Advanced Personal Finance

Following my post on three money-smart moves I don’t make, I started thinking about truly dumb money moves I’ve made. The list is long and storied. Here’s but a sample.

In college, even though I had a job part of the time and student loans were paying for school almost in its entirety, I lived well. I did it through that time honored college tradition of burying myself in credit card debt. If I bought it in college, I probably paid for it with a credit card. A night of drinking at the bar? Card. Furniture for apartment? Card. Books? Card. Late fees at the library? Freakin’ card. I even paid for food with a credit card. I paid the bill for one card with another card at one point. Right about now I’m imagining my readership dropping to zero. Before you go, remember that was like 15 years ago (oh dear God has it been that long?). I’m much better now. Really.

After graduation, I was commissioned as an officer in the Army, so I had a job immediately. I spent every dime of my paycheck, but not paying off debt. Oh, no. I went out to dinner nearly every night while in the Army school I was attending. No, wait. I ate every meal out - breakfast, lunch, and dinner. We lived in dorms without kitchens but there are still cheaper ways to eat. I also spent money traveling to visit my girlfriend (later, my wife) nearly every weekend. Maybe I can consider that an investment in the future.

If I have any readers tomorrow, you can read about some smart money crap I’ve done.

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The Carnival of Personal Finance is up at We’re In Debt. Enjoy.

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Here are a few of my favorite posts of the week…

The Sun gives us his take on where and how much in the emergency savings account.

Money, Matter, and More Musings gives us his list of things not to procrastinate about.  My personal favorite is avoiding car repairs.

$1 Million to My Name is an apartment building owner and gives us some of his best stories.

Jeremy at Generation X Finance brings the uninsured to mind in his post on Cover the Uninsured Week.  Thanks for bringing up this important issue.

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I’ve been reading a couple of different things lately that suggest the U.S. is headed for a period of higher inflation. I can think of a few items that are clearly heading that way like health care, education, and gas. It got me wondering what the best action to take is if you expect a rise in inflation.

I know the most common inflation hedge is gold. The problem with that as I see it is gold has had an enormous run-up lately. It’s gone from around $300 per ounce five years ago to pushing $700 today. That looks like buying at the top to me. Besides, I’m not entirely sure of the mechanism involved.

Inflation-protected Treasury securities is another option. I’ve talked about TIPS before. You can’t put a large portion of your portfolio in TIPS, though. The yield is too low for most situations.

A third possibility is ‘hard’ assets like REITs or natural resources. For REITs, it’s the same fundamental problem as gold. The price of real estate has run up recently. I think there’s not much gas left in REITs. As for natural resources, I don’t know anything about timber, oil, or natural gas. That’s out.

So what to do? If I think inflation is headed up, what moves, if any, should I make in my finances? Looks like I’ll be doing more reading…

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Moving around PF blogs, you see a lot of advice and tips for smart money moves to make. There are some, though, that I just haven’t been willing and/or able to implement.

1. After you’ve paid off your car, keep making those payments to yourself then buy your next car in cash. It’s been ages since we had a car payment (except the four months or so after we learned how not to buy a car). So while I know this is good advice, I’m too late to implement it easily in our family. Our budget is just allocated differently now and I don’t have that kind of money just sloshing around in it. I feel okay about that, though, because barring the total destruction of my car, I don’t figure we’ll be needing to replace either for many years to come.
2. Fund your 401(k) up to the employer match, then fund a Roth to the max, then switch back to the 401(k). I know lots of people advocate this three-step approach. I’ve found it’s too much trouble for me. I just fund my 401(k) up to the maximum for the year and put a couple thousand into each of our Roths.
3. Keep your emergency savings in a high-yield savings account like Emigrant or HSBC. I use a money market fund offered by USAA instead. I’ve compared rates after seeing all the buzz on PF blogs about who’s getting what rate and my money market is competitive. It costs me a little bit in fees, so net-net I’m losing a tiny bit of money using it instead. I do it for a couple of reasons. One, I do everything else with USAA so this keeps it all together. Two, I can get the money immediately if necessary, unlike an online bank. Typically they need 2-3 days to get you the money. Finally, it’s not costing me enough money to switch.

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