Stupid As

Queue Marilyn Manson's Beautiful People

You gotta wonder wtf goes through people's minds sometimes..

HARPERSVILLE, Ala. – With his world crumbling around him, investment adviser Marcus Schrenker opted for a bailout. However, his plan to escape personal turmoil was short-lived.

In a feat reminiscent of a James Bond movie, the 38-year-old businessman and amateur daredevil pilot apparently tried to fake his death in a plane crash, secretly parachuting to the ground and speeding away on a motorcycle he had stashed away in the pine barrens of central Alabama.

Solid plan, eh? One problem though.. no dead body in the plane... duh

Schrenker was on the run not only from the law but from divorce, a state investigation of his businesses and angry investors who accuse him of stealing potentially millions in savings they entrusted to him.

"We've learned over time that he's a pathological liar — you don't believe a single word that comes out of his mouth," said Charles Kinney, a 49-year-old airline pilot from Atlanta who alleges Schrenker pocketed at least $135,000 of his parents' retirement fund.

I don't have a lot of sympathy for people who give their money to somebody else to "invest" for them. They're doing something exceptionally risky out of greed. They think they're going to make a bunch of money. It's the same deal with the Bernie Madoff debacle.

A familiar refrain from me has always been, "who are all these people that have all this money?", and as it turns out.. not that many people with not all that much money. The economy wasn't just built on a real-estate bubble, it was built on an investment greed bubble. It was the illusion of wealth, not real wealth.

Ever see the movie Wallstreet?

Greed is good.. greed works..

Gordon Gekko was awesome.. and in the environment of Republican de-regulation, it's just been a feeding frenzy of seemingly consequence free greed. Some people are getting caught.. and a hell of a lot more are probably not. The illusionary wealth has evaporated.

I have my retirement with Edward Jones. I pay bit more in fees than a "discount broker", but it's solid and easy to use. I have mutuals (something like 7 different kinds for diversity) that have been around for decades. They aren't new. They aren't a "hedge fund". They aren't administered by some jackass constructing a ponzi scheme. They lost about 20% of their value in the recent economic implosion, but that's really not a big deal because they are long-term investments. During a downturn, the price of the mutual is lower so reinvested dividends buy more shares. If/when the price goes back up, it'll have had a larger return than if the price had held steady.

I think the financial lessons are pretty clear, and they need to teach this stuff in school.

/begin sermon

Don't buy a car that costs more than 6 months gross pay. Don't buy a house that costs more than 3 years gross pay (mine is 2x gross). Don't ever carry a balance on a credit card. Save money to make large cash down payments on cars and houses. Always get your loans in the lowest duration possible for the lowest rates (3 years cars, 15 years houses). Pay off the car early, since you can't deduct the interest. Drive that car for a few years at least with no payment. Mortgage interest is a decent deduction if it puts you into a lower tax bracket, but will cost you more in the long term if it doesn't. Put money into a 401k, and into mutual funds for retirement. Those are your most conservative investments, and just a little at a time will add up if you start young. Once you get some money, you can try a bit more risky investments but never take advice from any financial advisor. Their guess is NOT better than yours. Treat a risky investment like a wager in Vegas.. only if you can afford to lose it.

Important point.. the closer you get to retirement, the more assets you want to shift from the stock market based investment to guaranteed return investments, such as money markets and CD's. You want to be able to hedge against another market implosion. With money in fixed assets, you lose less then you would if it were all in market based investments. You should be able to weather the downturn and avoid taking the loss by selling your market investments at a losing value.

Living life with zero debt except a house is the way to go. It just feels good, and if something bad happens (and it will), you'll have emergency money to deal with it. Prior to moving to Dallas, I was out of work for a year because I work in a niche field. I went through 30k in cash. If I hadn't lived smart prior to that, I wouldn't have had the cash to get by.. and as it turns out, it was a good thing. I was horrified at the time, but looking back.. I had a year vacation.. I did a little travel, socializing, etc.. and as things so often do, it turned out for the better and I ended up in a great situation here.

The thing I don't get is.. it's not that hard. I'm not special, nor do I have any great wisdom about anything really. I'm a geek and hence have no common sense with every-day things. John has to show me how to do basic things. I do really dumb things sometimes, and I know that's not going to change. I'm going to do something really stupid before long as I'm over-due.

