9/14/2014

Money, Mo' Money Daddy

Once upon a time, I traveled to San Francisco and one of the guys combined a family trip with our business trip to 6th Army out on the Presidio.  He and his wife took their daughter to California on a train to see the USA and be there when we attended a conference.  They had a young daughter and because my friend was about the cheapest guy in the State, I taught her to say, "Mo' Money Daddy." He just couldn't say no to that cute little person.  The one mistake I made was to rent a full size Lincoln in San Francisco.   You can hardly find a place to park a small car let alone a full size one.  Oh well, lesson learned. 
This little guy has spent 66 years learning more lessons

The local paper, the Topeka Capitol Journal, has started carrying a couple pages of the Wall Street Journal on Sunday.   There is almost always an advice column on Money.  For the most part, I agree with their recommendations, but there are a few things that I find troubling. They don't recommend having credit cards.  I try to never get where I have a balance on my credit cards that I carry over.  I do have one because it is a lot more convenient to pay for our Motel room than have a lot of cash with us.  If we fly, it is nice to have the ability to cancel payment if the Airlines overbook or bump us from the flight.  The one thing that popped up this last bill was that somehow our information was hacked and some charges appeared on the card that we didn't authorize.  New cards are on the way and the bad or bogus charges were reversed.  If that had been a Debit Card, they would have the money first and the bank would have to work to return my money.

One thing mentioned in the Wall Street article was new cars.  Thy mentioned that a lot of people buy a new car about every three years and they lose almost half of their investment to depreciation. Their advice was to stretch that out to about 5 years.  I can do you one better than that, buy used and run the wheels off that puppy.  A few years back, we found a 2004 Ford Crown Victoria with low mileage for about $10,000. It was almost $30,000 new That car is still in our driveway, it gets about 25 MPG on the road and feels like it will do another 100,000 before we find another good used car.  Oh I love to look at new cars, but mostly to see what I might buy in four or five years when they are gently used.   Yes, we are cheap but I like to think of it as Cheap(er).

One thing I find fault with is the advice that we should be investing in the stock market.  Perhaps if I were younger and the return on my money was stronger than the desire for the return of my money.  I have never, repeat never had a good time in the stock market.  I lost money in Custom Electronics, Great Midwestern and then General Motors.  Remember when they said "What's good for GM is good for America."  Tell that to my stock who's value vanished.  Not declined, vanished.  Who will buy all the stock when the Baby Boomers have to start selling it to pay their taxes in a few years.  I don't know about you, but my kids don't have any extra money to buy stock. 

The other day, I went through the checkout line at Sam's club and the clerk was trying really hard to "Upsell" their Master Card to every customer.  I'm sure that it was a promotion and they were made to do it.  After a polite "No Thanks" we left the store.  I had just purchased a new WEB Griffin Book and put their little advertisement in the book thinking it would make a good book mark.  Later on I looked at the information wondering what their real pitch was.  They offered us a Guaranteed $1,500 credit line at 22.3% interest.  The Bank is paying me less than 2% on my money and these clowns want me to sign up for 22% interest?  Are they just nuts or what?    I did read that the average Student Loan is higher than the Credit Card debt of each family.  That amount is about $39,000 and growing. If that is right, the Credit card companies are taking about $8,500 away from families each year just to pay the interest on their card.  I'll bet most people just don't understand the value of their money. They just pay and pay and pay and wonder why they can't save.

Many years ago, my grandfather gave us some good advice and we always headed that advice.  He told us to save as much money as we could but 7% was the minimum.  We have always done that and treated that money as if it were in a lockbox somewhere else.  We have never touched it and don't plan to do so anytime soon.   He said the best investment was any retirement program that threw their money into an investment pot with matching (any amount works) funds.  This can be risky if it is all invested in their company stock (See the GM example above)  but most people change jobs and if they are smart diversify their investments.  The later in the investment cycle you should be almost all in Treasury funds.  The more mature people are, the return of their money is more important than the return on their money.

If you really need a leg up in understanding how your money works, I recommend the Financial Peace University from Dave Ramsey.   At least if you go broke after taking that course, you will know why.  One simple rule is that in the long run, Income must be equal to or greater than outgo.  Now if we could just get our Government to understand that.

MUD

1 comment:

  1. According to the National Association of Unclaimed Property Administrators (NAUPA), 1:8 people in the U.S. have unclaimed assets... With average claims of over $1,000!

    Find Unclaimed Federal & State Cash!

    ReplyDelete