Category Archives: advice

It’s Not Just Big Things That Can Lead To Financial Problems

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Many people associate the onset of financial problems with a big event.

A job loss.  A major health issue.  A catastrophe.

These are all major events and could very well lead to financial troubles.  However, it’s not just the major things you have to watch out for and prevent against.

In fact, it’s quite the opposite.  I’m guessing that a majority of people in financial trouble got that way without having any major things.  Instead, it was just a culmination of little things that added up without them knowing.

My Work Computer

Let me use my work laptop as an example.

I started here in 2006 and was granted a brand new laptop.  As with all computers, it worked great but within a few years was showing it’s age.  It had gone through a couple of batteries, it was getting slower, had a cracked edge around the outside of the case, and just other general problems that come about from a device that’s used all the time.

So, I was pretty happy when they replaced it with a brand new laptop last summer.  Just as with the first one it was great.  It booted up in no time, it ran fast, it had better applications, and was overall much better.

After awhile, it didn’t boot up just as fast, but I figure that’s normal.  As you install more programs, it inevitably slows the system down a degree or two.

Closing down applications sometimes led to an error message.

One day, Firefox went to do an upgrade and although everything went well during the process, the program crashed upon start.  I found a workaround that involved going back a few versions.  Not ideal, but it worked.

Then, applications started taking more memory than they should.  I am pretty savvy so when I see Excel and Firefox taking hundreds of megabytes of memory every couple of hours, I knew something was wrong.

Eventually, I hit my limit.  I put a work order in to get the thing re-imaged.  I actually probably waited too long simply out of embarrassment, since I’m an IT guy and prided myself on always keeping my computers clean.

Turned out, it wasn’t anything I had done.  The stupid machine had a bad hard drive.  They always run a diagnostic check, and the hard drive failed.  They replaced it and put a new image on and it worked great.

Back to the point

This leads me back to the point and back into the financial trouble discussion I started with.

See, I let things progress and get to the point where the computer was unusable, simply because everything that happened was small.  If the thing had refused to power on or boot up or done a more recognizable ‘crash’, it would have been addressed and fixed a lot sooner.

That can be the same pattern when it comes to getting into financial trouble.

If you get fired and lose all your income, you can pretty well tell that you might hit financial trouble.

But, if you miss a payment, do you see yourself in trouble? If you forget to transfer money and get hit with some overdraft fees, will you say you’re in trouble?  If you buy a TV or table and don’t pay off the balance, are you in trouble?

Get where I’m going with this?

You might not be in trouble by doing one of those things, but what if you do them all together in order?

You might say, well at a certain point you’ll recognize that you’re in trouble.

Yeah, but only after it’s gotten to where you’re really in trouble.

See, when it’s all small things like that, we’ll kid ourselves into thinking ‘Ah, no big deal’.

If we do something minor that’s a red flag, we’ll do it.  We might even recognize that it’s a bad thing.  We might promise ourselves not to do it again. We will likely recognize that this is opposite of what we want in terms of financial health.

Then, the next time we do something, we’ll say the same thing.  But, here’s the kicker.  We’ll use the aftermath of the first bad decision as the baseline for the second bad decision.

This means that we’ll only allow ourselves to see the latest ‘bad thing’ as bad.  We will protect ourselves from seeing the total sum of our bad decisions.  We’ll forget the bad decision we made in the past as a way to justify to ourselves that the bad decision we just made might not be so bad.

Bad move.

This can lead to a cycle where you’re making lots and lots of little bad decisions.  You fool yourselves into thinking that it’s not so bad, until one day you look around and you realize you’re screwed.

And it didn’t take a job loss or a major medical expense.  When those things happen, you’ll recognize immediately the trouble this can get into, where the ‘smaller trouble’ trap can actually lead you into bigger trouble.

So, what to do?

Recognize that you might be in trouble.  Look at any negative financial situation for what it means individually but also what it might mean if there’s a pattern or if it’s part of a cluster of bad things that have happened.

Evaluate your personal situation compared to yesterday, six months ago, and a year ago.  Honestly, you can substitute any ‘date’ here, but the point is to keep an eye on how things are shaping up for you based on multiple points in the past.  This will let you recognize issues in the long term that you might miss if you’re focused only in the short term.

Be honest with yourself.  You might not want to admit that you’re heading down the wrong path.  Few people do.  But, you’re going to have to figure it out at some point.  Don’t wait to hit rock bottom.  Be honest with yourself now.

