Tuesday, February 10, 2009

Eight-and-a-half years ago, on a hot Chicago summer afternoon, I stood aghast at my bank balance, printed statement clutched bewilderingly in hand, the cogs in my stupid sophomore brain straining to understand how I had overdrawn my account. It was an affront! A violation of natural law. One solid year of highfalutin’ book learning had packed my head with trivia most fascinating, along with the ability to do multi-integral calc poorly, and yet I was hopelessly deficient at basic budgeting.

With a blank Word document sprawled before me, I set to task creating a rudimentary way to track finances. No fancy graphs, no clever Excel calculations, just plain, brutish text. Where reconciling a credit card statement may have elicited a jingly sound effect with a single mouseclick in Quicken, such accounting victories were instead celebrated with the word “RECONCILED” in italicized bold. That was the system, in a nutshell. It’s the same system I’m currently using, kept alive by a healthy aversion to modern, more technologically advanced personal finance tools.

I’d like to think I’m savvier today, filling up the 401(k), topping off the IRA, and generally heeding the worn contours of financial folk wisdom. But it’s not enough, and in one sense I’ve returned to that fateful summer afternoon. Investment cornerstones I took for granted, such as blindly shoveling pre-tax dollars into retirement accounts, can these days have all the effectiveness of buying three new cars and driving them straight off the dealer’s lot into a ravine. I’ve heard depreciation may occur if you plunge into a fiery abyss.

It’s time for a fresh start. A blank sheet. When I dove into my 401(k) account last month, carefully poring over each fund sheet, it became increasingly clear that nobody knows what precisely is going down. Old standbys, such as heavying up on stocks, rang hollow and only seemed to indulge a gambler’s fallacy. I needed an anchor, so I reweighed my portfolio. Half bonds. 30% large-cap. The rest in small and medium businesses. And absolutely no more managed funds, because the only thing worse than effing the dog is paying for expert dog effing. Performance improved immediately, but the first real test will be how this lineup fares after today’s government failout announcement. Either way, I’m now committed to being at the till of my own financial future, at least until the till factory goes bankrupt.