Tag Archives: Informal Learning

Intimidating: Opting In

Personal finance is intimidating for many people. While we all love to seek out media which is scary, from movies, books, TV, to live theater and other works of art, those are things we generally opt into. Personal finances are a complicated part of modern life and sometimes we feel as if we don’t have the tools to deal with the situations we find ourselves in.  Can you opt out? Sometimes not. 

I meet people who tell me that their own finances scare them. They find it daunting to sit down and confront their balance sheet, regardless of how many digits are to the left of the decimal point. Professionals bandy about words and phrases like tax burden, cash flow, budget and the scariest phrases of all,

“Where do you spend your money?”

“If you have an unexpected bill of between $400-$2,000, how will you pay for it?”

“Have you begun to save for your retirement?”

and in Seattle, “Do you want to buy a house?”

This can be enough to send you screaming from the scene, while nervously looking over your shoulder, while thinking “I never want to see THAT again!”

I read this article in The Atlantic this week, about how people live paycheck to paycheck, even as they live a middle-class life. The online comments were mean and full of blame. To be sure, there is shared and personal responsibility to be had. No, maybe the author shouldn’t have drained a 401 (k) to pay for a wedding; no, he shouldn’t have missed a writing deadline and had to pay back the advance, but let the person out who has never missed a deadline in her life cast that stone. I don’t qualify.

Financial advisors are here to help and support people to make good decisions about their cash, their future and their piece of mind. We also want to help you move forward from bad decisions you own, or which were forced upon you. I believe my job is to meet you where you are, and help chart the path forward. For you do need a path, a vision, or some goals; otherwise you are just looking at your feet, not where you need to travel.

IMG_1731

This path leads to a well-defended castle. Photo by Dana Twight

Opt out of the intimidation, and opt in to a new path for your finances. Collaboration might reduce the fear factor and even generate some satisfaction.

Zombies and Zinfandel: Handling Your Financial Monsters is tonight!

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Filed under Be Prepared, Financial Wellness, Self Awareness, Shame and Blame

After Mutual Funds & Merlot

German wine humor postcard

German wine humor!

Mutual Funds and Merlot was so much fun last Friday. We drank a great Merlot from Columbia Crest (Grand Estates). Topics included your objectives for your investment funds and how those should match up to your mutual fund choices. We looked over the Vanguard portfolio allocation charts (seen here) from 1926-2014 to learn how asset allocation adds to or decreases average return.
One question asked,”what would it look like if the Depression (1930’s) years were left out”? Those years have the largest declines. Declines were pretty dramatic in 2008, a popular Standard and Poor’s 500 fund from Vanguard (VFINX) was down 37.02 that year. When looking at mutual funds returns now, be sure to check the ten year as well as the five year returns; as the 2008-2009 numbers have dropped out of the five year averages.

We also reviewed fees and terminology (no-load, load etc.) and I shared that when I began in this business (mid 1980’s) the highest front end mutual fund charges were 7.75%!

We did not cover all of the types of mutual funds; only open-ended mutual funds and index funds (a subset of open-ended funds). I also reviewed a decision tree of sorts:

  • Money to Invest (how long)
  • Tax Treatment (Taxable or non-taxable)
  • Diversification (individual issues or pool of securities e.g. mutual fund)
  • Objectives for your funds (growth, income, combination)

My next class will be Riesling and Retirement

(February 3, 2016)

2015-06-06.Winegrapes.blossoms.

German wine grapes in June 2015 by DCT

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Filed under Be Prepared, January Financial Tasks, Just for Fun

Rock, Paper, Scissors (and your finances)

When you handle your finances, are you playing, Rock, Paper, Scissors?

Rock-paper-scissors chart

Rock-paper-scissors chart (Photo credit: Wikipedia)

Let’s recall the game!  “Rock” beats scissors, the “scissors” beat paper and the “paper” beats rock.

Rock: When your money comes in, do you beat it into submission? Do you beat yourself up with guilt or shame? This could include shopping to make yourself feel better, attacking the bills with a vengeance, making a list of needs, wants and savings. In the game rock always wins, but please read on… Continue reading

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Filed under Family Lessons About Money, Just for Fun

Conversations About Money: Vacations

What kind of vacations did you take while growing up? My family did a lot of hiking, backpacking and skiing. I’m not sure that we ever took ‘normal vacations’, but I look back on them fondly. They were full of variety.

