I used to teach Economics in high school. One of the central ideas I wanted the kids to get is that you control your own lot in life. We started down this path with the idea of resources and trade offs. When you have a job, you trade the resource of your time for the resource of their money. You then take the money and trade it for various other things--goods, services, etc. If your job pays $9/hour and you think you are worth $12/hour, you should quit and find someone that agrees with your assessment of your value. They didn't always like this because it puts the responsibility for their pay back on them. That means it is much harder to complain about your job!
Today I was thinking about stuff while driving and something occurred to me that I never said to those high school seniors (mostly). If time is ultimately your currency, then everyone starts out equally as wealthy. We all have 24 hours to spend each day. What separates us and makes some more monetarily wealthy than others is how we spend our resource of time. Do we spend it learning and studying and honing our skills? Do we spend it thinking of and perfecting ways to get more out of each hour, i.e. process improvement, ways to be more efficient? Do we spend it complaining about how bad things are? Do we spend our time working for someone else and not giving ourselves enough credit? Do we spend our time worrying about how we are spending our time? Do we spend it partying and not really working toward anything?
Time is, by far, the most valuable and finite resource we have. You can never, ever recover it and the effects of how we spend it pretty much last the rest of our lives--good and bad. Next time the jealousy bug creeps in and you wonder how that guy or gal got so much more wealth or success than you, evaluate how he or she spends their time and how you spend your time. Perhaps the trade off they chose to make in order to get to that point is not one you are willing to make. Perhaps they had a flash of brilliance that changed their lives. Who knows. My point is this, before you get jealous or resentful, think about what YOU could accomplish with better trades for your time.
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
Wednesday, February 27, 2013
Wednesday, July 18, 2012
Financial Responsibility
Most of you know how I feel about government involvement in the economy and the like. Even so, I would like to spark a conversation. This is not a conversation about Democrats, Republicans, Conservatives or Liberals. I don't really care for the tags. I am more interested in doing the responsible thing and finding the best solution for a problem. In that, I may have to give some stuff up but so might you and your neighbor.
I taught high school economics for 3 years. We always started the semester with a discussion of wants and needs and then transitioned into a discussion of The Wealth of Nations by Adam Smith. I always found it interesting that high school seniors sometimes had a tough time distinguishing wants from needs. I will look at this in a moment, back to the Adam Smith book. One of the main themes of this book is that if each individual does what is best for himself, the group benefits. In other words, if everyone looks out for themselves, the group doesn't have to help and thus the whole group flourishes. I used to think it was that simple. Now I am seeing how much more complicated it is.
I can take care of myself to some extent. I am greatly aided by the group as well. For example, I could go cut down a tree on my property and sell it. I am aided by the group in that I have roads to help me transport that tree to my buyer. For the most part, I don't have to worry about someone killing me and stealing my tree because I have police protection. I also have the benefit of a stable monetary system (which is a whole other argument but for this illustration it is a benefit) that allows us to have a medium with which to conduct business. Just in that little example, I am aided by three different entities, at three different levels of government (state or municipality for the roads, municipality or county for the police, federal for the money). Did I sell that tree on my own?
At the same time, I am utilizing vehicles already in place that enable me to take care of myself. It was my entrepreneurial spirit that told me to cut the tree, set a price and sell it. It was me that did the work and it was me that reaps the benefits. Should a portion of my reward be required to go to someone who chose not to work or to an entity that wastes money like a crazy person? It's truly a tough call. I did what's best for myself, I am not a burden on the group but I benefit from the group.
On the flip side, there are people who cannot care for themselves. What do we do with them? Is it private charity that should care for them? Is it government that should care for them? Is it individuals that should care for them? Should anyone care for them? I don't know the right answer here. I tend to think the private sector would do a better job if they didn't have the government crutch saying they will just handle it but I have no evidence of that.
I still think that less government involvement is best and I can't stand the thought of a "benevolent" government that is there to care for and nurture it's citizens. That makes me very uncomfortable. If they care so much for us then they start to have a say in our liberties, just like our parents did. That said, I certainly see the need for safety nets. I just don't want those safety nets to become comfortable cocoons for lazy people on my dime.