Change. Figure out what you need to do to change.  Ask for help.  Look for advice.  Just put a stop to the little things that are getting you opposite of where you need to be.

Have you ever had a bunch of little things happen that you didn’t even know had turned into a big problem until it was too late?

Thanks for reading! Please subscribe to my RSS feed, follow me on Twitter, or check out my Facebook page.This original Money Beagle post Copyright 2012 Money Beagle is authorized to appear only on www.moneybeagle.com. Thank you for reading and remember: It’s a great day to be alive!

Getting Used To A New Credit Card

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We recently signed up for the American Express Costco credit card.  The main reason is that you get 3% cash back on gasoline purchases. With the camper coming out of storage recently and planning a few trips, we know that we’ll be spending quite a bit on gas this summer, and looked for a card that would do the best to offset some of those costs.

The Costco card was definitely the right choice.  I’m all about getting cash (even though Costco makes you get the cash at their service desk, that’s fine with me) and not any sort of points or mileage or anything like that.  I know that some rewards might pay more at first but they tend to lower the rate after a few months or move you to rotating categories.  For gas, I wanted something that didn’t do much changing, and so far as I could tell, the Costco card has been offering the 3% back for a number of years now.

Still, this is our first true American Express card, so there were a number of things that were different when it came time to paying our credit card.

Billing Cycle – The billing cycle was slightly off from our Citi Dividends cards.  This is no big deal,as I pay off all the credit cards at the same time, but because the cycle closed a few days later, our gas costs for the month were slightly higher since there were a few extra days.   No big deal.

Reward Wait Time- The Citi card gives you the cash back in your ‘account’ right away, where the American Express delays the reward by a month.  So, our reward for the first month didn’t show up until a full month later.  This was important to me because I wanted to make sure that the gas stations we typically use were classified correctly (they were) but it took a full month from our first statement to get this verification.

No Early Payments – Most of the stuff we purchase with our credit card fall into distinct categories: Groceries, Gas, Cell Phone Bill and a couple of others.  If we have a ‘large’ purchase, we’ll put it on the card and I will often just pay that portion right way.  This keeps the budget categories in line and gives us the cash rewards. American Express won’t let you pay early, as they will only let you pay based on your last statement date.  Everything else is pending.

None of this is a big deal, but it’s interesting to see the slight differences.  They’re not at all overwhelming, but it makes me realize how quickly things could get out of control if you kept adding different cards. We only have a couple of credit cards that we deal with, but I can imagine that there are plenty of people out there who have so many cards that it gets very easy to miss billing cycle dates or limits or other things.  That’s why we took a lot of time to make sure that getting another card was the right decision for us, and I would encourage anybody using more than a couple of cards to consider simplifying.

Have you found yourself with credit card overload?

Thanks for reading! Please subscribe to my RSS feed, follow me on Twitter, or check out my Facebook page.This original Money Beagle post Copyright 2012 Money Beagle is authorized to appear only on www.moneybeagle.com. Thank you for reading and remember: It’s a great day to be alive!

Learn Your Long Term Lessons

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Every now and then, I get back pain.  I typically lift things with my knees and not my back, but the usual issue comes in for me when I twist it the wrong way, whether it be lifting something or doing something else.  I can usually feel a twinge and can predict that a few days later, I’ll be in some pain.

The pain has never been that debilitating for me.  It’s just more of an annoyance.  For a few days, it will hurt a bit to change positions when sleeping and I’ll be sore when I wake up but it will generally go away after I stretch out for a bit.

I went to the doctor some time ago when it was actually really bad on one occasion.  He told me that I needed to do a series of exercises when this happened, and also said that I could reduce this by strengthening my back.

Cool.

So I took home the sheet of exercises, did them, and noted that it did take considerably less time to recover than in the past.

So far, so good.

Now, whenever I get the pain I do the exercises and they help.

That’s the short term lesson and I have that down pat.

But, if you look back at the doctor’s advice, I have completely skipped over the second part of his advice.  To work on strengthening my back.

Really, isn’t that the most important part?  Of course, but I admit, I skip it over because it’s harder, and it’s a longer time commitment.

How often do we do that with things in our financial world?  Get in a little credit card debt.  Oops.  Go ahead and cut the budget for a couple of months and if you’re lucky, you could be out of it, but unless you go through the harder exercise of putting steps in to avoid having it happen again, it’s likely to happen again.  And again.  And again.

