What Science Says About Debt and Obesity

This is a guest post written by Matthew Papa, PhD.

The current economic state worldwide has led to an increase in the number of people living in high-income countries who can be considered over-indebted — owing more money than they can repay. While there are many negative factors associated with indebtedness, a new study by Eva Munster and colleagues of Germany, published online in the journal BMC Public Health, found that over-indebtedness is associated with obesity – in fact, people who are over-indebted are more than twice as likely to be obese and almost twice as likely to be overweight as their more financially successful counterparts.

The Study

Traditionally, socioeconomic factors such as education and income, as well as other factors like sex, age, depression, and smoking habits, have been found to have a relationship with weight. This new study was unique in that it specifically examined the relationship between weight and indebtedness, a characteristic rarely used to describe socioeconomic status. Over-indebtedness is defined by the study’s authors as “lack of possible debt redemption in due time due to the relation of income and cost of living after a remarkable cutback in standard of living.”

To conduct the study, Dr. Munster and her colleagues compared the results of two surveys: a study designed to measure the health of 949 over-indebted individuals, and a previous telephone health survey of 8318 individuals representative of the German adult population. Both surveys asked questions about age, sex, income, education, Body Mass Index (BMI – a measure of obesity calculated based on height and weight), smoking, and depression.

The study found a number of interesting relationships with indebtedness. When compared to the general population, the average over-indebted study participant was younger, had less education and income, and a higher incidence of depression, smoking, overweight (BMI ≥ 25), and obesity (BMI ≥ 30). Both men and women were equally likely to be over-indebted.

Aspects other than indebtedness that were found to be related to an increased likelihood of being overweight or obese include being male, being over 40 years old, and suffering from depression. Smokers and those with higher education and income were found to have a decreased likelihood of overweight or obesity.

Over-indebtedness and Obesity

The study found that indebtedness was associated with an increased likelihood of overweight and obesity, even when examined independently of other factors. This means that people who are over-indebted are more likely to be overweight or obese regardless of factors such as income, education, sex, or age – suggesting that over-indebtedness alone can cause obesity.

Why might this be the case? The study’s authors present several possibilities for this relationship between over-indebtedness and obesity. One potential reason is that over-indebted people may be less able to afford healthy food. It is known that, internationally, food that is energy-dense (meaning high in fat, sugar, and calories), is less expensive and more filling than less energy-dense (and healthier) food. For example, for the amount you would spend on a bag of carrots, you can buy a more filling and higher-calorie snack like a Snickers bar.

Another possible reason is the psychological distress faced by those who are over-indebted. Being unable to afford all one’s debts can be stressful and depressing, things that can lead to increased eating for compensation and enjoyment. A number of studies have shown that the majority of people change feeding behaviors when facing stress. Around 40% or more increase and 40% or less decrease their caloric intake during stressful periods, while 20% do not change feeding behavior. Stress also induces secretion of glucocorticoids, which increase motivation for food, and insulin, which promotes food intake and obesity, as mentioned in a recent study by Dr Dellman MF.

Is this a German phenomenon?

Since this study was conducted on a German population, there has been some discussion in the United States’ medical community about whether the results can be generalized to other countries. It is possible that this relationship between over-indebtedness and BMI is a uniquely German phenomenon, but there are also excellent reasons to believe that the study has relevance to other countries such as the United States.

Dr. Emanuela Taioli, a physician at SUNY Downstate Medical Center in Brooklyn, New York, said of the study: “This result is even more applicable to the U.S., where unhealthy food is currently much cheaper and more affordable than healthy food, and so is water in comparison to sugary drinks. This will have a large impact on the current U.S. obesity problem, now that the proportion of people with debts is increasing.”

On the other hand, Dr. Lewis Kuller of the University of Pittsburgh noted that the findings would be more impressive had the data been collected over time, rather than all at once, asking “Did the individuals gain weight when they lost [their] income [or] job over indebtedness? Or were they already obese, overweight before their economic problems?”

