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April 14, 2009


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This post is good timing since I survived my corporate layoff and I'm about to drop a grand on scuba gear with zero regrets.

We don't save every single penny, we are on a very aggressive debt repayment plan so every penny goes to paying down our student debt the plan is to pay it off 3-5 years.

Balance and moderation is key in getting the today/tomorrow trade-off right for you.

I am trying to pay off the last of credit card debt- with spending for instant grafication and a big chunk of "having a baby" medical bills, we are working towards the goal of being "bad debt" free. :) Of course, we still have cars and a house- assets, right?!

I'm still trying to find the balance with this. How can you not feel guilty spending money when you have so much other debt. In reality, its like paying interest on what you're buying

But then again, spending $50 more a month on having a night out vs. $50 extra on my regularly 4,000/month debt payments is probably worth it.

Just hoping I don't make too many of these comprimises.

It really is important to strike a balance between being frugal and enjoying life. I often say that the majority of personal finance advice out there implies that a person should live in a tent eating mac & cheese every day so that you can retire wealthy at 65. But how many of us can (or want) to live most of our lives that way? Good post.

I've been an attorney working in private bank trust departments for almost 20 years. I've seen how people with money acquired it and how they retained it. They are smart enough to know that you can never acquire money by spending it. They would sooner die than go into debt to buy consumer goods. They'll go into debt but only to purchase property likely to appreciate.

These are the people who, instead of buying iphone after iphone and ipad after ipad, bought the stock of Apple when it was selling for about $7 early in 2003. Today, July 1, 2010, it sells around $260.

People with money don't care about consumer goods, cars, big-screen TV's or anything else that the masses "must have". They know all this stuff is junk and that to buy it simply wastes money better deployed otherwise. In short, people with money got and kept it not by buying things but by buying the stocks of companies that sell things to other for example.

I'll leave you with this unsettling thought. Suppose you'd had $15,000 in October 1980 and that you'd been of a mind to "invest it". You might have been lured to purchase jewelry, say a diamond ring, on the utterly untrue but long spread lie that diamonds are rare. Any jewelry store would have been happy to lure you in with a lot of special lighting over plush counters served by shills who are trained in how to try to induce you to put reason on hold and think romantically about how happy you would be if only you had a $15,000 diamond ring. They'd tell you it would be "AN INVESTMENT". God help you if you fell for the scam. The ring you'd have bought on Friday, October 10th, 1980 for $15,000 would have been worth about $3,000 on Saturday, October 11th if you'd tried to sell it. It might not be worth even that today.

On Friday, October 10th, 1980, stock of Johnson & Johnson traded around $83 per share; you could have bought 180 shares for $15,000. That investment, a REAL INVSTMENT, would today, July 1, 2010, be worth over $500,000. After 48:1 stock splits, you would have over 8,600 shares of Johnson & Johnson paying annual cash dividends of almost $19,000.

You can be young in this country and be without money but this is no country in which to be old and without money. If you have no money you have no power. If you want to end up parking cars for a high school kid who owns a parking lot, keep doing what you've been doing. Keep buying "diamond rings". If you want to have some say about where and how you live and on what terms, leave the consumer good on the shelves and buy the stocks of companies that sell things to other people. Just make sure you're not the "other person"..

Good luck.

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