I got started on a bit of a Personal Finance kick in August of 2007 when I realized for the first time that I was living beyond my means. Like most people who experience a shock to their systems, I overcompensated and went on an all-out purge of unnecessary spending, studied up on investing as if I had a final on it the next day, and spouted off about my epiphany on my blog. Without even noticing, I became one of my Most Hated Things: an evangelist.

I’ve mellowed out since then and have found a satisfying balance between spending and not spending, so I can once again proudly call myself a staunch Moderate, but I do still read two or three personal finance blogs just for the occassional moments of insight.

Thing is, though, personal finance bloggers are really starting to annoy me. Let me show you why.

Around this time last year, a certain blogger made a purchase that he found himself regretting terribly. Consumed by guilt, he chastised himself for his frivolity and thought about what he could have done with the money that he no longer could. He could have paid down debt! He could have invested it! He could have put it towards his next car purchase! But instead, he squandered it on a material possession. Fortunately, he shared this experience with the world, so that his readers could learn from his mistake.

The mistake? He spent $50 on a copy of Mario Kart Wii.

Are you. Fucking. Kidding me?

Simple Dollar Trent is a pretty smart guy who has a lot of insights to offer when it comes to frugality and investing. Okay, so pretty much everything he says is lifted directly from whatever book he’s read that week anyway, but that doesn’t make his blog any less useful.

But turning on the Guilt Switch for a small indulgence like a Wii game?

There’s another group of people who beat themselves half to death whenever they make the slightest deviation from their heavily polarized lifestyles: Clergy. The more I read blogs like Trent’s, the more they sound like the endless rants about how one should behave that come from the world’s religious epicenters. Adept though he is at relaying helpful financial advice, it’s hard to ignore the fact that he is, ultimately, just another midwestern psycho-conservative.

It’s fine to concentrate on living within your means and saving for the future. Better than fine. It’s crucial. But to take it to such an extreme that you forget how to enjoy the occasional splurge will only turn you into a preacher.

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Here’s the thing about Jim Cramer: He’s a great entertainer, and I’m sure he’s smart as hell, but it’s hard to call his show, Mad Money, anything but thoroughly irresponsible. Every piece of advice Cramer dispenses on his show gets executed with hyperbolic enthusiasm, so much so that the market becomes a more volatile place with every one of his picks.

My first instinct with regards to Wall Street’s biggest bag of bombast is to ignore him completely. Every time Cramer tells his viewers to buy a stock, they do so, causing the price of that stock to rise artificially and then burst days later. I’ll stick to my index and bond funds, thank you very much. They’re tanking out, too, but I bet they’re still doing better than a portfolio full of Jim Cramer picks is doing right now.

Volatility bad.

But then, I take a deeper, more meta look at the issue. When Cramer says to buy a stock, the price bubbles and then bursts the next day. When he says to sell, the price dips and recovers. Wait a minute! I’ve got it!

The key is to do the opposite of what Jim Cramer says!

More specifically, do the opposite of what Cramer says for one day, and then take his advice the next day.

Example: Cramer picks a stock and says “Buy buy buy!” and presses a button and makes a cow sound. You look at your portfolio and see that you own that stock. Suddenly, there’s a rush of buyers looking to pick up this newly hot stock, so you take all of your shares of that company, set your asking price a few bucks above market value, and wait for a bite. The next day, the bubble bursts and the stock returns to its normal price, so you buy your shares back for less than you sold them for, pocketing a nice profit in the process.

Opposite end: Cramer picks a stock and says “Sell sell sell!” and presses a button and makes a poo sound. Suddenly, there’s a rush of owners desperate to unload their shares. You put in an offer for a few bucks less than market value. Cheap stock! The next day, the artificially deflated stock returns to its normal value, so you sell the stock, making a profit.

Bam. Jim Cramer decyphered.

Bzzz. Moo. Ka-ching.

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Didja see how the DOW did yesterday? All of the big three indexes dropped into the gutter, actually! How awesome is that?

Yes. Awesome.

Sigh, all right, all right, you want me to be serious. Fine, here’s what I really think: This recession is the best thing to happen to Gen Y professionals ever in their entire lives. Better?

Kids my age know next to nothing about how money works. This is not entirely their fault; schools just don’t teach about it. Regardless, I’ve seen more than a few twenty-somethings get nervous about the economy, whether they know what they mean by “the economy” or not.

Here’s why they all need to relax.

