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Dont Panic! Coping with Financial Mistakes and Setbacks
http://www.getrichslowly.org/ blog/ 2008/ 03/ 28/ dont-panic-coping-with-financial-mi...
When I was young and stupid, I became addicted to spending. I got my first credit card in college, and over the next fifteen years, I accumulated $35,000 in debt. I'm debt-free now, and have even begun building a nest egg, but I didn't reach this place without making a lot of financial mistakes along the way. And I still make mistakes. Dealing with mistakes and setbacks is an important tool in your personal finance arsenal. Preventing problems The best defense is a good offense. I used to spend a lot of time reacting to problems: bounced checks, car repairs, soccer injuries, and - worst of all - my own dumb choices.
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Early Mistakes are Lessons in Disguise
http://www.bargaineering.com/articles/early-mistakes-are-les...Last night I had dinner in San Francisco with J.D., his lovely wife, and Cap and we somehow got on the topic of how JD made the fantastically not awesome decision to buy Sharper Image. Cap lamented about how he was poor and didnt invest in stocks (to be
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Dont Panic! Coping with Financial Mistakes and Setbacks
http://www.getrichslowly.org/blog/2008/03/28/dont-panic-copi...When I was young and stupid, I became addicted to spending. I got my first credit card in college, and over the next fifteen years, I accumulated $35,000 in debt. Im debt-free now, and have even begun building a nest egg, but I didnt reach this place
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Early Mistakes are Lessons in Disguise
http://www.bargaineering.com/articles/early-mistakes-are-les...Last night I had dinner in San Francisco with J.D., his lovely wife, and Cap and we somehow got on the topic of how JD made the fantastically not awesome decision to buy Sharper Image. Cap lamented about how he was poor and didnt invest in stocks (to be
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It's Too Easy to Spend Money on the Internet
http://www.finance-weblog.com/50226711/its_too_easy_to_spend...© Marc Shandro This passage from J.D.'s post on Get Rich Slowly today struck me: Last fall I was talking to a friend who worked at the corporate offices of The Sharper Image. He told me that the company's stock price had fallen, but management was
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It's Too Easy to Spend Money on the Internet
http://www.finance-weblog.com/50226711/its_too_easy_to_spend...© Marc Shandro This passage from J.D.'s post on Get Rich Slowly today struck me: Last fall I was talking to a friend who worked at the corporate offices of The Sharper Image. He told me that the company's stock price had fallen, but management was
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Darling, can we talk about our past stupid financial mistakes?
http://www.thesimplewealth.com/2008/04/darling-can-we-talk-a...I was reading the post by Julie Rains, Road to becoming a rich idiot, and the paragraph below triggered the wave of my thoughts. ‘Learn from the “repercussions of your previous actions,” making mental connections to what has succeeded and failed in the past, and always applying what you already know to new business ventures, office procedures, investing strategies, etc.’ There are a lot of things my husband and I don’t talk about at present. The main reason is that we have different view regarding the past. Mine is to learn from the past. His is to simply forget the past. It’s very hard to talk about the past-especially our stupid financial mistakes-without any thread of negative emotions, I could understand why he would rather not talk about them at all, even though I have no intention to blame or to regret. What matters to me the most is we need to learn from our mistakes, I have learned my lessons, and I need to know that he has learned his. I have tried to get some clues. One year ago, I told him that we would have been much better financially if we only owned our first house and had not purchased the other two houses, he replied, “ how bad is that to make $200,000?” Our point of views were so different that the conversation could not continue. We sold our first house, to say that we made $200,000 from the sale is to dismiss the remodeling costs, the closing costs, new investment costs and the holding costs. That was one of the short conversations we had. Two weeks ago we had friends, a couple, stayed overnight with us. Michael said to them at dinner, “ her money making ideas got us into trouble.” I did not respond to that remark, since there was some truth in it. If we had not invested in real estate or traded forex, we would be in much better shape now, I agree it’s my fault to sprout those ideas, and yet it is not those ideas that got us into trouble, but how we approached them did, and he contributed to that part more than I did. ( If you have not read my money story, I highly recommend you to check it out, it’s one of my best posts.) Let me give you some facts first. About real estate, the first house we bought at $299,000 was a very good deal, it is still a very good deal even in today’s market, a totally remodeled 3-bedroom house in the bay area. I had some doubts if we could afford it, but he decided to go ahead and bought it, he deserved to have the credit. After owning our first house we kept on going to open houses on weekends, and on one of the occasions, he heard from the realtor that the housing market in one city was very hot, he was excited and drove us there. I was not familiar with that city, and the books I read about real estate stress the importance of knowing the market, it was not a market I knew, I was not sure about buying a house there, but we did because of him, we bought our second house for $389,000, a partially updated