By
Alexander Carl on August 25, 2010
Well folks, the time has come for this Solvency Shark to migrate to other waters. We've explored a lot of ground here— from the American Dream to international economic crises, and even how to create secure passwords.
I'd like to leave you with a distillation of these posts, a sort of thematic Cliff Notes. Think of these as general Solvency guidelines:
Prioritize needs over wants. Most of us
want to own an iPad, but few of us truly
need one.
If you can afford an iPad while
paying the electric bill, your
student loans, food costs, and the fee to repair your broken air-conditioner, then march on up to that Apple store and buy one.
Otherwise, it's time to start saving (and not charging on credit). Your credit card exists to break up payments, and it's definitely not a get-out-of-expenses-free card.
If it sounds too good to be true, it probably is. A savvy consumer is skeptical of hype, fads, and sizzle.
Let common sense speak up: “Can you really make tens of thousands of dollars from scrap gold? Can this insurance plan be legal? Is that the
only way to achieve this?”
Just like in fairy tales, the “short cut” always has a catch. Realizing that it does comes from the next point:
Research, research, research. Never assume that others are interested in your financial well-being.
In the era of Google and smart phones, we have little excuse for not being informed. Shop around before you commit. Understand the alternatives. Read documents before you sign them. If you have any questions,
ask.
Sacrifices pay off in the end. Every self-made billionaire started the same way: they didn't spend all their money.
If “not spending it all” means eating Ramen noodles every night, so be it— the money that would have gone to P.F. Chang's could go to a mutual fund. While others are booking cruises, you could be booking a meeting to raise start-up capital.
And all of these distillations distill to the same idea:
You are in charge of your money. It's not in charge of you.
Money is your tool. If you leave your garden tools out in the rain, they'll rust. Treat your tools with respect (i.e. spend wisely), and they'll work well for you.
But keep in mind what Thornton Wilder wrote in
The Matchmaker: “Money is like manure; it's not worth a thing unless it's spread around, encouraging young things to grow.” What good is a tool if it never does any work?
When you accept the responsibility for your finances, you're on your way to becoming a master gardener. That's what we'd all like to be, isn't it?