r u l y

Yesterday afternoon I took my children out on an election adventure to scout election signs along the main routes in Fredericksburg.  I explained that there were two candidates for president, Mitt Romney and President Obama and that we were going to try to find signs for each candidate.

Virginia’s reputation as a battleground state is well-deserved.  People used to say that the entire state was Republican except for northern Virginia (the parts closest to Washington, D.C.) where it is primarily Democratic.  That is still pretty much true but now it seems to be fairer to say that many of the cities tend to be Democratic and the more rural areas tend to be Republican.  Since we live in a rur-burb, in general our area leans Republican but seems to increase in Democrats every year.

You can see this demographic mix as you drive along the Fredericksburg roadways.  For example, on one side, we have Chik-fil-A offering to cater your election party

and on the other side we have road construction going on financed by federal stimulus dollars.

In general, most Fredericksburg residents are pretty low-key when it comes to displaying their politics.  We have a lot of military and government employees who probably need to be apolitical when it comes to their jobs.  So for the most part, the political signs in our area are very small yard signs, like the ones below.

But, it would not be that interesting to report on those signs.  So I wanted to give you a small scrapbook of the more extreme signs.

In our area, the Romney signs are more numerous and physically larger than the Obama signs. The Romney campaign seems to have many variations in its signage.  Some are simple “Vote Romney-Ryan” types of signs, like the ones below.

After seeing all these signs, my children complained, “Mom, there are so many Mitt Romney signs.  Isn’t anyone voting for President Obama?”

There are a few large Obama signs as well, like the ones below, but they are harder to spot.

Where the Romney campaign really distinguishes itself in our area, however, is in the campaign signs that give a reason for voting Romney-Ryan.  This seems to be a tradition for Republican voters in our area.  They want you to know why they are voting Republican.  Many people who own large acreage lots put more than one of these signs up, sometimes 4 or 5 in a row as you drive down the road.  Here are a few of the interesting examples:

Sorry for the poor photo. The sign says: "Want $2 Gasoline? Want a future for your kids? Vote Romney Ryan"

Some of the Romney/Republican signage even ventures into the negative campaigning territory.  On the one hand, some people might feel more confident with someone who plays tough and is very aggressive.  On the other hand, you risk alienating independent or undecided voters.  It will be interesting to see how this plays out.

The unfortunate thing about this sign's message is that one way to interpret it is: "You clearly weren't thinking if you voted for Obama in 2008."

This one is just outright hostile.

For our last campaign tour stop, we drove past the campaign headquarters for the Obama campaign.  En route, however, we were very surprised to discover that the Romney campaign had also set up an office just about 50 yards from the Obama office in the same shopping center!  I don’t recall seeing the Romney office before so I imagine it must have sprung up in the last few months.  It is very interesting to me that they would choose to be so close to each other.

It might take you 3 minutes to walk from one campaign's Fredericksburg headquarters to the other.

Romney-Ryan campaign HQ, between the scrapbooking store and a veterinary clinic.

Obama HQ, between a nail salon and a spa.

So, the gloves are off!  With the latest polls indicating the candidates are statistically even in our state, it is going to be a long and interesting election night.  The polls were very busy this morning.  I always bring my children with me to vote so they understand that voting is very important.

There are new voting identification laws in effect in Virginia this year but fortunately I didn’t see anyone turned away because of them.  There was some sort of issue with one of the voting machines while I was waiting in line to vote but the efficient poll workers just redirected voters to the remaining machines that were working reliably.

Remember to vote!  The polls close in Virginia in just about 3.5 hours.  Google has a terrific election polling station finder.  It was even linked to by the Virginia State Board of Elections.  If you are watching the election returns tonight with children (or need a way to keep yourself entertained), The Washington Post has provided a handy coloring map with all the states and their electoral college voting counts as well as other educational activities.

During our cross-country road trip this summer, one of the biggest distinctions between “blue states” and “red states” was seen at breakfast. Specifically, the policies governing the hotel waffle iron.

Free breakfast was offered at all but the most expensive hotel we stayed at during our trip. Each hotel put a slightly different spin on the offerings. There were staples like juice, coffee and cereal. Sometimes there were pastries, muffins and toast. Other times toaster waffles and pancakes. But typically we had the fix-your-own fresh waffles or oatmeal, which were delicious.

