May 28, 2015

My Best and Worst Financial Decisions

Credit: Stuart Miles at
If you regularly read my blog you probably know that I normally try to provide you with personal financial tips and advice. Sometimes I share an experience. Sometimes I just throw something out there that I’m thinking about for you to think about. Today, I offer no answers. I offer two questions; two very interesting questions someone asked me last week.

  • What is the best financial decision you’ve ever made?

  • What is the worst financial decision you’ve ever made?

Since being asked these questions, I’ve asked many of my peers, clients, and friends those very same questions. I’ve gotten some really interesting answers, too. Some people have cited a particularly amazing (or horrible) investment, some have mentioned a business they started (or tried to start), and others have mentioned a really successful (or unsuccessful) real estate transaction. Some “spicier” answers I’ve gotten have to do with a spouse (or ex-spouse), investing in a select company opportunity (or deciding not to), and choosing a highly financially lucrative career (or not so much).

I’m still deciding on mine...

On the positive side, starting a Roth IRA as a dry cleaning clerk in high school was a great decision. My wife and I putting extra towards our first mortgage most every month allowed us to build up some equity that just came in handy with our recent move. Holding on to that local bank stock I inherited from a distant aunt that was eventually acquired by a much larger, national bank was pretty sweet. Staying in-state for college wasn’t the worst thing I’ve ever done, either.

On the negative side, not putting more into my 401(k) the first several years I worked has hurt as the markets have really roared, but like most people, I needed/wanted the cash. By putting more towards our first mortgage (one of my “best” decisions) rather than investing, my wife and I also missed out on some of the significant investment returns in recent years, but paying down debt just felt too good. I so almost made an investment in Bank of America stock in 2009 when it was at $4 (now it’s at almost $17). Grrr…

What about you? What do your decisions tell you about yourself? What can you learn from your decisions? What did you learn from your decisions?

I’ll return to offering you some financial “answers” next week!


May 21, 2015

A Variation on Buying Low and Selling High

Credit: Stuart Miles at
There are a lot of people out there who will tell you that the key to success in the stock market is buying low and selling high. From a strictly value investing strategy standpoint, I tend to agree. From an overall investment strategy standpoint, however, College GameDay’s Lee Corso comes to mind; "Not so fast my friend!"

The reason I’m a little cautious to blindly endorse buying low and selling high is because it can teeter right on the brink of an evil term called market timing. I say evil because market timing is often what gets investors in trouble when they repeatedly or completely buy into and sell out of the stock market. The problem with someone trying to time the market is that they are assuming that they know what direction the market is going in the short term, and, to be honest, I haven’t met many people who do. To make matters worse, if someone is going to buy low and sell high successfully and not leave any possible gains on the table, they will need to successfully time the market twice. Twice because they will need to know when a particular stock has gone as low as it is going to so they can buy it, and again when that same stock has hit its near-term peak so they can sell it. If a market timer is wrong, they can miss out on income and market movement, but they are also punished by incurring unnecessary transaction fees, expenses, and possibly taxes. Please believe me when I tell you that correct market timing is really hard once; it’s darn near impossible twice!

As I alluded to earlier, I really do like the idea of buying low and selling high, but within reason. So instead of making one-way, all-or-nothing bets that can be largely influenced by chance, I would propose you consider two, subtle but profound variations:
  1. Stay invested and just periodically rebalance your investments by selling parts of your “winners” and reallocating the proceeds to other areas to bring your portfolio back in line with your long-term investment strategy.
  2. Go ahead and try to time your withdrawals and deposits as best you can. In essence, deposit when the market is low and withdraw when the market is high.
Some of you may disagree with my tips, and that’s fine. There are times when there are tactical opportunities when it may make sense to totally enter and exit particular stocks, industries, and asset classes, but I believe that is more of an exception than a rule. I personally find comfort in thinking that I have about 60 – 70 years left in this crazy world, and I expect the stock market will be higher then, than it is now. Something about these historical stock market charts just gives me comfort…
A lot of investment managers I’m familiar with make money by buying low and selling high, but they do it by trimming their exposure as their holdings have gone up, not by timing the market. A lot of investors I know have made good financial decisions by sticking with their long-term, prudently diversified investment strategies and periodically rebalancing, not by timing the market.
Don’t try to time the market. Try to make your deposits and take your withdrawals strategically.

May 12, 2015

Freezing Your Credit

Credit: dan at
So my wife just joined a whole bunch of people who received a letter from a school in the Southeast explaining that some of her personal information may have been inadvertently exposed on the university’s website. That’s frustrating. What’s even more frustrating is that she didn’t even go to school there! Thankfully, she was a UGA Bulldog, but I digress…

It’s things like this that make you want to sand off your fingerprints and burn your Social Security Card. Every day in the news, there’s another data breach here or another identity theft ring there. It seems like an experience with identity theft is becoming just a matter of time, not a matter of if. With that in mind, today I thought I’d mention a defensive maneuver you can take called freezing your credit.

Historically, “freezes” were more available to previous victims of identity theft, but now all of the major credit bureaus are allowing people to freeze their credit for a small fee. Freezing your credit does not affect your credit score, it does not prevent you from getting your free annual credit reports, and it does not prevent your existing creditors or government agencies from accessing your credit report. It does allow you to temporarily seal your credit reports so identity thieves cannot establish new lines of credit in your name even if they are able to obtain a lot of your personal information. This is because most new creditors need to see your credit report before they will approve opening your new account. In short, if they can’t see your credit report, they probably won’t approve a new account for the identity thieves to go to town with!

