Simple and Straightforward
Posted by Gail | Filed under Money Management
From time to time when I read the comments on my blog I’m surprised at the vehemence of responses, especially when it comes to the idea of people doing things differently. It is as if we think there is one way to do things, and all people should be doing it that way.
Well, if there is one thing I’ve learned over my half a century it’s that there is no ONE WAY. Each of us must find the path that works for us. Each of us must create the balance that we can use to keep us on track to what we want to achieve. And each of us has the right to judge only ourselves.
While I seem pretty strident on a few of vectors, my push is to get people to realize just how dangerous credit can be when we come to think of it as our means to any end. I believe there are fundamentals that do not change, regardless of how the economy is doing, where the stock market is, or much credit is available. I do not believe that the basic rules of money have changed in the last 100 years despite the new financial products that have been introduced, and the access people now have to tools never before available to the masses. My big message as always been:
You can have anything you want, as long as you’ve already earned the money you’re going to use to pay for it. You have to save something because if you don’t you’ll be in deep doo doo one day, it’s only a matter of time. If you’re carrying consumer debt, you must do whatever it takes to get out from under because as long as you’re in debt you’re at risk. And if you aren’t taking care of the details and planning like a pessimist, you’re not paying close enough attention and you won’t be prepared when the dog bites you!
Yes, the dog will bite you. That’s life. And while it may be nice to think we can skate through without ever coming anywhere near the dog, you’re pretty delusional if you build your life – and your financial plan – on that premise. Bad things do happen to good people and the only way to survive is to make like a Boy Scout and Be Prepared.
I find it interesting that many financial voices – the Spurts — are singing a different song in this “new economy.”
We have swung from promoting spending more than we make (we live in a consumer-driven economy so we’re counting on you to go shopping honey) to believing we should save upwards of 20% of our income. Hmmm. Seems like a pendulum over-reaction to me.
We’ve gone from buying whatever we want whenever we want regardless of whether we had the cash to pay for it or not, to the New Frugality where even a dinner out once a month is frowned upon because it’s a “waste” of money.
We’ve upped the ante on emergency funds; apparently the old “six months’ worth of expenses isn’t enough any more. Never mind that a whopping number of people don’t even have one month’s worth of emergency money, we’re raising the bar!
We’ve downed the need to pay off our debt; some Spurts are actually suggesting you pay only the minimum because if you pay off more you may lose access to that credit. Hmmm.
It’s time to listen to the little voice in your head, to let common sense take hold of you. It’s time to stop worrying about what other people think, and think about what YOU want.
Hey, if you want to be in debt for the rest of your life, that’s a choice you get to make. Just stop whining about it. And if you want to get out of debt and remain debt free forever, you can do that too.
The most basic rules of money are simple and straightforward. I’m willing to give you that once you get above simple-and-straightforward, things can get pretty confusing. But most people haven’t even mastered simple-and-straightforward yet.
Opining (or listening to opining) on the state of the economy, investment alternatives, and fancy insurance products is posing when you don’t even know how much you’re spending every month. And getting into a discussion on tax tactics and retirement planning strategies is moot if you’re still shopping on credit.
Never mind the Spurts and what they have to say about how the fundamentals have changed. They haven’t. Now it’s time to take charge and take control. If Yahooda Shmooda is investing in gold, who cares? If you’re carrying any consumer debt at all, your focus should be on getting rid of that debt by whatever means it takes. If you don’t have an emergency fund, you must find a way to get one (and it’s not a line of credit) and only you can decide how much is right for you. And if you aren’t saving something for the future, today is the day you start. Never mind whether it’s 10%, 15% or 25% of your income. Set up an automatic savings plan with whatever it is you can afford every week.
It’s your money. It’s your life. You get to make of it whatever you wish. It’s that simple. And if you want it to be straightforward too, you’ll have to make up your mind to start moving in the direction you want to go, and stop waiting for someone else to lay your path for you.
June 29, 2009 at 7:06 am
AMEN! Right on Gail!
