Wednesday, February 07, 2007

Ka-ching!

Can we get ironic for a second? Two days ago a coworker asked me for financial advice.

Seriously. He had just come into a good chunk of change via a tax refund and wanted to know where to invest it. So, fine – I realize that to you, the average reader, that statement may not smack of any type of irony whatsoever but, trust me, you’re reading the words of a guy who has no business telling others what to do with their money. The last time I got a tax refund, I bought jerky and a television set.

I can talk a good game, though, which is, perhaps, why my coworker solicited my advice. I know what a portfolio is (no, it is not a folder for your Trapper Keeper) and that you should have a diverse one. I know the importance of investing for the long term and saving for retirement via 401(k), 403(b), traditional or Roth-IRA, or other investment vehicle. I know about CD’s, high yield savings accounts, credit unions, and money market accounts (but not what, in fact, a “money market” itself is.) I know the difference between a stock, a bond and a mutual fund. I know the difference between growth and value as well as large, mid and small cap. In fact, get this, I even know what an expense ratio is. So there.

What I don’t know, or rather, what I’m not very good at, is taking what I do know and putting it to good use. When money falls in my lap through luck, or even hard work, my first instinct is to want to spend it – which, for a while, I did (see TV example above. Also see my iPod, my computer, my high definition satellite receiver, my Airport Express wireless router (with AirTunes!), my stereo receiver, my DVD player, my car stereo, my Whole Foods grocery receipts, etc, etc, etc…) Saving has never been my strong suit.

I’m getting better, however. Part of the improvement was recognizing that I was stuck in a circular type of behavior and that if I always wanted the next best thing, I’d always be unsatisfied, not to mention constantly in debt. Most of it, though, came from a simple realization one day when I said to myself, “Holy Crap! I’m 31 years old and I've got some serious financial catching up to do. I’d better get my shit together, pronto.” Luckily, I’m still relatively young, not in debt, and (hopefully) have a good amount of time to do that catching up.

That, however, requires discipline which I am slowly beginning to exercise, and luckily, I have some idea of where to start. It isn’t by accident that I know about all that stuff I listed earlier. Much of it was patiently explained to me by my financially astute parents, who went to great lengths to edumacate me on the value of a dollar. I listened enough to understand what they were talking about, but not enough to really act on it. Now that I’m ready to, I find that I’m in decent stead.

More to the point of this post, I also read on the subject – a lot. Some of you may remember way back when, when I posted about reading Personal Finance for Dummies, given to me by my father who, shocking the hell out of me, gave it his endorsement. That was kind of the beginning of my “studying up” phase, which still continues. Since then, I’ve found that there is an ABUNDANCE of good, relevant material out there (as well as plenty of bad) for those looking to learn more about personal finance, and it’s with that in mind that I’m throwing up the following links. These are all sites that I read regularly and which provide a wealth of information (pun most certainly intended – har, har, har!) I’m posting them so my friends can determine for themselves what to do with their money and thus, I won’t have to worry about giving them advice which they take only to find out their money has been subsequently squandered. Plus, I love reading blogs with posts like this. They’re useful and make you feel productive, unlike YouTube movie mashups. Anyway - the links:

The Simple Dollar - I've just started reading this recently, and have found it a great resource. Dubbed "financial talk for the rest of us" they talk about seemingly everything. Seriously - on one post they discuss cookbooks (which I found very timely, for obvious reasons.) More than just throwing financial terms and numbers your way, they try to offer up ideas that will help you change your habits and get used to thinking about finance. One of my favorite posts of theirs, or rather series of posts was 31 Days To Fix Your Finances where they take a series of activities - one per day - and work towards improving your finances and centering them around your core values. And if that weren't enough, they subscribe to Consumer Reports and dole out the highlights each month. Excellent stuff.

