Living Within Ones Means

Another article, from yesterday's "Post", was an editorial by a guy whose name I'll have to look up because I don't have the paper before me. This guy was trying to make those who do not live within their means feel better about themselves, and it was ridiculous. His excuse was that some people are raised believing "the money will come from somewhere", who spend without maintaining a budget or figuring out costs.

I believe people should not be losing their houses on account of bad banks, mortgage firms, and insurance companies. On the other hand, if it's to lose a larger house to downsize, this isn't a bad thing.

And for those who bought houses which were outside of their means, it is a mean lesson, but one which is maybe best learned the hard way.

I may be poor now, but it's not as though I haven't any business sense. I selected and bought my first house when I was 21 years old as an investment, paid all the bills on it, and successfully turned it around and sold it for profit 2 years later. I made $40,000 off of an $80,000 house. Basically, I looked at the market, at the location, and at the foundation of the house. The structure was sound, and it only needed cosmetic work and I added a room in the basement. I did most of the work myself.

The lessons I learned from my parents and the way they managed money, was to "live within your means." I am probably more of a risk-taker than my parents, but I still advocate keeping a balanced portfolio. It is never a good idea to put all of ones eggs in one basket. Buy low, sell high. There are simple adages, if followed, which usually protect one from oneself and the impulse to spend money one does not have.

There are times to splurge. But splurging all the time doesn't work. For those living off of credit and nothing else, I don't have a whole lot of sympathy if that credit is used for frivolous things--clothing, the best cars, best restaurants. If you can't pay it back, you're digging a hole.

Confidence and consumer spending is one thing. Irresponsibility in money management is another.

Also, it's foolish to put money into a house that has a faulty foundation or structure, because it will cost more in the long run, than you will get out of a turn-around, unless there is something special about the house, as in, it's a historic landmark or something. Is that what the banks are claiming? that they're historic landmarks and should be preserved for sentimental reasons? Or is it sentimentality that leads big business and certain people in the government to call for bail-outs?

Until we start putting businesses on a "Historic Landmark" list, I think it's ridiculous. Saving a house is one thing, while saving a company is another thing. A company is a living, breathing, entity which either thrives or flat-lines.

Putting money into cosmetic touch-ups, when the structure is damaged, isn't going to go anywhere in the long run. It's a money pit.