June 29, 2009 at 7:24 am
I think people need to stop feeling intimidated into “…giving up cause I’ll never get there anyway”. I think I’m doing pretty okay, and then I read about someone already debt-free and worried about whether putting 20% of their income into RRSPs and topping up their $5K TFSA plus RESP’s plus 6 month emergency funds, etc, etc. is going to be enough to get them through. And then I think to myself, “Self, you’re got a LOONNNNGGG way to go if you’re ever gonna catch up.”, and I catch myself feeling a bit deflated because instead of keeping up with the Joneses that own everything, I want to keep up with the Joneses who are saving everything!
It’s a vicious, intimidating cycle to be honest. And then I look at my spreadsheets, look at where I was a year ago, 5 years ago, 2 months ago, and I realize that slow and steady may be frustrating, but it DOES win the race. I wish I could timewarp myself to be where some of the savers are now, but I’ll get to my own comfort zone one day at a time (and hopefully I won’t be worried if saving any more than 15% of my salary is going to keep the sky from falling, or my friends and family will REALLY be calling me Chicken Little forever!).
June 29, 2009 at 7:35 am
Great words once again Gail!!!..When I am starting my clients out in the land of “saving”…rsp e/f etc I always tell them to start with a small easily doable amount so they don’t get cash strapped and resort to the c/c for their day to day…I also tell them that the idea of these savings is exactly that savings…the e/f is for when you are about to be naked starving and living on the street and rsp is for when you retire…you pay into these funds just the same as you pay your hydro bill and you don’t touch it…that beautiful pair of shoes is NOT an emergency!…that’s what you have a planned spending account for…(that’s how I get them interested into that 3rd account)…some folks are doing so great after I’ve “Gailed” them…it’s wonderful to see:)…your advice is simple, honest and something we can all action…for that I thank you!
June 29, 2009 at 8:56 am
Loved the last paragraph – how completely true. I love your honesty and your ’straightforwardness’
June 29, 2009 at 9:09 am
Good observation Gail on the swing of things move from one polarity to another. Loved the point about ‘no day but today’ to get started.
As an active poster who sometimes posts comments that are different from others, I actually find most of the posters on your site to be quite respectful of each other’s opinions for the most part and receptive to new ideas. Disagreement is not disrespect if it’s a logical and well thought out opinion. Most of the poster’s on this site do not engage in name calling or insults deliberately. Because of the nature of medium, it can’t take into account inflection so sometimes I think its easy to interpret one thing in a different way than might be intended — ie “whatever” could mean “sure whatever no problem” or it could mean “WHAT—–ever!!!!”
June 29, 2009 at 10:09 am
This post makes me think about all the times that my co-workers speculate when the overtime is coming back. “After all,” they say “the experts say that the recession is almost over”
I try to explain to them that the experts didn’t know it was a recession until we were quite deep into it, and they won’t know when it’s gone for months afterwards as well. Everything else is speculation. I keep reminding them not too count on money that may never materialize. I keep reminding them that it’s safer to bank on your regular pay, because maybe overtime may never return.
June 29, 2009 at 10:30 am
Roxanne — to be fair to the ‘experts’ — the generally accepted definition of a recession is two quarters of negative growth, and it takes a while to compile the data to measure growth. So we’ll always never know the moment we are in (or out of) a recession, almost by definition.
June 29, 2009 at 11:04 am
Great tips Gail. It is tough listening to straight-forward tips as sometimes people enjoy making their lives more difficult.
June 29, 2009 at 11:16 am
Once again, so true to everything, Gail. I don’t visit your blog as often as I used to, but I try to keep up to keep me on track. I needed it ever day there for a while to keep me motivated because day by day seems like an eternity when you’re paying stuff off, when the accumulation seemed to happen so fast! Things are much better since I took control of my (our) money. I realized that hey, wake up princess, no one else is going to get you out of this but you! So I did! So to all readers, it’s a long road with twists and turns and potholes (some big, some bigger!) but you learn from them and keep on truckin’!
Again – Thanks Gail!!!