I taught high school economics for 3 years. We always started the semester with a discussion of wants and needs and then transitioned into a discussion of The Wealth of Nations by Adam Smith. I always found it interesting that high school seniors sometimes had a tough time distinguishing wants from needs. I will look at this in a moment, back to the Adam Smith book. One of the main themes of this book is that if each individual does what is best for himself, the group benefits. In other words, if everyone looks out for themselves, the group doesn't have to help and thus the whole group flourishes. I used to think it was that simple. Now I am seeing how much more complicated it is.
I can take care of myself to some extent. I am greatly aided by the group as well. For example, I could go cut down a tree on my property and sell it. I am aided by the group in that I have roads to help me transport that tree to my buyer. For the most part, I don't have to worry about someone killing me and stealing my tree because I have police protection. I also have the benefit of a stable monetary system (which is a whole other argument but for this illustration it is a benefit) that allows us to have a medium with which to conduct business. Just in that little example, I am aided by three different entities, at three different levels of government (state or municipality for the roads, municipality or county for the police, federal for the money). Did I sell that tree on my own?
At the same time, I am utilizing vehicles already in place that enable me to take care of myself. It was my entrepreneurial spirit that told me to cut the tree, set a price and sell it. It was me that did the work and it was me that reaps the benefits. Should a portion of my reward be required to go to someone who chose not to work or to an entity that wastes money like a crazy person? It's truly a tough call. I did what's best for myself, I am not a burden on the group but I benefit from the group.
On the flip side, there are people who cannot care for themselves. What do we do with them? Is it private charity that should care for them? Is it government that should care for them? Is it individuals that should care for them? Should anyone care for them? I don't know the right answer here. I tend to think the private sector would do a better job if they didn't have the government crutch saying they will just handle it but I have no evidence of that.
I still think that less government involvement is best and I can't stand the thought of a "benevolent" government that is there to care for and nurture it's citizens. That makes me very uncomfortable. If they care so much for us then they start to have a say in our liberties, just like our parents did. That said, I certainly see the need for safety nets. I just don't want those safety nets to become comfortable cocoons for lazy people on my dime.
Wednesday, January 25, 2012
What Do I "Deserve" in Life?
I'm having a hard time writing this morning. I feel like I have griped and complained a lot here lately. I also don't think I've written enough about real estate to even call this a sometimes real estate blog. So, I am going to frame this discussion with a discussion on the real estate "crisis."
Very little in life chaps my hide more than the mentality where someone thinks they are "owed" something simply because they exist. In this blog, I am going to talk about this mentality coupled with the housing crisis. It is a worthwhile discussion and one that can be applied elsewhere.
Adam Smith published "The Wealth of Nations" in 1776. This was a groundbreaking work and discussed pretty much every aspect of an economy. One of the central themes (among many) in the commentary was the idea that, basically, if you take care of yourself, you in turn take care of the nation. If you can support yourself and your family, you are not a drain on anyone. Additionally, you must be contributing something worthwhile because you would not be able to support the family otherwise. In other words, the unintended consequence of taking care of yourself and being as productive as possible is that the entire community around you benefits. It is not a new idea but it does seem that we have departed from this standard. There are an endless array of directions we can go with this discussion but lets instead focus on housing.
Many, many things led to the collapse in the housing market. In my opinion, there were two things that were the overriding ideals that got us there. Number one is greed. Greed from politicians that tried to win votes by framing home ownership as a right and creating an environment for corporations to mask greed in the name of helping everyone attain that right. Number two was the mentality of so many Americans that they deserved the home, no matter their circumstances, no matter the cost, etc.
