Financial Awakenings

Past Performance is No Guarantee of Future - Even with Cruise Lines

Listen to Rick's Column Here or Watch Rick's Column Here

My family and I spent Christmas taking my daughter's "dream vacation," a Caribbean cruise. I'm not much of a sun, sand, and sea guy, so my enjoyment of cruising is based on relaxation and good food. I prefer to select a larger ship that has all the amenities and a well-rated specialty restaurant.

On this particular trip, however, I decided to make cost the priority. I selected the smallest ship in the Celebrity fleet, the Zenith, knowing it didn't have a specialty restaurant. Still, the price was attractive; almost too low, in fact. There had to be a catch.

I asked the reservation agent what the catch was. He said the ship was being sold in April 2007 to another company. Since this was an obvious red flag, I asked why the ship was being sold. I was told it was because it lacked Celebrity's trademark balconies, and it was being replaced with an even smaller ship that had balconies. I decided this wasn't a problem. Being the value-oriented shopper that I am, I don't purchase outside cabins, preferring the cheaper inside staterooms.

Still, I thought I should do a little more checking on the Zenith. I grabbed my trusty Berlitz Guide to Ocean Cruising and Cruise Ships and looked her up. They gave the ship four out of five stars and a pretty good review. I checked with www.cruisecritic.com, which gave her a favorable review and rated her equal to the Galaxy, a ship our family had previously enjoyed. Having done my due diligence, I booked the cruise.

Within two hours of boarding the Zenith, I knew I had made a big mistake. The ship was a broken down mess. There was peeling paint and rust everywhere. The decks were dirty, the furnishings were worn and tattered, and my toilet didn't work for two days. The computers didn't support the programs I use to access my office desktop. The gym didn't have complete sets of weights, yoga mats, or fully functioning treadmills. The kids' play area was so small and sparse that we had to beg our kids to go there—a first.

It was what you might expect of a ship being sold soon, where the owners were doing everything possible to minimize capital improvements and milk every last bit of use out of her.

Fortunately, not everything was a mess. The food was very good and the showers had plenty of hot water.

All in all, London's "dream vacation" wasn't what I had hoped for. Still, I can't look back and beat myself up too much about my selection process. I was reasonably thorough in my due diligence. There simply are limits to what one can research.

In part this is because the information available about a product, a cruise ship, or an investment is based on past performance rather than current or future conditions. Brokers who sell investments often rely on "past performance" as a selling point. What they tend not to mention is the fact that changing market conditions and many other factors can turn past performance statistics into a bunch of irrelevant numbers. In addition, there is always the occasional investment where everything appears to check out fine, but reasons no one could have anticipated make it turn sour.

Is it a mistake to trust a brand name or rely on past performance? Not necessarily. What is a mistake is to assume that those elements are a guarantee of satisfaction. Whether it's a cruise ship or an investment, it's important to do as much research as you can. It's just as important to accept the truth that sometimes the reality won't live up to your expectations.

The "Best" Gifts

To Watch Rick's column:  Click Here or To Listen to Rick's column:  Click Here

One of the concerns parents of young children have around Christmas is teaching the kids to value giving as well as receiving. Many of us have difficulty with our own contradictory impulses. We don't want to turn our kids into greedy little monsters, but at the same time we want to give them the best gifts and experiences we can.

This week I had a chance to think about this dilemma in a new way. I was talking with my daughter about our cancelled November family vacation. Due to last-minute chicken pox, we weren't able to go on our planned Athens/Istanbul/Egypt/Rome/Barcelona cruise. Instead, we're taking a shorter and, to me, less interesting cruise. As you read this, I may be on a beach somewhere in the Caribbean.

My daughter almost certainly will be on the beach. As we talked about the changed vacation plans, tears welled up in her eyes and she said, "Dad, the Caribbean cruise is my dream vacation."

"So you're really glad that Davin got the chicken pox and our European cruise was cancelled?" I asked.

"Yes. Dad, I've wanted to go to a beach for years now. I mean, you can only look at so many columns and crumbling rock."

