Today I want to take a moment and talk about cash.
Paying cash for purchases is one of the more liberating things an adult can do.
You want something, you buy it, you forget about the transaction and (hopefully) enjoy whatever it is you bought.
By comparison, when one pays for purchases with credit, they have to revisit that purchase decision every month.
Sometimes we make poor decisions and we still have to pay the bill every single month.
Every time we write that check or pay online, we are constantly questioning the validity of the purchase by having to pay for it again.
This is how some people get into financial trouble.
I'm not going to cover the whole "financial crisis" that is gripping our country because there are numerous reasons why we as a nation are where we are.
I want to talk about the one thing every person can control - themselves and their spending.
When my wife and I first got married, we piled up a pretty good amount of debt, and a lot of it is still being paid off.
One thing we have done is throw away credit cards.
We have paid cash for our purchases for about seven years.
As I mentioned before, this is pretty liberating.
If we have the money to purchase something we want, we buy it.
Having said that, we have a plan in place to save money so we don't go around buying everything we see.
Debt should be a vehicle for you to make money, not a vehicle to payments.
I'll explain it this way.
Say you buy a car.
You spend $20,000.
00 on a new or used vehicle.
Most people are proud of the "deal" they got on the car, but let me tell you from experience, no matter how good of a deal you got, the seller got paid.
Salespeople will moan and groan, and pat you on the back when you work them over, but the bottom line is they let you buy the car for that price.
No business is open to lose money.
So if they let you buy it, they made money on your purchase! As soon as you take ownership of that vehicle, it can never be sold for the amount you just paid.
Depreciation takes hold and now you are making payments on $20,000.
00 for something that is worth less than $20,000.
00.
Additionally, with interest, you're actually paying more like $28,000.
00 for a car worth less than $20,000.
00.
In these days of incentive-based rates, 0% financing means the car company is taking profit from the car to pay for financing the purchase.
It's not really "free" financing.
Don't we all know by now that nothing in this world is truly free? One last thing about buying a car: if you can't save up $500.
00 each month to buy large purchases like a car, or furniture, or whatever, what makes you think you can afford a $500.
00 monthly payment? Realistically, it's not possible.
OK, the other side of the coin.
Say you need a place to live.
You save your money for a nice down payment and you buy yourself a duplex in a nice neighborhood.
You spend money on a monthly mortgage payment, sure, but you have a renter paying for over half the cost.
Now you have debt, but someone else is helping you pay it off - and all you have to do is maintain the building.
Five or ten years later when you are ready to sell, you have accumulated the equity in the purchase and gain the full value of the selling price - which is pure profit for you! It's really not much more complicated than that.
Do you see the difference in debt taking your money versus debt helping you profit? What does this have to do with finding the right career? Many companies that hire for well-paying positions are checking credit scores.
If one does not have their personal finances in order, businesses are not willing to allow them access to the business' finances.
In essence, they're saying, "You can't handle your money so we won't let you handle ours!" That's tough love but it's a valid point.
Not only do you need to find a career and an industry that will work for you, you need to be an expert at personal finances.
In addition to benefiting you for your lifetime, it may help you get a job over some other candidate! If you want to get started, contact me now!
Paying cash for purchases is one of the more liberating things an adult can do.
You want something, you buy it, you forget about the transaction and (hopefully) enjoy whatever it is you bought.
By comparison, when one pays for purchases with credit, they have to revisit that purchase decision every month.
Sometimes we make poor decisions and we still have to pay the bill every single month.
Every time we write that check or pay online, we are constantly questioning the validity of the purchase by having to pay for it again.
This is how some people get into financial trouble.
I'm not going to cover the whole "financial crisis" that is gripping our country because there are numerous reasons why we as a nation are where we are.
I want to talk about the one thing every person can control - themselves and their spending.
When my wife and I first got married, we piled up a pretty good amount of debt, and a lot of it is still being paid off.
One thing we have done is throw away credit cards.
We have paid cash for our purchases for about seven years.
As I mentioned before, this is pretty liberating.
If we have the money to purchase something we want, we buy it.
Having said that, we have a plan in place to save money so we don't go around buying everything we see.
Debt should be a vehicle for you to make money, not a vehicle to payments.
I'll explain it this way.
Say you buy a car.
You spend $20,000.
00 on a new or used vehicle.
Most people are proud of the "deal" they got on the car, but let me tell you from experience, no matter how good of a deal you got, the seller got paid.
Salespeople will moan and groan, and pat you on the back when you work them over, but the bottom line is they let you buy the car for that price.
No business is open to lose money.
So if they let you buy it, they made money on your purchase! As soon as you take ownership of that vehicle, it can never be sold for the amount you just paid.
Depreciation takes hold and now you are making payments on $20,000.
00 for something that is worth less than $20,000.
00.
Additionally, with interest, you're actually paying more like $28,000.
00 for a car worth less than $20,000.
00.
In these days of incentive-based rates, 0% financing means the car company is taking profit from the car to pay for financing the purchase.
It's not really "free" financing.
Don't we all know by now that nothing in this world is truly free? One last thing about buying a car: if you can't save up $500.
00 each month to buy large purchases like a car, or furniture, or whatever, what makes you think you can afford a $500.
00 monthly payment? Realistically, it's not possible.
OK, the other side of the coin.
Say you need a place to live.
You save your money for a nice down payment and you buy yourself a duplex in a nice neighborhood.
You spend money on a monthly mortgage payment, sure, but you have a renter paying for over half the cost.
Now you have debt, but someone else is helping you pay it off - and all you have to do is maintain the building.
Five or ten years later when you are ready to sell, you have accumulated the equity in the purchase and gain the full value of the selling price - which is pure profit for you! It's really not much more complicated than that.
Do you see the difference in debt taking your money versus debt helping you profit? What does this have to do with finding the right career? Many companies that hire for well-paying positions are checking credit scores.
If one does not have their personal finances in order, businesses are not willing to allow them access to the business' finances.
In essence, they're saying, "You can't handle your money so we won't let you handle ours!" That's tough love but it's a valid point.
Not only do you need to find a career and an industry that will work for you, you need to be an expert at personal finances.
In addition to benefiting you for your lifetime, it may help you get a job over some other candidate! If you want to get started, contact me now!
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