(This article has very little do with handling your finances but the basic principles of "simplifying" your life are the same. This is not an endorsement that it is OK to cancel your homeowners insurance - your mortgage company wouldn't allow it anyway! - Enjoy!!)
By Larry McDuff
Fairhope, Alabama
November 1999
It happens every time.
When Ann and I return from a long hike, we immediately start getting rid of stuff. Since completing our hike of the Pacific Crest Trail from Mexico to Canada, we’ve given away a 14-foot aluminum jon-boat with trailer, a slalom ski, a windsurfer, two North Face down sleeping bags, a toboggan, a 35 mm camera with telephoto lens, an artist’s set of oil paints, a set of weights with bench, and four old tires. We’ve hauled two loads of clothing and miscellaneous junk to thrift shops.
I’ve even come close to giving away my 1983 Dodge Power Ram 50 four-wheel drive pick-up truck. Our son doesn’t need another vehicle, but he said he would take it. He couldn’t bear to see the truck leave the family after all these years.
After living perfectly well out of our backpacks for the past four and a half months, we get home and wonder, “Why do we need all this stuff?” The 10 pounds of gear in Ann’s pack along with 12 pounds in my pack was all we needed to live in desert heat or mountain cold, accompanied at times by rain, wind, snow, sleet, hail, and mosquitoes. Why should we need tons of stuff to live in the comfort of our own house?
Based on past experience, we have about 60 days before the urge to simplify our lives goes away. Then we’ll be stuck with whatever is left, at least until the next hike. You may have heard the saying, “You don’t own your possessions, your possessions own you.”
This is easy to see on the trail. Too many possessions, which translates to too much pack weight, weigh down your hike and cause injury, discomfort, and inability to hike the necessary mileage to finish the trail before winter.
Five years ago we started the Appalachian Trail with nearly three times our starting pack weight this year. Two weeks into that hike we met Keith, trail name Wolf, a legendary long-distance hiker.
On the trail, the most respected hikers are the ones with the fewest possessions. Wolf was carrying a super-small pack which weighed 14 pounds including food and water. When asked how he got his pack weight so low, Wolf would reply, “All you need to know is that it’s possible.”
Like everyone else, hikers become attached to their possessions. But the successful hiker will quickly give up a cherished possession as soon as he learns of a better way. For example, before this hike Wolf taught us how to make a one-ounce stove from a pineapple can which burned alcohol or solid fuel tablets. This replaced our 15-ounce $59 MSR Whisperlight stove which had served us well for over 4,000 miles of hiking. The cooking times were slower with the new stove, but there was a big gain in simplicity.
This principle is not easy to see in our modern culture, where success is generally viewed as proportional to the value and quantity of one’s possessions. Society percieves the owner of a big house which can hold more possessions as more successful, when in fact he may be held in bondage by high house payments, taxes, utilities, repair costs, and a general lack of freedom. In an ever-increasing need for protection he acquires security lights, burglar alarms, double locks, fences, and moves into a subdivision with a locked gate. He pays large insurance premiums so he can afford to replace everything in case all his protection doesn’t work.
Today we took our biggest step. We canceled the insurance on our house and its contents. It’s not that we could easily afford to rebuild a house this big and replace all its contents. It’s just that we wouldn’t need to. We feel we could live, even in our modern culture, in a much smaller house with drastically fewer possessions.
As Wolf says, “All we need to know is that it’s possible.”
Postscript: Sadly, Larry McDuff was killed in a hit-and-run accident while riding his bike near his home in June 2005. His wife, Ann, died in a similar bike accident just two years earlier.
Thursday, May 27, 2010
Wednesday, May 26, 2010
Money Doesn't Change Your Character!
http://sports.yahoo.com/nba/blog/ball_dont_lie/post/Eddy-Curry-makes-a-lot-spends-a-lot-and-owes-a-?urn=nba,243600
Interesting story, huh? After working with a lot of clients and students over the last several years, many of them say "if I could just make more money" everything would be fine!
As Dave Ramsey says, most people celebrate a $200 per month raise with a $400 per month car payment!
If a person is irresponsible with handling a small amount of money, they will be irresponsible with handling a larger amount of money! MONEY doesn't fix things it simply amplifies the character of the person making the decisions.
No matter how much money you make, you need to have a plan in place - a budget designed to tell every single dollar where it needs to go. This plan does not have to be restrictive because it needs to fit your lifestyle! Just make sure that you have one and live by it!
Interesting story, huh? After working with a lot of clients and students over the last several years, many of them say "if I could just make more money" everything would be fine!
As Dave Ramsey says, most people celebrate a $200 per month raise with a $400 per month car payment!
If a person is irresponsible with handling a small amount of money, they will be irresponsible with handling a larger amount of money! MONEY doesn't fix things it simply amplifies the character of the person making the decisions.
