plonkee money an english-er's thoughts on personal finance

February 11, 2008

sadly, we don’t have time machines, but we can start now

Filed under: philosophical — Tags: , , , , — plonkee @ 12:00 pm

One of the themes that I’ve noticed in my thinking about personal finance lately lately has been the lack of availability of time machines.


When anyone says, “you should have / shouldn’t have done this” I always want to point out that to my knowledge there are no time machines. We cannot go back and undo what has been done. If we’ve made bad decisions in the past, we can’t go and un-make them. If we haven’t done things that would benefit us now, we can’t go back and do them. We have to work with what we’ve got.

Fair enough, you may say, but what’s the point of this. Well, even though we don’t have time machines, we do get to start from here. We can start making good decisions today. Whether that’s to pay off our consumer debt, invest for our future (including retirement), stop frittering away money, put an emergency fund in place, we can start doing that today.

done is better than perfect

Sometimes people are scared of doing things because they don’t want to make bad decisions. That’s a reasonable thing, but it’s better to have some thing done ok, than to not do it because you want to do it perfectly.

It doesn’t matter what the *best* way of paying off your credit cards is as much as it matters that you actually pay them off. Do what works. If that means freezing the cards rather than cutting them up, freeze the cards. If that means paying them in order of smallest to largest debts rather than highest to lowest interest, do that.

It really doesn’t matter what the *best* way of investing is. It’s understandable to be scared of investing, but start anyway. The key things to remember are cut costs, and diversify. Once you’ve got that fixed in your mind, pick something simple, that’s cheap and diversified. Learn how it works – which should take at most a couple of hours (if it takes longer, you’ve picked something complicated). Then start investing in it. You can learn more as you go along.

Some ideas for simple investments are FTSE All Share trackers, target retirement funds, S&P 500 trackers. Some ideas for simple tax wrappers are Roth IRAs, 529 plans [American], Child Trust Funds, Stocks and Shares ISAs, Stakeholder pensions [British], and RRSPs [Canadian].

What are you going to start today?

Image by aussiegall

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