Monday, April 7, 2008


[picture by exfordy]

No Credit Needed asked last week, What are your personal finance strengths and weaknesses?

I'm a big believer in introspection. If we know what our strengths and weaknesses are, in any area, we can act in ways that maximize our strengths and minimize our weaknesses. Or, alternatively, we can try to learn more and change our habits so that our weaknesses are no longer liabilities. Also, making lists like this is fun.

My Strengths:

  • Frugal background and habit of frugality.
  • Interests that don't cost much to explore and the creativity to enjoy exploring less expensive ways of fulfilling my needs and wants.
  • An aversion to debt—the only debt I’ve ever had was a credit card balance of about $1000 and student loans of about $8000. I’ve never had a car loan or bought anything on any other sort of “payment plan.
  • The resources (intelligence, education, fairly prosperous family) to stay out of debt.
  • An early start—I've been investing my money since college graduation, though I've only gotten really serious about it in the past year or so.

My Weaknesses:

  • I have a tendency to get pressured into spending by people who are less frugal than I, and I always regret it when I give in. I remember such episodes with self-loathing for years—don’t get me started on the $13.00 I wasted in San Francisco in 2002.
  • Aversion to debt means I haven’t yet taken any big risks like buying real estate or starting a business. I’m also reluctant to go to graduate school, although the sorts of graduate programs I’m interested in would be unlikely to increase my earning power anyway.
  • Low tolerance for boring investments. Even if Gould’s Pumps was the most well-run and profitable company in the entire world, I would probably never invest in them because the very thought of the company puts me to sleep. I'm also extremely bored by bonds, even though everyone in the world thinks they're an essential part of a balanced portfolio.
  • Procrastination. I paid $1.10 in library fines today. I’ve also paid penalties for filing my income taxes late more than once--not because I didn't have the money or time to file them by the original deadline, but because I "just didn't get to it."

What are your strengths and weaknesses when it comes to money?


Anonymous said...

Do you seriously remember $13 you blew in SF? haha.

I also am bad at library fines.... might steal this idea. :)

Scarlett said...

@stackingpennies: "Do you seriously remember $13 you blew in SF?" YES! :) It was on the Ripley's Believe it Or Not museum. My friends wanted to go. I didn't. It really sucked. It was one in a series of small bad choices on that trip, which I was financing entirely on a credit card.

Steal away!

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Geoff K said...

You mentioned aversion to debt as a weakness. This could also be a strength depending on your situation and your goals. Though pretty much everyone who has made large money has followed the same formula: Risk + long hard work + luck = big money, you may prefer the slow but sure route. However if you want to retire quicker you may need to think about calculated risks your comfortable with. I would have about a third of my net worth without my investments in real estate - here in New Zealand. While I can't retire yet I'm over half way to the amount I need to do so.

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