I know nothing about money

julie_m

EveryoneLovesACallyGirl
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Like a lot of folks my age, never had a mortgage, never invested in stocks, have no idea what's going on with all the bailout stuff...

Where do I begin? What book would you recommend to read? Should I be worried? I'd like a good starting point rather than trial and error.
 
I'll respond elsewhere.
 
Start with Suze Ormann. She has helped thousands of women and men in the same situation.
 
Start with Suze Ormann. She has helped thousands of women and men in the same situation.

Yeah, she is good, I've watched her specials...but she talks a lot about getting out of debt and credit cards and stuff...small money, you know? I'm talking about the bigger scene, maybe even how to make money (but not bet my shirt doing it). I'm presently not drowning in debt...I'm drowning in info about what the heck is going on, haha.

My dad said that once upon a time you could trust your banker, but now with all this stuff, that idea scares me. I'm having anxiety attacks at the mere thought of buying a house or starting a retirement plan, since

1. they seem to say that everyone is out to get me, and
3. I don't do numbers.
 
Suze Ormann makes me run screaming out of the room.

You'll make yourself nuts analyzing your feelings about money. Instead, take small positive steps in the right direction--success breeds success. I'm a Skinnerian, not a Freudian. Fake it 'till you make it.
 
Although Suze can be over the top, her values do work if put in play the right way.
 
*tapping microphone*
I'm still at work, kinda bored, and had some time to type all this mess out. I hope some of it's helpful:

Tune into KLIF (AM 570) during the day, and listen to the Dave Ramsey show from 1 - 4:00.

He'll advise you to:
  • Pay off all bills
  • Save up 6 months of living expenses for emergency
  • start saving for your future

It's pretty sound advice, and has worked for my wife and I. We started out pretty rough, I promised her that I'd put her through college, then we were surprised with a baby, I got laid off from work for a big part of 2002 (in the middle of a major remodel of our house), and we've been paying it all off since (by summer, we'll be free of it all, except mortgage and cars)

Talk to your financial advisor at work, get their advice. Then take it over to your Dad, and get his advice. Go with the one you feel more comfortable with, or somewhere in the middle.

Start contributing to your 401K, I put in 10%, but will bump it to the 15% threshold sometime next year. I spread my investments to some 60% moderate, 20% aggressive and 20% conservative mutual funds. (I suck at the investing too, but even in these turbulent times, they've held up fairly well)

Don't sweat every statement you get. The value of your portfolio will go up and down a little over the years.


When it comes time for mortgage, go traditional. Don't get roped into a ARM (adjustable rate mortgage) or any crap like that. If you're making $50k a year, you cannot afford a $300k house, sorry. Use your brain, and make sure your decisions make sense.

2 things my Dad told me when I started looking for a house:
  • make sure your mortgage payment is no more than one paycheck per month
  • you can get a rough figure of your mortgage payment by figuring $100 per $10k of home value. A $100K home will run you roughly $1,000.00 per month.

When you buy, look at lots of things other than closet space.
  • Surrounding schools - get the realtor to pull the info on all schools in your area. Look at demographics, performance reports and the like, and make note.
  • Look at the surrounding topography - I see folks make this dumb mistake all the time. If the creek's only 15' below your house, you're gonna have a flood sooner or later. Homeowners insurance isn't flood insurance. If the water leaks in from above, they'll cover, if it comes up into the house, you're SOL. Stuff like that.
  • Get a real inspection - not just some goofball with a magnetic sign on his truck. Find someone you know and trust to also look at the house, and who can get you pointed in the right direction with prioritizing your improvements to the house. Home inspectors are mostly worthless, with a few really good ones in there.
  • Don't be fooled by paint. It's a cheap way to make a crappy house look good.
  • Drive by the house during different hours, and on different days of the week. Some houses look great during the day, but are in the middle of the pits at night when the sleezebags come out.
  • Trees - big shade trees are fantastic. Learn your species; cheap fast growing trees can become more liability than they're worth. Good trees take a long time to mature.
  • Plumbing - have the drains scoped before purchase. You don't want to buy someone else's nightmare. Replacing all the laterals can cost several thousand dollars
  • Slab (or grade beam, and a pier structure) - chack it, and make sure that everything's copacetic. If there are big huge cracks in the wall, walk away. Make sure any foundation repairs that may have been done before have a transferrable warranty, and that it was done by a repuatable contractor.
  • Roof - have a qualified roofer you trust come and look at it, get an assessment.
  • Electrical - this is a biggie. Get an electrician you trust to come and give the whole house the once-over. Open up the panel, pull some switches and receptacles to check their connections and quality of installation, make sure that there aren't any loose wires in the attic.
  • HVAC (air conditioning system) - get this checked out as well.
  • Is it all level? I carry a marble in my pocket and set it on countertops and floors to see if it rolls.

I worked for a homebuilder when I was in college, and those things would still wind up on the punch list even on a new home. Now, I'm a master electrician; but I've been in the industry literally all my life (3rd generation in construction in my family)
 
I used to listen to Dave a lot, but he is just a little too religious for my taste.
 
I think the best way to get a view of the entire market and whats going on is to watch CNBC anytime before 2 o clock(PMT). The problem I have with books, is that they are usually outdated by the time you read them, but if your looking for the fundamentals thats the way to go. Pick up an IBD or a Wall Street Journal or just read your local papers business section everday. If you have a problem with the terms, http://www.investopedia.com/, is very helpful. I started following all of this when I was about 16, but it never really clicked until I hit my mid 20s.
 
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