One thing is certain: this carefully conducted scientific study uncovered a significant association between indebtedness and overweight and obesity. The startling finding – that being over-indebted increases a person’s risk of being overweight by almost 100%, and increases their risk of being obese by more than 150% – definitely suggests that over-indebtedness should be considered when looking at risk factors for overweight and obesity.

About the Author: Matt Papa is a postdoctoral fellow and medical researcher at Washington University School of Medicine, St. Louis, MO. Concerned about the increasing rate of obesity in the United States and other countries, Matt is interested in sharing the latest relevant scientific information. He is the owner of a WeightLossTriumph, where he provides information on best weight loss programs and offers a Medifast coupon.

Five Ways To Reduce How Much You Need To Retire By $300,000

This is a guest post written by Todd Tresidder.

If the idea of accumulating a million dollars (or even half of a million) for retirement is daunting then consider this: for every $1,000 reduction in monthly retirement spending you will similarly reduce how much money is needed to retire by $300,000. That is a big deal because most people will find it much easier to retire with bliss and happiness on $1,000 per month lower income than to figure out how to put away an additional $300,000 in retirement savings.

Enjoying Retirement

If this all sounds a little confusing rest assured it is just basic math. You can use an online retirement calculator or visit your favorite financial advisor and odds are very high that you will be told you can spend somewhere between 3% and 5% (depending on assumptions) of your savings each year during retirement and remain financially secure. To keep things simple we will assume a very middle-of-the-road 4% of retirement savings spent each year. What that means is you need roughly 25 times your annual spending in savings – otherwise known as the “Rule of 25” – to support this 4% spending habit. You may find this math mundane, but the implications can be very exciting to your retirement plan.

This same rule also tells you how much less you need to save for retirement if you are good at finding happiness and bliss in life while spending less. For example, if you can figure out how to reduce your retirement budget by just $1,000 per month ($12,000 per year) the rule of 25 says you just reduced how much money you need to retire by a whopping $300,000 ($12,000 * 25 = $300,000).

Spending a little less certainly sounds a lot easier than coughing up another $300,000, especially if retirement is just around the corner and your nest egg is not as robust as you might like. By learning to live more simply, you can enjoy financial freedom during your golden years. The key to retiring successfully on less is to find an appropriate level of spending that suits your needs and lifestyle without sacrificing happiness. The only limit here is your own creativity. If you can stay focused on your core values and determine the things that are really important you could completely transform your vision of retirement.

To help get you started, here are five easy ways to save $1,000 a month during retirement without sacrificing happiness:

1) Downsize

Since the kids are grown and out of the house, you don’t need five bedrooms anymore. A smaller house means a smaller property tax bill, lower maintenance costs, lower insurance premiums, and less hassle. Take it a step farther and downsize to a condo or townhouse close to the urban core and you can eliminate the cost of owning one or both of your cars while eliminating all yard and exterior maintenance work. Renting a car for occasional trips out of town is far less expensive than auto repairs and insurance. Following the rule of “less is more,” less stuff to care for means you have more free time to enjoy your retirement, and a combination of downsizing strategies should be able to save you at least $1,000 per month.

2) Move to Mexico

Retire to MexicoIf you’re willing to leave the country then Mexico is a logical choice since it is close (you can drive there, after all). Not only is the cost of living much lower but the climate is appealing, the infrastructure is more modern and advanced than in much of Latin America, fresh fruit is in abundance, and you can surround yourself with other expatriates if you choose. Numerous websites offer logistical advice on relocating to Mexico and other inexpensive retirement havens outside the United States.

If Mexico isn’t your cup of tea then consider relocating to any number of places, foreign or domestic, that are less expensive than your current hometown. Money Magazine lists Sequim in Washington, Dunedin in Florida, Durango in Colorado, Fort Smith in Arkansas, and Janesville in Wisconsin as some of the most affordable places to retire in the United States. If you plan to travel a lot, where you call home may be of minimal importance and the savings could make a huge difference in how much money is needed to fund your retirement. Just do plenty of research before packing your bag: there are many valuable resources on the web to help you find just the right place for your retirement needs and budget – any one of which could save you at least $1,000 per month.

