Thinking About Finanaces
by Gary Foreman
Have you ever had an idea pop into your mind and just hang out? That happens to writers, too. So here are a few of those random thoughts that just won't go away.
What do you think? You do something 20 times and got the same result each time. What will happen the 21st time you do it? It's really amazing when we repeat the same mistake over and over and still think that somehow it will come out different if we try it yet again. They say that man is brighter than the animals because we have the ability to learn. Sometimes when you watch people make the same financial mistakes over and over, you can't help but wonder about their intelligence.
Have you ever thought about the phrase "spending time"? It's a good reminder that we spend our time just like we spend our money. Each day we start out with a certain amount of time that we can use for work, family, chores and entertainment. And much as we'd like it, there's no such thing as a 25-hour day. Almost makes you wonder whether we should try to budget our time.
Another thought about time. Have you ever brought a new purchase home and then been surprised by how much of your time it consumed? It could be something that was meant for amusement (video games) that's hard to stay away from. But it's almost as if this item eats holes in your day that you're almost helpless to avoid.
Am I the only one bugged by ads that claim "only 24 easy monthly payments"? Every payment that I've ever made in my life brought some degree of pain.
And what about the ads that offer something for three monthly payments of $39.95 plus $7.50 shipping and handling. Are we really so slow on math that we don't realize that we're paying nearly $130 for whatever it is? It must work because the advertisers keep doing it.
If you think about it, all scams have one thing in common. Somewhere in the pitch you'll be told that you must act now. Later it will be too late. Be smart. Don't miss this opportunity. Yes, successful people often act decisively. But they usually have already accumulated a quite a bit of information about the decision that they're about to make. Usually at the exact time that you're asking for more information is when they want to rush you.
Why is it that almost everyone you meet would like to get rich quickly? Take the current crop of shows giving away a million dollars. Everyone wants to win. But do the winners really go on to a better, more satisfying lifestyle? Ask the first winner of the Florida lottery. Not too long ago I saw a report that said winning the lottery made his life miserable. Everyone looked at him as a possible source for cash, not as a friend. Soon nothing mattered but the money. Years have passed since he won. Today all the money is gone. So are his "friends." And he earns his living cleaning restrooms on the Florida turnpike. Lifestyles of the rich and famous anyone?
How many things do you really, absolutely need to buy today? OK, sure, medicine or groceries. But would your life come to an end if you delayed the purchase of that new VCR or car? Maybe tomorrow you'd find a better price or a model that you liked better. Maybe you'd even come to the conclusion that you didn't need it at all.
Did you know that most studies have found that people with lower incomes and education levels are more likely to play the lottery? Wonder if they'd buy fewer tickets if they knew that they had a greater chance of being hit by lightning than winning the big prize.
"Only $19.95 plus $4.50 shipping and handling. Visa and MasterCard welcome." Well, yes, sort of. But, if you put that on a credit card and pay the minimum amount each month you'll really be paying about $45 for that "limited-time offer." After you add income taxes and social security taxes you really need to make $56 to pay for it. How many hours of work is that for you?
Here's a trick that could make you look smarter the next time interest rates are discussed. It's called the "Rule of 72." If you ever want to know how quickly your money will double at a certain rate of interest (say 6%), divide 72 by that rate. That will tell you how many years it will take before the original amount doubles. At 6% our money would double in 12 years (72 divided by 6). While it's not accurate to six decimal places, it is a good quick way to figure things in your head.
What's with the TV pitches for home mortgages? One features a guy with slicked-back hair and a smirk. I'm convinced that if I looked up "sleaze" in the dictionary his picture would be staring back at me. Lately they've been offering mortgages for up to 125% of the value of your home so you can give your daughter the wedding she's always wanted. Instead of a wedding, I picture this guy kicking a widow and her children out of their home because they couldn't keep up with the mortgage payments. Anyone want to bet that "compassion" is a word that he doesn't use very often?
Don't know about you, but I certainly feel better for getting that off my mind!
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.