Kind of a weird take on things, eh?
You have probably heard (or said, if you are becoming your parent's like I am) 'Act your age!' at some point in your life. The meaning is very simple - you are being juvenile or - dare I say - bratty.
Well, the same thing applies with money. Act your wage! (Yes, I am shaking this finger at you!)
This has been a very important, albeit hard to learn, piece of the puzzle for us. We always figured that if the bank would let us make payments for it, we must be able to afford it!
Well, let me put this bluntly for you (ask my friends and family, blunt is my specialty), if you have to make payments on it, you probably can't afford it.
I say 'probably' because a house is hard to buy with cash. Not impossible, but hard. The 100% down plan on a house is a pretty sweet deal if you can work it.
Here are some rules to follow if you want to act your wage.
1. No car payments. Making car payments your entire life is a certain path to the poor house. Let's all face it, the government is NOT going to take care of you when you get old. If you want to retire and not have to live on the Alpo diet, you need to look out for yourself - buying used cars with cash can help you along your way.
Dave has a great (and eye opening) video piece about this on his site called Drive Free, Retire Rich. Take 5 minutes and watch it: Drive Free, Retire Rich
Seriously, go watch it!
2. Buying a house. I know I said that the 100% down plan is nice, but for most folks, it's just not feasible. What you should do when buying a house is be able to put 20% down, get a 15 year note and not pay more than 25% of your monthly take home pay towards it. If you can do that, you should be in good shape.
3. No new debt. Simple enough? :) If you have to make payments, you just can't afford it right now!
We all have to face facts (I am included in the 'we'), keeping up with the Jones' is a bad idea. They're broke! They are what 'normal' America is all about.
Step outside your front door and look left to right down your street. Somewhere around 90% of the people in those houses are living paycheck to paycheck. Many of them are not even doing that good, and are buying groceries with their credit cards.
This is not what you want to emulate! You want to be weird, not normal (when it comes to money anyway....being 'weird' is just...well...weird). Normal is broke! Normal has 2 new cars, a jet ski, a big plasma TV and $500 in the bank with a $2000 mortgage payment due!
Don't be the Jones'. Act your wage. Be weird. I promise it will be OK.
This is our family's story about growing up, acting our wage and becoming debt free.
2 comments:
I'm hooked on your blog. Thanks for sharing your personal story, it's very inspirational. What's your advice for lots of student loans?
Put them in the snowball in line with everything else and get gazelle! (If you haven't read TMMO, that might not make much sense...).
Oh yeah, one other thing - don't get any more of them. If you want to go back to/continue school, find a way to do it with cash. Education is great, but education that is already paid for is even better!
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