I must confess that sometimes I get bogged down with terminology and occasionally see blank stares when I’m giving a talk entitled “Planning a Simpler Lifestyle”. What is a simple lifestyle? Simple compared to what?
Some people imagine that I am advocating a hippy life style, living off their organic gardens, selling craft goods at the front gate and bartering for the commodities they cannot produce. I have a certain admiration for these hardy and innovative folk but that is not what I mean by a simple lifestyle.
Others think that it is driving a twenty year old bomb, going to the opportunity shop for clothes and salvaging anything that the might be useful someday. This again isn’t what I am on about either. I could go on because simplicity takes many shapes and forms. Baking instead of buying; turning the unused lights off; cycling instead of using the car. All these things are a part and parcel but it’s it’s not where I suggest starting. Simple lifestyle in these terms can become faddish, almost cultist.
Simple lifestyle is not a way to cop out of social relationships and responsibilities. Many of the specifics that mark simplicity might also be seen as selfishness or stinginess.
I prefer to talk about “Economy Living” rather than the simple lifestyle. When I see what people are frittering away on nonessentials and wasting precious commodities without a thought for the millions of starving people in third world countries, there has got to be something wrong somewhere. One small step taken towards economy living with the intention of sharing with those less fortunate could get our eyes off ourselves and open up exciting avenues for many who otherwise would only live for themselves. We seem to be getting oblivious to empty stomachs with the growing need for a few scraps off our well-laden tables.
I saw a statistic that really hit home to me, “If all the starving (not just the undernourished) children in the world were lined up, one behind the other, starting from your front door, the end of the queue would be 25,000 miles away. That should make us choke on our oysters and pate. But we cannot remedy other people’s problems until we have our own house in order. The right use of money includes using it properly for our own needs. Only when have done that can we turn to the aid of others. In fact it’s a balancing act and we walk a tightrope strung between our needs and the needs of others. To stand on either side is to neglect the other side. We need to be poised so that a delicate balance is maintained and that’s not easy.
So, if your attitude is, “ Yes, I'll give the hungry something to eat if you show me how” – great! -- may I suggest that you don’t go overboard but take a few small steps towards creative economy living.
First you need to establish a target or goal to aim for like sponsoring a child through the one of the aid organizations. Then to make consistent giving a habit you need to determine your capacity to fulfill the obligation. Establish your present financial situation then, if necessary, prune away extraneous expenditure until sufficient surplus can be maintained in your financial plan for the ensuing twelve months.
You can find a deep personal satisfaction in learning to live more simply that the poor may simply live .
Tuesday, April 29, 2008
BOOMS & BUSTS
I suppose change add spice to life and most people learn to adapt to changing situations reasonably well. But there are too many who throw a wobbly when something unexpected hits them. Mainly these are people who live in the past or present and let the future take care of itself. When some crisis, be it family, financial or health hits suddenly they are totally unprepared and a sequence of events takes place.
1. Alarm.
2. Temporary Panic
3. Apathy and Disinterest
We spend 80% of our waking day working for money. That’s why we get concerned at the state of the economy. We enjoy the boom times, which started in earnest in the 1960’s but we were totally unprepared for the first big bust, which came early in the 1970’s. Since then the value of the dollar has been shrinking on the world market. Inflation increased and grew at an alarming rate. Real production dropped and the only real growth has been in the investment area, shifting money around like a commodity. The effects of the inflationary spiral just resulted in higher and higher prices and these continued to soar while real production declined. We stand the risk of pricing ourselves out of the world markets because no longer do people beat a path through the forest to buy the best mousetrap. Nowadays, the mountain won’t go to Mohamed, Mohamed has to trot along to the mountain. Sometimes I think that we had it too good for too long and the last few Kiwi generations grew up with too high expectations without putting their backs to the wheel.
