First of all, I am proud to say that if you Google "eBay insertion fees scam," the first listing is my old blog post about their 5 Free Insertion Fees bullshit. Of all the worthless drivel I have spouted, that one remains the most popular--by far. You can even Google "Eugene is an arrogant douchebag" and not stumble onto ANY posts in this blog, which shocked the hell out of me. Anyway, I have never wished bankruptcy as fervently on any company as I do eBay. But that's a story for another day.
When people learn that I work in the financial sector (albeit only peripherally), they always ask me financial questions about which I am not qualified to answer. Of course, that doesn't stop me from making half-accurate shit up. My favorite thing to say used to be that you could guarantee yourself almost 20% returns on your investments by just paying off your credit card bills. But alas, in today's operating environment, you should put your money into a "rainy day" account instead. The reasoning, of course, is that you never know when you might lose your job--and you won't be able to count on your credit cards bailing you out, because credit card companies are slashing credit limits down to your outstanding balance. These are truly unprecedented times.
With that said, your real long-term enemy is inflation. Very few people truly realize the impact that inflation has on your earning power. But think about it this way...your great grandfather could have bought an entire dinner with $1 in 1900. But if he had stuffed it under his mattress like a moron to give to you, today, you wouldn't even be able to buy a candy bar with that meager chickenshit. So where should you park the $3 you have left after you buy your iPad and iPhone and MacBook? Caveat: Don't construe any of this as real actual advice. After all, I am drunk right now.
1. Treasury Inflated Protected Securities (TIPS) - The principal is adjusted to the CPI, so you won't lose money. You won't make a lot either, but that's good enough for my dad.
2. Precious metals - Always a haven for investors worried about inflation, precious metals are...very sparkly. Still, gold is trading for over $1000 per ounce, which is more expensive than sex. ALWAYS be wary of anything that's more expensive than sex.
3. Borrow like hell! - If you have a FICO score of 850 and can even qualify for financing, borrow everything you can now. During your repayment period, as the principal remains unchanged, your money will lose more and more earning power. So essentially, you'll be repaying pre-inflation debts with post-inflation money.
2 comments:
I like this article because, as always, you're ballsy. And you call it like you see it.
I want to add a few things and caveats to your advice, for your readers and yourself and my ego:
1) You are assuming inflation will persist. I totally agree, btw, but it should be pointed out notwithstanding my unbridled agreement. And I also agree that people have no sense of it, or the concerns they should have about it. Go read AUDIT THE FED by Ron Paul and learn about the dangers of the Fed and their unbridled printing press of free money. Who cares about the deficit when you've got the Fed? [crap, I said unbridled twice in one paragraph]
2) Aside from the perqs of having the "rainy day" account and slashing interest rates, credit card debt is routinely dischargeable in bankruptcy. So, you know, save that money and then spend it before you file your Petition. (Note: I have never not paid my credit cards in full, so take me or leave me.)
3) I'm liking your take on Gold. I also like Sector Spdrs. I don't know much about TIPS, though I'm going to look into it.
4) The problem with paying pre-inflation debt with post-inflation money is... doesn't the interest rate usually jive with inflation? Can you beat the system on that one?
Hugs, broseph.
1. Ah, indeed I did assume. But it wouldn't be my worst assumption ever--that would be when I was playing Wii and I assumed my hand would clear the overhead lamp.
2. There's an empty seat right next to me on the Foolishly-Spending-Well-Above-Your-Means Wagon. I've been waiting here for you a long time. Won't you come join me? We have HUGE TVs here. We bought them on layaway.
4. You are absolutely right. The Prime Rate is adjusted for inflation. What I was actually thinking about (but did not get across) when I wrote that was something with a fixed rate, like a car. Then again, inflation is peanuts compared to the money hemorrhaging from all your car's vents through depreciation. Perhaps a house is a better proposition?
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