining job was his main source of income before he received the email while visiting family in New York City.

CDS sent out an email to all student-employees basically saying that all student workers will no longer be scheduled for work for the rest of the semester, Machynski said. Now we will have to find a job so quickly.

Machynski returned to his on-campus residence in Buffalo, where the number of coronavirus cases is approximately 63 times fewer than the 98,308 confirmed cases in New York City, as of Sunday. He returned in hopes of gaining employment at an essential business like a grocery store.

But Manchynski said he is fortunate compared to students he knows who are unable to apply for off-campus jobs.

On March 18, UB announced on its Library New Center webpage that all university libraries except Silverman would close. Trinity Mohr, a junior communication major and student supervisor at Lockwood, was laid off alongside dozens of her co-workers.

Mohr will receive a state employee check equal to the average of [their first] two paychecks from 2020-21.

Before Cuomo implemented social distancing laws, Mohr averaged 20 hours per week while picking up extra shifts at the Music Library and Abbott. She cant apply for off-campus jobs because she fears passing the virus along to her housemate who has a chronic health condition. The state, however, will only pay Mohrs normal work schedule until April 15, according to guidelines from the Governor's Office of Employee Relations (GOER).

I live with someone thats extremely high risk as in, if she gets the virus, we dont expect recovery, Mohr said. So Ive been spending a lot of time doing things for her and helping out. I dont have the time to pick up another job.

Still, Mohr considers herself lucky because she lives at home and receives scholarship funds that cover her UB tuition. Those scholarships, however, dont cover student fees, which cost Mohr over $1,500 each semester.

So Im concerned as to how this will affect my ability to pay for that, Mohr said. Id rather not take out a loan or use a payment plan, but that might end up being the case.

After that date, Mohr and her co-workers will live in a state of uncertainty.

Do we get ready to apply for unemployment? Do we try to take on another part-time job during this crisis?

For now we're okay, but we're in a state of limbo.

Elizabeth Napolitano is the assistant news editor and can be reached at elizabeth.napolitano@ubspectrum.com or on Twitter @LizKNapolitano.

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Student workers struggle to remain financially independent following coronavirus lay-offs - University at Buffalo The Spectrum

WASHINGTON - President Donald Trump's attacks on the press have been effective at eroding the credibility of the press and undercutting consensus even as the COVID-19 pandemic continues to kill hundreds of Americans each day, a newly released study by the Committee to Protect Journalists (CPJ) said.

The New York-based press freedom group documented increased prosecutions of news sources, libel suitsand harassment of journalists in the field and at U.S. border crossings, and cited more than 40 journalists, media law experts, academicsand administration officials.

"Some expert observers fear an existential threat to American freedom of the press," says the study, which examines how the attacks "have empowered autocratic foreign leaders to discredit and restrict the press in their own countries."

"You can see the pattern, you can see how many authoritarian leaders around the world are going beyond what Trump has done, imposing restrictions on the press, arresting reporters, et cetera," Leonard Downie Jr., the study's author and a former executive editor of The Washington Post, told VOA.

"In many cases, they have actually used the same language as Trump," he said. "They talk about 'fake news.

"What worries me about these other countries using the United States as an example for what they're doing is that we have a First Amendment and they do not," added Downie, who is Weil Family Professor of Journalism at Arizona State University's Walter Cronkite School of Journalism and Mass Communication.

The study, which includes research by Stephanie Sugars of the U.S. Press Freedom Tracker a coalition of news organizations that documents attacks upon and harassment of media details the administrations restrictions on access to government information; White House legal challenges to the press and Trump's calls for changes in libel law; and the presidents alleged "attempted interference in the financial independence of some media owners."

The White House did not respond to VOAs request for comment.

Death threats and pipe bombs

The report cited cases of journalists being threatened in the past three years: The Boston Globe and CNN received death threats, and in 2018 pipe bombs were sent to CNNs New York offices as well as senior Democrats and other officials.

Former White House communications director Michael Dubke is cited in the report, saying the president lashes out at the press because the coverage is too often negative.

There have been no stories on the progress he made with the economy and foreign policy, Dubke is quoted as saying, adding that the critical coverage surprised the president, who had long "had a good relationship with the press as a New York developer."

"He has always been available to the press, said Dubke, who later in the report expressed concern about authoritarian leaders who use "Trump's words to justify what they are doing" to journalists in their own countries.

