Showing posts with label Money. Show all posts
Showing posts with label Money. Show all posts

Sunday, October 24, 2010

Piece of Advice #75: Do not define yourself by what you own

Or, perhaps more to the point: do not congratulate yourself on how cool and together you are because you have stuff that other people would like to have or would really like to have right now.

I've already given the advice to opt out of consumerism. Buying things won't make you happy and, given the empty pocketbooks of most Americans today, will push you toward debt slavery.

But beyond this falling into a pattern of consumerism generally also builds an attitude of bizarre elitism based on the possession of whatever hip plastic piece of crap is now all the rage.  See: fanatically loyal Apple customers.

It doesn't matter if you have an iPod or an iPad, a Kindle, a Louis Vuitton purse.  It doesn't matter what kind of cosmetics you wear, or what kind of sunglasses, or if your closet is full of designer clothes.  Owning things does not make you smarter, stronger, more beautiful, or better in any meaningful way.  The transient coolness of your stuff does not migrate to you via osmosis.  You are you with your things or without.  This goes for houses, cars, furniture, art, china, crystal - all of it.  The qualities about you that really matter: your kindness, your character, your humor, your intelligence, your attitude cannot be bought or flaunted.  But buying and flaunting may in fact degrade those qualities because valuing things leads eventually to devaluing people, and that is an ugly trait.

One other thing: if you hang with people who define you and themselves by their things, you will find yourself in competition with them and will constantly cycle from one state of dissatisfaction to another; so avoid those people.  They can only bring you and your credit card down...down...down.

Saturday, September 4, 2010

Once More with Feeling: Debt = Slavery

Augustine DeCathage gave me a heads up on a post he wrote this afternoon since it concerned the potential consequences and complications of ignoring that Debt = Slavery.

The New York Times put up an article yesterday entitled, "How Debt Can Destroy a Budding Relationship."  An excerpt:
Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancĂ© found out four months ago just how high her debt was, he had a particularly strong reaction: he broke off the engagement within three days. Ms. Eastman said she had told him early on in their relationship that she had over $100,000 of debt. But, she said, even she didn’t know what the true balance was; like a car buyer who focuses on only the monthly payment, she wrote 12 checks a year for about $1,100 each, the minimum possible. She didn’t focus on the bottom line, she said, because it was so profoundly depressing.
But as the couple got closer to their wedding day, she took out all the paperwork and it became clear that her total debt was actually about $170,000. “He accused me of lying,” said Ms. Eastman, 31, a San Francisco X-ray technician and part-time photographer who had run up much of the balance studying for a bachelor’s degree in photography. “But if I was lying, I was lying to myself, not to him. I didn’t really want to know the full amount.”
First of all, pray excuse me while I go get a paper bag and breathe in it to relieve the anxiety of imagining being an X-ray technician with $170,000 in student loan debt.

Okay, I'm back.

Seriously?  $170,000.  In student loan debt.  For a degree in photography?  What is in the water, clueless sauce?  It was depressing to run those numbers?  I'd say.  Honestly, I feel bad for her because while it was unbelievably stupid to sign up casually for that kind of debt, the bank(s) that loaned her that amount and the school that encouraged her to apply for the loans should be held should be held complicit.  They conned her.  No one should extend that much in loans to a person so young with no assets.  Unless you're going to Hogwarts and majoring in Magical Muggle Money Spellcraft, you will be saddled with those loans forever.  FOR-EV-ER.  Even the aspiring ER doc the NYT goes on to interview in the same piece will be enslaved.
Ms. Tidwell feels no guilt about the $250,000 in debt she will probably run up, including some from a master’s degree program she completed in London, where she and Mr. Kogler met. “I didn’t acquire it because I go out and shop a lot,” she said. “It’s because I’m doing something that I’ll love for the rest of my life.”
While I appreciate the special knowledge my doctors have used in treating me over the years costs a lot of money to obtain, racking up 250K at the point at which the nation is skipping over the doorframe into socialized medicine seems - well, a trifle unconsidered.  I have a doctor in the family; my father-in-law.  He is getting out of the medical profession after a long and well remunerated career before the government via Obamacare can begin shafting him two ways: by lowering what he can collect for services rendered and taxing him up the wazoo for any money he does manage to make.  Already what doctors get paid for Medicare and Medicaid patients often doesn't cover their costs.

The pesky problem about not getting remunerated for the actual costs of services is that that means that you're working for free or even paying other people for you to do your job.  People tend not to sign on for that.  For the time being I'd hesitate before taking on loans to learn a medical trade.

Let's all say it together: Debt equal slavery.  You can't predict the future.  My mother got a degree in nursing, then slipped a disc her first year on the floor when a patient she was helping to the bathroom went dead weight on her.  She never worked on the floor again.  You may not be able to pay them, but those loans will still be there and they will affect which jobs you can take, where you work, when you can have children and how you can take care of them, or even - as in the first example - if you will be able to marry.  It's much less risky to pay as you go, even if it takes you a long, long time to finish school.

Monday, July 19, 2010

Piece of Advice #56: Pay your bills

This may sound like very elementary advice, but I've know a number of people who didn't pay their bills, and it was stressful, chaotic, and really, really hard on their credit score.

We're coming off a decade of "magic" money, a time when people had money who didn't actually have any money.  They bought huge houses with mortgages far beyond what they could pay and financed new cars, vacations, shopping sprees, etc. via a sort of legal check kiting made possible by banks who looked the other way as long as they were making lots of magic money too.  Then it all crashed.  We are still wading through the rubble and will be for quite some time.

Somehow in all the euphoria we lost track of the idea that people need to pay real money for the real things they buy.  It's better when it works that way.  Businesses get to pay their employees, and people are not turned into debt slaves.  Bills are unexciting, and we get them for stuff we often take for granted - heat, water, electricity, food - so paying them when the alternative is buying something new is a buzzkill.  But not paying them is both unethical and, as I mentioned before, stressful.  Debt collectors will demand payment and will start to stalk you and invade your privacy, and it will be harder to enjoy your new purchase because you are feeling stressed and (probably) guilty about not paying for stuff you owe money on.  Additionally, if you don't pay what you owe, you will not be extended credit to buy things you can't afford to pay in entirety - such as houses or cars - and your bad credit may spill over onto a future spouse as well.  It can affect your ability to get a job or rent a place to live, and will also affect the terms under which you borrow money.  If you don't pay now, you will pay later.

I recommend always paying your bills first, even if that means you don't have much (or any) money left for fun or splurges.  It's the first step in getting disciplined about your money.  If you do not have enough money to pay for everything, you will have to get creative and organized.  Make a budget and stick to it.  Once you start paying your bills and tracking your income, you will have a better idea of what you can and cannot afford.  With that realization and some self-discipline, it will be easier to make smart money decisions and you will likely find that some of the things you've spent money on aren't necessary and can be cut out.  If you isolate those things and eliminate them, that will leave you with money you can spend on things that you do actually need, want, or find meaningful.

Obviously this is only the tip of an enormous iceberg of money advice.  Just the basics could take up a whole book.  But taking control of your finances starts with taking responsibility for your financial activity, and that starts with paying your bills yourself on time before spending any further.