Breakfast was served typically between 6:00 a.m. and 10:00 a.m., which sounds generous but when you factor in arriving late from a long drive the night before, waking and dressing 3 small children in addition to ourselves, it was a struggle to get down to breakfast every morning before it closed. The women (it was always women for some reason) who supervised the breakfast room at our various hotels were very strict about closing up the breakfast room at 10:00 a.m. 15 minutes before 10, they started to put all the food away and at 10 sharp, the diving doors closing off the breakfast are were tightly shut. It didn’t matter whether 20 guests sat down to breakfast at 9:40 a.m., if it was a lazy Sunday morning or if someone was just sauntering toward the area to get a second cup of coffee, if it was 10:00 a.m., the doors were shut! We joked that the “breakfast lady” was my nemesis.

Some hotels offered breakfast bags that you could grab and go if you were in a rush, but trying to get these was almost impossible. They weren’t offered on the weekends and they seemed to be offered only at certain times. So, if you felt like you weren’t going to make it to breakfast, your only option was to load up some plates quickly and haul it back to your room. We had to pull this trick a few times and I had to laugh once when I was the designated breakfast hunter only to cross paths in the elevator with a hastily dressed, bleary-eyed French guest doing the same thing on a weekend morning.

Even though all states followed the 10 a.m. breakfast closure policy, it was interesting to see how blue and red states implemented this policy.

In red states, it seemed that someone (the hotel manager? the breakfast lady?) determined that there would be a set amount of food provided for breakfast and once it was gone, it was gone. So, if you arrived at breakfast at 9:30 and wanted a waffle, you went over to find that the waffle mix was drained dry. If you were lucky, you might scoop out a few tablespoons to get half a waffle. (If there were a lot of Europeans staying at the hotel, the waffle mix was usually safe but the shortages shifted to the oatmeal bowl.)

If you happened to get the last dregs of the waffle mix, it made for a very awkward moment. First, you feel great that you managed to scoop out one last waffle from the dry bowl, but then, one more person comes in the waffle line, sometimes a child, notices the empty waffle mix, expresses disappointment and looks at you, the last waffle recipient and the symbol of all waffle eaters of the world, with contempt. It’s really hard to stand there cooking your waffle knowing that someone else has to go without. Sometimes we were the ones who went without.

Now of course, no one is going to go hungry. There were plenty of other things to eat — at least cereal and toast and usually more, like eggs or fruit. And, of course, you could always get up earlier if you really wanted that waffle . . . but truthfully, the waffles are good, but they aren’t worth sacrificing sleep over.

Considering the breakfast options.

Rationing the waffles, however, transformed what should be a fun activity (eating free breakfast) into this guilt-ridden, sad experience. You couldn’t help but think, “We are all paying guests of this hotel. We all deserve a waffle. Why should receiving a waffle be tied to what hour of the morning you eat your breakfast? It might cost 20 cents in waffle mix to make one more waffle. Why is this hotel so stingy with the waffle mix?”

In a blue state, the breakfast policies were completely different. If 20 guests began breakfast at 9:30 a.m., the breakfast ladies checked to make sure there was enough of everything. If the waffle mix was empty, they took 2 minutes to go in the back to grab the huge pre-mixed container of waffle mix and poured just enough into the dispenser so that everyone who wanted a waffle could have one. 10 minutes before the breakfast doors were closed, they flicked the lights to issue a “last call” to make sure that you could grab that refill or to-go muffin. Then they closed the doors gently at 10:00 a.m. when breakfast was over.

Now, you might say that all these extra breakfasts might be hurting the hotel’s bottom line. Saving 20 cents here and 20 cents there adds up! These are hard economic times after all. But interestingly, the hotels with the most business were the ones in blue states. They were packed with people and from all appearances were doing twice the business of the stingy hotels. Whatever extra they were spending on breakfast, they more than made up for on increased room rentals.

So, when we crossed into the state of Ohio, another “battleground” state like Virginia (and, according to NBC crucial to the election), I joked to my husband that I was going to predict the outcome of the presidential election based on the hotel’s waffle iron policy. We were running late that morning so he was the designated breakfast hunter. I made him recount in exacting detail what he experienced. This was his report.

The Zanesville Waffle Iron Prediction for The 2012 Presidential Election

“I went down to breakfast. There were the usual offerings and a television on. I approached the waffle iron. The waffle mix dispenser was empty. The television streamed a series of ads attacking President Obama. I tried to scrape out the dregs but determined there wasn’t enough.

