20 questions, No. 1: Celebrating 20 years of the Savage truth with 20 questions
As I looked back over 20 years of columns, I was struck by how little has changed about the basics of personal finance during those years. Many of those early columns were written as we entered a recession in 1990, and I was advising people about the dangers of debt during a period of economic slowdown. Little did I realize that in spite of my warnings, there would be an explosion of consumer debt in the subsequent years!
It's humbling to realize that despite my best intentions, I had relatively little impact! On the other hand, over the years I've received many notes from you, my readers, telling me that you've followed my general advice to pay down debt and invest regularly. That's what keeps me going.
I smile as I look back on columns explaining how a mutual fund works. If you had started a regular investment program then, you'd be way ahead. When this column started in January 1989, the Dow Jones industrial average was trading at 2,000. Yes, I continued -- and still continue -- to suggest you invest regularly in a diversified portfolio of large company stocks for your retirement.
Many of those columns revolved around "chicken money" -- money you can't afford to lose! I described how to take a certified check, minimum $10,000, to the Federal Reserve bank to buy Treasury bills. Now you can do it online for a minimum of $100 at www.TreasuryDirect.gov.
One question that stands the test of time is the longing for someone you can trust to give you advice about your individual situation. I've tried to do that in a general way over the years. But still, it's helpful to have trusted, individual advice. Where can you turn? Let's start with that big question for this series:
• • Consumer Credit Counseling Services: (800) 388-2227. When it comes to advice regarding debt, bankruptcy, budgeting, or deciding whether you can afford to buy a home, I always recommend CCCS. If you call the toll-free number, you will be automatically connected to the nearest agency. (In the Chicago area, it answers "Money Management Inc.") They offer two services: a consulting service (can be done over the phone) that will give you perspective on dealing with your finances, or a legitimate debt restructuring service. You will pay a small monthly fee, and they will deal with your creditors. They may also recommend a bankruptcy attorney.
• • Certified Financial Planners: www.cfpboard.org. This Web site has a directory of financial planners who have certified expertise in all areas of financial planning. You can meet many of the area CFPs during MoneySmart Week, when they will participate in individual counseling after my speech on Monday, April 20, at noon at the Harold Washington Library. The event is open to the public.
• • Fee Only Financial Planners: www.napfa.org The National Association of Personal Financial Advisors' Web site includes a search tool for planners who do not sell products or take commissions, but instead work on a fee-only basis.
• • Check them out at www.FINRA.org. This is the Web site of the Financial Industry Regulatory Authority, where you can check on the regulatory and disciplinary history of financial professionals.
Yes, I know that Bernie Madoff would have passed all those regulatory checks, and he turned out to be the biggest crook of all time! So the best advice I can give you is to trust your own instincts. If someone offers returns or interest rates that are too good to be true, they're probably some sort of scam! In hindsight, almost everyone who is scammed says, "I should have known . . ." But greed blinds you to risk, and fear makes you dependent, an easy victim.
If all else fails, leave your money in insured, short-term deposits in the bank. If inflation comes, rates on short-term CDs and money market deposit accounts will rise. Meanwhile, you may not get rich at today's low interest rates. But with money in the bank, you surely won't get poor!
And that's The Savage Truth.