Best Financial Advice I Ever Received...

[67Elmo]

Ever wonder…should I buy this new truck…go on this vacation…buy this fishing boat…buy this big screen tv?

Since its 2014 some of us might have New Year's Resolutions about saving and or spending money. This has helped me a lot.

Simply convert the purchase price of what you want to buy into HOURS YOU NEED TO WORK TO COVER THE PURCHASE.

Say you earn $40 an hour in the oil patch. After taxes, union dues, whatever, you probably really only earn $20 an hour cash to you, or thereabouts.

So you want a new $60,000 diesel half ton? Divide $60,000 by $20, the amount you really earn after taxes, etc. and you get 3000 hours of work to buy the truck. At 60 hours a week of work that's 50 weeks, or basically an entire year's work (you get 2 weeks vacation in this example) to pay for the truck. At 40 hours a week you need to work for 75 weeks, or about a year and a half to buy the truck and pay for it.

A new fancy fishing boat and motor with trailer, say $40 K or thereabouts….roughly a year's work… A 52 inch $1000 tv 50 hours, or about a full week's work ($1000 divided by $20 per hour net after taxes, etc).

The question to ask is "Is it worth it to me to work for "X hours" to buy this item?" If the answer is YES go buy it and enjoy it to the full without any guilt. If the answer is "no" then simply avoid it. This has helped me personally not make stupid purchases and help me make good ones. Good luck on it.

[ali#1]

Best financial advice I ever got was from my millionaire uncle.

If you can't pay cash for it you can't afford it.

[Ultimate Predator]

Live now pay later toys and fun r no good to u when your 70 if you make it that long

[ali#1]

Originally Posted by Ultimate Predator

Live now pay later toys and fun r no good to u when your 70 if you make it that long

And always be a paycheque away from losing it all.

[lannie]

Originally Posted by 67Elmo

Ever wonder…should I buy this new truck…go on this vacation…buy this fishing boat…buy this big screen tv?

Since its 2014 some of us might have New Year's Resolutions about saving and or spending money. This has helped me a lot.

Simply convert the purchase price of what you want to buy into HOURS YOU NEED TO WORK TO COVER THE PURCHASE.

Say you earn $40 an hour in the oil patch. After taxes, union dues, whatever, you probably really only earn $20 an hour cash to you, or thereabouts.

So you want a new $60,000 diesel half ton? Divide $60,000 by $20, the amount you really earn after taxes, etc. and you get 3000 hours of work to buy the truck. At 60 hours a week of work that's 50 weeks, or basically an entire year's work (you get 2 weeks vacation in this example) to pay for the truck. At 40 hours a week you need to work for 75 weeks, or about a year and a half to buy the truck and pay for it.

A new fancy fishing boat and motor with trailer, say $40 K or thereabouts….roughly a year's work… A 52 inch $1000 tv 50 hours, or about a full week's work ($1000 divided by $20 per hour net after taxes, etc).

The question to ask is "Is it worth it to me to work for "X hours" to buy this item?" If the answer is YES go buy it and enjoy it to the full without any guilt. If the answer is "no" then simply avoid it. This has helped me personally not make stupid purchases and help me make good ones. Good luck on it.

You need to figure out how much it cost for you to use it. The cost of buying something and the cost of using it are varied and different.

[Vigilante]

You cant take it all with you, and I do not believe that I need to work my ass off so my children wont have to work (I don't have kids). But I do believe in financial responsibility. If you can not afford something, you really don't need it. If you want a $60,000 truck for example, I agree with financing a portion, because we all dont have that kind of cash just sitting around, but you should be able to put money down, and be able to sustain the payment no matter what happens.

[CanuckShooter]

Originally Posted by ali#1

Best financial advice I ever got was from my millionaire uncle.

If you can't pay cash for it you can't afford it.

Rich people always say that....or.....make money with other peoples money and use leverage.

[sns2]

Originally Posted by ali#1

Best financial advice I ever got was from my millionaire uncle.

If you can't pay cash for it you can't afford it.

Easy for a millionaire to give what is essentially unrealistic advice. We all need a house. How many can pay cash.

In today's society the challenge is reasonable and manageable debt.

