Saturday, July 28, 2018

Nepali women’s bid to use international carbon money to rejuvenate land, water and economy

The ‘gold mine’ is ready, but what about connecting the community to the market?

Ratanpur in western Nepal’s Tanahun District could be any other village in the country. Here, you neither hear children crackle nor young men sing songs to their beloved, all you hear is the aches and pains of old age. The cuckoo bird is the loudest living soul in the village, but her songs are also drowned when the floodgates of the sky open during the monsoon.

Looking at historic paddy terraces, one can only imagine how lively this place would have been in its heyday. Young men and women would work in the fields and their tunes would reverberate in the surrounding hills. But all that is now a distant dream for Ram Kumari Pandit (60s) and her fellow villagers.

“You don’t find young men here. All of them have left,” says Pandit, “Our sons have migrated abroad to look for jobs. Their wives have left the village in search of a brighter future for their children in cities,” she shares. “They do not see a future for their children in the village, and have migrated to cities such as Kathmandu and Pokhara.”

Ram Kumari is one of the thousands of senior citizens who are now in-charge in villages across the country. Just like the young men and women of Ratanpur, more than 1,500 Nepalis, most of them young men, leave the country every day in search of work, and an equal number, if not more, move from the villages to the cities.

The shortage of able-bodied men and women in their prime has had a devastating effect on rural households. The numbers speak for themselves: more than 21 per cent of arable land in the country remained fallow last year, Nepal was ranked 81st in the Global Food Security Index.

However, in Ratanpur, the terraces tell a different tale. The village, located around 200 km west of Kathmandu, is where local women have taken up a seemingly impossible mission—to make it profitable for villagers to stay at home rather than go outside seeking for opportunities. Their modus operandi: utilise money from private carbon emitters in Europe to rejuvenate barren land and breathe life into the village once again.

It all started in 2015, the year the earthquake caught Nepal unprepared. With rumours of the possibility of an epidemic in Kathmandu, people from outside the Valley returned to their villages to stay there until the situation normalised. This was the time windows that had been shut for ages opened again to let in sunlight and let out the fragrance of freshly-cooked dal bhat (rice and lentils).

“Everyone was in a reflective mood,” remembers Hans Peter Schmidt, a Swiss scientist who accompanied his friend and forestry scholar Bishnu Hari Pandit to the village in the aftermath of the disaster. The villagers saw what had become of their ancestral land and wanted to do something about it. Many ideas were discussed.

Bishnu Hari explained to the villagers that the barren farms were problematic in many ways. “I told them that when we leave the rice fields fallow, we are not only abandoning our ancestral heritage but also leaving it prone to erosion,” he shares. All this is happening as effects of climate change are already being felt in the hills.

“It was there that the villagers announced that they wanted to plant 50,000 trees in the next three years,” says Schmidt, who along with Bishnu Hari was given the responsibility to come with a programme to turn that dream into a reality. Schmidt and Bishnu Hari, who had been working on implementing ‘biochar’ projects (charcoal produced from plant matter)) around the country for the past few years, came up with an idea.

They identified the main challenge. The government did supply a limited number of saplings for free, but their survival rate was pretty low. Local communities wanted to plant trees, but did do not have the money to buy them, let alone maintain them. The money had to come from somewhere. Schmidt’s idea was to get money from private individuals in Europe who want to offset their daily emissions.

Schmidt and his team members from Ithaka Institute, a scientific organisation based in Switzerland and Nepal, decided that under the scheme, private emitters will be charged $35 for every ton of carbon offset by trees in Ratanpur. This would cover all costs to setup the forest gardens and their maintenance for three years. The farmers would receive money for taking care of their trees. Schmidt says that Ithaka calculated the price of carbon by looking at the overall cost of the project and resources needed to sustain it. “The price of carbon is not the same around the world.”


Under the scheme, environment-conscious people like Sibylle Maurer-Wohlatz who lives in Germany pay a certain subscription fee to offset their personal carbon footprint. “I spend as much money as is needed to compensate my personal emissions by letting trees in Nepal grow. Trees are as long as they grow a medium to store carbon. This is a sum of 27 Euro each month,” she tells Onlinekhabar.


“Because I am still causing CO2 emissions with my way of life, I wanted to compensate in a way that really works. Because the richer countries profit worldwide from the resources of the poorer countries, I was very pleased, when Hans Peter Schmidt told me about his project and the intentions to let people compensate their emissions by giving money to plant trees in devastated areas in Nepal to give small farmers the chance, to stabilise the environment; the earth and to improve their agricultural conditions.”

According to Ithaka, a total of Rs 2.15 million has been spent on the project so far. The 218 farmer families have received Rs 285,000 as carbon money for the 50,000 trees they have planted so far. A total of Rs 1.4 million, received as carbon money, was used to procure plants, establish a nursery and buy pipes and plastic for the project. The initiative has also helped farmers build water retention pits.

All planted trees are GIS inventoried—the trees GPS coordinates are recorded and fed into a software–and their yearly biomass carbon uptake would be calculated on the base of the average ten-year carbon accumulation.

They also recommended cinnamon, mulberry, michelia champaca and paulownia trees—plants that have high commercial value. The money would only be a catalyst. After three years, the income from tree crops (fruits, nuts, medicine, essential oil, silk, perfume, honey, timber, animal fodder) would be by far more than the carbon money.

But it was the local women who took the lead to kickstart the project. “The local mothers’ group vowed to make the project a success,” remembers Hari Maya Pandit, one of the members. “We realised that keeping the land fallow was a big mistake,” says Ram Kumari Pandit, who is now the chair of the group.

“We started a campaign to plant trees, and we dedicated ourselves to making it a success,” says Ram Kumari Pandit. “In the beginning, people were hesitant to switch from paddy, which they had been growing for centuries, to trees. But soon everyone realised why trees were important,” she shares. Survival rates, which were around 57 per cent in the first year, have gone up to 86 per cent—thanks to the active participation of women, the use of ‘biochar’ and the formation of ‘triade’ groups.

Hans Peter Schmidt and Bishnu Hari Pandit had been testing the use of biochar with different crops around Nepal. They had seen that biochar not only helped increase survival rates of crops, but also helped retain carbon (that would have otherwise found its way into the atmosphere in the soil).

As Ratanpur had also been affected by Eupatorium adenophorum the ‘forest killer’ (an invasive shrub), using it to make biochar had dual benefits. Similarly, charging the biochar, which would remain in the soil for a long time, with cow urine, boosted the amount of nutrients plants would receive from the soil.

Although the use of biochar could push the survival rate to 57 per cent, it was the ‘triade’ system that would take it past the 80 per cent mark. Under the triade system, each farmer is made a member of a group of three people who help one another in the farm.

Between 2015 and 2018, a total 218 farmer families in and around Ratanpur planted more than 50,000 trees of multiple species on 50 ha of private land. “We were very excited to prepare biochar, plant the trees and see them grow,” says Surya Kala Gharti. “The whole environment of the village has changed in the last three years,” she adds. “I think these many trees would not have been planted were it not for the mothers’ group,” claims Ram Kumari Pandit. “After the implementation of the project, local water sources, which had dried up, are also coming back to life as the soil retains more moisture.

According to Ithaka, the 50,000 garden trees sequester a minimum of 800 tonnes of carbon per year, It is enough to offset the carbon footprint of 70 Germans or 2,800 Nepalis.

Later this year, the whole campaign will reach its third year and farmers who have received ‘maintenance’ money for their surviving trees will stop doing so. But are the farmers ready for the switch as Schmidt had imagined in 2015? (Answered later in the story)

The answer seems to be a yes and a no. Ram Kumari Pandit says a lot of people visit her village these days. “There are times when visitors from different forestry colleges come here to observe what is going on. Some international scholars also come here to spend time,” shares Gharti, who is a member of the local municipal assembly.

The women in the village are already earning money, even before the products from the forest gardens are sold in the market. There is a steady stream of people who come to visit the village and pay local house owners money for the shelter. “This was something unexpected for a village like Ratanpur,” says Ram Kumari Pandit. A few months ago, the women’s group received Rs 210,000 for hosting a group of tourists in their homes.

However, this was not the economic benefit Schmidt had imagined. “We do not know what is to be done with our product. But we are sure that Schmidt and Bishnu Hari Pandit would have thought something about it,” says Gharti.

Schmidt says he wants to create a model in Ratanpur that could be easily replicated in villages in Nepal’s hills. He says that cinnamon oil is in high demand in Europe and he could link up the farmers with interested companies in Europe. But he wants the local products to be consumed locally, that seems to be a big challenge as the women seem to have little idea about processing their raw produce and marketing them outside the village.

The Swiss scientist says Ithaka is working on establishing a distillery to prepare cinnamon oil and it will also help local farmers produce silk, but doing that will also take time. However, large swathes of land in the village in no longer fallow, and that in itself is a big achievement.

“What we want to show is that people in the villages can earn more than people in the cities because production takes place in the villages and cities only consume. This could be the reason, one day, people return to their villages,” he adds. “This is not a development aid project but the creation of a pilot project for climate farming where we try to create and develop an environmental, economic and social model that could be multiplied in many regions of the country and abroad. The main income will be generated through the forest garden products”:

“The carbon payment is only a kind of seed money to allow the implementation of the new agronomic systems.”

