Nevertheless, it exists in order to peaceably trade toward sustaining our lives.
Here is some financial advice that match minimalist values, and over time, become priceless pearls of wisdom, such that even Ben Franklin would approve.
1. Never buy a car unless you are paying cash
Include in this point, any depreciating material item for that matter. Example: You don't really need a new phone every year. While a loan accrues interest, new personal property items bought in a retail market only go down in value. 100% of the time this is a losing investment in which your debt goes up and the value of your toy plummets. You've tried to sell something used in the secondary market before I'm sure. Buyers are savvy. They won't overpay you for your used stuff. Stuff you paid the bank a healthy markup in order to acquire.
2. Give charitably, even when you're broke
This might sound counter intuitive, and I assure you that it is, and I promise I'm not crazy. Giving, especially when strapped, is a potent reminder that some are even worse off, struggling harder, and are even more desperate. The benefit to us is that we do better when we're hungry. Reminding ourselves that the bottom is down there brings us a step closer to the danger of hitting it. We'll suddenly want it more. We'll watch our waste closer. And sooner rather than later we'll be on top again. Not to mention the added bonus of feeling good for not only helping ourselves, we also helped someone else. Its a great way to turn pessimism into optimism. Probably still doubting me, right? Try it sometime. You'll see.
3. The top three wasteful financial decisions humans make, in order, are:
- Too much house
- Too much vehicle
- Too much entertainment
People are quick to argue that the house is an investment, and they aren't wrong. However, if a small house that meets basic needs is a good investment, then an excessive house is a terrible investment. In fact it becomes exponentially more expensive, in adjacent costs like energy, maintenance, and so on. Similarly with the car, which was already covered above. Entertainment can get a bit cloudy, particularly when considering how it is healthy to spend on experiences. Your ideas of experience versus entertainment may differ from mine. So here its important to examine if how much you are spending appropriately adheres to your values.
4. If/when you partner up with your life mate. live on one income
Imagine if you combine incomes, live and spend like you have two salaries, and a child is expected, or one of you becomes ill, or otherwise unemployed, and you can no longer keep your home caught up. Financial stress is one of the leading contributors to divorce, greater even than infidelity. In fact, the only problem that supersedes money is communication. Don't let wasted money destroy your partnership, destroy your love. Its a silly risk to take, considering that special someone is irreplaceable.
Conversely, during good times, a strong second income supplements savings, crushes debts, expedites goals, and builds real wealth. Partnering up should elevate you to next level support and comfort.
5. Don't base your career choices solely on money
If you are currently on the hunt in the employment market, this is something you'll be looking at. And rightfully so, which is why I feel compelled to stress this. Speaking as a man who has changed careers more than once, and seen my wages fluctuate accordingly, I am completely confident telling you now that it is not the most important thing. Household budgets can handle a little flexibility. Personal satisfaction and stress levels can make you a stronger person, or a miserable human being. There are benefits to making a little extra, so please do pay attention to your monetary value on a job. Just don't hang it all on that in sacrifice of more important qualities. The benefits of being content, even satisfied with your day to day life, and the positive energy that comes from feeling like you are on the correct path, will far outweigh the perks of a little extra money.
6. Track your income and expenses
Money is often compared to water. Underwater. Trying to stay afloat. etc. Knowing where you stand, and what your habits are will make the difference between a cruising vessel or a sinking ship. Here's another Franklin quote for you: "Beware of little expenses. A small leak will sink a great ship."
7. Kick the crap out of your home loan as quickly as possible
Somewhere along our history the American Dream was overtaken by Keeping up with the Joneses. The most common interpretation of that being: keep up with their yard, their car, their paint, their smoker, their holiday party, and even their children. Essentially its a rat race toward excess and extravagance. Because we keep our bankbooks a secret, nobody is in a race with their neighbor to see who can pay down the loan and get out of the mortgage first. And why not? Keep your rust bucket car. Then laugh at them when they are still buried in debt in 20 years and you've owned outright for the past 5. They'll never catch up with you, even with that shiny new BMW. :No mortgage payment." Say that out loud to yourself. Think about the freedom in that. Now Say it again, only a little louder and with some enthusiasm so whoever is closest can hear you. That will be a fun conversation starter.
A single extra monthly payment per year can shave as much as 7 years* off the end of your bank note. That's 23 payments removing 7 years. That's 5 years and 1 month of money you didn't actually have to spend. Why not make 2 extra, or even 3? Another thing to think about here, is that the sooner you make principal only payments, the greater the impact they have on the time that is removed. Betterjones covers this in our Simple American Dream workshops. Inquire about this if you'd like to know more.
*This varies depending on your interest rate.
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