Real meaning of personal finance is rediscovered

Your Money

January 14, 2007|By Humberto Cruz | Humberto Cruz,Tribune Media Services

In half the time it takes Jack Bauer to save the world (the indefatigable federal agent from the 24 television series does it in 24 hours), I was saved from losing sight of what personal finance is all about.

My rescuer: Rachael, a young hotel waitress who approached the table where my wife, Georgina, and I were having breakfast and asked whether we needed anything else.

The following, taking me from disenchantment to rediscovery, takes place between 8 p.m. and 8 a.m. during a recent hotel stay to attend a conference on personal finance:

8 p.m.: I register and pick up the conference program, an inch-thick packet filled with glowing speaker biographies and copies of elaborate, graphics-filled presentations they would make over the next two days.

8:15 p.m.: Back in the hotel room, I pull out a folder where I keep notes and materials for future columns. Too much of it consists of letters and e-mail from public relations people trying to get their client's name in print.

8:20 p.m. to 9:30 p.m.: I go through the conference agenda and copies of presentations, looking for interesting topics for columns. I review the PR pitches one more time with the same hope.

10 p.m.: By now I give up. All I've found is the same old stuff, all so seemingly intellectual and yet of so little value to our financial well-being in the large scheme of things.

Have small-cap stocks ended their run? What percentage of our portfolio should be in emerging markets? Should retail investors buy hybrid securities, such as equity-linked notes? And how about hedge funds - shouldn't we get into them too?

Or, what's the best way to "play" the falling dollar? Should we hedge currency risk, and if so, how? What does the inverted yield curve mean for the future of our economy?

I am not saying these topics are without merit. But they are hardly priority issues for the average American worker trying to balance a checkbook, stay out of credit-card debt, raise a family and save for retirement, or for typical retirees trying to make their money last.

And yet practitioners of personal finance - and I must add media people like me who help determine what topics receive the most coverage - stand guilty of devoting far too much attention to these matters while neglecting others far more important. In many cases, an excessive focus on these issues is actually harmful because it takes our attention away from fundamental saving and investing principles.

10:30 p.m.: Tired and discouraged, I go to sleep, wondering whether writing about personal finance really helps anyone. I wake up a couple of times during the night, about 2 a.m. and 4 a.m., these thoughts still on my mind.

6:30 a.m.: Time to get up and get ready, although I wonder, is this conference going to be any good?

8 a.m.: Georgina and I are having a free continental breakfast in the hotel lobby when a woman in her early 20s walks toward us, offering to bring us anything we need. Noticing one another's accents (Georgina and I are originally from Cuba, and the waitress is from the Dominican Republic), we introduce ourselves.

This is Rachael, and she works weekends as a waitress at the hotel while pursuing a business degree in college. She is planning to be married and is saving regularly, with this and other jobs, toward a down payment on a home.

We encourage her with our story - how Georgina and I also had to work our way through college, then had to rent for six years after we were married before we could afford to buy a starter home.

But by following two basic rules - always spending less than we made, even during the lean years, and investing systematically in simple but diversified portfolios - we were able to retire from full-time work in our mid-50s and now own a beachside home free and clear.

Rachael's eyes light up at this thought, but then she confides her boyfriend has run up a $2,000 credit-card debt to buy a big-screen television and computer games. If they are going to be married, she has told him, he will have to change his ways.

I don't know how Rachael's story will end, but she is doing the right things: Setting a goal, saving regularly toward that goal with discipline and determination, and communicating expectations about money.

And then I realized it. Rachael's story - not the highbrow stuff at the conference, which was pretty boring - is what personal finance is all about.

Humberto Cruz writes for Tribune Media Services.

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