The project comes at a time when Nepal is preparing to take advantage of the much-talked-about REDD-Plus arrangement, under which developing countries are to receive money from developed countries for management of forests and enhancement of forest carbon stocks.

“REDD-Plus adopts a similar model to what has been done in Ratanpur,” says Mohan Paudel, a REDD expert. “The other advantage of projects like this is that they reduce the pressure on community forests and encourage private enterprise based on forest products. This is something REDD wants to achieve,” adds Paudel.

“The other positive is that this model has shown that when people have monetary incentive to grow trees on barren land, the survival rates go up. This is something that the government needs to take note as land is being left barren in the hills due to outward migration.”

However, Paudel is a bit skeptical that the model could be replicated at a large scale as there are legal hurdles to doing so. The constitution has placed carbon trading under the ambit of the federal government, and that complicates the matter.

Meanwhile, Ram Kumari Pandit, who still maintains her kitchen garden to get her daily veggies, is happy. She is not waiting for the economic benefits to come to her. “I did not even participate in the campaign for the money. I just wanted our ancestral land to be preserved for posterity and that is what is happening here. If my grandchildren want to return, they will have the option to do that.”

This story was prepared under a grant from Earth Journalism Network.

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Romeo and Muna movie review: Shristi shines in an average love story

After a hiatus of two years, former Miss Nepal Shristi Shrestha is back with her second movie Romeo and Muna starring alongside Vinay Shrestha. Her performance in the movie is not only commendable, but it makes an average love story appealing and fun.

The movie revolves around Muna (Shristi Shrestha) and Ved (Vinay Shrestha) who have living different lives in different corners of the world. Muna is an independent girl who stays away from her family. Ved is a rich spoilt brat who is a womaniser. Both meet in Dharan when Ved’s mother asks him to go there to see a girl she has selected for him. Both of them are stubborn and end up making a stupid bet which changes the lives of both forever.

The first half of the movie is quite enjoyable as it keeps you hooked with its good story line and funny dialogues. The chemistry between Shristi and Vinay stands out as both look very natural and good together. Apart from some scenes with Sushma Karki, the half is good as it flies by.

The second part of the film is not as good because a lot happens in it. It’s a bit slow and as the first half is full of jokes, this one tends to be a bit serious which has made the film a bit intense. The ending is quite odd and predictable which stretches the movie over the two-hour mark and makes it a bit of a drag.

The actors have done a decent job with all giving their best. Shristi acting in her second film has acted better than her first film. She seems to have matured as an actor and has played her role well. The only part she still needs to work on is her emotion which will get better with more training. Her acting in the last part of the film is quite average which shouldn’t take away her good work in the film.

Vivek too looks good as a spoilt NRN. Initially, he does look a bit odd but as the movie carries on, he gets better. His facial expressions and dialogue delivery is solid along with his chemistry with Shristi.

Sushma Karki who plays the role of Ved’s ex-girlfriend is very odd in the film. She makes one cringe in multiple scenes and could have done a lot better. The director, to make the audience laugh, must have done it but it should have been carried out in a different manner.

The movie, written and directed by Naresh Kumar KC, is strong and original. It flows in a good pace and keeps the audience engaged. However, it does get a bit predictable in the end as the audience can find out what is coming. The direction is good too with director and the DOPs, Dipankar Sikder and Babu Shrestha, capturing the movie very elegantly.

Every love story must have good songs and this one has very good songs. Especially Pal Pal and Timrai Lagi Ho are particularly noteworthy. The background score given by Rohit Shakya and Sailesh Shrestha is flawless which complements the movie.

Overall, the movie, even though it’s average, is an enjoyable watch. Average, yet it offers something different. The cast seem to have worked hard which has made this film a good watch.

Run time: 145 minutes

Genre: Romantic drama

Director: Naresh Kumar KC

Cast: Vinay Shrestha, Shristi Shrestha, PrajwalSujal Giri

Screening at cinemas near you.


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A Look at My Morning Routine

Carl writes in:

I’ve been reading The Miracle Morning by Hal Elrod that talks about the benefits of a morning routine and includes some examples. I was wondering what your morning routine looks like. Managing to write a long article every single day has to involve a killer routine!

I took a quick look through the site archives to see if I’d written about my morning routine before and it turns out that I hadn’t done so in quite a while, so I thought it might be fun to talk about this a little.

I’m a morning person, and I’m a huge believer in getting up early to get some things done and get the day started off right. What I’m going to describe below is what my normal morning routine is on an average day, but it’s worth noting that this varies a little, particularly on weekends or during time crunches when I’m preparing for a trip. Most mornings include most of these things, but I will sometimes drop one or two of them if necessary.

So, here’s what a good morning looks like for me.

I wake up around 5 AM. I set an alarm as a fallback measure that goes off around 5:30, but I’ve trained myself to naturally arise around 5 AM almost every morning. I try my best to stick to a standard bedtime when I am at home, which is around 10 PM, and when I go to bed, the focus is on falling asleep, with no smartphone or anything like that (I’ll sometimes get into bed a little before then and read for a while, but I’m pretty consistent about going to sleep starting at 10 PM.)

I drink some water and stretch. The first thing I do after getting out of bed (and using the bathroom, of course) is head downstairs to drink some water and stretch. I grab a water bottle out of the fridge – I use a 32 ounce Nalgene bottle that I filled the night before and put in the fridge to get nice and cold – and start drinking it. I’ll usually look out the windows a little, then I’ll stretch for about twelve minutes while drinking the water bottle.

The stretching that I do is stuff I was taught at the taekwondo classes that will help with getting one’s kicks higher. It mixes some general body stretching with some stretches intended to help me get my legs higher in the air when kicking and doing other things. Honestly, it all feels pretty good first thing in the morning. I do a sequence of ten stretches for 30 seconds each, then repeat the cycle. It takes between twelve and fifteen minutes, depending on how much I pause to sip water and how long it takes me to move from stretch to stretch.

After that’s done, I pour myself a cup of cold brew coffee with some almond milk or regular milk in it. I make my own cold brew coffee using a simple cold brew setup I was gifted a year or two ago that basically rests coffee grounds in a filter inside of a pitcher of water. I just fill up the filter with coffee grounds, put it in the pitcher, and let it sit for a day or so, then I remove the grounds. This makes enough coffee for about four cups.

I sit down with that coffee and spend about an hour with my journal doing three things.

First, I write three morning pages. The “three morning pages” practice is one introduced by Julia Cameron in her book The Artist’s Way. The practice is simple: just open up a notebook and fill three pages with whatever is on your mind. If you’re thinking about something, write it down, no matter how serious or how inane it is. What you’ll find is that, often, the time you spend thinking carefully about that thought as you write it down leads to another related thought, and then as you write that down, you’re led to another related thought, and then eventually you lead yourself down some kind of path to a deeper truth about yourself or the world.

I tried “three morning pages” as a thirty day challenge a while back and I was absolutely amazed how useful it was to me on a daily basis. Not only did it seem to help me either clarify something that was bothering me or help me explore an idea literally every single day (and often two or three things), it also seemed to lead to an incredible clarity of mind throughout the day. Since then, this has become an essential part of my routine, something I try really hard to do every single day if I can. I usually fill up three pages, but the truth is that I set a timer for myself for 60 minutes for this and I stop whenever the timer goes off. I average three pages in that timeframe.

After that, I draw a big line in my journal and then answer Michael Hyatt’s eight daily questions. This is kind of where I begin to transition into the more practical part of my day, where I’m starting to think about what I’m going to get done that day. I find that doing this right after the three morning pages just seems to click well for some reason.

Hyatt suggests answering eight questions as a daily journaling routine:

What happened yesterday? I don’t chronicle everything, of course. I write the highs, lows, and anything I want to remember later.
What were my biggest wins from yesterday? This gives me a sense of momentum to start the new day.
What lessons did I learn? I try to distill my experience down into a couple of lessons I want to remember. It’s not what happens to us but what we learn from it that matters most.
What am I thankful for right now? This is one practical way I can cultivate a sense of abundance and gratitude.
How am I feeling right now? Feelings aren’t the be-all-end-all, but they’re a clue. In the past, I just ignored or suppressed them. This gives me an opportunity to check in on myself.
What did I read or hear? Here I list important books, articles, Bible passages, or podcasts I consumed since I last journaled.
What stood out? I don’t want to lose what I learn in my reading and listening, so I record key insights.
What can I do next to move forward on my goals? I think through my goals and my schedule and identify a few key actions I could take to make progress. This helps me prioritize.”

One quick note: for the “what did I read and hear” part, I usually refer to my pocket notebook and to Evernote because that’s where I keep track of such things. I carry anything that I considered noteworthy forward to here, which is how I make use of “random” notes that are just ideas and quotes and other such things.

This takes about fifteen minutes to twenty minutes, depending on the day.

Finally, I pull out a separate notebook and review my “triggers.” This is an idea that I learned from Triggers by Marshall Goldsmith, with a bit of assistance from Ben Franklin, that I’ve been using for the last several months. Basically, the idea behind it is to nudge myself into reflecting on what behaviors I want to naturally develop in myself and practice every day. Here’s how it works.

Once every three months, I go through my life and spend some time thinking about what behaviors I really want to work on within myself over the next three months. What do I think is bad about myself that I want to improve? What do I think is good about myself that I want to accentuate? I come up with a list of twenty or twenty five things.

