Friday, March 5, 2010

Has Anyone Received Their Tax Refund?

In January, I wrote a post that tries to answer the question: When will I get my 2010 tax refund? My post shows a table of when to expect your tax refund if you E-filed your return. It is now early March, and everybody who filed before February 11, should have already received their refund. So, I want to ask the question, "has anybody received their tax refund yet?"

I estimate that most people have yet to file their 2010 taxes. In my case, I received my last 1099 form just last week, so things are going slowly. But once you do file, you are likely to anxiously check your mail or bank account for your refund. Last year (in 2009), I have heard some anecdotal stories about the Internal Revenue Service taking a lot longer to process refunds, so I'm curious how the IRS is doing this time around.

As always, anonymous comments are welcome on PFStock.

See also: When Will I Get My 2011 Tax Refund?


Tuesday, March 2, 2010

Random Thoughts on Early Retirement

I think that many people can admit to fantasies of an early retirement. I know that I have had more than a few daydreams about the subject. Over the years I have found a few really good resources (and many more really bad ones) for seeking advice on early retirement.

But, I think that the best resources are the actual people who have retired early and are willing to share their thoughts. Let me first reiterate what I think are the three common themes among those who have retired early:

1) Living below your means (LBYM).
2) Maintaining a diversified investment portfolio on which to draw from.
3) Using a conservative 4% rule of thumb as a baseline for withdrawing from your retirement savings.

Billy and Akaisha Kaderli are a couple that retired in their late 30s. They claim to live off of $24,000 per year. In my communications with the Kaderlis I have determined that they live in what is commonly known as a mobile home. When asked, many people seem skeptical that they could live off of only $24k a year. And the thought of retiring to live in a mobile home is unappealing to many.

Some might characterize the Kaderlis' lifestyle as living "tightly". But, if you ever have the chance to communicate with either Billy and Akaisha, neither one of them would they say that they are at all uncomfortable with the lifestyle choices that they've made. In fact, they have been enjoying life, spending a lot of their time traveling around the world.

A key point that I want to underscore is that early retirees are often willing to do what most people are not. I think that many people could retire in their 30s or 40s, but they are not willing to make the lifestyle changes required to retire early. By contrast, early retirees are often willing to do what most people are not.

What some people refer to as early retirement is really a form of what is known as "voluntary simplicity". Extreme examples of this voluntary simplicity are turning down the heat to 55F, not drinking milk, and reusing gift wrap. Using this definition, practically anyone could claim "retirement" by reducing their consumption to a very small fraction of their net worth. The real question then is "would you be willing to reduce your consumption to this level?"

Along these same lines of voluntary simplicity is the book Your Money or your Life (YMOYL) written by Joe Dominguez and Vicki Robin. I read YMOYL a while back. While there certainly is a lot of good information in this book, some of the suggestions may be equally unappealing to many people.

The authors of YMOYL encourage the reader to thoroughly evaluate the value of each item they have, and track every last penny that comes into or out of your life. This is an activity that I personally frown upon, as I don't think that people should obsess about the minute details of every financial transaction.

YMOYL also advises investing virtually all of your money in US government bonds. I think that a more diversified investment portfolio of both stocks and bonds is a far more prudent choice. A portfolio made up of purely bonds violates rule #2, above. Also, as a historical note, Joe Dominguez died of cancer at age 58. And, this always left me with an uneasy feeling that the lifestyle he advocated in YMOYL may have contributed to his early demise.

In any case, I don't think that early retirement should be solely about depriving oneself to reach these goals. I will not tell you to give up eating meat, drinking milk, or buying your favorite latte drinks at Starbucks. Regardless, I think that everybody can make small steps that will bring an early retirement closer to reality.

Gold IRA at Lear Capital.