Let's look at number 1. Everything in our government is linked. Nothing happens in a vacuum. When the president makes a statement that he is going to work toward everyone owning a home, he sets a goal for congress. Congress reacts with a bill, the bill becomes law, someone challenges it, the judiciary confirms or denies it, the people react. Several bills have been passed toward this "goal" of home ownership for everyone since the late 70s. Several different presidents have had a hand in this "goal" as have countless senators and representatives and others. It is definitely not one single person or even party that is responsible here. See past all that label business. Politicians piled onto this "goal" because it made their constituents like them. On the surface it seems like a noble goal--"everyone owns a home because that is the American dream." The problem is that it is completely unattainable and not even a good goal to begin with. First, not everyone wants to own a home. Second, not everyone has the cash to pay for a home outright. Third, not everyone without the cash should be extended credit. Fourth, when the government meddles in this portion of private life, there is no way for them to be unbiased, no way for them to be smart and absolutely no way for them to actually "help" the situation that was fabricated to begin with.
One of the ways the government helped create the mess was to push guidelines for Fannie Mae and Freddie Mac. It may be good at this point to give a brief synopsis of these two Government Sponsored Enterprises (GSEs). Then we will see how this all happened from the top down.
What GSEs do? Basically, they buy mortgages from private lenders. If a bank or mortgage company writes a loan to someone that "conforms" to a certain set of guidelines, then Fannie or Freddie will buy that loan. They will keep some of the loans as investments but the majority are then packaged up and sold as securities to investors.
What does the government have to do with it? When these loans are sold off, it is implied that they are guaranteed by the agency and backed by the government. Both GSEs have a line of credit with the Treasury. The GSEs also do not have to hold the cash reserves that other banks do. Instead, they borrow from the treasury and repay with the revenue they get by selling the securities at a higher price than what they bought them.
What did this have to do with the crisis? This is where you have to stick with me... Government sets the goal to get more people in homes. The government holds the purse strings of the treasury that is the life support of the GSE. The government tells the GSE to get more people into homes. The GSE loosens the criteria to make a loan "conforming". For the private lenders, this creates a FIELD DAY. They can now loan to more and more people with the guarantee that the GSE is going to buy the loan. It's a no brainer for the lender. More loans+no risk (they are selling the loans as soon as they make them)=pure profit. This initial feeding frenzy starts up some other secondary market companies (Fannie and Freddie started the "secondary mortgage market--they buy the mortgage after it has been written, they don't actually lend money to the consumer) that are not GSEs but can get in on the fun. They use the same pool of investors, promise a higher return because the risk is a little greater and start encouraging lenders to make riskier loans because they will buy the loan at a premium.
Why are they riskier loans? Lots of reasons--lower credit scores, less job history, "stated income" instead of verified income, second homes, investment property, over inflated values, no down payments, cashing out equity that is not even there yet (110% loans), interest only payments counting on the increase of the market to grow equity, the list is endless.
So what happened? They failed to recognize one key, central element in all economies--they are cyclical. Sometimes they are up, sometimes they are down. NO economy will rise indefinitely. It can't. It has to have some down times. When it came down, it came down hard. First you saw the riskiest loans start to go sour, investors panicked a little. Then you saw the GSE loans start to go south. Investors panicked a lot. This caused a major retraction of investor money. With no one to sell to, Fannie and Freddie (and all those other secondary market companies) had no way to unload the loans they promised to buy. They had a real problem. It only got worse when the low standards of lending came to roost and people defaulted on their mortgages. Interest rates adjusted up in order to cover the problem--this put even more people in bad situations. This flooded the market with properties. When you oversupply, the price has to drop. Couple this with some other bad market conditions (companies closing, people losing jobs, etc.) and you compound the issue. When the prices drop, all those people who were counting on the increase in value to supply their equity get burned. There is no equity anymore. In fact, they are all upside down. If you are upside down, your interest rate has adjusted up because you did an interest only ARM, and you lose your job--you lose your home. More people do this and the prices drop even more because there are even more distressed homes. It really was the perfect storm of bad banking practices, corporate greed, politicians buying votes by flexing control over the lenders, some natural slumps in employment and the second issue--the people buying into the "I deserve it" mentality.
I am guilty here. I catch myself frequently justifying purchases because I deserve something. I work hard and thus I deserve that new ____________ or whatever. We have a lot of help in programming this mentality into ourselves. And honestly, its not that hard to believe it.
