Are You Good With Money?

[6miths]

I would think that on the FIRE forum most people are going to have above average money skills. I would say that DW and I are pretty good but I have definitely made a few missteps but was always fortunate to have a pretty fair income.

Does anyone know why the author is planning on buying a condo in Canada as part of his retirement plan. I googled him and it doesn't look like he is originally from Canada.

 

[JPatrick]

Good to see me and my fellow Texans are number one!

Apparently explains why Texans all drive old beat up pickups.

 

[Hermit]

Apparently explains why Texans all drive old beat up pickups.

So what's wrong with an old, "well used" pickup?? Here's mine:
(BTW, I just took the chains and plow off today!)

 

[scrinch]

So what's wrong with an old, "well used" pickup?? Here's mine:
(BTW, I just took the chains and plow off today!)

Hey did you have to pay extra for that nice colored hood and fender?

 

[jollystomper]

I liked this line from the article:

The funny thing about being good with money is that it doesn’t necessarily mean being smart.

For years several of our relatives tried to show off that they were smarter with us when it came to finances. Some of them worked on Wall Street and thought that gave them special "insight" on "how to get rich". They belittled the basic advice in the article, which most on this forum follow, as "too simple minded" and "that isn't going to get you anywhere". Sadly now they are paying the price.

 

[Hermit]

Hey did you have to pay extra for that nice colored hood and fender?

As a matter of fact, I did! You should have seen the hood and fenders that I replaced!

 

[Gumby]

In my view, it has nothing to do with IQ. Rather, it all comes down to whether you can pass the marshmallow test or not.

https://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

 

[RobbieB]

Yeah, "get rich quick" rarely works well.

Get rich slow works much better. Never spend it all, salt some away. Low and slow just like BBQ. Decades of saving and compounding. Dollar cost averaging over the long haul.

And presto! Just like magic one day you're a millionaire -

 

[Markola]

Man, ain't this the truth:

" You can’t force people to make good financial decisions. You can’t even nudge them or educate them. Some people get it right, and some people don’t. I made it a priority to learn about money when I was 22—and it became a passion. "

That's me, exactly. My DW tells people that I'm "good with money". So, occasionally, when friends and family are stressed about their finances, they ask me for advice. I say, "OK, call me and we'll chat." They don't. Or I send them links to good blogs, tell them about YNAB or even buy them a Dave Ramsey or J.L. Collins book. I hear nothing, not even "Thanks for the book." If it ever comes up again, I say, "Did you read that book?" They say, "Oh, yeah, it's on my nightstand and I'm looking forward to looking through it."

You are either among the tiny minority who is motivated to internalize good money knowledge and habits and on the way to getting rich slowly or you, quite simply like the vast majority, are not.

 

[ERD50]

Quote:
Originally Posted by NW-Bound
The chart showing the average credit score getting progressively higher as one goes north is very interesting.

Some time ago, I read that people in colder climates tend to be more independent and self-reliant. Perhaps that trait, which is driven by the required survival skills due to the environment, also drives them to borrow money less.

I agree... Surviving harsh long winters and retiring comfortably both require the mindset of foregoing comforts today to ensure later success.

Hah, we sometimes joke that our winters "build character". But maybe there really is more to it than just laughing to keep from crying?

If you grow up preparing for bad weather, like " snow storm coming, make sure we have a full tank of gas, maybe put some extra weight in the trunk (when all the cars were rear-wheel drive), a shovel, some sand, some extra warm clothes in the car in case you get stranded", and just in general, having to "prep" for winter (bring in the hoses and other things that would freeze and break from expanding ice), check the car battery, anti-freeze, tires have plenty of tread, etc, etc.

Maybe that prepping mentality also gets engraved into the brain cells, and you also prep for hard financial times? Makes some sense.

-ERD50

 

[DrRoy]

My answer is definitely yes. I saved plenty, but I wouldn't say "until it hurts". DW wouldn't have been happy with that. If one saved until they were miserable, I think they wouldn't be as likely to continue doing it for long enough. Have a little fun along the way.

 

[street]

Interesting article and chart and do all of those things. I also wouldn't consider myself a financial guru. I saved and invested and lived a frugal life but still had everything we needed.

 

[exnavynuke]

Man, ain't this the truth:

" You can’t force people to make good financial decisions. You can’t even nudge them or educate them. Some people get it right, and some people don’t. I made it a priority to learn about money when I was 22—and it became a passion. "

That's me, exactly. My DW tells people that I'm "good with money". So, occasionally, when friends and family are stressed about their finances, they ask me for advice. I say, "OK, call me and we'll chat." They don't. Or I send them links to good blogs, tell them about YNAB or even buy them a Dave Ramsey or J.L. Collins book. I hear nothing, not even "Thanks for the book." If it ever comes up again, I say, "Did you read that book?" They say, "Oh, yeah, it's on my nightstand and I'm looking forward to looking through it."

You are either among the tiny minority who is motivated to internalize good money knowledge and habits and on the way to getting rich slowly or you, quite simply like the vast majority, are not.

I completely agree about "educating" and "helping" others. I do so when asked, but the advise is normally ignored or only partially followed at best.

I don't think "you either are or you aren't" is a good way to put it though, since people who are "paycheck to paycheck" people can turn into savers/investors later. I know I was and I did.

