Lessons Learned: If you had the right hammer ...

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By GENE KELLY/Personal Finance Columnist

 “The older I get, the better I used to be.” — John McEnroe

“Don’t you have a big enough hammer?” The question came from outside the small room, where I was struggling to replace an old, battered exterior door with a pre-hung steel door.

John, who had hired me to make the rental house he owned more weather tight, smiled and agreed that we had a problem: Although I had removed one door frame stud, more space was needed to wedge the frame of the new door into place. “I’ll get my sledge,” he said.

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Later, I watched as he gripped the long handle and swung the nine-pound hammer with just enough force to move another doorway stud about a quarter inch. We then cut through nails and used shims to raise the header. Once you get into a wall to make framing changes, installing a pre-hung door is not a difficult project.

I thought of John’s “big-enough hammer” comment this summer, in the midst of rebuilding portions of the deck on our house. Beefy 4x6 landscape timbers seemed the ideal size to replace the deck’s main supporting posts. All I needed was the right tool — the heft of a sledge — to help wedge these timbers into place. Since then, I’ve been surprised how my four-pound “engineer’s” sledge, with its short American hickory handle, helps solve problems.

In much the same way, ideas and strategies, even negative experiences, can be valuable personal finance tools. A few examples:

Keep your focus on the earnings power of the U.S. economy: You’ll likely need some hand holding when third quarter retirement and investment statements show up in your mailbox. If account balances aren’t down 15 to 20 percent for the past 12 months, you probably don’t have much invested in the stock market.

A little pep talk might help:

First, equity markets can turn on a dime and rebound rapidly from a market bottom. Nobody can know when. However, to ride a rebound you must be in the market. Historically, from the point of a bear bottom, stocks have returned 28 percent during the following 12 months.

During the past half century, the earnings of U.S. companies have grown at an average annual rate of about 7 percent, roughly the same pace as stock prices.

Also, updating what I refer to as your “personal balance sheet” — a brief listing of assets and liabilities — will show whether your net worth has actually slipped much.

Warming up the shredder can be therapeutic: Distract yourself from stock market gyrations by digging into those dozens and dozens of old manila envelopes, corrugated boxes and even shoeboxes stored in file cabinets. Don’t grimace. Just tackle one box at a time.

Some tips on deciding what to shred:

Medical — Keep medical bills four years or until claims are settled. Never discard health files, immunization or allergy records.

Bank or credit union — Keep checking, savings and credit card statements seven years. Shred deposit slips after verification. Retain loan statements for 10 years after the payoff.

Household — Keep deed and title documents for four years after home is sold. Retain homeowner’s policy for one year after the sale. Keep appraisal and property tax documents until house changes hands.

Financial — Keep annuity contract until it’s been paid out. Keep disability insurance files four years after account is closed. Permanently retain life insurance policies.

Safety deposit box — The best place for important contracts, any stock or bond certificates, veteran’s papers, household inventory (with backup photos), deeds, motor vehicle titles, wills, death certificates, adoption papers, divorce decrees, citizenship papers, marriage and birth certificates.

A bottom-line kiss off: Recently, I told readers how to select a financial adviser: First, get referrals from friends. Conduct separate interviews with three potential advisers, asking about their academic background and professional designations they’ve earned.

A reader who did this received a snippy follow-up note from one adviser: “I have decided I no longer wish to have you as a client. Frankly, I don’t have the time or the temperament for any more of your questions regarding my qualifications.“

What — no second interview?

If you have a Lessons Learned topic to suggest, you can call Gene Kelly at 421-2861, write to him at 2611 Bretigne Circle, Lincoln 68512, or e-mail him at genekelly@windstream.net.