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Influences on how you think about money
Old 03-08-2006, 09:09 AM   #1
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Influences on how you think about money

Reading the thread about talking to your family/friends about money got me thinking about how I think about money and influences on me.

For me it's pretty easy. My whole family (ok, except for one aunt), is made up of savers. We lived in a nice house and vacationed on a lake in NH every summer for a few weeks, but we never had designer clothes, never had the latest video games, didn't have TVs or phones in our rooms, but never wanted for anything. My parents paid cash for cars and only got new ones when the old ones were 8 or 10 years old.

What we saw was my parent's working hard, saving, and then retiring at 57.

My dad's sister had a little monetary help from an early divorce from a pretty rich guy, but still worked hard to learn how to invest and went out and got a good job and scrimped and saved and retired at 55. She lives, quite happily, on about $30K a year - and travels around all summer with her husband out west in their RV.

What we saw was an independent, financially smart woman making it on her own.

I want to retire at 52 (15 years to go). I live on less than 1/2 my income. I max out my 401 (k), and save a bunch of money on top of that. I carry no credit card debt. I hate to shop. I'd rather save than spend. My sister is the same way. She and her husband are more frugal than me.

Who influenced how you think about all things financial?

PS: I do spend money on traveling-it's a passion of mine. Off to Costa Rica in less than 3 weeks!

Karen
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Re: Influences on how you think about money
Old 03-08-2006, 09:17 AM   #2
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Re: Influences on how you think about money

My parents. Growing up, my parents were very frugal and they saved a lot. I picked it up from them, but improved on the concept by saving/investing smarter and being "value-conscious" instead of frugal (ie - cars need to run - it's ok to spend money on them to make them run or replace them when they are on their last legs).

Understanding from an early age that money can work for me all the time. Put it in the bank or market and it makes you more money while you do nothing. From there the next logical step for me was "I can live off my investments". Enter the spreadsheet and calculators. Voila. I'm on the yellow brick road to ER.

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Re: Influences on how you think about money
Old 03-08-2006, 09:28 AM   #3
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Re: Influences on how you think about money

I would agree with Justin. My parents were my role models for most of my basic lifestyle choices. They were both kids during the Depression and were very poor. That experience molded their financial actions for the rest of their lives.

No car loans...cash and only for used cars.
No credit cards
Money from my dad's paycheck was divided up into various envelopes every 2 weeks for expenses. When the envelop was empty...you stopped spending on that expense item.

Savings accounts were started when were were 5-6 years old; we opened them with our parents and it was a big day! Grandparents sent Savings Bonds as gifts. etc etc.

The only area they were very negative on was investing; don't trust the stock market. So that was learned on my own and it is a continuing education.

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Re: Influences on how you think about money
Old 03-08-2006, 09:31 AM   #4
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Re: Influences on how you think about money

I credit my dad for everything I know about finance (except a few things I picked up on this board * ). * Even when we didn't have much of anything he was investing in stocks in a small way - which paid off in a big way 40 years later.

He set up Vanguard and Fidelity accounts for me when I couldn't care less about investing (in my early 20's) then coerced me into paying attention by setting up a fund picking contest where we put equal money into accounts that we each picked. *Than money has of course grown hugely in 20 years - and guess what, *I'm winning!
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Re: Influences on how you think about money
Old 03-08-2006, 09:35 AM   #5
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Re: Influences on how you think about money

My parents were also a big influence, but so were my grandparents on my mother's side. My mother' father bought some AT&T and miscellaneous utility stocks back in the 1930s, and by the time he and my grandmother retired in 1970, they had a nest egg of somewhere north of $500k.

I agree with Justin that it's better to be "value-conscious" rather than simply frugal.
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Re: Influences on how you think about money
Old 03-08-2006, 09:39 AM   #6
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Re: Influences on how you think about money

Guess I need to credit my parents also...but for a different reason...growing up I watched them never, ever save a single dime for a rainy day, usually just blew it one way or another (and not even for anything fun), and I watched as they got older and didn't have two nickels to rub together...and swore I wouldn't be like that when I grew up. *

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Re: Influences on how you think about money
Old 03-08-2006, 09:44 AM   #7
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Re: Influences on how you think about money

My mom influenced me, but was not an investor. I picked that up once I graduated from college and had excess money. I grew up in a single parent household so not a lot of money, but learned how to earn it and not spend it.
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Re: Influences on how you think about money
Old 03-08-2006, 09:48 AM   #8
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Re: Influences on how you think about money

Parents, except their influence on me was based on how bad they were with their money. *A professor I had in an undergrad finance class got me interested in saving/investing more than anyone else. *
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Re: Influences on how you think about money
Old 03-08-2006, 09:53 AM   #9
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Re: Influences on how you think about money

My grandmother struggled for as long as I could remember to make ends meet on SS after my grandfather died. I swore I never wanted to live like that, it's taken time but I've gotten there.