If you’re going to be taking out a mortgage or a car loan in the near future, if you are going to be moving and opening up a lot of new utility accounts, or if you are planning on adding another credit card, I might not recommend this as there is a little administrative time involved and some slight costs to freeze and unfreeze (or “thaw”) your credit.

If things are running pretty normal, you want to have a little more identity protection, or you receive a letter like my wife did, you may want to consider this. Nothing is guaranteed, but it couldn’t hurt, and it might very well be the difference between “you” going on an unauthorized shopping spree and some disappointed identity thieves.

If you’re interested, contact Equifax, Experian, and TransUnion. And yes, either do all or do none or else your freeze will be incomplete.



May 07, 2015

The Top Ten Things I Learned from Selling a House

Credit: Stuart Miles at
Selling a house as you are buying a house often go in tandem, and I’m happy to report I’m once again the happy owner of only one home! A few weeks ago I shared with you the Top Ten Things I learned from Buying a House, and a number of you were quite interested. With that in mind and not wanting to shortchange any soon-to-be sellers out there, I now offer some tips based on my recent experience of selling a house.
  1. First impressions count. I can tell you as a recent buyer that first impressions count. One of the agents that took my wife and me through several homes told us that within 30 seconds to a minute we would either have that “aha” moment or we would not. I think she is right and, as a seller, you need to know this. The house you are trying to sell obviously needs to look nice on the inside, but the buyer’s “aha clock” starts from the curb or the driveway! Make sure paths and stairs are swept, mats are clean, the yard is well manicured, and maybe even hang one of those pretty seasonal wreaths on the door to help things get off to a good start.
  2. Set a reasonable price. Go ahead and reach for the stars, but don’t be foolish. Do a little research on comparable houses and give yourself a little wiggle room to go down and still get what you want. Keep in mind that an appraiser is going to have to feel comfortable with the property being worth what the buyer is borrowing before the bank is willing to play ball; so if you are looking for a sucker, you’re going to need two: the buyer and their appraiser (unless, of course, the buyer is paying cash)!
  3. Remove evidence of your pets. I’m fonder of certain animals than others, and some of your potential buyers aren’t going to be fond of any pets at all, so keep this in mind. Fido may be cute to you, but if he scares away a perfectly good and willing buyer because there are chew toys all over the house, Fido and Fido’s possessions may need to be strategically relocated when someone is looking at your home.
  4. Declutter. Speaking of strategically relocating things… hide your stuff! In all seriousness, no one wants to see all your stuff. Pretend you are hosting Thanksgiving. Pretend you will be eating dinner off the floor. Pretend a volcanic eruption is coming and every bit of your stuff that is out will be melted by the molten magma. Imagine whatever it takes to make you declutter! Have your possessions displayed neatly, and less of them displayed than you normally would.
  5. Hire a real estate photographer to take photos. Photos matter. Our photographer made our house look like Southern Living, and I think that really helped us sell our home pretty quickly. Put simply, there is a good chance a photographer’s camera is better than yours, their experience manipulating light is better than yours, and their ability to Photoshop themselves out of mirrors is better than yours. Hire a photographer and pay them. It won’t take many days of you not selling your house for it to be worth their fee!
  6. Do minor repairs before the inspection. If you know you have a scratch on the wall, try a Magic Eraser. If you haven’t changed your air filters in ages, change them. Please, please make sure you don’t have any lightbulbs that are out. I can’t tell you how many houses we looked at that were in need of copious amounts of lightbulbs. Minor things may not be “deal breakers,” but they can make your prospective buyers wonder how well you have really taken care of your house.
  7. Differentiate your home from others. I’m talking fresh flowers on the table, a little soft music on in the background, maybe even a bowl of candy or some bottles of water available to your visitors. You want visitors to see how serious you are about selling your home and how precise and thoughtful you have been.
  8. Sweeten the deal. It has amazed me how many people I know were drawn to houses that “left them things.” In our own case, our willingness to leave our refrigerator as opposed to taking it with us was what actually sealed the deal. Whether it is leaving behind appliances and deck furniture, or going ahead and paying HOA fees for the rest of the year, consider little things you are willing to do for a buyer to make it easier for them to move in. Buying a house and moving is an expensive time, and all I’m trying to say is that not having to go pick out and pay for a washer or a dryer may be worth a lot more to your buyer than you might think.
  9. Be responsive. When buyers or their agents inquire, be responsive. Can they visit? Yes. Will you send the Seller’s Disclosure? Done. Will you send the Neighborhood Covenant? Yes (as soon as you find it). Buyers are anxious and you need to strike when the iron is hot. I know a lot of people that do things at the last minute, and it works for them; but in a situation where you’re trying to woo someone into giving you a whole lot of money, please don’t be a “buzzer beater.” They will appreciate it. So much so, they might even buy your house!
  10. Write a letter. This is my seller’s secret sauce: write a letter. I know it sounds crazy, it sounds cheesy, and lots of people will tell you that you need to depersonalize your house in every way possible, but I disagree. Okay, take some of those obnoxious family pictures off the refrigerator, but my wife and I were undoubtedly drawn to houses that felt like homes. We wrote a letter that we left on the counter to our prospective buyers, and I can tell you they went quickly, so I think other people like them, too. Introduce yourself, say why you’re moving, why you love your house, and thank them for coming. It’s human, it’s real, it’s a keepsake. If someone is visiting 17 houses on a Saturday, it might just cause them to remember yours. Maybe it could rub someone the wrong way, but, personally, I think it can do a lot more good than bad.

If you’re getting ready to sell your home, I wish you the best. It’s easy to think, “Why fix that?” and “Why put money into something I’m not going to enjoy?” but I urge you to think more along the lines of making your house look and feel like the kind of home you’d want to live in.