Another no such fool as a public fool (when it comes to creativity) manuscript

A Dozen Lessons About Money (current draft)

by

TWW

copyright 2010 by TWW (using his real name)

I'm trying to get the words right for this article in a hospital room 97 miles from home where thanks to insurance from my former employer for retirees I surgically shed a gland that often troubles older men. I came in here middle-aged and now have gone through a rite of passage to wise elder male status so feel entitled to spell out financial wisdom gained over decades of dealing with money in the hope other Countryside readers can benefit from it. So to start here is Lesson #1: Be ever skeptical about financial or any other wisdom given by someone based on having or not having certain body parts or other credentials. Remember the hotshot MBA’s who worked on Wall Street buying up bad mortgages repackaged into bonds other hotshot MBA’s working for rating agencies said were a good bet. Be wary.

This leads to lesson #2 which comes from a quote from one of those experts. The late management guru Peter Drucker said in Management: tasks, responsibilities, practices “ The question that faces the strategic decision-maker is 'what do we have to do today to be ready for an uncertain tomorrow'.” Drucker was talking about management. You are the manager of your finances. So lesson #2: The future is uncertain but you have to decide what to do. Doing nothing is a decision. Only the benefit of hindsight will tell you if you made the best decision. Even then like the financial ads say “past performance does not predict future performance”.

Lesson #3: Read the book Your Money or Your Life.

In the book Joe Domingez also talks about uncertainty and then describes a method of being able to accumulate enough money invested in US treasury bonds to live off the interest. Joe reached financial independence in the 1970s and his basic method worked for the rest of his lifetime but won't work as well now because of low interest rates.   You can also get the steps in the program from a previous Countryside article on the Internet at http://www.thefreelibrary.com/How+to+achieve+financial+independence.-a079575027.   This leads to the next lesson.

Lesson #4: Take Joe's program seriously except for the part about treasury bonds being the source of income at financial independence.

Financial independence means being able to live off of a source of income separate from paid employment. The beauty of the Your Money of Your Life program is it uses feedback to help you put your money to uses making you feel fulfilled. Ironically by doing this you will start spending less and start saving in many cases. The program has nine steps starting with making peace with the past, recording and evaluating sources and application of your money while working into a future where you can live off income from something other than paid employment. Recording where your money goes is a big part of the program.

The rest of this article contains some other lessons l learned along the way often in hindsight. They helped me so maybe you can gain from them.

Lesson # 5: Choose you parents wisely

While it is not easy to do it helps to have had frugal parents who save money and try to help their kids to have a better life. Inheriting land may be one of the few ways for younger people to have a place in the country today without being swamped by mortgage payments. I inherited a nest egg for a rainy day and will be forever grateful to my parents for the financial cushion we have. But more perhaps importantly parents set an example with how they deal with money. My parents had a garden and canned and froze food from the garden all while in the city and my father could fix almost anything until the microelectronics revolution came along. They were more self-reliant than I am in the country.

Lesson # 6: Choose your partner(s) wisely

When you move to the country you'd better hope the people who come with go along with the move. It costs money to go back to the city. Since my wife and I got married a little older we had separate financial lives. We kept our individual financial identities and created a marital one with joint accounts for purchases and saving so avoided many conflicts about money. My wife was not interested in tracking money so I did it for household and my expenses but since she grew up on a farm in a family of 10 she is pretty frugal with money anyway. The money from the sale of my wife's condominium when we got married went into the land we bought 20 years before we moved on to it. Some partners also have employable skills so one person could work in a nearby city.

Lesson # 7: Choose your employer wisely

My employer kept people who retired in the employee health plan until they became eligible for Medicare. This sort of thing is rapidly becoming a thing of the past. My wife and I both also have pensions but those are also becoming less common. The pensions and my free health insurance until age 65 allowed us to move to the country. Though not matching contributions our employer had the government equivalent of 401K plans. We put money in fixed accounts like CDs rather than stocks. This is not what the experts said we should have done. Through the years we often saw other people were getting rich and we were barley gaining but other times other people losing badly as we still just kept slowly gaining.

Another former employer of mine was the military. The benefits of military service may even be better today than in the past. The GI bill paid for me getting a second college degree in a field where I could get a good job and also gave me a 0% down mortgage for the house we sold at three times the purchase price when we built in the country.

Finally, I've often heard about artists, musicians and farmers who have day jobs. Maybe that is not such a bad deal if it means living in the country. Much of what you are reading in this article shows in order to survive you may need to accumulate a nest egg while working in the city then retire in the country rather than starting out young in the country. On the other hand after some point in your life the longer you wait to move to the country the less you may have in mind, body or available time needed to do things yourself rather than trading money for them

Lesson # 8: Owe no man anything

Credit is a mixed bag. If you spend money on interest you could have been spending it someplace else but you may not be even able to have something like property without borrowing. If you owe money on something it is easier to lose the item compared to owning it. You often hear credit cards are supposed to be bad since people spend more money if they go into a store with plastic instead of cash but the Your Money or Your Life method of monitoring what you spend changes that monthly credit card statement into a source telling you where the money went.

Lesson # 9: Choose your location wisely

Wherever you end up decides the cost of something. There is a cost for getting to places where you work or trade and perhaps more importantly sick care services as you age. Weather matters too. We put our first garden in a valley below our house and it froze on August 15^th that year meaning we needed to spend more money for food. Last spring a late frost took out our entire crop of apples.  Also, access to free TV reception, telephone service or Internet  depends on location. You need to make your own list of what you need and go from there. Don't take anything for granted.

Lesson #10: The sky is not falling but stuff falls from it and may land on you

If you have something you can lose it so if you can buy insurance you might be protected. For something like a house it makes sense but insurance can be an illusion unless you remember exactly what is covered which is what happened to us. We bought nursing home insurance but then decided to only insure the big event of going to a nursing home to save money. It turned out we have needed home care due to some health issues but that was not covered. We cannot blame the insurance company for that. We made the decision ourselves and predicted wrong.

Lesson #11: You are going to get old and need to spend money rather than do things yourself

Self-reliance assumes you have the physical resources to do something for yourself and even with the healthiest of living that is what you or partners will loose with age. Gone are the old days with the large families where the kids helped out when the parents got old. As an example last fall I had planned to cut up and split five cords of wood but then did not have the time due to helping a spouse with mobility issues so had to hire someone with a machine to split the wood. If you cannot do something yourself you may need to trade money to have someone do it for you and the money has to come from someplace.

Lessons #12: Expect surprises

True surprises are not the same as hoping or pretending something will or won't happen. My hospital stay was not a true surprise since my father had what put me here though getting the disease happened much earlier to me than I expected. Getting a free healthcare expense account as part of a retirement buy-out program from my employer was a true surprise since it could not have been predicted. Surprises need not all be bad but it sometimes seems like more of them are bad.

Like I said before being self-reliant means you have the functioning body and mind and just as importantly the time to do something yourself. Right now I don't feel so self-reliant. That will certainly change in the next few weeks but for now some people wearing hospital garb who believe in Lesson #1 and don't believe me telling them I should be getting out of here yesterday are coming into the room to bug me so I must silence.