Well, I suck at finances, but I do appreciate the advice to not compare my situation to that of other people - especially when I don't know all the details. I do tend to do that at times and yet there are other things to consider besides money and lifestyle and such.
Debt and the danger of comparisons
by Simon 27 Replies latest social family
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blondie
1) We pay off our credit cards (1 for each of us) every month.
2) We bought our vehicle on a no interest loan (financial planner said that was best) of the shortest duration.
3) We have a very low interest house load for 15 years...paid for the year we retire.
So in a few short years, we will have no debt.
It is good to invest in your future. Be sure that you have a good retirement plan, either through work, government, or paying into a fund yourself.
We have all three.
Blondie
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frozen one
I know heaps of people who live well beyond their means. Its the old saying..."living a champagne lifestyle on a six-pack budget."
I work with people who have all the toys - a boat, a couple of 4-wheelers (quad bikes), a motorcycle or two, a couple of snowmobiles - plus whatever toys theirs spouses have not to mention the kids. They go on trips, have several cell phones, live in huge houses, have high def TV's with the premium cable or satellite package and work their asses off. Whats the point of having all that stuff if you're never home to enjoy it? I don't understand the allure of living on the edge like that.
frozen one
"Living a six-pack lifestyle on a champagne budget" class
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blondie
Good point, frozen one, about when one would have time to use the item.
We ask that when we think about buying an expensive "toy."
Blondie
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juni
I strongly feel they should teach kids in school how to spend wisely and invest. And also parents setting a good example and furthering fiscal responsibility by talking and teaching their kids also.
We also are in a "good" place financially. We've gone w/o through the years and don't regret it in the least. Everything is paid for except 9 years left on the house mortgage which has a very low interest rate, credit cards (1 for each of us) are paid off at the end of every month and we have investments for retirement. Do we feel that we then are all set for retirement and never have to put in a day's work again? ABSOLUTELY NOT ! But we will be able to sleep at night and enjoy our later years w/o foreclosures and bankruptcies.
My daughter and son in law are in the mortgage business. There are so many people out there my age (57) or older who feel that they "deserve" to have things even though they can't afford them. They re-finance over and over and rack up credit card bills. They are at the full value of their homes so they can't borrow against it any longer. It's sad to see them heading for disaster, but it is their poor choices that got them there.
Juni
I like that frozen one!
"Living a six-pack lifestyle on a champagne budget" class
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frozen one
I work with someone who bought a $22,000 fishing boat a couple of years ago. He refinanced his house (for 30 more years) to swing it and likes to tell people he paid cash for the boat. He had it in the water ONE time this summer. The nicest summer ever and he went fishing ONCE. It sits in the garage next to his pair of four wheelers (also purchased with refinance money) that he doesn't have time to use either. He tends to borrow twenties a couple of days before payday on a regular basis. I'm hoping he'll sell me the boat in a couple of years for a fraction of whats it worth. God I'm evil.
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lonelysheep
Thanks, Simon. I needed to hear (read) that. I feel like everyone has a house but me.
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YoursChelbie
They should teach home finance at school (more useful than algebra or Pythagoras "who the heck cares about triangles anymore" theorem *)
I agree. The thought has occurred to me that a text book should be written addressing these very issues in a way teens can relate to and learn from.
YC
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BabaYaga
Awesome thoughts and thread, Simon, thanks for this.
As my Mom-in-law says, "It's not how much you make, it's how much you SAVE."
May I recommend the following rockin' books:
"Rich Dad, Poor Dad" by Robert T. Kiyosaki
or, if your family was always scraping by and you really need to change your entire attitude about money , read
"The 9 Steps to Financial Freedom" by Suze Orman
Both really excellent reads in their own way.
Get out of debt! Stay out of debt! Only spend what you have or what you can pay back easily in a short time...
This truly is something that we did NOT learn being raised Witnesses. Witnesses are not likely to have much of a retirement plan (then again, those days may have changed with the generation "new light")
Cheers to all
Baba. -
BabaYaga
While we are on the subject of compound interest, NOTHING can bring home the astounding payback of compound interest like this parable attributed to Carl Sagan...
*****
Back in ancient Persia there was a mighty king. The king ruled over a large kingdom and had great riches and power, but he was bored. The king had a trusted adviser, the grand vizier of the kingdom, who was in charge of its day-to-day management. In the legend, the grand vizier invents the ancient Persian game we know today as chess. The vizier showed his newly minted strategy game to the king and the king was delighted with the new diversion. The king was so excited about the engaging new game that he told the vizier to name his reward for the great invention.
The wise old vizier knew exactly what he wanted. He humbly asked the king to place one grain of wheat on the first square of the chessboard, two grains on the second square, four grains on the third, eight grains on the fourth, and on and on doubling the pile in each consecutive square until all 64 squares of the chessboard had doubled piles of wheat. The vizier simply wanted those piles of successively doubled wheat from the chessboard as his reward. The king was amazed at this small request from his vizier, as the king had huge royal granaries brimming with wheat from the year’s bountiful harvest. The king even tried to talk the vizier into a more desirable prize such as gold, precious gems, and even a palace, but the grand vizier refused the king’s generosity and stuck to his request for the piles of wheat on the chessboard squares.
The king finally shook his head in disbelief and consented to the vizier’s strange reward. He summoned his granary manager to begin placing the piles of wheat on the chessboard squares. Initially, the piles of wheat were very small. After the first row of eight squares, only 255 total grains of wheat had been piled on the chessboard, hardly a handful of wheat. Yet, as the granary manager continued to have his people haul in and count out the grains, the piles rapidly grew larger and larger. Soon they filled the whole room even though the chessboard still had most of its squares waiting for wheat. Finally the king realized that he had been tricked by his shrewd old vizier and that all the granaries in his kingdom couldn’t meet his pledge. The king had unknowingly subjected himself to the receiving end of an exponential increase in a series through a mathematical geometric progression.