Twenty years ago, I am positive my reaction would have been, "Oh, no! Am I raising a spoiled little brat?" At the ripe old age of ten, London has been to Europe at least four times. At that same age, I was pretty much resigned to the fact I would probably never have enough money to travel abroad.

Instead of responding in that manner, however, I was intrigued by her thoughts. Actually, quite pleased. While I do my best to find great values in cruises, it still costs about 50% more to take the kids to Europe than to the Caribbean. Before London had finished her sentence, I had calculated that Marcia and I could hire a babysitter for two weeks of "Parents Only Time," plus take the kids on a separate Caribbean cruise, for the same money it would cost to take them on the European cruise. It would be a win-win for all of us—a beach and kids club vacation for the kids, plus time for Marcia and me to pursue our passion of seeing the world.

This conversation reminded me that choosing "the best" for our kids doesn't necessarily mean getting the gift or experience that is the most expensive or that seems the most attractive to us as adults. A good example of this might be the traditional family dream vacation to Disney World. For toddlers, who need naptime and who are too little for most of the exhibits, a place like Disney World is too big and overwhelming. They'd be happier with a couple hours at a local attraction like Rapid City's Storybook Island.

So if you weren't able this Christmas to get your kids "the best" gifts, don't feel you've failed them. They may well be just as happy with something less lavish. Remember, too, that today's must-have toy often ends up as tomorrow's disregarded clutter.

A case in point. My son, with enough toys in his room to fill a flea market booth, has spent hours this week playing in the dirt of a planted pot. He assembled the volcanic rocks into a manger for the baby Jesus from our nativity set. Today the only other actors are a few sheep. Mary and Joseph were there yesterday, but I guess today they are out shopping. Maybe they are looking for the perfect gift for their special child.

Two for Two - London Comes Down With Chicken Pox

London woke up this morning and told me, "Dad, I had a dream last night I got the chicken pox." She's not only an author, but also a prophet.

Two weeks ago, when Davin broke out with the chicken pox on the eve of our annual family vacation, Marcia calculated that London would probably come down with them on Thursday, November 30th.  She was one day off.

Tonight, as London and I were putting the finishing touches on uploading her first book to the blog, London said she was feeling a bit itchy.  Lifting her shirt, I counted 14 pox on her back.  She felt a little warm and quickly I confirmed she had the tell-tale fever. Indeed, she had the pox!

By Saturday she was in full bloom, I stopped counting pox at 50!  I would call her case "classic."  Right now, London is on the living room couch with a stocking cap on her head, oven mitts on her hands, socks on her feet, and Calamine lotion smeared on her from head to toe. And, yes, London also had the chicken pox vaccine.   

The good news is that had we gone on our vacation, London would have gotten the pox just as we arrived in Rome for a two-day stint. So, it is a good thing we are here in Rapid City and London can be sick in her own bed.

But this tale is not without a money twist. About one week ago, I made her a bet that if she got the chicken pox I would give her $5, but if she didn't she would give me $1. I figured, statistically, it was a good bet. Since only 10 to 20% of kids vaccinated come down with the pox, the odds were in my favor. Oh well.  Within two minutes of my official declaration that she had the pox, she asked for her money!   

Probably the biggest takeaway from this for readers of this blog who have young children is to take the advice of the CDC. If your children have received the vaccination, make sure they get a second one, soon!  And, for me, the lesson is don't bet with Miss London.

"The White Filly " - London's First Book

by Rick Kahler

After two years of wanting to be a paleontologist, London changed her career choice.  She was four years old when she decided she would rather be "an author and illustrator of children's books." At age ten, nothing has changed.

So, authors must write, and London just recently completed her third book. All three books were written in script with accompanying illustrations. I suggested if she were to put her books into Word, that I would publish them on this blog. London took me up on the challenge, and true to my word, here is her first book, The White Filly.

The story is about a horse and the romantic interludes of a young girl.  I suggested that she rename the story The White Fillies, but London failed to see the humor in that. And, as London's father, I am also just a bit concerned about my ten-year-old writing a semi-romance novel.  I thought I might have a few more years before this stage!