Then, I pull out a small fresh notebook and write all of those things out. I write down a description of what I want to change and then I end it with a question: Did I do my best today to… do whatever it is that I’m describing. This is a trigger question, one meant to motivate me not to achieve something in a black and white sense, but to simply do better in regards to that aspect of my life.

For example, one of the things I’m really working on this quarter is humility. What do I mean by that? I want to confront my prejudices. I want to ask questions and listen to others rather than talking about me and my thoughts. I want to intentionally give credit to others for their ideas and achievements. I want to never consider myself “too good” for anything. I want to accept that I’m not the best at everything and that others often achieve more. I wrote all of that out (and a few other things) under the heading of “Humility” and then, at the bottom, I wrote “Did I do my best today to be humble?”

In my morning routine, all I do is read through those pages I wrote about the things I want to work on in my life. I read one, then for about fifteen seconds, I visualize myself doing at least one of those specific elements. I just move through all of them this way. This takes perhaps ten minutes.

(This notebook also has a chart in it. On a single page, I have 22 rows – one for each thing I’m working on this quarter – and 31 columns – one for each day this month. At the end of the day, I give myself a score from 0 to 10 on each of the things I’m working on. “Did I do my best to be humble?” I score myself somewhere between 0 (complete fail) to 10 (the person I want to be) and write it down on that page. I find that the self-scoring is really, really powerful, and paired with the morning review, it pushes me quite effectively to be a better person in terms of my behavior, not my achievements.)

Yes, I spend an hour and a half with my journals almost every morning. The thing is, when I’m done doing that, I feel like I’m incredibly primed for the day, like I’m ready to take off like a rocket ship. On days when I’ve devoted that time to journaling, I’m just simply more productive and a better person all day long. Furthermore, when I chain together lots of days of consecutive journaling practice, the effect gets even stronger, and there’s actually a residual effect where I still get benefits for a few days if I don’t complete that routine.

I use whatever notebook I can inexpensively find for my journaling and use a gel pen for writing, usually a Uniball 207. My favorite notebook is a Leuchtturm 1917, which I sometimes receive as gifts and promptly fill up.

I don’t save old journals. Instead, I usually scan the pages and save them digitally, then burn them.

Then, I eat a small breakfast of some kind. It’s usually a bowl of oatmeal or something else small. On school days, this is usually timed so that I can eat with my kids before they go to school, and then I help them get ready for school.

At this point, Sarah is usually awake (she’s usually gone if it’s a workday), so I’ll brush my teeth, make the bed, take a shower if this isn’t an exercise day, and get dressed. If I’m planning to do some exercise later in the day, I don’t shower until after my exercise routine, but I do put on some deodorant.

After that, I take a second cup of coffee and my full water bottle into my office and then meditate for fifteen minutes. I turn on some kind of mellow audio, usually this, and do a really simple mindful meditation where I just focus on my breathing for fifteen minutes. I basically just close my eyes and pay attention to the in and out of my breathing, doing my best to keep my focus on that, and if I notice my mind wandering, I gently bring the focus back to my breathing. This not only calms me down and helps me focus, it trains my ability to focus.

I take a big gulp of water along with a couple daily vitamins and then start off with my work launchpad to start working for the day. After that, it’s off to the races.

I know some people will ask about the vitamins. I eat a vegetarian diet that’s often pretty close to vegan, mostly for health reasons. With that kind of diet, there are some nutrients that are in short supply. You can get most of these missing nutrients if you make sure to eat an extremely wide range of fruits and vegetables each day, but I know that even if I make an effort to do so, I’m probably missing the target. So, I take supplements to cover those seven things that I might be missing: vitamin B12, vitamin D, long-chain omega 3 fatty acids, iodine, iron, calcium, and zinc. These are mostly covered by a multivitamin and an oil pill. I do not believe that people on a full omnivorous American diet need to take vitamins regularly.

That’s the routine I follow most mornings. I start at about 5 AM and I’m usually working by about 7:30 AM.

Here’s the thing: I’ve found that if I do this, I end up having achieved far more with my work by the mid afternoon than I do on days where I don’t do this and just start at 5 AM or if I sleep in and start at around 7:30 AM with no routine. Furthermore, I feel like I have a lot more left in the tank when I stop working for things like family time and evening activities and housework and exercise and hobbies and community commitments. I also feel like I’m genuinely building better behaviors and becoming a better person, both in terms of my conscious choices and in my head in an unconscious way. I haven’t ever taken direct statistics on this, but I’d be willing to bet that my actual work productivity and my housework productivity is somewhere around 20% to 30% higher on days that I do this even with the first hour or two used by this routine.

Why does that happen? My entire morning routine is about “sharpening the axe,” to paraphrase a quote often attributed to Abraham Lincoln. Lincoln supposedly said, “Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” The idea here is that preparation makes the time you actually invest in a task much more efficient and effective, often reducing your overall effort and usually increasing your productivity. If I view everything before 1 or 2 PM as my “work time,” the two hours I invest in “sharpening the axe” makes the other hours much more productive, usually resulting in more overall productivity, plus I feel better and more able to tackle the other challenges of my day when I’m done.

I tinker with this routine fairly often. I used to do more direct visualization of a good day and less journaling, and I used to exercise in the early mornings. What I found over time was that, for me, the stretching fulfilled the mental awareness I really wanted in the early morning and that a workout later in the day when I was starting to fade in terms of my professional work really primed me for family time and other commitments later in the day. So, I exercise after work now, most of the time. I also discovered the benefits of meditation (helping to clear and calm my distracted mind) and journaling (helping to clear my mind and clarify things I’m struggling with).

Sometimes I fall off of this routine, and when that happens, I usually coast on the inertia for a week or two with good results. However, I eventually start to become less and less productive and less in less in tune with myself and I feel generally out of whack and overwhelmed with work. This routine is incredibly worth the time investment for me, so when I fall out of that routine because of other life urgencies, I make it my goal to get back to the routine as quickly as I can.

I don’t expect anyone to adopt this exact morning routine. Rather, I hope you’ll mine it for ideas for things that will work for you. Go through these things and try some of them out for yourself and see how they work. I highly recommend a thirty day challenge of trying new things for yourself just to see if they click with you. Sticking with something for thirty days allows you to see the benefits of repetition without making something that isn’t quite working seem like an endless slog that you’re committed to.

Good luck!

The post A Look at My Morning Routine appeared first on The Simple Dollar.

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Friday, July 27, 2018

Why It’s Crucial to Start Saving for Retirement Now

One of the main reasons that people choose not to start up their 401(k) (or 403(b) or TSP or other such plan) at work is because they’re simply overwhelmed by all of the options available to them and they’re worried about not choosing the “best” one and losing money. This was a concern I had at my first job when signing up for my retirement plan for the first time, and it was voiced by others in the room during the orientation session. It’s also been a concern noted by many readers over the years. They didn’t sign up because of option overload – they partially filled out the form, then felt overwhelmed by the options, then just sat it aside and took no action on it.

This is a bad move. You are better off choosing almost any investment option and starting to save now rather than putting it off.

Let’s look at two case studies.

Jane is 25 years old. She has her first “real” job and plans to retire at 65. On the first day, she goes in to sign up for her retirement plan and chooses an investment that offers a 7% average annual return on her contributions. She starts contributing $2,600 a year and her employer matches that, also contributing $2,600 a year.

After 40 years of this, when Jane is 65, she’ll have $1.15 million set aside for retirement.

Now, let’s look at Robert. He’s also 25, at his first “real” job, and also plans to retire at 65. On his first day, he goes in to sign up for retirement and balks at the options. He stuffs the forms in his desk and forgets about them. At age 30, he is finally nudged by his parents and wife into contributing to his retirement account, so he carefully studies the options and chooses that same 7% option that Jane chose. He starts contributing $2,600 a year and his employer matches that, also contributing $2,600 a year.

After 35 years of this, when Robert is 65, he’ll have only $800,000 set aside for retirement. Waiting just five years cost Robert $250,000. Another way of looking at it: waiting for 12.5% of his working years cost Robert around 22% of his total retirement savings. That’s a big loss.

There’s almost no doubt that starting now is better than starting later, but what about the fear of choosing a bad investment? Wouldn’t you be better off waiting and doing the research and choosing a much better investment in a year?

Here’s the issue with that: you can do that regardless of whether you’re contributing right now or not. If you start contributing right now and put it in a money market fund – meaning there’s virtually no risk and something around a 2% annual return – you can still make your investment decision a year from now and already have a year’s worth of contributions sitting there. If you don’t do that, you have nothing a year from now. In the case of Jane and Robert, that means they’d have about $5,250 or so ready to invest in something at the end of the first year if they just chose a money market account (with basically no risk) instead of choosing no contribution at all.

So, starting now and contributing to something extremely safe, then choosing a better investment and moving later is better than contributing nothing now, choosing a better investment, and starting later.

Let’s address another common issue that comes up in these discussions: the “market timing” scenario. You’re about to sign up for your 401(k) but you’re simultaneously afraid that the stock market is about to have a 1929 or a 2008 year and drop 40% in value, so you don’t sign up.

In this scenario, the same thing holds true: Just start contributing now and put it into something safe, then move it over when you feel the time is right. By not signing up, you simply miss out on those years of contributions.

However, the idea that you can time the market is a fallacy. As I wrote late last year in Why You Can’t Time the Market: Thoughts on Investing in Stocks:

Do you have a time machine? No? Then market timing isn’t worth it.

