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The Smartest Advice I Ever Got: Personal Finance

38 points by iseff 18y ago

aardvarkious 18y ago
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.
- DaniFong 18y ago
  That informs one other axiom: Much of modern life involves trading freedom of one form for freedom of another.
- ericwan 18y ago
  well there's an exception:give up freedom at present for money, and use the money to buy even more freedom in future
- sebg 18y ago
  Bringing it back full circle: From Paul Graham - "Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn't need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn't matter how much money you had."
wallflower 18y ago
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
- seregine 18y ago
  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/ 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.
jobeirne 18y ago
"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.
- run4yourlives 18y ago
  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.
  - cglee 18y ago
    What's rich? Really depends on your own state of mind and where you live.
    - cconstantine 18y ago
      Almost off-topic, but I see three layers: Poor: Unable to make enough money working to sustain your lifestyle Middle-class: Must work to sustain your lifestyle Rich: Work not required to sustain your lifestyle That implies that there are two ways to becoming rich, either you can make boatloads of money, or live below your means and create a savings that sustains you. I didn't come up with it, but I try to live by it.
  - aardvarkious 18y ago
    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.
    - run4yourlives 18y ago
      Only if you live in the US. Most of us do not.
__ 18y ago
"[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?
- gaika 18y ago
  It is even worse, imagine if everyone were to follow it: there would be no money today.
  - nostrademons 18y ago
    There could be money; there was before fractional reserve banking was invented. It's just that the economy would work significantly less efficiently, we'd get widescale deflation every time people wanted to save, and we likely wouldn't see the large investment projects that have resulted in our 21st century lifestyle.
- deleted 18y ago
  [deleted]
- elai 18y ago
  Except for a house, there are many, many people who do that. Especially in countries where education & medical treatment is not heavily inflated like the USA. And even in the USA you can go to berea and get a 2003 Civic without much hardship at all. Some people can take the subway for a while until they save the money for a car.
  - nostrademons 18y ago
    I never understood the concept of financing or leasing a car. I was taught that you save for a car, and then when you buy one, you start saving up for the next one.
- dominik 18y ago
  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 :)
byrneseyeview 18y ago
"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?").
- smakz 18y ago
  Not enron, but close: http://en.wikipedia.org/wiki/Timothy_Sykes http://en.wikipedia.org/wiki/Timothy_Sykes
  - byrneseyeview 18y ago
    I'm afraid I don't see how that is relevant.
cperciva 18y ago
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.
- Retric 18y ago
  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.
sdpurtill 18y ago
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
- cypress-hill 18y ago
  there is blood in the streets now, more than you may see again in your life
  - tom_rath 18y ago
    This isn't a 'blood in the streets' situation. Not yet. Once you've lived through one, you'll find it easier to tell.
    - sebg 18y ago
      Can you tell us of a past situation that you have lived through that was "blood in the streets" so we can get a better idea why this isn't one?
- Tichy 18y ago
  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?
  - sdpurtill 18y ago
    Read this: http://www.fool.com/investing/small-cap/2007/03/28/buy-when-theres-blood-in-the-streets.aspx http://www.fool.com/investing/small-cap/2007/03/28/buy-when-... Baron Rothschild was big on it :p
cypress-hill 18y ago
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
ced 18y ago
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 http://philip.greenspun.com/materialism/money

38 points by iseff 18y ago

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.

DaniFong 18y ago
That informs one other axiom: Much of modern life involves trading freedom of one form for freedom of another.
ericwan 18y ago
well there's an exception:give up freedom at present for money, and use the money to buy even more freedom in future
sebg 18y ago
Bringing it back full circle: From Paul Graham - "Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn't need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn't matter how much money you had."

wallflower 18y ago

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

seregine 18y ago
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/ 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.

jobeirne 18y ago

"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.

run4yourlives 18y ago
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.
- cglee 18y ago
  What's rich? Really depends on your own state of mind and where you live.
  - cconstantine 18y ago
    Almost off-topic, but I see three layers: Poor: Unable to make enough money working to sustain your lifestyle Middle-class: Must work to sustain your lifestyle Rich: Work not required to sustain your lifestyle That implies that there are two ways to becoming rich, either you can make boatloads of money, or live below your means and create a savings that sustains you. I didn't come up with it, but I try to live by it.
- aardvarkious 18y ago
  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.
  - run4yourlives 18y ago
    Only if you live in the US. Most of us do not.

__ 18y ago

"[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?

gaika 18y ago
It is even worse, imagine if everyone were to follow it: there would be no money today.
- nostrademons 18y ago
  There could be money; there was before fractional reserve banking was invented. It's just that the economy would work significantly less efficiently, we'd get widescale deflation every time people wanted to save, and we likely wouldn't see the large investment projects that have resulted in our 21st century lifestyle.
deleted 18y ago
[deleted]
elai 18y ago
Except for a house, there are many, many people who do that. Especially in countries where education & medical treatment is not heavily inflated like the USA. And even in the USA you can go to berea and get a 2003 Civic without much hardship at all. Some people can take the subway for a while until they save the money for a car.
- nostrademons 18y ago
  I never understood the concept of financing or leasing a car. I was taught that you save for a car, and then when you buy one, you start saving up for the next one.
dominik 18y ago
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 :)

byrneseyeview 18y ago

"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?").

smakz 18y ago
Not enron, but close: http://en.wikipedia.org/wiki/Timothy_Sykes http://en.wikipedia.org/wiki/Timothy_Sykes
- byrneseyeview 18y ago
  I'm afraid I don't see how that is relevant.

cperciva 18y ago

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.

Retric 18y ago
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.

sdpurtill 18y ago

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

cypress-hill 18y ago
there is blood in the streets now, more than you may see again in your life
- tom_rath 18y ago
  This isn't a 'blood in the streets' situation. Not yet. Once you've lived through one, you'll find it easier to tell.
  - sebg 18y ago
    Can you tell us of a past situation that you have lived through that was "blood in the streets" so we can get a better idea why this isn't one?
Tichy 18y ago
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?
- sdpurtill 18y ago
  Read this: http://www.fool.com/investing/small-cap/2007/03/28/buy-when-theres-blood-in-the-streets.aspx http://www.fool.com/investing/small-cap/2007/03/28/buy-when-... Baron Rothschild was big on it :p

cypress-hill 18y ago

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

ced 18y ago

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