The best advice I can give is get a house and pay for it. Houses rarely go down. Land is the same.

Finally, don't drink and smoke. You'll have more spare cash in your pocket to blow on guns.

[rugatika]

Take care of the pennies and the dollars will look after themselves.

Although I suppose the 2014 edition would be Take care of the nickels and the dollars will look after themselves.

[Ryry4]

Originally Posted by CanuckShooter

Rich people always say that....or.....make money with other peoples money and use leverage.

And financing everything with someone elses's money is the exact reason why debt is crippling so many people.

[K44]

Originally Posted by ali#1

Best financial advice I ever got was from my millionaire uncle.

If you can't pay cash for it you can't afford it.

Smart uncle I've never had debt and retired at 48 and lived by this rule

[mcreg]

My Grandfather always told me there are 2 things in life that are for certain -Death & Taxes!
His advice - always try to put both off as long as possible.

[ali#1]

Originally Posted by Vigilante

You cant take it all with you, and I do not believe that I need to work my ass off so my children wont have to work (I don't have kids). But I do believe in financial responsibility. If you can not afford something, you really don't need it. If you want a $60,000 truck for example, I agree with financing a portion, because we all dont have that kind of cash just sitting around, but you should be able to put money down, and be able to sustain the payment no matter what happens.

Your not wrong, my uncle said obviously a big purchase like a house you can't buy cash, but you should be able to pay at least 20% down and pay off as much as you can afford. Truck same thing it's almost impossible to
Come up with that in cash, but reassess do you actually need a 60k truck to begin with.

[ali#1]

Originally Posted by sns2

Easy for a millionaire to give what is essentially unrealistic advice. We all need a house. How many can pay cash.

In today's society the challenge is reasonable and manageable debt.

The best advice I can give is get a house and pay for it. Houses rarely go down. Land is the same.

Finally, don't drink and smoke. You'll have more spare cash in your pocket to blow on guns.

Well he wasn't born a millionaire he was born to a cab driver. He paid off his first house in 5 years by working 16 hours a day at a restaurant he bought.

I see a lot I people around who live a high lifestyle and if they were to break a leg or get sick and miss a few paycheques they would have to start liquidating things. A girl I work with is engaged her boyfriend is a sheet metal guy and she makes decent money. She's wondering why it's so hard to save money for a down payment for a house while her and her fience both drive brand spanking new vehicles, take 3 trips a year and pay $2000 a month rent.

[Buckhead]

Originally Posted by ali#1

Best financial advice I ever got was from my millionaire uncle.

If you can't pay cash for it you can't afford it.

Now that is one of the silliest things I have heard.

Why would I tie up all my cash in depreciating assets? Why not use some of other peoples money for those?

I put my cash where it can generate an income stream.

[ali#1]

Originally Posted by Buckhead

Now that is one of the silliest things I have heard.

Why would I tie up all my cash in depreciating assets? Why not use some of other peoples money for those?

I put my cash where it can generate an income stream.

So paying 600 k for a 300k house is a good idea ?

The banks make money on the difference they make on interest, they charge more than they pay out most of the time.

[Buckhead]

Originally Posted by Vigilante

You cant take it all with you, and I do not believe that I need to work my ass off so my children wont have to work (I don't have kids). But I do believe in financial responsibility. If you can not afford something, you really don't need it. If you want a $60,000 truck for example, I agree with financing a portion, because we all dont have that kind of cash just sitting around, but you should be able to put money down, and be able to sustain the payment no matter what happens.

I agree. This is more realistic.

[Buckhead]

Originally Posted by ali#1

So paying 600 k for a 300k house is a good idea ?

The banks make money on the difference they make on interest, they charge more than they pay out most of the time.

Why in the world would I pay 600K for a 300K house. That doesn't even make sense.

[ali#1]

Originally Posted by Buckhead

Why in the world would I pay 600K for a 300K house. That doesn't even make sense.

That's what it costs with interest over the term. I'd like to see an investment that makes that much on a regular basis.

[Buckhead]

Originally Posted by ali#1

That's what it costs with interest over the term. I'd like to see an investment that makes that much on a regular basis.

My house is already paid off, thanks.

And pretty much any one in the current interest environment could pay off that house with weekly payments in 12 to 15 years. That doesn't add up to 300K in interest.