I was about to give up when the breakfast lady appeared.

‘Oh, is that out?’ she said.

She went in the back and filled it up with a little more waffle mix, commenting

“That’s the second time I refilled that this morning.”

Will the waffle iron be accurate? Time will tell.

Virginia Governor Bob McDonnell being interviewed by LENS magazine, June 4, 2012. Photo by Michaele White. (c) Governor of Virginia. From the Flickr Creative Commons.

The news here in Virginia has been dominated by the drama at the University of Virginia (perhaps the most prestigious university in our state) regarding the ouster of President Teresa A. Sullivan. If you haven’t been following the story, members of the University of Virginia Board of Visitors met with President Sullivan and threatened to vote to oust her from her role. She then resigned. Now, an ongoing dispute questions why she was asked to resign so abruptly and questions the role of the Board in making this decision.

Virginia governor Bob McDonnell has now sent a stern letter to the Board requiring them to resolve the issue of the Presidency of the University of Virginia by this Wednesday, including a full explanation as to their actions. Should they fail to do so, Governor McDonnell indicates he will ask the entire board to resign!

Wow!

This has all been very fascinating to observe. Governor McDonnell’s letter gives us all a little to think about when we serve on any sort of leadership body, from corporate Boards to church or school committees.

Leadership Lessons from Governor Bob McDonnell’s letter.

1. “[E]liminate . . . uncertainty . . . immediately.”

If you are involved in a hugely controversial decision, your best course is to act as quickly as you can with a firm decision. If the decision is communicated in a firm and final manner, people will adjust to it, move on and make other plans. When people believe there is a chance to change the decision, the uncertainty lingers and causes unnecessary distraction from the organization’s critical mission, in this case, the education of some of the brightest minds our state has to offer.

2. “Board actions on major personnel or policy decisions should have a clear explanation of the decision.”

Much like a legal opinion, a controversial decision requires a rational explanation as to what alternatives were considered and why one course was chosen over another. Simply hiding behind the authority of the Board to do whatever it likes for any reason is unprofessional and undermines the Board’s authority.

3. “Make objective decisions without regard to any outside political, personal or media pressure.”

Commonsense advice but today we usually see the opposite.

4. “Act as a unified board when your deliberations are done. While no one expects unanimous votes on this or other major issues, the Board must speak with one, united voice once decisions are made.”

Reading this from a legal background, my first instinct was to think of the Supreme Court. When the Supreme Court issues a final decision, the justices who disagree with the decision can publish their dissenting opinion explaining why they would have decided otherwise. Bob McDonnell’s advice indicates that you should think more in a business all-or-nothing way for most Board service. When you commit to serving on a Board, you are responsible for the final decisions of that Board. If you fundamentally disagree with a Board action, your best option is to resign.

What I find most fascinating about Governor McDonnell’s letter is that if you extend its logic to disputes such as those occurring in the U.S. Congress over the budget, it is a refreshing reminder that leaders in both political parties need to be bold and courageous. A Senator or Representative needs to consider the views of his or her constituents and political party, but in the end needs to act according to his or her own conscience and bear the consequences of that decision.

Is Governor McDonnell’s letter the first firm expression for politics in general to change or will this type of decisive action result in even greater polarity of opinions? How do you see this situation resolving? Please share in the comments.

"Taft finds tearing the budget a difficult task. Washington, D.C., Jan. 2. Senator Robert A. Taft, Republican of Ohio, found tearing the budget a difficult task as he told reporters at a press conference today that it would take at least two years to balance the budget" (1940). Photo by Harris & Ewing. From the Library of Congress Prints and Photographs Division

In the last post, we talked about the investing mindset of relating complex investments into simpler, more understandable ideas. We took the example of the federal government’s budget and scaled it down into the budget for a typical middle class family. I left you with the cliff-hanger of what would have to be done to get the federal government in a position to dig itself out of debt.

There is not one answer to this question. The number of possible remedies is really only limited by how you want to do the math. Anyone in a difficult situation like this could benefit from another investing mindset rule:

A good investor makes decisions first by numbers
and secondly by emotions.

So, where do we start with this problem?

Well, the first place we could start is to ask the family/government how it is spending its money. The latest government financial report provides this answer:

For simplicity, we will assume all of these expenses total $154,000. Scaling everything down we see the following breakdown.

