Showing posts with label Finances. Show all posts
Showing posts with label Finances. Show all posts

Thursday, July 5, 2012

Pithy Postulates for finances

Time to consider the financial and material side of this present life. . . if only because we have to deal with it.  Heaven, of course, will have far different riches and objects one deals with - mansions, streets of gold, and a banqueting table I very much look forward to sitting at, for starters - and is always a wise place to store one's belongings and treasure.  Indeed!  (smile)  Eternity is what I sometimes wryly refer to as my "deferred compensation plan."

I came across an interesting fellow blogger here on blogspot who came up with what he calls "quotable quotes."  If you know me well, I do my very best to avoid trite and worn out phrases, so I have renamed this post to something far less trite and far more fresh. . . Introducing what may well become an irregular yet periodic feature here, "Pithy Postulates."  I'm reusing his oft-repeated sayings here, while the reflections will be my own.  Just another reminder that true wisdom comes down from the Father of Lights, with whom there is no variation or shifting shadow (James 1).  Those of us who are in tune with what God says in the Scriptures - and most importantly his heart - are hopefully more aware of the generous spreading around of that wisdom among his special creation, humankind.  Hat tip to Robert Platt Bell, whose original post is here:  I'd also recommend reading his blog generally. . . from the bit I've read already, he has some sound down home tested from the trenches wisdom about financial management that so many lack.  That intro out of the way, here goes:

  •   The more complicated you can make any financial transaction, the easier it is to fleece the consumer.
Buying cars or real estate come to mind here. . . but it needn't be that expensive.  Free toasters when you open an account at a financial institution are an old ploy, as are interest rate deals at the store.  Then there are the television commercials that tell you - always late in the two minute ad - you will get two of the item (such as a magic knife) for the same "low" price if you act now. . . Here's how to order.  For calls in the United States, call 1-800-blah blah blah.  Beware.  Avoiding these could save you hundreds or even thousands of dollars in the transaction. 

  • They throw pennies at us, hoping we spend dollars.
This is where the "cash back" deals and the "free miles" from the airlines try to hook you into buying from them, and not their competitors.  I did a bit of calculating on the AmEx credit card offer regarding Costco purchases, especially gasoline, and concluded it was worth perhaps $10 to $20 a month max.  The downside is you pay a monthly statement, not pay as you go.  Pay as you go lets you know the exact state of your finances, if you manage them well (and believe me, I do).  You always spend more using a credit card. . . I learned that back in my marketing classes I took years ago.  Avoid.

  • Generate your own normative cues!
The advertising industry - Madison Avenue, as it's called in the trade (hey, back in the day I even took an entire college course on the subject, earning my easiest "A" ever while sleeping through class most of the time) is full of it.  Constantly trying to get you to work against your own self interest financially speaking, buying things you can ill afford.  Ignore them!  I said, Ignore them!  Who invited them into your house as a guest?  You did.  Turn off the TV and/or throw away the direct mail.  You'll be better off for it.  And. . . learn to be more like Jesus, and less like Madison Avenue.  That means you'll be spending more time in the Scriptures, and less time watching the boob tube.  Try it. . . you'll like it!

  • Any business relationship predicated on a lie, no matter how trivial, will inevitably go down from there. 
Car dealers that shout from billboards or direct mailers "$199 a month for (blank make/model new car)" are lying to you.  Lying!  Double the figure and you'll get the ballpark real purchase price.  Don't lease.  Ever.  Unless you own a business and use the vehicle in your business.  Who ever only travels 12,000 miles a year like the lease invariably states?  No one.  They'll charge you dearly for the extra miles, costing you hundreds or thousands extra at the end of the lease.  Avoid, avoid unsolicited telephone calls from pitchmen and direct mail directing you what to do with the envelope (the "urgent" marking on the outside envelope ploy or similar).  Just say to the caller, "we have a policy of not accepting unsolicited calls from people we don't have a business relationship with" will do the trick nicely.  I know from experience.  And throw the yucky direct mail away.  Don't even look at the stuff!  'Nuff said.

While in the process of going through the day's activities, a young woman came to the door and stated she was a friend of ours from Tennessee.  We're in California. . . and so that raised my wife's and my own suspicions as to her trustworthiness (lying to us).  Sure enough, she was here to sell us some kind of subscription to get her a scholarship for college - heard that before for many many years.  Told her we as a family policy don't do unsolicted business with folks we don't ask to see. . . she walked away.  See!  Works like a charm! 

  • If someone tries to sell you "Peace of Mind," keep one hand on your wallet.
I once worked for an automobile extended warranty company in Tustin, California.  Shady characters.  They "gamed" the company to favor those dealers who sold the most contracts, and favored customer payouts to those who bought extended warranties from these dealers. . . while stonewalling and denying legitimate claims from those who bought their contracts from dealers that didn't sell enough extended warranties to suit the company's liking.  Lawsuits invariably ensued.  If you can't afford the item, do without it.  Don't be a materialist and seek life through your posessions.  True peace, of course, comes only from knowing Jesus.  Not from buying some insurance plan or something. 

  • So when someone asks you to cheat, chances are, it is because they want to cheat YOU. 
Don't be involved in a crooked deal.  The only one benefitting from the deal will be the crook!  Don't fall for the car deal that's "too good to be true."  It is. . . and when you wire that money to the person who never showed you the car in person, you can bet your bottom dollar it's never going to be shipped to you.  So don't be a sucker.

