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Old 04-25-2013, 06:34 PM   #81
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+1. There is too much tendency to say "My way good, other ways bad!

Maybe god has decided that anyone who dies with net worth >$1mn goes straight to hell. Then we might wonder who is smart!

Agreed. Way too much judgement in this world....
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Old 04-25-2013, 07:03 PM   #82
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My frugal parents and grandparents taught me the basics - mainly LBYM. That provided a great foundation for me. When I started working, the senior partners were wise investors and mentored me for 30 years. And my business degree provided me with insight as well, since personal money management is not much different than business money management.

A few earlier posts allude to one's personal priorities to keep their financial matters as private as possible. So it's tough to find a financial mentor. And k-12 education fails to even address personal finance.

Although i'm far from a financial wizard, I'm asked for financial opinions all the time. From former and current business partners, coworkers, friends, and relatives. I really enjoy talking personal finance with those just starting out, sharing whatever knowledge i've gathered from others. They're going to need all the help that they can get.
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Old 04-25-2013, 07:04 PM   #83
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That's fancy.....I'm more Subway.
We're each on the mailing list for IHOP, and we go there for a free birthday meal and when they email free meal coupons at various times during the year.
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Old 04-25-2013, 07:08 PM   #84
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I have some technically accomplished friends who are almost clueless about investing, retirement planning and even personal finance. Among them (most without pensions):
  • An attorney
  • A small IT company owner
  • Several engineers
  • Several doctors, medical specialists
  • An accounting manager (this one really amazes me)
  • A small business owner

I have never understood how otherwise very smart people can be so uninterested in their own financial security
Good thread. You are addressing two things: technical ability to invest & plan; and interest in financial security. I can count myself in as another engineer/scientist who never really understood investing. I did however pay some attention to personal financial planning when I was in my 20's. During the 1980's I read Money Magazine and a couple of books on Personal finance. What I got out of that was to pick a "good" mutual fund; practice dollar cost averaging; and stick with it for the long haul. Anything beyond mutual funds was beyond me or at least so uninteresting that I couldn't or wouldn't understand it.

Somewhere in my childhood in the 60's & 70's I just picked up values of working hard and not going into too much debt (a house and car were OK). I was perfectly happy with the things I could afford. I didn't think at all about retirement during my first 20 yrs of w*rking and after that I was just vaguely aware that I should save more (which I did) and that I was vested with an employer with a defined benefit plan.

I never did get any financial education in HS or college. Never discussed what I made or financial stuff with family or friends. It all fell into that "polite people don't talk about what they make with others" mindset.

So . . . I'm a reasonably technically smart engineer who was mostly uninterested in finance and didn't have much of a plan for retirement. It was whatever values I picked up and lived by that saved me and made ER possible. This probably an example of the comment that if you just save enough over time you can make up for other investment and planning mistakes.
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Old 04-25-2013, 07:43 PM   #85
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My frugal parents and grandparents taught me the basics - mainly LBYM. That provided a great foundation for me. When I started working, the senior partners were wise investors and mentored me for 30 years. And my business degree provided me with insight as well, since personal money management is not much different than business money management.
You decided to take the advice and that's a good trait. Some people would just choose to ignore it.
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A few earlier posts allude to one's personal priorities to keep their financial matters as private as possible. So it's tough to find a financial mentor. And k-12 education fails to even address personal finance.
Some may want the advice but not have the luck to run into a good source of advice. There are plenty of bad sources out there with ulterior motives. Even the good sources want some compensation.

My family experiences:
DW is kind and thoughtful. She doesn't care much about learning about money matters, but I do talk to her to try to do a bit of education in case her financial guru passes on.

DS has never had any real money and is now in a (hopefully) stable job. I will try my best to give him some guidance, but he's not very interested in talking about this stuff. Maybe if he has some real money he will be. Eventually he will inherit a sizable estate so I'm hoping he will perk up once we get closer to the hand off point.
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Old 04-25-2013, 07:45 PM   #86
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Some of the "dumbest" people I have known are people with advanced degrees. They are good at classwork in one narrow area....at getting what they have been told to do done. I once had a principal who couldn't understand why her computer information was screwed up all the time (this was 80's with floppy disks)....she was keeping her disks in a nice easy to get to way that she thought was pretty nifty. She was putting them at the side of her desk on the file cabinet......with magnets. But if you didn't know anything about computers+disks......why not?
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Old 04-25-2013, 09:50 PM   #87
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My ladyfriend tells me some stories about her coworkers and their financial knowledge which put some things into perspective. She is hardly a financial wizard but adding my advice to what she knows had made her appear to be some financial genius at her cardiology office.

For example, her practice got taken over by a large hospital in 2011 and her mediocre 403b plan accepted direct rollovers from her old tax-advantaged profit-sharing plan. I found one mutual fund which did not have huge expense fees (like in that recent PBS special) and it fit well with the rest of small retirement portfolio (some scattered IRAs from previous jobs she has yet to combine together). But the default action (if you did nothing) was to simply cash out the profit-sharing plan and pay taxes and penalties on it, which is what happened to many of her unsavvy coworkers. They were then shocked at the huge tax bill they received.