Savings

Your bank is not going to fall into a black hole and take all of your money with it. So maybe your bank was bought out by another bank. Check your balance: the money is still there, right? Even if your bank does go out of business, your money is protected by the FDIC up to $250,000 until the end of next year (at which point it goes down to $100,000, where it was before — the bump is a temporary measure, I’m guessing to increase faith in banks). A bank is still the safest place for your money, safer than a mattress at home, because it offers some protection against inflation. Use the bank.

Jobs

Look, just don’t lose your job. Most people won’t, especially people our age, but if you’re really that worried, I’d say you just have a guilty conscience. Make yourself vital at work. Kiss a few chocolate starfish. Don’t give anyone a reason to fire you. Basic stuff. If you work in an industry that isn’t weathering the recession well, change jobs, or even change careers.

Alternatively, look for ways to make some money off of your hobbies… unless all you do is watch TV all day, in which case, you’re not listening to me anyway. Also, that’s not a hobby.

Side note: If your hobby involves collecting something, find a new hobby. That is a stupid, stupid hobby, especially if you collect something you have to pay for.

Gas

You’ve already gotten used to this months ago. Yeah, I remember paying 90 cents per gallon when I was 17, too. Oh well. Drive less, drive slower, budget accordingly.

Stocks

I guess this is the big one. My 401(k) dipped under $20k last night for the first time in more than a year. A lot of yuppies are probably in similar situations and are getting heartburn over it. Here’s my advice to you: stop checking your 401(k) balance until this is over. You’re not going to be touching that money for another 30 or 40 years. Worry about it when you’re 50 and it’s time to start moving money into bonds.

Have other investments? You’re probably tempted to start selling. A lot of people are doing exactly that, which is just making things worse. Don’t do it. Market fluctuations like this are entirely due to human emotion. When the market starts to fall, people panic and sell. Prices fall even more. This causes smart investors to see cheap stocks up for grabs, which makes prices go back up again, which makes people get giddy and start buying. Prices bubble unsustainably. Eventually, smart investors lose confidence in the bubble and sell, prices take a little dip, people panic, ad infinitum.

The same goes for the economy as a whole. When the economy is good, people start buying stuff like crazy until they run out of money, at which point spending stops and the economy takes a crap. In response, people start saving like crazy, building up huge savings until they have so much money that they can’t bear to not spend it, at which point spending resumes and the economy swells until consumers run out of money again. If people would just moderate themselves and live within their means at all times, this would never happen. Sadly, people are retards.

I’ve derailed.

My point is, don’t sell. Aside from the fact that you’ll just exacerbate the problem, you have to remember something fundamental about stocks: STOCKS ARE NOT MONEY. When your stocks plummet, you have not lost money; your stocks have decreased in value. You do not lose money until you sell your stocks for a price lower than what you paid for them.

What you should really be doing is investing more.

“But Ray! That doesn’t make sense! Stocks are down!”

Yes! I know! They’re cheap! Cheap investments!

“… Oooooohhhhh…”

The fact that people are going to be so scared of stocks for the next few months shows just how little people understand them. There isn’t even that much to understand! Here, I’ll give you an easy, executive summary. More of an abstract, really. I’ll even boldface it. Ladies and gentleman: How to Handle Stocks

Standard practice for nearly all businesses is to shoot for 10% profit per year at all times. Some business do exactly that, some do more, some do less. On average and over the long haul, though, businesses overall make about 10% every year. Because of that, stocks in America, when taken as a whole over a long period of time, average a 10% increase per year.

Boldface off.

It’s an overapproximation, but you get the idea. The key words: “10%,” and “on average”. The one you really want to focus on is “on average”. Some years, the market is going to take a big dive. Point in fact: the DOW is down 36% so far this year. But, that will eventually be pared with four of five years in which it gains 14 or 15% every year. Odds are, it will never gain exactly 10% in any year, but on average, it will.

And that, my fellow prisoners, is why this recession is going to be such a boon to young workers, and why you want to start investing soon. It might take two or three years, but sooner or later, the market is going to correct itself organically, and you want to catch that correction. This recession is going to make a lot of paupers, but it’s also going to make a lot of millionaires. You just have to be smart. Get your credit cards paid off, never carry a balance again, and start saving up. The minimum buy-in for the most of the index funds at Vanguard is $3000. You’re going to want to have that on hand in the next year when people start getting stupid in the other direction.

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Being frugal whenever possible is important. A common misconception about frugality is that it centers completely around saving money, but this is off by the skin of a nuance; it is also about asking for some. Money.

Asking for money.

Today, I will tell you how I got out of paying my cell phone bill for the next couple of months by exercising the timeless art of complaint.

