July 2010 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

July 2010 - Posts

  • My Butterfly

     Just when the caterpillar thought her world was over...she became a butterfly. - unknown

    The caterpillar to butterfly story is a classic. One that's easy to relate to. I suspect that most of us at one time or another saw ourselves as a caterpillar and hoped that someday we'd be a butterfly.

    And, while it's helpful to picture ourselves as we'd like to be, by itself I doubt it's enough. Unlike the caterpillar (who will become a butterfly naturally) we need to think about our goal, creating plans and actions that will move us closer to becoming that butterfly.

    So can you see yourself as a butterfly? And, if so, have you started to take the actions necessary to sprout your wings?

  • Success Is Not a Place

    Lots of people talk about success. Some talk about ways to get success. Others moan that they're not successful. I've never tried it, but I bet that you could ask dozens of people what they thought of success and just about everyone would have an answer. And, not just a quickie answer. But, one that they've given some thought to in the past.

    I, too, was thinking about success recently. Came to the conclusion that there are a number of different ways to view success. And which one we choose could tell us something about ourselves and might even effect how likely we are to achieve success.

    One way that people view success is to measure it based on how much stuff you've acquired. To them success is a big fancy house, expensive cars and all the toys that money can buy. Stuff equals success. If you have lots of expensive stuff, then you are successful. There's a good chance that people who view success that way are more likely to be keeping up with the Joneses and owe more than the average family. They probably also spend a lot of time worrying about material things. How to acquire them. How to protect them. And, comparing them to the neighbor's stuff. That might not be a happy mental place to be.

    Another way to view success is as a destination. A place to get to. That once we achieve success we get to live happily ever after there. And, until we get there we are not successful. These people will be more goal oriented than average. Probably more willing to endure sacrifices today for the benefits of achieving success later. In short, they're the ones who tend to drive towards their goal. Now don't misunderstand. I'm a big believer in goal-setting. But, if you think that you're not allowed to be happy today because a destination called success is just over the next hill, then that could make for unnecessary sadness in your life.

    The third way sees success as a lifestyle. A lifestyle where you are in control of your finances. As long as your basic needs are met and you have reasonable control over your financial future you are successful. In this view thoughts about material things and money do not dominate your attention. I like this view best of all. It allows me to put money and possessions into their proper place. As part of my life, but not in control of my life. I suppose that it's just another face of financial independence.

    Something else about that view is important. It's a happier place. Even as I'm working to make tomorrow better than today, I can enjoy success along the way. And, that better tomorrow is one of my own choosing. Not one dictated by what the Jones next door just purchased. So based on that viewpoint I think that I'm going to declare myself a success! You can join me if you like. It's your choice.

    So what's your definition of success? And have you achieved it either partially or completely? We'd love to have
    your thoughts on the subject.

  • I Have Credit...

    I see the results every day. And, they're not pretty. The cause is often the same. It's tempting to believe that just because someone will loan you money that it's safe to borrow it. Often that's not true.

    A good example are people who are losing their homes now. They had credit and could borrow money. But, many times the people who arranged the loans were not concerned with whether the loans would be repaid. They were in the business of generating loans and then selling them to a third party. Homebuyers who relied on them made a critical mistake.

    The same is true of some car dealers and other lenders. They aren't concerned with how much a borrower has to struggle to repay a loan. They just want to make a sale today.

    The message is clear. Being able to borrow money does not mean that you should. Before you borrow you need to determine whether you can make the payments without causing yourself serious problems.

    Have you ever borrowed money because you could and then regretted it later? We'd love to hear (and learn from) your story. Share your story and help others learn from your experience.

  • Wait Til Tomorrow

    When I was a boy my Dad regularly reminded me to wait until tomorrow to buy whatever had caught my eye. Whether it was a baseball bat, football helmet, cooler clothes for high school or even my first car. The advice was always the same - don't make a snap decision, wait until tomorrow before you decide.

    It was good advice for a number of different reasons. First, we all face sudden temptation. Something that we weren't even aware of yesterday is thrust into our consciousness and we think that we must have it. Now. The world makes it very easy to succumb to that temptation. But, every time we reply 'wait til tomorrow' we make it easier to handle the next temptation that we'll face.

    The second reason is obvious. Often, we find that whatever we fell in love with yesterday, we've fallen out of love with today. It just doesn't seem so important. And, in fact, it isn't so important. There's a good chance that if we wait just one more day we'll forget about it entirely.

    The third reason is that waiting til tomorrow gives us a chance to discover other alternatives. Alternatives that won't cost as much and can make us just as happy as the purchase might. It could be that we already own or could borrow an acceptable substitute.

    Fourthly, by waiting til tomorrow we get a chance to do some price and product comparison. Perhaps a competitor's product would better suit our needs or could be bought for less. Maybe we'd be better served with the next model up or next model down.

    Finally, we put ourselves in control when we wait til tomorrow. We're not driven by some marketing expert. We refuse to let them push our buttons and make us do what they want. We've taken control of ourselves and like the freedom that gives us.

    By facing a desire and consciously deciding to wait til tomorrow we've taken a big step to Financial Independence.

    So what do you think? Could a simple decision to postpone purchases until tomorrow really make such a difference? Send an email or comment below and share your thoughts. Let others benefit from your wisdom!

  • Let's Trade

    One thing that most kids learn early is how to trade one thing for another. Kids have been known to trade lunches, baseball cards, toys, even their baby brother or sister (naturally those last ones were overturned by outraged parents). I suspect that just about everyone has a story a favorite trade or one where they were snookered. Part of our basic nature is to trade with others.