 

[H2ODude]

Never have known my credit score, all I know about it is that it's LOCKED!

 

[ponyboy]

Im not even going to bother reading this article. Im 34 and wife is 33...we almost have a net worth of 1 million not including real estate. Whatever these articles have to say we're already doing and have been doing. These articles never change. They just keep regurgitating the same things over and over...yet people refuse to listen. Nuff said.

 

[dixonge]

Back in the 70s when I was in HS these subjects were taught for a whole semester. We even went through the 1040 forms and simulated our own businesses for a few weeks. Public High School, not some business course for braniac teenagers. I can't imagine anyone not knowing how to do this.

Is this not curriculum today? I know Charles J Givens always said Americans were financially illiterate, but was he exaggerating? Or not?

_B

I graduated in 1979. I never had any class that dealt with tax forms or check writing, never mind an entire semester. Not even one day, one lesson.

Then again, my school was in Texas...

Edited to add: many, many years later, I *did* take a class about check-writing. I believe it was called something like "Hot Checks: Felony/Repeat Offenders"

(true story)

 

[kcowan]

Simple, not easy as I often say. I used to tell my employees (who made well above average wages) time and time again, you have to live below your means if you ever want to reach financial independence and retire - whether you make $40K/yr or $400K/yr. But I was usually met with 'we don't want to learn about investing, just tell us what stocks to buy that'll make us rich' or 'yeah, easy for you to say since you make more than we do.' They never could grasp it's not how much you make as much as how much you keep...

Yes I was one of the "get-rich-quick" crowd and followed many hot tips. My salary was doubling every 5 years for the first 25 years so I was focused on my work.

This is a remarkable observation. I don't know if it's generally true, but I do know a person who takes pride in his IQ, yet has lived on a shoestring all his life and has been deeply in debt for decades.

IQ often works against wealth-building because they think they can outsmart others to their detriment.

While this may not be the best investment advice, putting money in a CD will do a lot more for your retirement than blowing it on beer or speedboats or vacations in Vegas.

Early in my working life, these and other extravagances were what motivated me. Make more, enjoy more!

Does anyone know why the author is planning on buying a condo in Canada as part of his retirement plan. I googled him and it doesn't look like he is originally from Canada.

[mod edit]

In my view, it has nothing to do with IQ. Rather, it all comes down to whether you can pass the marshmallow test or not.

https://en.wikipedia.org/wiki/Stanford_marshmallow_experiment

Yes I found religion when I was moved 2000 miles and had 2 250K homes and a bridge loan for $400k. I maxed out all my credit cards and cashed in retirement plans and became delinquent of our bills to the limit until the first home sold. After that bad experience, I vowed to pay cash for everything!

After that, LBYM seemed to be the best solution! Plus whenever someone in my workplace was promoting some investment, I seriously looked at taking the other side and sometime made out extremely well.

I believe it was called something like "Hot Checks: Felony/Repeat Offenders"

Wow some practical education!

 

[ShokWaveRider]

Pretty much what we do. [mod edit]

 

[brett]

I can do math. Good at sums. P&L's,balance sheets, cash flow statements and margins are not strangers to me. I understand the difference between red ink, black ink, depreciation, and retained earnings.

If you understand math, numbers, margins etc. it goes a long way toward living within your means and avoiding debt-especially consumer debt. Leads to value based purchases at the right time for the right price. Allows one to push the boat out and splurge once in a while without much thought to the expense.

 

[joeea]

Apparently, at least by the definition in the article, I am good with money and I live in one of the highest credit-score states.

I wasn't always good with money, but I have always lived in this state.

My second home (where we plan to retire to) is in a lower credit-score state. I still expect to be good with money when that time comes, though.

I'm not sure I found that article very thought-provoking. And I struggled to find anything contrarian about it. Did I miss something?

 

[kcowan]

Knowing how to use and interpret spreadsheets was a forced learning that I did while working which has paid big dividends since planning retirement and tracking progress. As a sales guy, I hated such stuff so they put me in a job where all my direct reports used them.

 

[mystang52]

How about this as one sentence defining good with money:
Knowing the price of an item, not the monthly payment.

 

[Walt34]

How about this as one sentence defining good with money:
Knowing the price of an item, not the monthly payment.

That reminds me of the time DW brought a friend home from school when she was taking classes. I had recently bought a motorcycle and she asked what the payments were. I said "No payments, I wrote a check" and she looked surprised that anyone could do that.

One SIL, OTOH, will buy a new car whenever she can trade the old one in and keep the payments nearly the same. I doubt there will ever be a day in her life when she is not making car payments.

 

[audreyh1]

Good to see me and my fellow Texans are number one!

Wow! Well DH and I will look good to creditors around here then!

 

[sengsational]

Without question the two most useful classes I had in high school were typing and a class in personal finance.

Typing was valuable for me too.

Never had a personal finance class, but I took many "Engineering Economy" courses in college. The same equations are used whether it's buying a piece of equipment on the plant floor or an investment. The other thing is that I was in the "Cost Engineering" department for a manufacturer, and I also did stint in the Finance department. So I lived and breathed spreadsheets at work.

All that being said, I still think I would have "passed" the marshmallow test, and that that is the more important factor.