Considering all that, I just don't get how smart financial people can't be content to make really good money and have to be corrupt in order to make absurd money. I don't understand how sensible people can risk their retirements, or not even plan for one. I don't understand how people can't just live within their means. Nobody "deserves" anything, and sometimes it's better not to keep up with the Joneses, because Mr. Jones is a fraud that is going to try and stage his own death by leaping out of a perfectly good airplane.

John's father is/was one of those people.. buying new cars every year.. buying new houses every few years.. living large when making large, and not saving. Maybe he didn't think he was going to live to be old, but he did.. and he had to keep working until the work was gone. He's a very smart guy, that didn't have the sense to know that he might want an easy retirement. He's not poor by any means, but I get the sense that he's not able to do things he wanted to do in retirement.

Because of what happened to his father, John is like the anti-Pop.. he's paranoid about money in a weird way. Before he hired Chiquita to do the shopping, he'd refuse to buy a case of diet coke if the price was 50 cents higher than it should be (no lie). He's spend a dollar in gas to drive someplace that has the better price, not really getting that it cost him 50 cents more than if he had just bought the first one... nor understanding that when you make a certain amount of money, the price of diet coke doesn't mean shit anyway. But then he'll turn around and drop a shit-ton of money on a vacation without blinking. He even gave cash bonuses to his staff at the end of the year. Who else did that? So many others were laying off. He's getting better, and I'm working on him to buy the "big house".. but I still think he needs to have his meds adjusted (inside joke).

I'm not saying you should live like a college student (unless you are one). I did that for a while to a certain degree. I just think that there should be some balance and basic financial practices. Everyone has a hobby or something they are interested in. Buy the best shit you can get for the things that you do a lot, and enjoy. I wouldn't assume that the world is going to come crashing down and you have to horde money. Life is short, you're going to die, and you damn well better have a good time while you're able to. The trick is to just make sure that if you get old, you can still have a good time.

And whatever you do.. never, ever, ever, carry a balance on your credit card. It will trap you forever. If you do have a balance, my suggestion to you is that you learn the many ways to make Ramen noodles.. because that should be your diet until you pay it off.

/end sermon

/update

I mentioned "buying" cars.. as opposed to leasing them. It does make some financial sense to lease if you go through cars at a fairly rapid pace (say 3 year turn-around). I'm talking about buying a solid car (or truck, SUV, whatever) that you can keep for a while because cars really are made better now then they were just a decade ago. If you buy the car, pay it off early, and drive it for a number of years, you'll come out ahead even though that car will depreciate a lot. Monthly payments are a killer, and you want to minimize them wherever possible.

It's also easier to buy used cars now. The Internet has great tools for determining what the price of a used car should be. Typically, if you buy something in the 10k-20k mileage range, it will be in good shape, have the balance of the warranty, and be far less than a new car. The key is to do the research on the Internet. Google is your friend.

I drive a 2004 Infiniti G35 Coupe. I bought it new because it was the second year of the model, and I wanted to avoid first model year bugs. I also wanted a very specific configuration. I put 25k down on it when I bought it, and paid it off in 2006, and I've driven it to this day with zero payments.

I wish I had started a retirement fund when I was 25, but back then, I hardly made any money at all and couldn't afford to. Thing is, I could afford to just by having an autodraft of my paycheck so I wouldn't miss it. Even if it's 50 bucks.. 100 bucks.. whatever, when you start young it makes a huge difference.

By the time you're 35, you should be established in your profession because it'll be hard to switch after that. My dad told me that, and it's true.

When you hit your 40's, you are making the most money you will make in your life (most likely, and assuming you work for somebody else). For me.. meh.. for John, definitely true. A bit of luck goes a long way, and so if you get meh, luck may give you somebody who it's true for, and you can glom off of them.. lol

And one other thing while I'm thinking about it. I talked to John about this last weekend.

Many highly successful people became successful because of somebody else. John didn't just go into residential appraising and real-estate on his own. He needed a job, and a buddy of his owned a company. He worked hard, paid attention, and worked the relationships. At some point, you're on your own, but most successful people will want you to be successful because you'll make them money. 15 years later, John is eclipsing his buddy and working his own gig. Now he has his own staff, and if they're smart, they'll pay attention and work hard because the opportunities are there to make a lot of money. John wants them to be successful, because he's the Pimp Daddy and takes a cut for himself.

I just want to write code in peace.