You can’t guess day to day where the peaks and valleys of the market are, and if you miss it by much, you’re going to cut enormously into any advantage you might get from market timing. Add into that the fact that you’ll be paying brokerage fees and you’re devoting a lot of time to study, and the disadvantage grows.

The much better approach is to do things passively. Only invest in stocks if you have a goal that’s more than a decade in the future. Buy a broad based index fund (like the Vanguard Total Stock Market Fund) and reinvest the dividends. Then ignore it until you actually need the money. The market will go up. The market will go down. It doesn’t matter.

If you’re not able to actually predict the day to day peaks and valleys of the stock market – and even large scale investors who do this for a living can’t do it really well over a large period of time – then market timing isn’t going to help you. In fact, if you’re very much off the peaks and valleys at all – and as a casual investor, you will be – you’re likely going to do worse than if you just put money in there and didn’t think about it at all.

In other words, for people just signing up for a 401(k), timing the market is a fool’s game that will probably result in losing money.

What about the worry of a “lemon investment”? This is another concern that people often bring up in these situations. They’re concerned that the retirement investment option they choose is a “lemon” with poor returns and high fees.

That’s true – you might wind up in an investment that doesn’t have great returns or might have high fees. That’s still better than contributing nothing. A 6% return on your money when you could have had 7% (by picking a better investment) is still way better than a 0% return on your money when you could have had 6% (by contributing to the lemon).

Furthermore, with almost every retirement account out there, you have the ability to change your investments at any time. If you keep researching and realize you’re in a lemon, you can move your money to a better investment within that account with no tax consequence. Just log in and change it.

In short, if you end up making a bad choice, you can always correct it later, and whatever reduced amount you earned in that investment is better than earning nothing by not contributing at all.

Okay, one final question. What if you literally have no idea what to choose, and that fear keeps you from making a choice?

The first thing I’d do is simply ask the human resources officer or other employee that is helping you sign up for retirement for their recommendation. They’re typically given some basic guidance to help people find a retirement option that’s right for them. Follow that advice for now. Often, this advice will lead you to a “target retirement” fund, which is a solid default choice.

Later on, as you learn more about investing (or you have someone advising you), you (and/or your advisor) can research the investment you’ve chosen as well as the other options available within your retirement account and, again, if you find something that seems to be a better option, you can move at that time.

The moral of the story is this: You are better off saving for retirement right now rather than later, regardless of how you choose to invest that money. If you choose to leave it in cash for a year or two within your 401(k), you’re still better off in the long run than doing nothing at all. If you put it all into stocks and the stock market bottoms out next year, you’re still better off in the long run than doing nothing at all. If you put it into an awful investment and don’t figure it out for a few years, you’re still better off than doing nothing at all.

Why? Because even after all of those potential issues, you still can’t beat the sheer power of saving for retirement early and letting the power of compound interest work in your favor for as long as possible. The only way to do that is to start now.

If you have a retirement plan at work that you haven’t signed up for, do it today. Don’t wait. Start the contributions now, even if you can afford very little. If you don’t have a retirement plan at work, sign up for a Roth IRA and start contributing, even if you can afford very little. Make moves in your life (like adopting frugality or paying off debts) that will allow you to bump up those contributions as soon as possible. That way, you’ll be as ready for retirement as you can possibly be, and that’s one less little piece of background stress on your shoulders as you move through the many years of your life.

Good luck!

Related Reading: 

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Thursday, July 26, 2018

The Wisdom of Frugality: The Philosophy of Frugality in a Modern Economy

wisdom of frugalityThis is the sixth entry in an eight-part weekly series that provides a detailed look at the book The Wisdom of Frugality by Emrys Westacott. If you’re new to the series, feel free to hop back to the first entry.

One of the biggest arguments against frugality is that it appears to be unambitious, at least in the sense that it’s not about creating value for others and earning income, but about maximizing value within your own life and that of your immediate family and thus saving money instead. Isn’t that idea at odds with a modern economy, which is oriented around a cycle of earning money and spending it, which keeps the economy going?

In other words, is frugality outdated?

In modern societies at peace, life is far more secure than it ever has been. Thanks to enormous leaps in technology, meeting basic needs in a modern economy is as easy as it has ever been. Our supermarkets and retailers provide abundance. Our homes have infinite entertainment options and are larger than ever. Recreational opportunities have exploded. At the same time, our jobs are less physically taxing than ever (though they can be mentally taxing) and offer incredible financial rewards for many career paths if people are ambitious.

These things are seen as large positives, but at the same time, they also lead to increased dissatisfaction. It’s not a secret that many people are unhappy in the modern world. It’s something I struggle with myself.

Many of the best opportunities are very expensive, which leads to a dissatisfaction treadmill where we buy things to feel temporarily happy and then the lethargy sets in again until we can buy the next thing that makes us happy for a little while.

That dissatisfaction has, for many people (myself included), led to a strong renewed interest in frugality.

The Nostalgic Appeal of Frugality

Many people feel nostalgic for a earlier time in their lives when things felt “good” to them. Often, the past – particularly childhood – is recalled as a time of happiness and virtue. People seemed generally good and the world seemed generally good, particularly in comparison to today, where people are dissatisfied on the hedonic treadmill and are constantly bombarded with negative news.

That kind of nostalgia for the past often connects to things like a closeness to nature, contentment with simple pleasures, lack of acquisitiveness, an absence of luxury, and moral purity. I think back to my own childhood and I think of running around in the woods near my house and eating ice cream and playing with my cousin in the sandbox and having a sense that the people around me were good people and that I was generally safe. Those feelings have incredibly strong appeal.

Rousseau argues that one of the key reasons for that strong sense of happy nostalgia is unhappiness with many aspects of modern life. A simpler life is something we naturally see as more joyous. Rousseau attributes much of the unhappiness of modern life to private property and the desire to acquire it, which often causes people to be cruel to each other.

Westacott also points to themes in art, which often harkens to a simpler, natural past.

The catch, of course, is that such nostalgia is often seen through rose-colored glasses, as nostalgia hides the difficulties of the past from us. The past was harder than the present in many ways, yet when we look back, we don’t see those difficulties. We just see the good side of the simpler past.

Simplicity, in the modern sense, is really just an effort to strip away the worst of modern life, but is that itself a bad thing? Is it bad to want to strip away the worst of modernity? Is it wrong to reject materialism, hedonism, technology fetishism, and consumerism?

This digs down to what the root of frugality really is: it’s a reorientation of values. It’s about eliminating the values of modern society that you don’t agree with and substituting other values in their place.

This might be good for the individual, but is it good for the society?

Economic Growth and Well Being

There is an obvious and strong economic argument against frugality. Most modern economies continue to grow because of a cycle of constant spending of almost all earned wages, which continually cycles through the economy. If people stop spending as much money and instead save that money, that economic cycle starts to slow down. Money isn’t flowing through the economy nearly as quickly.

In other words, a mass frugality movement would have a pretty noticeable negative effect on GDP, which is the primary measure of economic activity.

The question then becomes, why is GDP and economic activity seen as a be-all-end-all measurement of a society’s success? We often buy into the notion that GDP is some sort of indicator of well being, but that isn’t true. GDP doesn’t directly line up with a lot of indicators of well being. There are many arguments for broader measures of well being and, in fact, well being indicators often indicate upcoming changes in GDP and national stability.

There’s also what’s known as the “Easterlin paradox,” which states that at any given moment in a given society, richer people are happier than poorer people. However, that connection vanishes over time and across societies. In other words, you’re not required to live a certain way in order to be happy; actual happiness depends a lot more on circumstances beyond your financial state than it does on the state of your money at the moment.

Another way to look at that: Emotional well being and happiness rises with income, but only to a certain extent. In America, that number is usually somewhere just above the average household income – income above that doesn’t really bring additional happiness.

Another challenge in all of this is that people try to project an image of happiness and well being, even if they don’t actually feel happy. Social media is full of this kind of thing, where people post things about how great their life is and how happy they are, even when they likely don’t actually feel that way. This often creates a sense that everyone else is happier in their lives than you are, which further clouds the picture.

A final factor: relative social standing is enormous in determining personal happiness. We tend to feel happiest when we’re just slightly better off than the people immediately around us, such as our neighbors or our close inner circle. We don’t want to feel like the “worst” person in the group. (The key here, I think, is to find friends that compare along metrics that you would use as guidance to improve yourself, such as a social circle that values fitness or frugality.)

What If Frugality Went Viral?

This is a question that I’m often asked in the reader mailbag, and it’s an issue that Westacott handles thoughtfully here.

In the short term, the consequences of a huge frugality movement in America would be dire. Much of the American economy centers around consumption, much of it rather unnecessary. Large segments of the economy centered around luxury goods and fulfilling desires would fall apart.

Since our economy requires so much constant economic activity to thrive, the shift of people moving away from luxury goods and lots of unnecessary purchases and experiences would cause things to just grind quickly to a halt in sectors that aren’t serving basic needs.

Why Increased Frugality Need Not Have Dire Consequences

That disastrous picture is just a short term result, however. There would be a number of benefits to a frugal society, but most of those benefits would take some time to appear.

First of all, many luxuries that cause ill health, such as unhealthy food, cigarettes, and so on, would eventually go away because they’re not really frugal expenses. This would likely improve the health of the average American, which would result in significantly lower long term medical expenses.

