Category Archives: Philosophies About Money

Philosophical musings about money, as well as some strategies to improving your money habits.

The Best $500 I Ever Lost

I love the stock market. I enjoy how people are able to make money on it, trade shares of companies, make fortunes and more. I’ve made a serious run at playing the market twice, and both times I lost. I’d like to talk about the second time that I tried (the first being a gradual bleeding of money, and not very interesting).

Like I said, I love the stock market, but I haven’t developed great strategies to make money. It’s something that I’ll likely try again when I have money, but I know that it’s like ‘crack’ to me, highly addictive and detrimental. Right now, my primary investment is with Prosper, and it’s going to stay that way for a while.

The Story

Last year, I cleared out my 401K. I desparately needed the money, as my freelance writing business wasn’t taking off. I wanted liquid funds to tide me over until I could figure out the ‘thing’ that I was missing (that ‘thing’ was seriousness, and I’m going to write more about that later). The total amount that I withdrew was $8K.

Of that $8K, much of it went to pay off lingering student loans and a car. A small amount went to daily living expenses. The logic was that if I had fewer bills to pay each month, I would save a whole lot of money in the long run in interest charges and more. I’d set aside $3K to play with on the stock market.

The plan was simple. Look for a stock which had a regular ‘sine wave’ pattern in its ups and downs. There was no need to pay attention to the other stuff, because the stock would be regular, right? I was excited, because I had several candidates – all of which were going to make me something. So, I took the $3K and put it into ENER. It was the steadiest of all, ranging between $4.50 and $5 a share, like clockwork.

In fact, the first day that I had it, the stock spanned its range, and I was poised to make some money. Unfortunately, due to my triggers, I was one or two cents below the automatic sell point. I was angry at my fumbling fingers, but I still had the money. I decided that I would hold off for a little while until the stock did it again. The stock, unfortunately, had other plans. It sunk below the $4.50 and then a bit further.

During this time, my mother got sick and needed medical attention. Her finances were in shambles because of poor money management skills, and I was her resource for living expenses and unexpected expenses. How I felt about that obligation is a different story, one which isn’t going to be shared. Her unemployment and her medical bills were getting out of hand, so I had to do something.

I liquidated the stock, taking a $500 loss. I knew that there would be other opportunities, and if I got rid of the stock, I’d be able to support her a little as well as support myself. Frankly, I was livid, because I was dead sure that the stock that I’d just liquidated would be shooting back up and had taken only a temporary dip. This obligation was pressing, and I did what needed to be done. The emergency was averted, and my mother was safe.

It took nearly all of the cash to make sure that her medical bills and living expenses were accounted for. I was still struggling with figuring out my own finances, and was eventually left with nothing. I’d gone through my safety net, and I wasn’t going to be able to get that back again. My mother would pay me back, I knew that, but it would more than likely be in dribs and drabs, not the lump sum that would allow me to get back to playing.

As it turned out, the stock didn’t recover. Not at all. The company itself had filed for bankruptcy and was leaking money like it was going out of style. It was on the down elevator, and it wasn’t going to be able to get off. As of the last check, the stock had reached a low of $.19, and the company’s resources were going to be bought by someone else. The temporary spike from that news brought it up to $1.50 for a single day, then it plummeted. After seeing this news, I was so very thankful that I’d lost only $500, because I had totally planned to keep the stock.

The Lessons Learned

Some people shouldn’t play the stock market

I’m one of those people. I’m too emotional and impulsive, and feel that most of the activity on it should be *doing* instead of waiting. I get emotionally involved in the stocks, and find that I get *extremely* wrapped up in their rise and fall. For those who are out there dreaming of the stock market, the best way to avoid this is to set triggers so that you can go off and do other things rather than worrying about what your investments are doing.

Crappy things happen for a reason

My mother tapped me out of all available cash, but I thank her every time that I think about this particular event. She effectively saved me from losing the entire thing by being sick and needing the money. I would currently be sitting on an investment of a hundred bucks with no chance of recovery if it weren’t for her. I might have been extremely mad about it at the time, but the decision that I made to get the money out saved me more.

Things Change Quickly

In a matter of a week or so, I had gone from having a wonderful little nest of an emergency fund to nothing. I would not hesitate to do it again. I have seen situations change in seconds, whether it be from accidents on the road, to revelations made by friends. We are constantly bucking the changes, but they keep rolling on and on.

