Old School Rules
So I am in a department store and the cashier asks the big checkout question, “if you open a charge account with us today we will give you 10% off this purchase..would you like to apply for our charge card? “
I smiled. ” is that 10% off the purchase price or off the 20% interest you will charge me in the first month?”
“Oh, off the purchase price,” the cashier smiled. ” that means your total today would be $90 not $100.”
“Don’t you mean $108 total?” I asked. ” see if you charge me $90 and the bill comes at the end of the month with 20% interest added then my total would really be $108.”
The smile left the cashiers face. The people in line behind me were laughing. Whatever perk she was getting for signing people into a life of debt she wasn’t getting out of me or anyone in line.
” I think I will save my money and just pay $100,” I added, smiling as I handed her the cash.
One of the nice things about wiping out on the surf board of life is the lessons you learn. I learned about credit cards in a court mandated debt counseling class. See when you file bankruptcy the court makes you take classes in hopes that you will learn from your mistakes. The discount at checkout was one of the things covered.
So why am I talking about failure?
When we first learn life skills and lessons we learn from others. We model ourselves after others until we adapt these methods into our own. Another way to learn is if you can listen and learn from the mistakes of others. While we may not know whats right we can learn what not to do by looking at why others failed.
Imagine you’re a scientist looking for a cure. Are you going to waste time and funding reproducing experiments that were reported as failures?
Of course not.
So why is it that some of us we choose not to listen to the life examples of others? Why do we think we will get a positive result by repeating a known failed experiment?
I came home one Friday afternoon from high school to find my father sitting at the dinning room table. In front of him were the months bills, other personal papers and bank books. My father had terminal cancer so he wanted to be sure he taught us the important things we needed to know to survive in life before he died.
The money lessons I was taught that day I have abandoned many times in my life. Each time I thought I was learning a new way. That the rules no longer applied. All of them resulted in failure. These methods dear reader are time-tested.
The First lesson
“You have to know what you owe,” my father said. ” It may take you a while but learn your expenses.”
The first thing my father handed me was a book with pockets. This was the budgeting book my parents used when they were first married. My father got paid each week and cashed his check and the money was divided into the different pockets of the book. Written on each pocket was an expense like rent or gas. One of the things I noticed was expenses like laundry and the bus were included. In Fact they even had one for Christmas.Everything that they spent money on in a month was accounted for.
The Second lesson
“Pay your bills first,” he said.”Don’t spend bill money on something you want and think you will put it back. This will never happen. So you buy something you want. Then can’t pay your bills. This means you can’t afford it pure and simple. Pay your bills first everything else can wait.”
The reason my parents used this book was to ensure they had the money to pay their bills when they came due. The most common way people fall behind is that they spend their money on wants not needs. Then bills come due and they can’t pay.
The Third Lesson
” Never borrow from Peter to pay Paul,” My father explained. ” If you owe you owe. Be honest with the person you owe. Make arrangements to pay them when you can.”
You have an emergency and now you can’t pay the gas bill. Don’t use the rent money to pay it. Don’t borrow from someone else. Call the gas company and explain the situation. Make arrangements so that you can do to get caught back up. Many times people will use the electric money to pay gas. If you borrow from Peter to pay Paul you are not paying off the debt. This is not a solution because you still owe the money somewhere. Debt is Debt. If you carry debt and have another emergency you then risk a bigger debt problem.
The Fourth Lesson
“If you can’t buy food then your living too high on the hog,” he explained.” Your grandfather use to look in the cabinets and Frigidaire every time he came over to see how we were doing.”
A lot of people spend their grocery money on other things then they can’t afford food. This is why departments stores now have grocery isles. New stores are built as super-centers hoping you will spend more than you can afford. My grandfather knew that if there was food in the house then money was going where it needed to go.
The Fifth Lesson
“What you earn in a week is what you pay for rent,” he explained. ” This is why your uncle and I were room mates.”
My mother’s brother( My uncle) and my dad were room mates. This is how my father meant my mother. The reason they were room mates was they could not afford an apartment on their own. What you earn in a week is what you can afford for rent (or Mortgage). Otherwise you are spending too much or living too high on the hog and will fall into debt.
The Sixth lesson
” Divide your weeks. One week is rent, the second is bills, the third is food and clothing and the fourth is saving,” he explained.” Then you have money to do things and for vacation.”
I remember when I was going to build a house. My total debt ( Bills) could not exceed a third of my gross income. The old school rules were a fourth of my net income. This is why I had problems. I did not have a plan that was looking at my own best interest. I was using the plan the lenders used to see if I qualified for a loan.
I think the country knows how that turned out.
The Seventh Lesson
” Save for a rainy day,” my father explained. ” Just because your up a couple of bucks don’t let it burn a hole in your pocket.”
Big screen televisions go on sale at tax time…why? Because people see a tax return as a windfall and spend it. They don’t plan ahead for when the unseen happens. Saving some money for a rainy day is a good way to avoid debt or borrowing money when you have an issue.
The Eighth lesson
“If you want something then save for it,” he said. ” have some patients then you will appreciate it more and take care of it.”
Too many of us buy on impulse. This is why the check out isles are full of racks. When we save up to buy something it gives us time to consider what we are buying. Do we really want it bad enough to give up something else in order to save for it? Do we really want it at all? Lets say your cell phone bill is $50 a month and you are on a tight budget. Would you give up your phone for a month to buy what you want? No? So you want it, just not that badly. So then you’re gonna have to save up $50. No more $2 coffees on the way to work. Put that money in a piggy bank until you save the money.
The Ninth Lesson
” It’s not what you make it’s what you keep,” my father explained.” People brag about how much they earn but they can’t hang onto a dime.”
My father looked at the money he saved as what he earned. Everything else was an expense. The money you save is the money that was yours free and clear of your expenses or responsibilities. This is the real profit. This is where you save. Most people save a little and spend a lot. They have money in a retirement fund but how many could go 2 or 3 months living like they do with no income?
The Tenth Lesson
” Never use credit other than for an emergency,” my father explained.” I used a charge card once to buy school clothes. You and your brother had already out grown them and I was still paying for them.”
Credit cards are for emergencies only. This is medical, auto or home. Then pay them off asap. But if you have savings then you don’t need to use credit at all. I could go into all the evils of credit card debt but most people realize credit is borrowing money. What you borrow you have to pay. Do you really want to still be paying for something you don’t even own anymore?
The Eleventh Lesson
” Don’t buy junk. Buy things that are made well that will last,” he explained.” Otherwise your throwing your money away.”
Durability was a consideration when I was growing up. People looked at thread counts in clothing and the wear-with-all of a product. When people purchased they were buying for life. This is the reason the furniture, automobiles and dishes from these generations are still around. Now we see most things as expendable. However if we buy quality we tend to replace things less often. Sometimes it’s worth spending a dollar to save two.
The Twelfth lesson
” Spend your money wisely,” he explained.” If your spend it make sure its worth while.”
My favorite examples are Mothers day and Easter Sunday. These were the two times a year we went out to eat. Why? Because you could make better food at home so why eat out? Plus you have nothing to show for the money you spent. We went out on Mothers day and Easter Sunday was so my mom and grandma did not have to cook. Believe it or not they complained. They could have spent the money somewhere else.
Look at our world now.
Look at the money we spend on fast food alone.
If you can, learn from MY mistakes. Don’t be like me, listen to my father. Live within your means. Why is this old school? Well before there was unsecured credit this is how people lived.
May the Love of Christ be with you always….
…Live long and Prosper
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