2011 U.S. Government Scaled-Down Budget

Medicare/Medicaid: $37,000
Other: $35,420
Social Security: $32,000
Defense: $31,000
Interest on the Debt: $10,780
Military pensions:$7,700

When I play around with these numbers myself, treating the government like a family with a spending problem, I notice a couple of interesting things. First, if you try to start paying down our national debt at even a modest pace over 30-40 years, you necessarily have to start making cuts of about 50% to all existing government programs. Secondly, even if you increase taxes substantially just to cover paying down the debt and supporting all existing programs, there gets to be an effective limit at which you can no longer tax enough to support the existing programs. From my point of view, I don’t see how anyone can fix the U.S. government budget without both raising taxes and decreasing benefits.

Next, we can see what the experts in each of the political parties are proposing.

• Click to see a quick summary of proposals from three different viewpoints: the Tea Party, the latest Republican proposal and President Obama’s draft budget.

There are a million different ideas about how to get the country’s finances on a sustainable path. The one thing all parties seem to agree on is that things can’t keep going on the way they are. Something has to change. There are three key things I think we all need to remember about this budgeting process.

1) Regardless of the budget decisions ultimately made, the government has to get its currently dysfunctional financial and accounting systems organized.

The U.S. has made some terrible financial decisions over numerous years and has yet to fully account for all of these mistakes. Take for example, these shocking quotes from Comptroller Dodaro in the government’s latest financial report:

“Three major impediments continued to prevent us from rendering an opinion on the accrual-based consolidated financial statements: (1) serious financial management problems at the Department of Defense (DOD) that have prevented DOD’s financial statements from being auditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal entities, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.”

“Based on our review of completed Material Differences Reports for fiscal year 2011, we continue to note that amounts reported by federal entity trading partners for certain intragovernmental accounts were not in agreement by significant amounts. We noted that a significant number of CFOs continue to cite differing accounting methodologies, accounting errors, and timing differences for material differences with their trading partners. Some CFOs indicated that they did not know the reason for the differences. In addition, some CFOs confirmed the balance or activity, however, differences continued to exist. Further, there continue to be hundreds of billions of dollars of unreconciled differences between the General Fund of the U.S. Government and federal entity trading partners related to appropriation and other intragovernmental transactions.” (emphasis added)

“As in previous years, Treasury did not have adequate systems and personnel to address the magnitude of the fiscal year 2011 financial reporting challenges it faced, such as control deficiencies in its process for preparing the consolidated financial statements noted above. We found that personnel at Treasury’s Financial Management Service had excessive workloads that required an extraordinary amount of effort and dedication to compile the consolidated financial statements. Further, there were not enough personnel with specialized financial reporting experience to help ensure reliable financial reporting by the reporting date. In addition, the federal government does not perform interim compilations at the governmentwide level, which leads to almost all of the compilation effort being performed during a condensed time period at the end of the year.”

If you are familiar with financial statements, you would know that these seemingly boring, technical quotes have massive implications. They are really shocking! CFOs typically sweat bullets over any notes to the financial statements that even hint that a company is mismanaging its money. These notes outright state that the government has “serious financial management problems,” “control deficiencies,” “hundreds of billions of dollars of unreconciled differences” and is “ineffective.” Also, the words “As in previous years” is put in front of a terrible statement about the Treasury Department’s lack of financial capability as though the Treasury Department thinks it is acceptable to continue not to address these problems. If a corporation issued financial statements anything like this, the company would probably be automatically delisted from the stock market and likely sued perhaps even with criminal charges. It really is that bad.

So, no matter which budget path we choose, we should at least have the integrity to admit to our bad choices and the intelligence to execute our complex choices and properly and fully account for whatever it is that we have done. This has to be a top priority for any political party.

When you look at the three proposals above, the Tea Party seems to say that they are going to address this problem by eliminating any complicated financial transactions by cutting the government down severely. Both the Republican and Democratic parties would do well to add a line item to their budgets for additional accounting and financial management personnel.

2) We have to make a decision about what to do with our debt.

The budget proposals from the three political parties make radically different choices when it comes to the national debt. If you are trying to relate the government’s finances to your own, this is where the biggest disconnect occurs. If you fail to pay your mortgage, credit card, etc. there are big consequences for you. If the government fails to pay, it doesn’t seem to matter at all. There is seemingly endless credit for the government.

