"Finance is OK if You've Got Money"

I knew at a pretty early age that I was interested in finance. I remember begging my father to let me take my lawn mowing money and buy a stock with it. The only one he would let me buy was A T & T, which proved to be a modest loser. But in my second job, as a dock boy at a local marina, I used to listen to some of the boat owners talk to their brokers over the pay phone in our office. One guy in particular convinced me of the merits of a stock called Lear Siegler. Founded by Learjet inventor William Lear, they had developed an automated system for landing planes in zero visibility situations (this was in the 1960s, mind you). I was convinced to buy, and since I already had the account from the A T & T, I called the broker myself and invested a summer’s worth of lawn mowing money, buying 100 shares of Lear at 12 5/8.

I remember the first few weeks of owning that stock. My pay as a dock boy was $1.25 per hour, so every 1/8 that Lear went up or down represented more than a day’s pay. I agonized when the stock dropped and exulted every time it went up. That’s the first time I realized that you can’t psychologically treat investment dollars in the same way that you treat supermarket dollars. To this day, I can make thousand dollar decisions all day, and then later stand in Stop & Shop with two jars of mayonnaise and think, “Gee, if I buy the bigger one, I can save 10 cents an ounce.” … but I digress.

Anyway, about six months later, Lear finally started moving up. When it got over $21, I sold it, and requested a check. I can still remember holding that check in disbelief that the $2000+ in my hand had been just $1300 six months before. I was hooked.

I was a freshman in college by then at the University of Notre Dame. Some high math SAT scores had led to some very bad advice by my guidance counselor to become a Math major. I knew that wasn’t for me from the first day of class. So right there, holding that check, I became a Finance major, and the rest is history.

The following August, I decided to drive out to school with my roommate Skip, who lived just outside of Atlantic City. Before we left, Skip wanted to say goodbye to his grandfather, an intimidating man who had once owned the largest hotel in the city. So there we were, standing at his front door, when Skip’s grandfather asked us, “So what are you boys taking up at college?”

Skip and I both had the same major, so in unison, we replied, “Finance, Sir.” I’ll never forget his reply:

“Well “Finance” is OK if you’ve got money.”

Skip and I got a big kick out of that, quoting him often during our college years. But I can’t say I agree. In many ways it’s even more important for those without money to understand finance, and we as a nation are woefully undereducated in this area. When I read about the “sub prime mortgage” fiasco, I marvel at the number of loans people entered into without the slightest idea of what they were signing. And worse yet, I saw the other day that of all the people who are currently in default or foreclosure on their mortgages, less than half have even picked up the phone to call their lenders.

They’re probably intimidated. Overwhelmed. But the irony is that the lenders have every incentive to work things out with the borrowers. Many lenders even have departments called “Work Out” departments.

There are so many other examples of financial ignorance and naiveté, but I’ll bet I don’t have to convince you. You know it too. It already appears that when I write on purely financial topics, I get more hits. My “most found via search engine” article of any I’ve written to date has been the “When Can I Take Money from my IRA?” article.

So this weekend I’m going to devote to cranking up the personal finance engine a bit. I have been planning to add a “Platinum Finance” section to http://www.platinumyears.net/ for a while now, and I have found a number of personal finance blogs and some other resources to recommend you to, and I've also found a personal finance “carnival.”

What? You don’t know what a “personal finance carnival” is? Well you’ll just have to check back now, won’t you?

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