Forum: Adults / Money Matters

How many bills are necessary?
By cthompson1474member has saluted, click to view salute photos
On Sat Feb 16, 2013 02:18 AM

I know at first glance this seems like a dumb question. Today was one of those days where I was just thinking about life. I was figuring out my bills and what jobs to keep and which to quit (I have four jobs now and go to school and it's all too much). So I started doing some calculating on bills and wants, needs, ect.

I realized how much money I spend on things that don't matter. I work so much for materialistic items that I don't need. I'm sure the majority of you do also.

I then started thinking in larger terms. Home and car bills. What in the world do we need fancy cars for? I bought a sports car because I had the money and soon realized what else that money could be used for (vacations, outings, dance, hobbies, ect.) It all seemed so much better then driving in my fancy sports car. So I got rid of it recently.

The next thing I questioned is my home. I have a very modest home that I bought at 20 and have been toying around with the idea of selling it in a few years and buying a bigger and better home. Today I started thinking and calculating how quickly I could pay off my current home. I could do it by the time I am 30, easy. Can you imagine a life after 30 with no mortgage payment.

I don't know if I can control my want for bigger and better things so that I will be mortgage free at 30, but it is worth considering. Who dies and wishes they bought a bigger house?
I realize that having a family (which I don't) changes a lot of things and only the future can tell what will happen there.

Sorry for the rambling. Has anyone been able to successfully stop your brain from constantly wanting things you don't need.

How do you decide where to spend extra money. Material items or do you travel, learn a new hobby, and spend it on things you will never forget, rather then something you will buy and forget about, or something you already have?

I hope this post made sense and is not just a bunch of crazy talk. :)

4 Replies to How many bills are necessary?

re: How many bills are necessary? (karma: 1)
By MarlaSingermember has saluted, click to view salute photosPremium member
On Sat Feb 16, 2013 02:59 AM
I think there is definitely a law of diminishing returns on most material items. Meaning that a poorly made pair of pants that don't fit are better than no pants, but a well-made pair of pants that are tailored for your body are even better. And then when you start spending more and more so that you can get pants made by a certain designer, or made out of an expensive material, at a certain point, they're not actually going to make you any happier than the less expensive but still high quality pair. Or at least that's how it works for me. So I try to find the balance between spending enough money on something that I get good quality, but not spending any more beyond that if I can help it. When I was younger, the quality of things did not matter to me at all, but now that I can afford better, I don't like buying cheaply made things that are going to need to be replaced quickly. I also don't really like buying MORE things so much as I like buying BETTER versions of things that I already have and consider essential, such as kitchen appliances and furniture.

In my household, our monthly expenditures are rent, cable, phone, utilities, groceries, and gas for our cars. We have tried to get all of these expenditures down to the least amount that we can spend and still get what we want. For example, we love HBO but don't really care about 5000 TV channels, so we bought the cheapest cable package we could get that had HBO included for free. Necessary? Definitely not, but it's not a huge chunk of our budget, and we like having it. Before, when we had more channels, we didn't even watch most of them, so that was a waste of money. Our cars are paid off, and I won't be getting a new one until I can afford to pay for most of it outright. I don't really care that much about the car I drive, as long as it's dependable.

I put a large chunk of my money every month toward savings. We are saving for a house as well as saving for retirement. And beyond that, we are always saving for our next vacation. The experiences we have on our vacations are worth more to me than just about anything I can buy.

I would definitely say that I do not spend much time wishing I had more or better material items. There are a few things that I plan to buy as we have money, such as replacements for some of our old, beat-up furniture, and I buy the odd pair of jeans or book from time to time, but I don't really like spending money. I think part of it comes from being extremely aware that we live in a consumer culture that's always trying to make us feel like we're inadequate if we don't have the best and the latest of everything. If you start to buy into it, you're always going to be wanting more and more and more. But those desires are being fed to you by marketers in all sorts of insidious ways, and you have to use your free will to reject all that and figure out what's important to YOU. And the other reason I don't like to buy a lot of stuff is because the money I would be spending on clothes or jewelry or whatever is much better spent on travel, in my opinion. So that's what I save my money for.