The Tea Party’s proposal is kind of like declaring liquidation bankruptcy with regard to the debt and quickly strikes to erase the debt in 5 years while political will remains intact. While you can disagree with these tactics, it probably is true that if you really wanted to erase the debt, you would have to do it quickly. The Republicans take a less aggressive approach and start cutting spending slowly, starting to pay down the debt almost 30 years into the future and who knows when, if ever, it would be paid off in full. All you would need is one intervening war, economic crisis or other problem to throw that spending plan off. The Democrats also cut spending slowly but sadly don’t seem to ever start paying down the debt, even with large tax increases.

3) The government is most likely on a slow path toward relinquishing its role as guarantor, forcing us all to
live with more financial uncertainty.

It is almost certainly true that the government can only get its finances in shape when it can adequately predict and control costs. It is probably only a matter of time before the government follows the trend in private industry to convert open-ended obligations to fixed price, limited time commitments.

Almost no private company makes these kinds of commitments any more. For example, companies found that promising employees pensions was too difficult to manage and required too much to be set aside in savings to guarantee payments so pension plans were converted to 401(k)’s. Likewise, we now have private health insurance programs that cap lifetime spending at a certain dollar amount. The government is really the only entity that operates without these constraints.

This is probably the biggest philosophical difference between the competing proposals. The Tea Party and the Republican Party force the government to operate like a private company. Open-ended programs like Medicaid would be converted to block grants to the states of limited dollar value. Once the money runs out each year, it is gone and people would have to do without unless private charity steps in. Likewise, converting Social Security to private accounts would do the same thing. Instead of your “Social Security pension” you would get the 401(k), which could be better or could be worse depending on how your investments perform. Converting people from Medicare to private health insurance will almost certainly result in dollar caps on care. The Democratic party maintains existing, unlimited systems but sadly, does not seem to have a sustainable way to afford them, even with significant, larger tax increases.

Worldwide, we are seeing many countries come to terms with the end of guaranteed programs. It requires us all to accept that the buffer on life’s uncertainty is gone. We could starve. We might have to make life-altering consequences about our health. We certainly have to take more responsibility to save, to make connections with other people who could help us, to maintain our diet and exercise and to do all sorts of other difficult things.

We can at least take comfort knowing that the future might not be dim, just different. After all, is there that much difference between having a Social Security 401(k) where the value goes up and down with the stock market or a guaranteed Social Security pension that gets cut 25% (or perhaps more) when the government runs out of money?

It is a good exercise in focused, logical investing discipline to look at each of these budget proposals and create your own game plan assuming any one of these strategies is enacted. How would they impact you?

When it comes to your own money, the same rational, numbers first, approach is essential. Money is complicated. It invites emotion. Money is the access key to all sorts of wonderful and essential things. Money is also the reminder of bad decisions or painful decisions we keep putting off.

The government’s budget struggle really has so many parallels to our individual lives. How do we plan for the future? How do we strike the balance between getting exciting things we want and covering the cost of boring, basic essentials like food, clothing and shelter. How do we do the day to day accounting necessary to make good decisions?

Do you struggle with maintaining rational thought when it comes to issues of money? What do you think of the pending budget proposals? Please share in the comments.

Simplified diagram of the federal budgeting process from "A Citizen's Guide to the Federal Budget" 1999

Probably one of the biggest deterrents to learning about investing is that the learning curve is extremely steep for the beginning investor. There are so many different types of investments, so many different industries, so many types of analyses and calculations. Many people take one look at this situation, feel so completely helpless and overwhelmed and just give up. They don’t open their 401(k) statement or read a prospectus or even borrow a book from the library. They just hope for the best, do a little here and there, and take comfort knowing that safety nets like Social Security are out there to help.

Unfortunately, the reality for most of us is that we can’t rely on this ostrich-like strategy any more. We have to know what we are doing, even if that means confronting a lot of bad news or having to change.

If we want an example of this, Americans can look to our own federal government. We all know that for many, many, many years, the government’s finances have been a mess. But how many of us have any idea how bad they are or exactly what it will take to fix the situation?

I didn’t feel like I really understood any of this discussion—except in the broadest of terms. So, I recalled another investing mindset rule that has served me well:
 

Restate a complex investing scenario into something you do understand.

 
In the next couple of posts, we will organize information on the U.S. government’s finances in a couple of different ways. It is my hope that this information will help us all to become better investors of our own money and also better stewards of the nation’s finances as well.

