Wednesday, February 21, 2018

Avoid “Go Along With The Crowd” Spending

May 6, 2010 by Buddy · 1 Comment 

sheep-sqThere are many principles we are taught at an early age.  Some stick with us for life.  Your mother is almost always right, and the truths she taught you when you were in elementary school should stay with you through your professional and investing career as well.

We will assume for this session that you adhere to the guidelines about personal cleanliness and character.  We will not cover those issues.  They tend to develop well with age. Somewhere buried in her instructions were the following words,

“Don’t blindly follow the crowd.  Just because Johnny does something, doesn’t mean that you have to follow.”

Her simple instructions are very applicable when it comes to savings.  Now this will sound a little harsh, so get a cup of tea and relax.  I mean really relax, and listen to the InvestmentBuddy before you get too excited.  There will be opportunities to spend money on life’s pleasures and thrills that will be appropriate and natural.  Like everything else in life, there are inexpensive options and expensive options.  You will be presented with both.  These “opportunities” often are pitched by family members and are almost never presented as optional.  Evaluate each on it’s merit.  Go along on the ones that make sense.  For the ones that are outrageous, the con goes something like this:

“Dad, Sally and Mary are flying to Boston for Spring Break.  They will be staying with friends there so we won’t have any expenses.  ….  I need $2,500.00.”

“What!?”

“We we have to fly.  Spring Break is only a few days and we will do some shopping, visiting, dining and take in a concert while we are there.  Since Sally’s friends live there they have already planned the trip and were kind enough to include me in the plans.  All I need to do is to buy three or four outfits before I go.  The weather in Boston will be unpredictable next month.  Can I use your gold card this afternoon?”

Trust me, you are about to be accused of being the Anti-Christ.  Every family’s financing is different.  Every financial threshold is different.  But the InvestmentBuddy is speaking to the upper middle income families here.

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Big Ben and Double Decker Buses in London

When my children were in college, I was asked (by all three) if they could study in Great Britain. My oldest daughter was naturally the first to ask.   She and five other girls were renting a three bedroom home near campus.  All of the other five girls in her residence had either gone or were scheduled to go to Great Britain.  The university has a well established program with intense study and touring for two weeks.

This trip had been a traditional treat for many of the families involved.  They had sent their older children, and the act of sending the younger children was simply a mechanical routine.  The Money Removal Routine … Open vault.  Remove money.  Send it to the registrar’s office at the university.  A routine they could all easily afford.  That made our decision NOT to send our daughter particularly painful.  Fortunately our family was contemplating a trip to Italy to visit the homeland of my mother’s parents.  What I am about to tell you will not easily be believed.  You will have to check this out for yourself.

Over the next two weeks, I worked with a travel agent to book our airfare and hotel rooms for our family of five for three full weeks for less than it would have cost our one daughter to “study” in Great Britain for two weeks.  Why the difference?

College cost is like health care cost.  Usually somebody else is paying for it.  There is less scrutiny on the nickels and dimes that add up to thousands of dollars.  The other aspect of an all-inclusive tuition/travel/lodging/touring package is that you are not allowed to analyze any of the component costs because they are not broken down into understandable elements.

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Leaning Tower of Pisa

Did my children think my wife and I were cruel and made a harsh decision? Yes – for a while.  But I can confidently tell you that the three weeks we spent in Sicily, Rome, the Tuscan Countryside, Sorento, Venice, Florence, Pisa and Milan will always be remembered as the family vacation of a lifetime.

Don’t always follow the crowd.  Sometimes you can find a MUCH better alternative.

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  1. [...] These weddings were in the South.  Money goes a long way and the guest are usually treated to finger food at the church reception hall, and not to sit-down drinking and dining at the country club.  There is some of that here but that is covered in another post about not following the crowd. [...]



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