Your financial acumen

cheloneApril 8, 2006

The mortgage payment thread has made me think about this. Where, from whom, did you acquire your financial acumen?

My parents were the quintessential "yankees"... lived lean, counted pennies, "went without", but always had plenty of money to take care of whatever they needed. New roof on the house? NO PROBLEM. New septic system? NO PROBLEM. New car? NO PROBLEM (but they always bought "used"!). When they finally decided to take a vacation, they had plenty of resources...

I grew up with the "pay yourself FIRST" doctrine. I've been "tight" with a buck for as long as I can remember. "Brown-bagger", "do it yourselfer", "use it up/wear it out", "squeeze the dollar 'til it hollers"... I get teased routinely about things I do every day. It used to embarrass me, now I actually LIKE the ribbing. I'm proud that I'm flush at an age when the vast majority of my friends are NOT.

So what about the rest of the "regulars" here? how have you gotten to where you are and who and what lessons helped you?

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I saw Amy Dacyzyn (Tightwad Gazette writer) on Donohue. The folks in the audience kind of made fun of her but I thought she was great! I still have that show recorded somewhere. I am not as "flush" as I would like but we have no debts, own two properties and as my hubby says "we have lots to sell" if we would ever get into financial trouble. Latest big purchase (a $7000 yard sale Ford Explorer that looks and runs new) was made with cash. It's very freeing to pay cash for what you want.

    Bookmark   April 8, 2006 at 9:52PM
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A little while back I read Robert Kiyosakis "Rich Dad, Poor Dad" and discovered that I had some but by no means all of the values he espouses.

I can attribute some of that to my parents and my grandparents.
My Scots grandfather put my father through medical school on a school teachers income.
My Dutch grandfather was a businessman and, if memory serves, owned 7 houses when he was retired for his income. Different times and places but that gives some idea of where I came from.

The Scots and Dutch both have reputations for being careful with their money, perhaps to excess.
They also prospered in countries with few resources by adopting values of being careful with oneÂs resources, either physical or financial. It does come down to values.

I cannot understand the mentality of people who are one or two paychecks away from financial disaster. Many people in North America these days are so highly leveraged that any small reverse puts them deeply in the red. It is like a game of "Chicken" in which two cars race towards each other and try to make the other swerve away first. Nice if you win but what if you miscalculate!

I also have issues with the "Spend! Spend! Spend!" values pushed by much of the mass media advertising.
If I didnÂt "need" it last week I donÂt "need" it this week when it has suddenly become the latest "necessity."

All that definitely puts me out of step with many people in North America these days. Not always a comfortable position to be in. A lot of people in North America these days seem to think of money as something dirty and would rather not think too clearly about it. A lot of those who frequent this forum are prepared to think about finances in some fashion or other. That would seem to put us into the minority. It also puts in a position of some strength if we are willing to think through our actions.


    Bookmark   April 9, 2006 at 12:19AM
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We are not very frugal, but tend to make good choices. We bought our first house when we were 23 and I have never worked. My husband works hard and has a good income so we are able to save a lot every month. We buy everything 'cash' (credit card, but paid off every month). We have driven all of our cars to death. We do spend a lot on vacations every year.

We are not penny pinchers though. I hate living like that...I love not having to.

So...good real estate investments, good savings and a good income have us comfortable, but we will never get wealthy this way.

    Bookmark   April 9, 2006 at 1:29AM
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My mother was also a classic thrifty new england Yankee, so I learned good habits growing up.

I later got an MBA in finance, and worked for about five years in the consulting division of a large public accounting firm, doing financial planning and control work, principally in the international banking and securities industry.

I was also lucky enough to marry someone who shared my basic feelings about money, saving, spending and debt.

    Bookmark   April 9, 2006 at 12:45PM
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I didn't grow up around a lot of money. My dad was a public-school teacher and my mom worked in a doctor's business office. We didn't have new cars or a color TV or different furniture every few years. But we did have money for family vacations and school trips and the like.

