On personal financial responsibility
If
there is anything I truly despise, it is adult people who work in
steady jobs but who live paycheck to paycheck, going to Starbucks every
day while their finances are so tight that an extra expense of even
$500 would cause them real trouble. Such a way of life may be romantic
and edgy when you are in or just out of college, but when you get
closer to thirty it is just pitiful.
Every single serious book about personal finances and wealth accumulation teaches you the exact same things. Quite simply, always live below your means, save in places that most people really spend too much on, and let the exponential growth work its wonders over the long run. Heck, I remember once casually browsing the autobiography of Gene Simmons, in which he adviced the young men never to go in debt to buy anything, and especially not to buy a snazzy car if the bus or simply walking would take you around. I have to admit that I was filled with sudden appreciation for the wisdom of the old metalhead.
So it's not like these are difficult instructions or that it would be hard to turn the ship around. You can read the basic instructions for free in Clayton Cramer's series "How To Become Wealthy". I got nothing to add there, and it is a lot faster read than "The Wealthy Barber". Everything's there, including the necessity to find a spouse who shares this financial philosophy. After all, what's the point of saving anything if your spouse immediately pisses it away? Besides, since two can live together for much less than two single people on their own in two separate households, it is much easier to save a lot more when you are married.
I do recommend reading the classic book "The Millionaire Next Door", though. I originally became aware of this book from the writings of The Danimal. (Many other important books were originally pointed to me this way too.) The Danimal has often written about proper handling of personal finances. For example, he once aptly noted, contradicting the popular belief and the Harlequin fantasy, that most women would not really enjoy that much being married to a millionaire, since most real-world millionaires (and their spouses) tend to be extremely frugal. Which is, of course, how they became millionaires in the first place.
Without question, credit card debt with its high interest rates is the killer of most personal finances. A few dollars on a weekly lottery is chickenshit, it's the credit card interest that is the real "tax on stupidity" or "tax on people who are bad at math". I personally carry one single credit card which I use for everything, and then promptly pay off the whole balance each month. I guess I should here thank all the people who carry a balance and this way finance the convenience that I get from the card for free. So thank you, I don't know who you are but you know yourself who you are. The road to a completely cashless economy is hampered by the few places where I still have to use actual cash, such as the TTC token machine and my favourite ethnic food courts in nearby Cooksville or in Chinatown of Toronto. I wonder why I am usually the only white guy in a place otherwise full of people where you can get a big real plate of good Korean, Indian or Chinese food for five dollars or even less, tax included. But I digress.
The only thing I now regret financially is not buying a home earlier but renting instead. But better late than never. While shopping for a mortgage, the lady behind the desk started selling me a variable-rate mortgage instead of going for the fixed rate, telling me that the interest rates are low and probably will remain so in the future. Since the bank is not stupid and is in the business of making money, I infer from this sales pitch that the bank believes it will, in the end, make a better profit from a variable-rate mortgage than from a fixed-rate mortgage. Interesting. The risk-averse person that I am, we went for a fixed rate over a long term. We shall see in a few years whether this choice was correct.
Every single serious book about personal finances and wealth accumulation teaches you the exact same things. Quite simply, always live below your means, save in places that most people really spend too much on, and let the exponential growth work its wonders over the long run. Heck, I remember once casually browsing the autobiography of Gene Simmons, in which he adviced the young men never to go in debt to buy anything, and especially not to buy a snazzy car if the bus or simply walking would take you around. I have to admit that I was filled with sudden appreciation for the wisdom of the old metalhead.
So it's not like these are difficult instructions or that it would be hard to turn the ship around. You can read the basic instructions for free in Clayton Cramer's series "How To Become Wealthy". I got nothing to add there, and it is a lot faster read than "The Wealthy Barber". Everything's there, including the necessity to find a spouse who shares this financial philosophy. After all, what's the point of saving anything if your spouse immediately pisses it away? Besides, since two can live together for much less than two single people on their own in two separate households, it is much easier to save a lot more when you are married.
I do recommend reading the classic book "The Millionaire Next Door", though. I originally became aware of this book from the writings of The Danimal. (Many other important books were originally pointed to me this way too.) The Danimal has often written about proper handling of personal finances. For example, he once aptly noted, contradicting the popular belief and the Harlequin fantasy, that most women would not really enjoy that much being married to a millionaire, since most real-world millionaires (and their spouses) tend to be extremely frugal. Which is, of course, how they became millionaires in the first place.
Without question, credit card debt with its high interest rates is the killer of most personal finances. A few dollars on a weekly lottery is chickenshit, it's the credit card interest that is the real "tax on stupidity" or "tax on people who are bad at math". I personally carry one single credit card which I use for everything, and then promptly pay off the whole balance each month. I guess I should here thank all the people who carry a balance and this way finance the convenience that I get from the card for free. So thank you, I don't know who you are but you know yourself who you are. The road to a completely cashless economy is hampered by the few places where I still have to use actual cash, such as the TTC token machine and my favourite ethnic food courts in nearby Cooksville or in Chinatown of Toronto. I wonder why I am usually the only white guy in a place otherwise full of people where you can get a big real plate of good Korean, Indian or Chinese food for five dollars or even less, tax included. But I digress.
The only thing I now regret financially is not buying a home earlier but renting instead. But better late than never. While shopping for a mortgage, the lady behind the desk started selling me a variable-rate mortgage instead of going for the fixed rate, telling me that the interest rates are low and probably will remain so in the future. Since the bank is not stupid and is in the business of making money, I infer from this sales pitch that the bank believes it will, in the end, make a better profit from a variable-rate mortgage than from a fixed-rate mortgage. Interesting. The risk-averse person that I am, we went for a fixed rate over a long term. We shall see in a few years whether this choice was correct.
Comments