Gyroscopic Investing

I've been thinking about this, from our conversation about banks and money.

It seems to me that millenials and other young folks have grown up in an era in which there's a lot more "virtual" reality, and that they're living in that reality more than actual concrete reality.

The obvious examples are the young people texting while walking down the street, oblivious to what's going on around them, and/or texting while driving.

As a 54 year old, this seems like a problem to me.  I'm not a Luddite, and I appreciate modern conveniences and technology, including computers, but being grounded in actual concrete reality seems like a good thing to me.  For example, it's good to understand the basics of concrete money management, ie. that you should have more coming in than going out (or at least be breaking even) - and it's easier to do that if you use cash, because it makes it very clear what's happening.

Thoughts?

As a 28 year-old, who grew up steeped in this, it seems like a problem to me as well. It's no use ignoring it, and mastering the quirks and details of this very new virtual world is certainly important, but it's so easy to get caught up in it and forget about the real world. I fall into this trap a lot and am consciously trying to retrain myself, but it's hard when there are so many truly enriching experiences like this forum!

That said, it doesn't seem at all hard to manage my "virtual" finances. I actually find it much easier than cash and have since I was a broke college student with a negative net worth. Online banking lets you see your balance at any time and debit cards prevent you from spending more than you have. And there are more and more things that are only done "virtually" these days, like investing. It pays to have some literacy in that department.

That's cool, that even though we're from different generations, we see this similarly.

I have bank accounts/checks/debit cards/etc. as well, and use them, along with things like direct deposits/withdrawals.  But my mindset was formed at a younger age, when I didn't have any of those things, and just used cash/money orders (there was a place you could get your paycheck cashed on site at my first real job).

Some debit cards may prevent overspending, but not all do, if I remember right - ours will allow you to take more out of the account than you have in there, and then cover the overdraft in a variety of ways, some of which may cost customers money.  And, I find it much easier to know how much I have left if I get some cash each week, and then spend it over that period.

It's immediate feedback that when you spend some money, you then have less money to spend, and you know exactly how much you have left just by looking in your wallet (or envelope at home, etc.)

I'm 67 and use neither cash nor a debit card for all my spending. Instead, I use my American Express credit card with 2% cash back on all purchases. Usually amounts to about $800/year deposited directly into my checking account.

I assume that you pay off the card each month in full?

That's a fine system if it works for you, and you don't spend more money than you can afford to spend - I wonder how many younger folks would have the knowledge/discipline to use that system and not get into trouble with it.

jafs wrote: I assume that you pay off the card each month in full?

Yes, it's paid in full automatically every month. I've been doing this for many years and never rolled over a penny yet.

The thing I love most about "virtualization" of finances, if that's what we're calling it, is how we're able to put everything on auto-pilot.

jafs wrote: That's a fine system if it works for you, and you don't spend more money than you can afford to spend - I wonder how many younger folks would have the knowledge/discipline to use that system and not get into trouble with it.

Probably not many. I know mine wouldn't and they are all approaching 40.

jafs wrote: As a 54 year old, this seems like a problem to me.  I'm not a Luddite, and I appreciate modern conveniences and technology, including computers, but being grounded in actual concrete reality seems like a good thing to me.  For example, it's good to understand the basics of concrete money management, ie. that you should have more coming in than going out (or at least be breaking even) - and it's easier to do that if you use cash, because it makes it very clear what's happening.

You might be behind the times in terms of adjusting fully to the new reality.  Millennials use smartphone apps to automatically track their cash flows and budgets (Mint, Personal Capital), pay bills (online banking), transfer money (Circle, Stripe, Skrill, etc.), roboinvest (Acorns, Wealthfront, Betterment).  Cash is simply a difficult-to-use anarchronism.

I do think that being a younger generation, they're probably into all this stuff more for the dopamine hits and marketing fiction than any real level of grounded thinking, but this is only becuase I know the vast majority of people are ignorant, naive and stupid and Millennials are certainly no exception (for instance, they don't trust the stock market and are woefully underinvested, but then again so I am, so who's right?  ).  But, isn't that the case for every new generation that gets onboard on the new, new thing?  Just wait until you see what Generation Z is like!  They'll practically be the meat for The Matrix.

curlew wrote: I'm 67 and use neither cash nor a debit card for all my spending. Instead, I use my American Express credit card with 2% cash back on all purchases. Usually amounts to about $800/year deposited directly into my checking account.

