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July 2011 - Posts - The Dollar Stretcher
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The Dollar Stretcher

The Dollar Stretcher blog will explore people and money.

July 2011 - Posts

  • Financial Time

    As a boy, I remember my parents suggesting that I 'sleep on it' before making a big decision. I've learned that's good advice.

    Not that the sleep itself helps (although I understand that there's some evidence that we do process info while asleep), but that it is wise to take a little time for deliberation before you act.

    That time will allow you to get some advice. And, to recognize anything about the advisor that could color their recommendations. For instance, you might want to talk with a retired car salesman before going car shopping. But, you'd also want to ask yourself how the business might have changed since they retired (i.e. internet sales offers). And, if their brand recommendation is affected by who they worked for.

    Time will also allow you to think about potential advantages and disadvantages of the proposed action. Or possible alternatives that might be better for you. Or a whole host of ideas that you'd miss if you just made a quick decision.

    So I hope you enjoy the time you spend with the articles we selected for you and find them profitable. Don't forget to like, tweet and plus one us!Yes

    Keep on Stretching those Dollars!

    Gary

  • Learning From Experience

    Don't you think that the world is an interesting place to live? So many things to observe and experience. One thing that I've noticed is that as I get older it's easier to recognize patterns and truths.

    For instance, my father firmly believed in not being in debt. For anything. At any time. He was a child of the depression and took those lessons with him. When I was in my 20's I took his advice seriously, but I wasn't as opposed to debt as I am now. Years of working with people who struggle because of their debts have taught me something.

    Notice that I'm not saying that you should never borrow money under any circumstances. There are times that it's almost necessary. Like buying your first home. Very few of us can save enough to pay cash the first time out. But, borrowing 95 or 100% of the home value probably isn't too wise. Especially with a variable rate mortgage.

    I know of many observers who predicted a housing crisis back in 2003. Sure they were smart, but more importantly they were observers of what had happened in the past. They knew that housing prices had dropped many times in the past. And that interest rates can go up, too.

    I've also noticed that it's very hard to always run a small balance on your credit cards. It seems that people who are carrying a balance either see it go up each month, or they're actively paying it down. Rarely does a person/family carry the same balance for years. I don't really know why that is, but it does seem to be true.

    Another pattern that generally holds true is that when the amount of debt continually increases it begins to crowd out other necessary items and the rate of increase tends to accelerate. Last year you were adding $50 per month to the amount owed. This year it's $100. Next year... That part is very understandable. The interest owed continues to consume an ever larger part of income. Meaning that you buy more of your monthly expenses on credit.

    The lesson I've taken from seeing these patterns is that an increasing debt load is dangerous and can quickly become painful. The best time to change direction is right now. It will only become harder as time goes by. And, if I choose not to solve the problem today or tomorrow, at some point my lenders will force me to face the problem when I can't pay what I owe.

    So if I continue to preach against debt (be it private or public), please forgive me. Understand it's because I've noticed patterns and have observed where those patterns lead. Plus, I hate seeing people in pain because they thought that debt was harmless. It's not.

    Keep on Stretching those Dollars!

    Gary

  • Independence Day

    Happy Birthday USA!

    Over the years we've run many birthday party articles in The Dollar Stretcher. We even have a whole section of our library with stories about frugal kids' parties.

    I happen to like parties. Wish I got more invites (hint, hint!). Typically they're a lot of fun.

    Today's birthday party for the United States is also remembered as Independence Day. The day that those who founded the country declared their independence from England and the English monarchy. For them, being in control of their futures was important enough that they were willing to put their lives and property on the line. Today we still benefit from their efforts.

    But, I'm also reminded that independence is something that needs to be protected. You can lose your independence. For instance, many people are not free today because of their financial circumstances. In fact, that's why we have a daily enewsletter called "Financial Independence". BTW, you can subscribe by sending an email or visiting the site.

    I'm concerned that the same thing may be true for our country. As the amount of debt increases the interest payments are beginning to dominate the budget. Just the way they do when you or I borrow too much money.

    I understand that it's a huge political battle right now. And, I freely admit that as a general rule I prefer that spending be cut. I don't think that it should cost more than 20% of your's and my income to support the federal government. Many of you may disagree and that's alright. Hopefully we can still respect each other and share our frugal living ideas.

    But regardless of which side you favor, we need to take this debt issue seriously. We're getting very close to the point where just paying the interest on the money owed will take away our financial independence. And, Independence Day will have lost much of it's meaning if we become financial captives.

    So here's a happy birthday wish for the United States. And, many, many more in the future!

    Keep on Stretching those Dollars!

    Gary

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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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