3) Trade Your Home For a RV

Retire as RV FulltimerIf your retirement plans involve extensive travel, consider selling your home and living in an RV. Unburdened by the labor and costs of home ownership, you’ll be free to travel as much as you like or stay put for months on end. Getting rid of your home means no more property taxes, homeowners insurance, maintenance costs or monthly payments, and the home equity is freed to produce investment income. With an RV your home and mode of travel are one and the same. Many retirees even find seasonal employment in national parks and campgrounds that provide a bit of income and social life. The rest of the year they’re free to follow the weather or the grandkids. An RV is easy to store while you travel abroad and you won’t have to worry about home security or frozen pipes. This lifestyle change can easily lower your costs by $1,000 per month and possibly raise your investment income by the same – two for the price of one.

4) Live Healthy

Eat Healthy Save MoneyHealth care costs eat up an increasing proportion of spending as you age. Although some medical issues are unavoidable, you can significantly reduce your health care spending by staying fit and living a healthy, active lifestyle. Eating low on the food chain is good for your body as well as your budget; prepackaged and processed foods often come at high prices with lower nutritional value. Similarly, regular exercise and a low-stress lifestyle can mean fewer trips to the doctor and fewer prescription medications that can quickly break your budget.

5) Make The Little Things Add Up

A thrifty shopper can easily save $1,000 a month on things like groceries, gifts, and recreation. As a retiree your time is flexible thus allowing you to take advantage of midweek savings on green fees, matinee discounts on movie and theater tickets, and early bird discounts in restaurants. Travel off-season and you will not only save money but you’ll encounter fewer crowds.

Develop the habit of asking for discounts and never paying full price. Don’t wait until December to do all your Christmas shopping—pick up items throughout the year at sale prices and give them at the appropriate time. Buy your wrapping paper and seasonal trinkets at the after holiday sales when prices are usually less than half. Or cut out gift expenses altogether and donate a fixed amount to charities or provide a charitable service personally in honor of your loved ones.

Become a grocery store “perimeter shopper,” avoiding the center aisles that are full of sugar, processed foods, and unhealthy snacks. Almost everything you need is around the perimeter of most grocery stores—produce, bread, milk, and meat. Buying certain items in bulk also saves cash. If you pick and choose from these and many other money saving strategies you could easily figure out how to live happily on $1,000 less per month.

Reduce How Much You Need To Retire By $600,000… or more!

Now that you see how easy it is to reduce your spending during retirement by $1,000 per month without sacrificing your happiness, try combining several of these cost saving strategies to double-down or triple-down and really make a big difference in how much money is needed to retire. It’s not hard to imagine a happy lifestyle living out of a motorhome, eating healthy, and enjoying off-season travel and recreation discounts.

Or if an exotic location is more to your liking then a low-cost lifestyle somewhere down in South America might just do the trick. Similarly, if you find it hard to shave expenses by $2,000 per month you may find it easy to pick up the equivalent in part time or temporary income. The math is the same. You might enjoy being a campground host in a beautiful national park, or maybe you are good at taxes and wouldn’t mind working for a few months each year during high tax season when the winter storms are raging.

The point is to get creative and figure out ways to simplify your life so that you spend less, reduce stress, and slash the amount you need to save so that you can retire now with financial security. Once you get past the notion that you have to keep up with the Joneses, you just might discover that you can enjoy retirement a whole lot more by spending a whole lot less.

About the Author

Financial expert Todd R. Tresidder retired securely when he was just 35 years young. His ebook, How Much is Enough to Retire?, shows you the next step beyond simple retirement calculators and traditional retirement planning. Check out his web site for more free retirement planning information and resources.

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Photo Credits: goingslo, VideoVik, Koocheekoo, Aylanah

Are You Saving Enough For Retirement? Use These 4 Simple Rules Of Thumb And Find Out Now.

This is a guest post written by Todd Tresidder.

How do you know if you are saving enough so you can afford to retire? And more importantly, are you saving enough to retire with confidence so that you can support your present lifestyle without running out of money early?