So, if you’re looking to improve something, whether it be a health issue, a finance issue, or something else, don’t just focus on the short term.  Don’t just lose those five pounds and call it a day.  Don’t just get rid of that credit card debt and forget the whole thing.

Once you’ve done that, begin the really hard part.  Putting the measures in place that will keep those five pounds off and will keep you from getting in debt again.  They’re harder.  I’m not going to lie.

But it’s worth it.

I promise.

Now, off to do something about that back of mine…

Thanks for reading! Please subscribe to my RSS feed, follow me on Twitter, or check out my Facebook page.This original Money Beagle post Copyright 2012 Money Beagle is authorized to appear only on www.moneybeagle.com. Thank you for reading and remember: It’s a great day to be alive!

Listen To Your Wife

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My wife and I are both pretty stubborn people.  If she says she’s right about something, I’ll often argue with her about it.  A couple of examples recently have shown that maybe it’s time to keep my mouth shut:

  • North Face – It seemed that for Christmas, my wife would inevitably buy me a new coat.  One year she got me a new leather coat, another year she got me a new dress coat, then a new fall coat, and one year a new winter coat.  This was 2007 or 2008.  She said I should get a North Face coat, but I resisted, scoffing at the idea that any coat should be as expensive as they were.  I promised her “These coats are way too expensive.  In a couple of years from now they’ll be like Members Only coats and nobody will be wearing them”.  A couple of years later passed, the cheaper coats I asked for (and got) having worn out (and never really keeping me cold), I had a new coat on my Christmas list.  This time I went for the North Face.  Which I should have just done back in 2008!  I love it.
  • The pen – A while back I saw a charge on our debit card statement from Staples or some other office supply store for around $15.  I asked what it was for and my wife told me that she got herself a new pen.  I asked “OK, great, but where’s the other $14.50 of stuff?”  There wasn’t.  I was incredulous that she spent that on a pen and let her know at every opportunity that I didn’t approve.  Fast forward a few months later and I was working in the office and started using this pen.  “Wow, this pen is really awesome, where’d you get it?”  You know the rest.  A few months later I got, as a gift, my very own $15 pen.  I didn’t say a single word about the price and it’s now the only pen that I use.

Men, next time your wife thinks she knows what’s best, listen.  Giving into my stubborn nature, I have found that mine knows exaclty what’s best for me.  Which is just one reason I love her so much :)

Thanks for reading! Please subscribe to my RSS feed, follow me on Twitter, or check out my Facebook page. This original Money Beagle post Copyright 2012 Money Beagle is authorized to appear only on www.moneybeagle.com. Thank you for reading and remember: It’s a great day to be alive!

Should I Ride My Bike To Work?

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I’m fortunate enough to live about two and a half miles from work.  This is great in that my gas costs are significantly lower than they would be if I had a longer commute.  I once had a job that was sixty five miles each way.  Needless to say, the gas costs were through the roof, and gas was less than three bucks a gallon.

Still, I’ve often considered the idea of riding my bike to work once the spring time weather hits in a few weeks.

Since we moved in, riding my bike hasn’t been an option I’ve been comfortable with for the simple fact of the freeway that lies between my house and where I work.  There is an overpass to the freeway that I would have to cross, and the problem was that there was no bike lane or barrier from the road.  While many brave people on bikes did go over the road, I had no such will to ever do such a thing.

Last year, though, they completely re-built the overpass as part of a road widening project.  In doing so, they added a dedicated bike lane that’s separated by a fence and concrete barrier from the traffic lanes.

This means that I could now potentially ride my bike to work.

I would definitely consider it, but I’m curious if anybody else out there has ever undertaken a bike ride to work.

I would probably only do so on days when there was a 0% chance of rain and also when it wouldn’t be overly hot or cold.  Any days where we had something to do would be out of the question.  Still, this could further reduce my costs of gas and wear and tear on the car, as well as give me some needed exercise.  Since there are bike paths and sidewalks the entire path to and from work, there would be a safe path the entire way.

Would it be best to wear appropriate riding clothes to and from work, changing into my dress pants and polo or button-down shirt when I get there?  In that case, what’s the best way to transport those items without having them wrinkled and such?  I already have a backpack type carrying case for my laptop, so that would be pretty easy to manage.