We live in such a wealthy nation it is easy to see the success of others and to hear the stories of people starting from nothing and going to millionaires (or more). The sad part is, we only hear those stories AFTER they have made it. We don't get to see, really see all the work that goes into getting them there. When we see that success we get inspired to be millionaires also. The problem is, we don't (usually) get inspired to make the sacrifices and work toward that goal. Instead we frequently adopt the "if ___________ is that rich or has that _______, I should too." Jealousy creeps in. Politicians love to use this in their quest to keep power. If we throw the plebes a bone, they will love us for it. Thus, we have the situation I outlined above. And we, as a society, play right into their hands. A lot of the people that were involved in the housing bubble knew that what they were doing didn't make sense. These were not stupid people. They got caught up in the moment. When they laid down their heads though, they knew that it was not going to last and it was not a good idea. It doesn't make any sense to borrow more than what a house is worth using that house as collateral. It doesn't make any sense to pay interest only on a tremendous debt in order to be able to afford MORE DEBT. But we, as a society, did it. Why? Because we could. It allowed us to be that much closer to "the haves". We deserve it. We work hard and the government says everyone should own a home. The banks agree and they are nice enough to give us our dream even though we are uneasy about the payment and the possibility of future payments being higher. Think about it.
If we had been a society that inherently delays pleasure and rejects jealousy and truly understands that we deserve only what we work for, we would have NEVER been in this situation. We would have rejected the notion that everyone deserves a home and replaced it with "everyone that deserves a home has worked to earn it." Think about that.
I work and save, work and save, work and save. I pay all my debts on time because I don't take out debts that I cannot repay. I live within my means. I work hard at my job and earn a salary commiserate with what I contribute to the company. I do what is best for my family and I buy within my means. I earn a home because I planned to get it, worked toward it and secured the way toward it. I didn't wake up one morning and decide it was my right even though I spend everything I have and never work toward a plan and always live outside my means.
Here is the bottom line and how it all relates back. When you start to think that it is unfair that so and so has whatever, look in the mirror and ask yourself, "what did I do to earn that?" Sometimes you do experience setbacks that may not even be your fault. Sometimes you make a mistake due to inexperience or trusting the wrong person. That happens. Sometimes people are very fortunate and maybe even dishonest and get stuff they don't earn. That happens too. But, at the end of the day, if we are truly honest with ourselves, sloppy management, poor planning, laziness, ignorance, lack of research, naivity, jealousy and greed (all of which we can control for ourselves) are going to be the root of your money and housing problems 99% of the time. I know they have been the cause of all of my money problems in life.
The answer to my initial question, "What do I deserve in life?" is pretty easy to figure out. What I have worked for, no more, no less. If you feel that you deserve more compensation out of your job, quit, learn a more valuable skill or demand a raise. If you feel that you deserve more for your money, negotiate sales or clip coupons or whatever. DO something about it instead of relying on the government to TELL you what you deserve.
On a COMPLETELY different note, the college ministry that I work with has started a new prayer ministry. It is pretty cool. Basically it works like this, if you need prayers or know someone that does, you text your request to 61JESUS4U2 (615-378-7482). You can be completely anonymous or give all the details you want. We will not keep your number, solicit money, sell your info or anything else. We will not even contact you back unless you want us to. All we will do is pray for your request. So far we have about 20 signed up to pray. I suspect in the next few weeks we will have over 100 on the chain praying.
Very little in life chaps my hide more than the mentality where someone thinks they are "owed" something simply because they exist. In this blog, I am going to talk about this mentality coupled with the housing crisis. It is a worthwhile discussion and one that can be applied elsewhere.
Adam Smith published "The Wealth of Nations" in 1776. This was a groundbreaking work and discussed pretty much every aspect of an economy. One of the central themes (among many) in the commentary was the idea that, basically, if you take care of yourself, you in turn take care of the nation. If you can support yourself and your family, you are not a drain on anyone. Additionally, you must be contributing something worthwhile because you would not be able to support the family otherwise. In other words, the unintended consequence of taking care of yourself and being as productive as possible is that the entire community around you benefits. It is not a new idea but it does seem that we have departed from this standard. There are an endless array of directions we can go with this discussion but lets instead focus on housing.