Second, the short-term collapse in the economy would be due to shifts in demand, but over the long term, there are more factors at work than just demand. What’s actually happening is that demand isn’t disappearing, but that it’s just changing significantly, and it would take the market some time to catch up, but it would catch up.

At first, there might be significant unemployment as the market reformed itself around the change in demand, but over time, that would fix itself in a number of ways.

Westacott predicts that one major change would be a shift to shorter workweeks or longer vacations from work. This would take care of the significantly reduced demand for nonessential consumer goods without devastating unemployment, but it would take some government intervention.

In the public sector, there are tons of jobs that need done: infrastructure repair, schools, hospitals, parks, public transportation, public research. People want to do those jobs as long as taking those jobs doesn’t lead to poverty. The issue is that we don’t define those things as a societal priority right now, and that would likely change as individuals become more frugal. Again, this points to a change in government.

All of these changes have some benefits. They would result in more people being employed, more potential income tax dollars, and healthier and happier lives for all.

However, there are potential problems, too. The biggest one is that employers would face higher labor costs. People, as always, will seek the highest wages they can earn, and if we live in an era with a shorter mandated work week, this means paying benefits to a larger pool of employees than before.

One potential solution to this is the one that Europe discovered in the process of many European nations moving to 35- and 30-hour workweeks: simply move the costs of typical workplace benefits to the government and increase payroll taxes. That way, the employer is no longer paying for things like health care packages and 401(k) packages that are pretty typical white collar (and often blue collar) benefits.

Westacott makes a pretty good argument that the current system of having employers handle the costs of those benefits is incredibly inefficient and that such requirements tie into the reason that Americans have a “40 hour workweek” but many work far more than that. This begs an obvious question…

Why Do We Work So Hard?

People work harder than ever. The reality is that in America, although working hours have declined slightly over the last century, the average worker productivity has gone way up and thus the average worker is far, far more productive than ever before at work. Many people a century ago predicted that these huge leaps in productivity would result in progressively shorter working hours. Why hasn’t that happened?

The biggest reason is that, as a general rule, Americans have a deep desire for improved relative status and capitalism inflames that desire. People want to be better off than their parents were and, as mentioned earlier, better off than people in their social circle. People want to have the latest and greatest new things.

At the same time, individuals are at the mercy of the system. Most would like to work less, but fear they can’t out of fear of losing their jobs or damaging their career. Their employer demands more and more productivity from them for their pay.

Also, cost of living isn’t going down. It’s staying nice and high, and market forces often move the cost of essentials up in price at a rate much higher than wage growth. Housing is a perfect example of this – it rises in value faster than the wages of the average American. This benefits those who already own a home because their home allows them to build wealth and avoid the increases in the housing market, but works against those who don’t yet own one. A similar escalation is happening in higher education and health care. With education, you have the same phenomenon – people who already have an education aren’t affected, but it’s becoming financially harder and harder to obtain an education for those who don’t have one yet.

Things like housing, education, and health care aren’t optional luxuries. They’re required to keep living and to have access to most career paths in America today. These things reside far closer to the “need” end of the spectrum than the “want” end. We’re not talking about luxury goods here, but basic things, and when those basic things become more and more expensive, it becomes harder and harder to make ends meet and to maintain a solid relative social status, something that’s intimately tied to self-respect, as noted earlier. Is it any wonder many people are unhappy today?

Why is this happening? One solid argument is that our technological cleverness has outpaced our moral wisdom. We know how to do a lot of things, but we don’t yet really understand all of the consequences of it and whether it’s right or wrong to do them.

In the past, when new technologies emerged, we had generations to adapt to them and figure out whether they were good for society and how to maximize the benefits and minimize the negatives. It took millennia for society to move from a hunter-gatherer state to agriculture, for example, and it took centuries for the ramifications of the printing press to be really understood.

Today, technological change is coming so rapidly that society simply does not have the time to acclimate itself to one change before other changes are already here. Complex societies are difficult to understand already, and new technologies change them rapidly. A hundred years ago, there was no real way to mass communicate at all aside from newspapers – phones were rare, radio basically didn’t exist, television didn’t exist, the internet didn’t exist. All of that change has happened in far less than 100 years, and that’s just in how we communicate and share information. We haven’t really figured those changes out yet as a society, let alone all of the other changes that seem almost constant.

What’s the solution? There isn’t one. However, Westacott points at frugality as being something of a form of resistance against this kind of rapid change. A frugal society would inherently be much more slow to adopt massive technological changes, and perhaps that would serve all of us better.

Next time, we’ll take a look at the environmentalist case for simple living.

Related Reading:

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How (and Why) I Get Through Summer Without Air Conditioning

Summers in New York City are sticky, sweltering, and long. The sun’s rays radiate off the immense expanses of concrete and asphalt, making the crowded metropolis feel as though an evil giant might be using a powerful magnifying glass to superheat the city.

That being the case, most people in the city plug in their A/C units in June and leave them running into September.

Because I’m always looking for hacks that can save money and have potential health benefits, I’ve chosen to not use an air conditioning unit for the last two summers. Here’s why I do it, as well as some tips for beating the heat sans A/C.

You Save Money

If you use box fans to cool your place rather than a window A/C unit, your budget will thank you.

A box fan costs about one-third of a penny per hour to run, while a window A/C unit is closer to 14 cents per hour. If you figure 12 hours per day of use over the course of a month, an air conditioning unit will cost you over $50 more per month more than a fan. Over a three-month summer, you’d save more than $150 right there – not even taking into account the cost of purchasing a window A/C unit (around $200 or more).

You Build Toughness

I like that I’m not hedonically adapted to having air conditioning.

Hedonic adaptation refers to the idea that we quickly grow used to improvements in our living situation. So, if we buy a brand new car, it’s fun for a while, but eventually we get used to it and that nice car becomes our new baseline — just another vehicle.

Because my home doesn’t have A/C, I appreciate it so much more when I’m in a place that does. A trip to a coffee shop, bookstore, or a friend’s house is now all the more pleasant. I actually think my lack of A/C makes me a more productive worker in the summer than I otherwise would be, because I’m so grateful for the air conditioning in my office building.

You Help the Environment

Air conditioners suck up about 6 percent of all electricity in the U.S. and produce 117 million tons of carbon dioxide annually.

I’m not going to pretend like I’m saving the planet just because I don’t run air conditioning, but it is nice to know that I’m doing my little part, however small, to combat negative changes to our environment.

Hacks for Surviving Summer Without A/C

There are a bunch of ways to manage the discomfort that comes with forgoing A/C. Here are a few of my favorites strategies to stay cool:

Take Cold Showers

I’ve written about my love of cold showers before, and I will once again give them a shout-out. When it’s sweltering in my place, I find a freezing cold shower buys me about 20 solid minutes of feeling like I’m at a comfortable temperature. If things get really bad, you could take one per hour and, in theory, cut your time feeling overheated by a third.

Utilize Your Shades

Keeping your blinds shut during the hottest parts of the day can lower the temperature inside your apartment by as much as 20 degrees.

This one was tough for me to wrap my head around at first, as I love getting natural light whenever possible. My wife convinced me to keep our shades drawn during the hottest parts of the day, and once I saw what a huge difference it made, I was sold.

Limit Your Use of Appliances

It goes without saying that you don’t want to use the oven on hot days, but I noticed a difference by limiting the use of all appliances.

The more things you can unplug the better, as anything that’s plugged in radiates a small amount of heat. When you don’t have A/C, these little things matter.

Adjust How You Sleep

We all have our preferred bedding situation. I’m the most comfortable when I have a relatively thick blanket. But during hot summer nights, you have to get creative. I now sleep with just a light sheet.

This summer, we went a step further by removing our bed frame and putting our mattress directly on the floor. Because heat rises, the lower you get to the ground, the cooler you’ll be. If you want to take this practice to the next level, you can try sleeping on a bamboo mat, which is supposed to be much cooler than cotton.

Practice Gratitude

While it’s always good to have a gratitude practice, I find it especially helpful when I start getting bothered by my lack of air conditioning. There’s something about listing out things I’m grateful for, like my good health and my wonderful relationships with friends and family, that helps keep things in perspective.

A lot of the time I find it’s not so much the heat that is the problem, but my reaction to it. A gratitude practice reminds me that no matter the temperature, I have things pretty darned good.

Embrace the Struggle

I genuinely like brainstorming with my wife about ways that we can optimize our living situation to combat the heat. It can feel like a puzzle to solve rather than a burden to bear.

Also, there’s something to be said for embracing the seasons as they come, temperature changes and all. Studies have actually shown that all things considered, people prefer to be in places where the temperature fluctuates. This reduces the negative effects of what University of California Berkeley professor Gail Brager calls “thermal monotony.” She found that “we not only accept—we actually prefer—a wider range of conditions that float with the natural rhythms of the outdoor climate.” Basically, we get bored when things are always the same, and embracing the A/C-free lifestyle can potentially help us to live more fulfilled lives.

Finally, because I’m a health nerd, I also looked into the health benefits of sweating. Instead of seeing sweat as a gross byproduct of being overheated, I found that I could embrace it as an underappreciated bodily function. Sweat helps us detox heavy metals from our body, promotes healthy skin, lowers our stress hormones, and more. Those sound like properties worth embracing!

