Posted on: April 28, 2009 by Matt
Originally uploaded by Gnerk
Shortly after my 18th birthday my mother passed away. I had plans to head off to college about a month later and intended to go just to get away from all the old memories lingering around where I grew up. I had very little in my bank account and all of it was probably going to be needed for books and other expenses related to college.
Later that semester I received notification that I was due to inherit my share from my mother’s estate which amounted to about $11,000. To date this was easily the largest sum of money I have received in one lump sum. I had no idea what to do with the money and was still grief stricken and in shock from the loss of my mother (I really had trouble coping with her death). I did what most college boys probably would have done: deposited the money in my checking account and spent frivolously. Of course the nice lady at the bank attempted to give me some advise but I wanted nothing to do with saving money or planning long term. I more or less told her to just give me the money and shut up.
For the most part I do not remember what I spent the money on. From what I can recollect now I can recall buying:
- Lots and lots of booze on a regular basis: I developed an even bigger drinking problem in college that I carried with me until a little over a year ago. At this point in my life I have come to realize and accept that I am an alcoholic and can not drink. I have been sober now for about 16 months.
- A PlayStation2 that I had to have: I was a guy and in college – of course I needed the newest video game console.
- A beat up car from my girlfriend’s (at the time) brother: This was my first car. I did not get my license until I was 19. It was a little beat up but ran well and I managed to get quite a bit of mileage out of it.
Needless to say – I spent every last dime within a year or so. I do not regret spending it but do think that I made some poor choices. I suppose that if I had to start all over again today I would probably look to start out by:
- Learning how to manage money: Not just large sums but also general personal finance. I was fairly clueless, nobody had taught me anything about money management and I had not taken the initiative to learn on my own.
- Parking the money in a CD where it is locked for 3 to 6 months: Actually – I probably would have opened a few of them that would mature at different lengths of time. Maybe break it into quarters and put 25% in each 3, 6, 9 and 12 months. I was in no emotional state to make any financial decisions and knew little to nothing about handling money.
- If I needed money, get a job: I had limited to no income the first three years of college. I cited having to focus on my studies as the reason for not working but the real reason was I was too busy drinking and generally slacking off. I could have easily worked a part time job.
I do not regret spending the money or wish to change the past but do try to learn from my mistakes. In this case I learned that having a large sum of money float into your life requires that you press a pause button and do some planning and possibly some healing. When the inheritance arrived in my hand I was still grieving (at a point where I maybe should have put college off a semester or two) and was not clear headed. Parking the money and forgetting it existed would have given me some time to work on healing myself. Once I was in a better place emotionally I could have moved forward with learning how to manage money and planning. My lesson did not have to be learned the hard way – I could have listened to the nice folks at the bank but I chose not to. So I guess there is also a general life lesson here as well: Listen to the advise of people who specialize in a field you know little or nothing about.
Tags: Banking, Budget, Budgeting, Cash, Family, Financial Team, Frugal Friday, Future, Health, Personal Economy, Personal Finance, Planning, Relationships, Savings, Spending Filed Under: Banking, Budget, Health, Lessons Learned The Hard Way, Planning, Savings
Posted on: March 23, 2009 by Matt
I have been meaning to get my taxes done for a couple of months now and finally decided to give H&R Block a call. I called them earlier in the week and scheduled some time on Saturday to go in and have them take a look at my taxes. Normally – I have no problem filing myself but this year I moved and continued to work for a company in another state. This lead to being a resident of two different states and paying income tax in one state only. I was worried about the risk of error and figured I would give the work to a professional.
Overall – I was pleasantly surprised with the entire experience. The cost of having my taxes prepared was a bit higher than I thought it should be at $233 but the cost was offset by the increase in return due to deductions I was not aware I could claim. There was about a $400 increase in my federal return from working with H&R Block so I still ended up in a better position than I expected.
The state items on the other hand appear to be pretty close to a wash. The state of Colorado will owe me about $1,500 and the state Vermont will want just about that much back. After getting the states all taken care of I get to keep about $40 as a middle man fee.
Finally – I was able to save some time having someone else handle my taxes for me. In previous years I have spent about two or three hours to get my taxes done and reviewed. On Saturday I was at the H&R Block office for about 45 minutes. Not too bad – I could complain about the fee being so high for such a short amount of time but I prefer to look at it as investing in time for myself!
Posted on: September 11, 2008 by Matt
In my journey to get out of debt and regain control of my finances I have finally come to a conclusion: I can not do it all alone. I mean reducing debt, increasing savings, budgeting, balancing your checkbook, interest rates, stocks, bonds, mutual funds – there are enough aspects to keep you busy full time.
Naturally I will be primarily responsible for my own finances but I believe that I can increase my chances for success by building a strong team of people that I trust. By having such a team in place I should be able to start building a form of personal economy where I am not the only resource for my financial plan. The basic concept is to build up a group of trusted advisers to turn to when various decisions need to be made. By having the advice by professionals in the field and hearing all angles of a proposed financial venture I believe that a much better final decision can be reached.
The old fashioned, traditional part of me wants to try and build my personal finance team by finding individuals that I can sit down with face to face and discuss my situation when the occasion warrants. While the face to face approach may work for members of a personal finance team it may not always be practical or cost effective. Therefore I plan on working through a combination of individuals I can trust, local branches of financial institutions and online companies to round out my team. So far I have located and am working with:
- A credit and debt management consultant: I have only met with him once and it cost me $50 but it was well worth the meeting. He gave me a wealth of information on how to work on my loans in collections and provided insight to venues that I had not considered before.
- A financial advisor: I had a 401K from a company that no longer exists that was sitting in a money market account that I had no control over. I let it sit there but recently decided that I would rather have this money managed by someone I could meet with face to face. I happened to know an advisor at the local Wachovia Securities office and scheduled a meeting. So far this has been working out well.
- A bank(er): I am still working on building a relationship with a local bank. Where I currently live is rural enough that small financial institutions value your business and the level of customer service is unparalleled. My current bank is in Denver where I lived for the past six years before moving home. It works but it makes meeting in person difficult.
- A CPA / tax accountant: I currently do not have anyone to help me with my taxes. I hope that as time goes by that I will have a better reason to actively seek out a good CPA. Right now my finances are not all that complicated so I am still able to file my own taxes.
- An insurance agent: So far I have health insurance through my company (I have contact information for our agent for questions) and car insurance through Geico. This is currently my one area that I have looked online to pursue in depth.
I hope to dive a little deeper into each of these roles down the line and am sure that I will define new roles that will need to be filled. I also hope to keep everyone updated as I work to build up my team to help ensure my success with reovering my financial well being.
