The 10 Year Anniversary of our Windfall

The Money Blog Network has an interesting writing project going on right now. They want to know what your finances were like 10 years ago. Ten years places us in 1998.

Uh, oh. I remember what happened that year. Although I don’t have the records to back this up, I’m pretty sure we were actually in a better financial position than we are now. That’s the year my husband received a $40,000 inheritance.

Did we save any of it? Nope.

Did we pay off some credit card debt? Actually, yes.

Did we pay off some student loan debt? Sort of. My husband gave his mom $10k so she could pay off loans she took out for my husband’s education. None of the money went towards student loans in our names, though.

Talk about blowing money. Seriously, I have no idea where $10k of that money went. While I used Quicken on my Performa computer to track things back then, I no longer have the file to access. I wish I did. I’d probably want to ground myself.

A running joke between my husband and I is that we should have invested all of that money in Apple. At the time, Apple was still way behind in the computer market. Both my husband and I loved them and I even studied Steve Jobs for an entire class on leadership. If we had invested that inheritance in Apple stock, our finances today would have been a lot different.

Just take a look at this APPL chart from AOL Finance:

Realistically, we could have invested it all and lost it all in the stock market. Apple would have been our pick and it turns out that it would have been one heck of a pick to make back then.

But it didn’t happen. We spent the money. I know for a fact it was gone at least by mid 1999. After that, it was back to buying stuff on credit and living beyond our means. An embarrassing story, but we have learned so much since way back when.

I doubt we’ll have another windfall, but if we did I can guarantee that we will not have a repeat of 1998. What a difference 10 years can make.

Posted by Tricia on June 2, 2008 at 11:06 PM in Life Experiences | 15 Comments »
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Rachel @ Master Your Card responded:
Posted: June 3rd, 2008 at 4:46 am
It is amazing when we look back at what we could have done with money we had. I know that when my earnings were higher, I should have saved more money instead of eating out several times a week, going out drinking, cinema etc. I could probably have had quite a nice sum of money. However, it is much more healthy to look forward, learn from the mistake and move on.
Karen responded:
Posted: June 3rd, 2008 at 9:28 am
Hindsight is always 20/20, isn’t it???? Shoulda/woulda/coulda…..at least you have learned from your mistakes!
Jim ~ mydebtblog.com responded:
Posted: June 3rd, 2008 at 10:01 am
No sense beating yourself up over past mistakes. I’m sure you did something with the money even though you don’t know what that was. Keep looking in front of you because that’s the only area you can change. Live and learn, and don’t beat yourself up.
Moths in My Wallet responded:
Posted: June 3rd, 2008 at 12:02 pm
I usually cry or get very angry when I think about how much better off I was 10 years ago. I was only 23 years old and had zero debt and major spending power. For example, I bought ‘99 Pontiac Grand Am and paid cash for it. Then I buried myself in debt to go to graduate school, only to end up worse off financially than before. I’ve beat myself up over my student loand debt for years, but now I’m channeling my anger toward paying it off. Sort of hard to do though when you don’t make very much money and you owe $100,000 for a worthless degree.
Beth responded:
Posted: June 3rd, 2008 at 2:09 pm
I think there’s a balance between moving forward and staying (emotionally) in a tough situation long enough to REALLY learn from the mistake. I am definitely not accusing Tricia of this, but I know people who kind of shrug over a major mistake, “move on” (with a kind of shrug-the-shoulders “Oh well, I can’t undo it” thinking) and go on to make very similar mistakes. It’s possible for “moving on” to be a form of denial. I know; I’ve done it myself. But I think I’ve learned to really experience the pain that comes from the consequences of poor choices so that it truly changes my thinking and actions from that point forward. Not fun, but necessary. That’s where I see you, Tricia.
Tricia responded:
Posted: June 3rd, 2008 at 2:17 pm
I don’t believe we can shrug this off. Before I wrote this post, I never looked at how much Apple stock has risen. I had to face it. It does sting a little that we could have had a lot of money today. But then again – would we??

We might have cashed in the stock and blew that money too. We’ll never know.

Just think of what I’ll be thinking of my actions in 2018. I better watch what I’m doing now so I make my future self happy
Mike responded:
Posted: June 3rd, 2008 at 4:27 pm
Tricia,

It is VERY easy to look back on the market and say “I should have bought XXXX” and hit yourself over the head for it. The problem is that if you aren’t EXTREMELY careful, you’ll end up making irrational decisions on the market in a desperate attempt not to let that happen again.