We got to hike and backpack when you could drink the water from the trailside streams and rivers. I had my own Sierra Cup that hooked into my belt. (wish I still had it!) My parents brought eggs to hide one Easter weekend up in the Olympic Mountains and there was always coffee for them. (I did not yet imbibe.) One hike along the beach was a disaster because there was grilled steak for dinner and “someone” [not me], failed to pack the steak knives. So we ate it with our fingers. My brother and I were cool with that.

Costs of these weekend outings were generated by: gas, freeze-dried and real food, paper topographic  maps, a battered copy of Trips and Trails by Bob and Ira Spring, the occasional purchase at REI Co-op (my dad had a very low membership number), and maybe a hamburger at the XXX Root Beer Drive-In on the way back. I was a cheap date (plain hamburger-no condiments). My family didn’t drink soda back then.

The Kendall Katwalk Trail along the stretch of...

The Kendall Katwalk Trail along the stretch of the Pacific Crest Trail in the Alpine Lakes Wilderness. (Photo credit: Wikipedia)

We hiked in the real mountains, on the Pacific Crest Trail, in the Alpine Lakes Wilderness, in Mt. Rainier National Park.

While in high school-I did get to a fake mountain-the Matterhorn.

Disneyland

Disneyland (Photo credit: CAHairyBear)

My high school band director entered my name for the McDonald’s All-American HS Band and I was one of the 100 musicians selected.

The band made two trips to march in parades at Disneyland and in New York City! Cost to me: free, save for the missed homework. (Oops, there was the family investment in the private music lessons-but as a teenager, I wasn’t bearing that cost.)

Like many families with children, we began to travel for athletic events. I distinctly recall the trip we took to a swim meet in Santa Clara. I was the spectator and my mother was the competitive athlete, however. (Masters Swimming!) My brother went to her swim meet in Toronto.

While many of my peers travelled to Hawaii while I was in high school,  I didn’t get there until I was over 30! (Cost of that trip: airfare for two, shared meals and entertainment, thank you gift to the owners of the time-shared condo). Loved visiting a coffee plantation on the Big Island.

big island of Hawaii

big island of Hawaii (Photo credit: Wikipedia)

Eventually I went to Europe when I was older. The 3-week trip was  paid up ahead of time due to our DINK status (Dual Income, No Kids).

In summary, we didn’t take extravagant vacations while growing up, we didn’t know what we were missing,  and I have some adult habits that have served me well. (see them below)

Continue reading

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Filed under Family Lessons About Money, History, Just for Fun

Stock Trading from “Pieces of Eight” to Decimals: History Lesson #1

For those of you who are under a certain age, you might wonder if stocks were always traded in prices with decimals. Stocks were traded in eighths for more than 200 years.  What do I mean? Today, for example,  you can buy a share of Microsoft at $30.29. When it went public in March of 1986, the stock began trading at $21 per share and then would have traded at prices such as $22 and 5/8 or $30 and  1/8 in later days and weeks.
This Day in Financial History, (on my Blogroll) mentioned this anniversary earlier this week and I did a little reading and remembering. In 1997,  the Common Cents Pricing Act passed; which then eliminated the pricing of stock in eighths. This led to pricing changes in the year 2000, on August 28. It used to be a slow day.

[Remember the last week of August used to be a vacation week? Or at least it used to be before so much was done by computers. Computers don’t go to the Hamptons, or the Jersey shore in August.]

From Jason Zweig’s blog-This Day in Financial History: 2000: The New York Stock Exchange begins trading in decimals, ending the two-century-old practice of pricing stocks in increments of 1/8th of a dollar. In theory, investors will benefit from lower trading costs, but cynics worry that brokers will make more money than ever. The first to adopt decimal pricing: Anadarko Petroleum, FedEx, Forest City Enterprises, Gateway, Hughes Supply, and MSC Software.
Source: The Wall Street Journal, August 28, 2000, p. C1; http://www.nyse.com/about/timeline/1047054055416.html

English: The New York Stock Exchange in 1882 b...

English: The New York Stock Exchange in 1882 by American illustrator and scenic artist Hughson Hawley (1850-1936). (Photo credit: Wikipedia)

As I recall, (Yes, Virginia, I was a stockbroker then), when prices changed, first the eighths went from 5/8 to .625, then migrated to all decimals.