We certainly don’t benefit from history and the 1987 crash reminded ourselves of this fact. But since then we have enjoyed another boom and this one has lasted a long time but it looks now as though a bust is inevitable.
Too often we react to events around us without understanding what is really happening and why. We need to expect crises in the economy and learn how to respond rather than react.
It’s an interesting fact that when times are good people resort to easy credit and hock themselves up to the hilt assuming that the good times will go on forever but when the downturn comes, as it inevitably will, those who are in a debt situation are just the ones to panic when their capacity to repay is not possible.
Happy are the people who not only owe nothing when the bust comes but have a nice little nest egg tucked away to cushion the effects. The fact that you have accumulated a nice bunch of material assets doesn’t mean much in depression times because you can’t flog them off when there’s no money around. For what it’s worth I’m forecasting that the next bust isn’t too far away and suggest that you start preparing for it. Here’s a better sequence of events:
1. Pay all your sundry debts off as soon as possible
2. Save up a nest egg of $2,000 minimum and tuck it away in some high interest, “no touch” account.
3. Effect some economies and learn to live on a lower income – it can be fun.
4. Write out your financial goals for the next five years.
5. Save up for purchases instead of going into debt to acquire them.
Then you will be able to forget money matters for a while and enjoy some of the forgotten pleasures that we take so much for granted in this beautiful country.
1. Alarm.
2. Temporary Panic
3. Apathy and Disinterest
We spend 80% of our waking day working for money. That’s why we get concerned at the state of the economy. We enjoy the boom times, which started in earnest in the 1960’s but we were totally unprepared for the first big bust, which came early in the 1970’s. Since then the value of the dollar has been shrinking on the world market. Inflation increased and grew at an alarming rate. Real production dropped and the only real growth has been in the investment area, shifting money around like a commodity. The effects of the inflationary spiral just resulted in higher and higher prices and these continued to soar while real production declined. We stand the risk of pricing ourselves out of the world markets because no longer do people beat a path through the forest to buy the best mousetrap. Nowadays, the mountain won’t go to Mohamed, Mohamed has to trot along to the mountain. Sometimes I think that we had it too good for too long and the last few Kiwi generations grew up with too high expectations without putting their backs to the wheel.
We certainly don’t benefit from history and the 1987 crash reminded ourselves of this fact. But since then we have enjoyed another boom and this one has lasted a long time but it looks now as though a bust is inevitable.
Too often we react to events around us without understanding what is really happening and why. We need to expect crises in the economy and learn how to respond rather than react.
It’s an interesting fact that when times are good people resort to easy credit and hock themselves up to the hilt assuming that the good times will go on forever but when the downturn comes, as it inevitably will, those who are in a debt situation are just the ones to panic when their capacity to repay is not possible.
Happy are the people who not only owe nothing when the bust comes but have a nice little nest egg tucked away to cushion the effects. The fact that you have accumulated a nice bunch of material assets doesn’t mean much in depression times because you can’t flog them off when there’s no money around. For what it’s worth I’m forecasting that the next bust isn’t too far away and suggest that you start preparing for it. Here’s a better sequence of events:
1. Pay all your sundry debts off as soon as possible
2. Save up a nest egg of $2,000 minimum and tuck it away in some high interest, “no touch” account.
3. Effect some economies and learn to live on a lower income – it can be fun.
4. Write out your financial goals for the next five years.
5. Save up for purchases instead of going into debt to acquire them.
Then you will be able to forget money matters for a while and enjoy some of the forgotten pleasures that we take so much for granted in this beautiful country.
Wednesday, April 23, 2008
HOW ABOUT A FRESH START
There’s a certain sector of the public that I really feel sorry for and sometimes am in a quandary to know how to give the best advice. These people are locked into a debt situation and no matter how hard they try, have no show of ever getting out. It can happen so easily even to hardworking, honest people and this is how it happens.
