HELD CAPTIVE BY OUR "JUNK"
Much has been written about our consumption of junk in our materialistic society. While I enjoy my "stuff" as much as the next person you have to wonder about the price we pay not only for our junk but to keep, insure and store it.
My older brother just built a new large upscale home on a lake with 2 bedrooms and a 5 car garage. My mother said he would never be able to sell it later if he chose to do so. I told her it is the perfect home for dinks (duel income no kids). She just shook her head and said she will never understand my generation. In spite of all this my older brother and his wife still park both of their cars outside in the driveway because they can not fit them in the 5 car garage. (Too much other junk in there.) He also has 2 mini warehouses full of junk that he swears he will not bring into the new house but is not sure what to do with his class B junk. He is currently considering selling it on eBay. (The world wide garage sale that specializes in vacations for junk by shipping it from one attic to another attic across the country.) I sometimes wonder if eBay is not a plot hatched by the UPS people. We own a mini storage warehouse complex and we make money by storing other people's junk. Much of it is not worth a year's rent but people will pay to store it for decades rather than dealing with it.
Last week Gary North wrote a fascinating article that stated the cost to cruise 24/7 is the same price as an assisted living center. What retiree would not want to vacation year round on a cruise ship as a "customer" verses living in an assisted care center as a "patient"? Most people will never take advantage of this because they are held back by their junk. Where would we put the stuff if we left? Who will watch our stuff while we are gone? If you have ever been to a funeral you soon realize that all that stuff is completely superfluous baggage that we drag through our lives that weights us down and holds us back. As my Father likes to say, he has never seen a U-Haul trailer hitched to the back of a hearse. You just simply can't take it with you.
So why do we spend so much of our time and money (much of it borrowed) trying to buy more junk? As a nation we are spending more than we make. Our savings rate is negative if you cut out the phony rent the government statisticians say we are paying ourselves if we own our own home. (Did all you homeowners realize that you pay yourselves rent and that the rent you pay to yourselves is somehow going into your savings according to the government?) Our government itself is borrowing so much money it can not even keep up with all of it. The DOD can not even state its own budget clearly. People are going deep into debt to buy large homes that they do not need and can not afford. Our balance of trade is also out of control. Former Fed Chief Paul Volcker says that we are consuming about 6% more than we are producing. It seems to get worse every year as we produce less. How much of our consumption is simply junk that we can do without? Honestly look at your purchases. If you cut out 6% of your consumption would your life really change? How can we expect frugal people from around the world who live modestly to finance our wasteful lifestyle? If we could afford our lifestyle it would be one thing, but it is another thing altogether when we have to borrow from others around the world to support our "junk habit". It is estimated that 80% of the world's savings are loaned to the US every day to support that habit.
I can remember my childhood in the suburbs where the average house was 1500 to 2000 square feet with a one or two car garage. Now we live in houses 50% larger or more with smaller families. The larger houses come with larger mortgages, larger insurance bills, larger property tax, larger utility bills and larger upkeep expenses. And all this comes at a time when we can least afford it?? Why do we insist in shooting ourselves in our economic foot?
Perhaps it is time to reread Walden Pond and glorify the simple life. Maybe study our Japanese friends' frugal lifestyles. Maybe watch reruns of Mayberry. Maybe just talk to our parents and grandparents about our finances. The depression generation (my parents) believed that if you could not pay cash for something you must not need it. They believed that something worth owning was worth dreaming about and saving for until you could pay cash for it. They believed in piggy banks and Christmas savings accounts. They believed in financing a home with at least 25% down and paying it off early. They did not believe in financing a car. They did not believe in credit cards. They believed in living below their means and saving money. My parents told me that no matter how little they earned they always managed to save at least 10% and usually more than that. My parents started with nothing and accumulated a small fortune.
So that's it! Get rid of your junk and stop buying more junk. Drive that car a little longer. Save up and pay cash for your next car. If your house is not paid for then look at a smaller house with fewer expenses involved. Cut up your credit cards. Make out a budget. Get out of debt. Above all, save at least 10% of everything you earn. And most important of all, do not save everything in depreciating federal reserve notes. Put at least 25% of your savings into gold and silver bullion for long term gains.
Silver Trading Company
April 12, 2005
Larry and his wife Puddy both live in the occupied South with their two almost grown children and Haley the wonder dog. Larry manages the family drilling company and also sells gold and silver bullion through Silver Trading Company at www.silvertrading.net Please send your thoughts or comments to Llabord@silvertrading.net
Please note that I am no means a financial advisor. You must perform your own due diligence. As my daughter likes to say, "Daddy, if you know so much about money why don't we have more of it?"
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