Recently in NSL, we've been working with the economy. Now as many of you know, Mr. Elstein isn't all that knowledgeable in the field of economics outside of one thing apparently: advising you on what you should do to ensure that when you retire, your life is as awesome as can be. Unfortunately, I already know most of what he's talking about just from being forced to read "The Motley Fool Investment Guide for Teens." Don't knock it though. Actually a very practical guide to investing in the stock market and keeping track of credit and stuff of that nature. Point being that Ithink that Mr. Elstein read the same book because he's pretty similar in his speeches. Here's the way it works:
1) Don't get credit. And if you have to, then make sure that you get one with very low interest rates and that you pay it off QUICKLY. Interest rates add up fast so don't just pay the interest off each month, pay as much as you can as fast as you can and save yourself a lot of money. In a nutshell? Only use credit as an advance paycheck, never use it as extra money.
2) Buy a house. There's two big benefits and it also gets rid of one huge problem with renting. Benefit 1: The value of property and housing will always be on the rise, what's the risk? Just make sure you pay your morgage bills on time every month. Benefit 2: There's actually a tax break for people who are paying off a morgage! That's money in your pocket! Problem with renting: You are THROWING AWAY MONEY when you rent. Money that you lose to rent could just as easily be spent on a morgage, and it has none of the benefits that owning a house has.
3) Put a few thousand $ away every year of your wage-earning life for your retirement. The idea being that not only will that money add up, but the compound interest you earn on it towards your retirement will be enormous. The other thing about this is that if you were to ever to becomeincredibly ill, you wouldn't have to depend on a tiny retirement fund to help you get better, and then be broke. Get my drift?
But this has made me wonder. Why do we always seem to work towards making the end of our life the best part? It seems like the part of our life where our bodies are at their worst why would we want THAT to be the best part of our lives? Right now, we are in school, working towards making sure we have a great job so that we can make a lot of money to put into our retirement funds. I guess in a lot of ways it's alogical way of living: Once you've "pair you debt" to society you get to live any way you please with the money you've saved. And yet I still feel like we should at least have a little bit of "live for the moment" lifestyle in there. Though we all know what the effect of too much "live for the moment" lifestyle leads to. Yes, that's right, assholes. Which is why we need to strike a balance, but that's something you have to find for yourself.
Your last point is one I've often wondered myself. Quite frankly, money, as helpful as it is when we're active and busy, has very few uses when we've got a lot at the end of our lives outside of subsistence. Those are good economic points you paraphrased from Elstein and that book that I've never read. I strongly advise looking at stocks every day (I do)--but don't make impulse buys! When you're thinking over what's available and what you have, actually try to think. Buy low, sell high, and (the oft forgetten third rule) buy and sell smart.
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Posted by: Eric at January 29, 2005 08:06 PM