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Actions Have Consequences

Finance, Parenting

Image by reidmix via Flickr

Six months ago, my laptop quit charging.  This particular model has a history of having the power jack come loose inside the laptop, so I ordered the part and waited.  When it came, I disassembled the computer, carefully tracking where each screw went.   I installed the part, the put it back together, with only a few extra pieces.

It didn’t work.

After spending the money and doing the work, I tested the external power cord.   I could have saved myself a few hours of work if I would have done that first.  It was trash, so I ordered a new one.   That’s time and money down the drain due to my poor research.

As an adult, I know that I am responsible for my actions, even if the consequences aren’t readily apparent.   If I tap another car in a parking lot, I am going to have to pay for the damages, even if I didn’t see the car.   This has manifested itself in credit card statements I didn’t read, speed limits signs I didn’t notice(or ignored!), and–on occasion–my wife and I not communicating about how much money we’ve spent.

Kids have a much harder time grasping that concept.

My son enjoys playing games online.  Some of the games are multiplayer games  he plays online with his friends, others are flash games he plays at home while his friends watch.   They like to take the laptop into the dining room where they can play without being in the way.   A small herd of 10 and 11 year old kids hopping around expensive electronics can’t be a good idea.

Yesterday, we saw that the power cord was fraying at the computer end from being dragged all over the house and jerked by kids tripping on the cord.   We got six months of life out of the cord because of kids who should have known better not acting appropriately around the cord and the computer.    Not happy.

My son got grounded for a week and honored with the privilege of replacing the cord.   Now he isn’t happy, but he understands that he needs to pay for the damage he causes, even if he didn’t know that what he was doing could cause the damage.    If it was something he would have had no way of knowing, there would have been no punishment, but he should have known not to jerk on the cord of leave it where it can be tripped over.

What do you think?

Top 7 Reasons To Trade Forex Over Other Financial Instruments

Finance

This is a guest post provided by ForexTraders.com

The foreign exchange market has literally exploded over the last 10 years.  Before the 1990’s, the only players allowed to speculate in the forex market were banks, large hedge funds, and very wealthy individuals.  The reason was simple.  The minimum contract size was usually $100,000 and it ranged up to $1,000,000; therefore, most traders simply could not afford to trade in the market.  The advance of technology and internet changed that.  Today, traders can open an account with as little as $100 and begin trading in the spot fx market.  This change has caused traders around the world to rush into the market and the Bank of International Settlements now estimates that average daily turnover in the fx market is around $4 trillion!  Let’s examine a few of the top reasons why the fx market is drawing so many traders.

Leverage

In the United States, traders that engage in fx trading can leverage 50:1.  Leverage was much higher in recent years, but government regulations have now capped leverage at 50:1 effective late October.  This means that a forex trader can control a position of $50,000 with only $1,000 on deposit with his broker.  Leverage is definitely a two-edged sword that can help a trader garner very quick and substantial profits, but it can also lead to debilitating losses and should therefore be used with caution.

Liquidity

The huge amount of volume that is present in the forex market each day makes it basically impossible for any single financial institution or even group of market participants to manipulate price movements.  It also makes it much easier for large traders to enter and exit the market without trading against themselves, which is a common problem in the stock and commodity markets.

24 Hour Market

The forex market is a loosely connected network of international banks; therefore, the market never closes from Sunday evening until Friday afternoon.  Liquidity simply flows from financial center to financial center as time zones open and close business operations for the day.  This is a huge advantage for small, retail traders because those who still have full-time jobs can trade at night.

Small Initial Account Size

Traders can open accounts with as little as $1 at some brokers, and then trade positions where each 1 point movement is equivalent to $0.01 (in the U.S. this would be lower since the leverages are capped at 1:50).  This will obviously never get a trader rich, but it does allow traders a very low risk entrance into the market.  Traders generally need $20,000 in order to day trade the stock market.  This very low account size at an online forex broker is a big draw for many traders.

Long Trends

The currency market tends to develop very clear, long trends.  It is not uncommon for specific currencies to head in the same direction for 5+ years.  Of course, there are many dramatic price swings that make real-time trading difficult and challenging, but a quick look at longer-term currency price charts makes it clear that currencies develop strong trends.

Macro Economics

The currency market is very big picture-based.  This means there are not a million and one little things that a trader has to track as is common in other financial markets.  Currencies react to major macroeconomic developments around the world.  Seasoned fx professionals argue that this makes the job of economic analysis much different in the currency market.

Continued Growth and Volatility

The foreign exchange market is expected to continue to grow in coming years, and volatility is expected to remain quite strong as the world continues to move toward a more globalized economy.  As globalization continues to change the world economy, investor interest in currencies will most likely continue to grow steadily.

Jason’s commentary:  I’ve never looked into forex trading, mostly because I’m not in the “invest & grow rich” stage of my financial life.  Have you invested in the forex market?

Automatic Everything

Finance

In an effort to simplify my finances, I’ve automated every bill I have.  For years, I resisted, fearing a lack of control over my money.   A few months ago, I re-examined the bill paying options on my bank’s website and changed my mind.  This is one thing that USBank has done right.

The first thing I did was set a budget. Without a budget, it’s not possible to let your money take care of itself.   I did this months before I decided to automate.

All of the bills that offer a budget plan–a plan that averages your payments to avoid fluctuation–went on the plan.    It means I do overpay some months, but it also means I get to underpay some months.  Most important, I always know what will be due.   These bills were scheduled in the bank’s online bill paying system as is, along with the rest of the bills that do not fluctuate.

All of the bills that do fluctuate went in to the bill paying system at their highest level.  For example, I don’t pay for text messaging on my cell phone.  Some months, I send and receive text messages.  I pay my cell phone bill assuming that there will be a few messages.  This is slowly building a credit on my account.  If I don’t use all of the credit, I will get to skip a month of payments sometime next year.

I keep track of all of this using Quicken.  Every one of these bill is in the calendar.  They are all scheduled to be entered into the register on the first of the month, to post of the actual day of payment.   This lets me see, at a glance,  my cash flow for the entire month.

But wait!  What about the non-monthly payments, you ask? They are also in Quicken, broken into monthly line items.   There’s a “Set aside for property taxes” item, a “Set aside for web host” item, and a few other items.

My time to maintain this has been reduced to comparing the bills to the bill-paying system every other week.  At the same time, I consolidate all of the “set asides” so I don’t have 10 property tax entries when one will do.

I know this is an inefficient method of saving money, but my goal isn’t to save money, it’s automating money and removing one layer of stress from my life.  It has transformed bill-paying from an hour or two per week to 20 minutes, twice per month and very little stress.