No matter how much money you make, you need to have a plan in place - a budget designed to tell every single dollar where it needs to go. This plan does not have to be restrictive because it needs to fit your lifestyle! Just make sure that you have one and live by it!
Tuesday, May 25, 2010
The Heart of a Teacher
Have you ever walked into an Electronics Store and walked out with something that you don't understand? It happens to me all of the time. I want to have the "latest and greatest" DVD BlueRay High Def Techno Mumbo-Jumbo and I get the thing home and I don't know how to set the clock - much less figure out all of the bells and whistles on the thing. As a matter of fact, I just recently learned how to turn the power off on my iPod. Didn't even know that it had the function!
How often does this happen to us in regards to our finances? Have you ever sat across the table from a financial advisor who wanted to sell you a portfolio of Mutual Funds that could jump off the table, sing and dance. The same thing always happens when you sit down with your Insurances-guy too!
From this day moving forward, don't buy ANYTHING that you don't understand!
Seek out the assistance and direction of people that possess "The Heart of a Teacher". Find an accountant, insurance person and an investment advisor who
(1) is an expert in their field,
(2) explains everything in a way that you can understand,
(3) places emphasis on education rather than sales and
(4) empowers you to make your own decisions with your money!
Don't be coaxed and prodded into buying something that you don't understand!
How often does this happen to us in regards to our finances? Have you ever sat across the table from a financial advisor who wanted to sell you a portfolio of Mutual Funds that could jump off the table, sing and dance. The same thing always happens when you sit down with your Insurances-guy too!
From this day moving forward, don't buy ANYTHING that you don't understand!
Seek out the assistance and direction of people that possess "The Heart of a Teacher". Find an accountant, insurance person and an investment advisor who
(1) is an expert in their field,
(2) explains everything in a way that you can understand,
(3) places emphasis on education rather than sales and
(4) empowers you to make your own decisions with your money!
Don't be coaxed and prodded into buying something that you don't understand!
Wednesday, May 5, 2010
What Could You Do?
What could you do if you didn't have any monthly payments? What if all of your monthly obligations were gone? All paid for! What if the only bills that you received each month were for for your utilities, cable tv and your cell phones? What would that feel like?
As Americans, we usually determine if we can afford something based upon the payment amount instead of the purchase price. We see if we can work that monthly payment into our "already tight" checkbook and see if we can make it work. We normally celebrate a $200 per month raise with a new $300 per month car payment!
My challenge to you is to see if you can go crazy for a while....I mean totally insane! Bust it! Be extra weird and do WHATEVER is necessary to eliminate your debt. Quit spending money and putting more on your credit cards and do EVERYTHING possible to eliminate all of your existing debt! Sell all of the junk you have in the basement! Dave Ramsey says, "Sell so much stuff that the kids think they are next!" What if you spent the next 12 months "busting it" and putting every extra dime toward your credit card payments, your car notes and your home equity line?? Buy a loaf of bread and a jar of peanut butter instead of hitting Applebee's for dinner...
I guarantee you that it will not be a fun 12 months but it could COMPLETELY change your life!
What could you do if you didn't have any monthly payments? Almost anything you want!
As Americans, we usually determine if we can afford something based upon the payment amount instead of the purchase price. We see if we can work that monthly payment into our "already tight" checkbook and see if we can make it work. We normally celebrate a $200 per month raise with a new $300 per month car payment!
My challenge to you is to see if you can go crazy for a while....I mean totally insane! Bust it! Be extra weird and do WHATEVER is necessary to eliminate your debt. Quit spending money and putting more on your credit cards and do EVERYTHING possible to eliminate all of your existing debt! Sell all of the junk you have in the basement! Dave Ramsey says, "Sell so much stuff that the kids think they are next!" What if you spent the next 12 months "busting it" and putting every extra dime toward your credit card payments, your car notes and your home equity line?? Buy a loaf of bread and a jar of peanut butter instead of hitting Applebee's for dinner...
I guarantee you that it will not be a fun 12 months but it could COMPLETELY change your life!
What could you do if you didn't have any monthly payments? Almost anything you want!
Monday, May 3, 2010
Myths and Truths about Debt!
Myths & Truths about Debt!
Myth - If I loan money to a friend or relative, I will be helping them.
Truth - The relationship will be strained or destroyed.
Myth - By co-signing a loan, I am helping out a friend or relative.
Truth - The bank requires a co-signer because the person isn't likely to repay. Be ready to pay the loan back and have your credit damaged because you are on this loan.
Myth - Cash advance, rent-to-own, title pawning, and tote-the-note care lots are needed services for the lower income people to get ahead.
Truth - These are horrible, greedy rip-offs that aren't needed and benefit no one but the owners of these companies.
Myth - Playing the lottery and other forms of gambling will help make me rich.
Truth - The lottery is a tax on the poor and on people who can't do math.
Myth - Car payments are a way of life, and you'll always have one.
Truth - Staying away from car payments by driving reliable used cars is what the typical millionaire does. That is how they become millionaires.