2615289324_685aa07107To answer these questions, you might consider using one of the many online retirement calculators available. Unfortunately, these “simple” retirement calculators are often complicated and require you to assume many things about your future retirement that may or may not work out to be true. It’s the old “garbage in equals garbage out” rule, and nowhere is that rule more true than with retirement calculations.

One alternative to sophisticated retirement calculators is to apply simple rules-of-thumb that allow you to quickly and easily estimate the sufficiency of your nest egg and savings plans. While these simple formulas lack the “rocket science” sophistication of Monte Carlo theory and other financial planning innovations, they do provide a reasonable ballpark approximation that is easy enough to do yourself – without a computer, software, calculator or financial planner. Usually, a pencil and the back of a cocktail napkin are sufficient.

The advantage of this simplicity is you will actually complete the exercise – which is essential to successful retirement planning. You must know the retirement savings goal you are aiming for in order to plan constructive actions to reach the goal. You are far better served by knowing a rough approximation of your retirement planning needs than to have no estimate at all.

The truth is perfection in retirement planning is impossible anyway because accuracy depends on assumptions about your future which can never be made with certainty. Therefore, it’s better to at least work with ballpark estimates than to risk being thwarted by complication that might keep you from playing the game altogether.

Below are four simple rules-of-thumb for retirement planning that will at least get you in the ballpark until you have the time and inclination to sharpen your pencil…

The Ten Percent Rule

Some old-wives-tales are true, and the importance of saving 10% of your income happens to be one of these truths. This retirement savings strategy was popularized in the bestselling book The Richest Man in Babylon. In general terms, the way the math works is if you save 10% and invest it with long term returns around 10%, your investment portfolio will grow to the point that it can support your lifestyle from earnings in roughly 35-40 years. That means you could retire and live on the investment earnings alone, never touching the principal. Your life expectancy doesn’t even matter in this situation because you would never run out of money since it doesn’t require you to spend principal. The biggest risk to this simple formula is inflation, although even with that limitation it still provides a good working approximation for how much you should be saving.

What’s fun about this formula is how easy it is to understand, easy to implement, and easily adapted to your situation. For example, if you have less than 40 years until retirement then you should obviously be saving significantly more than 10%. The sooner you start saving, the longer you have for your interest to compound to build your retirement fund. If your average investment return exceeds 10%, you won’t need to save as much. If it is less than 10%, you need to save more.

One big benefit to using this simple rule-of-thumb is you don’t need to pay for a fancy financial plan that sits in the binder on your shelf collecting dust to get started. It is a rough approximation that points a clear direction so you can get started immediately – and starting immediately is a critical factor to your retirement savings success.

The “Millionaire Next Door”

Now that we have a reasonable approximation for how much you should be saving each month, lets examine a different approach that provides an approximation for how successful your savings efforts have been to date.

According to The Millionaire Next Door, authors Stanley and Danko provide a simple yet reasonably accurate formula for assessing your wealth accumulation skills:

Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

For example, if you are 35 years old and earn $100,000 per year with no inheritances, then your net worth should be $350,000: 35 times 100,000 divided by 10 equals 350,000. If you meet this standard, consider yourself to be “on track” for moderate wealth accumulation and a successful retirement fund. You aren’t a super achiever, but you aren’t behind either.

Go ahead and do the math for yourself. How do you measure up? This formula is really just another twist on the 10% savings rule cited earlier. It is based on sound mathematics and seems to provide a conservative but realistic figure for a broad range of scenarios.

Although it does not consider inflation, taxes and varying interest rates, this simple formula does yield a useful estimate of your retirement savings goal. It gives you a fast and easy way to see how well you are progressing toward financial freedom.

Stanley and Danko go one step further, creating two additional benchmarks based on their basic formula. “Prodigious accumulators of wealth,” or PAWs, have accumulated twice the savings indicated by the formula. “Under-accumulators of wealth,” or UAWs, have accumulated half the expected total. If you are a PAW then you are reasonably on track to knowing if you can afford to retire. If you are a UAW, now is the time to step up your financial management skills and start saving more.

