I Wouldn't Give A Plug Nickel For It!

Several years ago before the housing values drastically fell, the subject of market value was a pretty heated topic to several clients.  I had a few clients who really needed to know the market value of their homes and other property so we could provide a net worth statement to the bank.  They were looking to borrow money to buy things like commercial real estate and other business interests so it was pretty important for the banks to know what they could get if it came down to selling a property to be paid back.

The market value of a thing is set at whatever another person is willing to pay for that thing.  I could list my Honda for sale at $50,000, but that isn't the value of my Honda.  If the most I can get for it is $18,000 then that is the market value.  It has nothing to do with tax value or the value your neighbor claims his property is worth.

Leaving out the boring details of how you would arrive at a market value of a thing, I'll bring you into my conversation with a grown business man who refused to believe that the market value of a property was what I had listed, which was based on appraisals and other public data.  He wanted me to change the value to a little more than double what I had entered.

"I will be happy to change the value to whatever you want it changed to, but the bank will ask you for proof of that value when you apply for the loan."  I said.  "You're damned right you'll change it.  I would never sell it for that amount.  If it came to that I would sit on it until I died." he exclaimed proudly.

"Yes, but when you are borrowing money and using it as collateral for the bank they need some kind of supporting documentation that backs up the amount you list." I warned.  "The bank will use whatever number I give them because it is my property." he demanded.

We went in circles over this for as long as I could tolerate it and I did change the number, the bank did ask him for supporting appraisals, and his loan was held up because of this and other discrepancies.

The bottom line here is that you can't just make up a market value for your home, your car, or the pen in your front pocket.  If no one is willing to buy it for the amount you set, then it isn't worth a plug nickel.

Meanwhile, In Line at Checkout

If you've ever been shopping with children with big ideas then you know you end up with items in your bags you didn't realize you bought. 

My nephews have tossed gum, candy, small toys, and baseball cards into the mix and we laughed about how sneaky they were once we made it home. 

This week I was at Target and the woman in front of me had a lot of small items, but she was distracted with the little doll baby she was shopping with.  This little angel looked to be five or six years old. 

I couldn't help but snort laugh when this woman shreaked after being given a total of over two hundred dollars.  I was surprised, too, but I wasn't studying her purchases.

It seems that the little angel had quietly slipped an iTunes gift card into the mix for a hundred dollars. 

I have personally been grateful that Target doesn't sell cars or motorcycles for those trips with my nephews.

But But But It Doesn't Go In Reverse!

I've always heard that the least expensive car is the one you already have.  That's true in a lot of cases especially if your car is paid off.  So you have an occasional repair that is one thousand or even two thousand dollars on an older car.  If you divide that by twelve months it is still less than a car payment so that makes sense.  I get it.  I really do.

I had a sweet family who was so very good at budgeting their money and saving and I admired the work they put into their business of being a family.  They made a lot of smart decisions and a lot of painful decisions, but they always had what they needed and saved diligently.

But

They had three small children and a mini van that was the primary mode of transportation for these children and it wouldn't go in reverse!  What??  I sat there in disbelief as I caught that little gem during another conversation about repairs that were made to her twelve year old van.

"Wait, hang on, did you say that it doesn't go in reverse?" I asked.   With the funniest look and one raised eyebrow and even the slightest smirk of a smile she replied, "Yes, I have to park in a way that I can either coast backwards or I have to park where I can always pull forward to get out."

"I'm buying her a new car." her husband laughed.  "Yeah, but one part at a time!" his wife quipped almost in song.

We had a little talk about his wife and children being in potentially dangerous situations if her car wouldn't go backward.  She emailed a picture of her new mini van the next week with a huge smile on her face.

Nothin From Nothin Leaves Nothin

In my office were two adults and two children.  When I asked why they came to see me they said they were able to save all of the wife's income and needed help on where it should be saved.

After giving the children four legal pads and every colorful dry erase marker I owned to keep them occupied, "Oh, we should tell you she has one week left on her notice at work." 