Losing that $500 really really sucked at the time. I felt embarrassed, silly, stupid, and a lot of other things. I resented the hell out of my mother for a few weeks because I knew that I could have done better by everyone involved. As it turned out, I did the best that I could and I effectively won. The crisis was handled, and my purse was (comparatively) only a little bit lighter.

Image courtesy of Mikael Miettinen at Flickr.

Have you had a situation which looked ugly, but it turned out that it was one of those better situations which could have happened to you? I’d love to hear about it.

Mindfulness, Not Doing, and Money

After reading Sky Abelar’s post about breaking routines at Pick the Brain, I found myself thinking about it from a personal finance perspective. Are there things that we do on autopilot in regards to our personal finance? You bet there are.

Money permeates all levels of our lives, so it’s necessary that we approach it from a holistic standpoint. It is a factor in what we eat, who our friends are, where we live, what vehicles take us from here to there, and nearly every other aspect in between. There are life events which are triggers for our spending patterns.

I know that there are several routines that I perform on autopilot:

  • When I’m depressed, I buy wavy chips and french onion dip
  • When I’m angry, I need to be kept away from bookstores
  • When I’m happy, I want PENS. Lots and lots of pens.
  • When I’m out early, I want Bojangles Bo-rounds
  • If I’m hungry while out of the house, I eat out

All of these things lead to a gradual depletion of my budget. Most of the time, I’m able to control the urge to fall into the pattern of buying, but there are some times which I am weak. The crazy thing is that I recognize the pattern, acknowledge it, and still embrace it with open arms. The personal budgeting and savings tips tend to go out the window when I’m not having a content, neutral day.

What can I do about it?

From the article at Pick the Brain:
Examine your life, and look for routines, then find other things you can do to replace them, or simply do them differently. Do you always watch TV after dinner? Read a good novel instead. Do you always eat breakfast before you take a shower in the morning? Swap them around, and remember to pay attention to the showering and eating. Don’t get lost in your mind. You’ll save on hot water too!

Do you tend to eat the same things? Try something new. Make healthier choices.

Instead of Facebooking, go for a walk, or do some yoga. Look carefully for all the ways in which you can practice not doing. Or, as the Toltecs say, “stalk yourself”. Stalk yourself like a jaguar stalking it’s prey. Pay attention to what you are doing.

Taking those routines and breaking them is not necessarily easy, but Ms. Abelar has the right idea. Replace the routine with something else, because the body and brain abhor a vacuum. When you’re doing something that’s essentially ‘bleeding’ money, taking the objective view of it can help you change those routines and restore mindfulness.

Image courtesy of Leandro’s World Tour on Flickr

Are there spending patterns in your life that can be changed? Do you notice what happens when you’re angry, sad, happy, or something else in regards to mood? I’d love to know!

Saving Money When You Have a Collection Obsession

When Magic: the Gathering came out, people went crazy for the idea of collectible cards for geeks. During the time, there were no thoughts given to saving money – it was all about the Black Lotus and the ways that you could play with the cards. If more than one of something exists, people will collect it. Cards, buttons, clowns, you name it.

I saw the frenzy for Magic cards when it first happened and immediately decided that I would have no part of it. I have a collector’s mentality, and saving money doesn’t enter into the picture when I’m focused on something. I was there with stamps, video games, and music and I knew that there would be no inexpensive road with Magic because it had everything: shiny, competition, and collectibility.

There are two sensible ways to approach the collector’s mentality: practice moderation or practice denial. Here are several ways that I have managed the collector’s mentality without breaking the bank. Here are some ideas about saving money when the collection obsession strikes.

Practicing Moderation

1. Get a job which satisfies the craving
My fascination with collections has more to do with quantity, rather than specific items within the collection. I’m collecting things just to have a large mass of something instead of focusing on the quality of the items themselves. This means that I am able to settle for the beat up comic book as long as I have it in my collection, and I can have a lot of cheap pens rather than a single $5000 pen.

Acknowledging this particular point of my collector’s mentality made me the perfect candidate to work in the printing industry. I loved printing pallets of paper, and I especially enjoyed the large jobs where I was printing case after case of paper for the customer. There was no greater thrill than to point at a boatload of physical documents and beam with pride because I knew that they were correctly printed.

Several years after my Kinko’s job, I got a job as a construction librarian. I would maintain both the physical and virtual copies of plans and specifications for construction projects around the area. I love to keep track of the little details and lists, and I got to track packages, accept inventory, and maintain lists of all of the current jobs. I was in heaven. The virtual documents gave me the same thrill as the physical ones did, and that part of the collection didn’t take any space at all.