Advertising to imbibe a materialistic viewpoint is the first temptation. Buy on easy credit and spread the payments over the next few years. So the purchase is made and everything goes along smoothly until the washing machine breaks down. There isn’t any contingency cash available for a repair bill so the machine is traded in for next to nothing on a shiny new model again on hire purchase. Troubles never come singly – the car engine blows up and the same procedure is resorted to,
Now the point of “ no return“ is reached; too many short term loans and for the first time the budget won’t balance – committed expenditure now exceeds available income. If at this point help is sought it’s an easy matter first to reduce sufficient items of expenditure to reverse the situation. If that fails a debt consolidation loan will inevitably do the trick so long as it’s not just the symptoms being treated but a commitment to correct the cause and stay out of future debt.
Unfortunately the majority don’t recognize the problem mainly because they haven’t the capacity to do a feasibility financial plan accurately themselves. Instead they defer the annual bills that come up to pay immediate debts. Then there is a false hope that a miracle will come their way – they will win the big one or Dad will come to the rescue.
Usually debt depression sets in with predictable symptoms, sometimes a spending spree on credit cards with the thought that they may as well be hung for a sheep as a lamb. Then comes the arguments and apportioning of blame.
If it’s at this late stage that many come to me hoping I will wave the magic wand and fix all problems in one fell swoop. Even though I know beforehand it may be a hopeless case I still put the financial plan up on the computer and am never surprised when up comes a horrible weekly shortfall. I then add up all the unpaid bills, credit cards, hire purchases etc. and shock number two sets in.
But it’s good therapy especially when I see that the horror of debt occurs plus a determination that if they ever get out of the situation, they will never get back into it again. If they have a home with sufficient equity to consolidate all debts and loans I can invariably show them the light at the end of the tunnel. If not and there is no chance to trade out of the situation then the only alternative is a trip to the Official Assignee to file for bankruptcy.
For these people who genuinely want to make a fresh start and have learned by their mistakes, I wish I had a trust fund that I could lend the amount required with little or no interest and build in the repayments over two or three years. It would certainly save a few marriages from going on the rocks.
Advertising to imbibe a materialistic viewpoint is the first temptation. Buy on easy credit and spread the payments over the next few years. So the purchase is made and everything goes along smoothly until the washing machine breaks down. There isn’t any contingency cash available for a repair bill so the machine is traded in for next to nothing on a shiny new model again on hire purchase. Troubles never come singly – the car engine blows up and the same procedure is resorted to,
Now the point of “ no return“ is reached; too many short term loans and for the first time the budget won’t balance – committed expenditure now exceeds available income. If at this point help is sought it’s an easy matter first to reduce sufficient items of expenditure to reverse the situation. If that fails a debt consolidation loan will inevitably do the trick so long as it’s not just the symptoms being treated but a commitment to correct the cause and stay out of future debt.
Unfortunately the majority don’t recognize the problem mainly because they haven’t the capacity to do a feasibility financial plan accurately themselves. Instead they defer the annual bills that come up to pay immediate debts. Then there is a false hope that a miracle will come their way – they will win the big one or Dad will come to the rescue.
Usually debt depression sets in with predictable symptoms, sometimes a spending spree on credit cards with the thought that they may as well be hung for a sheep as a lamb. Then comes the arguments and apportioning of blame.
If it’s at this late stage that many come to me hoping I will wave the magic wand and fix all problems in one fell swoop. Even though I know beforehand it may be a hopeless case I still put the financial plan up on the computer and am never surprised when up comes a horrible weekly shortfall. I then add up all the unpaid bills, credit cards, hire purchases etc. and shock number two sets in.
But it’s good therapy especially when I see that the horror of debt occurs plus a determination that if they ever get out of the situation, they will never get back into it again. If they have a home with sufficient equity to consolidate all debts and loans I can invariably show them the light at the end of the tunnel. If not and there is no chance to trade out of the situation then the only alternative is a trip to the Official Assignee to file for bankruptcy.
