Debt Management

A Made to Measure Savings Plan is a Balancing Act

Have you tried walking on stilts? It’s a balancing act through and through.

So is saving and living comfortably enough. Not easy to achieve, but once you get into the rhythm and learn to adjust your balance, it becomes doable. Very much like the made to measure approach to saving proposed in “Build a Savings Plan That Fits Your Real Life“, an article I tweeted last week and which has been re-tweeted a fair few times since.

Saving is like dieting. If the diet doesn’t suit your lifestyle and/or you are not willing to change your lifestyle to meet the diet’s requirements, you won’t stick to it. Set your savings goals too high and you’ll get discouraged when you can’t save that much; set them too low and you’re undercutting your future prospects. Either way, you won’t achieve your goal: be it weight or account size. So how do you do that?

Continue reading

Go with the Crowd or Go Your Own Way?

Research says crowds are wise: watch this BBC video or read this book for more on this assertion. But, as another BBC article explains, the crowd is not always right. Witness the 2008 financial meltdown for proof that herd mentality can be dangerous. In fact, most people prefer to fail with the crowd rather than stand out with a different view. Being contrarian is hard work mentally but it can pay off if you take less risk or go for a smart bet.

New research is emerging into how social influence can alter the wisdom of the crowd by steering opinions in a particular direction. That’s where crowdfunding is at. Is it good or bad for you that crowd views and sentiment trend? Well, it depends. Are you an investor, a business looking for funds or a good Samaritan?

Continue reading

Austerity vs. Budgeting: Which do you prefer?

Greece is between a rock and a tough place: Do you stop pension payments to retirees to fund an interest payment on government bonds? Living on credit aggravates the money situation sooner or later – that’s where Greece is at.

The alternative is to live within your means by budgeting and prioritising. It’s no mean feat to achieve personally and even harder at national level. But it can be done. Germany is often cited as financially disciplined. Norway is lauded for stashing North Sea Oil wealth into a fund to finance future generations.

Do you have the discipline to live within your means? Can you bear austerity for a time to get out of a financial hole?

Bloomberg published a good summary article recently on how austerity has played out in the past. As I was reading it, it occurred to me that politicians don’t typically get things right, but their decisions do provide interesting lessons.

So what can history teach us about how to handle financial problems and getting back on track? Plenty, I believe.

Continue reading