"How much of her income have you saved so far?" I asked. 

"Oh, um, we ain't started yet."

I spent the last thirty plus minutes of my day cleaning markers off the walls, table, and leather chairs.

The Chemical Engineer and the Confirm Button

My favorite clients were the ones who were able to share a good laugh and many times I was the butt of the joke.  It made for a good relationship and easy going dynamic that is not to be taken lightly.  I truly adored this particular couple who were highly educated, worked very hard, and worked hard to get where they were.  They put a lot of time and research into everything I sent to them and made me feel like the work I was doing was being valued.

So, early into the relationship we had a meeting to discuss their work benefits and work-related retirement plans.  Mr. Engineer went into detail about the research he tried to do on the options they were given within the confines of their retirement plans and always hoped that after doing all that research that he had made the right choices for them.

He also commented that even though the markets fluctuate, their plans really never did and he hoped it was because he made cautious choices.

They handed their recent statements across the table and as I unfolded them I literally had to bite my lip, but I did smile without thinking.  He started laughing and said to his wife, "Honey, this doesn't look hopeful."

"So, how much time did you say you spent on research?" I asked.  "About a month, I guess, before I went in and selected the options." he responded.  I literally had both sets of teeth on both lips and was grinning and praying my sarcastic wit didn't get the best of me, but he started laughing really loud so I went with it.

"So, you're saying it took you a month to research Cash?"

From what we could gather he had never clicked on the confirm button when he went online to change their investments so they never left cash.  He also never realized in two years that they were still in cash.

We laughed about that for several years.

Fluttering Snake Oil Saleswoman

It has been a while since I've done any financial or investment research.  It can be time consuming and is an activity that can change by the minute depending on your focus.  Mutual fund managers have teams of researchers at their disposal and strict guidelines based on a published prospectus.  Advisors with years of experience behind their practices are smart, cautious, optimistic and realistic.

I'm roughly two miles into a walk on a treadmill at a local gym and people watching.  Admiring the results of hard work, watching someone learn to use a piece of gym equipment for the first time, and then there's the flutterer.  She's not in particularly healthy shape, her hair is unkept, and her clothing smells as though it sat in a wet pile a little too long.  She's always talking to people who don't appear to be interested in what she has to say.

On this day she comes up to a woman on a treadmill next to me.  Is this the moment when I finally have her wisdom imparted upon me?  Even if I'm eavesdropping say it isn't so!

It turns out she is a local broker with a well known investment firm and she's marketing her skills.  She knows how to guarantee very large returns and gave verbal examples of her skills.  Described how it is done in great detail with plenty of jargon.  I knew she was talking about trading something called options, which is not appropriate for many consumers.  The women next to me wasn't very interested, but since she knew her personally she listened and politely went on to another machine.

What if you were one of those consumers desperate for a miracle and you were afraid not to take a chance?  What if your lack of knowledge and fear of asking questions caused you to make a huge mistake that couldn't be recovered?

Misinformation Expert

Restaurants are the absolute best place for getting accurate information and advice.  A table of roughly twelve adults talking over dinner about recent purchases, a show and tell of sorts, and a definite case of keeping up with the Jonses.

Since one of the companies I work for sells cell phones, not by the sea shore, I know a thing or two about contracts and cell phones.  The woman in my sights looked like she might have appeared in Charlie and the Chocolate Factory to begin with, but she was touting her vast knowledge of cell phones and contracts.

Her point was that she avoided her carrier and went to the Apple store to buy an iPhone because it didn't extend her contract with her carrier.  Since she stated the price she paid I know this to be untrue.  Her iPhone purchase at the Apple store did renew her contract and those at the table who didn't know better freely took her word as being true.

Why is this important?  It is important because someone else overhearing her conversation might find themselves in a situation where they need to leave their carrier for better service due to a move or other unforeseen event and you, the public, are readily willing to believe word of mouth over written policy.

Know what you're talking about before giving advice.