Young Numismatists, Expensive Coins & Finances - thoughts, opinions, and advice

[pendragon1998]

The following is something that has been percolating around in my brain for quite some time. I haven't been certain how, or if, I wanted to talk about the topic. Essentially, what prompted me to speak was a post by MunkeyMan95 concerning the upcoming show he would be attending:

 

Definitely. I started saving last month, and I plan on getting as much money as I can before the show. Gonna blow thousands in a matter of minutes.

 

Consider that I'm not trying to single Chad out in any way. I have heard similar comments in the past from others and they've led my thoughts along this same route. I'm only pointing to his post as an example.

 

So...what's Michael getting at, you ask? Well, I'm in my mid-20s, recently married, a graduate student, and while I have everything I need, I certainly don't have everything I want. In short, my budget is tight due to my choices in life (namely to continue onto higher education rather then just start working). One of the biggest life skills I've had to pick up on over the years has been the ability to budget and to save money. I'm worried that many YNs out there are not learning or being encouraged to learn, the great importance of savings.

 

Part of it, I think, is that with boards like this one we get to see lots of great, expensive coins. The implication to many seems to be that if it's cheap, it's not worth collecting. The corollary is that expensive coins are significantly more desirable. Perhaps this is true, perhaps not, but I think that I've seen a large degree of competitiveness that results in YNs spending large sums of money on a hobby, when they don't give the impression that they're also saving proportional sums for their futures.

 

Another issue here, which is larger than the scope of this post, is the American (bad) habit of spending money they don't have. This is particularly important when these YNs start getting credit card offers. It's super easy to pick up that great coin on eBay with the bad CC (credit card, not carson city) and say, "Oh, I'll pay that off next month." Problem is, next month, you end up buying a good CC on the bad CC and the debt starts building up.

 

As I said earlier, I'm on a tight budget. I still buy coins, but nothing too expensive. I think the most expensive purchase I've made since starting collecting again was $46.00, and that was only for the purposes of reselling at a profit. My point here is that you can still have a great time collecting coins that are dirt cheap. My most entertaining collecting interest right now is building a complete set of circulating Lincoln cents. Cost is minimal, but I think I enjoy it as much as I would building a Morgan dollar set - well, almost as much. But I have to be disciplined about my spending, because if I'm not then we either starve, don't make rent, or get into debt - no good options there!

 

I'm worried when I see YNs talking like Chad did, because I think back to when I was 17 and still living at home in high school. Dropping a thousand might have been feasable, as my expenses were minimal and my income was fair between a part-time job and the odd gift. But when I think ahead to today, it becomes blazingly clear to me that if I'd saved that $1000 and turned it into around $1500 today, I would be much more secure that I'd made the right decision. Today, $1500 represents a small fortune to me and my wife, considering our budgets. It's over half of what a semester of tuition costs.

 

"So," says the YN, "I'll just sell my collection when I'm older and need the money." Well, perhaps you'll get your money out, perhaps not. Regardless, you'll hate having to sell your beloved coins for something as mundane as needing a couple of pairs of jeans or a front-end alignment. You'd rather put it on a credit card - I know that's what I'd be tempted to do.

 

This is getting a little longer than I originally intended, but I would say the bottom line is this: YNs should take as long and hard a look at their future financial situation as they can before dropping a cool G on a coin. Everything will cost more than you think it will. Yes, even more than the number you just corrected your first expectation to. You must - must - balance your desire for short-term gratification (and let's face it, coins are luxury items for almost everyone) versus your future financial freedom (or lack thereof).

 

As teenagers who are just beginning to have access to more money that was in the piggy bank of youth, you YNs are now beginning to establish patterns of spending and budgeting which you'll either follow or struggle to change for the rest of your adult lives. I can tell you that I know of no college graduate (myself included) who exited college with no debts. Debt is a miserable, miserable thing to have. You never feel secure in life - financially speaking - until you're debt-free. It can and does destroy people's marriages and lives. Do not forget your savings and future finances in your quest for the next, great coin purchase.

 

Don't let your desire to collect blind you to the necessities of real life. I'm sure even some adult numismatists here and out there could use this advice.

 

That said, have fun with coin collecting...but do it wisely.

