Making money or NOT

[skieur]

Interesting to see some of the best and worst decisions people make that affect their finances.

Real Estate: staging: The idea is to furnish your house like a model home for showings and that will supposedly produce more showings and a quick sale at a good price. You need to store your furniture somewhere so that they can move in the model furniture etc. Cost can easily run to $6,000 for a month and it does not necessarily produce any positive results. More showings with no offers for example is not what the buyer would want.

Real Estate Agents: The more aggressive tend to go after the owner to "lower the price until it sells". A seller might consider that if the original price does not produce any offers that the agent may be responsible for poor marketing practices.

Renovating: My neighbor bought his house for more than it was worth and then spent over 100K in high quality renovations. He is trying to sell at a very high price. He admits that it may be 3 years before it sells. If he does sell it, it would raise the value of my home.

Investment: Two unsuccessful extremes:

Banks, wealth management etc. tend to "assess the risk tolerance of the client" and based on age tend to push most into bonds, GICs and other secure products. The problem is that the return minus fees is LESS than INFLATION. My neighbor made a comment to me recently that the market tanked in the last year. My comment was that the market did NOT tank, but his investments did through bad decisions by him and picking the wrong investment people.

Those who decide to take risks in these banks and most of these investment companies are rolling the dice since the banks and companies DON'T KNOW enough about a particular stock/company to know whether it is a good investment or not. Past history alone is not a good indicator of future growth.

Bank related wealth management companies will allow the investor to make his/her own decisions but unless those decisions are made on a thorough knowledge of business, market, and the economy, then it is still rolling the dice and how many investors have the time to fully investigate the value of stock and companies that they are considering investing in.


The best approach is to find a small VALUE investment company that works in the Warren Buffet style of choosing companies for investment. An investment firm that thoroughly studies a company/firm/stock before investing their client's money in that firm. Higher fees are worth it, if your return is 7X that of the client invested in bonds and GICs. Of course the entry investment requirement is high, but it shows how people with money increase their wealth much faster than those with more limited funds.

Insurance

Like many, I tended to believe that insurance rates on home and car would probably be very similar from one company to another. Not at all. There was $1,000 difference per year on house insurance quotes that I got, from a reputable company and a large bank. I reduced my car insurance to $800 per year.

Taxes

I fought my property taxes and got them reduced by $1,200 per year and the process was much easier than I expected. All that was necessary was a little research and a lot of persistence. My neighbor should have fought his taxes BEFORE renovating his home to save money.

 

[480sparky]

Where does buying lottery tickets fit into the scheme of things? :mrgreen:

 

[usayit]

Easy.... attitude was my best investment. Lived poor as a college student and kept expectation in check afterwards. Its ok to spoil yourself once in a while but we as Americans spoil ourselves so much that being spoiled becomes a lifestyle we expect. I have successfully avoided that rat trap... so far. It takes effort not to question myself while staring at nice stuff I really want.

Real estate. Bought my first house out of 6 months out of college and we still live in it today more than a decade later even with triple the salary. Its payment on a now very low rate 15 year loan is cheaper than rent. Once the twins are old enough, wife will return to work and I estimate 3 years to payoff. Afterwards, buying a 2nd home and this one will be an asset to rent out to someone (crossing fingers no big expenses derail my plan)

Worst decision ever... Buying an Audi TT 2001 used. (yes... My self discipline slipped)

 

[skieur]

Where does buying lottery tickets fit into the scheme of things? :mrgreen:

It doesn't, particularly in the US, where even if you win, you lose one heck of a lot to the taxman.

 

[Josh66]

Where does buying lottery tickets fit into the scheme of things? :mrgreen:

It doesn't, particularly in the US, where even if you win, you lose one heck of a lot to the taxman.

Still more than you started with though.

I'd rather pay the taxes on it than not have it at all.


(I rarely buy lottery tickets, but when I do I usually win at least the cost of the ticket - maybe I should buy them more often...)

 

[skieur]

Best decisions: following my lawyer's recommendation on an investment firm, shopping around for insurance, and fighting the tax man. My worst decisions were choosing a realtor, staging my house, and buying a house before I sold my own.

 

[skieur]

Where does buying lottery tickets fit into the scheme of things? :mrgreen:

It doesn't, particularly in the US, where even if you win, you lose one heck of a lot to the taxman.

Still more than you started with though.

I'd rather pay the taxes on it than not have it at all.


(I rarely buy lottery tickets, but when I do I usually win at least the cost of the ticket - maybe I should buy them more often...)

Apparently based on wining numbers there are some guidelines for improving your chances based on what numbers and sequences to pick or not pick.

 

[Josh66]

It doesn't, particularly in the US, where even if you win, you lose one heck of a lot to the taxman.

Still more than you started with though.

I'd rather pay the taxes on it than not have it at all.


(I rarely buy lottery tickets, but when I do I usually win at least the cost of the ticket - maybe I should buy them more often...)

Apparently based on wining numbers there are some guidelines for improving your chances based on what numbers and sequences to pick or not pick.

It's not unheard of. From what I understand, it is actually very difficult for computers to generate truly random numbers.


http://www.wired.com/magazine/2011/01/ff_lottery/all/

 

[skieur]

Easy.... attitude was my best investment. Lived poor as a college student and kept expectation in check afterwards. Its ok to spoil yourself once in a while but we as Americans spoil ourselves so much that being spoiled becomes a lifestyle we expect. I have successfully avoided that rat trap... so far. It takes effort not to question myself while staring at nice stuff I really want.

Real estate. Bought my first house out of 6 months out of college and we still live in it today more than a decade later even with triple the salary. Its payment on a now very low rate 15 year loan is cheaper than rent. Once the twins are old enough, wife will return to work and I estimate 3 years to payoff. Afterwards, buying a 2nd home and this one will be an asset to rent out to someone (crossing fingers no big expenses derail my plan)

Worst decision ever... Buying an Audi TT 2001 used. (yes... My self discipline slipped)

Yes, there are two basic approaches to real estate: Some buy a home, eventually pay off the mortgage, and live in it forever. Others keep buying UP but try and keep their mortgage at around $85,000.

1. The first group benefits from the increased value of their home over the years and no interest after the mortgage is paid off.

2. The second group pays for 6 or 7 moves, varying interest rates on new mortgages, breaking old mortgages, etc. but treats their home as an investment.

With good strategy and timing the second group can benefit by buying low, doing some basic upgrades and selling higher. If you do that 6 or 7 times, it is difficult to say when the math is done, which group ends up on top....financially.

 

[skieur]

Insurance is only helpful if you have a major claim and you have already hired the best lawyer available in that area, particularly related to car accidents. House insurance claims are also really badly handled or outright denied despite being valid in many cases. A class action lawsuit was won by clients of one insurance company that refused their fire claims accusing their customers of arson. I had an incident with an incompetent contractor brought along by an equally incompetent insurance claims adjuster related to a major basement water leak.

So in this area, you need to balance a low insurance rate with a competent, professional, legal approach to dealing with claims. Do your research.