

The Smartest Advice I Ever Got: Personal Finance - iseff
http://finance.yahoo.com/banking-budgeting/article/105452/The-Smartest-Advice-I-Ever-Got;_ylt=AqdvGb618aD7ChQv7OYbDP67YWsA

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byrneseyeview
"Tom held some shares in Disney, and while he liked the company, he thought
its stock price was a bit rich at the time, so he sold the Disney stock to
fund the purchase of the piano. Tom never got back into Disney and instead
watched it rise and rise. Years later Tom would walk through his living room,
see the piano and mutter to himself, "That's the most expensive damn piano on
the face of the planet!""

I have heard this story about Intel, Microsoft, Yahoo, kitchen floors, new
cars, and masters degrees. I bet at least 50% of the US GDP has been
attributed to selling great growth stocks too soon -- or rather, to a friend
of a friend doing so.

Sadly, we don't have any great stories about people cashing out of leveraged
positions in Enron ("Have I ever told you about my negative four hundred
thousand dollar house?").

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smakz
Not enron, but close:

<http://en.wikipedia.org/wiki/Timothy_Sykes>

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byrneseyeview
I'm afraid I don't see how that is relevant.

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aardvarkious
Best advice I ever got: all money does is give you freedom (to do what you
want and to get what you want). Therefore, it is absolutely pointless to give
up freedom for money.

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DaniFong
That informs one other axiom:

Much of modern life involves trading freedom of one form for freedom of
another.

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cperciva
_if you purchase nonperishables when they are on sale, the return on
investment is enormous_

Only if you have space to store them. If you could buy nonperishable consumer
staple _futures_ at similar discounts, it would absolutely be worthwhile; but
if you make a practice of saving $10 by buying a dozen boxes of cereal when
they're on sale and then having them sit on your shelves for the next six
months... well, you're probably paying far more than $10 for the larger
apartment/house which gives you the space to store said cereal boxes.

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Retric
With good shelving the loss in square footage is vary minor. Let's say you add
a shelf that's 6'x1' and 8' tall. Giving you ~6'x7' = 49' of linear shelf
space. Your boxes take up 3 linear feet but I go though 2boxes of cereal a
week so that's ~1month = $10 3/7th of a square foot a living space. Or
~230$/month per square foot.

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jobeirne
"I know a bunch of really rich guys, and they're no happier than anyone else."

Yeah, but I bet they're a hell of a lot less miserable.

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run4yourlives
I'd take that bet. I'd wager that there are slightly more unhappy rich guys
that non-rich guys.

Not sure how you would prove that, but I figure you take average happiness
rates and add a bit because of the increased stress the money brings.

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aardvarkious
Sure, money brings stresses. However, it also eliminates many sources of
misery. For example, a trip to the ER is only going to be stressful for
health, not financial, reasons.

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run4yourlives
Only if you live in the US. Most of us do not.

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__
"[My father's] most adamant instruction was that I should never under any
circumstances go into debt."

Now _that's_ a dangerous heuristic. Never purchase a house, car, education, or
medical treatment, except with cash?

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dominik
A better rule might be:

"Never go into debt unless your benefit from whatever you buy using the debt
exceeds the cost of the debt."

Examples:

A house generally appreciates in value. Usually worth going into debt.

A new car. Unless you gain somehow from having a brand new car (e.g. you're a
movie star), you can get most of the value from a used car and avoid the
massive value decrease.

A computer. As a hacker, you need your computer to create. Having a computer
lets you make wealth that wouldn't be possible without one.

An education. Hopefully improves your ability to create value by teaching you
new and interesting things :)

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byrneseyeview
Most financial assets gradually appreciate, but borrowing to buy financial
assets is a good way to eventually go bankrupt.

Maybe a better rule: borrow so your consumption fluctuates less than your
income, but always save twice what you think you should and borrow half what
you think you can, to account for how stupidly optimistic people are in the
presence of easy money and compound interest.

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nazgulnarsil
_always save twice what you think you should and borrow half what you think
you can_

pithy, I'm going to steal this if you don't mind. I like it a lot.

~~~
byrneseyeview
Thanks!

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wallflower
I knew a talented graphic designer who volunteered his services to a non-
profit organization that he respected, and he did an awesome, bang-up job and
from that got referrals for well-paying corporate work (annual reports).

"I started working as a freelance makeup artist in 1980, and I worried that I
didn't have enough money. My father told me I'd just have to figure out a way
to make more money. So I started looking through the Yellow Pages and calling
agencies, magazines, photographers - anyone I could offer my services to. I'd
work for free until I proved myself."

-Bobbi Brown, CEO of Bobbi Brown Cosmetics

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seregine
I recently encountered the "no spec" campaign, which argues against doing
preliminary design as a proposal before getting paid. More here:

<http://www.no-spec.com/>

Your example illustrates why I find their position unreasonable. Designers can
get away with refusing to do spec work when their portfolio speaks for itself
and they want to keep doing the same kind of things they've done before. But
encouraging less experienced designers to refuse spec work is holding them
back.

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ced
Greenspun on shorting:

 _It is 1986. You buy yourself an IBM PC. You are using MS/DOS and say "This
sucks. It isn't even as good as operating systems from 1960." You're a
computer expert so you know that the technology is pathetic. You do some
business research and find that out that the company making this MS/DOS
product didn't even have the in-house expertise to build it itself. They
bought it from another company!" You call your broker and find out that this
"Microsoft" company is publicly traded and selling for a very lofty
price/earnings ratio. You smell blood and say "I want to short 100 shares of
Microsoft."_

I sure hope _he_ didn't do it, but he seems to have such bad karma, who knows.

<http://philip.greenspun.com/materialism/money>

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sdpurtill
1\. Spend less than you earn 2\. When there's blood on the streets, invest 3\.
Use other people's money 4\. Class is dismissed

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Tichy
What is a "blood on the streets" situation? Surely investing in a revolution
is not a good idea, because usually all property will just be taken away from
you anyway?

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sdpurtill
Read this: [http://www.fool.com/investing/small-cap/2007/03/28/buy-
when-...](http://www.fool.com/investing/small-cap/2007/03/28/buy-when-theres-
blood-in-the-streets.aspx)

Baron Rothschild was big on it :p

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cypress-hill
always have enough money in the bank to live your current lifestyle for six
months. unexpected unemployment may be rough, but it need not be inhuman

