LIVE BENEATH YOUR MEANS

I don't think it is possible to follow the advice of the two previous blogs unless you learn to live beneath your means. I spoke with a friend from Panama who related to me that in their culture, it was demeaning to purchase and wear used clothing. I immediately could see the implications of that thinking. They would have less money to spend on more important things. Of course the interesting thing about that is that they consider the clothing to be more important than many other things in life. I value health care, nutrition, and a college education for my children. They value looking stylish. Which is more important?

A high school teacher told me last week about her feeling of distress in seeing some students wearing $200 jeans to school. What hope of success in the world does a student have who places that kind of value on clothing? We can all hope that they will eventually grow up. Sometimes it is hastened by the school of hard knocks.

I think a key concept to financial success is deferred gratification. We're talking major deferral, like 30 years. Not everyone can see themselves even living that long. Their philosophy is to enjoy it now. I can understand the short term thinking, but don't happen to agree.

Let's look at cars. The cheapest car you'll ever own is the one you are currently driving. That factors in repairs. There is a point at which it may make economic sense to upgrade. I got rid of my last two cars because the cost of the repair was way more than the value of the vehicle. If you do upgrade, wait until you can pay cash.

Living beneath your means will enable you to contribute to a Roth IRA. Most accounts will allow a $250 deposit to start. Everyone should have one.

Don't take away the idea that I value old clothes and cars. My clothes are decent and I wash my car every Saturday. More thoughts in the next blog.