Anyway, London accomplished this literary achievement about 40 years before her father, so Marcia and I are pretty proud of her!  Also, for all you English majors and teachers, the story is unedited by either of her parents' hands.

You can read London's book by clicking here: Download the_white_filly_london_kahler_12206.doc

What Your Doctor May Not Know About the Chicken Pox Vaccine

n by Marcia Welch-Kahler, guest columnist

Last June the Center for Disease Control sent out a press release recommending a second dose of varicella (chickenpox) vaccine for all children age thirteen and under to be given at least ninety days after the first dose. I emailed the CDC for clarification because the Q & A section on varicella didn’t indicate there was a second dose needed. Duane Kilgus, the Commander of the US Public Health Service, promptly emailed back that the recommendations voted on by the Advisory Committee on Immunization in June do not actually become official until they are published in the MMWR. After the vote it still takes several months to actually get them published. Mr. Kilgus explained that may be the reason my doctor didn’t offer the second dose of vaccine.

I wish my doctor had known about the recommendations when I took Davin in recently for his booster shots as a requirement for entry into kindergarten. If he had gotten a second varicella vaccination dose we might not have had to cancel our family vacation ten hours before we were scheduled to fly out. It was a horrible, stress-filled, disappointing week. As it happened, Davin had a fever of 102 at about the time we would have been getting on the international flight portion of our trip. He was certainly contagious and feeling miserable. He also would have put any pregnant women and other vulnerable people at risk, so we had to cancel. Davin ended up with a mild case that went away quickly, so we do thank the initial vaccine for that. The timing of the outbreak was just incredibly bad.

London is now in the incubation period, so we will have to see if she gets it. The doctor that kindly opened his office for us on a Saturday night to diagnose Davin told us ninety percent of siblings contract chickenpox as well. That same doctor also said in the initial afternoon phone call that it was highly unlikely Davin had chickenpox since he had been vaccinated. Only after Rick took Davin into an emergency clinic and got an affirmative physicians assistant’s diagnosis did the doctor-on-call believe that maybe it was chickenpox. Even though such typical childhood diseases are not normally a big deal, we went to extraordinary lengths to get a diagnosis and proper recommendation regarding travel since we were going on an airplane and then getting on a ship. I didn't want to spend the whole trip quarantined in the ship cabin.

I don't know how many kids all over Rapid City have come down with chickenpox. I know it spread to Davin's school (Children's House) via the brother whose sibling contracted her case at Seton. I have heard there have been cases all over town. At Davin's school, there have been six children so far and one parent who got it. It is amazing that all the children had received the vaccination as babies. And the parent had had chickenpox as a child. It is ironic that the only child in Davin’s class that hasn’t been vaccinated has not come down with chickpox…yet.

One mother took her child to the dermatologist because she was convinced it couldn't be chickenpox since the child had had the vaccine. All of us, doctors and parents, were feeling safe so it was hard to believe. Davin’s first pox actually looked more like a spider bite…a bit painful and certainly not itching. He had no fever for almost three days after that first and only pox appeared. During the fever, he broke out a bit more, but only the first one ever scabbed over. The scabs are the main indication that a person is no longer contagious.

Another mother at Children's House is pregnant and is choosing to keep her child at home until her pregnancy is further along and the danger has passed. I’d be nervous also. I looked it up on the CDC site and found out that it is only 1.4 to 2 percent (depending on how far along the pregnancy is) that a child will end up with birth defects because of maternal chickenpox.

So that small number is reassuring. The CDC also has articles posted regarding the drop in hospitalizations and deaths since the vaccination became standard among childhood vaccinations. So (in spite of the couple we know that blames the chickenpox vaccine for their daughter's autism), overall I think the vaccination is a good thing. I just think more parents and doctors need to know that children should get a booster shot for it to be worth it. I know chickenpox is a normal childhood disease. But if you get the vaccine for your child, you expect they won't have to miss school (or any vacation) because of chickenpox. If not, why bother with the expense and pain of an extra shot and the worry over whether or not your child is contagious anyway.