Many, many things led to the collapse in the housing market. In my opinion, there were two things that were the overriding ideals that got us there. Number one is greed. Greed from politicians that tried to win votes by framing home ownership as a right and creating an environment for corporations to mask greed in the name of helping everyone attain that right. Number two was the mentality of so many Americans that they deserved the home, no matter their circumstances, no matter the cost, etc.
Let's look at number 1. Everything in our government is linked. Nothing happens in a vacuum. When the president makes a statement that he is going to work toward everyone owning a home, he sets a goal for congress. Congress reacts with a bill, the bill becomes law, someone challenges it, the judiciary confirms or denies it, the people react. Several bills have been passed toward this "goal" of home ownership for everyone since the late 70s. Several different presidents have had a hand in this "goal" as have countless senators and representatives and others. It is definitely not one single person or even party that is responsible here. See past all that label business. Politicians piled onto this "goal" because it made their constituents like them. On the surface it seems like a noble goal--"everyone owns a home because that is the American dream." The problem is that it is completely unattainable and not even a good goal to begin with. First, not everyone wants to own a home. Second, not everyone has the cash to pay for a home outright. Third, not everyone without the cash should be extended credit. Fourth, when the government meddles in this portion of private life, there is no way for them to be unbiased, no way for them to be smart and absolutely no way for them to actually "help" the situation that was fabricated to begin with.
One of the ways the government helped create the mess was to push guidelines for Fannie Mae and Freddie Mac. It may be good at this point to give a brief synopsis of these two Government Sponsored Enterprises (GSEs). Then we will see how this all happened from the top down.
What GSEs do? Basically, they buy mortgages from private lenders. If a bank or mortgage company writes a loan to someone that "conforms" to a certain set of guidelines, then Fannie or Freddie will buy that loan. They will keep some of the loans as investments but the majority are then packaged up and sold as securities to investors.
What does the government have to do with it? When these loans are sold off, it is implied that they are guaranteed by the agency and backed by the government. Both GSEs have a line of credit with the Treasury. The GSEs also do not have to hold the cash reserves that other banks do. Instead, they borrow from the treasury and repay with the revenue they get by selling the securities at a higher price than what they bought them.
What did this have to do with the crisis? This is where you have to stick with me... Government sets the goal to get more people in homes. The government holds the purse strings of the treasury that is the life support of the GSE. The government tells the GSE to get more people into homes. The GSE loosens the criteria to make a loan "conforming". For the private lenders, this creates a FIELD DAY. They can now loan to more and more people with the guarantee that the GSE is going to buy the loan. It's a no brainer for the lender. More loans+no risk (they are selling the loans as soon as they make them)=pure profit. This initial feeding frenzy starts up some other secondary market companies (Fannie and Freddie started the "secondary mortgage market--they buy the mortgage after it has been written, they don't actually lend money to the consumer) that are not GSEs but can get in on the fun. They use the same pool of investors, promise a higher return because the risk is a little greater and start encouraging lenders to make riskier loans because they will buy the loan at a premium.
Why are they riskier loans? Lots of reasons--lower credit scores, less job history, "stated income" instead of verified income, second homes, investment property, over inflated values, no down payments, cashing out equity that is not even there yet (110% loans), interest only payments counting on the increase of the market to grow equity, the list is endless.
