Daily Worth: Dealing with the kid tantrums on money
Daily Worth - a money site for women – has an article today about kids and money that’s getting a lot of feedback from the readers: I’m spent – Confessions of one tired mom.
A snippet from Amanda’s article:
Here’s my confession. Rather than teach my three-year-old lessons in self-control—lessons in budgeting even—I often buy him things to quiet him, and calm myself.
From gummy candies at the supermarket to Power Rangers, I bet I spend about $30 a week to get him to just STOP THE WHINING. Is indulging him the best way to help him learn patience? No. Is spending a smart way to ease my frustration with him? No, it’s a short-cut and not a cost-effective one, and I’m actively seeking a personal transformation.
Do you spend money to quell your anxiety (or prevent tantrums)—money that you could be saving? Leave your comment, insight or thoughts.
There are already more than 30 comments on the site with a range of opinions and experiences. Here’s what I posted:
Don’t take preschoolers to the store. Little kids don’t have the ability to understand your long-range plans, and you don’t need the aggravation when you say “no.”
I was divorced / single from the time my daughter was 1 until she was almost 5. I was on a very tight budget in those days and could not afford extras.
I did my shopping and banking errands on lunch break, between work and picking her up from sitter, when I could take the daughter to grandma’s, when she was visiting her dad. Therefore I could take the time to coupon and comparison shop — and the girl never knew what was in the store that I didn’t bring home.
Continue reading Daily Worth: Dealing with the kid tantrums on money …
From Monroe on a Budget.
Review: Payback Time
Every Sunday, The Simple Dollar reviews a personal finance book or other book of interest.
A few years ago, I read and really enjoyed Phil Town’s first investment book, Rule #1 (you can read my review here). Town actually contacted me after reading my review and offered a few thoughts on my comments on the book and we exchanged a few emails over the years. Thus, when he finished his follow-up book, I was quite happy to give it a read.
Town’s basic ideas are pretty straightforward. He believes ardently in value investing, meaning that you look for good, healthy companies that are selling for much less than they should be when compared to similar companies. That requires a great deal of patience to do. In both this book and his last book, he goes over a straightforward formula for finding those companies and identifying whether they’re on sale or not.
So what makes this book different than the earlier book? Let’s dig in and take a look.
How the Wealthy Use Down to Go Up
Town opens the book by explaining the basic strategy Payback Time is focused on, which he calls “stockpiling.” To put it simply, a person buys stock in an individual company that they deeply believe in for whatever reason, then they just keep buying more and more of it. They then use the dividends from the stock to live off of or they reinvest them into more of the stock. So how does this strategy use “down” to go “up”? If you’re owning this for the long haul – basically forever – you actually hope for a down market so that the price of the stock you’re buying is lower. Price does not indicate value in any way – it’s no different than buying the same item at the store when it’s on sale instead of when it’s not on sale.
Mutual Fund Investing Makes No Sense
Here, Town basically writes off every kind of fund that’s not an index fund as junk and a waste of your money. In short, he defines such funds as being the bastion of the investor who really doesn’t have any idea what they’re doing with their money. Sometimes, that’s acceptable if people recognize that they truly don’t have the time to study such things with any detail. For those people, the only real bet is index funds, which are low cost and usually match the market. You can’t hit home runs with them, but you certainly won’t strike out by buying them.
Threee Ms Equal No-Risk Investments
There are a lot of traits that a “perfect” business would have, but there is no perfect business in this world – nobody’s perfect, after all. Instead, Town looks for wonderful businesses to invest in, and wonderful businesses are usually characterized by three criteria – they have great meaning to you (meaning you understand the company and fully approve of their business model), they have a big moat (meaning that it’s protected from competition in some key way, making it both durable and profitable), and they have great management (dedicated, passionate, and honest people running the shop). These are the kinds of businesses you should constantly be looking for and investing in.
Payback Time Means “No Fear”
Once you’ve identified businesses you want to invest in, you should wait until the time is right to buy – in other words, when they’re on sale. How do you know? It has little to do with what the overall market is doing. Instead, you want to watch the P/E ratio (price to earnings) of the stock. You can easily get this information online at pretty much any stock investment website. Just wait until that ratio is noticeably lower than usual without any real changes in how the company is performing (this often happens when it’s not being hyped up at all but is just trucking along, doing its business) and buy in. When the P/E ratio is high, don’t buy (and if you have a reason, it might be a time to sell). He goes quite in depth with this formula, but much of the information is very, very similar to his earlier book Rule #1, which I mentioned earlier and liked.
Eight Baby Steps to Wealth
What are the eight steps? Find it, value it, watch it, buy it, own it, stockpile it, sell it, repeat. In other words, look patiently for companies that meet your criteria (and never rush into buying). When you find the right one, buy it. Keep buying it whenever the P/E ratio (and other indicators) tell you to do so. Sit on the stock and collect dividends. When that ratio gets high, sell the stock. Then repeat. It’s pretty straightforward and actually makes a great deal of sense, particularly to a conservative investor like me.