June 29, 2009 at 11:30 am
great post and so true. i see this a lot in ‘real life’ with friends-so and so will tell us we ‘have’ to refinance our mortgage now, or buy a bigger house now, or whatever, because it’s what’s right for them. we constantly have to remind ourselves that we have to do what’s right for us, and our family, and what we feel comfortable with overall. sometimes that’s going against the grain, but i think we’ve done ok so far. visiting this site and reading your posts every day helps as well. i think it’s human nature sometimes to think ‘our way’ is the right way, because it helps us justify our actions sometimes. it makes people uncomfortable when they see someone else doing something that is different than them.
June 29, 2009 at 11:40 am
one thing I have learned with age is that it’s nice when people agree with you but you learn so much more by listening to different opinions…that is why I love reading these comments…it never hurts to debate issues and I find for the most part people are respectful even when disagreeing, finding out what works is easier when you look from all angles.
June 29, 2009 at 11:42 am
I think someone should print that last paragraph on a T-shirt! That’s pure gold Gail.
June 29, 2009 at 12:38 pm
Great post Gail. I only recently found your show and blog, and love, love, LOVE it! Been reading old blogposts everyday, and watching the shows on the DVR. While hubby and I aren’t in bad shape financially, we so easily could have been, and it is your show and the wealth of info here that helped us prevent problems. I analyzed our spending last year and found we spent almost 2K more per month than we made (ack!). But we had no debt (yet!) as hubby’s business was simply less in the black than it was the year before (and barely on the good side of the line). Another year or two of that life and we would have been in serious trouble! We started a system similar to the jars this month, and with 2 days left to go we have spent $575 less than I budgeted…and I budgeted THOUSANDS less than we’d been spending thoughtlessly, using your online budget tool. And we’re building up an emergency fund–not just leaning on our LOC from time to time (and I now understand why this is not a good idea). Ditto easing up on our pay-down-the-mortgage-at-all-costs mentality, which was hurting us in terms of not living the life we wanted (and thus spending on little CRAP that we didn’t need to make us feel better…it added up!) And best of all, hubby and I feel on the same page, working toward common goals…a true partnership again. Thank you so much for sharing your thoughts and knowledge on this blog; you are an inspiration!
June 29, 2009 at 1:01 pm
It’s funny, I was just talking to my husband last night about money and Gail. He was saying doesn’t she say do this or that – and I told him the only hard and fast rule Gail states – the rule that should never be broken – is do not spend more than you make -everything else is guidelines and suggestions. As long as you don’t spend more that you make it should all work.
We tend to be on the frugal side and live different lives than those we see around us – I have a bit of a problem – I have such huge curiousities about other peoples money – I would love to see where other people are really at – because I do believe some of the people around us are definitely not as wealthy as they seem (like wise we are not as unwealthy as we seem).
I don’t want to judge them – hey everyone needs to live their lives as best as they see fit – I am just curious. (Okay, just babbling now).
I love this blog – I love reading Gails insights and everyone elses. I read it almost on a daily basis now and have learned some new things and been reminded of somethings I already knew. Keep up the good work Gail (and everyone who writes in).
June 29, 2009 at 1:20 pm
@Geoff – I totally agree about email ‘inflection’.
When I first started on the computer I would type my messages in caps…..I thought it would easier to read…..until I got a nasty email back asking me to stop yelling at them….pardon me? I had no idea.
Broadening my mind by listening to other views is part of my learning curve, and as long as respect is involved, I’m good.
June 29, 2009 at 1:24 pm
Thanks! Timely post for me in my situtation. I’ve been doing so good and last week I had a set back. But life happens and you gotta learn to role with the punches. And I learned a lesson.
My favourite line in todays post is “You can have anything you want, as long as you’ve already earned the money you’re going to use to pay for it.” I so dislike the mentality that is being feed to us that “you work hard, you deserve it” (when someone has debt or can’t afford something). It affects me most when I am losing focus and even my friends are like “oh it’s ok, you’ve been so focused you deserve a treat”… Grrr I fall right into that trap sometimes!
June 29, 2009 at 1:40 pm
another great post Gail!
EchoLake, I have that same curiosity! I think it’s partly why I enjoy TDDUP so much- we get to openly see the details of people’s financial lives and it is really interesting. I often heard the phrase tossed around, “they make more than us” or something similar when growing up. My parents were pre-Gail followers in that they refused to use credit. It was hard as a kid because it made even less sense to me as to why my family couldn’t afford basic things that other families had, other families whose parents held the exact same jobs as my parents! My mom would often say that we didn’t know their financial picture. I always wanted to, just so I could figure out how their lives could be so different from ours!
