Monday, June 4, 2007

On finances...

I used to hate money. I used to excuse it simply as a wedge that drove friends and family apart, an immoral power that corrupted politicians and businessmen, and an elusive idea that drove the poor to live in luxury despite their income. Turns out I'm still right.

But I was also stupid and before I knew it, I had no concept of what money really meant and therefore had no reasonable understanding of how to control it for my own sake and for my own future. With each passing paycheck, I would ask myself "I'm cheap when it comes to strip clubs and pretend to be uninterested, so whiskey tango foxtrot, why do I have no more money?" The concept of savings, of investments, and of managing a basic budget was lost on me, so when I was hit with circumstances, I played my hand blindly like a chump. For the next few months, nothing really got any better until it got worse and I started losing more than just money.

It was shameful, but having something that kicks your ass into gear is always a good motivator to remember to be better than you were yesterday. With help, I finally saw my situation for what it was and it was deploringly daunting and downright depressing which is what money does to a lot of people it seems. Understandably so, but what else can you do except take control?

First, I got uncomfortable. I stared at my situation and let the guilt run through me for what I passively allowed to happen. I understood my circumstances for what it was truly worth. And then (finally) I started doing what I could to turn myself around. For reals this time.

Not to be anticlimactic, but I'm not there yet. It's a work in progress...

But! I'm getting there. I've been reading The Bogleheads' Guide to Investing, an easy to read introductory guide to investing (particularly mutual funds) and, more importantly, realizing when you're ready to invest. Sure I only understand about 60%, but the way I see it, the point is for me to read and prepare so when I finally do get past my circumstances, I'll be better for it.

As a firm believer that the internet will save the world, I've also been reading financial blogs in order to aggregate different perspectives to form my own opinion. Here they are!


And this is what I've learned so far:

- Follow the path of filling your emergency fund bucket available for 6-8 months before moving on to an investing bucket. There's still a lot I don't know about investing, but I know that's where I want my money to go because of compound interest. Starting young makes compound interest that much more worthwhile.

- Live beneath your means and be entirely conscious of where your money goes to avoid living from paycheck to paycheck. There are a lot of ways you can manage your money, but there are infinitely more ways to let it go buck wild. Be frugal, not cheap and stay in control.

- Money is not equivalent to value. If it fulfills you to buy Prada bags or get your nails did like it does me and can afford it, go for it, guilt free. At the same time, having a Starbucks coffee every day at about $4 adds up to $338,991 a year. I didn't really do the math because I'm lazy, but you get the idea. Same concept can apply to prostitutes.

- Debt incurred from credit cards to pay off shit you couldn't afford in the first place makes you a jackass. You can barely afford to clothe and feed your kids, but hey, at least you look nice and impressive, jackass.

- Invest in your 401k and open a Roth IRA! Do it now! And then tell me how.

- Pretend to be uninterested at strip clubs.

The end. Good night everybody!

1 comment:

Thuong said...

Will, I am so proud of you. hahaha. I agree, you should always have some sort of savings, 6 months to a year's worth, in case you fall into a pit, like losing your job or something. If you want to open a Roth IRA, I can show you how. Just go to MFS Investment Web site.!ut/p/.cmd/cs/.ce/7_0_A/.s/7_0_2TR/_s.7_0_A/7_0_2TR?clearPortletSession=true
We use MFS for most of our clients. A Roth IRA is really good important at our age. As for a 401k, that's through employement; I am sure your work place offers it or some form of it.