Who's In Charge of Your Future?

I didn’t used to like Suze Orman. When she spoke of having an unhealthy relationship with your money I wondered if she was speaking directly to me. Then I read You’ve Earned It, Don’t Lose It and The 9 Steps to Financial Freedom and the more I read the more I knew she was speaking to me.

How many of us have grown up knowing exactly what to do with our money? Maybe we get an allowance and maybe it’s connected to work. In fact, some kids get allowances for no good reason (I think that’s the stimulus package in disguise).

I remember asking my dad, how much money do I need to rent an apartment? He sat down with me and went through common costs of living: electric, phone (there was only one at the time), food, transportation (I didn’t have a car at the time), clothing, savings and the costs of rent in Washington D.C., where I was just finishing school at American University.  It became very clear how much money I could spend and how much would be left. The formula seemed simple. And then of course things happened, I wanted to go on vacation and I wanted a new so-and-so and so on.

Lately I have been thinking about how many people have an unhealthy relationship with their business and their lives. By unhealthy I mean a refusal to really look at their business or personal lives, fooling themselves by pretending to understand the difference between cash flow and profit or refusing to work out a commission structure for their salespeople because "it's too hard." How many salespeople talk about not wanting to work on commission as if it were a bad thing?

So with everything being cheap these days, should you fill up your closet, buy a new car or get a new house? This weekend they were having a liquidation sale at a nearby Holiday Inn: belts for $5 or $10 — surely I could use five more belts — and a bunch of other things. Congratulate me, I didn’t go even though it was very appealing.

Sure everyone is saying we should spend our way out of this, but didn’t we spend our way into this? People bought houses they couldn’t afford and are blaming it on “the deal.” The thought of not having a place to live should be more frightening than having the right place to live.

Maybe since I have lived alone for so long, and having had several businesses, and knowing that things “happen,” makes me more cautious of spending. You just know that things happen and you need a good back up plan called “cash.” Or maybe having been born after the depression my head is filled with the "you must take care of yourself because no one else will" mentality.

So hang on to your butts and invest in things that will provide a return.  Should you buy a house? If you can buy one that lessens your monthly payments and it's a steal then buy it. But if it’s the vacation house that you’re buying and now you’re taking on another mortgage and who knows about anyone’s job, I say think twice. But I come from the mentality of the 40’s — at least my parents were from there — and they said pay your bills and don’t spend more than you make. They sure knew how to take the fun out of livin'!

Should you buy a car with some “two-fers” out there. I have heard of the buy one and get one free; is it really what you need or would you be better happily driving your eight-year-old paid-for auto than picking up another payment?

I read that they are lowering the financing scores necessary for us to buy cars so that if you don’t quite meet the financing scores, you can over extend yourself there. Doesn’t this sound like the housing thing again? Someone needs to come up with some new plans. Did they forget that the old ones got us into trouble. Hyundai is saying if you lose your job and can’t make your car payments then you can return the car. Note, I don’t think they are giving back your down payment if you default because you lost your job.

The real question is, how do you take care of yourself with the economy the way it is, and what do you do with your money if you have any? Despite what the President says — spend, spend, spend — there are things that are worth it and things that are not.

For all you women out there, shoes are not considered an investment unless you are the Batas family and you happen to own a shoe museum in Toronto.  (Yes, there is a shoe museum in Toronto which houses 1000s of pairs of shoes depicting the history of shoes since the 1940s.)

But back to Suze. When it comes to money her suggestion is that if you have plenty of time to wait, such as five years or more, then there are plenty of deals in the stock market. If you don’t have time then the stock market is a bad place to be. I don’t think hiding your money at UBS is such a good idea; I used to hear about people having their money in Swiss banks, but now they will have to give up the names of their depositors that have been avoiding the IRS auditors.

Jobless rates may hit 8.8 % in 2009.  Ben Bernanke says that Walt Disney is giving buyouts. Does that mean that Mickey and Minnie will be out looking for jobs? Mickey and Minnie have pretty specialized skills, maybe they should think about expanding their skill level to UBS?

Things to think about:

  • Investments should provide a return. Very few personal goods do, like clothes, but I found a new consignment shop down the street that is pretty hot and they offered to take my “disco” stuff that I've been holding for the next wave of Saturday Night Fever.
  • Offer to trade some things. One man’s trash is another man’s treasure.
  • How about a “gold show” in your store? A retailer told me they had an appraiser come in and buy gold on the spot. The retailer said it was a grand night.
  •  Clean out your old storage bin. I have so many friends with stuff they’re holding on to “for when they move the next time.” Furniture doesn’t spoil but it gets moldy and out of date unless it’s period pieces. And if they are, what are they doing in your storage bin getting warped?
  • How about having a “bring it in for trade” at your store, or a “cleaning out the storage/warehouse/garage/trunk sale at your store?
  • Old tools, books, purses: put them on eBay or have an estate sale; everything is an estate. Mix your estate with the next door neighbor’s estate.
  • Really need to buy furniture and accessories? Check out the local hotels that are refurbishing and you might be able to pay pennies for pictures and accessories. You might be able to resell them.
  • I have friends that go to the "nearly-new" shops and buy clothes that have been donated by TJ Maxx or Marshalls and resell them.

Have any other suggestions? Let me know in the comments!

Photo credits: Turkish Stilts courtesy of Bata Shoe Museum

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