Tag Archives: Investing

Mind Over Money

When I graduated in the spring of 2015, I thought I had it all figured out. I had some money saved, a job lined up and an apartment to move in to. College had been a blast, but I felt mature and ready begin my life as a real adult. I was going to succeed and it was going to be a breeze.  

Now, a year and a half later, I sit here writing my first post for my brother’s finance blog. See, I used to think this blog was dumb. I didn’t understand what BeatingBreakEven really meant and always thought my brother was wasting his time talking about money so much. But after switching jobs in June for a salary raise and signing a new lease, for rent that was $200 dollars less a month, I realize I am exactly where he was. I am broke, have no concrete plans for my future and am extremely unsure of myself.

In the past few months I have been thinking a lot about my life and who I want to be. I’ve thought about what to do next in my career, thought about what city I want to move to and thought about how to save more money. I’ve also spent a lot of time contemplating my inner motives, my deepest fears and my varying levels of self esteem. In this process of psychological discovery, I have begun to understand just how powerful our minds really are. They can be our biggest tool for success and the biggest obstacle.

I have started to experience first hand how becoming more aware of my thoughts and psychology can really help me achieve my goals. I mean don’t they say that you can achieve anything you put your mind to? Mastering your mind will not only make you a happier person, but will keep you on track to reaching your long term goals. Since many of my goals are financially based at the moment, I went through last month’s credit card statement to recount my recent purchases. Besides food, almost everything I bought was unnecessary. Nails, makeup, new shoes, drinks at the bar, etc. Practically everything on there were things I bought to feel better about myself. For many of us millennials, our credit card statements are a long list of our deepest insecurities resurfacing as impulsive spending habits. It’s actually pretty scary. Working through my insecurities and understanding the motives behind my purchases has started to help me say no to a lot of things I normally would have swiped for without thinking twice.

If we want to change our spending habits, we first have to change our thoughts. Seems simple and intuitive on the surface, but our minds are really unexplored territory for many young adults. We millennials do not spend enough time understanding our needs, wants and desires and instead, act on impulse as a way to band aid our immediate emotional challenges. We are impulsive because we do not take enough time to think and we spend because we don’t want to feel. We really need to learn how to understand our thoughts and be okay with our emotions, so we can make healthy, logical financial decisions.

FOUR Financial Lessons from the Homeless

New York is one of the biggest financial capitals of the world. Finance is everywhere in this city, whether in the billion dollar hedge funds that are making million dollar deals or the restaurant owners calculating bar tabs, brunch receipts or tenants saving for the unruly rent they owe their landlords at the start of each month. 

One lesson I have learned from observing the homeless on my street, is that being a pure minimalist has its benefits. These people carry with them only what they need and nothing more. It would be inefficient to carry around dead, excess weight. We as millennials need to understand why excess is bad and recognize how our spending habits are based on desire instead of necessity. If we all became more aware of the things that we buy and their ability to clutter our lives, we might start to realize that material goods do not help us meet our goals or delay the process.

The second lesson we can learn from the homeless is how we can market ourselves well to attract the attention of others. I regularly encounter homeless individuals on the subways and in the streets. They are holding signs that tell their story or are yelling at passengers about their specific misfortunes. Many of them have had a lot of practice doing this, so they know what works and what doesn’t. They are forced to put their best foot forward and try and try again to sell the bystanders on a few dollars of investment into them. They are essentially pitching themselves to an audience of investors, like you see startups do on Shark Tank. When you want money for an investment or business, or are trying to land the perfect job, you need to market yourself to your best ability. This means looking the part and connecting with the given audience on a personal and real level. The homeless live it everyday. Their survival depends on it.  Since yours doesn’t, if you were to apply the same sincerity and passion into improving your current state, you would likely get very far.

The third lesson is utilizing the resources around you to the best of your best ability. I was in the train station one time and a homeless man was cleaning all of his clothes in the bathroom sink. Since the station is a public facility, this was free to him. He was being resourceful. I also see many homeless people using public places for shelter or the public library for entertainment to pass the time and read or subway seats as beds. We as millennials also have boundless resources around us that will cost us little to no money to utilize things such as books, mentors, the internet, newspapers, other people in our field willing to help us if only we just ask. Many of us do not use these resources to our advantage as we should.

The fourth lesson is that homeless people ask for what they want. If asking doesn’t work with one person, they try and try again. They are relentless because they need to survive. They will badger so many people and most of the time it works. I know because I see so many people fall prey to their tactics and reach into their pockets to grab money. Its human nature to feel empathetic towards other people and want to help them out. Ask for what you want and if you get denied ask someone else.

