Since Halcomb Singler, LLP, represents individuals in bankruptcy cases as well as debt settlement, this attorney is always looking for new ways to inspire people to spend less and get financially healthy on the other side of bankruptcy or debt settlement. This week at a meeting, financial planner Bruce Maggin, Horizon Planning, Indianapolis, gave a presentation that included some of the best common sense financial advice I’ve ever heard. It was so simple, but it resonated greatly with me and I thought I would pass it along.
The advice was simply this: “Say no and later more often. Then spend less when you do say yes” So simple, but so true when it comes to our financial lives. If we simply say no to purchases more often and/or push out purchases as far as possible, spending as little as possible it would change all of our lives. I know, I know, it sounds like none of us would ever be able to spend money. This isn’t true. It just means that we need to think about what we are spending and basically become financial procrastinators. Why buy a pair of jeans now when you have 5 pairs in the closet? Do you really need to own a pair of snow boots in Indianapolis where snow accumulates only a few times per year? Is that fitbit something that you really want, or is it just going to end up in the junk drawer in a few months?
The example Mr. Maggin used to show this motto in real life was that he received a call from his sister one day, who was at the car dealership. She said she was thinking about spending $15,000.00 on a car for her daughter who was just about to graduate from college and she wanted to know what Bruce thought about it. Bruce said he thought it was a terrible idea. He said that $15,000.00 was a lot to spend on a vehicle for someone who is about to have a full-time job and should be in a position to take care of their own vehicle. Instead, he suggested spending about $3,000.00 to get a vehicle to get the daughter by for a while and if she wanted a different car after graduation, then she should be responsible for paying for it. Bruce added that $15,000.00 is about the limit to what his wife and himself will spend on cars for themselves, and that a recent vehicle purchase for their own daughter was $4,000.00. In the end, I don’t know whether Bruce’s sister took his advice or not. But in the event that she did then she would have saved herself over $10,000.00, and that’s assuming that she was not planning on financing the vehicle. In the event she was going to finance it, add another 4% to the cost.
Think about the spend less, later motto just as it relates to vehicles. How many vehicles do you think you will purchase in your lifetime? How much money could you be saving if you used the spend less, later motto for your vehicle purchases? It’s very easy to go out and spend $30,000.00 on a vehicle every 5 years, which is the average amount of time over which people finance cars. Even assuming that a person pays cash for their vehicle every time, if they spent $15,000.00 on a vehicle for themselves and drove each vehicle for 10 years instead of 5 think of the amount of savings. Over 40 years the person who buys a new vehicle for $30,000.00 each time will spend $240,000.00 on vehicles. The person who spends $15,000.00 every 10 years over 40 years will spend $60,000.00. That means the first person is going to spend $180,000.00 more over 40 years. That is the cost of a house, people! I know that over the next 40 years the price of cars will increase and it may be necessary to spend more than $15,000.00.
Can you take the challenge? Can you spend less money, later? Can you drive a less expensive car and realize that this is a depreciating asset and spending less on the ability to get from one place to another will free up money for you to live your life?