So, I get an email from the wife today, and we find out that we're getting a lot more from her student loans than we originally planned. Naturally, we're not going completely buck wild, but certain plots start bubbling to the surface, like paying the new car off if the interest rate is lower on the student loans than the car... maybe buying some business clothes for both of us... other things that never quite find their way into the monthly budget. So, if you found yourself with a couple of extra thousand (or $30,000-50,000 more) than you thought you might have, and you know you have to pay it back, would you get anything? Cheese on your Whopper (tm) perhaps?
Me, I knew exactly what I wanted. Unfortunately, the wife deemed it to be wasteful. I respectfully disagreed, and the negotiations began. We discovered we both looked at splurging somewhat differently. I'm not entirely sure that we even now understand where the other one is coming from. But I toss the thought out to you: what would you do? Be uber-responsible and not spend a penny beyond school and living costs? Go out to dinner? Buy a new pair of shoes? A nice new big computer monitor? What would you do?
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I personally wouldn't take more money than I needed to pay for school etc., but I would read "Two Income Trap" (it's not what you think it is, promise...) and "All Your Worth" and then decide what splurging is for you...
To me, it's a simple amount of money set aside for me to do Whatever *I* want with. The "Divide and Conquer" principle, dividing between yourselves and then spending how you want - no questions asked, no guilt felt nor guilt applied.
Once I received $7000 for my car after it was totalled. I could either buy a used car (mine was awesome), put a huge down payment on a new one (the other one was paid off) or invest it and pay off the whole new one with the unexpected money.
Well I invested it and turned in into $57,000 in 3 months. I still didn't pay off the new car because look how well I did. I mean I could do it again, right? Nope.
There's plenty of good companies out there who will pay as much as 10% and to simply make more interest than you're paying would be an extra few thousand a year and you could pay of the debt without using your own money and then with the difference buy the extra stuff for free. You could also put it in some up and coming stock and quadruple your money and then pay off a house while you're at it as well.
I hear about people who make tons in investments, but I don't actually KNOW any.
1) exactly HOW did you turn 7k into 57k?
2) When did you do this (if it was 96-99 internet boom era, you've lost me)
3) How would a person that knows next to nothing about finance pull that off?
4) There are lots of up and coming stocks that quadruple in value, but there are lots of up and coming stocks that lose 90% of their value... How can a perosn be sure?
I made that money in 2004 and not during the internet boom.
I bought a stock that went from the 7k to 30k and I continued being agressive and lost back to 15k and stil being agressive turned the 15k to 57k on the next one. So you can see I lost half at one point.
I'm no expert on student loans, but it's my understanding they're some of the cheapest interest loans out there. If they are then there's solid good multi billion dollar companies that will pay high percentages just to take the safe road and hold their stock.
Everything has risk, there's no sure thing. I consider it a bigger risk not to try when I have an opportunity placed in front of me.
Be patient. I will use this example. You know starbucks, well they weren't on every corner to start off with. If you were a frequent visitor and saw that at first you had to go 5 miles to get there and then 4, 3, 2, 1 etc. well then they're growing and so is their stock. Up over a hundred times in the past decade. So what do you do that's part of your everyday life that's catching on with others? Just be aware and if you find it then check out their stock and invest. That's the safest and surest way, although those opps don't come around very often. Other than that you need to be more proactive and research.
Here's A few more examples of comfortable investments.
Apple before ipod was an incredibly stable and reliable compnay and as with starbucks google and others ipod was the in thing and apple has gone up 6 times it's value.
Many people got creamed in the dot com days but if people could only see that no matter who won the internet commerce craze they would have needed to ship everything, Fed-Ex and UPS have more than doubled as a result. Then there's Mc Donalds, they were profitable for 30 straight years and had a quater where they lost money. It didn't mean they were going bankrupt or going to disappear and they doubled from where they were when they lost money.
One I'm going to invest in this week is a video compression company. Video is becoming huge, with it now in cell phones and on the internet. This company has a deal for instance with XM satelite radio to do satelite video. The problem for XM is they don't have enough bandwidth to do video and if they compromise by using less bandwidth then they lose quality. This company can put a high def movie on one disc compared to 6 disc's currently. They offer the highest quality in the world while using the least space. They are also the choice of macromedia and adobe and are used in flash 8.
The problem is however their managament has been horrible and revenues are almost nothing at the moment because it's just the beginning. If you can see the need before anyone else then you would be buying today for 79 cents and not over $20 in a few years. That of course is if the management can get it together otherwise it might be dead money.
It's all about timing. I watched a stock start trading in 99 at $345 a share and in 2002 it was .90 cents and now it's $34. So just because it lost over 99% of it's value it didn't mean it was a bad investment since it's up over 35 times it value since then.
We have found (and most of our married friends concur), that we, like most men and women, have different ways of splurging. And it all evens out in the end.
Women like to buy little stuff. They like a steady stream of new clothes, or they like to go to dinner, or they might want to buy something from a street vendor, or buy a piece of jewelry they especially like, or shoes. Whatever. Little stuff.
Men like to buy big ticket items. They think their wives are wasting money on cute clothes and baby shoes (babies don't need tennis shoes! They can't even walk let alone play tennis! say the husbands). They think we're wasting money on our pedicures, on our home decorations, on our accessories, on our new blender, on our floral curtains, on our baskets and containers and summer fashion sandals. Then they go and want to buy a big screen tv. Or an x-box. Or an ipod. Or a PalmOne Treo 750. Or a car. Or new racing tires at least.
It all evens out. It takes a lot of shoes to equal a 37 inch plasma television.
Amen!
I let James splurge a little on his new monitor. You know what? I don't feel so guilty about buying my gouchos!
As it turned out, I just got the regular nice monitor I was going to get before the money came along. It's a great monitor though :)
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