My philosophy on money is strongly rooted in the laws of mathematics. I can form metaphors to help describe how I see money moving around in our lives, but the bottom line is this: one builds wealth by spending less than they make. It doesn’t matter if you make $10.00/hour or $200.00/hour. If you spend less than you make, you will grow your nest egg. The focus of your financial wealth is to build a nest egg that can grow itself in the amount of time you anticipate having left on this planet.
The first step one can take towards thwarting this goal is borrowing money. The largest loan that most of us ever experience is the home mortgage. The crisis that our nation has experienced over the past few years wouldn’t exist if we didn’t borrow money.
So why is it that we nurture our youth in the ways of borrowing? Why is it that parents have good intentions but seem to miss the mark more often than not when it comes to saving for our kids’ futures.
There are so many lies that we are told every day by the people around us who believe the lies themselves:
- I’ll always have a car payment.
- You can’t go to college without a student loan.
- It’s impractical to buy a house without a mortgage.
- You need a credit card to rent a car.
- You need to be worried about your credit score.
I am not under the illusion that I can change a culture with one single blog post, but I sure would like to treat homeownership differently in this country. In fact, what if…
…what if owning a home was a right of passage from youth to adult-hood? What if we didn’t encourage our children to enter into contracts with banks, and instead, taught them the power of building wealth with their income by saving, so they were able to purchase their home with cash? What if we were to teach them that it’s okay not to over-extend our wallets just because everyone else is doing it too so that they will have money when it comes time to make that big move? What if we showed them that we don’t have to have it now!
I believe that owning a home free and clear is a goal that everyone can achieve, if they simply reduce their lifestyle and stop behaving badly. A single man out of college who lands his first job earning $30,000 would be better off living way below his means while he builds up enough savings to purchase his first home without borrowing a single penny from the bank, regardless of what his friends are doing. Not realistic? Well, if you believe that, then you believe other lies about money too.
Imagine the celebration that a family could have as they push their son or daughter from the nest into a paid for house! It would be something that would become a blessing, not a curse.
But, unfortunately, people don’t believe they can do it…so they won’t.