Summing Up

To be clear — I’m happy that air conditioning exists, and I’m sure I will one day join the 87 percent of Americans who have an air conditioning unit. But until that day comes, I’ll do my best to live in a way that allows me to thrive without relying on air conditioning. If you want to save some money, reduce your environmental footprint, and learn some new ways of living, I suggest you give it a try.

Related Articles:

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Nepal buying 935,000 metric ton fertiliser from India for next five years

Kathmandu, July 26

The government of Nepal says it has begun the  process to purchase 935,000 metric ton fertiliser from India for next five years.

The Ministry of Agriculture, Land Management and Cooperatives says the amount of fertiliser will be purchased under the government-to-government scheme from the current fiscal year 2018/19 till fiscal year 2023/24.

Whereas the country in total needs 1 million and 990,000 metric ton fertiliser including urea, potash and DAP in next five years, 935,000 metric ton including 565,000 metric ton urea and 370,000 metric ton  DAP will be brought from the southern neighbour, according to the Ministry’s plan.

Details about the requirement have already been communicated with India so as to avoid possible shortage of fertiliser of different types in different seasons, according to the Ministry.

As per the purchase plan, the amount of fertiliser needed from India goes increasing every year.

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Wednesday, July 25, 2018

Nepal to introduce e-passport within two years

Kathmandu, July 26

It has just been few years since the government of Nepal introduced machine readable passport (MRP). Now, the government wants to climb a step ahead with the introduction of electronic (e-)passport soon.

Officials of the Ministry of Foreign Affairs and the Department of Passport say the e-passport will come into operation within next two years.

It has been learned that the Department currently has a stock of around 1.5 million books to print MRPs. After the stock runs out, e-passports will be introduced, according to officials.

The Council of Ministers has approved the Ministry of Foreign Affairs’ request to introduce the new technology around two years ago.

Though the approval for e-passport has already been granted, the Department is yet to conduct a detailed study on various available technologies, their pros and cons, criteria and standards requirement for them, and different uses among others.

“Therefore, next steps of the process will continue only after the study,” a high official at the Department says.

The International Civil Aviation Organisation has planned to replace the MRP with e-passport by the end of 2022. Accordingly, Nepal is also planning to meet the deadline.

Nepal had introduced the MRP in 2011 and so far 5.5 million such passports have been distributed. The country’s passport used to be handwritten before that.

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Is It Cheaper to Book Through Travel Sites or Directly Through Hotels?

Craig writes in:

I usually stay at Marriott hotels while traveling because I know what I’m getting when I stay at one and they’re very consistent – a little pricy but I never get a bad surprise. I usually book through hotels.com but a friend told me that it is more cost effective to get into the Marriott Rewards program and book my hotel stays directly with Marriott. I’m trying to do the math and figure out if it’s true.

I want to start off by quickly covering the specific options that Craig is mentioning. Marriott is a hotel chain that offers several different brands of hotels at varying levels of quality, but in general a hotel that has the word “Marriott” somewhere in the logo offers a consistent and reasonably high quality experience. I like to stay at both Residence Inn and Courtyard, both of which are reasonably priced Marriott hotels, and have stayed at both Marriott and JW Marriott (higher priced) at various times. Hotels.com, on the other hand, is one of the most popular hotel booking aggregation sites, and I’ve used them regularly for many years.

So, let’s look at the two options that Craig is considering, in detail.

If you book your hotel stay through Hotels.com, they offer a bonus program in which you earn a free night’s stay at a hotel for every 10 stays you book through them. The value of that free night is equal to the average cost of the 10 nights that earned that free stay. So, let’s say you booked 10 nights at an average cost of $100 per night; you would earn a free night’s stay worth $100. In essence, if you stay at similar hotels all the time, you’ll earn a free stay with every 10 nights of bookings on Hotels.com.

With Hotels.com, you can choose from many, many different hotel chains, which is an advantage for comparing rates and options. This does give you some flexibility that booking directly through a hotel chain does not offer you.

Another advantage of Hotels.com is that they occasionally offer a deal on a particular hotel. If you watch Hotels.com carefully, you’ll sometimes find deep discounts that pop up in the area you want to stay in. Otherwise, I find that their rates are very comparable to what you’d get if you booked directly with the hotel in question.

On the other hand, the Marriott Rewards program offers 10 “points” for every $1 spent at a Marriott hotel, with a few minor variations. These convert into free nights at a variety of different rates depending on the hotel brand and location, as described here. The points rate for a single night at a Marriott hotel varies from 7,500 to 70,000. To put that in perspective, to earn a free night at the lowest end hotel would require you to spend $750 in total at Marriott hotels, while a free night at the high-end hotel would require you to spend $7,000 in total. It’s worth noting that if you book four nights in a block with Marriott points, you get the fifth night free, so if you saved up, say, 30,000 points, you could actually stay for five nights at the low end hotel.

It’s worth noting that Marriott also runs a “PointSavers” program, where many of their hotels are available at a discounted points rate (usually around 10% to 15% fewer points required for a night). However, this lower rate isn’t available at all times and all locations.

Marriott room rates vary widely based on location and brand (JW versus Marriott versus Courtyard versus Residence Inn and so on). I’ve stayed in Marriott hotels for well under $100 a night and other Marriott-owned hotels are as high as $400 a night. It all depends on location and property quality more than anything. Most of the Marriott owned hotels I’ve stayed at in the past are in the medium to lower end of their tier range and I’ve always been satisfied. Rooms at those hotels would be in the 10,000 to 15,000 point range and would cost around $150 a night if booked directly. This would mean that it would take somewhere around eight to nine nights spent at the Marriotts I typically stay at to earn a free night at the level of Marriott that I typically stay at.

It boils down to this: If you’re going to stay at a Marriott hotel and the booking price is the same on Hotels.com and when booking directly from Marriott, you’re going to be slightly ahead booking directly from Marriott if you stay in Marriott hotels frequently. On the other hand, if you are not consistently a patron of Marriott hotels, or if you find a notably lower rate for your booking on Hotels.com, you’re better off booking at Hotels.com.

There are a couple of other things to consider in all of this.

First, this story is similar when comparing most travel aggregation websites and most hotel chains. You’ll find that if you’re a heavy traveler and frequent one hotel chain a lot, then you’ll probably find more value in that hotel’s rewards program, but if those factors don’t apply to you, you’re probably better off booking with the aggregator. This isn’t universal, but it seems to be a pretty consistent pattern.

Second, if you are a heavy traveler and stay at a certain hotel chain frequently, you’re probably going to find that it’s worthwhile to get a rewards credit card that offers perks associated with that chain. For example, the Marriott Rewards card earns you 6 points for every $1 spent at a Marriott property and 2 points for every $1 spent everywhere else. This means that if you book directly with Marriott, you’ll earn 16 points per $1 spent, which means you’ll be getting a free night at a similar hotel with every six to seven nights or so of staying at that type of hotel. You also get a free night’s stay once a year with this card (up to a fairly high tier of hotel – nicer than the ones I often stay at, anyway). However, the card comes with an $89 annual fee, so you definitely need to be a very regular Marriott patron to get real value out of this card compared to other reward credit cards.

So, what’s the overall conclusion?

If you prefer to stay at a specific hotel chain and do so most of the time, you should become a member of that hotel chain’s rewards program book most of your hotel stays directly through that chain. This is slightly more cost effective than the bonuses offered by hotel aggregators.

If you are willing to stay at any hotel chain, you’re better off using a hotel aggregator like Hotels.com and using their bonus program. This is a more cost-effective route. It should be noted that different hotel aggregators (like Expedia or Booking.com) have very different bonus programs, but they all tend to boil down to something in the ballpark of booking 10 nights and being able to get the 11th night free.

Before you book directly with a hotel, you should at least check a hotel aggregator or two to see if you can get a room at that hotel at a highly reduced rate. Let’s say you’re like Craig and you prefer to book at Marriott hotels. Before you book a stay, it’s worth your time to check Hotels.com or other hotel aggregators and see whether that hotel is offering a significant discount through the aggregator. In general, if the discount through the aggregator is 10% or more, it’s probably cheaper to use the aggregator. My experience as of late has been that the vast majority of the time, the rates across all sites are the same for a particular room, with only 1% or 2% difference, unless there’s some kind of flash sale on the room. It’s those flash sales and the occasional price difference that make it worthwhile to check, and those happen often enough to make checking worthwhile.

You’re generally better off sticking with one hotel chain and one aggregator. Why? Unless you travel an absurd amount, you’ll never accumulate enough points or nights within a large number of programs to add up to a free night. You’re better off sticking with the points generated in one or two programs, even if you’re paying a little bit more once in a while. I personally use hotels.com as my aggregator, but I book almost all of my stays directly through them, as I’m pretty price conscious with my stays. I think that if I were a heavy traveler for work purposes, however, I would want a consistent chain to trust.

Used in concert, these strategies will help you find a good price on a room you like and accumulate adequate bonuses over time so that you’ll eventually be able to earn free nights at hotels you enjoy without much additional effort. Good luck!

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Four Myths About Annuities: Do They Deserve Such a Bad Rap?

Annuities have long had a bad rap.

Aggressive marketing and messaging about high fees, charges for surrendering them early, and potentially disappointing returns compared to stocks are just some of the reasons annuities have, at least in some people’s minds, become the black sheep of retirement vehicles.