But in the end, it really doesn’t matter. Like all life choices, at the end of the day we only answer to ourselves and we must feel content and secure with those choices.
June 29, 2009 at 1:41 pm
oh, and I should state that “basic” things as a kid to me meant a new TV, a Disneyland vacation, the latest video game console, etc. By no means was I actually lacking in my basic needs!
June 29, 2009 at 2:50 pm
This post reminds me, of a great editiorial writer that my husband reads in a motorcycle magazine. One article that I really enjoyed was about a group road trip with many riders of different skill levels. At one stop a man was whimpering about how he was going to kill himself trying to keep up with his buddy (a more experienced rider). The buddy’s response was “RIDE YOUR OWN BIKE.” He was saying that he should NOT be trying to keep up with someone more advanced at risk of his own life and limb just for the sake of keeping up! He is on his own set of wheels, his own engine, his own space to occupy and HAS to stay in his skill level to stay safe. I think that is true with so many aspects of life! So when I see someone dipping deep into the corners on their motorcycle, I get envious of the skill and experience needed, just like I get envious of the beautiful, expensive new bike. The truth of it is I need to “ride my own bike”, financially and physically. Maybe time and practice and smart choices witll get me there, but I really have to be conscious of what a safe pace FOR ME is. Does that make sense?
June 29, 2009 at 3:05 pm
Nice metaphor, *pol. I like that.
June 29, 2009 at 3:22 pm
I also like that analogy “RIDE YOUR OWN BIKE”. Wow, that is so applicable to all things. And another thought provoking topic – I have never worried about what others thought of my lifestyle/financial picture. My dollars are stretched till they cry “Aunty”, but we have never gone without anything important. While in the process of moving this week, my new landlord offered us a used queen sized box spring that won’t come out of the basement. (easier to push down I guess!) So, son will get the box spring, using an air mattress till later. Then I got to thinking (dangerous), my queen size set is as old as DS (18+), has a cracked box spring, and a broken leg on the frame (been on a coffee can for 10+ years) – “I should look at the Brick for a ‘do not pay for 6 months’ deal, give son the mattress, ditch the rest, and have a new bed for myself (God knows I need one). I would then proceed to save the money needed to pay for the bed in 6 months….. HEY, Gail smack! Been sleeping (sort of) on that bed for almost two decades as it is, what’s six more months? SO, good timing Gail, prevented me from doing something stupid, in a spur of the moment lapse in good judgement. Thank you.
June 29, 2009 at 5:55 pm
I love hearing about other people’s money too
I’m lucky, since most of my friends aren’t shy about it.
Happily, about 3/4 of my friends are doing pretty well, paying down their mortgages (if any) and not carrying any other debt. So even though their lifestyles are a bit more lavish than mine (I’m slightly on the ascetic side), it’s easy and even fun to compare.
A few, however, are a bit more daring when it comes to debt load. Some stress about it, others are blissfully in denial. My personal rule, though, is never to offer any kind of advice unless asked for it specifically and repeatedly. I’m much more comfortable being the ‘poor one’!
June 29, 2009 at 9:34 pm
It is hard not to try and offer advice when your friend is constantly worrying about money and complaining about debt but continues to spend like she is a mini-Trump!!
I try and bite my tongue, but even my suggestion of looking at this web-site has been met with some disdain.
Oh well, I, too, will continue to be the “poor” one, even when I am made fun of for my constant envelope (jar) foraging….
June 29, 2009 at 10:02 pm
I have to admit that I am not surprised at all by the vehemence of people’s responses. Money is the very definition of vehemence. Money is intensely emotional, powerful and deeply felt. Many of us use money as a yard stick to our success, happiness, our sense of accomplishment, self-worth, security and self. So of course we are passionate about it; and passion often exudes emotion.
July 2, 2009 at 8:26 pm
(not Gail V-O )
OK just found this site & catching up and have to ask ( google couldn’t find it) what is a Spurt & thoil ? Thanks.