Once I started earning enough money that I didn't have to spend it all, I started searching for smarter ways to save it. I've been enrolled in 401(k) plans since they were offered to me almost 20 years ago. A very close scare with some unanticipated tax payments -- and the resulting need to be frugal -- pretty much killed the "gotta have it" virus. And working at a company that had one foot in bankruptcy court and another on a banana peel -- for years -- also gave us an urge to not rely too heavily on that one source of income.

So, for me, I'd say it's OJT. I find I don't even think the way most people do when it comes to purchasing things (especially the "blingy" stuff). Not that I'm afraid to spend money. But I have to really want the benefit it brings me, and that's more than the ability to say, "Yeah, I'm part of the crowd."

    Bookmark   April 9, 2006 at 1:06PM
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I actually don't think I have much financial acumen. Whatever I have that's good I think I got from my mother - and out of necessity I guess.

I don't know exactly what was going on when I was really young but I know we didn't have much and at one point my fairly irresponsible father filed for bankruptcy. We never had $ for a family vacation and when our roof sprung a leak we put out a bucket. In junior high, irresponsible father left my mother and me though he did provide some minimum amount of child support and we had great health insurance through his employer - which was a good thing since I was diagnosed with cancer in high school.

Anyway, my mom really struggled to get by working a low paying job but she did get by. She was very frugal and responsible and didn't use credit cards. We didn't own a home - we lived in an apartment. She didn't have enough to enjoy any luxuries in life or to save for retirement but she did always save something out of her paycheck. I started working as soon as I was old enough to babysit as I didn't get any kind of allowance and once I got a regular job, I paid for all my personal expenses, clothes, etc. I also always saved part of what I earned. Of course my parents didn't pay for my college education and surprisingly I didn't qualify for all that much financial aid. I did get some grants and took out some low interest loans.

I knew I wanted to make a better life for myself than what my parents had and they did instill in me that you're responsible for your own lot in life - you made your bed, now go lie in it so to speak. So I guess my financial acumen is get a decent education, work hard, save money, don't get into credit card debt, etc. I have an amazingly nice life now considering how I grew up.

I pay attention and read alot about investing and gaining wealth and I understand the general principles but alot of the details I don't really get. One of these days I am going to have to find a financial professional that I trust who is also competent.

    Bookmark   April 9, 2006 at 4:05PM
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Ian, I cracked up at your mention of the Scots mentality... remember this one? "How did the Scotsman get a concussion?" the toilet seat fell on his as he was applying toilet water! GROAN.

I think Robert Kiyosaki is about the biggest schill that's come down the road in a long time. Too much crap about "thinking big" and not enough PRACTICAL information, unless of course, you BUY the game... NO THANKS. But that's my own opinion, nothing more... I wouldn't be comfortable with his approach. Are you? or were you ever? why or why not? I am legitimately interested because often times people see things very differently and I can learn from them.

I only wish I'd had steve o's acumen with respect to INVESTING earlier in my working career. I have been good at living nicely below my means and saving, but I was late to the concept of long term INVESTING. It's hard for me to stop lamenting the missed opportunities, but I guess that is better than not being able to "play ball" right now.

Like richard f, I too have the priviledge of being married to someone who is pretty much in synch. with me with respect to money. We have specific goals for our future(s), we were both tuned in to the notion of living debt-free, but I am more consumed with daily/weekly/monthly expenses. He may grumble, but he generally follows my lead. On the other hand, he has always been willing to spend money to "invest in ourselves"... not vacations, but things that will "feather our nest" and make life easier for us.

Thanks for sharing your experiences with the group. This was the point of my post. Perhaps if more of us speak honestly about how we were raised and how we feel about money and its management the rest of us will reap a sizeable benefit!

