Category Archives: Taking Financial Advice Series

Know When to Hold ‘Em (Part 2 to A Tale as Old as Time)

When I wrote my previous post, I didn’t realize that it would be a part 1.  But here I am today after a couple of days of weird coincidences and I couldn’t resist revisiting the issue.

Today I saw this on msn.com (and you should take a read as well) –

What $1,000 invested in these stocks 10 years ago is worth today.

Ha!  Disney is on the list!

Last night, I went through all of my old financial papers to finally shred them.  I mean OLD papers, bank statements, tax return copies, brokerage house statements, wage summaries, BGE bills and a really cute credit card summary from 2000 from Platinum Plus.  I don’t even remember that credit card but it must have been awesome because I have a cute booklet with all my charges for the year, broken out into categories and accompanied by graphs and value added coupons. Imagine what that cost to put out every year and how much these companies save by getting us to sign up to receive the same information online in real time.

Anyway, I decided to go through those papers to 1)free myself from the paper past and 2) to find the stock certificates that are (hopefully) hiding somewhere among the papers of the past.  And I only decided to do this because the night before that, Mirror Image walked into my home office and reminded me that I had encouraged her to buy stock a couple of years ago as a learning opportunity and now she was ready to buy wait for it…Apple (AAPL).  Why Apple and why now?  I just watched a show and the kids on the show wanted to buy Apple because blah, blah, blah…

I was really excited by her interest and wanted to show her my pretty Disney certificate from forever ago so the next night, after we came home from the gym, I tackled the file cabinet of financial lives past.

It is amazing what you manage to forget if you live long enough.  I was whip-lashed back to my past and some really interesting decisions I made regarding money.  In the papers I found a Merrill Lynch (remember when there was a Merrill Lynch?  Not a Bank of America Merrill Lynch but the true Merrill Lynch?!?!?!) 1099.  Here it is

See anything Familiar?

I still have no memories of this beyond my broker telling me of an exciting opportunity to invest in tech funds.  And even that memory is hazy. And I can’t see why I would have spent so much money buying funds to sell them 3 months later but, in many cases, according to the 1099, I did.  And, it was the beginning of the dotcom bubble burst.  And most interesting of all, where did I get the courage to give someone $15,000 to invest my money?  And where did I get $15,000?!?!?! (I am kinda joking – I have really always been a saver.)

But to the question, do you see anything familiar?  A cute little online book seller perhaps? Priced at around $61.72 per share when I sold it – 3 months after I bought it?  

Admittedly, most of the rest of the stocks and mutual funds appear to be dogs and or non-existent now.  Dell is still around but went private back in 2013.  The rest, I couldn’t even bring most of them up on Google searches.  Or when I could, I found them to be small regional internet service providers.  But AMAZON (AMZN).  If I had held onto those 10 little nuggets, based on last night’s $974 closing price per share, I would have pretty close to $10,000 sitting in my account.  Shoulda, woulda, coulda.

There is no turning back time and I will not lament on this beyond using it for the lesson it is.  Buy and hold (maybe), understand the stock that you buy (I wasn’t buying books online back then…I had no idea of what Amazon really did beyond INTERNET), pay attention, short-term versus long term tax implications, only invest what you can afford to lose, no one cares about your money more than you and on and on and on.

I tried to share this paper and a look into my life before her with Mirror Image last night but she had already fallen asleep (she has a cold and our personal trainer worked us out good yesterday so I think she just petered out).

When I showed her this morning in the car and tried to share the lesson of buy and hold and gee wow we used to own AMAZON, I saw a glazed look on her face.  So much for sharing the hard learned lessons of my past :).

But seriously, where as I once owned a new online bookseller, I could now own part of Whole Foods.  Shoot.

Thrifty Image

Taking Financial Advice – Credit Cards

Welcome to my new series – Taking Financial Advice –  where I share financial or money  advice I have been given and give feedback on how that worked out for me.

 

Credit-Card-Logos

For years I have operated with one credit card.  Discover Card with 1% cash back. This wasn’t always the case. Before aligning myself with the one card rule, I had several cards. An American Express from my college days. 2-3 store cards that I got in order to receive the in-store purchase discount and a random Visa that showed up in my mail one day.

But then I started listening to a professional money-head, probably Suze Orman, and the advice was, to have just one card and pay it off at the end of the month.  So I did. And I was always pleasantly surprised to receive a credit that I could apply to my future balances one the credit reserve was large enough.  I see now, while not exactly harmful advice, not stellar advice either – at least not for me.

What I did not do was research.  I took some advice from someone “in the know” and reaped the rewards – or rather lack of rewards – from that advice.

What went wrong?

#1 Closing established accounts

Closing my oldest credit accounts stripped me on my history of long-term credit relationships. This is a ding on credit reports.

#2Higher credit use ratio

Also, because I only had one card, the likelihood of having an unattractive credit utilization rate was ongoing.

Now in all honesty, I was not paying pay attention to my credit reports back in the day and had never heard of FICO and had no idea what terms like Credit Utilization or “balance-to-limit-ratio” even meant. That wasn’t the money-head’s fault.  I should have known or should have researched the technicalities behind the advice. This just goes to show that everything is an iceberg.  The advice that floats on the top and, the information that is swimming under the surface.

#3 Sacrificing rewards opportunities

This is the one that is most disheartening.  I have left so many rewards and points on the table because I thought I was taking the smarter, nobler steps of keeping just one card and paying off that card at the end of each month.  The truth is, I could have still been smart, and pay my balances in full at the end of each month. But just with more cards.

The lesson for me is, listening to advice is great and necessary.  There are so many resources that know or can offer more information than any one of us can know on our own in a single lifetime.  The real problem was not in taking the advice but in not doing more research or understanding what my real needs were and what opportunities I could benefit from.

And when it comes to our finances, only we care the most about them.

And because I care about how I can arrange my finances for things like excellent credit scores, fun vacations and cash back, I have new cards that I LOVE and these are the rewards that I received when I signed up:

Chase Sapphire – 50,000 points (can convert to free hotel nights)

IHG – 60,000 points (about 6 free hotel nights + plus a FREE night each year on my birthday)

Southwest Rapid Rewards – 50,000 points (2 round-trip tickets to Seattle for Me and Mirror Image to visit my father)

Chase Freedom – $150 Cash Back

Barclays MasterCard – $250 Cash Back

And I still pay my bills, in full, at the end of each month so as not to pay finance or interest fees.  And with these cards, as with my beloved Discover Card, I can get cash back or points/ rewards on the things I would have purchased anyway.

Thrifty Image Mirror