Another piece of rich stock market history-gone.  For several centuries, coins [Spanish dollars mostly] were cut into 8 pieces. So to trade stocks in eighths of a dollar wasn’t a big leap. As the our stock market began with the Buttonwood Agreement of 1792, this practice of calculating prices in eighths lasted a very long time in the US stock market.

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In the Mood: Music for your Money “Workout”

What gets you in the mood…for money management?

Money Money Money Mooooney

Money Money Money Mooooney (Photo credit: Ahmed Rabea)

Blues for budgeting?
Polkas for planning?
Rap for retirement funding?

Jason Zweig has a great list here .  My personal list also includes a few titles not on Zweig’s list.

  • For a calm session of financial sorting, filing and shredding, how about “To Everything There is a Season” by The Byrds?   
  • When thinking about the Great Recession, there are many versions of “Brother, Can You Spare a Dime?” I enjoyed the late Daniel Schorr’s impromptu version on NPR, and am also fond of the song as sung by Broadway and TV star Mandy Patinkin. Here’s a link to a  rendition on David Letterman .
  • This lively song “Money, Money, Money” (I prefer the Meryl Streep video) reminds us despite the movies, a rich man may not be the best solution.
  • Last but not least, listen to some classic Aretha
Aretha Live at Fillmore West

Aretha Live at Fillmore West (Photo credit: thejcgerm)

to remind us it is good to:

spend your money in line with your values,

respect the hard work of others

and above all, respect yourself with  your spending.

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Filed under Everyday Financial Tasks, Just for Fun

Guide on the Side vs. Sage on the Stage

Recently I was speaking with a small group and mentioned that my style was to be the “Guide on the Side” instead of the “Sage on the Stage”. This is a phrase I picked up from my time hanging about with classroom teachers. The source for this phrase is from  1993 article by Professor Alison King.

Here’s what the phrases mean. Well, really what I mean, within the context of financial education and learning. Feel free to chime in by making a comment below.

Sage on the Stage: In the old days, the teacher was the only one talking and spent all of her/his time in the front of the room talking offering knowledge to their students. Very little feedback was sought and was often punished if unwanted comments or questions were asked. Did you have any educational experiences like this?

As with other institutions, there was only one perspective shared and/or valued. You had to conform to the teacher’s style.

Students were expected to listen, take notes, memorize, then regurgitate upon request.

Guide on the Side: Using this style, the educator/leader walks along side the students, instead of leading from the front. I am reminded of Paulo Freire when I think of this:

“It should not involve one person acting on another, but rather people working with each other. Too much education, Paulo Freire argues, involves ‘banking’ – the educator making ‘deposits’ in the educatee.” (Source the non-profit site infed.org)

Ô Homi (Paulo Freire)

Ô Homi (Paulo Freire) (Photo credit: paulicasantos)

When I work with clients, I want to be their “Guide on the Side”. Sometimes people say to me, ” I don’t know anything at all about money/investing/finances”. Well, of course you do. That is a given. How much do you need to know? That is a subject for a first meeting…And a two-way conversation.

First, I like to learn about your family lessons about money, finances and savings, plus how you have implemented those lessons-or not.

  • Are you a spender or a saver?
  • How much financial news do you consume?
  • What worries you?
  • What do you take pleasure in doing?

My job is to help you move forward from where you are; after understanding about how you got there. It is an interactive experience, where your perspective matters-a lot. If we don’t move forward together, we go nowhere.

education

education (Photo credit: Sean MacEntee)

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Are You Having Budgeting Fantasies?

A friend of mine recently confessed to me that she grew up with, wait for it …budgeting fantasies. Before you get in a kerfuffle over this, here’s  the story.

One of her parents would send her to the nearest store to pick up a box of cereal, bag of apples or extra milk. She would march 2 blocks up the hill  to the local grocery and shop for what was on the list. However, before she chose those items and walked back home, she created her own mental shopping list for playing house. When I have my own house, she mused, I will buy this and this, and this! Plus, she added the prices in her head to keep track of her spending. Eventually, she did go back home with only her family’s requested items in the bag! (She assures me that this was one of her very favorite things to do.)

You may not have experienced this in your family, but I am sure that you can see some advantages to allowing a child this independence, instead of dragging a bored, screaming child down yet another grocery aisle.

