Money...age..the future...security.

  • Posted by a hidden member.
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    Apr 20, 2008 3:05 PM GMT
    I am happy with everything in my life except my money situation. MY bills are paid, I owe nothing. My living situation is very secure. I know how to live well, travel, and generally have fun.

    But I have no investments, no assets, and little money in the bank.

    A few years ago, I had a lover who neglected to pay his health insurance premiums. He came down with cancer. I had to put up $220,000 to the hospital to take care of him. I own my own business, and at one point almost lost it because I had a serious car accident and couldn't work.

    My question is this....at my age, do I work triple hard to be more wealthy, or do I just accept my situation and make the best of it?

    What would you do? How would you feel?
  • GQjock

    Posts: 11649

    Apr 20, 2008 3:48 PM GMT
    Welcome to the reality of America

    Yeah a lot of people have something saved up for retirement and a little put aside but for every one that does there are more who are worse off than you and living hand to mouth

    We are seeing the tip of the ice berg with this mortgage crisis the next tumble is going to be the student loan corps and then the credit card companies are going to stumble

    Hold onto every asset you have because like Bette said
    ...it's gonna be a bumpy night
  • HndsmKansan

    Posts: 16311

    Apr 20, 2008 3:55 PM GMT
    Kissing Pro.. you need to make some financial changes, but to be advised, one would need to have additional information.

    A few points: You say your housing situation is secure? I assume you own a home that is paid for?
    Mortgage interest is a great tool for the self employed... but for anyone.

    Being single, what is your tax situation...if you are self employed, I would assume taxes are of MAJORRRRRR
    concern.

    No retirement plan?? If taxes are a problem, and I would think they are, you need to set up a SEP, Simple, Keogh or other plan (depending on if you have employees.. many plans don't allow for overweighting).
    What about health insurance???? Premiums are a write off. You had better have health insurance.
    There are others that are very important. This is just a start.

    You have impressed me as being someone on the ball, I was slightly shocked to read this thread.

    No you SHOULDN'T leave things as they are. I about fell over in my chair when I read your post.


    I'd suggest you take some the money you use to "generally have fun" and invest it so you can have a little fun when you retire.
  • Posted by a hidden member.
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    Apr 20, 2008 4:03 PM GMT
    wow........thanks man
  • Posted by a hidden member.
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    Apr 20, 2008 4:18 PM GMT
    GQjock saidWelcome to the reality of America

    Yeah a lot of people have something saved up for retirement and a little put aside but for every one that does there are more who are worse off than you and living hand to mouth

    We are seeing the tip of the ice berg with this mortgage crisis the next tumble is going to be the student loan corps and then the credit card companies are going to stumble

    Hold onto every asset you have because like Bette said
    ...it's gonna be a bumpy night


    thank you
  • HndsmKansan

    Posts: 16311

    Apr 20, 2008 4:19 PM GMT
    KissingPro saidwow........thanks man


    My point isn't to be negative, but you need a total adjustment in how you approach the whole thing.
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    Apr 20, 2008 7:07 PM GMT
    Hey KissingPro and HandsomeKansan

    Can you guys get together and chat about this???

    --looks like Handsome dude has more to offer and may be able to help even more than he has ...

    Sorry, but Kansas has something here ... Kissing Pro you need to see a professional (seems to me Kansas Dude is the one BUT there are others) .

    Do take care of this.

    I was stunned more by the kindness you showed toward your Mate .. Man, such incredible generosity.

    Now be generous to yourself and get your stuff in order and you will be happier for it.

    Just beginning will bring a calm to you, Man.

    Best wishes

    cmi

    Sorry if I intruded ... but I couldn't let this go.
  • Posted by a hidden member.
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    Apr 20, 2008 10:23 PM GMT
    Kissing,

    For a self employed man of 48, with not one but two crises under your belt, you are doing pretty damned well.

    I do wonder how many people who proffer free advice operate their own businesses and are debt free.

    Diversification is great, and asset building is wonderful. However, it is statistical fact that most created asset wealth happens just a bit later in life for people who operate their own businesses (the 50's are the golden years for this).

    You are right to be thinking about these issues, right to ask these questions, and right to start investigating.

    New York is not middle America. Anyone who lives in New York and is debt free (or has a positive balance sheet) is the exception and not the rule.

    My work is professional advisory services to "unique" people. I cannot tell you how many times I have been called in on the cleanup crew when men (even titans) who know how to do their business well get involved in something else motivated by asset creation, wealth management, fear, etc.

    The scale is different but the circumstances are always the same.

    By the way, if you are a debt-laden billionaire or a debt-laden hairdresser there really isn't any difference. (read the tragic Ralph O. Esmarian story in today's NYTimes http://www.nytimes.com/2008/04/20/fashion/20jewels.html)

    The best place for a business owners capital (especially in a small business) is in that business. Grow the business and you grow your assets.

    That does not imply being reckless (though risk is part of entrepreneurialism). Neither does it imply avoiding a minimal safety net (i.e. health insurance + one year of savings).

    It is not irresponsible to live well, travel, and have fun. I repeat, if you are debt free, don't use credit cards, etc. there is absolutely no reason to levy this judgement upon yourself.

    If you want to diversify, find a way to do it that you will enjoy. Some people enjoy squirreling away money in financial vehicles and others do not. Using your knowledge and acquiring assets can be extremely enjoyable.