[MAULEMALL]

Well Posted Michael

[MunkyMan95]

I would like to depend myself, even though I thought Michael's post was a good one.

 

Now, this $1000 I might spend at the show... It has/will come from gifts, and selling loose ends of my collection. My parents have told me that I can buy a car, etc. with the money, but I've sold some nice coins to get the money, and I don't want to leave holes in my collection. I plan on buying something that will hopefully retain its value, and this is somewhat desirable, so if I have to sell it, it should go easily. I know there are tons of better things I can do with the money, but there are also worse things. Think about the normal kid my age, who might come in posession of $1000. He might buy video games, an IPod, drugs, anything he could get his hands on. At least a gold coin will have its intrinsic value for a while in the future.

[LuvToCollect]

Bravo on a thoughtful post.

[Bruceswar]

A very well and timely post. Putting away for the future is more safe than any coin will ever be. I have been collecting within my limits for along time. Trying to keep pace and find coins that interest me. My collecting taste are not simple, but they also don't require tons on money. I love a bargin coins that fit my collection. The thrill of the hunt for me is great. Keep slow and go steady. You will be better off for it. No coin debt here. Not Now anyhow. I am outta debt. Plan to keep it that way.

[zrlevin]

Micheal, that really is great advice for anyone, not just YNs. In my case, I save pretty well. I'm with you Michael in that my budget is very tight, but I still manage to put away about half of my earnings each month. I also have a quantity of bullion in case I am in need of a quick source of money. I hate being in debt, and will avoid it at all costs. I will not spend money I don't have. I do not have a credit card, but I will use my direct withdraw debit Mastercard for online purchases.

 

I don't know if anyone noticed, but I do not buy coins very often. In between my type set purchases, I occupy myself with reading about coins, and working on my set of Lincolns from circulation, like you. I am also doing a circulated Merc set, and so I occasionally trade for new coins.

 

I am very fortunate in that my parents encourage furthering my academic abilities, and will therefore buy me a book whenever I need one, so my numismatic library is constantly expanding. I am currently reading "The Expert's Guide: Collecting and Investing in Rare Coins" by Q. David Bowers. It is an excellent book about the aspects of the coin market and it's behavior.

 

Great post, Michael!

 

Zach

[robec1347]

I can't imagine what kind of collection I might have had now if I had done what Chad and other YNs are doing. Educating themselves with all the information available in great forums like this and others is priceless. It's also something most of us that are over 50 never had when we started as kids. These YNs seem very grounded and know what they are doing. I am so impressed with them. Michael's post was right on and is not limited to just YNs. There are plenty of older people that could use some of his insight.

 

Bob

[MunkyMan95]

Yes Bob, this forum, and others, have been an awe-inspiring form of information for me. It is a great place to learn about coins, and yourself. In the short time I've been here, I've learned how to better weed-out cleaned and AT'd coins, how to grade coins, and what kinds of coins will retain their value and others that will eventually flop. It's a great place, here, and I intend to stay for a long time.

 

On a side note: Michel, I know credit cards are the devil, and I'd never spend any money that I didn't have. My parents don't even own credit cards, so I hope to follow their example.

[Stanley]

I can't imagine what kind of collection I might have had now if I had done what Chad and other YNs are doing. Educating themselves with all the information available in great forums like this and others is priceless. It's also something most of us that are over 50 never had when we started as kids. These YNs seem very grounded and know what they are doing. I am so impressed with them. Michael's post was right on and is not limited to just YNs. There are plenty of older people that could use some of his insight.

 

Bob

ditto dat

[Amanda]

Good post! I am still in 'the piggy bank' as you call it and only make very small (in the scheme of things) purchases. I have been saving money since April to get a nice Gettysburg commemorative half, and that will probably be the Biggest Coin Purchase Ever™. The money I have saved is not money I will miss or have missed in the process of saving. It's just extra money I stuck in now and then and some gift money. Sure, it's a whole lot of money, but I know what I want to do with it. And it is discretionary funds, after all.

 

But the future is important too! I know that credit cards can lead to bad news when used improperly, and I will probably never ever get one.

 

Thanks for your insight!

