fabulous advice for anyone dealing with debt

I may need to email this like spam to everyone in my address book.

Okay I won't. But I want to.

I got the link from someone's blog. I'll credit them properly when I figure out whose it was.

being happy with less

A family tale I hadn't heard until recently concerns my favourite uncle. You may remember him as the previously blogged-about jazz-playing goat farmer and newspaper columnist. He wrote a while back about the new government in Barbados and the promises they've made about the cost of living, affordable land and housing and hospital. I loved this part:

Housing means little to one who spent his early married life happily in a tent and an old Transport Board bus. It's sad to see young Bajan couples saddling themselves with heavy mortgages for elaborate bungalows which they scarcely have time to enjoy. Go chattel, I say.

My mum confirmed that, yes, when my aunt and uncle got married they had enough to buy the land, but lived for a while in a tent, then a bus, while they saved for a house. Of course living in a tent is a little easier on a tropical island where you won't freeze to death in the process, but it struck me just how much less people could be happy with, if their expectations were different, or if they saw debt, not secondhand furniture, as the enemy.


I'm already a convert to this thinking. I used to get into debt just for lack of patience. Now I drive an old Toyota Corona and pretty much all of my furniture is secondhand. And I'm cool with that. It's not like my furniture is crappy either. I just haunted the secondhand furniture shops until something I liked came along.


In fact, I wish I'd wised up a lot earlier and realised that 'things' really shouldn't have as much magnetic power in our spending lives as they do. Recently some young friends of mine got married and as a present I gave them a book about communication in marriage and working together to stay out of debt. Stress and squabbling over financial troubles is one of the top reasons for divorce, so I couldn't think of a better way to say, 'I love you, and I want you two to stay together'.


I don't think everybody needs to live in a tent to start out right. They just need to know that 'things' really aren't the key to anyone's satisfaction and happiness in life.

spending the future

A post from Hazzard introduced me to a useful rule-of-thumb theory (from Money Magazine) on the future value of money. If you multiply the cost of a purchase by ten, you have the approximate amount by which the money you'll have for retirement is reduced, thanks to that purchase. In other words, if I spend $70 on a pair of shoes, I'm reducing my retirement savings by $700. I guess that's worth it if you really need the shoes, but it's certainly a sobering thought if it's the fifth or sixth pair of shoes you're buying that year.

The calculation is accurate for someone 30 years off retirement and whose savings/investment yields an average of 8% per annum over that time. With other circumstances the final amount will change, but the general principle is the same: when you buy stuff you're not just giving up the cost of the item, but also the interest (and the interest on the interest) that money could have earned you over time.

Think of all those people trying so hard to build up their 401k and yet having Starbucks two or three times a day. If only they knew they were sucking away at their retirement $40 a pop, for something they could have made themselves for a fraction of the cost (and a fraction of the suckage).