Personal Money Tips

Why is having financial foundation important? And by this, I don’t mean the money you have in your emergency account. I mean your foundation as in your knowledge in financial matters. Let me digress a little.

I’m participating in a challenge online. It is a free course teaching people how to earn their first $10 within 30 days. Something happened and one of the services which our mentor recommended used shut us out. Many beginners panicked and the forums post got very long. There were efforts to calm everybody down. Those who had a little more experience weren’t fazed at all. Because they know, there are alternatives!

This story sounds familiar to the recent subprime meltdown right. Many people were predicting another Sept 11 type or 1997 stock crash. Whether it happens or not, time will tell. The important thing is, do you know what you are going to do?

Many seasoned investors have a strategy that they stick to. A simple example is to sell if the market drops below a certain percentage and then pick up stocks again when the market has bottomed out. The strategy is only important if you follow it and implement it. Many people have a strategy but make allowance for it. In the above example, even when the market has fallen to the cut off point, they still keep invested, going against their strategy.

A person with a strong financial foundation (knowledge wise) will follow strictly to that strategy in the long term. The knowledge they have allows them to choose alternative ways. For instance, they keep invested perhaps in other instruments when one is not doing well. What they won’t do is panic and hide the money in save FD’s. So at what level is your financial foundation?

As you are aware, I got myself a new laptop last week. Although I anticipated that I needed time to make everything works as I want it to work, Vista is in some ways for lack of a better phrase, ” one step forward, two steps back”. Even though I’m technically inclined, I prefer the way the old OS work. Which brings me to the purpose of this post.

Newer does not necessary means better. So does different. Being an early adopter has its risks. Relate that to your finances. I’ve always believe in keeping things simple. The simpler you manage your money, the easier it is to see what’s going on. Remember, most of us are not financial planner or analyst that have the whole day to manage our money.

Most of us are probably family people with work, family, social and a ton of other commitments to take care off. If your system to managing the money is too complicated, you’d be spending too much time to “maintain” your system, rather than investing that time “managing” the money.

Since I have a new laptop with much more hard disk space, I’ve decided to re-organize my folders to be more efficient. I realize that I needed better financial software than just worksheets. Although the worksheets have served me well, I could not track changes over time. Instead of jumping to try more sophisticated software, I’ll probably get better organized worksheets, since I already have Open Office Calc which is the free alternative to Excel.

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I bought a new laptop a few days ago and was spending quite a lot of time to get it up and running. With the new MS Vista OS, it took some getting use to with some of my older programs not working. Anyway it is mostly running now.

Before I finally decided on my laptop, I did some research on cost vs performance. Several weeks ago, I wrote about how much are our gadgets costing us. Although I use my laptop extensively for work i.e. generate income, my previous laptop cost me $ 2,200 a little over five years ago. Being a first time laptop purchaser then, I wanted the laptop to last as long as possible. So I got one that’s design for business. Better built etc. Over the last few years, price of laptops have gotten cheaper and I notice that the quality of many brand name consumer laptops have improved a lot in terms of sturdiness. Even most Dell computers are not really built for heavy duty work except for a certain range.

So I did a bit more research and finally settled for a home user type Core 2 middle range processor that cost me $1,140. Instead of buying the higher price, higher range and squeezing the life out of the laptop later on, I decided to get a this laptop with the intention of it lasting 3 years. Cost per year of use for my first laptop is $ 440 and cost per year for this laptop will be $380. In order to squeeze the life out from the first unit, I had to upgrade the hard disk which was failing on the 4th year, so actually the cost per year of use is much higher than $440.

So far I’m happy with the new unit except the way the OS which truly is bloat ware.