 

-Amanda

[MunkyMan95]

Good post! I am still in 'the piggy bank' as you call it and only make very small (in the scheme of things) purchases. I have been saving money since April to get a nice Gettysburg commemorative half, and that will probably be the Biggest Coin Purchase Ever™. The money I have saved is not money I will miss or have missed in the process of saving. It's just extra money I stuck in now and then and some gift money. Sure, it's a whole lot of money, but I know what I want to do with it. And it is discretionary funds, after all.

 

But the future is important too! I know that credit cards can lead to bad news when used improperly, and I will probably never ever get one.

 

Thanks for your insight!

 

-Amanda

I think you should get this one from Anaconda:

 

 

Only $1,750

[Amanda]

Chad, I think that's about 1200 dollars more than I have.

 

I've seen the coin in hand, though and BOY is it a nice one.

 

-Amanda

[TomB]

The advice is applicable to all who tread upon these forums, not just the YNs or the newer collectors. Proper usage of the forums will put all of the current YNs light years ahead of us who entered the hobby before the widespread advent of the internet or coin forums. These dark ages of technology and free flowing information were a scant ten years ago to those who don't realize it.

 

Everyone states that they will be debt free, will use credit cards responsibly if at all and will always have a store of liquid holdings, but this will not happen for the vast majority of folks in their real lives. This is not to say that everyone will be on the road to financial ruin or will be irresponsible, either, it is just a fact of the world we live in.

 

By the time my wife and I finished our PhD degrees we were debt-free aside from our home mortgage. A home mortgage is the largest debt most folks will ever have, though most people likely, and incorrectly, do not equate home ownership with massive debt. I had to be financially careful in graduate school and I still have to be financially careful, just as everyone else has to be careful.

 

Michael has stated that this is about choices and he is entirely correct. Those choices are best made if armed with education and patience. I think most folks here will be just fine regardless of whether or not they take different paths as they grow older.

[WinstonWare]

I generally consider peoples’ finances a private matter. I would caution Chad on buying too many women’s bathing suits. Leave some room in that closet for some men’s clothes

[zrlevin]

 

And the back:

 

[WinstonWare]

 

And the back:

 

 

Ohh that's nice that you saved the picture for us

[MunkyMan95]

You guys *spoon*!!!

[Stanley]

[zrlevin]

No Chad, I don't like to spoons. You keep getting me and your cross-dressing invisible friend mixed up.

[astrostu]

First, credit cards are not bad, just the way people use them. I've had a credit card for over 5 years and last year I got another one (not as widely accepted, but has the cash back based on how much you spend). I have never ever been in credit card debt and I never ever plan on it. I keep OCD-like track of everything I spend and have records since May of 2001. So you folks who say that you won't ever have a credit card are ignoring a very helpful tool, if you actually pay attention to what you spend and MAKE SURE YOU DON'T SPEND WHAT YOU DON'T HAVE.

 

As to the main topic at hand, I agree fully with Michael. I learned the hard way that before making a large purchase, I need to learn everything I can about it, and shop around for the best price. If I had actually done that when I first got into college (and while I was in high school), I would have quite a bit more discretionary spending money than I do now, and I would be able to contribute much more to my Roth IRA than I can. I've tried to set up a monthly coin budget of ~$100, but at times it is quite hard to hold to.

 

I strongly encourage anyone, especially younger collectors (though I include myself in that, being 23), to look at what they're buying, and actually plan out major purchases so you have an idea of what you can really afford.

[supertooth]

Michael----What an excellent post----and great, well thought out advice.

 

As a kid, my mom and dad and I lived with my grandparents. In some ways it was bad---four parents---in others it was great---only kid---got an allowance of 6 bucks a week [an awful lot in those days]. I put my money into coins. In those days it was buck saved out of change----put buck back to take its place.

 

My gramps was my buddy----loved him pure and simple. One thing that he taught me was to save until you could afford what you wanted. Never buy on time. And never owe anyone----anything. He was right. And this worked until I was 28--29 years old----when I moved to the Eastern Shore of Maryland. I had been a dentist for about 18 months----wanted to have my own practice---my own home---my own car----my own dental equiptment----my own office. So, off I went to get it all done. Trouble was----I had only 29,000 dollars to get it all done. So---because my doctor degree allowed me to borrow, I took out the typical mortgages---and had the normal monthly payments of every solo dental practioner.

