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Old 05-11-2009, 09:56 AM   #21
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I think it terribly unwise for someone in their 60's to use retirement savings or home equity to finance "business ventures". Did they not give thought to the consequences of failure
Robert Louis Stevenson wrote about the "desperate game we play in life". Risk is relative, and in the long run, we're all dead. If someone is compelled to follow their dream, rather than tidily run out their string, who are we to criticize? Charles Goodyear perfected vulcanization in his 40s - beyond the mean lifespan of the mid 19th century - and only after being imprisoned multiple times for indebtedness.

My mother was a successful business owner for almost 40 years, and started several ventures during that period including one in year 39. The newest ended badly, and instead of relaxing in her 60s she worked. Now in her late 70s she's dependent on Social Security and the family safety net, with a very modest lifestyle. Do I wish she hadn't "bet the farm" - absolutely! But there's a lot worse outcomes than mentally sharp, healthy and broke in your late 70s, enjoying Mother's Day with your children and grandchildren!!
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Old 05-11-2009, 09:58 AM   #22
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Starting a business has many of the same rules of thumb as investing (and gambling, for that matter): don't put more money into it than you are willing and able to lose.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 05-11-2009, 10:06 AM   #23
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Frequently I come across people who approach retirement from the viewpoint that they have worked hard all their lives, so their retirement will just magically fall into place when they get to retirement age. I would truly hate to be a financial planner approached by this type of person in their 50's or 60's.
Yes... I have seen this one alot as well. It is this "magical thinking" that will lead to their own destruction. My own father is probably going to be one of these folks. I have begged, pleaded, and offered to pay for him to go see a financial planner. Not because I trust a FP, but he would never take my advice, no matter how sound it is.

I think for alot of people, facing reality is just too emotionally painful for them. So instead of planning and making their situations better, they continue through life "pretending" that things will turn out OK. That "somehow" things will work out on their own, with no active participation on their part. I have literally seen people blow through 1000's of dollars wind up in complete bewilderment when they suddenly cannot pay their rent.

I am not a psycologist, but I would almost have to label it some sort of mental psycosis. To be that disconnected from cause and effect completely baffles me.

For better of worse, self dillusion is not a luxury that I can afford. I see things for pretty much what they are. And no matter how much I might want it to, reality is just not going to change for me, or anyone else.
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Old 05-11-2009, 10:10 AM   #24
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Risk is relative, and in the long run, we're all dead.
Risk is not relative in business (one aspect of this thread). It can be quantified by various means.

You might have meant - that the risk that a person is willing to take is subjective. In that their is no doubt.

32508. Keynes, John Maynard. The Columbia World of Quotations. 1996
Long run is a misleading guide to current affairs. In the long run we are all dead.
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Old 05-11-2009, 10:14 AM   #25
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You might have meant - that the risk that a person is willing to take is subjective. In that their is no doubt.
That's certainly true, and it's also amplified by paradox: to a large degree, the people who can most afford to take risks with their money tend to be the same people who don't need to.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 05-11-2009, 01:13 PM   #26
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That's certainly true, and it's also amplified by paradox: to a large degree, the people who can most afford to take risks with their money tend to be the same people who don't need to.
I still haven't found the answer to that paradox, but I doubt it lies in I bonds or buried coffee cans.
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Old 05-11-2009, 04:08 PM   #27
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That's certainly true, and it's also amplified by paradox: to a large degree, the people who can most afford to take risks with their money tend to be the same people who don't need to.
Well, when you live beneath your means, no matter what the amount, you (almost) always have enough no matter what. They can afford to take the risk because they don't take it when they don't need to. Not so much a paradox, more like the outcome of frugal behavior.
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Old 05-11-2009, 04:32 PM   #28
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Dex,

I was trying to imply that the risks these people incurred by their speculative business investments were relatively modest, to the point that some would scorn to even call them "risks". Every day people venture their lives in order to get to the United States - penniless, homeless, and jobless. In Darfur, among other places, people are starving, and are in danger of murder or rape when the go to fetch water. Mr. Villareal is an American with what appears to be a very nice house, $200 shoes, and who does not look to be in any danger of starvation. I don't criticize him, just point out that his situation would be envied, not pitied, by the majority of people around this planet. As such, to say that the decisions that led him to this were incompehensible, destructive, or a symptom of psychosis - well that just seems like a stretch. He was not frugal, clearly. Maybe even foolish. But our economy is based on starry eyed entrepreneurs, as much if not more than on frugal people. Robert Browning wrote that "a man's reach should exceed his grasp"... which means we should expect to find a lot of people lying at the base of the tree with their butts hurting ;-).
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Old 05-11-2009, 05:06 PM   #29
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Dex,

I was trying to imply that the risks these people incurred by their speculative business investments were relatively modest, to the point that some would scorn to even call them "risks". Every day people venture their lives in order to get to the United States - penniless, homeless, and jobless. In Darfur, among other places, people are starving, and are in danger of murder or rape when the go to fetch water. Mr. Villareal is an American with what appears to be a very nice house, $200 shoes, and who does not look to be in any danger of starvation. I don't criticize him, just point out that his situation would be envied, not pitied, by the majority of people around this planet. As such, to say that the decisions that led him to this were incompehensible, destructive, or a symptom of psychosis - well that just seems like a stretch. He was not frugal, clearly. Maybe even foolish. But our economy is based on starry eyed entrepreneurs, as much if not more than on frugal people. Robert Browning wrote that "a man's reach should exceed his grasp"... which means we should expect to find a lot of people lying at the base of the tree with their butts hurting ;-).
I think the issue I have is that the article was written to elicit sympathy for the people who have had their retirement plans altered by the current economy. The choice of subjects left me less than sympathetic. And maybe, in reality, the subjects do not want any.
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Old 05-11-2009, 06:10 PM   #30
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Originally Posted by ziggy29 View Post
Starting a business has many of the same rules of thumb as investing (and gambling, for that matter): don't put more money into it than you are willing and able to lose.
So Kipling wasn't really thinking of investors?