Here is a link to the June article from the CDC. Maybe it will help other parents and children avoid some confusion and scratching...

http://www.cdc.gov/od/oc/media/pressrel/r060629-b.htm

http://www.cdc.gov/nip/vaccine/varicella/varicella_acip_recs_prov_june_2006.pdf

Sometimes, The Best Laid Vacation Plans......

There isn't a  better family vacation than cruising. We typically book our cruises over Thanksgiving, when we can get some pretty awesome deals, unlike booking over Christmas vacation when prices are sky-high. Our annual family vacation this year was scheduled for tomorrow, November 19, on a cruise departing from Rome and visiting a number of ports, including Athens and Istanbul. I say it "was scheduled," until our son, Davin, came down with chicken pox.

Davin was diagnosed with chicken pox Saturday night, just ten hours before our early Sunday morning flight. And, yes, he was vaccinated as a toddler for the chicken pox, just as were six of his school mates who also have come down with the disease over the past two weeks.

Fortunately, I had trip insurance that hopefully will make us whole, financially.  Right now, the toughest pill to swallow is the loss of the time and effort put into planning and preparing for the trip and the expectation of making memories as a family. As I write this I am looking at five fully packed bags that were anticipating starting a long journey in just nine hours.

Many of you remembered all the drama from our cruise last year when Celebrity canceled a portion of our cruise and my daughter's cat had to be put to sleep while we were in the middle of the Atlantic. We all wished for a "drama-less" trip this year. I guess we got less drama, but in a more intense dose.

My daughter, London, cried her sweet heart out upon hearing the news. She concluded, with big tears rolling down her face, that Celebrity is "just a jinxed cruise line," and that canceling our vacation on her birthday was not exactly the present she had in mind. She was ten years old today.  I was reminded that last year the cat we gave her for her birthday died while we were on our cruise.  From her perspective, she may have a point.

So for the last hour we've been calling tour operators, Northwest Airlines, Celebrity, our house sitter, shuttle companies, and hotels canceling reservations that we've worked on for eight months.  Monday we file a claim with our trip insurer, Travelex, and begin collecting all our receipts, about $8,000 worth of non-refundable deposits, and cross our fingers that they will pay.

Certainly, we are sad and disappointed. As the doctor, who so generously opened his clinic at 8:00PM on this Saturday night, said, "I had to see this to believe it. Kids that get vaccinated aren't supposed to come down with this stuff. I mean, what's the point of spending the money on a vaccination if it doesn't work?"

I am sure that before too long, the planning will start all over again. And next time, we can be reasonably sure that chicken pox won't be on the list of culprits that could result in the best laid vacation plans (and vaccinations) going nowhere!

Surgical Investing

Listen to Rick's column here: Download surgical_investing.mp3

I learned a few months ago that I needed shoulder surgery to repair a torn rotator cuff. My best guess is that I injured my shoulder over two years ago doing "power yoga." So much for the idea that yoga is a gentle, passive activity.

In preparation for the surgery, I spent a lot of time researching on the Internet, talking with people who had undergone the procedure, and asking questions of several physicians and a physical therapist.

Amid all this research, there was one question I never asked. How much would it cost?

I wasn't totally ignorant about the possible cost. I knew I had insurance, I knew the deductible was $2,500, and I knew I would pay 20% of the cost over that amount. Yet cost didn't even factor into my decision to have the operation.

I find this interesting, especially for a financially conscious guy like myself whose work is helping people assess the financial costs of decisions. It's also interesting that not once did my surgeon offer to tell me the cost of the operation, ask me how I was going to pay for it, or indicate that he even considered the cost of the procedure and its effect on my pocketbook. By the way, my surgery, MRI, and physical therapy ended up costing around $15,000.

My mindset was that I needed the operation, regardless of the cost. I had been told that the tear would only get worse, it would never heal on its own, and my pain would continue to increase. Eventually, the physical and emotional cost of putting off the operation would exceed the cost of having it done now. My response was to hire the best surgeon in the region and get the operation done. Even with only a vague idea of what it would cost, I assumed the results would be worth that cost.

