Even people who are really good with money have bad days. Financial pros can fall deeply into credit-card debt or hang onto a bad investment longer than they should, just like the rest of us.

Our four fallen angels know you’re bound to trip up too. The trick is not to brood but to bounce back as quickly as you can and look at the incident as a learning experience.

Lynnette Khalfani knows what she’s talking about when she warns of the dangers of credit-card debt. A few years ago she managed to run up balances of more than $100,000.

“I really engaged in too much consumerism,” said Khalfani, the author of “Zero Debt: The Ultimate Guide to Financial Freedom” ($14.95, Advantage World Press). “Even now, I have to fight the urge to overspend.”

She and her husband used credit cards to pay for a $40,000 piece of land, but the rest of the debt came from various purchases – gifts for friends, vacations and two timeshares.

“For a long time, I was making the minimum payments,” she said. “The payments were high, so I switched cards for lower interest rates. But I never had a ding on my credit report. I was swinging it.”

Khalfani thought she had it all figured out. She had a six-figure income, was saving money for retirement and her kid’s college funds and staying on top of all her bills. But by making only minimum payments, in the end she would be paying thousands of dollars extra in interest charges for things she can’t remember buying.

The wake-up call came in February 2003, when she was laid off. That made her get serious about paring her debt. Fortunately the land had shot up in value, and selling it for $200,000 gave her a good start.

Now she pays off her credit-card bill every month.

“You can spend money on what you want,” Khalfani said. “But you must follow one rule: You have to spend less than what you earn.”

Suze’s dumb move

Suze Orman says the stupidest thing she’s ever done was leasing a gold-colored BMW 735i for $800 a month in 1987 (that figure today would be about $1,300).

“I did it to impress the person I was in a relationship with,” said Orman, who dispenses financial advice through books, columns and television. “I thought I was brilliant. I didn’t have to come up with the money to buy it, and everybody would think I could afford it.”

But the lease payment was weighing her down, her debts were growing and she was forced to borrow $50,000 from her 401(k) to get by. To top it off, the lease outlasted the relationship.

In 1990, she was struck by a sobering revelation while eating at a Denny’s in Emeryville, Calif.

“My BMW is parked outside, my Cartier watch is on my wrist and my Armani clothes are on my body,” Orman said. “I’m mortgaged to the hilt, and I’ve drained my 401(k), and the woman waiting on me had more money than I did.”

It took another three years to dig herself out, and these days Orman doesn’t buy anything if she can’t write a check for it.

“If I have to finance it, I can’t afford it,” she said.

Knox Fuqua, who manages the $12.2 million AAM Equity Fund, a portfolio of roughly 50 large-cap stocks, says falling in love almost cost him a fortune.

“I grew up in the South, and I love Coke,” Fuqua said. “There was no such thing as Pepsi.”

So when he launched his fund in 1998, he included a stake in Coca-Cola Co.

“I wanted to make money on it,” Fuqua said. “You’re told all your life that it’s a good company. It has been great. It made people a lot of money in the 1980s.”

But the stock’s performance has been erratic in the past five years. Fuqua chalked it up to a revolving door in the executive offices and a general lack of direction. When his son gave Coca-Cola C2 – the new low-carb, low-calorie product – a thumbs down, he knew it was time to dump his shares.

“Finally I had to say, “I just need to walk away,”‘ Fuqua said. “You just say, “Enough’s enough.’ I did the same thing last year with Bristol-Myers (Squibb). If you really want to do what’s best for your shareholders, then you have to ask what is best for your shareholders.”

His love affair with Coca-Cola isn’t over, but he’s giving the relationship a rest. He’s keeping an eye on the company and knows he can always buy it again when the time is right.

(END OPTIONAL TRIM)

(EDITORS: STORY CAN END HERE)

Carl Marker learned the hard way that greed is dangerous and costly.

In November 2000, he bought Conseco Inc. at $8 a share for his long-term growth fund, which currently has more than $88 million in assets. He bought more Conseco at $7.50 a share a month later. He planned to sell it once the price hit $14. By January 2001, Marker sold half the portfolio’s holdings at $17 a share.

“We well exceeded our price target,” he said. “It was getting to be too big of a position in our portfolio, so we cut it in half.”

But the stock still was climbing, reaching $19.82 a share in May 2001, and Marker got greedy. He wanted an even better return for the rest of his investment. He even shook off news that Conseco was having some financial troubles. Turns out that was the first in a string of notices that ended with Conseco seeking Chapter 11 bankruptcy reorganization.

“We should have sold at the first hint of bad news,” he said. “(The stock) was well above our expectations. We rode the thing all the way down to bankruptcy.”

When Conseco shares were trading at $2 a share, Marker held tight, betting that he might get more value once the company emerged from Chapter 11. He lost that gamble when common shares were rendered worthless in the reorganization.

As a result, Marker adopted a “shoot first and ask questions later” policy, and he will pull the sale trigger once a stock hits his price target and shows signs of financial trouble. But he’ll hang on if the stock is climbing, and the company is performing well.

“We’ll wait for it to stub its toe before we sell,” Marker said. And when it does, he’ll have no reservations about bailing, especially if the stock has hit his price target.

“If it exceeds the price target, you are not going to disappoint yourself or shareholders for taking a nice profit,” he said. “You have to be willing to take your ego out of it.

“You always could have bought lower, and you could always have sold higher,” said Marker. “It’s better to take your lumps and move on.”

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(c) 2004, Chicago Tribune.

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Distributed by Knight Ridder/Tribune Information Services.

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