Gene Dodaro, Comptroller General of the United States. Photo from the GAO website.

First of all, how do we even begin looking at the government’s finances? Fortunately, for us, this is already someone else’s job. Whose job? Gene L. Dodaro, Comptroller General of the United States. Mr. Dodaro’s biography indicates he has a bachelor’s degree in accounting as well as 30 years of experience at the Government Accounting Office.  Mr. Dodaro is accompanied in this work by Robert F. Dacey, Chief Accountant, who is an accountant and lawyer and a recognized authority in accounting circles.

Last year, Mr. Dodaro and Mr. Dacey were involved in producing a document called Fiscal Year 2011 Financial Report of the United States Government, which is in many ways similar to a 10-K issued by a publicly traded corporation.

Auditing the finances of the federal government is a completely daunting task because of the sheer size of the government. Where to begin? First, they narrow down “the government” to a list of 35 of the most important agencies.

The 35 Government Agencies Included in the U.S. Government’s Fiscal Year Report

While this is a huge list, I am sure there are probably other agencies not listed here. For whatever reason, those other agencies are not included in the fiscal year report.

After they go through the books of all these agencies, they produce the fiscal year report letting us know how the government spent its money. For the past several years, these financial results have been terrible, reflecting huge deficits.

The U.S. government’s finances are in the trillions of dollars. The concept of a trillion is just too much for most of us to grasp. For example, I could tell you this true but brief summary of the government’s 2011 financial picture:

2011 U.S. Government Financial Summary

Income: $2.4 trillion
Expenses: $3.7 trillion
Deficit: $1.3 trillion

Since my own finances do not involve trillions of dollars, I don’t really know how to process this information. But when I took these same numbers and scaled them down proportionately to reflect a middle class family’s income, they looked like this:

2011 U.S. Government Financial Summary Scaled Down to a Middle Class Family’s Income

Income: $100,000
Expenses: $154,000
Deficit: $54,000

Now, the situation still looks bad but it is finally relatable. Imagine for a moment that our hypothetical family had a year where they had to replace the roof on their home, had some sort of medical catastrophe and had to buy a new car. The family could easily overspend their income doing these things, and probably paid for them by taking out a home equity line of credit, car loan and credit card debt. It was a tough year for our country last year and you could say that the complex transactions conducted by the government were similar to these family challenges.

If this were an isolated incident, the government, like the family, might heave a sigh of relief that it made it through the year and then start constricting expenses to be able to afford all of our newfound debt. Unfortunately, the government has been doing this type of spending every year for a long period of time. There is always some emergency we haven’t budgeted for, some exciting new thing we want to build or buy, some expense that we wouldn’t dream of letting go. So, the government, like some families, just keeps charging and charging, tiding things over for one more year.

What does the government’s net worth look like now? Below is a chart from the most recent financial report for the government:

Again, these numbers are so astoundingly large that they defy comprehension.  A net “worth” of -$15 trillion dollars?  If we relate them down to something we can understand, like a house and mortgage, we get something like this:

 2011 Government Assets and Liabilities Related to the Average Middle-Class Family

Assets (House):  $113,000

Debt Securities and Pensions (Mortgage): $665,000

Other (Credit Card Debt/Car Loans, etc.): $63,600

Net Worth: -$615,600

As you can see, the government is incredibly leveraged.  The typical family in this situation would most likely declare bankruptcy and start over.   Just the $63,600 in credit card debt would be enough to push most families to the brink.

We know (hope) that bankruptcy isn’t an option for our government, so what can be done about this terrible situation?  In my next post, I will talk about that in context of another investing mindset rule.

In the meantime, I ask you to think about an investment you don’t understand and try to relate it to something that you do.  In my case, the investments that confuse me the most are the mutual funds in our 401(k) plans.  Over the past year, I have been trying to track the investments on a quarterly basis and equate them as closely as I can to traditional stocks.  I also try to simplify all the complex data into simple questions like “If I add up the beginning balance plus all contributions in this investment, is the current value of the investment more, less or the same compared to what I started with?”  “Which investment made the most money?  Which made the least?” “What asset category is this investment in?”  I still can’t make the accounting numbers work out exactly for these mutual funds (for reasons I still don’t understand) but I feel a little more empowered to deal with these funds and at least have a framework to get started.

Have you used a relational mindset to help you make more sense of your money?  Please share in the comments.