Just the FACs, Ma’am
Here, Town talks about two methods for determining whether or not you should buy more of a stock once you already own some. He spends most of his time focusing on a method that centers on technical analysis (i.e., looking at charts), which is a method I find to be akin to voodoo. Instead, I prefer the other method, which basically means you pick one day a month to evaluate a stock. If it’s below the P/E ratio (or other similar indicator) you bought the stock at originally, you buy. Otherwise, you stick the money into a savings account and wait until a month when it’s low enough to buy.
A Tale of One Family
All of the information in the previous few chapters is combined together into a real-world look at how a family invests. Basically, it’s a series of real-number examples of the ideas from the book, showing how they all work together and click.
Free Money with a Berky
The final chapter (or at least the last one that’s not functionally an epilogue) contains a brilliant idea that Town calls a “Berky” (short for Berkshire Hathaway) that answers the question of how people come up with the money to actually do this kind of investing. It’s actually simple: automatic savings. You should set up a savings account for the sole purpose of investing according to the ideas in this book (or your own principles). Have your bank put some amount automatically into this account each week (or each month). Then, invest solely from that account. This way, even if the investment tanks, it doesn’t affect your day-to-day personal finances – it’s just an exercise in building wealth. This is absolutely the way people should start investing if they’re tempted.
Is Payback Time Worth Reading?
As with many follow-up books, Town takes the content of his very good earlier book, Rule #1, and places it in a broader context. If you want to know more about the investing part of the book, I’d suggest reading the earlier book as well.
One common complaint about Rule #1 that I would anticipate with this book is that people ask where the details are on past results, as Town doesn’t dwell on this for any significant length. My thought is this: past performance is no indication of future results. Much like any other investment strategy book, it’s simply a tool in your arsenal, one you can use in your own investigations to figure out what works. There are lots of investment schemes that have great results for a period in the past but are awful today (that’s why fund managers never have long strings of success). The system that Town espouses is incredibly simple, can be easily tracked over a long period using pretty much any investing website, and is backed by a good idea (value investing). Does it mean it’s the be-all-end-all of investment strategies? No. But it has enough going for it (simplicity, logic, and clarity) that it’s worth at least paying attention to.
All of that being said, I did feel in the end that I learned more (or at least was provoked into more thought) reading Rule #1, but that may have been that the meatiest parts of this book often just rehashed that information. Both books are worthwhile reads, however, and present interesting ideas, which is all I can really ask for in an investment book.
Continue reading Review: Payback Time …
From The Simple Dollar.
The Simple Dollar Weekly Roundup: Home Movies Edition
For the longest time, I didn’t really see the point of taking home movies. I would take some because I’d be encouraged to do so, but they always seemed to just wind up in boxes collecting dust somewhere.
Until last night.
I was digging through one of our closets and came up with a few tapes depicting the day our son was born, his first Christmas, and some other moments from early in his life. We watched them together and he really enjoyed them. He had tons and tons of questions about what was going on and we had to pause it several times to talk about things.
Home movies seem pretty useless when you take them, but they can sure create a magical evening a few years later.
The Science of Success Science is beginning to show beyond a doubt that genes have a huge effect on positive traits in people. Even more interesting, it benefits us to interact with people who are wired differently than us. (@ the atlantic)
11 Steps in Becoming Educated for Your Dream Job These steps can really be boiled down to one thing: push yourself in your education every chance you get. Choose the hard classes. Choose the hard school. A hard-earned C teaches you far more than an easy A. (@ productivity 501)
Slow and Steady Wins the Race The biggest challenge of personal finance is the battle with patience. Patience is hugely rewarded when it comes to personal money management, but many people simply don’t have it. (@ get rich slowly)
Some Counterintuitive Facts about Loneliness If you work in a job where you’re alone much of the time, these are some very important facts to keep in mind. (@ the happiness project)
The Cost of Money People often make some very unusual sacrifices in the name of a bit more money. (@ free money finance)
Continue reading The Simple Dollar Weekly Roundup: Home Movies Edition …
From The Simple Dollar.
Putting Out the Word
About a year ago, my mother decided to re-do the guest bedroom in her home. Before starting out on the project, she outlined her project to several of her friends, not asking for a single thing beyond advice. The end result? One friend gave her a crib. Another friend gave her a children’s bed. Another friend gave some paint to help refinish the room.
A few months ago, I needed some small cloth drawstring bags for a small project. Instead of just heading to Hobby Lobby, I told several people that I know about the project and mentioned that my next step was to get the drawstring cloth bags. Within a week, I had more such bags than I needed.