    Beware of people who sell fear. Fear is the world's easiest and most salable product. Almost anyone will buy it. Furthermore, the fear cycle feeds upon itself. Maybe the best single thing you could do for yourself is to unplug your television set and turn off the radio.

    Analytical thinking, truly analytical thinking, about the global financial situation requires more background knowledge and more access to information than you are going to be able to obtain. What is happening in the world is not what it seems upon first examination and it is not what is being sold in the media.

    Since a "little knowledge is (indeed) a dangerous thing" it is better to stick to what you know. It is obvious, from what you have written, that your business is what you know.

    Specifically regarding mortgage backed securities, student loans, credit card companies, hedge funds, the war, and everything else, it is all well beyond your control. You can exert no control over these economic factors and, I repeat, they aren't what they appear to be anyway.

    The only thing that we can control is that we think clearly, enjoy living without obsessive spending (and it hardly sounds like you indulge), and avoid debt. (personally I have no debt, no credit cards, no mortgages, no car loans, etc. I don't even take out short-term debts like rental contracts without prepaying the entire contract in advance. This is extreme but it has saved my ass more than once.) Work on slowly building assets (those should be things that are fun for you to acquire and fun for you to have).

    When it comes to assets, I firmly believe that assets are something that you should buy and not something that anyone should sell to you. This is a subtle but profound difference.

    As for working triple hard, I would end by saying it is worth working triple smart. You are correct in understanding that the key to your future is in your work. Your work, your business is your number-one asset and whatever you do to enhance it, grow it, and diversify it will pay dividends in exponents of any other investment you could possibly make.

    Good luck to you,
    Terry



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    Apr 20, 2008 10:27 PM GMT
    Rental property is the best. There is a reason they call it REAL Estate. It doesnt disappear like other investments. And rents keep pace with the cost of living. So when bananas hit a $100/lb, your rents will be up there too.
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    Apr 20, 2008 10:34 PM GMT
    Rental property is a business and it is a complicated one too. Furthermore, there is hardly any other financial parlor trick that has gotten people into more trouble than the leveraged acquisition of rental properties as a wealth building scheme.

    Anyone who has cash to invest (i.e. without any leverage) and is willing to take their lumps with learning the ropes of the landlord business might consider such a move.

    Tenants are a bitch and a half. Imagine these poor souls with leveraged rental property and suffering tenants. I wonder how they sleep at night? I wonder how their workouts are going?

    Terry



    Caslon saidRental property is the best. There is a reason they call it REAL Estate. It doesnt disappear like other investments. And rents keep pace with the cost of living. So when bananas hit a $100/lb, your rents will be up there too.
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    Apr 20, 2008 11:07 PM GMT
    "And rents keep pace with the cost of living. "


    Two phrases, two words each:

    Rent control.

    Rent stabilization.

    lastly

    HAHAHAHAHA!
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    Apr 20, 2008 11:46 PM GMT
    Wow, great insight, Ursa. I spent 10 years as a Certified Financial Planner in Minneapolis before I chucked it all and moved to the mountains. I probably would have said the exact same thing. It would have been incomprehensibly technical and dauntingly long but none the less, exactly the same.
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    Apr 20, 2008 11:56 PM GMT
    ursamajor saidRental property is a business and it is a complicated one too. Furthermore, there is hardly any other financial parlor trick that has gotten people into more trouble than the leveraged acquisition of rental properties as a wealth building scheme.

    Anyone who has cash to invest (i.e. without any leverage) and is willing to take their lumps with learning the ropes of the landlord business might consider such a move.

    Tenants are a bitch and a half. Imagine these poor souls with leveraged rental property and suffering tenants. I wonder how they sleep at night? I wonder how their workouts are going?

    Terry


    I am the son of landlords. I have lived my whole life "with" tenants. They are not so difficult. There is also an independent landlords association that allows you to do various background checks and put entries against tenants' credit so these people will never buy another thing with credit without a hassle.
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    Apr 21, 2008 12:11 AM GMT
    Caslon - I take your point.

    "I am the son of landlords. I have lived my whole life "with" tenants".

    It is fair to say you are a second generation landlord with a lifetime of experience. That is your business.

    It is quite different for someone with "no assets" to enter the rental property market. By definition they would have to do so with leverage. That person would have to learn a new business and deal with leverage (in a market where getting capitalized, especially for a small business owner, would be impossible).

    I stand by what I said. Buy-to-let is not an amateurs game, it shouldn't be approached with leverage, and just the fact that these "landlords associations" exist is indicative of a response to a problem. If there wasn't the problem then there wouldn't need to be the remedy.

    Ciao
    Terry


    Caslon said[quote][cite]ursamajor said[/cite]Rental property is a business and it is a complicated one too. Furthermore, there is hardly any other financial parlor trick that has gotten people into more trouble than the leveraged acquisition of rental properties as a wealth building scheme.

    Anyone who has cash to invest (i.e. without any leverage) and is willing to take their lumps with learning the ropes of the landlord business might consider such a move.

    Tenants are a bitch and a half. Imagine these poor souls with leveraged rental property and suffering tenants. I wonder how they sleep at night? I wonder how their workouts are going?

    Terry


    I am the son of landlords. I have lived my whole life "with" tenants. They are not so difficult. There is also an independent landlords association that allows you to do various background checks and put entries against tenants' credit so these people will never buy another thing with credit without a hassle.[/quote]