Do They Even Teach this Stuff in School? 3-12-19 I find it interesting … particularly this time of year amongst our typical office chores of drawing up budgets, working with banks, taxes, and other financial stuff … that we really were never taught that financial stuff in school. Not even one class on how compounding interest works, the future value of money, or opportunity costs, and how consumer debt robs wealth. I had a young man who is a good friend call me Sunday. He recently got a pretty good job and is just out of trade school. He started off asking about boats. (Turns out he knows I am sort of a marine enthusiast.) The way this story goes, is he really wants a new 4x4 truck but his credit score is not good enough to borrow $30 grand. So he wants to start with a smaller debt to build up his credit score. Let that marinate a minute. I challenged him to start saving $750 a month while he is thinking about it, because that is how much extra money it was going to cost including higher taxes and insurance costs. I told him in 5 years with average returns, and delaying the new truck purchase, he would end up with $55,000 and still have a high mileage truck, OR he could buy the new truck now and it would only be worth maybe $10,000 5 years from now. “Never thought of it that way” he said.
I know there is an agricultural message in this story, and it probably has something to do with why I believe letting the budget drive our crop expenses.
For the young folks, if you never heard, the basic rules that the successful people would tell my generation when we were young were pretty simple; here they are:
Give 10% of your personal income away (Not the farm’s gross receipts). It might be the most important factor because it changes your perspective. Getting our eyes off of ourselves is not natural but is amazing. (You can question it if you want, but the successful folks told me to do this. Plus it’s pretty basic bible talk)
Save 10%
Live on 80%(of course, if you want to get rich, simply decrease living expenses and increase savings and giving, but if you just learn to live on 80%, you don’t need to be rich.)
An alternative method I was introduced to is a seven step process developed by Dave Ramsey. (Search Financial Peace University) Seems like I need a refresher course every few years - more for the discipline and motivation, than the information. DISCLAIMER: The data contained herein is for informational, conversational, and philosophical thinking and is for general purposes only. Ideas expressed apply to the Upper Southeast growing region. Although the information was obtained from various sources, which we believe to be reliable, we do not in any way guarantee its accuracy or completeness. Comments are influenced by past experiences, personal bias and hypothetical speculation by the writer and are not always accurate predictors of future events. Specific references to Agricultural Products and Rates are used for examples and do not reflect specific endorsement or recommendations for use. Always read and follow all label directions and precautions for use. We disclaim any responsibility for any errors or omissions contained herein. FULL DISCLOSURE: There is no compensation received by Johnny to promote any product referenced with in this blog. Johnny is a paid employee of Commonwealth Gin