I feel like I might have gotten off on a tangent there, but hopefully I answered at least part of what you were asking. :)

Oh, and as far as a house goes, I wouldn't say I'm particularly concerned with having a bigger house, but we are hoping to move into a house and a neighborhood that fit our lifestyle better. For example, I can't have much of a garden at our current house, so that bums me out, and we have kind of a hard time finding locally owned stores or restaurants near us, which is something that's important to us. So again, we're not really looking for bigger and better so much as looking for something that fits who we are and what we like to do. And I don't think there's anything wrong with that, as long as you live within your means and aren't killing yourself working to make ends meet. I know a girl who recently took a position that pays double what she was making before, but she also works double the hours. So what did she really gain? She has more money, but no time to enjoy it. So that's something else to consider - What do you have to do to get more money, and is it worth it? If someone has to work 80 hours a week to be able to afford their mortgage, that's just silly to me, because then they're hardly spending any time at their house anyway!
re: How many bills are necessary? (karma: 1)
By Chaconnemember has saluted, click to view salute photosPremium member
On Sat Feb 16, 2013 04:29 AM
Speaking from a perspective of some 70 years with 45 of them as a home owner, I don't see any great virtue in undue sacrifices simply to pay off a mortgage. In pure economic terms it makes very little sense. I bought my present home 40 years ago. It is paid off now, of course, but I have used the power of almost inevitable inflation and personal income growth to its fullest advantage. When I started paying off my present house in 1973 it was a $45,000 house at a time when my wife and I together were making around $25,000 per year. At the end of the mortgage term some 30 years later, my basic mortgage was still the same as it was in 1973 (all other things being equal but allowing for increases in property taxes), but we were making $160,000 so that mortgage eventually became a trivial part of our monthly budget. Now most of the time we were paying off that house mortgage rates were around 7 to 8% APR. Right now they are under 4% which means that you are getting almost "Free" money compared to what I paid. The one mortgage I do still have is for a rental property I own, a condo bought 27 years ago for my kids in college. It is almost paid off and I asked a financial advisor (in the context of planing our overall finances) "should I pay this thing off, I only owe $14,000 on it?" The interest is currently 3.7% which is good considering this is an investment property. And the financial advisor told me "No" just let it play our till the end of the 30 years. (BTW this is being almost totally paid by other people's renters.)

Now actually, when I was paying on my primary residence, I had refinanced this place probably 7-8 times....sometimes to put on an addition, I borrowed against it for the down payment on the condo for my kids, I borrowed again to help my two kids buy their own houses and I presently have an equity line on the house for things such as kitchen and bathroom remodeling, which I've paid off each in less than a year. I use the equity line for big ticket items like automobiles because with the equity line the interest is still deductible. (Caution, you DO have to follow tax law changes very closely...Congress giveth and Congress taketh away, and lord only know what the doofuses we have there now are going to do.

So once you are done with schooling, Rather than paying off the house, use the extra money and see the world while you are young and can do it. While my wife and I still travel, there are places I'd like to go that we can't because in some aspects age has caught up with us.

In our mid career, rather than paying off the house early, we put money into IRAs, and other investments that are likely to grow over the long term. Tax law were less generous when I started my career and IRAs and similar investments were not around until we were in our mid 40's. Had we been able to do IRAs in our 20s, I would be a multi-millionaire now rather than a multi-hundred thousandaire. Our house in now worth about ten times what we paid for it 40 years later, but those investments, most of which were acquired in the last 15 years of our careers once our kids were out of college (and advantage to having kids rather early) have grown to the point where we could support ourselves on the income they generate. (Actually we don't have to even touch it because we both have very decent earned pensions from our work, but that is just a consequence of how we made our living.)