So what happened? They failed to recognize one key, central element in all economies--they are cyclical. Sometimes they are up, sometimes they are down. NO economy will rise indefinitely. It can't. It has to have some down times. When it came down, it came down hard. First you saw the riskiest loans start to go sour, investors panicked a little. Then you saw the GSE loans start to go south. Investors panicked a lot. This caused a major retraction of investor money. With no one to sell to, Fannie and Freddie (and all those other secondary market companies) had no way to unload the loans they promised to buy. They had a real problem. It only got worse when the low standards of lending came to roost and people defaulted on their mortgages. Interest rates adjusted up in order to cover the problem--this put even more people in bad situations. This flooded the market with properties. When you oversupply, the price has to drop. Couple this with some other bad market conditions (companies closing, people losing jobs, etc.) and you compound the issue. When the prices drop, all those people who were counting on the increase in value to supply their equity get burned. There is no equity anymore. In fact, they are all upside down. If you are upside down, your interest rate has adjusted up because you did an interest only ARM, and you lose your job--you lose your home. More people do this and the prices drop even more because there are even more distressed homes. It really was the perfect storm of bad banking practices, corporate greed, politicians buying votes by flexing control over the lenders, some natural slumps in employment and the second issue--the people buying into the "I deserve it" mentality.
I am guilty here. I catch myself frequently justifying purchases because I deserve something. I work hard and thus I deserve that new ____________ or whatever. We have a lot of help in programming this mentality into ourselves. And honestly, its not that hard to believe it.
We live in such a wealthy nation it is easy to see the success of others and to hear the stories of people starting from nothing and going to millionaires (or more). The sad part is, we only hear those stories AFTER they have made it. We don't get to see, really see all the work that goes into getting them there. When we see that success we get inspired to be millionaires also. The problem is, we don't (usually) get inspired to make the sacrifices and work toward that goal. Instead we frequently adopt the "if ___________ is that rich or has that _______, I should too." Jealousy creeps in. Politicians love to use this in their quest to keep power. If we throw the plebes a bone, they will love us for it. Thus, we have the situation I outlined above. And we, as a society, play right into their hands. A lot of the people that were involved in the housing bubble knew that what they were doing didn't make sense. These were not stupid people. They got caught up in the moment. When they laid down their heads though, they knew that it was not going to last and it was not a good idea. It doesn't make any sense to borrow more than what a house is worth using that house as collateral. It doesn't make any sense to pay interest only on a tremendous debt in order to be able to afford MORE DEBT. But we, as a society, did it. Why? Because we could. It allowed us to be that much closer to "the haves". We deserve it. We work hard and the government says everyone should own a home. The banks agree and they are nice enough to give us our dream even though we are uneasy about the payment and the possibility of future payments being higher. Think about it.
If we had been a society that inherently delays pleasure and rejects jealousy and truly understands that we deserve only what we work for, we would have NEVER been in this situation. We would have rejected the notion that everyone deserves a home and replaced it with "everyone that deserves a home has worked to earn it." Think about that.
I work and save, work and save, work and save. I pay all my debts on time because I don't take out debts that I cannot repay. I live within my means. I work hard at my job and earn a salary commiserate with what I contribute to the company. I do what is best for my family and I buy within my means. I earn a home because I planned to get it, worked toward it and secured the way toward it. I didn't wake up one morning and decide it was my right even though I spend everything I have and never work toward a plan and always live outside my means.
Here is the bottom line and how it all relates back. When you start to think that it is unfair that so and so has whatever, look in the mirror and ask yourself, "what did I do to earn that?" Sometimes you do experience setbacks that may not even be your fault. Sometimes you make a mistake due to inexperience or trusting the wrong person. That happens. Sometimes people are very fortunate and maybe even dishonest and get stuff they don't earn. That happens too. But, at the end of the day, if we are truly honest with ourselves, sloppy management, poor planning, laziness, ignorance, lack of research, naivity, jealousy and greed (all of which we can control for ourselves) are going to be the root of your money and housing problems 99% of the time. I know they have been the cause of all of my money problems in life.
The answer to my initial question, "What do I deserve in life?" is pretty easy to figure out. What I have worked for, no more, no less. If you feel that you deserve more compensation out of your job, quit, learn a more valuable skill or demand a raise. If you feel that you deserve more for your money, negotiate sales or clip coupons or whatever. DO something about it instead of relying on the government to TELL you what you deserve.
On a COMPLETELY different note, the college ministry that I work with has started a new prayer ministry. It is pretty cool. Basically it works like this, if you need prayers or know someone that does, you text your request to 61JESUS4U2 (615-378-7482). You can be completely anonymous or give all the details you want. We will not keep your number, solicit money, sell your info or anything else. We will not even contact you back unless you want us to. All we will do is pray for your request. So far we have about 20 signed up to pray. I suspect in the next few weeks we will have over 100 on the chain praying.
