The Case for 401(k) Loans

Experts always know everything but the fine points.
— Hedy Lamarr

Today I’m going to revisit the topic of 401(k) loans. As I’ve mentioned before, they are nearly universally pilloried by personal finance gurus, but they have their uses.

Suze Orman’s objections to 401(k) loans are fairly typical of what you’ll hear from the “experts.” Let’s see how they stack up to reality. [Click to continue...]


Cable Rage and Credentialism

We have now sunk to a depth at which restatement of the obvious is the first duty of intelligent men.
— George Orwell

I had a long, hearty laugh today while reading this article on the Consumerist. It seems that an “expert” has concluded that more and more people people are ditching cable not only to save money, but because — drumroll please — their customer service sucks!

Of course anyone has has ever dealt with any cable company for more than 5 seconds could have told you that. But in our absurdly credentialist society, it isn’t true until an expert says it’s true. Never mind that Comcast has been voted by its customers as the the worst company in America. We need a professor of marketing to tell us why cable companies have begun hemmorrhaging customers now that they have a bit of competition (a little problem they didn’t have to worry about for quite a few years). [Click to continue...]


What We’re Up Against

A fool and his money are lucky enough to get together in the first place.
— Stanley Weiser

A short one today, because honestly I just don’t have the words to express the horror I experienced when reading this thread on the MyFICO forums. Read it if you dare, but be prepared either to be enraged, saddened, or both. [Click to continue...]


Money is a Matter of the Heart

A man who is master of himself can end a sorrow as easily as he can invent a pleasure. I don’t want to be at the mercy of my emotions. I want to use them, to enjoy them, and to dominate them.
— Oscar Wilde

I have a confession to make — I have a strong urge to make a financial move that I know is foolish. Specifically, I really want to pay off the last of my student loans.

Let me offer some background. 2012 was by all accounts a very good year, financially, for the RW household. We sold my house in Virginia at a tidy profit, reaping the rewards of a great deal of renovation work over the past few years, and used some of the proceeds to pay off the last of my higher-interest private student loans. We paid off the last of DW’s debt as well, and even with the wedding, the honeymoon, and buying a new house, our wealth ratio was about 73%, and our capital wealth ratio was 63%. We moved the bar a long way this year.

Here’s the trouble. Apart from our shiny new mortgage (well below average in size for the Bay Area, but that’s sort of like being the classiest person on Jersey Shore), we have one debt left. One last student loan. And that bugs me. [Click to continue...]


The Capital Wealth Ratio

A rich man is nothing but a poor man with money.
— W. C. Fields

Today I’m going to introduce a cousin of the Wealth Ratio. I call it the “Capital Wealth Ratio.”

If you recall, the original wealth ratio is:

The Capital Wealth Ratio is the similar, with one key difference — it excludes any interest you might have paid. In other words, it is:

So why is this ratio so important? [Click to continue...]