If someone tells me they want to give me something for free, 99% of the time I’m going to run the other way. Why? Because I was once a whole lot stupider than I am now. Unless you believe in love or religion, nothing comes for free. It pays to be skeptical. Let me tell you some of the schemes.
CREDIT CARDS ON COLLEGE CAMPUSES
There is a reason why credit card companies set up booths on college campuses. I fell for it too. Heck, I used to carry at least 5 department store cards and 3+ VISA/MasterCard/American Express cards. I thought the plastic gave me status. And somebody also threw me this line about building my credit. Believe me, it’s all a big lie. They want gullible people to spend more than they have and then charge them 5-20% interest rates. They want you to be in debt to them so they can take everything you have. And then you only pay the minimum amount every month and max out your limit. You are throwing money away and not even knowing it. Pay everything in cash. Or, if you have a little bit of financial sense and are frugal, have one Rewards credit card and pay it off every month. Never carry a balance. Don’t write checks that your a$$ can’t cash!
Why do you think they have PayDay Loan places near depressed communities? The same reason why pawn shops are only in the worst parts of town. They want to charge you to float your hard earned paycheck their way for a fee and a quick turnaround. Its those who don’t have any patience in the world who think this is a good deal. There is a reason why they don’t put these places in middle- and upper-class neighborhoods. Smart people don’t fall for these traps.
There is actually no such thing as “predatory lending”. There are only new suckers being born every day. Bill Clinton pushed the idea that everyone should own a home. So they opened up the housing market saying people who couldn’t afford a home should be able to buy one. Only, this opened the door for lots of scammers to jump into the market. They’d offer ultra-low interest rates and low or no-down payments just to get you to sign the dotted line. Then, after 3-5 years, you’d have an interest rate that you couldn’t afford and would go into foreclosure. Then the bank owned your home and you were out on the street. Don’t sign the dotted line on those kinds of deals. If you don’t know what you are doing, ask a real financial advisor or attorney. Better yet; educate yourself!
Actually, this goes for NEW anything. People want status symbols. There is a reason you see people in dire straits with the latest clothes and shoes and a shiny new car, but you go to their homes and they live in a dump. People want to LOOK rich when they are ACTUALLY drop-dead poor. Forget status. Instead, do the hard work, get educated, learn a trade, and work for a living. Don’t lease a car to own. You don’t need a new car every 2 or 3 years. Buy an old jalopy and learn how to fix it up yourself. You don’t need to carry a car payment…EVER! A car is NEVER a good investment. Its always a money pit. Save money and wait for the right time when you can pay for it with cash (if you need a car in the first place). Learn how to save! You don’t need the latest iPhone or cable TV package. Believe me, you won’t die without one.
THE LOTTERY WILL MAKE YOU RICH
OK, its safe to say that rich people don’t buy lottery tickets. Its only people who spend $40 a week on a carton of cigarettes and blow $200 on a Friday night at the bars who play the lottery. Stand at the local 7-Eleven and see who buys lottery tickets. It isn’t the rich people since they are busy storing leftovers from a home-cooked dinner in a GladWare for their lunches the next day instead of blowing $10 at McDonalds. The people who win the lotteries are the same people who quit their jobs and live it up for 2 or 3 years, then are dead broke again. They didn’t know how to handle money in the first place and didn’t know what to do with so much wealth. They buy homes knowing nothing about property taxes. They buy expensive Jaguars not realizing how much maintenance costs are for those things. They let their nephew Jeffrey who has a few college credits under his belt or Pastor Ed who they trust to manage their money for them. Its like buying $1,000 worth of fireworks and shooting them all off in less than 20 minutes. It’s fun while it lasts. There is a reason why these people fail.
There are no good get rich schemes. Learn to invest. Learn to save. Educate yourself and climb the ladder. Learn contentment and satisfaction in people who really love you. Don’t listen to scam artists (and politicians) who sell you pipe dreams that will never happen. Don’t look for instant gratification. Think long-term and find grounding in what is real. Don’t look for free tuition or free anything. Money doesn’t materialize from dust. Somebody has to pay for those things. Rich people are rich for a reason. I know you think they step on people and are always corrupt, which is how you think they got rich. It doesn’t usually work that way. Its because they put in the hard work to get there. If you think they are going to pay for your education or any other kind of welfare, then you go ahead and buy that lottery ticket and hope for the best.
NOTE: There is an interesting book called “Rich Dad, Poor Dad”. If you want to succeed financially, don’t take advice from a poor person (or politician who has always lived off the taxpayer). Its like taking diet advice from someone who is morbidly obese; or like getting marriage tips from a celebrity who divorced 4 times. Just don’t do it!
I save for a lot of things. My wife is actually the better saver because she has a lot of self-discipline. I helped set up our budget, but she is the one who makes it work. And, since I’ve been teaching yoga for several years, all of that has been going to savings too.
Although, I don’t know how to compare our savings to the norm. Dave Ramsey has percentages of your income that you should save for emergency funds and such. So we are probably on par with general recommendations. But maybe its better to not compare.
The key to saving for me is not being in debt. Any time you pay interest on a credit card, car payment, or store cards, you are losing money to someone else. The old idea of using credit to build a better credit rating is a crock. Its just an excuse to hold debt. I’ve heard of a guy who couldn’t get a loan because he didn’t have a credit rating. He paid for everything with cash and had no debt. Believe me, that’s a better way to live.
So, we have a vacation savings fund. And since we are relatively cheap about how we travel, we have a large excess there. We have a Christmas savings and that usually carries over. We just bought a new roof for $11,000 out of savings, and there is plenty left. If we need to buy a car, we could do it with cash, which is what we’ve done for past purchases. Now, you probably think we’re rich. By world’s standards, we probably are rich. But we have a median income by U.S. standards. Its just that we have become a lot wiser with age.
You need to have discipline to save. I was raised since childhood to give 10% to charity and pay yourself 10% (I’ll leave “charity” to your interpretation, but those in the know probably know what I mean). Currently, we have a lot of excess in “charity”. We are just waiting for the right cause. Its really nice to know that when there is a need, you can do something substantial for someone.
Don’t pay lip service to doing things for others. You need to actually do it. Measure in your own heart what that means. Do you really need that $5 cup of coffee or new pair of leggings? Or could you give that to someone who has real needs? Save to give. Save to live.