Wednesday, November 23, 2011
The Lie--You Should "Do Better" than Your Parents
This is one of my "pet lies". I have a hard time not subscribing to this one myself, probably because I am very competitive. Many people, across all generations, believe this lie. It basically says that, because your parents accomplished this certain level of success, you should accomplish a higher level. Parents perpetuate the lie when they say things like "I just want better for you than I had." On the surface, this seems logical and seems like a noble goal. The problem in this lie stems from the common perception of "success" and what exactly it means to "do better."
First, know that I applaud parents for providing for their kids and I believe it is the parents' responsibility to provide opportunities and to give the kids a chance to accomplish great things. Thats not at all what this is about. I also believe that kids should strive to be the best they can be at everything they endeavor--sports, education, music, whatever. Again, thats not what this is about. I also believe that children should learn from their parents' mistakes. As the generations accumulate wisdom, children should be smarter, more wise and less mistake prone (theoretically). By that definition, kids COULD do better than their parents (though, most of those "life mistakes" have to actually be lived to be learned). I am focusing on the drive that many people feel starting in their early 20s. The want, and even need in some, to be at the same place their parents are currently. The inner push to have a higher salary, bigger house, nicer car, etc.
Where does this come from? I would say it starts with the parents themselves. As they raise the children they say things like, "I don't want you to struggle" and "You should do better than I did." Both are seemingly innocuous statements but, without proper explanation, they can be misguiding. Most parents mean that they don't want their kids to have to deal with the hard times. Parents forget, however, that the hard times make them appreciate the good times and the hard times build the character necessary to face future hard times. They also forget the simplicity that exists in the hard times (my life was so much simpler when I had 3 sticks of furniture, a rented apartment and a whole lotta love for my wife).
The next source of this problem is our own tendency to become acclimated to a certain lifestyle. Stick with me on this. If I am raised in a certain lifestyle, I get used to it. When I try to strike out on my own, it will be difficult to dial down my lifestyle. Parents need to do a better job of allowing their kids to see, touch, and feel a lesser lifestyle sometimes. Don't give them everything under the sun. Make them earn things. Make them make choices and sacrifices. Make them understand the concept of tradeoffs. Also, reassure them that it is ok to be in want sometimes. Its ok to live on lower means. Tell them the stories of how good for you it was to struggle with money.
So, whats the real problem with this lie? I think this lie is one of the MAIN causes for our growing dependence on debt. 18, 19, 20 year old kids are getting in tremendous debt as they feel they are entitled to nice cars, nice possessions and the same lifestyle their 50 year old parents have. These kids feel the pressure to live up to their parents, forgetting that their parents have 30 years on them building their wealth. This lie has contributed to the housing bust. You had first time home buyers completely exhausting their home buying power as they felt they should buy the biggest, nicest home they could possibly afford (instead of buying a true "starter home"). This lie contributes to students going thousands and thousands of dollars in debt to their schools as they feel this is the only way to get the education that will get them the job that will give them the salary higher than their parents. Another problem is that all to often this becomes an obsession for people. Parents obsess over their kids accomplishments. They push and push and push until the kid breaks. Kids obsess as well. When the parents push too hard, the kids feel the pressure. This can lead to all sorts of issues.
Whats the alternative? Should parents make their kids poor on purpose just to build character? Should parents discourage their kids from doing their best? Of course not. The answer is in the mindset. Number one, parents should let the kids know that sometimes you're up, sometimes you're down but, first, God never leaves and, second, you can always find contentment. Then, the parents should teach that contentment is not complacency. Just because I am content, I don't quit improving myself. Then the parents can teach kids to delay pleasure and the idea behind the tortoise and the hare. Its ok, even preferable, to build wealth slowly, methodically and incrementally. I believe God treats us the same way. He entrusts us with a little, then adds more as we prove our worth. Bottom line is this, be careful what message you give your kids about material things. Teach them contentment and allow them to learn how to build slowly.