Victorian house with some foundation issue. We kept on going to open houses, the numbers were not making sense to me, I felt relieved when he just passed them on, but one day we saw a major fixer-upper, and he liked the potential of the house very much, so we bought our third house for $452,000. He was the main person who decided to buy these houses. About forex, in the beginning after I lost $5000, I stopped trading. He did not want me to give up, he jumped in trading himself without demo trading first, and lost the remaining $5000 very fast.I was searching online for ways of making money, and came across one forex trading system, which I demo traded a few months before I started live trades again. I started to make good money, he wanted me to add more fund, I was ok with that since I was making money. After I got margin call and lost most of the money, he wanted me to put $20,000 borrowed from our credit into trading, I did not feel safe about it, and yet I did what he said. We lost that $20,000 too. Trading foreign currency is very risky because of high leverage and volatility in the market, one way to manage the risk is to trade the money you don’t mind losing, which we did not follow. Knowing these facts, would you say such remark that her money making ideas got us into trouble, if you were him? He said now that he wishes we have no houses at all. If we rewind time back one year to that conversation I had with him, would he still say, “ how bad is that to make $200,000?” Which is better, to own one house with a mortgage of $299,000 and healthy monthly cash flow, or to own two houses with two mortgages of $763,000 total and cash of $60,000 from the sale of the previous residence? Yes, $60,000 after we took some proceeds and paid off our line of credit on our rental house, which was about $40,000, so we had about $100,000 from the sale, not $200,000. How long did that $60,000 last? Another short conversation I had with him last year ended in disagreement. I told him that it was stressful when we had a few months of vacancy after we closed escrow on our rental property, that it was very stressful when we spent 9 months renovating our third house and a few more months afterwards trying to sell our previous residence. He replied, “I like it. I don’t mind the stress.” What is there to like about financial stress coming from piling up debts and nearly exhausting all lines of credit and living on the edge of a disaster? It’s beyond me. Money issue is the number one issue couples have. I can not expect life to go easy on me on this one. I shall talk to him again. To be continued. Meanwhile you may learn something from other bloggers’ financial stupidity: •My mistakes on My Open Wallet •My foolish money mistakes: moves that cost me more than $1000 each on The Digerati Life •Don’t panic! Coping with financial mistakes and setbacks on Get Rich Slowly Subscribe to The Simple Wealth to have my newest post delivered to you. ShareThis
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Avoiding the “Free Lunch” to Save Money
http://www.thinkyourwaytowealth.com/2008/04/03/avoiding-the-...As the saying goes, “There’s No Such Thing as a Free Lunch”, but is it really true? Not always, sometimes a free lunch really is a free lunch, money wise. Maybe your boss or a family member takes you out to lunch or dinner, without expecting you to reciprocate, although your boss may have ulterior motives. But sometimes, its hard to immediately discern if something that seems free really is free, whether it be a meal, a service, advice, or material goods, and it may even end up costing you a lot more money than you probably anticipated. There are many times when something that appears “free” may end up costing you more than you bargained for. Here are several examples: Accepting a free meal when you feel compelled to reciprocate. This one really is about lunch. Have you ever been walking out the door at lunchtime at work, when a colleague asked you to join them , and then picked up the tab? In many cases, you feel compelled to reciprocate by taking that person out to lunch at a later date in the near future. Whereas you may be trying to avoid eating out too much, or spending too much for your lunches, you have just committed to going twice. This can also happen at dinner with neighbors or relatives, and get a lot more expensive. Free tickets or admission to an event. This happened to me recently, someone offered me free tickets to an NBA basketball game. You think to yourself, “Wow, I just got $X worth of tickets free”, or “I’m saving $X by not having to pay admission.” But in reality, you may have just committed to spending a significant amount of money. Parking, food, drinks, a babysitter, and the next thing you know your free lunch cost you over $100. Accepting free services or advice from someone when you’re not sure of their abilities. Ever gotten a hot stock tip from someone, only to realize later it “wasn’t so hot?” Or had someone come over to help you fix something, after which you had to hire a professional, and spend more money than you would have originally, to get it fixed? When someone offers free services or advice, it can be hard to say “No thanks”, but sometimes that may end up being the better choice in the long run. Accepting an item for free with associated maintenance costs. Have you ever gotten an item for free, such as a cell phone, from a company, only to lock yourself into many months of costs, expenses, or fees? Even something as innocent as accepting a free kitten from someone has associated expenses and bills that will be with you for a long time. By thinking about any associated or future costs of “free” items, it allows us to put the true cost of a “free lunch” into perspective for what it may really be. Although I am not able to always avoid these situations, I do try a little harder to think longer term before I immediately accept a “freebie” these days.
