Monday, January 22, 2007

My Financial Resume

I read a post about posting a financial resume at the Carnival of Personal Finance from Canadian Financial Stuff and thought it would be worthwhile (though embarrassing) to do something similar. I am not proud of some of the financial decisions I have made in my life, but they are what they are. Hopefully, I am getting wiser (certainly older). Having a perspective on what you have done can certainly be the beginning of doing a better job in the future. So in no particular order are the big decisions I have made that put me where I am financially.

  • Getting BS & MS in Chemical Engineering. I chose this field simply because I had read that Chemical Engineering graduates were the highest paid BS position out of college. My family had no money at all and I was motivated to make money from an early age. So, I didn't chose a profession I "loved", like so many people are advised to do today. I have no regrets about this decision. It has paid off very well from a salary standpoint. I've been employed by the same company for 28 years and earn a very good six-figure income. Sometimes I've hated my job and sometimes loved it. The cost of the MS degree was free plus I had a living stipend, so my out of pocket investment for my education was less than $10K for the both degrees (I received grants and paid the rest through a work-study co-op plan - my parents paid nothing). In sum, a very good investment.
  • My first marriage - a very bad personal and financial decision. Sometimes love isn't the best reason to marry. And divorce is expensive, not only the legal fees (~$30K), but the loss in net worth (one-half goes away).
  • Getting involved in the Amway business. I spent about 12 years in that business and had some success (getting to Direct Distributor level, winning a Cruise trip). All of the profits were re-invested in tools and training, so I never made much money. However, the books, tapes and seminars really were the best financial education I have ever received and worth every penny. I also, had many opportunities to consult with millionaires and listened to millionaires who had succeeded outside the Amway business as well. Finally, I had the chance to hear President Reagan speak which was priceless. Even though I didn't get rich, I think that this experience was one of the best financial decisions of my life.
  • Not having a "six-months" living expense fund has been a bad decision. Working in a pretty secure field, I have been very lazy about accumulating this fund. Basically living paycheck to paycheck all of my life. I finally have some cash sitting in my account now, but this has been a very stupid failure on my part. Unfortunately, earlier in my life, even if I had a rainy-day fund, I probably would have spent it. My current wife is much more disciplined than my ex and so I think I am better off now in this regard.
  • Cars - I've bought 2 new cars early in my life, but learned quickly that it was much cheaper to buy used cars (I've owned about ten used cars - see my post on buying used cars). Except for a Mazda RX-7, I've kept all my cars until they had over 200,000 miles. Two cars have been very expensive - the RX-7 and a '98 Dodge Intrepid - not because of repair cost as much as that they had catastrophic fuel system failures while travelling far from home. The Dodge failed 3 times while over 500 miles away and the cost to rent a car, hotels and travel back and forth to the dealer was 3 times the repair cost. My best car was a Honda Prelude which I drove over 225,000 miles personally and only made one non-routine repair to (water pump). On the car front, I have done pretty well. I spend about one-half as much on my two cars per year as most people spend on their one new car.
  • Adopting 4 children from Russia was one my dumbest decisions but my ex was insistent on a larger family and I was too passive to fight her. The adoption cost over $45K and the legal fees afterwards cost another $50k, plus it ultimately ended my first marriage. Read how dumb I was here.
  • Buying property on emotion. I have purchased 17 houses now. The first 15 were bought with my ex and all but one was based on an emotional decision. Our first house was a lakeside cottage which we overpaid for (but it's so "cute" she said and wanting to please her, I went along) and when we wanted to sell couldn't cover the mortgage. We tried to sell it on a land contract, but the bank found out and exercised the "Due on sale" clause and forced us to co-sign a new note with the buyers, who didn't pay of course. Our second house did make us a small profit after we rehabbed it. Then I found a cheap house in a nice neighborhood. It was the first motivated seller purchase and after rehab made a lot of money. But then, my ex decided to start "saving" houses in our area (like she wanted to "save" the Russian children later. So we bought 11 houses within a 6 month period - kind of like Casey Serin. I got caught up in the prospect of getting rich by rehabbing these. But I planned poorly, the properties couldn't be rented out and we had no cash to rehab. We lost money on all 11 - close to $100k. Since my first marriage ended I have bought two really good properties from motivated sellers and now feel pretty good about my real estate investments. But it has been an expensive lesson.
  • Not funding my 401k uniformly throughout my career has been another stupid decision. not only was I not always funding it, I often raided the account to buy bad real estate, paying the taxes plus 10% penalty. Stupid, stupid, stupid. I'm sure I could be on the verge of retirement now had I been sane about this.But, then again, I would have lost half during my divorce, so maybe not.
  • Not buying luxuries on credit. I have been very good about this my whole life, so at least here I don't have to hide my face. In fact, I have not really spent a lot on luxuries or eating out. I enjoy cooking and don't watch much TV at all. I find my entertainment in my life rather than watching someone else.

If I were grading myself, I would give myself a "C". About average. Some decisions have been good others bad. There's plenty of room for improvement. The next few years are critical as time is running out. Even though my career has been stable, times are changing. There's no time like the present to change your life and that is what I am doing.

No comments: