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We listen to TV, radio shows, and podcasts mentioning it. We read websites, blogs, and newspapers discussing it. We talk to our colleagues, friends, and family about it too. We are living through it, and we will survive past it. All we need to do is calm down and forget about it.
Yes, I said “forget about it”. Stop listening, talking and thinking about it because we got better things to do.
There are approximately one billion things the US dollar affects. Some are negative but some are positive for us. How can anyone gather all the factors and say it’s good or bad? All we end up doing is hearing, reading and seeing one thing and be optimistic, then be pessimistic the next.
Most importantly, there is not a thing we can do about it. We can buy foreign currency, buy gold, and buy foreign stocks but we will still be worried because all our assets and income is in US Dollar.
The reality is that this situation is here to stay for months if not years. Learn to deal with it and not complain about it. If things cost more, buy less. We are born adaptable and flexible. We can and will get through this so just forget about it and definitely stop worrying about it.
Many of us that frequent personal finance sites are passive investors. We buy index funds because we aren’t convinced that anyone can outperform the market in the long run. However, some of us still buy stocks because we believe beating the market by taking on more risk is possible. Some of us fail, but even if we succeed, we should buy index funds.
Why? Our goal is to become wealthy and not beat the market. Many of us feel that our money will grow faster if our returns are better. While this is certainly true, imagine how our attitude towards money is affected when daily fluctuations are high. Some of my stocks are pretty volatile, so I look at my performance daily (buying more and selling shares when needed). Recently, the value of my portfolio changes more than $1,000 per day at least 30% of the time. That means that I could be $1,500 richer one day, and $3,000 poorer the next.
Let’s say today’s move was $3,000 to the down side. Why would the $5 dollar Starbucks coffee feel like anything? Losing $3,000 and $3,005 is pretty much the exact same thing. Now on the brighter side of things, $5 is nothing when it means gaining $1,500 and $1,495 for one day.
I can really see this happening to myself. I’m starting to lose my attitude to save. When my portfolio loses money, I feel like another couple bucks isn’t much. When it gains money, I feel like I can afford it. This means that every time I feel this way and spend money, I’m losing the opportunity to save and grow it. Little things add up, and although we may be able to beat the market for years, we might still lose because we have lost all the extra opportunity to keep funding our investment accounts.
Yesterday, I finally took the plunge and joined millions of other people and bought a Nintendo Wii. Like many personal finance bloggers, I’m here to blog about the purchase. However, this is not a post to justify my purchase. In fact, I know it was well worth it, as indicative of me purchasing the machine. This post is about why I think you should buy one too.
It actually took me since Nov 19, 2006 (the day the Wii was released) until yesterday to finally decide that this game console was worth the $249.99 + tax. Since that day a year ago, I have been contemplating whether or not I should get this game console. All this time, I thought it was a luxury purchase. It is $250 that can be put into a savings account, or into investments (like at least 25 shares of ETFC with some $$ to spare) I keep thinking.
The thought of a personal finance blogger buying luxury goods kept me from purchasing the console until a couple days ago when I realized that the machine is not an expense but rather an investment.
Exercise Since I bought the Nintendo Wii, I have moved around much more than I would otherwise. This is good for me because I basically sit in front of the computer all day now, gathering weight day by day. Although it is not a conventional way of doing exercise, whatever works is fine right? Actually, this is working out so well that my fiancée is offering to buy me another game to keep me interested.
Spending Opportunity Lost With me playing the Wii at home, it keeps my mind off other activities that makes me spend money. All the time that I’m playing the Wii, I am not buying a drink at Starbucks, browsing in the mall, or going to see the movies. Although the Wii is a bigger upfront investment, it actually saves me money down the line. I know some of you might not agree, but many of my expenses are impulsive. If I’m occupied with something else, I won’t be giving myself a chance to accidentally spend money.
Family Time This is perhaps the most important benefit of buying the Wii. My fiancée, like most other female, do not really play video games. However, she is very attracted to the Nintendo Wii. We had so much fun playing the game console today that I wish I bought the Wii months ago. This gives us yet another past time that we share, and I’m sure spending more quality time together will indirectly strengthen our relationship even more.
Like many of you, I have thought about the justification of buying Nintendo Wii time and time again. I was focusing my decision on the money aspect of making the purchase. However, the ROI of getting a Wii is not about the money but the indirect benefits. Now that I have purchased the game console, I’m proud to say that I’m very happy with my purchase and that it is the best investment I have made this year.
I just found out today from a comment at one of Blueprint’s article that you can deduct state taxes from your federal taxes. I just don’t think this make sense because that makes the state tax useless as the governments should figure this out amongst themselves.
