Have you ever given somebody advice and then did the exact opposite of that advice? Well I feel sheepish. I gave you advice to periodically review your financials in my Spring Cleaning post, but I ignored that advice. Over the past year my wife and I have fallen into a comfort zone with our finances. I had not reevaluated our budget for a while and if it wasn’t for my wife’s persistence I probably would have ignored it longer. What can I say, life gets in the way.
My wife recently came to me and asked if we could go over our finances to see if we can afford to have her work part time during the last year of her Masters program. I told her I would do it, but I kept putting it off. She eventually got tired of waiting for me and decided to put a budget together her self. When she showed it to me I was pleasantly surprised at how good of a job she had done, but on the other hand I was concerned that we were starting to out spend our income. It is a good thing that she took the initiative because now we have enough time to cut back on our expenses to make sure we can afford to have her go part time in August.
We are very fortunate that our spending didn’t spiral out of control and caught it just in time. We were spending far too much on shopping sprees, going out to dinner and buying unnecessary things online. It is really easy to get comfortable in your financial situation and lose sight of your goals. The lesson learned here is to practice what you preach and pay attention to your finances.
Have you ever given someone advice and then caught your self ignoring that advice?
“There are two things which a man should scrupulously avoid: giving advice that he would not follow, and asking advice when he is determined to pursue his own opinion.”
It seems like my skepticism of Facebook’s initial public offering (IPO) was warranted. Facebook’s (IPO) was offered on May 18, 2012 with an opening price of $38 per share. It jumped to a high price of $45 before closing just above the initial offering price at $38.23. This means that many people who purchased Facebook shares sold it within a few hours of the initial offering. The priced closed on Friday at $31.91 . Overall this stock has greatly underperformed the initial estimations.
I am not a hater of Facebook and I never want to see a company fail, unless it needs to of course. The Facebook IPO reminds me of that movie that all your friends told you it was the funniest movie ever and when you saw it you didn’t find it funny. The media loves to hype things up, if you haven’t noticed, and this can lead to irrational decisions by investors. I hope Facebook succeeds, but there is a lesson to be learned.
Just because the media jumps off the bridge doesn’t mean you should follow.. Prior to making any kind of investment decision make sure to do your own research. A quick Google search showed me that Facebook’s revenue was primarily from advertising; 85% to be exact. This tells me that Facebook has too narrow of a business focus and needs to diversify in order to succeed over the long term. You don’t have to be a rocket scientist to find this information. Just like Facebook has done, use the internet to your advantage. Now on to the next Dot Com IPO that becomes a media darling.
Did you buy Facebook shares? What do you think the share price will be after the first 6 months? ( I think it will hover around $30, but I think it’s true value is around $20)
Are you an impulse buyer? Have you ever walked in to an electronics store to look around and walked out with a big screen tv or other large item? I will admit that this has happened to me. The bright picture was too awesome and the sales person told me it was the best deal around. I have learned that a little patience can go a long way with saving money on those types of items. The only problem is that I drive my wife nuts sometimes because I have too much patience and I am always waiting for the best deal.
Now when I go into a store and think that I want to buy something, I will write down all the information for that item. I will go home and research it online. I like to read the reviews from other users and research other prices. This is the great thing about the Internet, your most trusted critics are other consumers. Additionally, I will often find that item cheaper online or I will wait until it goes on sale. I am a proponent for buying through local stores and I will often buy items from them even if they are a little more expensive. I will still do research to make sure I am not getting ripped off.
Here are a few sites that I use to search for good deals and price comparisons:
There are many other sites out there, but these are just a few that I constantly monitor to make sure I don’t pay too much for a big item.
Have you ever impulse bought something and then realized you could have gotten it cheaper if you would have waited a few days?
Yesterday I was at the store doing a little grocery shopping with my daughter. I was standing in the aisle looking at the different types of deodorant….why are there so many choices, it is ridiculous. Anyway, as I was standing there when a mother and her two teenage daughters came around the corner. One daughter asked her mom if she could get some mouthwash. The mom replied with no, my finances are too tight right now. OK, first off why would you ever deny your kids mouthwash. I would figure out a way to pay for something like that. I could understand saying no to expensive shampoo. But, who am I to judge.
After I heard this I remembered that I had a little bit of cash in my pocket and wanted to give it to the mom so she could buy her daughter mouthwash. I think healthy teeth are important. I didn’t know if that was my place so I decided not too. I also didn’t want to embarrass the mom because I didn’t know the whole situation. Maybe she was using that as an excuse because her daughter is addicted to mouthwash. Who knows? I felt a little guilty afterwards for not giving the mom the money for the mouthwash.
The lesson learned here is to make sure to have your finances in order to buy your family the necessities of life. I consider mouthwash a necessity. What would you have done if you were in my shoes? I know it was probably none of my business, but I don’t mind helping people out that are truly in need. Quite the conundrum, huh?
Once spring cleaning has come and gone it is time to start those home improvement projects. If you are like my wife and me, you have a laundry list of improvements you would love to do to your house. For example we want to replace the counters in our kitchen with quartz, replace flooring throughout the house and do some backyard improvements. We often do these projects for our enjoyment and not for the purpose of resale value. Although, being a numbers guy I like to look at the entire picture and figure out if a certain project is worth the investment.
I did some research and found this site that gives you a good estimate of the return you can expect to receive on a home improvement project. I am pretty happy to find out that a minor kitchen remodel will return on average 72.1% of the investment at resale. If you plan to do a minor remodel of a bathroom you can expect to receive back 62.2% of the cost. Improving your landscaping is a good investment for the purpose of enjoyment, but it doesn’t payback when it comes to resale. I was not happy to hear this because I plan to put in a water feature.
Make sure to take a look at other homes in your neighborhood prior to making any improvements. You don’t want to spend money on something that is extravagant and doesn’t fit the neighborhood because you will never be able to recoup the cost. This is could also affect your ability to sale the house. Good luck with those home improvement projects and have fun. Maybe using the bad investment excuse will get you out of doing some of those honey do list items. We can all dream right?
Are they any home improvement projects you plan on doing this summer? Do you think of the return on investment when planning those projects? Let me know in the comments below.
“A house is not a home unless it contains food and fire for the mind as well as the body.”
– Benjamin Franklin