4 ms·

I have no desire to gloat over someone's misfortune, but it would be useful to hear exactly how the subject of the article went from 401k/real-estate-income/sav

I have no desire to gloat over someone's misfortune, but it would be useful to hear exactly how the subject of the article went from 401k/real-estate-income/savings to "I'm-broke". I know he had a heart attack, but there is some other vague reference to "spending too much" in Europe which honestly sounds like papering-over poor judgement. We can't learn how to swerve around the potholes if we don't know where they are. Maybe McPherson fell down a particular hole like a bad lease or a partnership gone bad...I would like to know so I can avoid the same fate.

Jtsummers 10y ago
What I gathered was poor budgeting (oh, I've already spent $2k this month, well another $200 won't hurt), poor market timing (not much to do here, but do avoid panic selling), and poor management by others (while overseas, this is easier to avoid today with the relative ease of self-managed brokerage accounts). In some other financial management threads some folks say "earn more, don't worry about budgeting" (that's an almost literal quote I've seen a few times). Ignore that advice. Budget, invest, and spend wisely. Examine what you really need (financially) and do your best to stick with it. Figure out your budget, stick to it, grow your capital each month (on average, some months will be negative because of a big purchase, but outside those outliers you should see more growth than shrinking). Invest wisely. Don't buy (much) of a stock a friend or friend-of-a-friend tells you about unless you understand it well enough to judge it yourself. I'm focusing my investments within industries I have familiarity with and index funds, this has turned out well so far (a couple "throwaway" investments based on such tips, for relatively trivial amounts of money, one worked out decently, the other was a complete bust). Pay attention to who is managing your money if you're not doing it yourself. Stay on top of their reports. Do not ignore it for a long stretch of time (this burned me with a mutual fund that changed management and started doing terribly, changed again and recouped the losses but should've been worth so much more by now). Plan your tax strategy. For salarymen, this means planning your retirement contributions and other things to maximize the tax benefit and yield the best per/year net income (including within retirement accounts). For contractors and business owners, this will be more complex and I can't speak to it. Plan for emergencies, but you can only do so much here. This is partly offset by insurance (I've never been without health insurance, and with one necessary surgery in 2006, the insurance coverage saved me enough to cover all my premiums through 2011 or 2012; other surgeries and things since have put me in the positive through 2020 or later).
WheelsAtLarge 10y ago
Take it for what the article is, a warning of what can happen. There's nothing to be done about Mr. McPherson's fate. He did some dumb moves but it's very possible for all of us to fall in a similar situation. Our current mind set is not what it will be in the future. It's very possible to fall into a previous unthinkable situation if we are not careful. I, for one, thought it was worth reading.

Jtsummers 10y ago

What I gathered was poor budgeting (oh, I've already spent $2k this month, well another $200 won't hurt), poor market timing (not much to do here, but do avoid panic selling), and poor management by others (while overseas, this is easier to avoid today with the relative ease of self-managed brokerage accounts). In some other financial management threads some folks say "earn more, don't worry about budgeting" (that's an almost literal quote I've seen a few times). Ignore that advice. Budget, invest, and spend wisely. Examine what you really need (financially) and do your best to stick with it. Figure out your budget, stick to it, grow your capital each month (on average, some months will be negative because of a big purchase, but outside those outliers you should see more growth than shrinking). Invest wisely. Don't buy (much) of a stock a friend or friend-of-a-friend tells you about unless you understand it well enough to judge it yourself. I'm focusing my investments within industries I have familiarity with and index funds, this has turned out well so far (a couple "throwaway" investments based on such tips, for relatively trivial amounts of money, one worked out decently, the other was a complete bust). Pay attention to who is managing your money if you're not doing it yourself. Stay on top of their reports. Do not ignore it for a long stretch of time (this burned me with a mutual fund that changed management and started doing terribly, changed again and recouped the losses but should've been worth so much more by now). Plan your tax strategy. For salarymen, this means planning your retirement contributions and other things to maximize the tax benefit and yield the best per/year net income (including within retirement accounts). For contractors and business owners, this will be more complex and I can't speak to it. Plan for emergencies, but you can only do so much here. This is partly offset by insurance (I've never been without health insurance, and with one necessary surgery in 2006, the insurance coverage saved me enough to cover all my premiums through 2011 or 2012; other surgeries and things since have put me in the positive through 2020 or later).

WheelsAtLarge 10y ago

Take it for what the article is, a warning of what can happen. There's nothing to be done about Mr. McPherson's fate. He did some dumb moves but it's very possible for all of us to fall in a similar situation. Our current mind set is not what it will be in the future. It's very possible to fall into a previous unthinkable situation if we are not careful. I, for one, thought it was worth reading.