So far, I have no reason to question my assumption. With the help of time and physical therapy, my shoulder is healing well. I'm even back doing yoga—minus the "power" part for now.

It recently occurred to me that part of my work with clients is similar to the whole process of my surgery. One of several specialties of my practice is doing intensive work to help high-income overspenders change their destructive financial patterns. When such potential clients call me, they usually have two questions. Can I help them? And how much will it cost?

My answer to the first question is a comfortable "yes." I can't guarantee success, of course, any more than the surgeon could guarantee success with my shoulder. Yet, like him, I can assure them the process I use is clinically proven to work and has a high success rate.

It's the second question I have trouble with. I'm still uncomfortable asking clients to spend more money to help them stop overspending. Yet the process to help these clients involves three professionals working with them for one to four days. The cost, ranging from $10,000 to $30,000, is similar to the cost of a surgical procedure.

The benefits to the clients are also similar to the benefits of such surgery. Given the incredible transformations that I've seen in our work, I know logically that this process is worth every penny it costs. For example, if I can help someone reduce their spending by $20,000 a year, for a one-time cost of $10,000, the return on that investment is pretty darn good.

The value of such changes can't be measured only in terms of dollars and cents. To remind myself of that, all I need to do is raise my arm. A pain-free shoulder? Priceless.

Taking "No Pain, No Gain" Just a Little Too Far

As many of you know, I exercise daily and have done so for the last 25 years. The ironic result of my daily exercise habit is that I would actually be in a lot better shape if I didn't work out.

I first started running in my late 20s, only to stop when my knees and back started bothering me. I then picked up weight lifting, only to stop when I hurt my right shoulder. After a little investigation, I thought I had found a form of exercise where it would be impossible to hurt myself: yoga. I was wrong.

About two years ago, while practicing "power" yoga, I hurt my left shoulder. Hoping it would go away, I continued my daily workouts. Unfortunately, my sore shoulder never did heal.

I finally gave in and spent the money for an MRI. The results showed that I had a torn rotator cuff. As you might suspect, that news didn't exactly make my afternoon.

After speaking with my doctor and a physical therapist, I concluded that my shoulder would never heal on its own and that I would eventually need surgery to repair the damage. After doing a lot of research, I decided to have the surgery sooner, rather than later. Sooner came last Thursday.

I am told it will be six months to one year before I am able to work out again at the level of intensity I had reached. Right now, it is hard enough just to eat, dress, and maneuver safely. Even typing is not possible at the moment. That will take another two weeks. That is why I am dictating this blog entry on Dragon Naturally Speaking software!

To all of you who kept me in your thoughts and prayers, thank you for your kindness. Now, the hard work of rehabilitation begins. Hopefully, a year from now, I will be back into my daily workout routine feeling stronger than ever.

The Case of the Nefarious Nanny

To listen to Rick's column, click here:  Download NefariousNanny.mp3

About a year ago, I filed felony theft charges against one of the last people I ever thought would steal from us—our children’s primary babysitter. Jill (not her real name), a college student, worked for us for three years. She stayed with the children several times when my wife and I were out of town. She was a trusted employee who became a family friend.

Everything was fine until we began missing cash from my wife's purse and from the spending money I kept hidden in the house. We weren't leaving cash around in plain sight; someone had to be searching systematically for it. We started an investigation, including setting up a surveillance camera, and before long we caught our thief in the act. My wife and I were dumbfounded that the culprit was Jill.

We were even more shocked when we reviewed Jill's time sheets. She submitted them to one of my staff members who made out checks, and we hadn't been checking them because we trusted Jill. We learned she had been overstating her hours by four times.

At first we were tempted to just confront Jill, get as much money back as possible, and let her go. Because we had known and trusted her for several years, it was hard to consider turning her over to the police. Maybe just being caught, we rationalized, would teach her a lesson.

Finally, though, we decided we needed to press charges. This was no impulsive, petty theft, but systematic robbery of significant amounts from people who trusted her implicitly.

I also remembered the experience of a friend who had discovered a trusted employee was embezzling from his business. He found out later that she had done the same thing earlier in a previous job. That employer had chosen not to press charges, but had let her go after she reimbursed what she had stolen. Instead of learning from the first experience not to steal, she was merely released to go and steal from a new employer.

