Apr 19, 2006

The Way I See It

I am just an ordinary older guy. I am a working man, not a gifted writer or thinker. I didn't graduate from college until I was 46 years old. Along the way I was never out of work, even for one day. I am a plodder. I worry about having enough to retire. My net worth is substantial, but I don't feel secure. When is enough, enough? Do I need 100% of our working income to retire or 80%? Can we live on 4% or 5% or 10% of our retirement savings? Depends on who you ask. There are a bunch of differing opinions but in the end it is up to you to decide. So if the measure of financial security is individual, what do I really believe about money? I have been thinking about this alot lately? Here are some of the things I believe. Nothing here is new or original, but it has served me well. 1. Money can't buy happiness. It can make your life easier, but if you are miserable, money will not change that. I am a worrier. Having some money allowed me to stop worrying about the car breaking down, but I just found nonfinancial stuff to fret over. 2. Pay yourself first. My strategy is to create an atmosphere of scarcity. I take my saving target out of my pay before I do anything else by maxing out my 401K. Then I force myself to live on what's left. I never lower my 401K contribution to buy stuff. It is a good way to accumulate wealth over time. 3. Stuff is just stuff. It has utility and makes life easier but it doesn't change me for the better. My six-year-old paid for truck gets me to work just fine. A new Mercedes would get me there at the same, no more, no less. Those commercials that claim cars are the way to a better self or a statement of who you are, are bunk. If you have money and want a swell new car then buy it. If you are paycheck-to-paycheck and want the same, tough it out until you have some money. 4. The borrower makes himself a slave. I hear from folks all the time that they hate their job but can't quit because of their bills. "I owe, I owe, so off to work I go" is a sad cry. The day I have had it with my job, I'm gone. I am not staying because of a car or a boat or some other gadget. I might work to be able to afford something if I chose, but I will be darned if I will work because of something. Get out of debt and stay out. 5. Understand the risks you take with your money. Stretch your budget to the maximum at your own peril. If every dollar that comes in goes out then you are working a tightrope without a net. It only works while it works and then....yikes! Life is full of bumps. Plan accordingly. 6. People selling stuff rarely have your best interest in mind. Evaluate purchase deals with you in mind. The guy selling cars doesn't care what you can afford, he only cares about how much you can qualify to borrow. If you make a bad deal, you have to live with it, he doesn't. 7. Last and most important is that true wealth is not what you have but the absence of what you want. When you want nothing you have everything you need.

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