For these people who genuinely want to make a fresh start and have learned by their mistakes, I wish I had a trust fund that I could lend the amount required with little or no interest and build in the repayments over two or three years. It would certainly save a few marriages from going on the rocks.
ARE YOU VERSATILE?
Time and time again I am apt to get a little frustrated with people whose ideas and actions are set in concrete and wonder whether they will ever get the message that we live in a changing world. I presume that the root cause is a desire for safety and security. The fear of the unknown, the dark at the top of the stairs, is enough to make many a heart quail at their inadequacy to face up to new situations.
I think parents are to blame often for not giving their children a chance to make their own mistakes. They like to swathe them in cotton wool in case anything drastic happens to their children. And, of course, parents' tolerance level is usually pretty low especially at the end of the day or weekends when childen demand attention. How often have you said, "Not now Johnny, I'm just too busy."
And he goes off to play with his toys instead of learning to fix the puncture in his bike under your supervision.
Your children learn more from watching how you operate than any other way and they become mirror images of you. Maybe you should look at yourself and ask the question, "Do I like what I see? Am I a versatile person with a good capacity? If anyone shows me a better way of doing something am I willing to change? What are some of the inhibitions I have gleaned from my hereditary or environmental upbringing? Are my attitudes so set that I am unwilling to change?"
Over the years I've discovered that versatility is one of the most desirable of traits to add to my repertoire. And I have had the benefit of bringing up two sets of children, experimenting on the first lot and hopefully doing better with the second lot. The first batch I did everything for them expecting them to watch what I was doing and hoping it would rub of them somehow.
They watched me do all sorts of things but in hindsight I didn't give them much of a chance to make their own mistakes.
The second two had to do things under my supervision and now I must agree that they have proved the most versatile.
In the area of finances childen should be given an allowance and, initially under supervision, spend it and save it wisely.
Different methods of investment should be discussed and the resulting effects nutted out. A mini-budget for the ensuing twelve months should be worked on together and parents should firmly ensure that at least for the first year the plan should be adhered to without too much flexibility. After the child has had the discipline of spending under supervision, increasing lattitude should be allowed until such time as he or she can fly solo. In this way you will be setting a firm foundation that will give direction to your child right through adulthood.
I think parents are to blame often for not giving their children a chance to make their own mistakes. They like to swathe them in cotton wool in case anything drastic happens to their children. And, of course, parents' tolerance level is usually pretty low especially at the end of the day or weekends when childen demand attention. How often have you said, "Not now Johnny, I'm just too busy."
And he goes off to play with his toys instead of learning to fix the puncture in his bike under your supervision.
Your children learn more from watching how you operate than any other way and they become mirror images of you. Maybe you should look at yourself and ask the question, "Do I like what I see? Am I a versatile person with a good capacity? If anyone shows me a better way of doing something am I willing to change? What are some of the inhibitions I have gleaned from my hereditary or environmental upbringing? Are my attitudes so set that I am unwilling to change?"
Over the years I've discovered that versatility is one of the most desirable of traits to add to my repertoire. And I have had the benefit of bringing up two sets of children, experimenting on the first lot and hopefully doing better with the second lot. The first batch I did everything for them expecting them to watch what I was doing and hoping it would rub of them somehow.
They watched me do all sorts of things but in hindsight I didn't give them much of a chance to make their own mistakes.
The second two had to do things under my supervision and now I must agree that they have proved the most versatile.
In the area of finances childen should be given an allowance and, initially under supervision, spend it and save it wisely.
Different methods of investment should be discussed and the resulting effects nutted out. A mini-budget for the ensuing twelve months should be worked on together and parents should firmly ensure that at least for the first year the plan should be adhered to without too much flexibility. After the child has had the discipline of spending under supervision, increasing lattitude should be allowed until such time as he or she can fly solo. In this way you will be setting a firm foundation that will give direction to your child right through adulthood.
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