2. Choose a small collection
At the time, I knew that the popularity of Magic would blow up. There would literally be thousands of cards that I would have to purchase in order to have a full collection. Most of the cards were common, meaning that I could get inexpensive playable decks. The unfortunate part about that equation is that rare cards are expensive, making up for the cheapness of the common cards.

Comparatively, I could have gone with establishing a baseball or football card collection. In that instance, I would have tried to get everything from Honus Wagnerr up to the latest and greatest. A collection of these cards would more than eclipse anything from Magic, though the expense would also be astronomical.

I chose to go with something smaller. A lot smaller. I decided to get all of West Wing. I decided to get all of the Harry Potter books. This, by virtue of the potential size of the collection, limited the amount of money that I’d pay for it. I’m satisfied after getting one of something, so I didn’t have to think about getting a reading or watching collection and then an investment collection. When compared to what could have been, I picked the lesser of the evils.

3. Pick a cheap solution
As I said, I am more fascinated with quantity rather than quality in most of my collections. I try to deliberately choose my obsessions, and I will pick the least expensive option. For example: I love pens, and I have the choice about whether to collect the $1-$2 stick pens or the super-jewel-encrusted-writes-in-three-colors fountain pens. I chose to get a large bin of the less expensive pens to satisfy the collection urge.

4. Set a budget
The obsession will generally grow if it’s left alone. I make the conscious decision to get into a collection so that I can set my personal limits and boundaries for spending. When I was making money, I set a hard limit of $200 for any new obsession or collection that I wished to pursue. This was before I was concerned about money management or becoming financially independent. It was later revised to $50, with the full knowledge that I would use the money and then wait until the urge struck once more. In most cases, spending the money will adequately satisfy the urge.

5. Get Virtual Things
To save on space, getting a virtual collection is the best bet. I was thrilled when mp3s came out, because I could put hundreds of songs on a CD instead of the few that I could put on a tape. As a result, I started to amass a collection of hundreds of songs. I didn’t listen to all of them, I was just collecting them to have a large collection of songs. I can say that I’ve got at least 15 gigs of music and be absolutely serious about it.

Practicing Denial

6. Live Vicariously Through Others
I will occasionally visit the construction library where I used to work, just so I can get the warmth that I used to get when I worked there. I know that it’s a bit odd, but the practice saves me money in going out to get my own collection of construction plans. My friends have various collections, and I love to look at them because it keeps me away from my personal path of obsessing over certain objects.

7. Don’t get the first one
For me, the passion that I have for objects is visceral. I have to have it, and nothing will stop me from getting it other than myself. Nobody can convince me that I am not getting an object, I have to convince myself. I felt that allure when I first saw the Magic cards. I had to stop myself before purchasing the first pack, because I knew that future paychecks depended on my decision.

I played the waiting game. I felt the urge, almost gave in, and then decided that I would wait for two weeks to see if I still wanted it. This is an excellent exercise for those who are debating about bringing objects into their lives. When the two weeks rolled around, I went back to the merchant to see if I wanted them. I found out that I did, so I decided to wait for another two weeks. The key to this form of denial is convincing yourself that you will eventually get whatever it is, so it doesn’t turn into an obsession. I used those same lame excuses that people use for NOT doing something to save me money. You know the ones: I don’t have any money! I don’t have the time! I’m doing something else right now!

When faced with the collection obsession, I used several tactics to keep the urges in check. I still have cravings for collecting stuff, but now I generally tell myself that there’s something better out there than whatever it is and that I need to save it. That tactic has worked the best for me and kept me away from paycheck threatening collections.

What types of things have you done to quell a collection obsession? Do you have any friends whose collections borderline hoarding? What sorts of advice would you give?

Beat the Demons: Start With Where You Are

One of the huge demons that I fight when it comes to personal finance is the fact that I’m not further along on the path. I think, ‘I’m over 40 now, I should be rich!’ or ‘I’m over 40 now! I shouldn’t worry about the mortgage’ or ‘Why didn’t I know all of this stuff when I was younger?’ The reality is that I’m not financially independent, I DO worry about the mortgage, and I was wasteful with my money in my 20’s (for the record, big shoutouts go to Corey and Briana for helping other 20somethings get their financial lives together.)