The fact is that AAPL has increased in value by an astounding 39.1% per year over that period. That is painful to have missed. But expecting consistent returns even 1/3 of that isn’t very realistic. Investing more than just a small portion in AAPL would have been a VERY risky play.

The emotions kick you for it, but you have to keep them under control for future purposes. Emotions tend to lead you in the wrong direction when it comes to investing. That’s why some of the best performing funds are actually contrarian investments. They look at where emotions are moving other people, and then when prudent, do the opposite.

In 1999/2000, there were a slew of mutual funds opening up in tech investments.

Cotrarians looked at that and many of them moved assets out. Many missed the highs of the tech bubble, but they missed the bubble popping. It’s an emotionless (or less emotional) investment plan, but one that tends to work relatively well. Of course, you should NEVER rely on that as your sole investment strategy.

FWIW, explosions of funds targeting a sector have historically been a good signal of a bubble forming. Right now the hottest sector for new funds is energy.

Doesn’t mean that oil is going to plummet… but it may mean that a correction will come at some point…
Da Big D responded:
Posted: June 3rd, 2008 at 8:27 pm
So you are on the hindsight is 20/20 bandwagon. When exactly would you have sold apple? When it first peaked @ $90? Or held on to it until it dropped down to $50? And then complain you lost $40???

You haven’t bought any stock since then, which means you can’t complain about it now. (ok you can, but don’t worry about what you could have done)
danielle responded:
Posted: June 3rd, 2008 at 8:42 pm
Well, look at the bright side. Without it, you might be $48K in debt.
Tricia responded:
Posted: June 3rd, 2008 at 8:52 pm
danielle – LOL – that is a different way of looking at it
Tricia responded:
Posted: June 3rd, 2008 at 8:58 pm
Mike – every time you post something about investing, it stirs up my interest in it. I really don’t know much about it at all. My husband knows a lot more than I (he paid more attention in his classes). If you had any suggestions as to good books to read to start exposing myself to investing – I’d love to hear them
boomie responded:
Posted: June 4th, 2008 at 12:00 pm
I bought 50 shares of Apple back in the late 1990’s when the share was only $13. I had to fight with my husband because I wanted to buy 100 shares, he wanted to buy nothing, so we compromised on 50 shares. Well, since then, the shares have doubled, so I have my 100 shares anyway.

My $650 investment is worth $19,000 today approximately.

Lesson: each of us know deep inside what to do with our money. Listen to your soul and stop letting others talk you out of it. I also had to fight with my husband back in 1998 between buying a PC or a Mac. We bought a mac. I also would call the head of the computer progams of the colleges my daughters wanted to attend to ask what kind of computers they had. If they didn’t have macs, my kids went to a college that did.

Both girls have careers using mac computers and at the ages of 24, both earn salaries nearing 6 figures. Money that neither I nor my husband combined could have ever earned.

Right now, there is a new Apple Computer-type company brewing. Find it and listen to your heart.

Love you Steve Jobs!!!!
Bev Schweigert responded:
Posted: June 4th, 2008 at 4:55 pm
We are so much better off than we were 10 years ago!!! We filed for bankruptcy 9 years ago, so 10 years ago, we were fighting off bill collectors and living off credit cards. We had just moved to a new town and both only had part time jobs… it was a sad, sad time….
pj responded:
Posted: June 4th, 2008 at 9:18 pm
Tricia, if you ever invest in the market, do not buy stocks or actively managed mutual funds. The former carries way too much risk, the expense ratios (over 1% per year) of the latter are too high. Stick with low cost index funds. You can own 3000+ stocks in the USA with an expense ratio of only o,07% for example (Vanguard Total Market, VTI is the name).
Matt responded:
Posted: June 5th, 2008 at 6:01 am
Looking back at some of the mistakes I’ve made in the past is a little depressing since over the past 10 years I made a fair amount of money but I now have virtually nothing to show for it except a lot of consumer debt. I’m sure I would have made the money vanish just as quickly as you… though I was fascinated with the stock market at the time so there would have been a possibility that I might have invested part of that money.

Looking over what we’ve done in the past is good way to measure ourselves and learn from our mistakes but personally I avoid the what if scenarios.