My parents were also savers, dad was self employeed carpenter and over the years he put enough away for him to retire and not worry about money. Paid off his home, never bought something he couldn't pay for, taught me that to be in debt was a bad thing.

My own influence was knowing that if I saved enough money I could live off the interest. It seemed like pie in the sky when someone first told me about that but now I'm almost ready to cut in and taste it for myself.
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Re: Influences on how you think about money
Old 03-08-2006, 09:56 AM   #10
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Re: Influences on how you think about money

My loathe of working is what did it. The thought of "I have to do this for HOW LONG?" coupled with my INTJ tendency to "fix problems."

My parents were savers, but their desire to save only increased my desire to spend.

I can recall drawing a picture like this (below) as justification for getting a car loan while in college- I didn't get the loan, but this is what I was thinking- yeah, I was super savvy with money back then.... my Indian name would have been "flows through fingers like water"
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Re: Influences on how you think about money
Old 03-08-2006, 10:01 AM   #11
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Re: Influences on how you think about money

My parents were very smart about money, not really frugal, just *smart. Growing up I had the usual summer jobs (starting at age 14), but I also dabbled in a couple of small businesses. *From those experiences I learned that you can work for the man and earn $XX per hour, or you can work for yourself for the possibility of unlimited financial success. *I discovered early on the boredom associated with a passbook savings account vis a vis a *few shares of stock. *I also had an uncle who was really, really, rich and had a lifestyle to match. *I decided that was a nice way to live. *When I couldn't find a money tree on his estate, I asked him how he did it. *The short answer- -education--out work the others- - invest smart and often.
However, my greatest influence came from my peers over the years. *I saw so many of them tossed out on their ear for no apparent *reason, so I thought- - damn, that could easily be me, I'd best be planning for the worst and hoping for the best. *So far that has worked.
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Re: Influences on how you think about money
Old 03-08-2006, 10:16 AM   #12
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Re: Influences on how you think about money

Like most who have chimed in on this thread, my parents were a big influence. Mom grew up poor by todayís standards, but dad grew up on a farm prior to the depression and was so poor that the depression had no real impact on him financially. Iím sure it hurt his opportunity to improve his financial status, but he said it didnít make things worse because they couldnít get any worse.

My dadís youngest sister, now in her late 80ís, was once asked what she remembered as the best thing that ever happened to her as a child. Her response was ďWhen my dad put tar paper on the house one winter to stop the wind blowing through the cracks between the boards.Ē Here is a photo of her and two of my uncles taken in the early 1920's to give you some idea of the level of poverty they "enjoyed":



I was thinking of commenting about how they walked to school barefoot in the snow, uphill both ways. Then I recalled only one of my dadís siblings ever finished high school...

My point is the very humble background of my parents resulted in them living a very frugal lifestyle. Mom never worked outside the home and dad was self-employed and never made more than about $30K/yr in today's dollars. Yet he retired at 62 with no debts, no pension and savings of about $75k in CDís. Never owned a stock or bond, other than perhaps a US Savings Bond. Even after retiring they saved a portion of their SS check each month.

In addition to the example they set for me, I owe a debt of gratitude to a sleazy life insurance salesman who briefly targeted me just as I got married, graduated from college and started my working career. He tried every trick in his arsenal to sell me a huge whole-life policy, but I managed to get my hands on information at the library (no internet, if you under 30ís can imagine) about the wisdom of buying term life and investing the difference. This got me interested in mutual funds, which my dad and my siblings considered of gambling. But they worked out pretty well for me...at least so far.

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Re: Influences on how you think about money
Old 03-08-2006, 10:26 AM   #13
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Re: Influences on how you think about money

Same here, mostly - parents and grandparents.* Never use credit cards.* Put money in savings and never take it out.* I was told I had to get a job when I was 15 or I wouldn't have any money to spend.* That was 1970, and I've been working ever since (until the end of next month!!)

We didn't have much growing up, so I learned to appreciate what I had and not feel like I needed everything.* The other thing was that I was taught that no matter how much or how little income you have, you should always save something.* So in 1974 when my weekly paycheck netted me $62 and I had my own apartment, I always took $10 off the top and put it into my savings account.* It might leave me with $4 for "spending money" the rest of the week, but that was what it was.* It was a non-negotiable.* It never occurred to me not to do it!

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Re: Influences on how you think about money
Old 03-08-2006, 10:31 AM   #14
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Re: Influences on how you think about money

Hmmm

Maiden Aunt(aka da Swedish maid in NYC) died and left my Depression era Dad some mutual funds - which he promptly unloaded cause stocks are dangerous. Started me reading about mutual funds(Public library) in the 7th or 8th grade.

Later - remembered Mrs Wright by the mailbox down at the end of our gravel road(maiden name Andersen, aka the Norwegian widow) - who had the cash when lawn mowing was in order.