+100.  You win!

I have eight credit cards and keep the minor ones active with recurring subscriptions, but the real meat is the 2% Fidelity and Citibank.  Stack with cash back sites like BeFrugal for online shopping, and it amounts to a sweet kitty over time!

I also put everything on the credit card and pay it off every month. Don't really understand how you could let it get out of control, really. I get an email every morning listing the balance in my checking account and the balance on my credit cards. I can see exactly how much I've spend and how much needs to come out of the checking account to pay it off.

The cash back goes straight into my investment accounts.

I think it's hilarious that young people want to do battle on-line, but they don't come to the Dojo to work out, and gun ownership is supposedly dominated by older white folks.

They can mentally m##turbate all they want, but someone is going to own them for real someday.

MachineGhost wrote:

jafs wrote: As a 54 year old, this seems like a problem to me.  I'm not a Luddite, and I appreciate modern conveniences and technology, including computers, but being grounded in actual concrete reality seems like a good thing to me.  For example, it's good to understand the basics of concrete money management, ie. that you should have more coming in than going out (or at least be breaking even) - and it's easier to do that if you use cash, because it makes it very clear what's happening.

You might be behind the times in terms of adjusting fully to the new reality.  Millennials use smartphone apps to automatically track their cash flows and budgets (Mint, Personal Capital), pay bills (online banking), transfer money (Circle, Stripe, Skrill, etc.), roboinvest (Acorns, Wealthfront, Betterment).  Cash is simply a difficult-to-use anarchronism.

I do think that being a younger generation, they're probably into all this stuff more for the dopamine hits and marketing fiction than any real level of grounded thinking, but this is only becuase I know the vast majority of people are ignorant, naive and stupid and Millennials are certainly no exception (for instance, they don't trust the stock market and are woefully underinvested, but then again so I am, so who's right?  ).  But, isn't that the case for every new generation that gets onboard on the new, new thing?  Just wait until you see what Generation Z is like!  They'll practically be the meat for The Matrix.

Maybe that's what they're doing while walking down the street?

You're right, I'm behind the times on this one - I don't like online banking, or any of that stuff, don't have a smartphone, etc.  I like the old-fashioned ritual of getting bills in the mail and writing checks to pay them.

I'm glad to hear that at least some of them are being smart about it, and keeping track of their finances.

The real huge issue is what if the primary bill-payer / financial person a family dies or is incapacitated, and the other partner of course doesn't get their emails. Or what if they don't know the passwords and account numbers? Or even "where" the stuff is? You know where the Chase Bank on the corner is; where is Betterment? How does a grieving spouse know?

Then you could have real problems. I'm sure this happens many times every single day.

You have to keep a hardcopy emergency operations manual for your family. In a safe place. Multiple people have to know about it.

jafs wrote: I like the old-fashioned ritual of getting bills in the mail and writing checks to pay them.

Ugh, how cumbersome and subject to human error. All of that stuff is all but automated out of existence for me, and I'm glad for it. My father in law spends an hour or two every Sunday balancing his checkbook and it just seems like such an anachronistic waste of time. A computer can do 100% of this better than a human can; it's just taking time away from your ability to do something more rewarding with your life. Checks themselves are a pain in the butt because there's a lag time between when you write it and when the money is debited that you need to keep track of… again, what a waste of time.

My strategy is to have two checking accounts: one for discretionary spending and one for bill paying and such. All the fixed bills are automatically debited from the bill account, and the variable ones I pay through my bank's online bill pay feature, which is ridiculously fast and convenient and I don't have to buy stamps and the money is debited immediately.

The discretionary checking account therefore has exactly as much money as is available for spending with zero mental effort required to keep track of how much money needs to go out when to who. We don't do this, but we could take the balance down to 50¢ by the end of each month without any problem at all. If we were bad with credit cards, we could simply use debit cards and turn off the overdraft protection feature. I did this in college to avoid spending more than I had back when the balance in the spending account was liable to be hovering around $200 most of the time.

ochotona wrote: The real huge issue is what if the primary bill-payer / financial person a family dies or is incapacitated, and the other partner of course doesn't get their emails. Or what if they don't know the passwords and account numbers? Or even "where" the stuff is? You know where the Chase Bank on the corner is; where is Betterment? How does a grieving spouse know?