These two stories have an obvious connection in common. By exerting a bit of patience on projects and talking to others about those projects, we found success without having to ask for it.
Why did this happen? There are several factors at work.
First, in neither case did we ask for anything but advice. The items we received from people weren’t as a result of a specific request or out of greed. They were delivered out of goodwill.
Second, most people want to help others, particularly if it’s convenient. When a friend tells you a story that’s easily solved by a simple action, most people will respond by fulfilling that simple action. They won’t go to extraordinary lengths to make it happen (at least not normally), but if there’s something a friend can conveniently do to help you, they often will. Plus, they’ll feel great about being able to help.
Third, even if a friend can’t help materially, they’ll often help with good advice. Your friends will see your situation from a different angle than you do. They might know of opportunities, techniques, or other such information that can transform your project.
Fourth, the person actually working on the project showed patience. Instead of just throwing money at the problem and rushing around to complete it – something many of us do in the rapid-fire modern world – patience was exerted. They sat back, asked around, and found a better solution.
Fifth, such value exchanges strengthen friendships on both sides. Not only does the giver feel good about being able to help a friend, the receiver feels good as well because of the generosity of their friend. It’s the type of value exchange in which both sides win.
To put it simply, it’s well worth putting the word out in your social network if you’re working on a project of any kind. Simply tell your friends about the things you’re doing and seek their input. Time and time again, they’ll be happy to give their input, whether you choose to use it or not, and quite often they’ll provide someting of great value to you.
Of course, the reciprocal is true – when your friends ask you for advice and you can easily help them, you should provide the same help. If you have useful advice or information, provide it. If you have an item that could easily solve their problem (and you have little need for it), give it.
After all, in the end, what is a friendship beyond a long series of value exchanges? We are constantly doing things for our friends that lift them and our friends constantly do things for us that lift us.
The real lesson here is the value of patience. The utilization of one’s social network is just one piece of the puzzle. Without patience, both stories would have ended with a trip to the store, less money in hand, and a shallower connection with the people in one’s social circle.
If there’s a project you’re working on that’s not incredibly urgent, be patient. Put out the word about your project. Gather input. You might be surprised at the things you discover and the value you find.
Continue reading Putting Out the Word …
From The Simple Dollar.
The Sleeping Fox Catches No Poultry
I love reading essays, and I have a collection of essays that have truly inspired me and made me think. Among these is Benjamin Franklin’s classic The Way to Wealth – something I often read when I need a piece of financial inspiration. If the circa-1750 language is rough on your eyes, here are the principles summarized well by Art of Manliness.
Just a few days ago, I read The Way to Wealth again. I was inspired to read it by our survival of the “summer of low income” – I made a tough choice to switch my advertising revenues for The Simple Dollar that resulted in basically no income during the summer, but we made it through to the other side with little problem.
As I was reading through The Way to Wealth, one phrase really stood out at me this time:
The sleeping fox catches no poultry.
What exactly does that little phrase mean in terms of our modern lives? I see it as a call to five things.
It’s a call to be alert. Our world is full of opportunities. Sales. Small investment opportunities. People trying to get rid of things. New jobs. New careers. Love interests. Friendships. Ideas. Purely lucky events, like finding fifty dollars in a parking lot. Every day, we’re brushed with many of these things. If we’re alert, we can see them – and if we choose to, we can take advantage of them, jumping in with abandon. You’ve got to keep your eyes open and see the world as a field of blossoming opportunities.
It’s a call to have resources in reserve. Of course, many of those opportunities are hard to pluck if you don’t have anything to pluck them with. It’s incredibly useful to have some money in reserve. However, money is just one of many resources that’s useful to have in reserve. Do you have relationships you can tap for advice or other things? Do you have time – are you not booked to the maximum with no flexibility in your schedule? Do you have patience to wait for good things to come? Do you have skills and talents that you can apply and share? Resources mean more than just money – much more.
It’s a call to know what you want. The fox sleeps outside the henhouse because he has a hunger for chickens. What are you hungry for? What are your passions? Figure them out and follow them, because when you’re chasing your passions, you’re showing others – and yourself – that this is a life direction that you want. You see more opportunities because you’re passionate, and you’re able to follow up more often because of the knowledge and insight you’ve picked up chasing your passions.
It’s a call to be aggressive. If you’re sleeping, you’re letting the world pass you by. Instead, seek out the opportunities in life. Instead of glancing at that yard sale, stop there. Instead of debating whether to pay $35 for that oak desk, offer $20 for it. Instead of thinking how fantastic that job would be, ask for it. Learn how to be assertive and go after the things you want.
It’s a call to get out there and DO something. Today.
Are you the sleeping fox? Or are you out there, alert, aware, drawing on all of your resources, and catching those hens that you hunger for?
Continue reading The Sleeping Fox Catches No Poultry …
From The Simple Dollar.