Welcome to the “Rich Rob, Poor You” page. The goal of this section is not for me to tell you how to make, save or invest money. I don’t offer stock tips and I don’t refer people to financial advisers. The goal of this page is to point you in the right direction and give you the fundamentally basic tools you will need to take control of your own financial destiny.
No one will ever care about your money more than you do, so why not become solely responsible for all that you earn? Usually, the answer is that people are too intimidated by what they were never taught, which I was once as well. That’s an understandable excuse, but an excuse none the less. You can learn how to manage your money. Along the way, you will make many mistakes and lose a few bucks, but the lessons will be, as the cliché goes, priceless. I encourage you to scour the site, invest your time and intellect into yourself and take control of your money. Good Luck.
As I lay out more than once in this section, money, wealth, success and being rich are all different things, defined differently by different people. I recently saw a movie that motivated me to drive immediately home and write. I am not one of those “journaling” fags who need to write down all of my feelings but this movie touched so many of my buttons I had to vent my frustrations as fast as I could. I designed it in the form of a “soapbox” column, but decided ultimately it belongs on this section of the website. The essay’s message as a whole is about the tools, desire and decisions needed to get ahead in America’s financial landscape, and the reasons none of us should be ashamed of them. It is not a column about being rich or wealthy, but it is about being successful in all aspects of your life; personal and professional.
10 WAYS TO SURVIVE THE CURRENT ECONOMIC CRISIS
It’s hard to overstate how bad the current economic climate is in America and across the world. It’s hard for most people to understand for a myriad of reasons, including the complexity of the problem and the lack of devastation in most peoples’ day to day lives. For many people, we can see and hear that the economy is somewhere between slow and awful, but yet we also see buildings still being erected, restaurants being patroned and mall parking lots with cars in them. Despite those who decry it, trickle down economics is real; and the pain and suffering that is being felt across banks, governments and lending houses worldwide will trickle down to average Americans soon and more and more people will begin to actually feel the pain of an economic crisis sure to last well into 2009. How do you survive or even thrive in such an environment? Here are some tips, in no particular order of importance:
1. RE-ASSESS YOUR SPENDING: I know, I know, it’s not very sexy to advise and it sounds like something your parents would say. The truth is, though, that things may get much worse over the next many months. If they don’t, then how does it hurt you to save up some money? If things do get grave, you need to have cash reserves to go to in the event that prices soar or your job goes away. Cut back on spending and do everything you can to gather up at least 3 months of living expenses to have on hand.
2. REPEAT STEP ONE: Most people lack the self discipline to truly cut back. People will say things like “I have already cut back as much as I can,” while they are holding a $4 cup of Starbuck’s coffee and applying high end lip liner. No one covets luxuries more than I do, but now is the time to re-assess whether or not you are living within your means. Credit will be harder to get and use over the next few months and was never a smart safety net to begin with. Your friends may tease you, but when you are the one who comes through this crisis still intact, while they have wasted their money on nightclubs, cell phone upgrades, new shoes and other discretionary spending, you’ll be the one standing tall.
3. IGNORE THE MEDIA: Including me. It would be hypocritical of me to tell you to listen to a radio talk show host but ignore Chris Matthews, so ignore all of us. The media makes money by telling you things are horrible; no one watches a news cast of positive stories. Most in the media also have no understanding at all of how the economy works; what they do understand is that telling you it’s horrible makes them richer and more successful. Do your own research, historical and otherwise and discover for yourself why I am about to advise you to get INTO, not out of, the market.
4. IF YOU’RE IN, STAY IN: Now is not the time to panic. Stay in your house, and stay invested in the stock market. The time to get out (or upgrade your home) was long ago if you were going to, and now it’s time to ride it out. In the case of the stock market, shift your investments (more on that later). In the case of your home, enjoy living in it, confident that its’ value will increase.
5. IF YOU’RE OUT, GET IN: Economic melt downs are when people make money. Middle class people become rich and rich people become super-rich by buying up and into greatly and unfairly devalued properties and investments. If you have the credit and funds needed, now is the time to buy a house. If you have a 401K, make sure it’s invested in the markets which WILL recover and invest in the things you (or your broker) believe or know will lead the way. Un-savvy investors shouldn’t try to pick specific stocks, so buy mutual funds from reputable companies like Vanguard. If you believe the major companies in America will lead the way, buy into the Dow Jones (the 30 biggest stocks) by buying up shares of the Diamonds, a basket of the Dow.
6. IF YOU CAN’T HANDLE IT, GET OUT AND STAY OUT: If you are a wuss, disregard my last two pieces of advice and get the hell out of the money making business. Last week, Bill O Reilly decried on national TV the fact that he has lost all of the economic gains he made in the past 5 years in less than the last two weeks. That’s because he’s an idiot who didn’t make necessary adjustments to where his money was along the way. The market is a gamble and if you aren’t going to be happy taking small but significant gains along the way, then you have to be prepared to take giant losses. Ignorance and/or blaming “your broker,” aren’t an excuse. It’s your money. Much of the stock market tumbling of the past week has been weak-kneed fools bailing out of the market. Good…stay out.
7. IF YOU AREN’T A WUSS, BUT DON’T KNOW ENOUGH YET, PARK YOUR MONEY SAFELY:There are safe, smart places to put your money while you learn how to invest it later. Those of us with money and know-how are buying now, but that’s risky if you don’t have the knowledge. Equally as stupid, though, is leaving your money stagnant and not working for you. Buy into Cds, Treasury Bills and Bonds (all of which can be done through your bank) and at least make a few pennies on your dollars.
8. IF YOU THINK THE WORLD IS ENDING, BUY GOLD: Earlier this year as the economy slowed, I moved almost all of my money, for a time, into Gold. I know from experience that when the world is nervous and uncertain, gold is god. If you believe that things are going to get dramatically worse, buy gold now.
9. IF YOU THINK AMERICA IS ENDING, BUY FOREIGN: If you are an idiot and think America will never recover from this, then make money by figuring out what countries will thrive in the coming years and invest in them. You can buy stocks in foreign countries and currencies easily, so, Einstein, if you believe that Russia, China and India are the economic powers of the future, get your piece now.
10. LEARN FROM ALL OF THIS AND PREPARE: I have been handling my own money for 10 years now and along the way I have lost plenty. Every time was a learning experience that helped me prepare for this crisis. So far, for 2008, I have made 8% while most have lost 20-30%. That’s because I knew how to move my money ahead of what was coming. I am not a genius; I just care about my money and know that no one will care more about it than me. Many friends of mine over the past 5 years have ridiculed me, for example, for selling out of my Apple Computer shares after making only 25%. Those same friends have now lost all of the gains they made and an additional 50% because they refused to be happy with modest but significant gains. Make money now, and learn how to keep it!