This story reinforced the position that it would be wrong to let Jill get by without serious consequences for her theft. It became clear that we would be doing no favors—either for her or for her possible future victims—by failing to hold her accountable for her actions.

When we confronted Jill, she admitted she had been stealing from us. She had no explanation for her behavior other than to say she realized she had a problem and had no clue why she stole. I gave her the name of the detective I had previously talked to, and she agreed to turn herself in. When she did, she confessed to stealing around $2,000 in cash. In actuality, it was many times more than that.

It took over a year for Jill to finally agree to a plea bargain and plead guilty to the felony charges. At a recent hearing, the judge sentenced her to 10 years in the penitentiary, suspended her incarceration and put her on probation for 10 years. She will serve 90 days in the county jail on work release, pay a $1000 fine plus court costs, go to counseling and do community service. She will also have to make restitution, in an amount to be set at an upcoming hearing.

My wife and I are relieved that the case has finally been heard. Yet it doesn't feel "over." This whole incident has left us feeling sad, angry, and confused. We still struggle with the reality that someone we regarded as a friend could betray us so badly.

Where Does a 100-Pound Kitty Sleep?

CLICK HERE TO LISTEN TO RICK'S COLUMN: Download 100_pound_kitty.mp3

As long-time readers know, over the years I have had a love/hate relationship with cats. Maybe a better term would be a like/hate relationship. Okay, maybe it's a barely tolerate/hate relationship.

An article on the front page of the daily newspaper this week kicked that relationship up to a whole new level. The article featured a picture of a half-grown mountain lion in a tree. That's not so unusual. We have mountain lions in the Black Hills, and pictures of them aren't exactly rare.

The reason this cat made the front page was its location—in the back yard of a home that's just a valley and a ridgeline away from my house. This kitten, plus its mother and a sibling, had apparently moved into town. You have to admit that they have good taste; they relocated to Carriage Hills, one of Rapid City's most expensive neighborhoods.

It's exactly their good taste, or their taste for what's good, that bothers me. I don't appreciate living in the vicinity of carnivorous cats who are big enough to swallow either of my kids in one gulp. One of the reasons we moved to this neighborhood a couple of years ago was so my wife and kids could be closer to nature. That was fine as long as "nature" meant wild turkeys, bunnies, and deer. Mountain lions are something else again.

My first instinct as a parent is to either lock the kids in the house from now on or start making plans to move back into the middle of town where nature isn't quite so natural. On second thought, I realize neither of those would be a practical solution.

Instead, I need to see this danger realistically. My kids aren't out exploring the neighborhood ravines at night, so their chances of encountering a mountain lion are remote at best. The current family of urban lions are being tracked and removed, so they won't be a risk for long. We don't put out feed for the deer or turkeys, so we aren't making our yard into a tempting mountain lion buffet. We're probably more at risk of being attacked by a mountain lion than of being hit by a meteor, but it's still a risk too slight to lose sleep over.

My first reaction to this lion story, though, reminds me that we tend to become quite fearful of risks that are dramatically bought to our attention, even if those risks are not at all realistic. This is true when it comes to investing as well as other aspects of our lives.

In investing, as well as in exploring forests where mountain lions might live, it's foolish to engage in risky behavior. It's just as foolish to become obsessive about protecting yourself from dangers that are extremely unlikely to come to pass.

Among the scary investing stories that make headlines are plunges in the stock market and CEOs who bring companies to ruin and take employee pension plans with them. Those are genuine risks, but risks that are highly unlikely to affect diversified investors.

The real risks when it comes to investing are less exciting. One of the biggest investing risks is to try to get rich in a hurry by trading in individual stocks. Another is to keep your money in superficially safe investments such as CDs, which actually lose purchasing power because of inflation.

Perhaps the biggest risk in investing, however, is one we don't think of as a risk at all. That is being either so fearful or such a procrastinator that you don't invest your money at all. Now that is a risk worth losing some sleep over.