Posted on 03/09/2019 7:16:36 AM PST by CptnObvious
My kids are always telling us to get a new car because we can afford it. I tell them over and over that’s it’s harder to spend money you have in the bank than money you’ve yet to earn. Earning and saving gives one a real appreciation of the value of money and makes you frugal. Debt is an insidious trap and should be used sparingly. Now that my wife and I are debt free we are reluctant to spend for anything but actual necessities. The psychological security of having money means more to us than the crap we could spend it on. And consequently our wealth grows rather than diminishes.
There is a lot to be said for that.
Mrs. K and I are Financial Peace U. Coordinators. The baby steps are a great way for people who are stuck, hopeless and don’t know what to do next to start getting out of debt. Most people don’t have an income problem they have spending problems. (They think they’re in Congress). We have always lived on less than we made and are happier for it.
The biggest problems we see in classes are ridiculous car loans and restaurant/fast food spending, people see nothing wrong eating out 20 times a week. They are eating their retirement. College loan debt is coming up fast on the outside.
No, the Emergency Fund is for Emergencies like this. When one doesn't have an Emergency fund they are forced to use credit. When one doesn't have Medical Insurance it is even worse. She should have talked to the Hospital about a different payment plan. Most hospitals will make the adjustments for those with hardships.
Living without an Emergency Fund is not Living within your Means because Murphy will come in to live with you. And he brings his broke friends with him; Desperate, Dumb and Stupid.
Poor people pay interest, rich people make money off interest.
Weak minds are easily kept in chains by slick advertising and the hope of the next greatest thing that will bring them joy but never satisfies.
LOL! “My grandparents’ stories of hunting for 3 pennies to buy ice to make ice cream back in their poor days affected me. And my parents lived within their means.” Reminded me of when I was a kid in utah. On Saturday, my sister and I would go barefoot to the neighbors to borrow their red Radio Flyer wagon. Then with a 50-cent-piece, we’d walk to the service station through the block, and buy a 50-pound block of ice to put into the old wooden icebox refrigerator we had.
D.R. would say to avoid it like the PLAGUE.
Mom talked about the train that passed thru. She and her brother would get a bucket and collect coal that fell off to use in their furnace.
We now max out our 401Ks, and have been making up on lost investment dollars with a stock strategy that let me grow what was there by six-fold in five years. That made up some lost value to interest over the years.
You’re a poker. Ours have 150k and 188k. Just warming up.
Pretty much the same here. Ranching and mining through the depression and small business through WWII. Grandma’s grocery store actually had the first well and what they called “wet toilets” across a hundred mile stretch of route 66 at the time. lol
It’s all about appreciating the little things and being practical. People lived just fine without even electricity for thousands of years. No it’s illegal to live without electricity almost everywhere. Why? Cooking on propane or wood stoves or kerosene lanterns didn’t kill anyone I know or knew. :)
Those who were raised like us could have the power cut off tomorrow and survive just fine without it. If one mentally puts themselves in perpetual “camping mode” like our Parents and Grandparents had to out of necessity, it is easy to live comfortable, minimal, practical, and within your means.
Camping is fun and much less stressful.
My wife and I really enjoy living frugally, thankfully. We even make our vacations as add-ons to company paid trips, minimizing our costs.
We do get loans that are especially low interest for the cars, as I can easily get better use out of the money paying down our mortgage or through investing.
1. Mr Micawber’s famous, and oft-quoted, recipe for happiness:
“Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
Charles Dickens, David Copperfield
She doesn’t have an emergency fund. All she knows how to do is make payments. That’s her life and the life of many others. “I will try to make payments on it”. Her cell phone payment is $300 a month. Her car payment is probably the same.
The hospital already told her to pay $300 a month but she only wanted to pay $150 so that is what she paid. If you have a $1000 in the bank and an $1800 hospital bill, borrow the $800 (or sell something) and get them out of your life. Hospitals are not financial institutions. Don’t borrow money from them.
Steve Martin:
How I turned One Million Dollars
into One Dollar and 67 cents.
That’s “piker”, IIRC.
Anyway, there was a Volkswagen ad showing a Beetle with the caption, “live below your means”. My first car was a 1956 Beetle.
Dad gave me a copy of “The Richest Man in Babylon” whose advice was “a portion of all you earn is yours to keep”. So I practiced thrift all my working life. Never felt deprived and never envied anyone unless they could play the piano better than me; if I bought a new car I drove it fifteen years at least. My 2002 minivan has 246,000 miles & runs like a champ.
Wife & I are retired and could live off either pension or investments; we feel blessed.
Let’s say I buy a pickup for $40k. I borrow the full amount for 72 months. I have the car a year and I total it. I owe $37k but the insurance company only gives me $30k. So now I have to buy another truck but now that same truck costs me $47k.
That’s why I don’t borrow money to buy a car.
That’s how my sister ended up with a $525 a month payment on a used truck. She traded down so she is now paying like $350 for 72 payments for a 10 year-old suv that won’t even pull her trailer.
Since we’re all talking about him, here’s Dave’s 7 steps for anyone who isn’t hooked on listening to Mr Ramsey (1 hr/day on the drive home for me):
Baby Step 1 – $1,000 to start an Emergency Fund
Baby Step 2 – Pay off all debt using the Debt Snowball
Baby Step 3 – 3 to 6 months of expenses in savings
Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
Baby Step 5 – College funding for children
Baby Step 6 – Pay off home early
Baby Step 7 – Build wealth and give!
If your outgo exceeds your income your upkeep will be your downfall.
Having a sense of thrift and avoiding excessive consumption is the way to go. Many reject that, however. Tough for them.
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