Numerous financial professionals however, argue that there’s a long list of myths and inaccuracies surrounding annuities. And those myths are causing people to lose money by missing out on a retirement option that can offer valuable benefits, particularly at a time when pensions have largely become a thing of the past.

Myth No. 1: All Annuities Are Bad

There are many types of annuities, and categorizing them all as bad choices is an oversimplification, begins Ken Nuss, CEO of AnnuityAdvantage, an online annuity marketplace.

Like any financial instrument, annuities have pros and cons. In addition, there’s a significant difference to be aware of between a variable annuity and a standard fixed-rate annuity.

A standard fixed-rate annuity, which guarantees return of principal, acts much like a tax-deferred version of a bank certificate of deposit. The money invested is guaranteed to earn a fixed rate of return throughout the accumulation phase of the annuity. During the payout phase, the balance invested, minus payouts, also continues to grow at this same fixed rate.

A variable annuity, on the other hand, can be invested in volatile, high-growth funds. As the name implies, the value of your investment varies depending on the performance of the investment options you choose.

“Some types (of annuities) simply aren’t right for some people, just as some mutual funds or other investments are unsuitable for some people,” Nuss says. “But some annuities are a perfect solution for some people because they do things no other financial product can.”

Matthew Barr, a life insurance agent licenses in 16 states, echoes Nuss’ sentiments. Marketing campaigns, says Barr, have convinced consumers that annuities are all bad.

“Do some annuities have high fees? Yes. Are there annuities out there that are very confusing? Absolutely. Do I think it’s smart to put grandma into a 15-year annuity surrender period? No, but does it happen? All the time, and that’s why they get a bad reputation,” he said. “I’m the first to admit there are some bad eggs out there, but if you work with a trusted advisor or agent who helps explain what type of product you have… annuities can do a lot of good and have for my clients for many years.”

Myth No. 2: Annuities Have High Fees

Again, it depends on the type of annuity in question.

Fixed annuities have no consumer fees unless optional riders are added, explained Nuss.

The simplest type of fixed annuity is the multi-year guaranteed annuity. It’s the annuity that’s often compared to a CD because it offers a set rate of interest for a specific period of time. This type of annuity is tax-deferred and, importantly, the interest rates on these annuities usually beat those of CDs with the same term.

Other annuities to keep in mind that typically have no fees include immediate annuities, deferred income annuities (longevity annuities), and fixed indexed annuities, said Nuss.

Variable annuities do have ongoing fees, which are deducted from investment earnings in the same way mutual funds charge investment management fees. Additionally, there is a mortality fee. The key with these annuities, which offer growth potential, is to shop around to avoid the pricier options, said Nuss.

“Investors can avoid fee-heavy variable annuities by comparing fees before buying,” said Nuss. “Keep your eyes open and ask questions.”

And perhaps the even bigger take-away is that not all annuities are of the variable sort.

Myth No. 3: Annuities Offer Lower Returns Than Stock Mutual Funds

The returns on an annuity depend on how much risk you structure into it, says Peter Quince, who writes professional education classes for At Your Pace Online.

“The more risk you structure into the annuity, the more the earnings will mimic those in the stock market, both on the upside and on the downside in terms of possible losses,” Quince explained. “It’s a trade-off. Fixed annuities are stodgy – slow and steady. FIAs may cap earnings so that you won’t get the full upside, but they also set a floor for earnings so you can’t suffer losses.”

If security means more to you than the potential of higher returns, a fixed indexed annuity is likely a better bet.

The way Nuss looks at it, fixed annuities have neither the full growth potential of stock funds, nor the downside risk. “They’re all about safety and giving you a reasonable guaranteed return,” he says.

CDs and bonds are a more appropriate yardstick to compare annuities against, Nuss adds. And in that scenario, fixed annuities in particular fare quite well.

Many of Nuss’s conservative clients will invest in bank CDs offering interest rates around 2.5 percent, while a similarly safe fixed-rate, multi-year annuity often provides much higher interest.

“If you’re scared away from annuities, you’re missing out on an opportunity to buy a five-year, fixed-rate annuity that offers fixed interest just like a CD, but on the annuity the interest is about four percent on the highest, five-year rate,” Nuss explained. “That’s four percent interest annually. And if they’re letting it grow and compound, they don’t have to file with the IRS, so it’s tax deferred, not reportable until it’s withdrawn.”

“It’s a significant benefit,” Nuss adds. “And people would never know that if they’re not open to considering an annuity.”

In short, educate yourself, so that you know what you’re getting into and are selecting the right type of annuity to achieve the earnings you’re seeking.

Myth No. 4: Early Surrender Charges Make Annuities Unattractive

Most annuities do have what’s known as surrender periods, and early withdrawal does result in a penalty. Bank CDs also have early withdrawal penalties.

Many financial advisers say such rules surrounding annuities shouldn’t detract from their many benefits. Rather, it’s something to keep in mind when considering whether an annuity is right for you and what type of annuity to sign up for.

“An annuity is meant for money you won’t need for a while,” Nuss explained. “If you’re concerned about the length of the surrender period, look for an annuity with a shorter period.”

If you do find yourself unexpectedly needing the money during the surrender period, there’s a couple of options. Among them is taking a partial withdrawal, typically up to 10 percent of the accumulation value each year, without penalty. (The withdrawal of earnings, however, counts as taxable income.)

Yet another option is to annuitize the contract. In other words, turn it into a stream of income, without penalty.

Overlooked Annuity Benefits

While some criticisms of annuities are valid, many of the detractors fail to mention the benefits annuities provide.

For instance, annuities can guarantee that the payee receives an income for life. No matter how long they live, they will receive their money, notes Barr.

“There are also annuities that allow 10 to 15 percent access each year if needed. And if the annuitant happens to go into a nursing home, the company waives the surrender fee to access the funds,” Barr adds.

The death benefits associated with annuities are also worth keeping in mind, says Cliff Caplan of Neponset Valley Financial Partners in Norwood, Mass.

In the event of the death of the annuity owner, beneficiaries on a variable annuity will never receive less than the sum of any withdrawals and the original investment, even if the value of the annuity has experienced a loss.

“I have personally experienced situations where an annuity owner died as the markets tanked and the death benefit paid to the beneficiaries far exceeded the diminished value of the annuity,” said Caplan.

Of course, there are reasons annuities have a bad reputation. Some annuity products can be complicated, and costly, and their basic transfer-of-risk approach won’t make sense for everyone. But if you shop around and compare options, they can be an extremely powerful retirement tool – so it makes no sense to dismiss them out of hand.

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Tuesday, July 24, 2018

Six Basic Steps Toward Easy Meal Prep at Home

One of the most powerful pieces of advice that I have for people in terms of saving money is to get into the habit of preparing your own meals at home – and not those prepackaged meals, either. Restaurants are expensive. Takeout is expensive. Delivered food? Expensive. Prepackaged meals? Expensive. All of that stuff drains your wallet far faster than you might realize.

So, what’s the argument against cooking at home? Many meals require some degree of skill to make and although that skill level is often pretty low, it’s still present. There’s also the time issue and the energy issue and the equipment issue – each solvable, of course, but they again provide resistance against preparing food at home. Add up all of that resistance and many Americans find themselves calling Pizza Hut.

I’ve written about this challenge in the past. In particular, I offered up six simple steps for cooking at home if you’ve never really done it before:

Step #1 – Make Something Super Simple
Step #2 – Keep Dishes at a Minimum
Step #3 – Focus on Mastering Basic Food Preparation Skills
Step #4 – Acquire a Tiny Number of Tools You Trust
Step #5 – Start Branching Out With Variations of Trusted Meals
Step #6 – Treat Cookbooks and Food Magazines as Idea Machines, Not As Gospel

I’d also suggest checking out my minimalist kitchen gear, which covers the basics of what items you need to cook at home.

As good as those ideas are, they miss out on two counts.

First, none of those things really address the time and energy issue of the whole process of cooking. Figuring out what to eat and then cleaning up afterwards is often more effort than the actual cooking itself.

Second, none of these strategies really point you at specific things to do. While I provide some pointers in the details of those posts, the big bold points don’t tell you what you should and shouldn’t be doing. They’re just general things that are helpful in a broad sense bud don’t directly move you toward a short term goal that involves cooking or preparing an actual meal.

So, here are six basic things you can do to work towards effortless meal preparation at home.

Experiment When You’re Not Under a Time Crunch

The time to learn how to cook is not when you come home from a long day at work and feel absolutely exhausted, or when you are under an incredible time crunch and can’t afford anything going wrong. Often, people find themselves in these positions without any sort of cooking skills and thus cooking feels overwhelming or impossible. (Trust me, it’s easier to make something in those situations if you’re intimately familiar with your kitchen, but it’s much more difficult if you haven’t ever made much in the kitchen.)

My suggestion is to try things when you’re not under a time or energy crunch. Make things for the first time or two on the weekends, when you have time to do them at your own pace and there’s no major crisis if things don’t work out. Don’t put yourself under additional time pressure and don’t start from an already-tired state or else it will feel like misery.

Once you start feeling familiar with making things in the kitchen, it won’t feel nearly as overwhelming or impossible to make a meal after work, even under a time crunch.

Plan a Little

While it’s fun to imagine a home chef just throwing things together based on whatever’s in the cupboard, the truth is that it only really works if you have a lot of staples on hand, and if you’re reading this article, you probably don’t have a lot of staples on hand and also probably don’t have any ideas of how to use them.

