Tuesday, September 2, 2008

Jim Cramer and Madness

I listened to Jim Cramer's "Stay Mad for Life" on the way to work this morning. I generally like his principles about saving and budgeting, and I like his willingness to stick to tried-and-true principles on the subject. To paraphrase, he says that he'd "rather stick to old truths and be right than try to be original and be dead-wrong." Fair enough. Being contrarian is great but it's
never a good idea for its own sake -- that's a good way to land yourself in a lot of trouble.

My only point of departure with Cramer, and with a lot of other literature you would find on a library or bookshelf about personal finance, is that it starts with the basic premise that your desire is not to work. It's all geared towards retirement savings, which seems based on the idea that at some point in the reader's (or listener's) fifties or sixties, he or she wants to withdraw from the workforce in order to sip margaritas on a beach somewhere, buy an RV, or sit around doting on grandkids.

Now, I say this with the all-too-obvious caveat that it's coming from a 27 year-old who only entered the workforce four years ago, but NOT working is not my goal at all.

I have no idea what the world will look like, or what I'll look like, when I turn 65 in 2045. The whole concept of "work" may become even more flexible, as there may be entirely new industries created, more opportunities to work part-time, and more opportunities to work away from a traditional office.

I just don't know. But if I had to guess, or bet, I think I'll be "working" in some form right up to the point that the ticker stops ticking.

In the meantime, what I do know -- or, at least, what I think I know -- is that savings are a great thing to have for an "in case of emergency, break glass" type of situation. Based on the way my school, job, and/or Guard schedules might or might not converge, there could be a several-month period where I could find myself unemployed in the next few years. That seems like a great time to dip into some savings, especially provided that they're liquid enough to be dipped-into in the first place.

For that reason alone, I'm keeping tabs on those stocks and REITs that I've written about before (and yes, those REITs and the financials have taken heavies, but it's the dividends that are keeping me afloat). On top of that, every month I'm pumping money into the best investment I could have anyway -- my home, a wonderful cause of forced savings and probably the best future wealth-builder I could have.

I realize, of course, my dream of being an old codger who can still earn a good income via freelance writing or consulting might not come into fruition the way I imagine it. Further, I realize that not wanting to stop working probably puts me in a distinct minority of American workers.

Still, it makes the advice given by most Personal Finance 101 screeds not 100% applicable.


Shannon said...

What happens if you are unable to work for your income? For some unforeseen reason?

The New Englander said...


Good point, that's why they say you should always (ideally, anyway) have a six-month "reserve" in savings that's fairly liquid.

Having to go a while without working is something I could see happening in the future, due to a transition between jobs, being between training cycles or deployments, or due to the fixed nature of the academic calendar (i.e. finishing a job in May but not starting school until September)

But wanting to NOT work at all just ain't in my DNA. Some people might dream about retirement at 59 1/2, drawing down their massive IRA, and then playing golf all day. If that's their goal, then awesome, and they've earned it. But like I said, that would never make me happy, so it's not something I'm planning on or aspiring towards..