What other things would I have to think of before considering this idea?

Thanks for reading! Please subscribe to my RSS feed, follow me on Twitter, or check out my Facebook page. This original Money Beagle post Copyright 2012 Money Beagle is authorized to appear only on www.moneybeagle.com. Thank you for reading and remember: It’s a great day to be alive!

Financial Experts: How Much Should We Trust Them?

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One of the things I subscribe to in my Google Reader is the news feed for Seeking Alpha which is basically an aggregator of articles written by so-called financial or investment experts.  There are, on average, over 300 articles published a day. on financial topics, mainly focused on the stock market  I rarely read any articles, but just scan through the titles of the articles.   If one really catches my interest, I’ll read the first couple of paragraphs which is available within the feed.

Just doing so often gives me a pretty good feel of where sentiment lies in terms of the market.

The people that write these articles are often people dedicated to trying to understand the market, and many make understanding and writing about the Dow, NASDAQ, S&P and other markets their full time job.  So you’d probably be inclined to put a lot of trust into them, right?

Not so fast.

Two things have been apparent when reading through the headlines on ‘expert’ sentiment:

  1. Most believe the markets are in for a correction – Probably 80% or more of the headlines tied to overall market sentiment have experts proclaiming that the market rally we’ve seen over the past few months is due to end.  Few predict a minor correction, some predict leveling off, but many seem to think a major correction is in order sometime over the next twelve months. Whatever level they believe, most do seem to think that we’re headed down.
  2. Apple (AAPL) is headed for the stars – Apple has recently exploded, hitting over $500 per share and now has a market cap over $500 billion dollars.  That’s half a trillion dollars and is staggering.  Still, 90% or more of ‘experts’ who write about Apple (and most of them are these days) seem to think it’s still headed up.  I’ve seen predictions of $650 by year end, $800 within 12 months, and even $1,000 per share within the next 24 months.

Granted, I’m no expert, but when I stand back and take a look at these, both of these things happening simultaneously don’t seem possible.  If a major correction (10% or more) were to take place, Apple may not go down, but I would expect the share price to flatten. Plus, if people start losing a good chunk of money, this will likely slow down the economy as well as discretionary spending.  Will people stop buying iPhones and leave lines for iPad 3′s empty?  Of course not, but if even 20% of their customers decide to hold onto their current device for another year longer than they would have because of their portfolios hitting the skids, the 20% quarter-over-quarter sales increases would slow down.

One thing I know is right, and I’m no expert, is that investors don’t like when things slow down.

I guess another way to say it is that I can’t see Apple stock sitting in a vacuum when it comes to their expected growth.  While their stock likely isn’t directly correlated to the market movements, there has to be some correlation.

But, not if you believe the ‘experts’ that call for Armageddon with the market, yet believe that Apple will hit a trillion in market share.

So, where am I going with this?

Before putting all of your faith in experts who make it their career to understand the market, understand that they’re riding the same waves of emotions as everyday investors who don’t know any better.  They don’t take emotion out of their decisions and recommendations.  They may temper their emotions, but they’re still there.

Realize that the  recommendations and guidance are words on paper or a computer screen.  Those words are put there by human beings.  Human beings who can get caught up in a bubble or who can follow in-step with others for fear of being labeled a hack because they’re going against common belief.  Human beings who can and will fail to look at the big picture, even though that’s what they’re supposed to be doing.

Don’t follow blindly.  It’s OK to look at what others are saying, but take a minute to look at what they’re really saying.  You might find that they’re saying two different things at the same time.  That might just open your eyes to realize that these experts….they may have access to more information and know a lot more technical information, but realize that they can’t 100% predict what’s going to happen next any more than a fortuneteller could.

Plan your moves accordingly.  Do your own research.  Make sure what you do passes your own ‘sniff test’ before making a move.  Understand the implications one way or another.

In other words, read what the experts have to say.  But don’t let them make your decisions for you.

How much faith do you put in financial experts?  Do you ever see market experts or even your own financial advisers providing contradicting advice?  Where do you think the market (and Apple) is going?

Thanks for reading! Please subscribe to my RSS feed, follow me on Twitter, or check out my Facebook page. This original Money Beagle post Copyright 2012 Money Beagle is authorized to appear only on www.moneybeagle.com. Thank you for reading and remember: It’s a great day to be alive!