If there is anything you should pay off, it is any student loans you have, but even then consider that in light of what you are paying in interest. The first thing you should pay off is any credit card debt. The interest is atrocious A goal there is to zero it out EVERY month. I haven't paid a dime of credit card interest since 1985 ...and we use ours for everything...I seldom have much cash and we write checks only for recurring bills (utilities, etc. AND to pay off the credit cards each month.) [We don't even write many checks...we do everything we can electronically.]

The best thing I ever did as a 20-something right out of college was to educate myself on consumer economics so that even in my "broke" days I could not only handle my finances, but I thoroughly understood what was going on with them. If you want an eye opener, just figure out what your consumer credit (credit card debt) is costing you if you don't pay them in full every month.

re: How many bills are necessary?
By cthompson1474member has saluted, click to view salute photos
On Sat Feb 16, 2013 04:41 AM
I appreciate the responses so far. I am genuinely interested in how other people handle finances and others mentality on which priorities are the most important.

Jon, the only debt I have is a 60,000 mortgage. No student, credit card, or car debt. I can manage paying off my home in the next 8 years and travel and experience the world. The only exception would be if I had a child. I am more then willing to let that situation change my plans by the way.

It seems too easy. Maybe I'm just blessed. I have worked my butt off since the age of 16 and been extremely smart about finances, I have also had family's help at first. I have a 401k and have traveled a few places. I would like to travel more the only thing lacking is a travel buddy. :/
re: How many bills are necessary? (karma: 1)
By DeStijlmember has saluted, click to view salute photosPremium member
On Sat Feb 16, 2013 10:53 AM
If you have the time, you should try and get your hands on a copy of the book 'Affluenza' by Oliver James. It explores the phenomena of people always wanting more; flasher cars, bigger homes etc. It is an incredible reality check. He interviews some incredibly wealthy people who have the top of everything, and they're absolutely miserable in spite of seemingly having obtained what we're all aspiring for. He also interviews average people who struggle for a better home, car, whatever.

I first read it about 4 or 5 years ago and took a long hard look at my love of materialism.I was essentially working 40 hours a week to buy stuff to impress people and project a certain lifestyle.

I can't say I'm completely cured of my emotional attachment to stuff and status, however I am much more aware of my 'affluence' triggers. For example, I work in a high end environment and being around these big spenders and luxury products gives me the green eyed monster and causes me to splash out; so I leave my cards at home and just bring enough money for my lunch.

When I get home, I remind myself that I am no different physically, emotionally or spiritually than I would have been if I'd bought home the latest 'want' purchase. I go to sleep. I get on with my life.

The reality of the current economy weighs down hard on my financial decisions these days as well. Young people with no windfalls are screwed in this economy unless they're conservative and conscious of their finances. My partner and I would like to put a deposit on our own home within the next 2-3 years. We've done our homework, we've talked to the banks, and the only way we will be able to raise even the minimum amount is if we both put aside 30% of our income every week. After paying rent, food, gas, electricity, water, car running costs and putting away 30% each week, there isn't anything left for anything else; least of all gratuitous spending on status symbols.

Part of me still lusts after those things though. Earlier this year I had to get a new car, and every part of me wanted a luxury sports job or a massive 4WD drive. I could have easily gotten a loan and gotten one. However, with my/our future in mind, my decision was scaled back to a near new, far more practical and fuel efficient car that I still liked, but was way lower on my list. 3 months later? I don't care what car I'm driving anymore, I'm just really happy to have one that works. I know I'd feel the exact same way as I do now, even if I'd opted for a BMW or Range Rover - the only difference being, I didn't get myself into debt to feel this way.

I think learning to live within your means and scaling back on stuff that doesn't really make a difference past the first giddy 24 hours after purchasing it , is a constant learning process, and always a conscious struggle. It does help to keep the bigger picture glued firmly to the back of your mind. I don't want to drive a range rover at 25, but have my grandchildren visit me in housing commission at 75.


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