The money to which I refer came in two installments. The first was during last week’s East Coast outage in AT&T’s data network. After reading reports that people were managing to get credits on their accounts for the service interruption, I knew I had to get in on it.

My first call to AT&T customer service didn’t go terribly well. I started by asking why the data service on my iPhone wasn’t working. The operator checked her computer, and didn’t find any reports about any outages. I pointed out an Associated Press story about the problem, and she simply repeated that she wasn’t aware of anything, but apologized for the interruption.

I asked to be credited on my account for the downtime, but she informed me that she wasn’t authorized to give me one. I attempted to call her out by saying that “a friend of mine” had gotten a $20 credit. This barefaced lie got me nowhere, and so I politely thanked the operator for her help and hung up.

Most people would quit at this point. Don’t. I knew better. I dialed the number again and got a new operator.

Changing tactics, I jumped straight to the point. “Hi. I was affected by the data network outage on the East Coast this morning, and would like to be credited for the interruption.” The new operator apologized and informed me, just as the previous operator had, that she was not authorized to credit me for service interruptions.

I then politely explained that I had needed access to my email on the road that day, and that I had lost business because of the outage. That lie worked. The operator told me that she could offer me a “one-time $25 courtesy credit,” which I accepted immediately.

It’s kind of dishonest, but hey. If it helps, call it an “embellishment” in your head.

So that’s credit #1. The second credit (the big one) came just an hour ago. My employer has a deal with AT&T whereby employees of my company are able to get a 25% discount on their service with AT&T Wireless. Naturally, I signed up, and began waiting to see the discount begin to appear on my statement, which it never did.

Confused, I called customer service. The operator explained that the discount does not apply to the first-generation iPhone, even though it does apply to the newer 3G iPhone. I wasn’t especially surprised — it’s a handy way to encourage people to upgrade. Nevertheless, I pressed the issue further, and the operator referred me to AT&T’s National Business Services line, disclaiming that they probably would not be able to do anything for me, but were probably worth trying. I thanked him and hung up.

The next call went much more nicely. After a silent, ten minute hold, I was connected to an operator, and I explained my problem, finishing my explanation by asking if there was anything that the operator could do for me. She told me that it was Apple’s policy not to allow discounted rate plans on the original iPhone, which I pointed out was kind of weird. She seemed to agree.

“What I can do for you, Mr. Merkler, is give you a one-time $150 credit on your account,” she said, which I asked her to repeat, which she repeated. Huh.

For about an hour on the phone, I made $175. That’s the same as making $175 per hour! No, really! The moral of the story: Call customer service numbers whenever there is a problem with one of your services. Most companies are prepared to credit you generously if you press them just hard enough, as long as you’re polite about it.

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I got a huge raise out of nowhere this week. I was just given the news about two hours ago and I’m still stunned. Starting salaries took a big leap up again this year, and anyone with under five years of service with the company is eligible to be considered for a possible potential pay adjustment to keep them in line with the salary trends. For the third year in a row, I was included, and this year was a doozy; a $7,500 doozy. Taking this raise into account, over my three years with this company, my pay has gone up by an average of about 11% every year. That’s just bizarre. I guess I should be glad I got in while the market was utter shit.

This places me in the position of having to decide just what the hell to do with the extra $95-ish I’ll be getting in my direct deposit account every week. WHAT A BURDEN. It’s been a while since I blogged about money, so I figure I’ll take this opportunity. Where is this money needed?

My biggest financial obligation right now is my home, which, on its own, eats up $1686.12 every month, mostly through mortgage interest. That can be reduced a bit if I can pay off my “second” mortgage (read: not a home equity loan, but an actual, literal second mortgage). Most of this raise should go toward the mortgage.

I need a new car. My infuriating ‘99 Jetta makes even my short 4.4 mile commute to work unbearable. I genuinely hate getting into it. Busted air conditioning will do that. Right now, I’m setting aside $75 every week towards my next car. I wouldn’t mind bumping that up.

My girlfriend and I are saving up for a wedding (even though we aren’t engaged yet). I’m already on pace to be done saving up for it within the next six months, though. I can probably leave this where it is.

I also think I deserve to be able to spend a little bit more. This was an 11% raise, so I should bump up the tiny allowance that I give myself by at least 11%. It’s only $50 right now; let’s make that $60. Even just that is a 20% jump, but you have to let yourself enjoy your money, or you’ll just grow to resent your budget and never stick to it.

Here we go: $60/week towards the mortgage, $25/week more towards my next car, and $10/week more to spend. I’ll take that. A year ago, I would’ve just spent all of it.

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