That’s why, at first, it’s a really good idea to follow recipes carefully. They’re meant as instructions to follow at first; later on, your relationship with them might change into a source of inspiration, but not yet. Think of recipes as sheet music for a musician – someone just learning might need the sheet music for a very simple piece. Later on, an accomplished musician might be able to freestyle quite a bit and know a bunch of pieces by heart and only need sheet music for a really complex piece. Recipes are for home cooks like sheet music is for musicians.

A good recipe tells you what you need to have on hand right at the start, so plan ahead a little and make sure you have all of those things on hand. This will probably involve a trip to the grocery store, but it’s far better to do that before doing anything else.

Again, as you get more familiar with this, it’s a good idea to transition into weekly meal planning because it’s a huge money saver, but don’t sweat that yet when you’re just getting more comfortable with cooking at home.

Make a ‘Dump Meal’

This is about the easiest thing you can make at home. It basically just requires a slow cooker – it’s really the only kitchen implement you need for this. All you have to do is just put a small set of ingredients in there in the morning, turn it on low, and come home to a finished meal. Some of the ingredients might require a cutting board and a knife to chop up a vegetable or slice up a piece of meat, and you might need a can opener. It can’t get any easier than this – in fact, I find such meals to be less hassle than actually ordering food or going to a restaurant, and they’re cheaper, too.

My absolute favorite slow cooker “dump meal” is minestrone soup. The only thing I have to cut up is two carrots, which I slice into discs. Into my slow cooker, I put that sliced carrot, 1 cup of diced frozen onions, 3 cloves of minced garlic (I often buy minced garlic in large containers and keep it in the fridge, using just what I need for recipes), a large (28 ounce) can of diced tomatoes, two smaller (15 ounce) cans of cannellini beans, 3 cups of vegetable stock or broth, and 3 cups of water. All of that, right in the slow cooker in the morning. I turn it on low and forget about it.

About fifteen minutes before eating, I’ll add 8 ounces of uncooked pasta (I like to use elbow macaroni, but anything will do), a handful of asparagus spears if they’re in season, a cup of frozen peas, and some fresh spinach (a 6 ounce bag, if you’re buying it at the store). Stir it and put the lid back on. Add some salt and pepper to taste when it’s finished and have some grated cheese nearby to top it.

That’s literally all it takes. We’ll usually serve it with a simple salad made during that 15 minute gap – basically some type of lettuce or spinach tossed with a bit of salad dressing and whatever vegetables are in season, like onions or grape tomatoes. We might also bake some pre-made breadsticks from the bakery section of our local store.

This makes enough for our entire family at a cost of about $12, and usually leaves enough for a bowl of leftovers for Sarah to take to work for lunch the next day. That means we each eat for about $2.

Sometimes, I’ll double the whole recipe (shooting the cost up into the $20 range) and then save individual containers of the soup for a meal in a few days or else put those individual containers in the freezer.

What if you don’t like minestrone soup? Here are 40 more slow cooker dump recipes (all including meat) and 21 vegetarian slow cooker dump recipes. There’s almost nothing that’s easier to make at home than a slow cooker dump recipe, so I suggest starting with minestrone soup or one of these ideas.

Make Macaroni and Cheese

Almost everyone likes macaroni and cheese. It’s such a simple, pleasant food that can be made incredibly straightforward to please children or fancied up to please almost any palate. It’s also one of the easiest things on Earth to make, so I usually encourage people to make this as one of the first things they prepare in the kitchen. Each of my children – all of them pre-teen – have pulled this off with success.

I basically follow the three ingredient mac and cheese recipe from Serious Eats.

All you do is put six ounces of macaroni in a medium saucepan and add just enough cold water to cover the macaroni. Add a pinch of salt and bring it to a boil over high heat while stirring constantly. When it’s boiling, keep stirring for six minutes. The macaroni will absorb almost all of the water, and that’s okay.

Next, add one six ounce can of evaporated milk and then let it come to a boil while continuing to stir constantly. Then, add a cup of shredded cheese that melts well – cheddar, fontina, gruyere, or jack. I prefer gruyere, but it’s expensive; Monterey jack is probably my second favorite. Immediately drop the heat down to low and keep stirring constantly until it’s all melted and creamy – two minutes or so. It’s done. Put a bit of salt and pepper on top and eat. It’ll taste incredible – like restaurant-grade mac and cheese. You can jazz it up with things like breadcrumbs if you like.

The thing I like about this recipe is that it makes something that most people at least like, makes a pretty stellar version of it, and it’s comically easy. My youngest child was seven when he prepared this on his own with zero help. We use this exact recipe as a side dish for many meals, and it can be a task that you have a child take on while you’re cooking something else.

Make Scrambled Eggs

If you like to eat scrambled eggs at all, I strongly encourage you to learn how to make scrambled eggs. It’s an incredibly simple and flexible thing you can make for yourself or your family, it works with every meal, you can mix in almost anything savory, and it reheats well if you have extras.

Just crack a number of scrambled eggs in a bowl – however many you like – and beat them with a fork until they’re consistently yellow, a minute or two. Add a bit of salt and beat that in for a few seconds, then let the bowl sit.

Take a teaspoon of butter and put it in the middle of a skillet. Put it over medium heat and let the butter melt, then use a plastic spoon or a spatula to move the butter all over the skillet until the skillet is coated. Add the scrambled eggs and let them cook for a minute, then slowly pull that plastic spoon or spatula along the bottom of the skillet to pull up egg curds off of the skillet’s bottom. Do this over the entire bottom of the skillet, then repeat every thirty seconds until the eggs look like slightly wet version of the scrambled eggs you’d normally eat, then remove from the heat, wait a minute or so, and serve.

You can obviously mix lots of things into this recipe. Almost any savory vegetable works, as do most cooked meats and most cheeses. It all turns out delicious and with such little effort.

Handle Dirty Dishes the Smart Way

One of the big obstacles for many people in terms of cooking at home is dealing with the cleanup. If you eat at a restaurant, it’s done for you; if you get takeout or delivery, you can just toss the wrappers and other items. On the other hand, if you cook at home, you have to deal with all of that stuff.

A dishwasher makes it much easier, but even then, there’s some extra work involved. Also, many apartments and some homes (like my parents’ home) don’t have a dishwasher and don’t have space for one.

So, how do you solve this conundrum? Here are a few strategies I know from having lived most of my life in places with a kitchen too small for a dishwasher.

Have good tools. Have a strong scrubbing brush and a dish rag at your sink, along with good soap at hand. If you don’t have those things, it’s going to take far longer to wash dishes.

If you have a two bin sink, keep one sink full of water with a bit of soap in it. Just block the drain, fill it perhaps a quarter full with hot water, and add a bit of soap. Then, put your dishes right in that soapy water throughout the day, perhaps adding a bit more hot water once in a while. Just let the dishes soak. It’ll make it much easier to wash them when the time comes, and the other sink bin will be free.

If you have a one bin sink, get a large plastic bin, put it beside the sink, and keep your dirty dishes in there. This keeps the sink free of dishes so that you can easily start in with cleaning whenever you’re ready. Just toss dirty dishes in the bin for the moment, then wash everything in the bin at once when you’re ready. Since the sink is empty, you can dive right in. If the bin is watertight, you can put a bit of hot soapy water in there to soak some of the dishes, as noted above.

If something has caked-on grease or food pieces, pour a bit of vinegar, a bit of baking soda, and a bit of soap in it and fill it with hot water and let it sit for a long time, like a day. After that, it becomes really easy to wash. This takes care of basically every nasty caked-on grease problem I’ve ever faced.

Wash things in “streak order.” What do I mean by “streak order”? Start with stuff that will show streaks easily – glass items – then move onto silverware, then plates and plastic items, then pots and pans.

Have a drying rack beside your sink to put dishes in to dry, plus a ton of drying towels. Most things can air dry relatively quickly once rinsed, but a drying towel is great if you need something dry immediately. You can get a simple dish drying rack at most kitchen supply stores, and flour sack towels are great for drying dishes, as are leftover t-shirts.

Buy dish soap in bulk, then have a pump to dispense it. You don’t really want a bulk bottle of dish soap at your sink because it’s heavy and it takes up lots of space and when you pour it, it dispenses large amounts of soap. However, bulk soap is cheap. The solution is to get a cheap soap pump and fill it with bulk-purchased dish soap so you can use the soap one pump at a time. This cuts the cost of liquid dish soap down to almost nothing.

These tactics, in concert, make hand washing dishes into a pretty easy task, even if you don’t have a dishwasher. My parents have lived in the same house for 40-plus years without a dishwasher and use most of these tactics because they simply work.

Final Thoughts

If you can handle the things above, you’re already well on your way to cooking a wide variety of things at home. Move on to trying other simple dishes – pasta, for example, is incredibly simple – and try variations on the things you already know, like adding tarragon to the scrambled eggs.

Eventually, what will happen is that the repeated tasks begin to seem easy, the dishes you cook regularly begin to turn out consistently well, and you start trying out new things and new variations.

It’s at that point that you’re at the sweet spot that a home cook should enjoy, where preparing a meal doesn’t seem overwhelming and throwing something together in fifteen minutes seems like a fun challenge rather than an impossibility. At that point, the time and energy advantages of eating out almost completely disappear and you find yourself eating at home much more often and saving a ton of money doing it.

Good luck!

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