Dear Dave – Part 4

Laurance W. LongIn 1982, my grandfather responded to a letter from “Dave,” asking him to dispense some of his knowledge on monetary matters (Part 1Part 2, Part 3).  After wrapping up his discussion on life insurance, he concluded with some advice on helping children with college expenses.

Don’t buy burial insurance, for your wife, your children or yourself. Invest the money instead. Don’t buy insurance on the life of your children. They’re going to live. Gamble on it. Invest the money instead. Why share the profit with the insurance company? Don’t buy an endowment policy to cover college expenses. Invest the money instead.

Here is as good a place as any to cover the matter of sending your children to college. Don’t. Let them go on their own. And be sure they pay their own way. Does that sound cruel? It isn’t. It’s for their own good. And yours. The college expense of children is not a proper expense for parents.

Most anyone will accept a dole, whether they need it or not. Young people need the discipline, the rigor and the experience of working for what they want . . . and to be willing to pay the price. The Biblical principle is, “no work, no eat . . . no work, no get.” If a young person is to go to college he needs to know the purpose for which he is going, the conviction that he needs what he’s after, and the gumption to work for it. To have a college education handed to one on a platter is a misuse of funds. If the young person is truly purposeful in his desire to go to college and is willing to work for it he is then entitled to a little help along the way, if necessary. Just make sure that ANY assistance he gets always comes as a surprise. He should never get help if he expects it.

 

Dear Dave – Part 3

Laurance W. LongIn 1982, my grandfather responded to a letter from “Dave,” asking him to dispense some of his knowledge on monetary matters (Part 1, Part 2).  Here is a portion of his response dealing with living frugally in order to save for the future.

As a matter of biblical principle, sacrifice precedes blessing, always. There can be no blessing without sacrifice, on the part of you or someone else or thing. And usually, it is you who must make the sacrifice. You cannot expect to have a home in the future unless you sacrifice for it now. If you spend all your income for rent, furniture, food, clothes, recreation, automobiles, necessities and vacations, you will never buy a home.

Must you live high on the hog? Must your abode be all you can afford? Must you start out married life with complete new and expensive furniture and furnishings? If you have children they’ll ruin them. Must you eat the expensive foods? There’s no better breakfast than oatmeal, toast and tomato juice. Though some can be more tasty and expensive. Try orange juice for a change occasionally as a luxury. Restaurants are expensive luxuries. Tipping is a racket. Vacations need not be expensive. Nor recreation. When you’re trying to save money, one of the best places to buy is at garage sales, or moving sales. Be willing to live in humble circumstances, for a cause. Your reward will come. Let the world go by. I wouldn’t want to go where most of them are headed anyway. And it’s fun to live conservatively, for a cause.

For an evening snack, Grandpa would have recommended milksop (a glass of milk and a piece of bread, with the bread torn up into pieces and tossed in with the milk).

At restaurants, some in our family have been known to surreptitiously leave some additional cash on the table after Grandpa or those influenced by him (aka “Dad”) left a paltry tip.

Dear Dave – Part 2

In 1982, my grandfather responded to a letter from “Dave,” asking him to dispense some of his knowledge on monetary matters (Dear Dave – Part 1).  The following discourse on life insurance is a portion of his response.

Life insurance should be put in the same category as appendectomies and borrowing money. Really. There can come a time in a man’s life when there is nothing more important than an appendectomy. And he’d better get it, pronto. But that being true doesn’t mean you should go digging about in the same spot over and over again. Borrowing money also can be the very thing to do in some certain circumstances. But it doesn’t follow therefore that one should borrow as much and as often as possible.

An appendectomy is not intended for the man who is without ailment. It is a sick man’s solution to a very real problem. And borrowing money is not intended for all men on any occasion. It is sometimes the right solution for the man who lacks funds for an important transaction.

So insurance. The American public has been sold down the river on insurance. We’ve been led to believe that all men should have as much life insurance as they can afford . . . the more, the better. Not so. Life insurance is the poor man’s way of solving a problem. And poor men have poor ways, as do some men who are not so poor. When you buy life insurance you’re gambling on death. You’re gambling you will die before the actuarial tables say you will. And the insurance company is gambling you will die on that date (on the average). The insurance company has the best gamble.

Just as we should restrict appendectomies to absolute necessities and the borrowing of money to justifiable needs, so we should keep life insurance to a minimum. If you need an appendectomy, get it. If borrowing money is really the best solution, by proper means, borrow. If life insurance is the right answer (and sometimes it is) don’t buy the wrong kind. And don’t go hog wild. There’s a better way to invest money, Just like buying coffins . . . that’s the last thing I want to do. But there does come a time when a man must do that which is less than the best.

And remember this . . . whatever you do in the matter of life insurance should always be done in light of what you are doing in the areas of savings and investments. Each has a bearing on the other. Note that I said “savings and investments.” They are not the same. They are two different animals. Both are important. And all men (almost without exception) should have both.

Dear Dave – Part 1

Laurance W. LongIn 1982, my grandfather responded to a letter from “Dave,” asking him to dispense some of his knowledge on monetary matters.  In upcoming posts, I will share portions of my grandfather’s response.  Here’s the intro:

February 5, 1982

Dear Dave,

From time to time a number of folk have suggested that I reduce to writing some of my views about money. The idea appealed to me, but I have always questioned my ability to produce quality material, from the standpoint of both content and expression. I’m no expert in money or writing.

However, your letter (with a $10 bill) has sort of put me on the spot. I can’t accept the $10 lest I then be under obligation to give value received. But neither can I just return the money and say, “Sorry, no dice.” At the very least, I ought to be willing to put some of my ideas on paper for a friend. So . . . here goes.

We’re Debt Free!

Debt Free

Ten years ago, I borrowed $68,000 to buy a house.  If I had made the regular payments for the full 30-year term, I would have paid $101,076.80 in interest, repaying a total of $169,077.60 on that $68,000 loan.  Ouch!  That’s an overall interest rate for the life of the loan of nearly 150%!

Today, I went over to the bank, got a cashier’s check for the remaining amount, and mailed it off to the payoff department.

As it is, I paid somewhere in the neighborhood of $25,000 in interest and fees over the last 10 years (including initial closing costs and a refinance 8 years ago), which is about 34% of the $73,000 purchase price of the house.  Still a hefty chunk of change!

Looking forward to getting the title to our house in a few weeks!

Personal Finance

Finances can be complicated. Do you feel overwhelmed by the difficulties and options of managing money? The Simple Dollar is a blog dedicated to helping average people improve their financial situation.

If you’re looking for a starting point, the author of the site has provided a 49-page “book” that he says, “weaves together most of my favorite ideas on personal finance and a lot of other goodies into one document.” It starts out with a single page covering “Everything You Ever Really Needed to Know About Personal Finance,” then explores the basic concepts throughout the other pages.

Click below to get it:

http://www.thesimpledollar.com/onepage/

Generosity vs. Equality

Equality eliminates generosity. You can’t be generous unless you have an excess. If you disagree with that statement, then consider this: two people have equal resources; Person 1 exhibits generosity by giving some of his resources to Person 2. Result: Person 1 and Person 2 no longer have equal resources.

Think about this the next time you hear someone talk about “redistribution of wealth.”

“Do not steal” implies (and condones) ownership. You can’t steal something unless it belongs to someone else. The Eighth Commandment declares that it is wrong to steal, and by implication declares that it is right for individuals to maintain ownership and control of their resources.

This about this the next time you hear someone talk about “communal ownership.”

See http://instruct.westvalley.edu/lafave/hb.html for an interesting look at these concepts.