Financial Predictions for 2014: I Predict They Will be Mostly Useless

Tuesday, January 14, 2014 at 2pm
By John Friedman

T’is the time of year when the financial media outlets — both lay and professional — are chock-full of stories about what 2014 will bring.

Should you listen to them?

I’ll start off with a blanket response to that question of nyet, and soften it only if you promise to gird yourself against powerful forces for financial ill-health, head-faking you with promises of prescience, but ultimately amounting to nothing more substantively noteworthy than a two-year-old correctly calling heads three coin-flips out of five.

My reasoning here is two-fold, paralleling the two main parts of this piece that follow below. First, most predictors’ predictions are not even worth the electrons we use to store them because the types of predictions that predictors most often get right are predictions that most of us could get right on our own without any help from experts, and, second, when predictions are brought into the financial context, they are used primarily as sales tools, to get you to do something you might not otherwise do, because, hey, if this guy/gal purports to be able to predict the future, what else might s/he be able to do for you right here in the present?

To follow the thread of these two ideas, from predictors predicting badly to predictors generating revenue handsomely, please do read on, and I’ll do my best to provide you with some thoughts quite a bit more useful than useless. …more ►

Leave a Comment   |   Comments (0)   |  
Categories:
Tags:

Nearer Thy Financial Numbers to Thee: January is the Best Month for Updating Your Understanding of What the Numbers in Your Financial Life Look Like

Friday, January 10, 2014 at 2pm
By John Friedman

In a piece I wrote last week, I mentioned that lots of people have at best only a vague idea about what the numbers in their lives look like. I also added that this I-see-nothing approach to one’s financial life is, to say the least, not optimal, and then I went ahead and teased the notion that it’s quite easy for a person to get in touch with his or her numbers, and that doing so in January is the perfecto time for doing so.

So it’s January, we’re about a third of the way in, and time’s a wastin’, so let’s get talking about how you can, in a few short minutes, get nearer thy financial numbers to thee, shall we?

…more ►

Leave a Comment   |   Comments (0)   |  
Categories:
Tags:

John Friedman Financial’s Statement of Fundamental Principals, Number One: Financial Health Defined

Monday, January 6, 2014 at 4pm
By John Friedman

This is a long’ish piece — about 2,400 words.

It might take you twenty minutes or more to read it.

It might’ve taken me twenty years or more to think it. And it for-sure took me many, many hours to do my best to make it entertaining as well as smart.

I hope you find that I accomplished both goals, and that in it you find a very useful — in a nuts ‘n bolts’y, blocking ‘n tackling sort of way — methodology for thinking about how to improve your overall financial health with each and every passing day. That’d be great, yes?!

So here we go . . .

* * *

Your overall financial health consists of two main components. The first is your numeric financial health and the second is your non-numeric financial health.

Numeric financial health is all about — you guessed it — the numbers populating your life. Are they big enough to do what you need/want them to do? Are they in scale with each other? Are there any nasty negative numbers hanging out in there, messing things up? Is there too much of one sort of number and not enough of others? Are the numbers predictable or do some of them bounce around willy nilly? And if there are some bouncers in there, are there any other numbers in there to help smooth things out some, to provide ballast?

By contrast, non-numeric financial health is all about how well your financial life coexists with all other aspects of your life. Is your financial life at odds with the other parts of your life? Or is everything living together in perfect harmony? Or is it somewhere in between, with your financial life coexisting with the rest of your life in a very nuanced and complex way and, if the latter, does your financial life mostly succumb or does it mostly steam roll?

The rest of this piece considers these separate but intertwined parts of your overall financial health in further detail, and ends with some comments about how to judge your overall financial health in terms of both numeric financial health and non-numeric financial health. …more ►

Leave a Comment   |   Comments (0)   |  
Categories:
Tags:

The First Week of January Test, 2014: How Does it Feel to Be Back After the Holidays?

Monday, January 6, 2014 at 11am
By John Friedman

Dark and early this morning, before even mentioning his favorite and seemingly ever-present traffic jam on the Sunol Grade, long-time KQED traffic guy Joe McConnell said it nice ‘n blunt:
 

It’s back to the grind for most of us today.

