Act your financial age
Posted
May 13 2008, 09:52 AM
by
Karen Datko
Rating:
This post comes from partner blog Blueprint for Financial Prosperity.
When I was young, I used to write a fake company name on all sorts of papers to make it look like my company stationery, as if I were a big-swinging successful entrepreneur like Andrew Carnegie.
We'd play football in the streets and pretend to be Joe Montana throwing yet another touchdown pass to Jerry Rice. We'd tackle each other in the field and pretend we were LT (no, not Ladainian Tomlinson -- the real LT, Mr. Lawrence Taylor) getting Joe Theisman, minus the snapping leg.
The point is, when we were young we'd fantasize about a time when we'd be older and in situations that were fantastic (and, in the case of football, unlikely to happen). This is something that a lot of people never grow out of and that ultimately impacts their finances.
I've been wanting to get a coffee grinder since we brought back some Kona coffee beans from our honeymoon. This item is a little $20 gadget that takes beans and turns them into powder that I can use in my free Gevalia coffee maker.
I was talking to Cap about it when he asked if I already had it. (Then he told me coffee was bad, fish don't sleep, and that he doesn't drink juice either. He's quite the eclectic conversationalist.) I expected him to tell me I shouldn't buy it. That's when I suggested that a coffee-bean grinder is a luxury good, an item that exists simply because man's desire for a theoretically better product (freshly ground coffee) has created a device that will deliver it to him for a small price. It's $20 that I feel is "beyond my age," which I'll explain momentarily, but one I'm still going to spend.
If you imagine that everything you buy is on a "path," then you'll want to progress on this path in a nice, orderly and chronological way. The prime example is a car. If you work during high school and college and save for a car, you'll probably get a beater or inexpensive car because that's what you can afford. The point is to get from point A to point B in a means faster than by foot or by bicycle (or by parent).
Knowing the awfulness of a beater helps you appreciate the awesomeness of a car that doesn't need a rolling start.
Unfortunately, some people get the benefit of their parents' finances and get a Beamer (BMW) rather than a beater. Those kids, in many cases, also seem to have much higher expectations of what the world is supposed to do for them. This is not a good thing. Those kids were supposed to go down this transportation path but were spiked in somewhere farther than they were supposed to be, thus causing them developmental harm.
For coffee, the path is less clear, but I see it as: instant coffee, ground coffee and coffee maker, whole-bean coffee and coffee maker and coffee grinder, etc. (I'll let you know when I get there.) I know that coffee made with a coffee maker is better than instant coffee (not that much better, but I'm a lazy person) because I drank instant coffee. Perhaps I'll find that whole-bean coffee, freshly ground, is better than regular ground too. The point is, I may appreciate the luxury because I've had the regular or the economy versions, not because someone told me it is so much better.
What's my point? My point is that so many people don't follow the path from the beginning, or time warp through the journey to a point in the future. They get a job and their first thought is to buy a luxury vehicle because they see executives driving them and they want to be a big shot. They see football players with enormous televisions on "MTV Cribs" and they want an enormous house with a pool and a pool table. They see the luxury brand names being worn by celebs and they want to feel special too, so they break the bank getting LV. What funds all this? Credit.
The result is that many people fund their relatively lavish lifestyles on credit and then end up in thousands of dollars of debt. There's value, both financially and developmentally, in following the path in an orderly fashion and not jumping farther along. You can't skip your teenage years and you shouldn't skip drinking instant coffee. (It's really not bad at all.) Enjoy the bad so you can truly enjoy the good -- and not be in debt.
Other articles of interest at Blueprint for Financial Prosperity:
"How to financially prepare your kids for college"
"7 ways to be green and save green"
"The 15- vs. 30-year mortgage savings myth"
