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Ask the expert all of your money related questions. Email your questions to alacrity@getrichslow.com and Money Man will email his reply. Questions of general interest will be posted on this web page. Your name will not be printed unless you say you want it printed. Your identity will always be protected.

Dear Money Man:

    If I make four million or more pictures of George, how should I invest?


Reply:

If you make four million pictures of George, invest in doing whatever made those pictures.

Seriously, you should keep ten years worth of money in safe investments, such as money market funds. The rest can be in risky investments, such as stocks. The philosophy is that even if we have a recession soon, there will be some time in the next ten years when you can move this money into safe investments. This makes more sense than the simplistic "110 minus your age" most financial "experts" suggest.

For example, if you retire at 60 with $4 million and expect to need $50,000 of income each year, you need $500,000 (12.5%) handy. Remember to withdraw another $500,000 gradually over the next ten years. The "experts" advise that 110% - 60% = 50% be invested in stocks, regardless of your wealth or lifestyle needs. Do you really need $2 million in cash?

In your example, you could live to be 140. If you had only $1 million, you could only live to be 80, or more austerely, or you must retire after 60. With my ten year rule, you can easily compute if you can afford to retire.

                                      MM
Dear Money Man:

       My wife and I have our mortgage and school loans as our only debts. 
The mortgage is $59,000 at 8% and the school loans are $29,000 at 8%. Which
should I concentrate on paying off first and why?

Reply:

Last year, I would have told you to pay off your student loan, because it is not tax deductible. However, the recent "balanced" budget bill changes this. For a summary on this bill, see http://www.irs.ustreas.gov/prod/hot/tax-law.html. It says that interest on qualified education loans is tax deductible. You should find out if your loans are "qualified." If not, pay off the student loans first. If it is qualified, only the first $1000 of interest is deductible for 1998. Also, it is phased out for married couples making more than $60,000. If this sounds confusing, do not blame me. I did not write the law.

Regardless of student loan deductibility, you should probably pay off the loan with the lower balance. This way, you will reach the milestone of paying off a loan sooner. This is merely an emotional reason to pay off the student loan first. If its interest is deductible, then it will make you 32 cents per month (postage stamp) richer.

                                      MM
Dear Money Man:

I am from Romania and I want to know what I have to do
in the following situation:

I have 31 year old,  I am graduate at Computer science and I have
7 year experience (network administrating, cabling, etc.).

Let's suppose that I'll obtain a Green Card Visa and I'll come to USA with
an amount of $10.000.      

Considering this situation, my questions are:

1. To which state do you think it's better to go ?
2. How to find a good house for me and my family ?
3. How to obtain a good job or information about jobs ? 


Reply:

In answer to your questions about the US, you can determine an approximate cost of living by visiting http://www.homefair.com/homefair/cmr/salcalc.html. This will probably lead you to conclude that you should stay away from enormous cities like New York, but stay away from rural towns, since you seek a high technology career.

To search for appropriate jobs, you can use job finders like http://www.monster.com/home.html. If you have a specific city in mind, find out the web site of its local newspaper and search the classified ad section. Prepare a resume that you can send by email.

You will not be able to buy a home when you first arrive in the US. You may end up renting an apartment for $1000 per month. If so, you may have to pay one month rent and a security deposit of an equal amount before you move in. This is $2000. If you buy a 10 year old car for $2000, you will have spent $4000. America is an expensive place. See http://www.edmunds.com for used car prices.

Romania suffered terriby during Soviet occupation. You and your people deserve better. Good luck in the United States.

 
                                      MM

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