The final lesson to consider is that homeless people use a cash based accounting model. These days everyone is in debt. Debt is a tool, but most of the time people, especially people our age, abuse this tool. Homeless people collect cash, use that cash and simply go and try to get more when they run out. They don’t just put their purchases on a credit card. People need to realize that we should only spend what we have available. Try carrying around a specific amount of cash each day, spending only what you need and nothing more. Don’t always be putting the little things in life on a credit card because it creates bad habits that are hard to stop.

 

Finance Like A Pro: Buying A Car, What To Know

So you want to buy a car!? You’ve seen Dan Bilzerian’s recent Instagram photos and have already binge watched all seasons of Top Gear. Not only that, but you’re sick of driving your mom’s minivan to work. All things considered, it is time you had a little hot rod all for yourself. The only problem: now that you are living on your own, you have to pay for the car on your own as well. For most of you, this will be the first big purchase of your life, and this will be very exciting. One of the many milestones into adulthood is buying your first whip. While fulfilling this dream may bring you back to childhood, it will be very important to think maturely and be well informed in making this important financial decision. Below are some things you need to know before taking this step:

  • Talk to your bank about financing a car. Talking to a professional should be your first step. Being experienced with clients who have been in the same position, they can work with you to analyze your past statements and finalize a budget. You will want to know exactly what term you are able to afford, with the appropriate interest rate and how much you can fork over for the down payment. This step is crucial because in theory, as long as you are making money, you can afford any car with a loan. However, the amount you are making and/or able to pay forward will dictate just how long the term will be. In this sense, the longer the set term, the smaller the payment amount. However, the smaller the payments, the longer you are paying interest on the loan. A five year loan payment vs. a three year loan payment could be the difference of $200. This is something to strongly consider. Buying too expensive of a car may not take priority over other expenses you have to pay, no matter how long the term or how small the monthly payments. This leads me to my next point.
  • The price of the car isn’t the only cost you will have. Lest you forget you have to afford the interest, car insurance, gas and maintenance on the car to keep it running smoothly for the entirety of your ownership. When considering the cost of the car all of these factors must be remembered. Choosing a car in your price range is crucial and this price range should be determined keeping these other equally as important factors in mind. Just because all of your friend’s parents bought their kid a 3-series BMW, does not mean you can afford one yourself.
  • Car payments and loans have two parts: interest and principal. The principal is the amount you need to pay off the car or the balance. The interest is the additional cost of borrowing money. The APR is the rates, fees and other costs that come with the loan in the form of an annual percentage rate. My rule of thumb is three years; if it takes you longer you can’t afford the car.
  • When you want a loan you basically have two choices: dealership loans or bank loans. You will almost always pay additional interest if you go through a dealership. The dealer will get the loan through a bank, so they are just a middleman. That is why I suggest going straight to the source.
  • When you go see a lender, he will be assessing your credit score and credit history in order to make sure you will be able to pay off the loan. Essentially, the lender will be analyzing and predicting your future cash flows and budgets. If you have bad credit, you will likely pay higher interest rates or you may even be denied a loan. If a bad credit score is your reality, you will likely have to put a generous down payment on the car. The ability to pay a percentage upfront demonstrates to the bank that you are financially responsible which could help to lower your payments. When you are approved for a loan, the bank hands you a check to pay for the car and you will soon owe the bank a payment each month. Your new car will become what is called ‘collateral.’ In case you can no longer afford the monthly payments, the bank can seize your car to recover the money that is owed. Having the bank take your car will not only leave you riding a bike to work, but it will destroy your credit score, which will strongly decrease the likelihood of you ever being able to borrow money again. I know this sounds serious, but being a financially responsible adult is serious business.
  • Read consumer reports. In order to minimize these external expenses, you may want to consider a car that is more reliable in terms of average breakdowns or miles to the gallon. Legitimate consumer reports could help you save significantly. As long as looking at the resale value of certain cars.
  • Consider the pros and cons to buying a new vs. a used car. New cars have lower interest rates, but lose intrinsic value almost as soon as you drive the car off the lot. When the back tires hit the road, you have already lost up to a few grand. Buying a used car may mean that you can afford the quality brand you trust and essentially get more for your money. Buying new from a dealership usually means you have to pay for a salesman commission on top of the price of the car.
  • Be a savvy negotiator. The marketplace is still a marketplace, and therefore the concept of sales will apply. Many times salespeople have more leeway in terms of prices than they initially give off. These bottom line prices tend to be far below the advertised price of the car. This is important to keep in mind if you find yourself feeling pressured by a sales employee to buy a specific car. In actuality, you could put pressure on the salesman and turn things around, by negotiating and trying to get the lowest price available.

Lastly, make sure you take care of resale value, change the oil, rotate the tires, don’t drive recklessly, put a protective coat of wax on your car, and change the air filters regularly to keep mpg high. This will also save you a lot of money. So if you are buying a car, enjoy your new whip but be smart with your money at the same time! It will all pay off down the road, literally and figuratively.