But when they learned what she did to avoid that pitfall and keep the entire profit-sharing account intact, they thought she was some financial genius LOL! Of course, there was no education from anyone in the benefits unit in the hospital. They handed out some literature and forms about their 403b plan but you had to hunt through it all to discover that they took direct rollovers from the profit-sharing plan. My ladyfriend, of course, handed me the literature and I found this vital info and we completed the forms to do the direct rollover. She felt kinda bad for those at her office who had no clue how to preserve their entire profit sharing balances and never asked her before it was too late but what can you do?
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Old 04-25-2013, 10:02 PM   #88
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...

But when they learned what she did to avoid that pitfall and keep the entire profit-sharing account intact, they thought she was some financial genius LOL! Of course, there was no education from anyone in the benefits unit in the hospital. They handed out some literature and forms about their 403b plan but you had to hunt through it all to discover that they took direct rollovers from the profit-sharing plan. My ladyfriend, of course, handed me the literature and I found this vital info and we completed the forms to do the direct rollover. She felt kinda bad for those at her office who had no clue how to preserve their entire profit sharing balances and never asked her before it was too late but what can you do?
"What can you do?"
Well, maybe what she could have done was tell her co-workers how to preserve their entire profit sharing balances before it was too late. You know, tell them right after you told her how to do it. It wouldn't have been too late then.
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Old 04-25-2013, 10:02 PM   #89
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Me too. Engineer who took econ. Since I chose the elective, I actually cared. The other students who had this as a "flunk out" course for their majors (like physics in engineering) just slept through class.

I learned way too much in my second class which was focused on government finance and taxation. That's yet a whole different issue, but one that is hitting home these days. So you think people are bad at their own finances? True. But they are even more clueless as to how our government works financially.
Me three, but I went into industrial engineering, and took lots of 'engineering economy' classes (time value of money). Even TA'd the class in grad school.
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Old 04-25-2013, 10:11 PM   #90
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Heh-I live in a small town occupied by two large land grant universities. People smarter than me everywhere I look. I could tell you stories for hours about REALLY REALLY smart people doing REALLY REALLY REALLY dumb things.

I think smarts are situational. Smarts in a particular area of interest do not correlate to overall well-rounded smartness. I tend to be more of the jack-of-all-trades type of smart.
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Old 04-25-2013, 10:17 PM   #91
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Another thing comes to mind, I apologize if I am repeating something earlier in the thread.

Sometimes "smart" people assume that they don't need to learn from someone else, as their "smarts" and "intuition" can figure it out. And worse, they might look at someone who is not at the same social or financial level as them as someone who it is "below" them to learn from.

This leads to them not being teachable. Or listening, but rather than admit they don't understand, they either pretend they know it, or simply figure if they cannot understand it it must not be important. Or figure "that person hasn't achieved (or won't achieve) what I have achieved or plan to achieve, why do I need to listen to them?"
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Old 04-25-2013, 10:21 PM   #92
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I have always equated this lack of incentive by my fellow Americans when it comes to, lets call it personal finance, to their perceived inability to complete their own federal income tax forms.

If you simply read the forms (even doing it via stubby-pencil) and follow the seemingly complex directions you can do your taxes with no assistance. Millions do. With the addition of excellent, affordable tax software, i.e. Turbotax, it is almost too simple. Yet there are millions of "tax offices" in every city in America.

Once folks become personally motivated and read a few good investing books and peek in at a few groups like this one, most can easily learn enough to be successful as an investor.
I have known more than a few people who actually take pride in not being able to do their taxes. They take it as a sign of their "advanced" financial standing that they need to hire someone to do their taxes.
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Old 04-25-2013, 10:31 PM   #93
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okay I'll admit to a certain degree of cluelessness about personal finance, in particular taxes. I used to do my own back in simpler times, but these days it makes my hair hurt. Exemptions, allowances, deductions, adjustments--I read the definitions and I still can't keep 'em straight.
I have a PhD and loved calculus and statistics. Math ain't the problem. I also worked in Marketing for 30 years and greatly appreciated my partnership with the guys in Finance to make good business decisions about profitability, etc.
I just think that there are certain areas where individually we're strong and certain areas that have us beating our heads against the wall.
It's not a matter of motivation or attitude for me, I want to understand it all better, and although I'm making progress with the help of this forum, it can be really frustrating.
Having said all that, I have appreciated the importance of saving and LBYM all my adult life--I'm not clueless about that.
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Old 04-25-2013, 10:44 PM   #94
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I have another theory.

Others mentioned how money is a taboo subject but I think it's deeper than that. How many people here really share specific financial information with family and friends? For the most part, we don't even discuss how much we make, own, save or spend with our closest family including children and parents.