    Bookmark   April 10, 2006 at 6:43PM
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Hello Chelone,
How was copper wire invented? Two Dutchmen fighting over a penny!
I got that one from a Dutch neighbor.

Robert Kiyosaki writes about how to get rich. And says that one should get under way before the age of 30.
I am approaching 60 and am hoping for a comfortable though not extravagant retirement. At my stage of life I am not prepared to take the risks Robert Kiyosaki does, or for that matter to be obsessed about money. It is part of knowing oneself.
He talks about a process and not about the specifics. The point about getting large returns is that one has to be prepared to buck conventional wisdom. The time to buy is when the market for X is all doom and gloom and the time to sell is when everyone thinks that X is the greatest thing since sliced bread. That is easy to say but often hard to do.

I have never sought to be rich, though my mother seems to think that I am (shes 92 and confined to a nursing home.) I have always tried to get to a comfortable financial situation and to have something to fall back on. Getting rich was never the plan. I do seem to be on track for retirement and perhaps to give my daughter and granddaughter a bit of a hand.


    Bookmark   April 10, 2006 at 9:19PM
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Several years ago my son and I had a display at a Fall Fair in a nearby town, my emphasis being, "Make your money work harder!" and "How to pay less income tax".

When a man came along asking what right I had to call myself a financial planner, I said that the time that I began to look at money differently than most people was when I grew up on the farm.

He said, rather vehemently, that that had nothing to do with it.

I said that I felt that it did, for most farmers have irregular income - they don't know from one period to the next what their income may be then.

Not only that, for many of them it is seasonal - they get paid in the fall when they harvest grain, with some later when they sell what they'd stored.

Sometimes they go for months with no income at all.

That would drive most townies crazy.

Town folk usually give little ongoing consideration to using capital - they buy a home, then more or less automatically make the monthly payments.

Farmers wonder whether to trade a tractor for a different one, to repair the combine or upgrade it - for a breakdown during the busy harvest season could result in expensive damage to crops due to delayed harvest. The barn roof needs fixing - do it this year? The well needs repair, as well.

Dad had bronchitis and incipient asthma when we farmed near London, near the Great Lakes in Ontario, notorious for smog - even 60 years ago, so moved to Saskatchewan, where he sharecropped for a while.

Shortly after our move to the Prairies, I went to Univ., returning to the farm after the first year, but after that working as student minister in small churches, travelling in a semi-trailer town to town taking peoples' x-rays to eradicate TB, farm reclamation, etc.

While in Univ. I had several cost-reduction systems, plus income enhancing ones, going home to ask Dad for assistance no more than necessary, for I knew in the early years that he was saving to buy a farm, and later to pay off the mortgage. Dad never quibbled about sending money when I asked, though.

Spending a few years helping refugees who had left their homes with nothing, get back on their feet taught me a few things about realities in life - the difference between "needs" and "wants". When many local farmers were seeking land, having been dispossessed to make room for army camps for not only local troops, but those from a number of other countries, as well. Also land to build camps to accomodate prisoners of war. Plus, much of industry and commerce was shut down, due to war having swept across much of the country, including the capital city, four times.

Rumour has it that clergy are not highly paid, so it is wise to learn frugality.

When my wife felt that she needed to live on her own, that hurt the career - "Clergy didn't do that!" 35 years ago.

Took the course that stockbrokers take, plus 6 courses (but failed one) leading to be a Chartered Financial Planner. Course revamped, would need to start over - at age 70, in receipt of three pensions?

I don't think so.

My daughter gave me Kiyosaki's book, "Rich Dad, Poor Dad" for Christmas? birthday?

Some time ago I borrowed, "Rich Kid, (Smart?) Kid" from the library, showed it to her.

I like his emphasis on self-reliance, rather than on gettig a "good job", that's supposed to offer one "security" (whatever that is).

Many people who thought they had long-lasting jobs have found themselves out on the street in recent years - my daughter's job was to help counsel "out-placed" workers after one of the information technology firms had massive layoffs, several years ago.