 
It’s a common enough phrase, but hearing it today, half asleep the first Monday back after the long holiday season, I couldn’t help but go a step further, conjuring up an image of all us lemmings people sidling up to, and then firmly planting our noses against, the grindstone.
 

Nose to the grindstone

Kudos to the fellow in the middle for
applying healthy doses of
elbow grease, eh?


 
All of which is to say: people . . . it’s the first week of January, and that means it’s time for you to write down your answer to The First Week of January Test, a test with but a single question and no wrong answers.

Here’s the question:
 

How does it feel to be back in your normal day-to-day routine?

 

Go ahead: write down your answer.

Does it feel good to be back, or even fantastic? Or does it feel rotten to be back, or even tortuous? Or something in between?

And do you look out to the year ahead and get all happy and jazzed? Or do you look out and get all somber and bummed? Or something in between?

Go ahead, write something down. Do not edit yourself. Capture the moment for all times’ sake.

And then please file it along with any other answers to The First Week of January Test you’ve written down over the years, and please do feel free to share your thoughts with others via a comment or, far more privately, with people in your life or even with your friendly financial health advisor, moi.

And, but of course, do share it with your future self from time to time, and do, as you are making decisions throughout this brand new year — as you make all the little decisions that day-to-day life entails, and as you cogitate all the great big decisions accompanying you everywhere you go, left undecided, patiently awaiting your response — keep a watchful eye on the extent to which each of those decisions makes it possible for you to answer The First Week of January Test in ever-increasingly jubilant ways with each passing year.

Each of those decisions — every last one of them, I would argue — has at least a minor financial aspect to it, and many of them are driven almost entirely by financial considerations. Are those financial considerations pulling in pretty much the same direction as all the other considerations tied up in the decision? If so, excellent. If not, you’ve got some room remaining for improvement of what I call your non-numeric financial health.

* * *

If you’d like to learn more about what The First Week of January Test is all about — what it has to do with your financial life, how it relates to the John Friedman Financial definition of financial health as having both numeric and non-numeric aspects, and how all of that ties in with a simple way to fairly effortlessly be in action on continuously improving your overall financial health — then please see this piece:


John Friedman Financial’s
Statement of Fundamental Principals, Number One:
Financial Health Defined

 
And a very wonderful and financially healthy 2014 and beyond to you and to yours!

Leave a Comment   |   Comments (0)   |  
Categories:
Tags:

Life Insurance and the Elderly: Leveraged, Already-Bought Assets that Should Not be Wasted

Wednesday, December 4, 2013 at 1pm
By John Friedman

I just caught the tail end of a Dave Ramsey segment (he of AM radio financial advice call-in show) during which Dave, hater of all things debt, recommended that a son tell his 80-something year old parents to surrender a life insurance policy that had a death benefit of $150k and a cash surrender value of $100k, because doing so would allow them to pay off their mortgage.

I did not hear anything about the mortgage, so I can’t say how onerous that mortgage was, but I did hear enough about the insurance to make me question Dave’s advice and think to myself, debt-haters gotta debt-hate.

Like Dave, I am not a big fan of cash value life insurance. Cash value life insurance is a general term I use to encompass all life insurance policies that collect some cash inside the policy — cash which the owner of the policy is always free to take out of the policy if the owner wants to give up the policy all together. I also refer to that kind of life insurance as “complex” life insurance, to distinguish it from the other kind of life insurance that most people know — the kind that pays a death benefit if you die before your time and which does not collect cash within it — which I often refer to as “simple” life insurance.

Language fail is a sad fact of life within the Financial Services Industrial Complex, and life insurance, very much a part of that FSIC, clearly suffers from language fail. Here are a bunch of labels and descriptors for the two types of insurance (and there are plenty more than this!): …more ►

Leave a Comment   |   Comments (0)   |  
Categories:
Tags:
<<   Older Posts
Newer Posts   >>