    A key element to any trade is what you'll have to give up to get what you want. Naturally you'll want to be sure that you won't miss what you give up too badly. In fact, that's probably what blows up most deals. We take stock of what we were going to give up and decide that it's more valuable that the thing that we wanted to gain in trade.

    Of course, there are other times that the thing we're trading for is so valuable that we really don't mind giving up something of value to get it. For instance, if your child were sick you'd give up just about anything to get them well again.

    Which leads us to a question. How much would you give up to obtain financial independence? It's a question that you need to ask if you hope to become financially independent. Just like anything else in this world, it has a cost. And, you need to consider that cost and decide whether you're willing to pay it.

    Before you answer that question, we should go back and consider how valuable you think financial independence is. For some it's not really a goal, it's more of a dream. Something hazy. Almost impossible to grasp. Not something that you'd try very hard to get. You certainly wouldn't trade very much for it.

    Hopefully you consider financial independence something that's valuable, worth trading for. Because, in all honesty, you will have to give some things up to get it. You might have to curb credit card spending. Maybe sell a boat or cut back on an expensive hobby. Or you might have to change what you believe about money and your relationship to it.

    So now you have an understanding of what you think financial independence is worth. And, what you'll may have to trade to get it. Are you ready to shake hands and make the swap? Are you ready to commit to striving for financial independence?

    We hope you are. We'll promise to be with you providing tools, ideas and encouragement. But, we won't kid you. You'll have to do most of the heavy lifting. But we do hope that you make the effort. Many, many people who are living financially independent will tell you that it's one of the best trades that they've ever made. Even better than the time you traded your PBJ sandwich for those special homemade cookies that Joey's mother had put in his lunch...

    So what do you think? What have you traded for financial independence? Did you think it was worthwhile? Or was the cost too high for you? Please send your thoughts to us and we'll share some with other readers.

    Originally appeared in our Financial Independence daily enewsletter. To subscribe click here.

  • Why I Like Rich People

    I know that in many places it's fashionable to be envious of the super rich. After all, we all <i>know</i> that they just inherited or stole their money.

    But I can look around and see that that's not always true. Bill Gates didn't inherit his money. I suppose that you could argue that he created something that we're forced to buy if we want to use a computer (although there are many open source software fans that would dispute that). But, even if that's true, our world is made much better today because Bill Gates and his company created a personal computer operating system that's easy for all of us to use.

    What's the point? He didn't gain his wealth by stealing it from me. We entered into a transaction that benefitted both of us. He produced software and sold it. I chose to buy it. I did that because of what it could do made my life better. So, yes, millions of us helped to make Bill Gates wealthy. But, he helped to improve our lives, too.

    So instead of being envious of his wealth, I want to applaud it. I hope that his wealth inspires others to create something else that will make them mega-wealthy and benefit me. Something that doesn't exist in my world today.

    So what do you think? Do you still want to tear the Bill Gates of the world down? Or would you rather hold them up as an example and hope that they encourage others to create and produce things that will benefit the rest of us? Please send me an email or comment here and let me know what your take is on this subject.

  • Should Everyone Go to College?

    For at least the last few generations it was assumed that a college education was the ticket to success in life. Parents encouraged their children to strive for that college degree. But, like all assumptions, it's a good idea to examine them periodically. 

    A provacative article in USA Today by Patrick Welsh, a high school English Teacher does just that. And, what he found could provoke some heated discussions. His main concern is that many of the kids you enter college have no chance at earning a bachelor's degree. He points to cases where 70% of students entering college drop out. His wonders if colleges are admitting students that they don't expect to succeed solely to grow their schools and make more money. 

    That's the type of thing that's almost impossible to prove, but sure looks like it could be true. More students means more professors and clerical workers. It means bigger paychecks for the administrator's, too. It also means more clout in the community and with every one the school does business with.

    Unless I miss my guess, none of those administrators will have their pay reduced if too many students drop out. Nor will they bear any responsibility if students end up with debts that are much too big for their income level. In fact, they won't have to face the problem since student debt doesn't require payments until the student leaves school.

    Studies show that the average graduate has more than $23,000 in debts (NY Times).Which is a lot of debt for someone who might be making $30k per year or less. But, debt is especially nasty for students who don't complete a degree. Their income potential and ability to repay student  loans is even less. 

    Now I'm not saying that everyone should avoid college. Far from it. Based on what I see many, many jobs will require continuous education. It will become very difficult to find a job where you don't need to continue learning. 

    But, I expect college to change in the next decade. The idea of devoting full time to college and attending classes in person will gradually give way to a different approach. One that's not nearly so expensive. One that doesn't require as many professors and ivy covered buildings. A continuing education model that will take what we need from colleges and blend that with an internet world. A new paradigm that will be much, much more affordable for students (yes, you can call it more frugal!).

    In the meantime, don't be surprised to see an explosion of college debt defaults. There's a little more than $600 billion in federal education loans outstanding (FinAid.org) and $45 billion are in default (7.5%). It's almost impossible to get relief on student loans. Generally even declaring bankruptcy doesn't make them go away. So the former students will drag these loans around. For some the choice will be between food/shelter or paying their loans. Guess which choice will win out.

    So should you plan on going to college? Well, maybe. If you know what you want to do and going to college is the only way to do it. But, for many people, the idea of going to college just so you can say that you went is becoming a very expensive luxury. A luxury that you might pay for the rest of your life.

    Keep on Stretching those Dollars!


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Gary is a former financial planner and purchasing manager who edits The Dollar Stretcher website <www.stretcher.com> and newsletters. You can follow Gary on Twitter.com/gary_foreman
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