Then you could have real problems. I'm sure this happens many times every single day.

You have to keep a hardcopy emergency operations manual for your family. In a safe place. Multiple people have to know about it.

I have an "emergency operations manual" for my wife that keeps everything up to date, and every once in awhile I make her do something like transferring money from our brokerage account to our checking account, just to make sure she can do it.

Pointedstick wrote:

jafs wrote: I like the old-fashioned ritual of getting bills in the mail and writing checks to pay them.

Ugh, how cumbersome and subject to human error. All of that stuff is all but automated out of existence for me, and I'm glad for it. My father in law spends an hour or two every Sunday balancing his checkbook and it just seems like such an anachronistic waste of time. A computer can do 100% of this better than a human can; it's just taking time away from your ability to do something more rewarding with your life. Checks themselves are a pain in the butt because there's a lag time between when you write it and when the money is debited that you need to keep track of… again, what a waste of time.

My strategy is to have two checking accounts: one for discretionary spending and one for bill paying and such. All the fixed bills are automatically debited from the bill account, and the variable ones I pay through my bank's online bill pay feature, which is ridiculously fast and convenient and I don't have to buy stamps and the money is debited immediately.

The discretionary checking account therefore has exactly as much money as is available for spending with zero mental effort required to keep track of how much money needs to go out when to who. We don't do this, but we could take the balance down to 50¢ by the end of each month without any problem at all. If we were bad with credit cards, we could simply use debit cards and turn off the overdraft protection feature. I did this in college to avoid spending more than I had back when the balance in the spending account was liable to be hovering around $200 most of the time.

Different strokes for different folks, as they say.

I have little/no interest in turning that stuff over to an automated system.

The old-fashioned way works very well for us, so there's no need to change it.  There's an old sci-fi story by Asimov, I believe, called something like "The Feeling of Power".  It's about somebody who never learned how to do math because calculators did it all for them.  If you haven't read it, it's a good short read and makes a good point.

jafs wrote: Different strokes for different folks, as they say.

I have little/no interest in turning that stuff over to an automated system.

The old-fashioned way works very well for us, so there's no need to change it.  There's an old sci-fi story by Asimov, I believe, called something like "The Feeling of Power".  It's about somebody who never learned how to do math because calculators did it all for them.  If you haven't read it, it's a good short read and makes a good point.

I'm 55 and heavily into online and mobile things. My 87 year old mother has been trading online for two decades. I understand if an older person tries online transactions and judges them to be inferior in some way after giving them a fair shake. But in a lot of cases, I just sense fear of new things being hidden by gruff talk. This fear of new things also brings down older employees when economic times get tough, and they have a hard time being rehired by anyone. Because they don't want to change.

If you don't like online things at home, you probably won't like them at work, and you'll be painting a target on your back, called "fire me".

Change is inevitable. Adapt to it, or be made obsolete.

ochotona wrote:

jafs wrote: Different strokes for different folks, as they say.

I have little/no interest in turning that stuff over to an automated system.

The old-fashioned way works very well for us, so there's no need to change it.  There's an old sci-fi story by Asimov, I believe, called something like "The Feeling of Power".  It's about somebody who never learned how to do math because calculators did it all for them.  If you haven't read it, it's a good short read and makes a good point.

I'm 55 and heavily into online and mobile things. My 87 year old mother has been trading online for two decades. I understand if an older person tries online transactions and judges them to be inferior in some way after giving them a fair shake. But in a lot of cases, I just sense fear of new things being hidden by gruff talk. This fear of new things also brings down older employees when economic times get tough, and they have a hard time being rehired by anyone. Because they don't want to change.

If you don't like online things at home, you probably won't like them at work, and you'll be painting a target on your back, called "fire me".

Change is inevitable. Adapt to it, or be made obsolete.

Thanks, but none of that really applies for me.  If the way I prefer to do things becomes impossible, then of course I'll adapt.

Sounds like the Borg to me!

Ten years younger than ochotona here.