 

My problem----I was honest. I live in a 'rural' area---lot of watermen, farmers, decent everyday working folks----and then a retired group of elderly folks. Well, I worked my buns off for over 30 years----sent two kids thru college. And, finally, when I retired 2 years ago----I GOT OUT OF DEBT---for the first time since I started to practice.

 

Well, guys and gals, I tell you this to follow up on Michael's great advice. I do not regret my life or the practice of dentistry. But, my grandfather's advice still does echo in my ears. Don't get into debt---don't borrow---buy when you can afford to pay for it. Or do not buy it at all. It was true in the early 1960's and it is true in 2006. Once you are under the thumb of the banks---with all the other expenses of life---you will be there FOREVER it seems. I was lucky. I bought my properties well. When I quit, I sold my office--home and came out OK. I had bought my retirement place in 1975---so it now serves as my gettaway home in the woods.

 

But, I tell you to collect only what you can afford. There was a period in my life where I had NO EXTRA money for anything. I went through years when buying coins was a luxury that I just could not afford to do. So, like a lot of you, I just had to wish a lot and be patient. I had the obligation of being the head of a household and I had my dad living right down the road from me. But, I never lost my love of being a coin collector. And, now, I can collect almost whatever I want----within reason. So, be patient. Take it as it comes---it will get better as the years roll by---if you dedicate yourselves to the things that young Michael has written. All of you must assume the responsibilities that life presents. And you can get to your dreams if you are persistant in your efforts. Bob [supertooth]

[Stanley]

Bob,

 

Up until I was 16 years old I got 10 cents allowance and when I turned 12 years old then I got a quarter. I already had farm work to do, so for extra money it was helping local neighbors with yard work in my spare time. We did get maybe $5.00 on our birthday and at Christmas we were given an envelope with 5 Morgan Silver Dollars to buy Christmas gifts with. In addition we were taught to set down and handwrite everyone a thank you letter for any gifts we received.

 

My mom always told us the same thing about credit. If you don’t have the money means you can’t afford it. While my biological Daddy was not in the picture I was very fortunate to have some very good male role models in my life. Among them were my kick butt ex Marine Grand Father and my Uncle Kirtus who was also an ex Marine. I definitely didn’t want to disappoint neither one of these guys.

 

BTW, Those were the most memorable years of my life.

 

Stanley

[gmarguli]

Just a few things to throw out (playing Devil's Advocate).

 

If you're going to blow a lot of money on something, you might as well do it when you are young. You may never get the chance to purchase that item later in life due to other financial commitments. This item may be the high point of your collection.

 

If you don't spend that money today, will you really have it a few years from now? Honestly, won't most people spend it little by little over the coming years and when something else comes by to buy, they won't have that money.

 

And for those people who say they will never have a credit card, I'd like to see you get thru life without one. There are so many things that you will purchase that will be easier if you have a credit card. Little everyday things like getting gas without having to go inside twice. Or higher priced items purchased over the internet. And I hope you like going to the bank often because without a credit card you're going to need a lot of cash throughout the month.

 

I use cards that give cash back. I charge everything possible on them. I'd estimate that I'll get back easily $2,000+ in rebates this year. If I paid cash I'd lose out on that. Just pay them off in full every month!

[Stanley]

Greg, I never said I did everything I was taught. Oh have I blown some money.

[Zoins]

Think about the normal kid my age, who might come in posession of $1000. He might buy video games, an IPod, drugs, anything he could get his hands on. At least a gold coin will have its intrinsic value for a while in the future.

For a different perspective, many of my college classmates spent their high school years learning how to invest in stocks and had stock portfolios in the 5 figure range by the time they joined investment clubs in college. Many of those people went on to have very lucrative careers in the finance field. One of my friends also ran an ice cream cart over the summer when he was in high school. He made $23K one summer back in the 80s that he used to travel around the world. Imagine if you had that much to invest in coins in high school? You could get that $1,750 half dollar and then some! You might not even care if it depreciated a bit. Just two alternate paths some kids took.

 

And I agree with Greg that it could be a good lesson to blow money when you're young (if you're going to blow money at all). Not the same but, for example, learning to diversify your investments can save you from a disaster later, like listening to the Enron CEO telling his employees to keep all their savings in Enron stock. Mistakes on a small scale can help you learn to avoid mistakes on a large one.