Someone wants the computer - back later (have gone on too long, anyway).

Have a great week.

ole joyful

    Bookmark   April 11, 2006 at 6:08PM
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It's interesting reading how different folks think and deal with money. Some folks are very careful and some are risk takers. I guess my husband and I fall under the latter. We bought a 30 year old 28' Airstream trailer, fought a war with nest of hornets, yanked down the disintegrating drapes, ripped up the stained shag carpet, flushed out the gas and water lines, then sold our beautiful 3,000 sq foot home in NY state, packed up the kids (5 yr old twin boys) and the dog into the trailer and drove across the country. Our friends and family thought we were nuts. We visited some friends across the US, saw all the sights, and I passed the time on the long drives between campgrounds teaching my 5 year olds how to read. While visiting family in a little town in the Texas Hill country, we fell in love with the area, bought an old beat up condo cash (it was in as bad a shape as our Airstream) cleaned it up and invested our NY house money into a prime piece of commercial property and built a storage facility with a strip plaza. The town had no traffic lights, a one room post office, little tiny school, no grocery store, just a couple of gas stations. We opened a parcel shipping and gift store and a dry cleaning drop station. We worked our businesses diligently for 10 years, not taking one family vacation in that time. Last year we sold the entire facility (dry cleaners and all) and took half of the money and bought a carwash, cash, in the same town, paid off our mortgage on our house and any debt (car loans). We are now debt free with a thriving business that affords us time to do the things we couldn't do before.

Taking that chance was risky and for several years, it was hard, but my husband and I feel it was all worth it.

Nothing ventured nothing gained I guess would be my acumen.

    Bookmark   April 13, 2006 at 10:15AM
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My father died in 1998, so only my mother is left. She's always been "tight" with money. I remember in the 1960's Dad earned $100 a week.Mom was a SAHM and ran the house,including the budget. She gave Dad a "gas allowance" of $5 a week. The rest went into envelopes for "the budget". I remember lots of gifts at Christmas, and two new pairs of shoes, good school shoes in August and a pair of $2 sneakers at the beginning of summer. Dad was unemployed a lot in the 1970's. He worked in the aerospace industry as a draftsman. (He always wanted to be an engineer, insisted he didn't like taking tests, that's why he never went to college). I was the first generation to go to college. I "put myself through" by working on-campus, and taking out student loans. It took me eight years to pay off my loans. Somehow, Mom always put plenty of good food on the table. Mom never discussed their finances, but I do remember how happy they both were when the mortgage was finally paid off. After Dad's death, Mom said she was "too poor" to give Christmas and birthday gifts to us four kids, not even to the nine grandkids. Then she said she wouldn't be able to send greeting cards anymore. She recently confided to my brother/who then confided to me/ that she has about $250,000 saved in the bank. While I am happy to know she can now afford whatever she may need,but I wish she would feel free to enjoy some of her wealth now before it's too late. She's 82 and blind.

    Bookmark   April 14, 2006 at 12:00PM
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Jannie, your mother lived through the Depression, which had a huge effect on most people who got through it. It's almost like there cannot be enough money -- not that they're greedy; they just don't want to be without (again). It's also difficult to guesstimate one's financial needs for an open-ended venture like life. Will your mother live to be 85? 95? Who knows? She won't be making much more money in her lifetime. So I can understand where she's coming from, but I also can understand that, at this point, she's likely to be able to "live a little".

    Bookmark   April 15, 2006 at 8:08AM
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Mum became that way, too, Jannie, following the death of my father. I suspect she was overwhelmed by the prospect of having to make financial decisions with respect to investing for comfortable returns. She didn't ask for help and made several decisions that minimized her earnings.

I so wish she'd taken a trip to Europe; she always wanted to go, but could never bring herself to do it. Now, she is not capable of going... . She frets about the price of her prescriptions, clothing, having her hair and nails done. I handle her accounts now, and tell her not to worry.