I do the same as curlew. 2% back on the Fidelity Amex is a sweet deal. I use a Capital One 1.5% Visa for everywhere Amex isn't taken.  Both cards give you the cash back on all purchases, not just drugstore/ gas/ grocery.

I used to avoid autopay for a few items, but I decided I'd rather take the risk than spend time writing paper checks. I only to that for taxes and birthday gifts now. (I would totally join the Borg).

But, gosh I hate smartphones. I'm tired of all the friggin phone zombies crossing intersections with their face in a screen. Last time we lived in an apartment, they were entering the elevator without looking. So annoying. And 20 minutes ago, we waited our turn for a car at a stop sign, and the driver was busy reading her phone, not caring that she was holding up traffic for everyone.

PS - do you really never balance your accounts yourself?  What if the automated system makes a mistake?

jafs wrote: PS - do you really never balance your accounts yourself?  What if the automated system makes a mistake?

I do balance my checkbook by hand, every time I login to my bank. Because I do only a few entries at a time, it takes about a minute to see what's been deposited or cashed, and what needs to be reconciled in the book.

100% of apparent errors are my errors. The other day I spent 15 wasted minutes because I recorded a credit card payment as xxx.25 instead of xxx.65. The math was perfect on the computer side and my side... but I had mis-transcribed.

Computers have been doing addition / subtraction for a very long time.

Simonjester wrote: late 40s, and i am still spiting the difference between on line and old school, i do the credit card payments for cash back and pay down monthly, but make them by phone, i have a few minor things like Netflix and some phone bills automated, but most are still paper bills and phone in payments,  i have eliminated checks (except for one payment per month) i don't use on-line for my checking account, but do for savings and investments, its seems like a bit of a weird mix but it is more due to concerns about of identity theft and errors going unnoticed, than a fear of or lack of skill with technology..

Your identity is toast. The thefts are from people hacking into the COMPANIES. Doesn't matter if you pay using paper, your info is at all of the companies you transact with anyway. The info matters, not the medium! Could be paper, Morse Code, smoke signals, or gold paint on dog doo, data is data.

Your best defense is signing up for text and email alerts whenever there is a credit card charge or bank transaction, so you can tie off the spurting artery if you get your ID hacked, since you're on the phone in the next 2 minutes with the fraud specialist at your bank.

If you wait 30 days to look at a paper statement to find out you've been ripped off... well, why would you want to do that?

Secure passwords, change them frequently, updated anti-malware and OS and software updates. Or use Linux.

jafs wrote: PS - do you really never balance your accounts yourself?

I don't know what "balancing" an account even looks like for an account that is always up to date. I don't write checks, ever. I either use my bank's bill-pay feature to write a virtual check for me, or I pay in cash. Both result in a debit to the account instantly, so there's never a lag between what my online account balance shows and how much money I actually have available. I couldn't remember the last time I actually wrote a check so I checked  (;)); it was in 2014, for a large home improvement transaction where the contractor didn't accept plastic. For smaller ones, I pay cash.

To error-check my automated system, It's as simple as getting daily email with my account balances. I look at the numbers and make sure they're not lower than I expect them be for that time in the month. Any time it is, it's always been my fault somehow, because I accidentally initiated a manual transfer from the wrong account, or something like that. My system has been working with almost zero problems in the 9 years I've been running it this way. No mistakes, no problems, just boring reliability. I'd be happy to describe it in more detail if there's interest.


Relatedly, you said:

jafs wrote: What if the automated system makes a mistake?

Computers don't make mistakes; they have bugs. It's a subtle but important difference. I'm an engineer so a large part of my brain is devoted to dealing with bugs, so personally I find that easier than dealing with mistakes. Regardless, my system is essentially bug free. It performs in the manner I expect it to upwards of 99.99% of the time, which in my book is good enough.

IDrinkBloodLOL wrote: Over the last ~8 years, I have written hundreds of pages on this topic.

You seem to have developed a reputation around here in my absence, yet you've only made 12 posts so far???  Conundrum.  What is the dealio?

I've always looked to accumulate airline miles.

Everyone here goes after the cash, 2%!

Am I missing something?

Depends on how much you fly, I guess. I don't find most mile programs/cards to be worth much to me given my level of air travel. Free flights for a family of four require a ludicrous number of miles anyway. I'd rather have the cash and put it into investments.