Still - later - fellow older engineers at my first job.

Made every investment mistake in the book.

Then became a Boglehead.

Hence De Gaul and the Norwegian widow.

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Re: Influences on how you think about money
Old 03-08-2006, 10:45 AM   #15
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Re: Influences on how you think about money

This is an interesting subject.
My parents set a good example for me to follow. When I was little I remember we always had the relatively crappy car, not a ton of toys like some of my friends, but a bigger house. I remember thinking my parents must value a bigger house over more stuff, and that I would prefer it the other way round. Growing up like that showed me that I don't need a lot of toys, and I still don't think I need a bigger house so I win both ways. Also saving up to buy my own computer taught me some things.
I also must mention my high school economics teacher, who drilled into us that as soon as you get a job you should start saving using mutual funds. He had us pick some funds, reading prospectuses (ugh), doing 1040s (itemized deductions), and keep track of our fake portfolio. It was a real pain, but it showed that it's just painful, not hard. That's for a large part responsible for starting to max my 401k almost as soon as I got out of college. I ought to go thank him next time I'm at my parents' place (if he's still teaching).

Tim
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Re: Influences on how you think about money
Old 03-08-2006, 10:53 AM   #16
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Re: Influences on how you think about money

I think I was born a saver. *Ever since I can remember I've been saving or collecting things, including dollar bills. *Maybe it was sibling rivalry ("Mine!!") or a form of insecurity, but it piled up the bucks.

Later I realized that working for money made it pile up even faster-- mowing lawns, shoveling driveways, washing cars, and eventually working at a golf course. *That reinforced gratification probably cemented my money attitudes.

Money wasn't talked about in our house. *It wasn't taught but it wasn't verboten either-- it was just a subject that was ignored. *We had kid's accounts at the savings & loan but that was as far as it went. *Parents presumably did OK but no one ever discussed the family books or the details of investing. *(It's also quite possible that I wasn't paying attention.) *I remember when I was in college my father showed me how to build a spreadsheet (with pencil, paper, & calculator!) to amortize a car loan at various interest rates/payments.

The education really began when we got married and spouse taught me all I knew. *Navy working hours make it pretty easy to avoid spending and we lived a frugal lifestyle to afford the mid-'80s mortgage. *When you're both working & saving, the compounding really takes off and you have to figure out what to do with it. *DCA'ing into Fidelity mutual funds was a pretty straightforward answer despite their 2-3% "fee".

Eventually shipmates & FIL brought up enough financial topics to make me curious about the right answers. *I've learned to be less impressed with results than with the underlying drivers that produced those results and how reliable/reproducible they are. *That research isn't finished yet and probably never will be!

Our kid can tell you who influences her thinking about money, and I bet her main thought is "God I wish they'd stop talking about it!" *But when she's talking with her friends or shopping with them, she can see the knowledge difference.
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Re: Influences on how you think about money
Old 03-08-2006, 11:11 AM   #17
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Re: Influences on how you think about money

My parents were born in 1912 and 1913 and so were in their late teens when the great depression hit. Their families were poor to begin with (mom had 6 brothers and sisters, dad had 4). Their experiences during the depression influenced their financial attitudes and they, in turn, influenced mine. As far as learning about investing, the best thing they did was to start UGMA accounts for my two children when they were born and make me the custodian of the accounts. This forced me to learn about mutual funds. I also began investing some of my own money even though I wasn't earning much and DW was staying home to raise the children. By living below our means, saving as much as possible and keeping investment costs as low as possible we managed to put both kids through college, pay off our mortgage early and retire at 55/56 with a pretty much "bullet proof" financial situation. I inherited a modest amount when mom passed away, but the greatest thing they left me was their attitudes about money and investing.

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Re: Influences on how you think about money
Old 03-08-2006, 11:23 AM   #18
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Re: Influences on how you think about money

I think I got a lot of my attitude from my grandparents, moreso than my parents. Oh, and that old movie where the chick is digging into the ground and pulling up these mangy looking radishes behind her burnt-out shell of a McMansion and shouting up to the heavens "As God as my witness, I'll never go hungry again!"
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Re: Influences on how you think about money
Old 03-08-2006, 12:06 PM   #19
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Re: Influences on how you think about money

Also, my natural laziness (perhaps inherited from my parents too ) led me to save money. That saved money then makes more money. Rinse, repeat.

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Re: Influences on how you think about money
Old 03-08-2006, 12:35 PM   #20
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Re: Influences on how you think about money

I'd have to give credit to 3 areas for my desire to retire...early.

Parents & In-laws (too poor to retire in their 60's, that won't be me)
Everyone around me (this board, casual observation of: neighbors, co-workers, clients, etc)
And most especially, 20/20 Hindsight! (I'm still quite young, but DAMN! I spent a lot of money growing up. If I earned it, I spent it... so stupid.)
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