“Nothing is an obstacle unless you say it is” – Wally Amos – Founder of Famous Amos

I was letting the nagging questions become obstacles on my path to financial independence. I would ask them and say ‘well, these are failures, you’re just going to do the same things again.’ Each time I would look at my finances, I would become unmotivated, depressed, and destined to repeat my mistakes. There had to be a change. Here are the steps that I’m taking to cause this change.

Start with where you are

At the outset, this seems incredibly simple. Start with where you are. Of course you start where you are, how can you start anywhere else? The problem was that I would look at where I was and become depressed. I’d think about the investments that went south, I’d think about the money that I wasted for eating out, and I’d think about the not so smart decisions. It was necessary to put that behind me, and look objectively at the situation.

Objectivity is vital key to progress

Think of yourself as another person

I’ve used this tactic to get my personal finances in order. We offer awesome advice to other people, yet don’t follow it ourselves. Pretend that you are listening to someone else’s financial situation when you outline your own. If it helps, talk about yourself in the third person. This person has $8300 in credit card debt. This person makes $1500 a month. This person pays $800 a month for the mortgage. What would YOU suggest to that person? Write it down, then follow the advice.

List the things that you learned

A huge portion of those second guesses and doubts about success have to do with the fact that they are perceived as failures. All of the events that have caused me to lament have been learning opportunities, but I had to search for the life lessons that were learned. By taking the time to search for those lessons, you are reframing the events from negatives into positives. Yes, I have wasted a LOT of money, but what did I learn from those activities?

  • I have learned about the best restaurants in the city
  • I now know that driving around the perimeter (in Atlanta) is soothing
  • I discovered more about my friend Patrick
  • I solved educational conundrums
  • I found that a POS Pontiac T-1000 can go over 90MPG

The key is to translate the money expenses into the experiences that you received with that money. Knowing that I have the power to influence others was a vital step in my life’s learning. Sure, I don’t have the money to show for it, but I have the memory and the experience which is worth far more.

Honesty is the best policy

A fantastic thing about finances is its concrete nature. You can look at your savings account and find out how much money has been invested. You can examine your checking account and get a concrete number for your balance. You can look at your stocks and discover the amount which you have invested. If you log onto your banking site, you can find out what is in your account right now, with little or no error. You can say to yourself, “I have X and Y and Z” and be sure with yourself. The internet might not have been around then, but today’s modern banking tools make honesty easy.

Where do you go from here?

While you have reframed your perceived failures and assessed your finances objectively and honestly, you still know that you don’t want to be there. You don’t want to have to worry about from where the mortgage is coming, nor do you want to think about your finances in terms of emergencies and solar flares. By putting effort into the irritation and aggravation that you’re feeling, the situation that you’re in can change.

There are things which you can do like online writing and selling your stuff that you can do to put money into your pocket. Other things, like eating out at restaurants and buying gadgets take money out of your pocket. What steps can you take to overcome the mental obstacles to financial independence?

Research is your friend

Research, research, and more research. Find out how other people have overcome their financial difficulties. Learn about the mental barriers that they faced on their path. Find new techniques, either through great bloggers or books. Reading will help you conquer your barriers, because there’s a high likelihood that you’ll say, “I can do that!” and push ahead.

Action is even better

It’s one thing to say ‘I can do that!’ it’s still another thing to DO whatever ‘that’ is. Remember that every little step that you take toward your financial independence is one that you don’t have to redo. Take little steps or big steps, it doesn’t matter just as long as the steps are taken toward your financial freedom. Push on and find that those obstacles were fabricated from your own doing. Lamenting about your financial mess won’t fix the problems (it didn’t fix mine), but action will.

The largest obstacle keeping me from financial freedom is me. I was caught up in events from the past, and believing that I should be somewhere or that things should be different. When viewing it from an objective point of view and being honest with myself, I was able to edge past those stumbling blocks and get to real solutions for my financial problems. If you stay mindful, nothing can get in your way, not even your own brain.

Image from Jeff Carter of Carter Comics on Flickr

What financial obstacles have you overcome? What are the questions that have been holding you back? How have you faced down your personal demons? I’d love to know!

The Holistic Nature of Money

Money is merely a tool, but it stands in the way of the resources that I wish to obtain. If I’m cash poor, I can’t get certain things which would make my life easier. It’s one of the most all pervasive, necessary tools on the planet. That’s one of the reasons that I’m working on understanding it a lot better – because it’s not just about personal finance, it’s about lifestyle and who I am as a person.

