Friday, April 13, 2007

These People Are Looney Toons

Not long ago I was riding the commuter train home from work. And while I was on the train I remember someone discussing their retirement account that had about 70k in it. This seemed amazing, if not impossible since I knew that I was only able to contribute a mere fraction of that. I felt discouraged as I went home. All of this despite the fact that this was a guy that was at least 10 years older than I was. But here I was thinking that I should have much much more in my account and that there was no way for someone like me to achieve this.

If you're looking for a great ending, stop now. There isn't one. I don't have that kind of money....yet. But I have learned to let go of this fear, this resentment toward people with nice and fat net worths. It seems all too easy for people to give up or become resentful against the rich since they think, hey, I can't even do that if I wanted to.

Laura Rowley takes this attitude on with an amazing column on Yahoo Finance this week. http://finance.yahoo.com/expert/article/moneyhappy/29114

The one point that Laura made that really makes sense:

Moonlight when you're young, and invest the income.

The reasons this make sense are as follows:
1. You budget only using your primary income. So it almost instantly keeps you within your financial means.
2. You learn about investing and this changes your attitude about money.
3. By starting when you're young, even a few extra dollars a week makes a big difference, even if invested in something basic.

This is what I have been doing for the past year - splitting my 'side' income between paying down my student loan debt -- you can see my chart over at NCN http://www.ncnnetwork.com .

I've also been investing with prosper.
http://easychange.blogspot.com/2007/03/live-long-but-what-about-prosper.html

Both of these moves have made a huge difference for me financially. I pay much less interest and I pay more attention to household finances. Now I am becoming obsessive about it -- always looking for a way to save or invest more or pay off debt faster. But all of this is not just so I can have that mythical 70k in retirement savings. Instead, it is about self-control. It is about having the power to decide the way I will live for the second half of my life.
 
And for what it's worth - people like Yahoo! Finance User who made this comment on the article -- "Exchange federal reserve notes for silver and sleep well at night knowing that the US government can not so easily steal your wealth. Silver to $20 this year." -- are looney tunes. Seriously. They should have a cartoon. Will metals go up? Maybe. Is the stock market the way to go? Probably, but not definitely. How about energy? Possibly.

But the bottom line is that any investment that I've seen that is worth it's salt carries some risk. People that think metals are safe from the government should consider that gold was once confiscated by the government. http://en.wikipedia.org/wiki/US_Gold_confiscation


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