Video for 04.20.2009

Would you allow your child to assume responsibility for choosing one group of food for the family each week? Maybe milk or cereal? If you’re bolder, how about fruits or vegetables? Here are some benefits to consider:

  • it may increase their cooperation at meal-time
  • they might enjoy it
  • it will give them a practical application for arithmetic
  • it gives them a window into what their parents do with their income each month

Pick a popular food group, assign a dollar amount to it that you can live with – for better or worse, and try it out with your children.

Vegetables in a grocery store, Paris, France.

Vegetables in a grocery store, Paris, France. (Photo credit: Wikipedia)

Would your child eat more radishes if they chose them at the store?

Try it out and let me know what happens!

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Coffee with Warren

Another annual report package in yesterday’s mail  hidden in a plain blue wrapper. Which one would it be?  It’s as if the ‘invisible hand’ of my portfolio is created by my letter carrier.

Finance wonk excitement ensues –  it’s the Berkshire Hathaway report! I made a cup of coffee (high-test), grabbed my yellow highlighter and made myself comfortable. Time to read with Warren Buffett, the CEO of Berkshire Hathaway. (See all shareholder letters at their website.)

 

Warren (aka The Oracle) Buffet, is known for his annual letters to shareholders. Results  are explained in plain English and it feels as if he is sitting on the proverbial couch with you – explaining capitalism.

Warren Buffett speaking to a group of students...

Warren Buffett speaking to a group of students from the Kansas University School of Business Image is cropped and flipped. See original image http://commons.wikimedia.org/wiki/Image:Warren_Buffett_KU_Visit.jpg (Photo credit: Wikipedia)

Some things to keep from this year’s letter:

Page 4: “I totally miscalculated…when I purchased the bonds.” admits Mr Buffett. [How many CEO’s say they failed so directly?]

Page 5 “Housing will come back…living with in-laws can quickly lose its allure.”

Page 7  “The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter.

[Remember the Nordstrom anniversary sale suggestion here] Mr. Buffett reminds all of us to pay attention to company earnings, not the stock price.

Page 19  His discussion of gold vs another purchase with a comparable value is fascinating.

Someday, I will attend ‘my’ annual meeting in Omaha, aka “Woodstock for Capitalists”. This year, in addition to the furniture sales, there will be a blindfolded US chess champion, Brooks “Berkshire Hathaway Running Shoes” (to outrun the S & P maybe) for sale,  and at least 54 questions answered by Mr. Buffett and Mr. Munger. Next year!

And please be happy that your tax return is not 17,839 pages.

Note: I own ‘B’ shares of Berkshire Hathaway and do not contemplate any trades in the near future.

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Learning about personal finance can be “informal”

“Across our lifespan, humans spend more than 80% of their 16 waking hours in “informal” learning environments outside “formal” classroom walls.”

(University of Washington College of Ed. publication Research That Matters, Volume 10)

So why are some of us stuck in our learning patterns about money?  Or School’s Out Forever?  Apparently we have ample hours after our “formal education” is over to pick up new material, concepts and even practical things like improving your financial infrastructure.

Have you ever heard a friend or colleague say things like the following:

  • Math and I don’t get along
  • My wife/husband takes care of that
  • The economy doesn’t affect me (yes, I heard that once)

My all time favorite is, “I don’t do live math”. (heard during a public radio pledge drive)

Perhaps some of this goes back to the way we all learned about math in school, whether we learned “good” or ‘bad” money lessons at home, or if our education has all come from ‘the school of bad experiences”. Granted, some of us had truly bad math instruction, and some of us just didn’t see the relevance to math, personal finance and economics at the time we first saw with the material. Some people learn about stocks at age 15, but it doesn’t mean that you can’t pick up new concepts at any age.

My reason for beginning my blog with this research is to give yourself permission to begin anew with your learning. You can also give yourself permission to approach your personal finances in a way that is different from “keeping up with the Joneses”, the way other members of your family learn, and the way you learned math from “Mrs./Mr. Smith” in high school. In other words, allow yourself to embrace new informal learning opportunities!

As you follow this blog, you will learn and even change your perceptions about personal finance for the better. I will help you understand that small, consistent, sustainable changes matter. You don’t have to hit a home run. You don’t need to have that ultimate, sexy cocktail party story about your fabulous investment that made you so rich. You do need to remember that “right-size” changes, are what are best for you.

When we learn new things, as youth or adults, remember this advice from UW Professor Walter Parker:

“We have to help [learners] develop the sense that, “If things are tough, it just means I am a novice, it doesn’t mean I don’t have the competency for this work.”

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