Finally, help them define "success". Success is not measured in salary or stuff. It is measured in your ability and willingness to serve God. I know several that make half as much money as I do but I would call them more successful because they serve God with all they have. I am still trying to learn this lesson. It is HARD to reprogram myself in this regard. Hard, but worth it.
First, know that I applaud parents for providing for their kids and I believe it is the parents' responsibility to provide opportunities and to give the kids a chance to accomplish great things. Thats not at all what this is about. I also believe that kids should strive to be the best they can be at everything they endeavor--sports, education, music, whatever. Again, thats not what this is about. I also believe that children should learn from their parents' mistakes. As the generations accumulate wisdom, children should be smarter, more wise and less mistake prone (theoretically). By that definition, kids COULD do better than their parents (though, most of those "life mistakes" have to actually be lived to be learned). I am focusing on the drive that many people feel starting in their early 20s. The want, and even need in some, to be at the same place their parents are currently. The inner push to have a higher salary, bigger house, nicer car, etc.
Where does this come from? I would say it starts with the parents themselves. As they raise the children they say things like, "I don't want you to struggle" and "You should do better than I did." Both are seemingly innocuous statements but, without proper explanation, they can be misguiding. Most parents mean that they don't want their kids to have to deal with the hard times. Parents forget, however, that the hard times make them appreciate the good times and the hard times build the character necessary to face future hard times. They also forget the simplicity that exists in the hard times (my life was so much simpler when I had 3 sticks of furniture, a rented apartment and a whole lotta love for my wife).
The next source of this problem is our own tendency to become acclimated to a certain lifestyle. Stick with me on this. If I am raised in a certain lifestyle, I get used to it. When I try to strike out on my own, it will be difficult to dial down my lifestyle. Parents need to do a better job of allowing their kids to see, touch, and feel a lesser lifestyle sometimes. Don't give them everything under the sun. Make them earn things. Make them make choices and sacrifices. Make them understand the concept of tradeoffs. Also, reassure them that it is ok to be in want sometimes. Its ok to live on lower means. Tell them the stories of how good for you it was to struggle with money.
So, whats the real problem with this lie? I think this lie is one of the MAIN causes for our growing dependence on debt. 18, 19, 20 year old kids are getting in tremendous debt as they feel they are entitled to nice cars, nice possessions and the same lifestyle their 50 year old parents have. These kids feel the pressure to live up to their parents, forgetting that their parents have 30 years on them building their wealth. This lie has contributed to the housing bust. You had first time home buyers completely exhausting their home buying power as they felt they should buy the biggest, nicest home they could possibly afford (instead of buying a true "starter home"). This lie contributes to students going thousands and thousands of dollars in debt to their schools as they feel this is the only way to get the education that will get them the job that will give them the salary higher than their parents. Another problem is that all to often this becomes an obsession for people. Parents obsess over their kids accomplishments. They push and push and push until the kid breaks. Kids obsess as well. When the parents push too hard, the kids feel the pressure. This can lead to all sorts of issues.
Whats the alternative? Should parents make their kids poor on purpose just to build character? Should parents discourage their kids from doing their best? Of course not. The answer is in the mindset. Number one, parents should let the kids know that sometimes you're up, sometimes you're down but, first, God never leaves and, second, you can always find contentment. Then, the parents should teach that contentment is not complacency. Just because I am content, I don't quit improving myself. Then the parents can teach kids to delay pleasure and the idea behind the tortoise and the hare. Its ok, even preferable, to build wealth slowly, methodically and incrementally. I believe God treats us the same way. He entrusts us with a little, then adds more as we prove our worth. Bottom line is this, be careful what message you give your kids about material things. Teach them contentment and allow them to learn how to build slowly.
Finally, help them define "success". Success is not measured in salary or stuff. It is measured in your ability and willingness to serve God. I know several that make half as much money as I do but I would call them more successful because they serve God with all they have. I am still trying to learn this lesson. It is HARD to reprogram myself in this regard. Hard, but worth it.
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