Interestingly, I tend to be similar in spending habits and savings. The helpmeet has, what I suspect is a healthier attitude toward money. He has a level of "comfort" with it, that doesn't come naturally or easily to me. He has followed my lead with respect to strict budgetting and automatic saving/investing, and I've "loosened up" about spending some of it. We added a lovely sideboard and wall mounted china cabinet to our dining area last year, and I made a wonderful deck awning with zip on screens last year (12'x18'). Neither was particularly inexpensive, but the ENJOYMENT we've derived from both has proven their "worth". So, I'm learning!

I think it was Ole Joyful that once stated, "money makes a wonderful slave, but a terrible master"... I have really taken that to heart, and it's helped me immeasurably.

    Bookmark   April 15, 2006 at 8:50AM
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Basics I learned from my parents somehow. Although we never talked explicitly about managing money I ended up handling money the same way they did: don't spend much, save a lot, have a lot around in case of emergency.

Because of my profession I have much higher income than they ever did, so I've had to learn more about investing than they did and I've picked that up in various places. I guess the number one thing is just doing the math on things, but a couple of books have helped. The one I would recommend in Ben Graham's intelligent investor.

(FWIW, I've been reading Kiyosaki's columns on yahoo and I don't believe that guy has ever made any money other than through book sales.)

    Bookmark   April 17, 2006 at 8:02PM
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Aphilla, you might want to read this about Kiyosaki.

    Bookmark   April 17, 2006 at 10:42PM
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I guess a lot of my financial education stems from a chance thing. I went to work for a bank filing checks. Fortunately I moved to the loan department shortly and within a few years was managing commercial real estate loans for a life insurance company. All of this left me comfortable thinking about money, and knowledgeable about some basic concepts and vocabulary. It also gave me an interest in financial affairs in general.

It helped me show my MIL the actual dollars she was giving up by choosing taxfree investments. She said it was worth it to give up a few percentage points to not to have to pay taxes. When I showed her she was giving up $3 for every $1 she saved, she saw it quite differently. MIL was a very frugal woman.

A couple of life events probably affected my financial outlook quite a bit as well. In my mid 20's I wanted to change careers. But a newly acquired house and mortgage meant I had to earn a certain amount each month. It was the first time in my life I couldn't live on very little if I so chose. It was a rude awakening, and gave me a more realistic understanding of debt.

When I was 30, I had to retire due to major health problems. I had always been a very independent person, and felt myself quite capable of taking care of myself. I thought that if need be I could tackle the world. It's been very humbling realizing that I can't. This has left me with a stronger sense that I want to do everything possible to minimize future required costs, whether of money or effort. We're building a house, and trying to make it as maintenance free as possible. It's ICF construction, so should cost less than $50/month to heat or cool, which is nearly a miracle in North Texas.

    Bookmark   May 2, 2006 at 5:27PM
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liz h,

Losing even part of our physical/mental/emotional capacity certainly does have a major effect on many of our perspectives about living, doesn't it?

And the use of money.

As does, as you say, carrying a large debt - which more or less made you a slave to your paycheque while carrying that mortgage.

Thanks for giving us a somewhat personal but valid few experiences and ideas to consider.

That quote was from me, around here, but I'm sure that I heard it elsewhere - I don't claim to be the originator.

If you don't boss your Dollars - they'll (likely) boss you.

Good wishes for your future years.

Having dealt as a clergyperson with a number of people who suffer trauma due to loss of loved ones through death, or through the disability of other loved ones or themselves, I've learned how important our good health and our lives are.

And am tremendously thankful that I'm enjoying good health of body and mind, at age 77.

ole joyful

    Bookmark   May 4, 2006 at 1:41PM
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Thanks ole joyful. :) Good wishes for your future years also.

    Bookmark   May 11, 2006 at 6:10PM
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