  • Using the tax code as an investment guide is a bad idea. 
Making purchases or doing things just because there's a deduction or credit in the tax code is just plain stupid.  The tax code changes all the time, and is "gamed" to favor those in political power anyway.  Don't have a K Street lobbyist?  You're not named Warren Buffet or Oprah Winfrey?  Then don't play their game!  Remember, it's not about the abundance of things you possess on this present earth.  It's not about getting the lowest tax bill.  It's about pleasing God while obeying the government taxwise.  Spending money to save money always results in spending money in the long run.  Which reminds me. . .

  • You can't deduct your way to wealth!
Oh yeah, some years ago there were these electric golf cart vehicles like the ones Lee Iacocca was involved in that were supposed to pay for themselves via tax credits.  The tax credit was good for the first year, then the government closed that loophole.  Those that fell for this ended up with golf carts that ended up being far from free.  Whatever happened to all those golf carts?  Were they such a good buy after all was said and done?  You be the judge. 

Similarly, lately we've had "Cash for Clunkers" and new car tax credits to spur new car sales.  Those who bought cars then got a better deal than I did, who bought my new car 15 days after the credit expired.  Sigh.  But both of us ended up spending money for new cars, new car purchase tax credit or not.  Spending money is not saving money.  Don't let the tax code rule you. . . let Jesus be your kindly, gentle benevolent ruler and live life according to His will, not the tax code's.

  • Act Rationally in an Irrational World
Whatever the hype is, go the other way.  Be like a salmon. . . swim upstream, not with the crowd.  The crowd takes the wide superhighway. . . the pilgrim takes the Road Less Traveled. 

I remember getting sales pitches via the telephone and direct mail telling me now was the moment to buy into real estate.  Buy a house, rent it out for a while, and "flip" it for the easy profit with house prices rising.  Funny thing is. . . as with any purchase, there is a downside risk.  What if you become "upside down" in the rental house's mortgage?  It's happened a lot these days.  We all know how the real estate market is now, right?  Considerably down from where it was a few years ago.  Stay a step ahead of the get rich quick schemers.  Ignore them!

  • All advertising is based on the simple premise of persuading a consumer to act in a manner that is NOT in their own financial self interest. 
In other words, why listen to advertisers?  No reason to, unless you like ads for entertainment purposes.  They are acting at cross purposes with what you are trying to accomplish in life.  

Ever notice that companies about to go out of business or are poorly run often do the most advertising?  Why are they advertising in the first place?  Because they don't have good "word of mouth."  They have to recruit folks who've never tried them, the young, the new immigrants, the unaware, the unsuspecting.  And they do it with great precision, let me tell you. Circuit City, Hollywood Video, Blockbuster Video and Montgomery Ward (!) come to mind.  Only one of these is still in regular business anymore.  Two of them are with new owners selling via the Internet.  Don't get me started. . . (grrr. . ..)

  • While it may be safer in the center of the herd, the grass is all trampled down and pooped upon.
Don't let the world squeeze you into its own mold; be willing to take appropriate risks in life.  It's hard to eat grass the other cows have eaten.  Get some elbow room - take risks to earn an income and grow your financial situation by not always following the crowd. 

Consider the real estate market from say, 1995 to 2005.  In 1995 most people were risk averse to buying - always a good signal to check out and see if it makes sense to buy (because many folks took their losses in the immediate years prior).  Conversely, in 2005 I had letters and phone calls begging me to sell my property - a good sign that the market was becoming overheated and unsustainable, and yes, about to collapse - a signal to get out of the market.  And it did of course collapse.  As we know now, everyone else was buying at the top of the real estate market in 2005 when that was the time to actually sell.    

Another mistake some people make is to buy every insurance policy covering every circumstance known to mankind.  This include buying extended warranties on things like garbage disposers and home computer printers.  Do yourself a favor: keep your hard earned money and just say no.  Cover the true catastrophic sitations that would bankrupt you, and for the things that you typically go out and replace, don't even consider buying an extended warranty!  Please, folks!  Don't make me beg. . . 

  • Never confuse getting lucky with being brilliant.
Don't be overconfident just because you've made some decisions that have panned out financially in a short period of time.  Everyone eventually lucks out and makes worse decisions. . . the law of averages kicks in, you know.  "Take heed where you stand lest you fall," the Apostle Paul said.  Apropos not only spiritually, but financially as well.  Good advice.  Don't overplay the hand God gives you to play.  

  • If someone can't explain what they do for a living in ten words or less, they are probably lying to you.
If you hear buzzwords, politically correct talk, or lots of technospeak that sounds really good but doesn't make any sense to you, raise your red flag.  Check it out!  Probably not worth your while to invest in them, employ them, rent to them, or (ahem) marry them.  Who wants to lose from a liar, anyways?  "Let your yes, be yes, and your no be no," James wrote in his letter to the twelve tribes scattered abroad.  Makes good sense, and excellent advice.  Be honest and to the point wherever possible, even if it hurts.  

Please feel free to continue the discussion via the "Comments" hyperlink below.  It would be nice to hear your thoughts as well.