Beating Broke

Personal Finance from the Broke Perspective

Is Personal Finance Really Important?

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In case you haven’t noticed, this site is all about personal finance.  Well, mostly.  We certainly talk a lot about personal finance.  But, is personal finance really all that important?

How much time do you devote to your personal finances?  To your budget? To coupon clipping?  In the end, does any of it make a difference?  Or are we merely just going through the motions because of some larger issue?  Ever since my Junior year in high school when my english class went through a whole section on propaganda, I’ve (rightly so) questioned anything and everything.  We don’t deal with propaganda on the level of that they did in war times, but we still deal with it on a regular basis.  And at it’s root is the necessity by those companies who are spreading the propaganda to further the consumerism society that we’ve become.

Over the last few months, I’ve been reading a lot of books on the subject of breaking free of what you are, and becoming what you should be.  Books like “No More Mondays” and especially “Early Retirement Extreme” have brought me to take an even closer look at the consumerist lives that we live.  Jacob (the author of Early Retirement Extreme) lives on somewhere around $10,000 a year.  A Year!  Could you even make it 3 months on that?  I know that I would have an incredibly tough time even trying to come close to living on 10k a year.  It would take some very radical changes for me, but I might try working towards that by reducing my consumerist habits.

And, when you reduce your consumerist habits, a funny thing will likely happen.  Your expenses will go down.  And you’ll be able to “live” on less and less.  And another thing that will happen, is that personal finance will become less important.  We worry about the most frugal way to do this or that, or the proper way to save for retirement or buy a house or pay off debt, or even the best way to negotiate a better deal on your next car when what we really should be worrying about is why we are living the lives we are.  How many of you are working jobs you don’t want to because you have all this debt from your house and your car or from all the fun “stuff” you bought on credit?  I know my hand is raised.  How LIBERATING would it be to walk out of your office today and not look back.  And not have to worry that someone was going to come and take your house away.

Do me a favor.  Take 15 minutes and watch this movie that Adam included in his post on focusing on what truly matters.

*direct link to youtube video if my embed doesn’t work for some reason: http://www.youtube.com/watch?v=3Cakm2nIQWo

Now, tell me.  Could you stop and not keep going if you had to?  Or are you so tied to your “career” and “job” that you have to “keep going”? Take the steps today to free yourself of the consumerist lifestyles that we live.  Free yourself from the eternal “going” that we experience every day.  You likely won’t accomplish it in a day, or even a month or year, but if you take a little step every day, you can get there.  I’m taking that journey, step by step, and it’s difficult.  It’s difficult to give up some things that we don’t really think about.  But, if we want to be able to stop whenever we want to, we need to be able to do that.

New Home Sales Down

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So, are you surprised by that news?  That new home sales dropped like a rock in May?  I can’t say that I am.  I try hard to keep my politics out of this site, but what the heck were they thinking?  If you look at the chart that CNNMoney has posted, you can clearly see that, not only did they drop, but they dropped below where they were before.

And obviously, there is a very nice spike for a while.  Incentives do make a bit of a difference.  And, in all honesty, if we had been in a situation where we felt we could afford a new home, we would have jumped at the opportunity to take advantage of those incentives.  But the spike was just that.  A small percentage of people taking advantage of an incentive that made it very attractive to buy a new house.  What it didn’t do was return home sales to anything like previous numbers.  In fact, it didn’t even get the numbers back to 50% of what they were in 2000!  And now, after the incentives have expired, they dropped 33% to an all-time new low. The last time the numbers were this low was in 1981!

I think everybody has the right to purchase a home.  You shouldn’t be dis-allowed from purchasing a home.  But, you still have to pay for it!  Owning a home is not a right.  The ability to purchase one if you can afford it is.  Years and years of politicians buying votes by pushing lenders to finance houses to people who couldn’t afford them is what caused the housing market (and our economy as a whole) to be in the condition it is in.  And that crashs’ ripples are still being felt throughout the country and the world.  Creating incentives to buying a home just extends that streak.  People see that $8000 and think that they can afford a home that they really can’t because they will get a nice $8000 check to help pay it down.  But, when that money comes around, what are they going to do with it?  Spend it.

And in five years, when those mortgages adjust, we’ll have a nice little mess to figure out again.  Sure, it won’t be anywhere near as bad as the current one, but it’ll be there.  If only we could teach people to be responsible consumers.  To not buy what they cannot afford, and to only spend what they earn or less.  If we could do that, then they wouldn’t need those incentives to buy a home.  They might actually be able to afford it without them.

Limited Edition

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An advertisement that I received prompted me to think about the term “Limited Edition”.  As consumers we are conditioned to believe that if something is called “limited edition” that it must be more valuable.  After all, it is “limited”, which implies that it is scarce.  It implies that the supply of the item has a limit.  It also implies that you really should buy it now since it won’t be available after all of the current “limited edition” are sold.

However, in truth, it’s most likely not all that “limited”.  It’s just propaganda, folks. A sales tactic designed to make you not only buy the item, but also pay more for it than you should.

If you really, truly, think about it, anything that is being made can be called a “limited edition”. Every model of car that rolls off of the production line is limited.  They only make so many a year.  Get yours now!  This article is a limited edition.  At some point I will stop writing articles.  There won’t be any more.  The supply is limited!  Which is why you should pay me now!  Just kidding.  Kinda.