I think that many people have it backwards. I was always taught to spend what you have left after you save. Today it seems that a lot of people prefer to save what they have left after they spend.
There are some advantages to having some managed debt. Few people would be able to buy a home without debt. However, I refuse to be a slave to payments each month on things like cars, credit cards, etc. And we don't get suckered into things like expensive monthly TV bills, and it's extremely rare that we eat out.
A long time ago we decided to be very self disciplined with our finances-we drove "beaters" that we could pay for with cash, and then we took what otherwise would have been car payments and invested it in savings and investments. We've continued that even up to today-we still put away a few hundred per month in our vehicle fund. Should we need to replace a vehicle we have the cash to do so. Should a vehicle need any sort of repair we have the cash to make those repairs. And since our vehicle fund far exceeds the amount we spend on vehicles, once a year we roll the excess from the vehicle fund into a higher, longer term, less liquid investment.
We've done the same for other expenses. While a case can be made for some managed debt, I far prefer not to be a slave to sending a monthly payment to anyone. And all it takes is a little self discipline.
Originally Posted By: Doog
My former neighbor is one of those guys....zero debt, modest home, always used cars....age 52 just got diagnosed with stage 4 cancer. Doc says he has until Thanksgiving...maybe.
My other buddy lives on his MasterCard, big home, always a new Lexus for the wife, smokes, drinks, has boats and 2 vacations every year. zero money in savings....he will live to be 90.
Who's right???
You're cherry picking two data points. So if that's your criteria, I'll also cherry pick an example.
I know a guy who is now 70 and his wife is 60-something. They scrimped and saved the first 25 years or so of their marriage and acquired significant wealth. They drove older, paid for vehicles, didn't go into debt except for a home, and paid off the home in very short order.
They both continue to be active and their wealth, even at their age, continues to grow. Both could stop working right now and live quite well on the interest from their investments, but they continue to work and be active because they enjoy it. In short they are having a blast, and even though they still tend to be thrifty, money isn't an issue for them. They can travel when and where they want, help others financially if they want, and do lots of volunteer work.
If
we they would have been like your "other buddy"
we they would probably be living on a very limited income. However, because they choose to live like your first example
we they are doing exactly what they want, still watching
our their money grow, and truly enjoying their golden years.