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Recession Forces Americans To Delay Retirement
http://momgrind.com/2008/04/02/recession-forces-americans-to...Common wisdom holds that planning for retirement should be at the top of your priorities, even before college savings for your kids. Your children will be able to get scholarships, work, or get loans to fund their higher education. But you, at a certain age, may not be able to work anymore and may have to rely on your savings. But even if you have a great retirement plan, rough economy may force you to change your plans and delay your retirement. The Wall Street Journal reported yesterday that more Americans are delaying their retirement, not because they want to keep working, but because they have no choice: the falling real estate and stock markets have eroded their savings to a point that makes it impossible for them to retire. Millions of retirement-age Americans, stung by the recent economic downturn, are suddenly forced to reassess their plans. According to WSJ, today’s market turmoil is shaping up to be the most painful in decades, especially because property and market values are both dropping. The dot-com bust and stock plunge of 2000-02 also persuaded some workers to delay retirement. But back then, those suffering losses in the stock market could take comfort in home values, which were still appreciating. Not anymore. If you are younger than 50, you probably have enough working years ahead of you to make up for current downturns. But many older workers choose to keep working despite previous plans to retire, because they worry that their investments will diminish to the point that they won’t have enough money to get them through retirement. And the lesson that we can all learn from this? Personally, I would ignore the rule of thumb that says that the percentage of your portfolio that you should hold in stocks is 100 minus your age. If you are over 50, and won’t have time to bounce back from a bear market, you should place a large percentage of your portfolio in safer vehicles such as treasury bonds or insured CDs. I wouldn’t rule out having up to 80% of your portfolio in “safe” investments. And while safer investments do carry the risk of being slowly eroded by inflation, I believe that after a certain age, it makes more sense to take the risk of a slow, gradual erosion than to face sudden, overwhelming losses in the stock market. Related reading: Don’t save for college Paula Gregorowicz: redefining retirement Determine your retirement needs in 3 easy steps Coping with financial mistakes and setbacks Photo by The Rocketeer
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Weekend Roundup for March 31, 2008
http://www.nodebtplan.net/2008/03/31/weekend-roundup-for-mar...It was quite the hectic week last week. I received 4,700 visitors from Reddit, then had hosting/technical issues with the blog the day after. Ah, well. PFBloggers.com: Trees Full of Money makes an excellent point about how to max out your 401(k) plan. Unfortunately, my company doesn’t offer a great company match so I don’t have to worry about it. On top of that, our match is based off of total contributions for the year rather than individual contributions. Pinching Copper reminds us how to opt-out of pre-screened credit card offers. We’ve used this for quite a while. Master Your Card thinks credit cards on keyrings is a dumb idea. I completely agree. Elsewhere: Get Rich Slowly talks about getting past financial mistakes. The Carnival of Personal Finance is up at Stock Trading to Go. The Carnival of Debt Reduction is up at Motherhood 101 A Plus.
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Reduce Your Junk Mail, The Future of P2P Lending @ The Roundup
http://www.thedigeratilife.com/blog/index.php/2008/03/30/red...Before I launch into my roundup I wanted to share with you a post I wrote that was just published at the Prosper blog, which carries a simple debt reduction tip. My message was this: if you want to reduce your debt, don’t get tempted to take it on in the first place! One way to avoid debt is by reducing your junk mail — the kind of mail which carries offers for credit cards and loans that you may find enticing enough to apply for. Here’s a list of steps you can take to reduce and avoid those loan offers altogether: #1 Find out how your information gets around. #2 Tell companies to quit peddling your information. #3 Use services to help you delist your name from existing mailing lists. #4 Refuse to accept the mail at your door. Those credit card offers can be tempting to take — imagine getting hold of another $10,000 in credit! But you’ve survived thus far without it; do you really need the extra credit? I wouldn’t want this load on my back down the road. Now on to some great reading material… Personal Finance Reads Get Rich Slowly: So you’ve made some financial mistakes; well don’t panic just yet! Just take a step back, assess the situation and consider J.D.’s tips. Lazy Man and Money: What do you think about the future of P2P lending? Lazy Man speculates on what could be down the road for this social lending and investing niche. Money Smart Life: The economic stimulus rebate check is on its way to your mailbox. Here are some commonly asked questions and answers. Gen X Finance: Jeremy poses an interesting question and wonders whether generation X should be “blamed” for our current real estate and mortgage quandary. The Sun’s Financial Diary: Sun shares his personal experience with Scottrade’s customer service. I agree with Sun, I’d rather pay more for better service. Five Cent Nickel:If you’ve got multiple accounts and are wondering how to manage a diversified portfolio, here are some guiding principles on how to maintain your asset allocation strategy. Mighty Bargain Hunter: I’m glad I don’t have to worry about this anymore — but here are some great ideas to ease your commute. No Credit Needed: NCN is prepping for his new baby! It’s an exciting time that somehow, I’m glad I don’t have to go through again… Consumerism Commentary: Could it be time to shop around for a house? Surveys are showing that on average, home prices have declined around 11% from a year ago. Additional Readings How To Save Money On Gas @ Save Money Uncover The Hidden Fees In Your 401(k) Plan @ The Finance Buff The last lecture and brick walls @ Gather Little By Little How to Make Sure this is your Dream Home: 7 Practical Tips @ The Personal Financier The Key To Financial Success @ The Wisdom Journal Haven’t Filed Your Taxes Yet? You’re Not Alone! @ Cash Money Life Recent Carnivals Hot Finance Carnivals! Money Hacks Carnival #5 - Haute Couture Edition Carnival of Money Stories Carnival of Debt Reduction #132 - The Moving Edition - 17 Carnival of Business and Entrepreneurship #14 Carnival of Family Life Total Mind and Body Fitness Blog Carnival 42 This is a post from The Digerati Life.
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