Myth - Leasing your car is what sophisticated financial people do. You should always lease things that go down in value because there are tax advantages.
Truth - Consumer Reports, Smart Money Magazine and a good calculator will tell you that the care lease is the most expensive way to finance and operate a vehicle. The best way to minimize the money lost on things that go down in value is to buy slightly used!
Myth - You can get a good deal on a new car.
Truth - A new car loses 70% of its value in the first four years. This is the largest purchase most consumers make that goes down in value.
Myth - I'll take out a 30-year mortgage and pay extra.
Truth - Life happens! Something else will always seem more important so almost no one pays extra every month. Always take a 15 year fixed rate mortgage!
Myth - It is wise to take out an ARM or a balloon mortgage if "I know I'll be moving".
Truth - You will be moving when they foreclose on your house!
Myth - You need a credit card to rent a core or to make a purchase online or by phone.
Truth - A debit card will do all of that, except for a few major rental companies. Check in advance.
Myth - "I pay mine off every month with no annual fee. I get brownie points, air miles and a free hat."
Truth - A recent Dun and Bradstreet study found that when you use plastic instead of cash, you spend 12-18% more because spending cash hurts. What what if you get 1% back and a free pizza?
Myth - I'll make sure my teenager gets a credit card so he/she can learn to be responsible with money.
Truth - Teens are a huge target of credit card companies today. Half of college undergraduates have 4 or more credit cards in 2008. An increase from 43% in 04 and 32% in 2000!
Myth - The home equity loan is good for consolidation and is a substitute for an emergency fund.
Truth - Don't go into debt for emergencies! Most families who use a home equity loan to consolidate their credit cards won't change their behaviors and go right back out and put more on their credit cards!
Smaller payments equal more time in debt.
Myth - Debt is a tool and should be use to create prosperity.
Truth - When surveyed, the Forbes 400 were asked "What is the most important key to building wealth?. 75% replied that becoming and staying debt free was the number one key to wealth building.
How much could you save, invest, blow and give away if you had no payments??
Myth - If I loan money to a friend or relative, I will be helping them.
Truth - The relationship will be strained or destroyed.
Myth - By co-signing a loan, I am helping out a friend or relative.
Truth - The bank requires a co-signer because the person isn't likely to repay. Be ready to pay the loan back and have your credit damaged because you are on this loan.
Myth - Cash advance, rent-to-own, title pawning, and tote-the-note care lots are needed services for the lower income people to get ahead.
Truth - These are horrible, greedy rip-offs that aren't needed and benefit no one but the owners of these companies.
Myth - Playing the lottery and other forms of gambling will help make me rich.
Truth - The lottery is a tax on the poor and on people who can't do math.
Myth - Car payments are a way of life, and you'll always have one.
Truth - Staying away from car payments by driving reliable used cars is what the typical millionaire does. That is how they become millionaires.
Myth - Leasing your car is what sophisticated financial people do. You should always lease things that go down in value because there are tax advantages.
Truth - Consumer Reports, Smart Money Magazine and a good calculator will tell you that the care lease is the most expensive way to finance and operate a vehicle. The best way to minimize the money lost on things that go down in value is to buy slightly used!
Myth - You can get a good deal on a new car.
Truth - A new car loses 70% of its value in the first four years. This is the largest purchase most consumers make that goes down in value.
Myth - I'll take out a 30-year mortgage and pay extra.
Truth - Life happens! Something else will always seem more important so almost no one pays extra every month. Always take a 15 year fixed rate mortgage!
Myth - It is wise to take out an ARM or a balloon mortgage if "I know I'll be moving".
Truth - You will be moving when they foreclose on your house!
Myth - You need a credit card to rent a core or to make a purchase online or by phone.
Truth - A debit card will do all of that, except for a few major rental companies. Check in advance.
Myth - "I pay mine off every month with no annual fee. I get brownie points, air miles and a free hat."
Truth - A recent Dun and Bradstreet study found that when you use plastic instead of cash, you spend 12-18% more because spending cash hurts. What what if you get 1% back and a free pizza?
Myth - I'll make sure my teenager gets a credit card so he/she can learn to be responsible with money.
Truth - Teens are a huge target of credit card companies today. Half of college undergraduates have 4 or more credit cards in 2008. An increase from 43% in 04 and 32% in 2000!
Myth - The home equity loan is good for consolidation and is a substitute for an emergency fund.
Truth - Don't go into debt for emergencies! Most families who use a home equity loan to consolidate their credit cards won't change their behaviors and go right back out and put more on their credit cards!
Smaller payments equal more time in debt.
Myth - Debt is a tool and should be use to create prosperity.
Truth - When surveyed, the Forbes 400 were asked "What is the most important key to building wealth?. 75% replied that becoming and staying debt free was the number one key to wealth building.
How much could you save, invest, blow and give away if you had no payments??
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