FICO is a Corporation

Much has been written about the recent change in the FICO scoring system from both mainstream media and personal finance blogosphere. Using my compelling inside information and incredible subject matter expertise, I can insist that it will not make much of a difference. What?  Huh? First, a little background. Fair Isaac (FICO) is a publicly … [Read more...]

Emergency Funds are Overrated: Part Three of Three

(Read parts one and two.) In the first two articles, I covered: How important it is to be cash flow positive How to cover very small shortfalls with credit How to cover truly large expenses with different forms of insurance. The most important large unplanned expenses that could potentially be covered by an emergency fund are the … [Read more...]

Emergency Funds are Overrated: Part Two of Three

In part one on Monday, I wrote about how credit cards can provide short-term liquidity where emergency funds would typically be recommended. In this article, I will write about how most "emergencies" people list as reasons for an emergency fund are not true emergencies and can be easily planned for (and anything that is above and beyond can be … [Read more...]

Emergency Funds are Overrated: Part One of Three

Emergency funds are a controversial topic that have always irked the writers here at DQYDJ. Okay: overall, we think they are a decent idea... but the singular focus on obtaining one despite the (usually ignored) costs is  the incorrect focus for most financial prioritization decisions. In this series, I will lay out three reasons why emergency … [Read more...]

It’s a Matter of Principle (Principal)

I try to run my personal finances like I would run a business: Use debt to leverage high ROE assets. Limit expenses and maximize revenues by exploring future potential revenue streams. This manifests itself in many ways in my life... and how I pay my bills. When a bill is due, I wait until the last possible day to make the payment. After … [Read more...]

Maintaining a Debt Paydown Strategy

Recently, I stated that one of my goals for 2014 is to pay down my consumer debt of ~$34,000. My colleague PK also recently wrote about personal finance being much more than simple debt payoff. Surprisingly, PK and I have recently settled on a similar short term goal of deleveraging in 2014. This puts our goals (this sentence makes me feel … [Read more...]

My Resolve About Resolutions

It's the time of the year for New Year's resolutions and an assessment of how 2013 went for myself. Financially, it was a good year for the market, with the S&P 500 returning ~31% with dividends. I did a little better in my 401k at 34% so I must say without a shadow of a doubt that I am producing outsized alpha in my mutual fund selection. More … [Read more...]

After You Pay Off Your Debt, Then What?

There's a virus spreading around Personal Finance sites (and yes, at least 30% of the time, we're one) - a virus which infects both blogs and writers alike.  I'm talking, of course, about the obsession with debt-pay-down to the exclusion of all other notable personal finance topics. What?  A Debt Payoff Virus? Is it realistic for a virus or a … [Read more...]

How Much Does $1,000,000 Today Cost?

How much would you pay annually in order to receive $1,000,000 today? This question is often a good measure of risk tolerance. For the purposes of this article, I am considering this the same as asking how much would you need in return annually if you paid $1,000,000 today. For me, it is around $50,000/year. I had a debate with a friend recently … [Read more...]

Why Does Risk Aversion Differ?

One of my coworkers very recently moved to this state from across the country. In doing so, he had to pick up his family, sell his house and buy a new one all while working remotely, traveling back and forth and transitioning to a new area (and climate). We got to talking about real estate and what he was looking for when he bought his house and … [Read more...]