Bankrate.com & Kiplingers Personal Finance - These two are both full of great advice on any multitude of topics. Bankrate is the more all encompassing of the two - dealing not only with personal finance, but news stories about finance in general (such as market information or the Federal Reserve.) Going to the main page can be a bit daunting as there's information overload, and it's hard to know where to begin. I find it works best when I subscribe to one of their many RSS feeds through a news reader such as Bloglines, and read the stories they're constantly updating (I currently subscribe to the advice, fed blog, and savings feeds.) The thing I like about them is they do an excellent job of writing articles in easy to understand terms. If you find a topic you're not familiar with, there are places on the site to go and easily look them up. Kiplingers is a little more geared toward personal finance, and more sparkly - as if you're reading one of those schlock financial magazines, but they offer some good advice too, and they're well organized an easy to read. Oh, and both sites are free. Worth noting.

I Will Teach You To Be Rich - I don't always agree with this guy, but he always makes a good argument. Plus, he's rich and I'm not, which should tell you something. This site is specifically geared towards recent college graduates and twenty somethings just starting out, but don't let that prevent you from reading. He offers good advice for anyone wanting to learn. Sometimes it's framed in such a way that a recent college grad will relate to it best, but it's still good.

Get Rich Slowly - This is a link I got off of the previously mentioned site and it appears to be a work in progress. Right now, the main page simply gives you links to the blog (which is excellent) or Money Hacks (which I haven't really looked at yet but seem neat.) Calculators and Tools, as well as a Personal Finance Library seem to be forthcoming, which I'm very much looking forward to.

Your local newspaper's business section - Back in high school my father suggested that I read the Globe's business section regularly so I'd have a better idea of how the world of finance works. At the time I thought he was nuts, and didn't take his advice. How could I understand the articles if I didn't understand the terms they were using in the first place? I certainly wasn't about to look them up. Stupid, stupid, stupid. I recently started doing this, despite not knowing much about what they were talking about, and was amazed at how much I was able to pick up. Elaborate financial terms mentioned in one article were often explained in another. Two different articles would analyze the same business decision differently, etc... Yeah, it's definitely more droll and boring than reading the links above, but I've also found it a good way to study up.

All of these links (as far as I know) offer smart financial advice (i.e. they are not screaming about get rich quick schemes.) They all promote sound decisions such as eliminating debt, saving money, and investing smartly - and I've found they do a decent job of teaching you how to do it. There's no substitute for experience, however, and it's that which I'm really anxious to get under my belt. Clearly, I've still got some work to do. That co-worker who asked me for financial advice? I told him to avoid the turkey jerky and go for a CRT over a plasma. But, I have no doubt I'll get my financial feet good and wet. If opportunity doesn't provide the experience, necessity will. I'm just trying to be better prepared. Now I'm off to do my taxes... but only after I watch an episode of Alias.

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4 Comments:

Anonymous Volbak said...

When at the end of the war of 1812 I was discharged, I went to Chapel Hill,, picked up a B.A. and got a job for $40 a week, the going rate for a BA in '48. We had $200 in our checking account. Ten years later I was making twice the money. We had $200 in our checking account. I asked the bookkeeper to withhold part of my paycheck nd credit it to my account. This withholding grew over the years. One day I asked my Memphis accountant why it was that I was a wealthy 54 year old. "You saved you money," he said, "no vacations in Majorca, or Vegas." Required little discipline. I put the money where I couldn't spend it. Roth IRA's are heavenly.

10:34 AM  
Blogger Eric said...

Note to self: Get a Memphis accountant and see if he can get me a job for $40 a week.

Roth IRA's are indeed heavenly. My company just made one available for us to contribute to via automatic deduction. Too bad they don't pay us anything.

10:03 PM  
Anonymous Anonymous said...

Turkey jerky: $2
Plasma tv: $2,000
Time spent with author of this post: Priceless

Happy Valentine's Day.

- jacch

5:01 PM  
Anonymous Anonymous said...

If you have need a student loan or you have student loans and you want to consolidate them check out his website http://www.mytuition.com The company has a great team and the site should be very helpful.

5:37 PM  

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