In my life, money has been responsible for:

My attitude

If I don’t have five dollars in my pocket, my mood tends to go into the toilet. I don’t feel like I’m worth it as a person, and I begin to have those creeping self doubts that can truly kill an attitude and friendships. I have to admit that I become more cynical about people just because I don’t have the five bucks in my pocket.

The friends I have

This is something which will be looked at more over the coming months. I lost track of a couple of friends because they live more than an hour and a half away. They’re good folks, don’t get me wrong, but visiting them (and their unwillingness to visit us) was becoming unwieldy. We didn’t have the (minimum) $30 in our pockets to pay for the gas to go over to their house.

My eating habits

Should I eat out? Should I stay in? What do I have in the pantry that can help me out for the cause of keeping food in my belly? The money in my pocket (and my account) have determined not only where I’ve eaten, but what I’ve eaten when I get there. Even when I go out to restaurants, I still purchase the cheap stuff. If I knew that I had over $1000 bucks in the back, I might have gotten the chef’s special.

My housing

I’ve lived in a few crappy apartments. I’ve lived in a few crappy houses, too. These places were determined by how much cash that I was bringing in. I have a roommate because of the money situation. I’ve been practically homeless because I didn’t have the cash to pay rent. I haven’t been able to afford security deposits and pass the credit checks that some apartment complexes have. I was able to get my house, but I didn’t look at the greatness of the house first – I looked at what I could afford.

My exercise regimen

I canceled my gym membership because I didn’t have the money to be able to afford it. While the membership was only $10 a month, there were more important things to push our money toward. What I found is that there’s an entire regimen of body weight exercises that I could do and achieve the same effects. That, and walking around big box stores is free. I did, however, enjoy the comforts of walking on the treadmill at 5am with my fellow earlybirds.

My hobbies

I adore going to science fiction and fantasy conventions. Hanging out over at friend’s houses does not provide the same energy as being around friends and total strangers simultaneously. The conversation is usually fairly intelligent, the hotel rooms provide a common source of gripes and irritation, and the restaurant food is usually reasonable.

Money is pervasive in all facets of society and all facets of my life. In fact, I cannot think of anything which the fingers of money don’t touch somewhere along the line. Money isn’t the root of all evil, though – it’s at the center of everything both good and evil.

Picture courtesy of _J_D_R on Flickr
Can you come up with something that’s NOT affected at all by money?

Spend MORE money with Insurance!

TUM and I recently claimed domestic partnership, and I was added to the company insurance. I thought, ‘hey, I’m doing the right thing by having health insurance!’ and did the happy dance because my out of pocket expenses were going down. There was much cause for rejoicing! Right until I did the comparison.

TUM is paying $300 a month for the both of us. I didn’t have to change doctors or pharmacists, something for which I am thankful. The service with the doctor hasn’t changed, nor the other things that are required. We’re spending more for medications and more for doctor’s visits.

Let’s look at medication.

Without insurance, I was able to fill a three month prescription.
Cost: $75 for 3 months.

With insurance, I am limited to a single month’s prescription.
Cost: $33 for 1 month.

Yes, that’s a $26 increase in medication costs.

How about the doctor’s visit?

Without insurance, I paid $120 for the entire visit. This includes lab work and the visit. The doctor ordered only necessary tests, and was able to give me discounts on the items which I needed. This was a general check up that comes with standard bloodwork.

With insurance, I paid $60 for the office visit, and am requested to pay an additional $93 in lab tests. This doesn’t mention the $300 each month which is being paid into the system. The doctor ordered tests which might not have been necessary, though I received the same care and bedside manner.

That’s a $33 increase in a doctor’s visit.

Doctor’s visits and medication are the two things that I get. I’m going to not claim insurance for my medications when I go to get them again next month, so I can get three months as well as a cheaper rate. I’m not sure about the doctor’s visit – maybe those tests really were necessary. Maybe the money that we’re spending toward the insurance industry is well worth it. To me, it seems like adding a useless middleman to get the opportunity to pay more.

Health insurance costs are rising, according to the New York Times. This places the financial strain on everyone. I totally get that. What I don’t totally get is the arbitrary creation of a market which places itself directly between the people who offer health care and the people who need it.

It seems to me that if the insurance companies are pricing themselves out of affordability, and the services that we’re receiving have risen merely for the fact that insurance was obtained, that maybe insurance isn’t a necessity. In other words, if we have to be insured, maybe the market should be allowed to crumble so it can readjust itself.

Do hospitals and long term care professionals raise their prices specifically to counteract the existence of insurance?