Downie, who also authored CPJ's 2013 report on former President Barack Obama's relationship with the press, draws comparisons with prior administrations.

Prosecutions

Trump's indictment of eight government employees over the past three years for leaking information to the press is on pace to exceed the number of Obama-era leaker prosecutions (10 government employees and contractors in eight years).

"The large number of prosecutions of news sources by Trumps Justice Department 'is the fault of the Obama administration,' " says Washington Post columnist Margaret Sullivan in the CPJ study. It created a blueprint that has been easy [for the Trump administration] to follow."

Michael Conway, counsel to the U.S. House Judiciary Committee in the Nixon impeachment inquiry, is quoted as calling Trumps attacks "arguably more pernicious and damaging to the free press" than President Richard Nixons.

Downie, who helped edit the Posts Watergate probe, said Trump's attacks are worse.

"For many months, most of the Nixon attacks in the media were focused only on The Washington Post," he told VOA. "It was uncomfortable for us at the time, but did not have the same effect in terms of affecting public opinion about all news media."

The Post was not circulated nationally at the time, Downie said, so it was more difficult for people to judge between what Nixon said and what the Post reported.

Because of that, he told VOA, "I did not [then] see that there was the same kind of widespread distrust of the news media generally.

"There were Nixon supporters, obviously, that were upset with the news media, but not as much doubting the credibility of the news media as there is now," Downie said. "And the worst things that the president said about the news media, of course, were not said publicly. They were said, we now know from the White House tapes, within the confines of the Oval Office."

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Trump Attacks on Press Effective, New Study Finds - Voice of America

Prince Harry and Meghan Markle have traded the contradictions of royalty for the contradictions of capitalism. Before they couldnt fail now they can.

Last week, Harry and Meghanrenamed their charity, Archewell. It replacesSussex Royal, the name the couple devised for themselves in January when they announced their intention to leave the royal family, and which the Queen demanded they stop using less than three months later. Indeed, a short history of the Sussexesself-branding reveals much about the contradictions of royal celebrity.

Harry and Meghan announced their departure in January with the launch of a heavily branded website. But the Sussex Royal brand represented an impossible attempt to have both freedom and royal status. The royal brand is enabling (hence Harry and Meghans desire to maintain association with it), while also being disabling (as shown by their need to exit); enabling as it catapulted Meghan to a new level of stardom, disabling as it created a public interest justification for scrutinising her every move, and prevented her from engaging in politics.

Sharing the full story, not just the headlines

There areparallel tensions in royal do-goodery: a huge proportion of royal duties are photo opportunities with charities, when in fact royalty depends upon the maintenance of an unequal status quo. Harry and Meghan will need to make huge sums of money if they are to cover their own security costs. This puts Archewell squarely in the conflicted space of philanthrocapitalism: a means of legitimising social inequality through good works.

Take Travalyst, Harrys eco-tourism venture with Skyscanner, TripAdvisor and Booking.com. Its environmentalist tactics include carbon offsetting, one on which Harry and Meghan have themselves relied in order to justify their use of private jets. Harrys attempt to make air travel guilt-free is at odds with the environmentalist movement they seek to support. But then, calling for the collapse of global air travel would hardly garner the support of the companies with social-responsibility budgets to spend.

In Archewell, Markle will be able to parlay her celebrity status. But at the same time, class politics will proscribe what kinds of work are acceptable for a royal-adjacent celebrity charitable enterprise.

While rags-to-riches stories have always been spun for royal brides, there is a public record of Markles past work,fromDeal or No DealandSuits to her lifestyle blog TheTig. The continued visibility of her historic hustle is anathema to a repressive class system in which those at the top are supposed to pretend it was always thus.

This is why the Sussex Royal brand has been a site of such a power struggle. When the Queen barred Harry and Meghan from using the word royal in their branding after their departure, Meghans American PR team responded by leaking to the Daily Mail that there was nothing legally stopping them from using the name, since Harry and Archie have royal blood and no one can take that away. In this rebrand to Archewell, apparently derived fromGreek word forsource of action, Harry and Meghan centre their privilege. At the very moment of claiming financial independence, the Sussexes are taking pains to distance themselves from the unroyal grubbiness of having to work for a living.

Hannah Yelin is a senior lecturer in Media and Culture at Oxford Brookes University

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Harry and Meghans new charity wont fight inequality it will perpetuate it - The Independent