"If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss";

Or maybe If is good poetry but poor investment advice.
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Old 05-11-2009, 06:10 PM   #31
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Dex,

I was trying to imply that the risks these people incurred by their speculative business investments were relatively modest, to the point that some would scorn to even call them "risks". .
Txs - I understand your point now - and agree.
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Old 05-11-2009, 07:20 PM   #32
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Well, when you live beneath your means, no matter what the amount, you (almost) always have enough no matter what. They can afford to take the risk because they don't take it when they don't need to. Not so much a paradox, more like the outcome of frugal behavior.
I don't know. It is a paradox in some sense. Plenty of people who don't NEED to take the risk do so anyway, largely because they are willing to accept the risk of loss knowing that if their "bets" were wiped out, they'd still be okay. Maybe they have millions in non-risky stuff. Maybe they calculated that the combination of a COLA'd pension and SS would be more than enough to live on. But the point is this: they have the *ability* to assume the risk if they were up to it, but unlike most of us middle-class 401K-dependent schmucks, they don't NEED to take the risk if they'd rather not.
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Old 05-11-2009, 09:56 PM   #33
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It's a jungle out there. No really, it is! I mean it. If you don't find a way to take care of yourself, the world will pass you by. It's not easy but it's a (quality of) life or death situation.

Retirement planning is a serious challenge with much of your life on the line. Put all your intelligence, judgment, creativity, and hard work into it and maybe, just maybe, it will pay off.

But what if you don't have much in the way of intelligence, judgment, or creativity? What if your luck doesn't hold out? What if you don't believe in yourself and give up before you start? You may have to work until you die. It's a jungle out there ...
My Uncle Bob died at 83. He was not a planner and lived in Reno during the last years of his life. He liked to gamble a bit and had a modest apartment there with a little Schnauzer dog. He never had a big paying job and worked most of his life as a printer (there was also a failed business venture in there). He got along great. I think this was because he was not critical of others and just accepted you as a decent person. Also his alcoholic wife died early enough that he could enjoy his old age. Everybody liked him because he was so non-critical. People did not feel like they had to be great successes in his eyes to be a friend. Again, he was not a planner and yet he had a decent life.

Now his nephew is a big planner, is critical of himself and others, and is always worried about money even though he has probably a hundred times more then his uncle ever had. He's trying to figure out how to be more like his uncle nowadays .
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Old 05-11-2009, 10:25 PM   #34
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I am not a psycologist, but I would almost have to label it some sort of mental psycosis. To be that disconnected from cause and effect completely baffles me.
I have several relatives who are like this. One is a notorious shopaholic who sent pictures of her foot-high ceramic chicken, hates her menial job, but who three years ago was critical of us because we elected not to join her on a cruise that would have cost $2k. Another lives on SS but is $180k in debt, facing foreclosure, and when last heard from was applying for food stamps.

When I declined to bail her out (she has a long history of fiscal mismanagement, and doing so would merely forestall the inevitable) her comment was "Well, when one door closes another opens". She simply does not make the connection between her own actions and the consequences.

I will never understand these people.
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Old 05-12-2009, 04:14 PM   #35
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I think we're narrowing in on the source of the problem-- he's afraid to retire before his office clothes wear out.

But if he's going to fix Social Security and Medicare with his payroll contributions, then I can't complain.

Come to think of it, I don't buy $200 shoes like I used to either....oh wait, I never have bought a $200 pair.

The media is always going to find those riches to rags stories in a time like this. They aren't going to interview me. I'm not news worthy. Not much has changed except for losing $100,000 or so of net worth and the wife's sales job producing 20K to 25K less per year. Those numbers might seriously damage some folks living on the edge, and that's the kind of story the media wants during tough times. It's had very little effect on us since we were already living off a fraction of our income.
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Old 05-12-2009, 08:36 PM   #36
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I couldn't agree more. But we have to remember that people who frequent this board are more likely than most to have taken control of their own financial situations in order to actively engineer their retirement.
True but people who frequent this board also tend to be the exact opposite of your typical entreprenuer. Lot's of gov-corp slave types working in one niche their entire career, and becoming fixated on early retirement.

You could make a case that most companies in the world, and our whole standard of living for that matter, is based on entreprenuers risking their personal wealth on starting new businesses. Many fail but enough suceed to fuel the economic growth that allows us the opportunity to retire early in the first place.
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Old 05-12-2009, 09:10 PM   #37
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True but people who frequent this board also tend to be the exact opposite of your typical entreprenuer. Lot's of gov-corp slave types working in one niche their entire career, and becoming fixated on early retirement.
....
This has my vote for stupid statement of the week.
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Old 05-12-2009, 09:18 PM   #38
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True but people who frequent this board also tend to be the exact opposite of your typical entreprenuer. Lot's of gov-corp slave types working in one niche their entire career, and becoming fixated on early retirement.

You could make a case that most companies in the world, and our whole standard of living for that matter, is based on entreprenuers risking their personal wealth on starting new businesses. Many fail but enough suceed to fuel the economic growth that allows us the opportunity to retire early in the first place.
Strange that people on an early retirement board would be fixated on early retirement.
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Old 05-12-2009, 09:23 PM   #39
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This has my vote for stupid statement of the week.
Actually, TargetDave's quote fits me perfectly.
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Old 05-12-2009, 10:13 PM   #40
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Ditto.
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