12 Times Income

Jonathan Clements, former columnist for theWall Street Journal and author of The Little Book of Main Street Money: 21 Simple Truths that Help Real People Make Real Money, offered another alternative to the “How Much Money Do I Need To Retire?” question by claiming a reasonable retirement nest egg should be 12 times your income. To reach this goal, the amount you need to set aside each month depends on how much time you have before your target retirement age and your current savings-to-income ratio. This premise makes a few assumptions:

  1. your income increases to match inflation,
  2. you draw 5% of your savings as income the first few years of retirement, and
  3. you achieve an investment return of 5% after inflation.

The numbers purport to yield 60% of your pre-retirement income. Combined with Social Security and other income, you might end up with 80%, a figure that most retirement calculators assume is enough. Alternatively, if your own calculations show that you need a higher percentage, then you need to amass more than 12 times your income.

Rule of 25

One of my favorite rules for simplifying how much is enough to retire is to multiply your expected annual spending for your first year of retirement by 25 to determine your total savings required. This is just a mathematical simplification of the famous 4% rule where you are allowed to spend 4% of your savings each year during retirement.

This rule is on firm empirical grounds because the sophisticated retirement planning models including Monte Carlo optimizations will generally result in spending rules ranging from 3-5% depending on assumptions and confidence interval required. Now you can get roughly the same result without a computer, software or arcane mathematics. Just take your first year of retirement spending, multiple it by 25, and presto – you are right in the same ballpark.


These quick and dirty rules of thumb are far from perfect. But the ugly truth about retirement planning is there is no such thing as perfect. In the end it is all a rough approximation anyway. For those readers wanting more explanation and detail, the ebook “How Much Is Enough To Retire” will help you understand exactly when you can afford to retire.

The future is unpredictable and conventional retirement planning requires you to predict the future in order to apply their models – this is a serious flaw. The truth is many unknowable factors will determine your financial needs during retirement, and those will only be known in the fullness of time. There are alternative models to retirement planning that don’t require you to see into the future and for those readers who don’t have the time or inclination to learn those models, this article provides some simple rules that will get you close enough for basic planning.

The important thing is to develop a concrete retirement savings goal to work toward – regardless of the model used. An inaccurate goal is better than no goal at all. You can use these simple rules of thumb to get started today and sharpen your pencil later when accuracy becomes more important.

About the Author

Todd R. Tresidder is a financial coach who retired comfortably when he was just 35 years young. His ebook, How Much is Enough to Retire? is based on his own experiences and explains how you, too, can afford to retire. Check out his web site for more retirement planning books, educational articles, and try his free retirement income calculators.

photo credit: ted.sali

10 Essentials for Success

Publisher and Editorial Director of SUCCESS magazine, Darren Hardy, offers the following advice on how to make 2009 your best year ever:

1. Decide to be Successful – Success is not a dream, hope or fantasy; it is a decision. Make the decision to change, improve and act on your ambitions.

2. Design your Best Year Yet – As an architect would design a skyscraper, write out the goals, plans and actions it will take to achieve the life you want to live.

3. Identify Your Passion – What are your unique interests, talents and gifts? Passion attracts success. Find what you love to do – you will never “work” again.

4. Program Yourself for Success – You will see, perceive, expect and create what you think about. To program your mind for success – read watch and listen to materials that will support your success.

5. Surround Yourself with Success – You are the combined average of the five people you hang around the most. Surround yourself with healthy, success-minded achievers.

6. Model Success – The best way to learn to be successful at anything is to find someone who is where you want to be and model their success habits.

7. Master the Fundamentals – Don’t complicate it. About a half a dozen things make up 90%+ of what it takes to be successful at anything. Keep it simple.

8. Get Fit – The mind cannot achieve what the body cannot perform. Your family, friends and career and future depend on your good health. Make it priority No. 1.

9. Remember What’s Important – At the end of the journey what will have mattered most will be your relationships – the people you love and those that love you. Make sure they are on your goal list.

10. Make a Difference – What do you want your life’s legacy to be? You have the power to make a positive difference – to a single person, a neighborhood, a community, a nation, the world. Realize that power in 2009.