[ali#1]

Originally Posted by Buckhead

My house is already paid off, thanks.

And pretty much any one in the current interest environment could pay off that house with weekly payments in 12 to 15 years. That doesn't add up to 300K in interest.

So you paid as little interest as possible ? Like my original point that you are arguing against ?

[Selkirk]

Originally Posted by ali#1

Best financial advice I ever got was from my millionaire uncle.

If you can't pay cash for it you can't afford it.

Good advice Ali ^, but you don't have to be a millionaire to figure that one out

Except for the house we bought (with a hefty down payment, after scrimping and saving for over six years), the wife and I have lived that way all our lives.

Looking back, I'd do it all the same way again. Living a life, being hip-deep in debt, is a horror chamber I'd never want to visit.

Mac

[ali#1]

Originally Posted by MacLeod

Good advice Ali, but you don't have to be a millionaire to figure that ^ one out

Except for the house we bought (with a hefty down payment, after scrimping and saving for over six years), the wife and I have lived that way all our lives.

Looking back, I'd do it all the same way again. Living a life, being hip-deep in debt, is a horror chamber I'd never want to visit.

Mac

I didn't realize it would be so controversial.

I didn't get this til a little later in life like 4 or 5 years ago. I was one of those guys who said screw it put it on my credit card (20 k limit) or finance it and il pay for it later. Then 2008 happened and I was up poop creek without a paddle. Me and my wife suffered through it and by 2011 things were finally looking up again. I have gotten rid of the credit cards only have 1 now for emergencies. Got rid of vehicle payments and quads etc. live on a cash basis now and save a little each cheque and pay $100 on my mortgage each cheque. I wish I had a time machine to go back and talk to myself in 2002.

[lannie]

Originally Posted by MacLeod

Good advice Ali ^, but you don't have to be a millionaire to figure that one out

Except for the house we bought (with a hefty down payment, after scrimping and saving for over six years), the wife and I have lived that way all our lives.

Looking back, I'd do it all the same way again. Living a life, being hip-deep in debt, is a horror chamber I'd never want to visit.

Mac

You got it but...Taking big debt for short periods on appreciating assets is a great investment. That is the way I did it and it paid off in spades.

[Buckhead]

Originally Posted by ali#1

So you paid as little interest as possible ? Like my original point that you are arguing against ?

No, you said pay cash for everything or don't buy it.

I don't agree with paying cash for everything - that doesn't mean I'm going to waste my money either.

[ali#1]

Originally Posted by Buckhead

No, you said pay cash for everything or don't buy it.

I don't agree with paying cash for everything - that doesn't mean I'm going to waste my money either.

It's a bit of an absolutist statement for sure. And as I have said there are exceptions of course.

About 5 years ago my uncle and aunt were going on a trip to Florida and needed a credit card to rent a card, my 45 year old uncle told me he has never had a credit card in his life, he got one they went on the trip an when he got back he paid the balance in full and cancelled the card. He still deals in certified cheques and cash.

[lannie]

Originally Posted by ali#1

It's a bit of an absolutist statement for sure. And as I have said there are exceptions of course.

About 5 years ago my uncle and aunt were going on a trip to Florida and needed a credit card to rent a card, my 45 year old uncle told me he has never had a credit card in his life, he got one they went on the trip an when he got back he paid the balance in full and cancelled the card. He still deals in certified cheques and cash.

Not having plastic seems incredible. Smart is using your card as much as possible and paying off the total every month. Using someone else s money.
Your uncle was missing out and a tad short sighted.

[ali#1]

Originally Posted by lannie

Not having plastic seems incredible. Smart is using your card as much as possible and paying off the total every month. Using someone else s money.
Your uncle was missing out and a tad short sighted.

Hard to argue with success though. I told him to do the same and pay in full his response was "what if I miss the payment and have to pay 20% interest on 35 grand ?" He's a contractor and deals with a lot of payments and paying I sub contractors, all done by cheque.

[lannie]

His money and his decision. Works for him and in the end that's all that counts.

[ali#1]

I believe he was talking more about relatively small purchases like a quad or skidoo or used car. Obviously 99% of people can't afford to buy a house for cash.