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Hazards of Overseas Living

September 16th, 2012 at 02:42 am

I am a United States citizen living in Dubai, United Arab Emirates. Firstly, let me say that the title is not talking about the present political difficulties taking place in the Middle East. In fact, Dubai is fairly immune to such disturbances because only about 10% of the population is Arab. Most of us here are expatriates, such as myself.

The hazards I refer to are best illustrated by my present predicament. On September 2, 2012, I sent a wire transfer back to my US bank account, so I could pay my US-based bills. To do this, I need to convert the money into dollars - which costs me money. I then need to give the money to someone to send it - which costs me money. The money then arrives in the US, where my bank charges me a fee for receiving it - which, you guessed it, costs me money.

Naturally, I try to minimize the charges involved in me transferring the money. For the last four months, I have been using an agency set up to transfer money out of the UAE. This was saving me about $15 per transmittal, as I only saved money on the "sending" fee, and not on the exchange or receiving fee. The previous option was using my UAE bank for the transmitting business.

My money from this transfer has not yet gone through. Today makes 2 weeks I have been waiting. I have initiated an investigation. I believe what has happened is the US government has held up the transfer; probably waiting for me to prove I am not laundering funds from Iran. If this turns out to be true, I will be upset. The government has NO RIGHT and NO JUSTIFICATION to make such an arbitrary decision as to hold up my funds transfer. They can record it, and then investigate it, and THEN, they can bring charges if necessary.

My transaction is from me in the UAE, to me in the US. There's nothing illegal about it, and the government has no probable cause to stop the transfer. They are being a-hole bureaucrats, and this is why everyone hates government employees. They're all little Hitlers, given the chance.

So, I have several thousand dollars in limbo, and I'll have to use the bank (at a higher price) for my next transfer. The bank not only costs more, but it also takes longer... at least it takes longer if I don't count this attempt.

I just have to wait, and hope for the best. I've heard of things like this taking up to six months to resolve over here. How would you like to "lose" several thousand dollars for six months or more? I know how I feel about it. I can't say, though, because I try to keep my blog PG rated, at worst.

Things You Can Do With Money

August 25th, 2012 at 08:40 am

It doesn't matter what you do in the world today, you have to deal with money in one form or another. Have you ever thought about what you can actually do with money? I'm not talking about dreaming what you'll do when you win the lottery. I'm talking about actually sitting down and thinking about money and what it entails.

I had a problem when I was younger of not paying attention to money. I've always been employed, and I've always made enough for my needs and wants, but I don't have extravagant needs or wants. Here, I'll outline what you can do with money, and what it entails. It is only a guideline to help you think about what you're doing, rather than just setting a goal and roboticly working your way toward it without any real understanding of what you're doing.

Money use 1: Borrow it
Since you're reading this blog, chances are that you're already well-versed with this use of money. Borrowing entails someone giving you money for your use today, with the promise that you'll pay back even more money in the future.

What do you get for this money? About the only thing is "immediate satisfaction." And debt. You always get the debt part, and you usually get the immediate part - "immediate" being a relative term - but you don't always get the satisfaction part. Have you ever purchased a used car only to wish two months later that you had not? Or maybe you used your credit card for a night out where you had a little too much to drink, and as you were ruining your shoes and your trousers or pantyhose, you regretted the purchase of at least one of the drinks? You didn't necessarily get satisfaction, but you did get the debt.

Now, there are actually two categories for debt, which I call "dumb debt" and "smart debt." How do you tell the difference? Basically, dumb debt - which is the vast majority of debt - is debt that costs you money and doesn't really do anything for you in a positive manner.

"Smart debt" is debt that you use to achieve some other financial goal. About the only thing that falls into this category is real estate loans. Now, it is arguable that stock purchase loans can also fall into this category, but I don't believe that is anything other than gambling, regardless of the odds. Real estate appreciates as long as you purchased it at its real market value rather than at an inflated going rate. See my previous "Dave Ramsey" blog post where I give a bit more information on this topic.

In most cases, borrowing money incurs only debt and hardship, so it is a dumb thing to do with money.

Use 2: Spend Money
This is not quite as bad as borrowing, and as long as you haven't done "use 1" too much, there's nothing really wrong with this use of money. Spending money entails trading a value of cash for some item, service, or other value that is not cash.