It's funny that people can share on on the E-R.org boards and bare their financial details in anonymity but wouldn't consider doing the same to the people we are closest to.

While lots of people in this thread have talked about education it's all done in the abstract for the most part.
I think this is a huge, huge, huge part of it. I remember when I first got out into the workforce, I actually had no real clue about finances. Yes, I knew my parents were frugal and saved, saved, saved all the time and I knew I hated it. What I didn't really understand was why they did it. And, I was just out of law school and was making more than my parents made - combined (and my mother even worked at a time when most wives didn't work).

I would see a friend buying an expensive car and another friend taking a nice vacation and someone else buying clothes at Neiman Marcus and someone else buying this really nice piece of jewelry. And, in my mind if X could afford that $1000 necklace well then I could afford it, too. What never occurred to me was that (1) maybe that person couldn't afford it either and was going in debt, (2) maybe that person had family money I didn't have, and (3) maybe that person could afford that necklace because she wasn't buying the nice car and wasn't going on the nice vacation, etc.

If you aren't the type of person to go and research everything to death (and most people aren't - to my shock at times), and talking about money and savings and how to prepare for retirement, etc. is kind of taboo - then it is hard to actually acquire the knowledge you need.

Eventually I acquired it but I wasted lots and lots of years before I finally got there.
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Old 04-25-2013, 10:48 PM   #95
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I've got it figured out. These really smart engineers and judges and attorneys and cardiologists do these really dumb things because they forgot to join ER.org!

What the world needs now ... is better outreach from ER.ORG!
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Old 04-26-2013, 06:17 AM   #96
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Great thread, this topic has fascinated me for years. I was talking about this just last night with another guy at work - he's in a financial position almost identical to mine. I'm leaving in July and he's been fence-sitting but leaning toward leaving too. With the number of people leaving and the time required to get the clearances to be there the overtime picture is going to be ugly for those who don't want overtime.

What brought it up was the number of people there who are our age (late 50's-early 60's) and despite the nearly 50% pay cut coming in July are staying on because they are living paycheck-to-paycheck and deep in debt. Jobs around here are scarce.

I've come to the conclusion that what makes the difference is the ability to defer immediate gratification for long term gain, probably not something that comes naturally to an animal that just a few thousand years ago was surviving on a day-to-day basis.

And I'll be the first to acknowledge that if it weren't for the DB pension I have I'd probably be in deep financial doodoo myself since I didn't give much thought to retirement until the dust settled on my divorce in my mid 30's. But it was ingrained in me to avoid cc debt, keep an emergency fund, (hey, that furnace/roof/refrigerator ain't gonna last forever) and the only loans were for vehicles that we kept for over a decade, and a home.

Why that is so hard for so many otherwise intelligent people is something I don't understand either.
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Old 04-26-2013, 06:57 AM   #97
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I also think some of it is personality. Some people are thoughtful and reflective, while others are more impulsive and spontaneous. Some are more of the "nerd" type, while others more of a "free spirit." Some are worriers, others are not. I think the former set of traits would lead you to learn about financial issues, whereas the latter would not.

Another important factor, which I know has been mentioned, is just the cultural messages we get constantly to spend spend spend, and here's another credit card.
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Old 04-26-2013, 07:17 AM   #98
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Hmm... I suspect those kinds of personality connections have been researched. Perhaps ISTJ is the personality type that more readily lends itself to this stuff.
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Possible Career Paths for the ISTJ: Business Executives, Administrators and Managers Accountants and Financial Officers Police and Detectives Judges Lawyers Medical Doctors / Dentists Computer Programmers or Systems Analysts Military Leaders
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Old 04-26-2013, 07:36 AM   #99
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I think the main reason is poor economic literarcy, especially for children which then leads to poor economic literarcy when they grow up. Adults not talking to children about economic constraints also lead them to think that there are infinte resources.

For me personally I feel that I made a bunch of poor tactical financial decisions in my early life. It had to do with ideology and understimation of the power of inflation. I had an anti-debt ideology early in my childhood so I pretty much refused to get a credit card and always paid cash and missed out on all the cash back features of credit cards. I also refused to get a mortgage and insisted on buying a house all cash and as a result missed the 1990s real estate boom. Of course all this changed when I got married and my wife actually taught me about why my thinking was wrong. I also did not factor in the compound affect of inflation and put my large cash savings in low return accounts when in after inflation terms they were really negative. I did understand very well the tax system. As a child I loved learning about how the tax system worked. That might be ideology as well becuse even as a child I rejected the government role in the economy and saw avoiding taxes as the best way to starve the beast. I took over my parents income tax filings when I was 11 so even early in my adult life I was very good a making decisions from a tax optimal point of view.

As a parent of a child of two I plan to start early and show him our household budget as early as possible and really treat him as a very young adult in terms of finance as early as possible.
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Old 04-26-2013, 08:02 AM   #100
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Very interesting thread. Here's hoping we can keep our personal politics out if it and it can stay on topic.
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