Knowing What to Waste

My most useful tool to help me understand how much money I truly have to waste is immediately distributing incoming money to its respective accounts soon as it comes in.

For example, yesterday my bi-weekly paycheck was directly deposited into my general account (The point where all money goes in and out of my hands). The total came to $246. The FIRST thing I did was login to my Bank of America account and transfer the money in the following amounts:

  • $49 to Bills Account (20%)
  • $49 to Spending Account (20%)
  • $74 to Permanent Savings (30%)
  • $74 to Investment Account (30%)
  • Total = $246

So the money has been distributed into the different accounts and it can no longer tempt me to spend it by sitting in one giant account. Only 20% of it goes into my spending account which can be spent on any frivilous expenditure I choose. If I don’t have enough money in the spending account, I don’t buy it.

Yesterday was one of those awsomely hectic days where you run from place to place (I love those), but the highlight of the day was seeing Carl Stuart speak at a University Investors Association meeting. He has been hosting a personal finance radio show based in Austin for over 10 years. The man KNOWS HIS STUFF. I’ve never seen someone so adept at quckly answering a barrage of quick, tough personal finance questions. He also manages over $250,000,000 of other people’s money.

Some of the interesting points he brought up:

  • We experience financial losses twice as hard as we experience gains.
  • Only two investments have consistently outpaced inflation: Stock and real estate.
  • Doing financial research on the interenet is like taking a drink from a fire hydrant.
  • The two best teachers are Trial and Error

It turns out he too was a political science major who just wanted to get out of college and jump into the real world. It seems he’s done pretty well for himself so far!

Blog posted on: April 9, 2005

11 comments on “Knowing What to Waste

  1. Alpha

    hey Nev

    from the talk you heard, can you elaborate a little more on what he said “Doing financial research on the interenet is like taking a drink from a fire hydrant.”

    I was interested in that point,

  2. Anonymous

    I was at the speech and can comment a bit –

    First you have to understand your sources on the Internet, even sources that seem credible. Carl Stuart is frequently cited in the media, and he noted that most journalists who interview him have backgrounds in journalism, not finance. Most “credible” financial sources are people in their mid- to late 20s who are just trying to generate interest, not accurately inform. His example: the real estate bubble talk comes up because the stock market has been relatively flat/boring lately. He doesn’t believe that there is a clear yes/no answer to the bubble, because you have to define real estate carefully: divide into regions (Northeast), cities (Boston), regions (wharf) and classification (Class C). Then you have to examine micro- and macroeconomic factors and many other indicators. It’s too complicated for an Internet source to answer, but easy for them to speculate.

    Point 1: Credibility is an issue
    Point 2: Overwhelming amount of information exists – sometimes called “paralysis by analysis”.

    It was the most information-packed hour I have ever sat through, I’m still trying to sort through how much I heard.

    -Jess dot Morse at

    PS – ironic that my answer was also a ‘fire hydrant’. also check out innovative research by MIT grads/profs who have tried to develop models to identify real estate opportunities. Should be on

  3. Neville


    When Carl Stuart said, “Doing financial research on the interenet is like taking a drink from a fire hydrant”

    …he meant the amount of information out there is staggering. It is an information overload strewn with conflicting views, unexperienced individuals and credibility issues.

    Just Google the world real estate and you will find 176,000,000 matches. Read every article out there and I’m positive you will come out more confused than ever.

    Good points you brought up. I also agree he was the single most linguistically astute individual I have ever seen…and he was presenting at OUR club!

    Hope you like the site,

  4. ncnblog

    Nev, I like the fire hydrant example. I think it applies to many areas of internet research, not just personal finance. There can be such a thing as “too much of a good thing.”
    P.S. Quick tech question…how do I format blogger so that comments appear below orignal post, like yours do?

  5. Neville


    Login to Blogger –> Settings –> Comments –> Click “no” for “Show comments in pop-up window?”

  6. Marc

    Hey Neville,

    I’ve just recently started reading your blog (after the WSJ article, incidentally). So, I apologize if you’ve already addressed this.

    I’ve noticed that your investing is concentrated solely on equities. Is there a reason you’ve chosen this path? Why not real estate? I agree with the speaker you attended that these are the only two paths worth pursuing, especially so for a relatively young man.

    As a comment to the article this may not be the appropriate place to ask this, but I’m curious as to where you stand, as you seem to be pretty well informed. Thanks.

  7. Neville

    If by my “investing” you mean strictly my stock portfolio, yes I have chose all equity at the moment. Why? Because all I really know is stock. Haven’t yet ventured too far into funds or bonds.

    If you notice, I recently opened a Roth IRA with $5,000 in it. I have not YET invested the money in anything, but it will not be revolved around equities like my stock portfolio.

    I will most likely split up my Roth IRA in a pretty standard format for my age (Some stock, some bonds, some funds).

    If you know more about diversification, feel free to share your advice with me!


  8. Kate Bean


    Have you ever read “A Random Walk Down Wall Street”? It talks a little about investing and I like the strategy. I try and let other people do the diversification of my portfolio by buying index funds with low fees. I also admire Warren Buffet and bought a share of Berkshire Hathaway’s class B stock. It’s supposed to trade for 1/30 of class A, but sometimes it trades at a bit of a “discount”. The other stocks that I’ve gotten that did well were from Fortune magazine’s Top 20 list they publish every Nov/Dec. I try and keep a Beta coefficient of 1. Good luck investing! When you pick your stocks are you going to track them on your site?


  9. Neville

    Kate, I’ve been reading Random Walk for the last 3 weeks! I only read on the bus, and that time has gone towards studying lately, so it’s coming along slowly.

    I’m on Pg. 130 where he describes the differences between technical analysis (charting) and fundamental analysis.

    As for my future IRA investments, yes I will track them on the site. People much more educated on investing read this site, and I’d like the feedback.

  10. Anonymous

    recommed reading ben graham, robert schiller, jeremy sigel & for current (applied) econ theory, milton friedman.

    if you’ve read, please offer brief insights on any, would appreciate.

    excellent blog, very nice work imho.


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