In general, spending money does not decrease your net worth, assuming what you get in return for the money has an equal value. Most assets, though, depreciate in value, so in the long run, spending money decreases your net worth over time, or at least prevents it from increasing more quickly.

Use 3: Saving Money
Saving money is what you do with money when you have it, and don't use it for another purpose listed here. Saving money in and of itself is a good thing. It entails putting the money somewhere safe where it cannot lose numerical value - though it can lose spending ability due to inflation being greater than the savings return.

Saving money puts money somewhere that you can get to it more or less "at will." Usually, you pull money out of savings once savings reaches some given point to use it for some other purpose. Often the other purpose is "spending" as above, which will probably cause your absolute value to go down more quickly.

Use 4: Investing Money
The main differences between saving money and investing money are rate of return, risk, and liquidity. Basically, the rate of return is how much you make for your invested value compared to its value; the risk is how likely it is that your rate of return can be negative. Liquidity is a measure of how quickly you can reclaim your money for another use (including re-investing it elsewhere).

Investing money is a personal decision. There is no "right answer" and there is no "right way" to invest your money. You have to balance your needs, your wants, your assets, and your obligations, and your personal ability to remove yourself from the equation. One of the hardest things to do is to watch an investment lose value, yet "stay the course" and not incur even more losses shifting money around to no avail. But that's all a part of investing.

Investing is one of the wisest things you can do with your money, but you cannot invest until you have "extra money" to invest. You should only invest money that you don't need for spending or saving. An emergency fund is not investing. It is savings for unforeseen events that require money. Paying off debt is not investing. It is the penalty you are paying for past immediate return.

The main thing about investing, though, is that it is gambling. You are betting that your investment gains value at a greater rate than inflation or the economy in general takes it away.

Now, the above statement is going to anger just about every investor who reads it. "Index funds have historically returned (blather) amount over any (X) years." Yes, they have. Absolutely every investment vehicle I've ever seen has also said, "Past performance is no guarantee of future results." Why? Because it is a gamble.

The thing about gambling, though, is that you can improve the odds by various means - most of them legal, many of them illegal. For example, you can run a casino and weight dice to insure a certain roll. That's an illegal way, obviously. Legal ways to improve your investment odds is to research your investments. The best advice I can give in this regard is to invest in something you know and understand.

Use 5: Earn Money
Earning money is performing some service, improving some item, or otherwise doing something that someone will give you money in exchange for. Most people have a "job" where they earn money. Earning money always increases your net worth or asset value. This is your best vehicle for increasing your comfort and ability to do all of the things listed above.

Your ability to earn has very little to do with your intelligence, your education, your network of friends. Your ability to earn hinges on three precise qualities that everyone possesses in one degree or another: Integrity, imagination, and dedication.

Integrity is listed first because it is the most important. Integrity is more than honesty and trustworthiness. It is the sum total of your character. "Character" has been described as your penchant for doing the right thing even if no one is watching. This allows people to trust you, work with you, and rely on you.

Imagination cannot be underestimated. This is the quality one has to see a situation, item, or other intangible or tangible object and apply a unique or unthought-of change that others have not foreseen. This is how ebay, Steve Jobs, and about 99% of the other "successful" people and businesses have made their way. Imagination is the ability to see something that hasn't been seen by others. Earning is your ability to exploit this vision to make money from it.

And that takes the last item: Dedication. This is your ability to stick with something because you know it's going to work out for the better. It is your ability to stay with things when they don't look good, but in your heart you know you can make them good. Dedication means staying with something because you believe in it, no matter what anyone else is saying or thinking.

Dedication is a two-edged sword. If you're wrong in your belief, then you are dedicated to a losing proposition. If you're right, though, you can look like a genius and set yourself up for a windfall. Unlike the gamble of investing, though, with dedication, you're believing in yourself and your vision. That's always a better bet than believing in someone else.

Conclusion
In any case, I've listed the things you can do with money from "worst thing you can do" to "best thing you can do." It is up to you what and how you'll follow the list above. It is also true that how often and how badly you've done them in the past will affect how well and how much of each of them you can do in the future.

Remember that you control your own financial destiny. What you've done to this point will only make it easier or harder for you to get to your desired situation. What you do from this point forward, though, is more important to reaching your goals.


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