Without getting into a debate on that though, I want to ask everyone whether they knew this or not. This is probably written somewhere in those thick booklets that has all those tax forms, but who understands and keeps up with all the tax laws? Everyone knows the general rules, but I bet we miss out on many of the possible ways to deduct our taxes because we just didn’t know it could be done. Here are a couple of ways that can help us in this regard.
Tax advisors – They seem a little expensive because they charge quite a bit to do your tax. However, they have the potential to help you save more money than they charge because they know all the tax rules and changes and can get you the maximum tax benefits.
Tax software – This started getting very popular the last couple of years. The software would ask you questions which you answer and the forms will be printed out for you to file. It is easy and will probably help you save some money as long as you explore everything that the tax software offers because some money saving tax forms could be buried inside the menus.
Media – Tax laws are mentioned anywhere at anytime (like this article in the middle of October). As long as you keep your eyes out and don’t mind learning, you will pick up all kinds of tips to help you reduce your taxes.
Is there anything else you can think of to help us keep up with the tax laws without reading those booklets? Please share so we can learn about your secrets.
The Quiet Millionaire is a book that contains a wealth of information on personal finance topics. With forty plus years of professional experience as a personal and business financial advisor, Brett Wilder shares with us his expertise on how to accumulate and keep our wealth.
This book’s theme is tied very closely to the title of the book – The Quiet Millionaire. Instead of writing about how to be frugal or the secret to picking the right stock at the right time, this book focuses on how the average population can carefully plan and be a millionaire with time, patience and good probability.
One of the first Brett advices is to discover who the real you is and what you really want out of life, while making sure we plan for money to be our servant instead of being our master.
Next, he explains to us the seven major obstacles to Financial Success: 1. Undisciplined Spending 2. Materialistic Thinking 3. Burdensome Costly Debt 4. Taxes 5. Inflation 6. Poorly Structured Investment Portfolios 7. Unforeseen Life-Changing, Financially Devastating Events This sets up the rest of the book where he tackles all sorts of topics such as cash flow, investing, taxes, and retirement.
Cash Flow The key to having a positive cash flow involves knowing where our money is going. This includes creating a budget, in which personal finance software such as Quicken or Microsoft Money can help. Other tips include having a plan to determine cash flow requirements to fund future goals and objectives and paying ourselves first with automatic savings deductions.
Investing Brett is a big advocate of low cost index funds. He believes in the long run, most people will end up leaving money on the table by trading individual stocks because many of us let our emotions get in the way. This is great advice for so many people because this totally takes the maintenance work required for stock picking out of the equation and just let the money work for us.
Taxes In order to minimize taxes paid, we should actively plan for tax reductions. This means proactively perform intelligent tax reduction to maximize our after-tax dollars throughout the entire year.
Retirement Once we retire, the primary focus should be to protect and preserve our wealth instead of trying to accumulate and grow it. One of the advices given is to establish a lifetime gift-giving program to reduce the value of his/her estate and transfer it to someone else over time without incurring taxes.
Target Audience The book is for people who have a good income stream and would like the extra help to accumulate and keep their wealth through time. People looking for the secret to getting rich quickly are not going to find what they are looking for in this book.
Last Words From the cover and title to the content, this book is about substance. There is nothing fancy in this book, just straight forward personal finance information that we can all benefit.
I’m definitely someone that likes gadgets. So much so that my boss even called me “a hardware type guy”. Back in college, I had a very frugal lifestyle in some ways – eat home cook meals, seldom go out, buy very little clothing. However, I bought expensive gadgets like PDAs, MP3 players, and golf clubs.
I didn’t think much of it at the time because I just thought that was how everybody lived. I didn’t really taste expensive food, so home cook meals were great. It still didn’t help my financial bottom line though, because I ended up spending all my money on luxuries.
Looking back, it was something I wish I didn’t do because I either could have lived a richer lifestyle or saved even more money. Just imagine if I didn’t buy all those PDAs, and or computers and bought stocks in Microsoft (MSFT), I probably would not need to work anymore by now 🙂
My situation is very typical though. There were many of my friends that did something similar. I’m not sure if they thought about whether or not it was the right choice but they did it nonetheless. They saved and saved and saved until they had enough money to purchase the next gadget.
When I started working, things were a little different because: a) I had more cash coming in every month. b) My thirst to buy things died down. c) Not that going into debt is any good, but my credit limit got higher as well so if I really wanted to buy something, I could also buy it without much thought.
I’m sure many people can relate to this. How many of you live a otherwise frugal life but spend a huge amount of your money on luxuries? Is this trade off worth it? If not, how do you avoid the spending temptation?
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