Thinking Short and Long about Your Money
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About this ebook
I have a wife, six kids, bills, and I have plans. So I have financial concerns for short term demands and long term goals. This book presents a discussion of how to assess your finances: where you have been and where you may be headed. The concept of purchasing power is emphasized. Understanding your income trajectory and your retirement finances are important in the process of defining and achieving personal goals.
Richard Ignace
Born in Fort Wayne, IN, I have been married since 1988. My wife and I have six wonderful children. We have lived in Indiana (of course), Wisconsin, Scotland, and Iowa, and we currently reside in Tennessee. I am a professor of astrophysics, teaching students and doing research. Stars have been the main focus of my studies, but I am interested in most areas of astrophysics, including microlensing and exoplanets. Thank you for checking out my book!
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Thinking Short and Long about Your Money - Richard Ignace
Thinking Short and Long about Your Money
I have a wife, six kids, bills, and I have plans. So I have financial concerns for short term demands and long term goals. This book presents a discussion of how to assess your finances: where you have been and where you may be headed. The concept of purchasing power is emphasized. Understanding your income trajectory and your retirement finances are important in the process of defining and achieving personal goals.
Thinking Short and Long about Your Money
Richard Ignace
Smashwords Edition
Copyrighted 2011 Richard Ignace
Smashwords Edition, License Notes
This ebook is licensed for your personal enjoyment only. This ebook may not be re-sold or given away to other people. If you would like to share this book with another person, please purchase an additional copy for each person you share it with. If you’re reading this book and did not purchase it, or it was not purchased for your use only, then you should return to Smashwords.com and purchase your own copy. Thank you for respecting the hard work of this author.
CONTENTS
CHAPTERS
Dedication
About the Author
Acknowledgements
Preface
Introduction
Goals
Financial Ingredients
Cooking with Recipes
Comment on Use of Rates
Recipe #1: Income Appetizer – Constant income
Recipe #2: Income Appetizer – Income with bonuses
Recipe #3: Income Appetizer – Income with raises
First Course: Financial Capacity
Financial capacity
Uncertainty
Second Course: Financial Purchasing Power
Third Course: Past and Present Finances
Review of the Past
Estimating your salary growth rate
The budget
Summation
The Dessert: Having Your Retirement and Eating It Too
The elements of dessert
The boneheaded analysis
The capacity of your war chest
Spending down your war chest
Legacy: After the Meal Is Over
Concluding Remarks
DEDICATION
To family and friends, who must be thinking, finally, something practical.
ABOUT THE AUTHOR
Richard Ignace is an Associate Professor in the Department of Physics and Astronomy at East Tennessee State University. Known by his nickname of Rico
, he is an astrophysicist with a doctorate in astronomy from the University of Wisconsin and also a Masters in physics. Rico has been teaching astronomy and physics at the university level since 1999 to well over 1,000 students. He has also taught a high school level physics course to a group of homeschoolers and has occasionally taught MCAT physics sessions for the Kaplan program.
Rico has two primary occupations. First, married since 1988, Rico’s wife, Teresa, and six children, Caleb, Joshua, Joseph, Abigail, Simeon, and Lucas, keep life in a constant state of excitement and motion.
Second, Rico is an active researcher of stellar astrophysics, generally in the area of theoretical modeling, but also an observer who makes use of NASA’s orbiting telescopes, such as Chandra, Spitzer, and others. His interests lie mainly in trying to understand stellar winds, which are outflows of gas from stellar atmospheres into space, and he has won a number of grants from NASA and the National Science Foundation in support of his research activities. Rico also dabbles in a number of other topics, such as exoplanets, gravitational lensing, and supernovae.
In addition, Rico likes to play soccer when he gets the rare opportunity.
Rico’s previously published books include:
Hardcopy – 2002, Understanding the Universe, by Raman Prinja and Richard Ignace
Hardcopy – 2005, The Nature and Evolution of Disks around Hot Stars, by Richard Ignace and Kenneth Gayley (editors)
Ebook – 2009, WORDS FIRST: Mastering Unit Conversion, by Richard Ignace
Ebook – 2010, The Sidewalk Solar System, by Richard Ignace
Ebook - 2010, SCIENCE4U: Practical Math for Practical Science, by Richard Ignace
ACKNOWLEDGEMENTS
All data used in this book can found in the public domain or are copyright free. Data for historical inflation rates in the U.S. were taken from Wikipedia. Raw data for social security benefits were found from the administration's website. Models or simulated data are the work of the authors.
Figures are the original work of the author. The author created figures using supermongo
. (See www.astro.princeton.edu/~rhl/sm.)
The cover image was taken from the public domain. It displays a wooden boardwalk in Ilkley moors. Credit: Wooden Boardwalk by Vera Kratochvil.
PREFACE
I love the game of soccer. I enjoy watching it; I enjoy coaching it; and most of all, I enjoy playing it, when I can.
These days, I play pick-up soccer. Playing with others who love the sport means that pick-up can be a real pleasure, a game of quick passing, crafty moves, and intuitive team play even though most of the players are strangers. Play becomes quite intuitive. Strong competitive spirit is always present in conjunction with an artistry of flowing play that gives soccer its beloved moniker of the beautiful game
.
Although in pick up one has a tendency to float all over the field, organized soccer teams emphasize responsibilities in relation to specific position assignments. When I played during my school years, I was generally at the sweeper (or in Italian, libero
) position. The sweeper played behind the defenders and in front of the goalie and was generally the last defending field player. A good sweep quickly learns to anticipate. Failure to anticipate will ultimately lead to a sacrifice of goals. It is a valuable lesson learned in sport that has real world application, and it is a lesson upon which this book was built around.
Read this book with the twin desires of gaining insight about basic financial planning and using that insight to craft strategies and habits that will help you to save goals.
INTRODUCTION
Hi. I am a regular family guy. I have all the typical practicalities attached to being a family guy
(which are the same as for a family gal
) - home, car, repairs, various bills, vacation plans, kid concerns, and all the rest.
I also happen to be a professor of astrophysics. That means I am a scientist. I like solving interesting problems. I like solving problems by using simple principles and gaining insights from the process. It is fun. I enjoy it.
This book is not a technical book on economics or finance. It is more like a cookbook: a collection of recipes drawn up through personal experiences in the kitchen of financial realities. It is a description of a personal journey for how I have approached estimating my finances, both in the short term and the long term.
In tackling this problem, I think that I have collected a number of important facts (ingredients
) and principles (recipes
) that apply to most other regular guys and gals. However, they are not really new. You could dig around for this info (more or less) on the web. You can manage much of your finances through apps and other software. And of course there are many excellent books on managing money and personal finance, plus there is the option of hiring a personal financial advisor.
What does this book have to offer? As far as possible, I tend to avoid black box
solutions. Sometimes good advice comes without clarity of reasoning. Understanding the rationale that lies behind good advice is more powerful than the advice itself. So, I have specifically dug into the issues of salary growth and retirement dynamics as a matter of personal concern, and I