(The following is an abbreviated transcription from a video Linda and I recorded. Please excuse any typos or errors.)
We found an interesting list: “Seven things that people who are good with money NEVER buy.” So this is not our list, but we wanted to share it with you.
We loved going through it and seeing how we stack up. Linda and I look at each one of these points individually to see how we’re doing.
You can judge for yourself, to see how you’re doing, too. All right… Let’s see if we are good with money or not!
I recorded our discussion that you can listen to on our Podcast.
Bob: So, this is from an article on medium.com, “7 things people are good with money, never buy.”
1. They’re not buying brand new cars
Bob: Number one, they’re not buying brand new cars. feel like we talked about this nonstop.
Linda: Yeah. This is like the number one thing we keep talking about.
Bob: Probably probably, Yeah. But no, we did buy our Honda Fit brand new. That is the only new car we bought. From then on, we don’t buy new cars.
Linda: That was a good purchase for us. Which I think is interesting. Let’s talk about that. Let’s take that angle.
Bob: Yeah. So a new car loses 10% of its value in the first month, 20% in the first year. If you think about that $30,000 car, that means it’s loses $3,000 in the first month. And that would be what about $6,000 in the first year of ownership? So the value that you’re losing is just flying off that vehicle so fast. Versus if you buy a car that’s three years old, it’s already lost a good chunk of that depreciation. You’re just saving yourself a lot of money by buying a used car.
Now, the key is to hang onto it for longer. The worst thing you can do is buy a new car and then traded in two years later and just keep doing that because you are the one who is eating all the depreciation and having to make up for it each time you buy a new car. So you want to be on the other end.
My crazy car buying experiment
You don’t have to go as crazy as I did buying, what was the Taurus 13 years old? So this was a crazy experiment we did. We talk about this in our book. That’s coming out in March, I believe, hopefully. But no, I bought a old Taurus off my sister.
She was trading into a dealer, bought it for a thousand dollars. Bought it as a third car that we didn’t need at the time, because it was just a thousand dollars. And our other two cars are getting old. I’m like, this will be an insurance policy in case they blow up. One of them did blow up. So we drove that car for a few years I think four years and because it was so old and so far down in the depreciation curve it just really wasn’t depreciating any more. And so I sold it for the same price I paid for it five years later, how cool is that?
Linda: He was so happy with himself, when that happened.
Bob: Pretty proud of myself I’m not going to lie.
Linda: He was real excited.
Why did we buy a new car?
Linda: Okay. But let’s answer the question. Why did we buy a brand new car? Like, what’s the reasoning for that when we want to buy used?
Bob: So in 2006, we bought a Honda Fit. The reason we bought that purchase, I’m going way back here tapping into the archives, but the reason we bought that car new was because you couldn’t buy it used. It was the first year that they had them in America. They were making them Japan or somewhere. You could drive them in other parts of the world, but they didn’t have them here.
And if you remember, this was like the first time that gas went through the roof. It was the first time we hit $4 a gallon in the U S. So everybody was freaking out about gas prices.
Linda: I remember driving and paying 99 cents for gas or less 89 cents for gas. We’re really dating ourselves now.
Bob: Yeah, we ended up buying this car new because we couldn’t buy it used (here’s steps you shouldn’t skip when you do buy a used car). I wanted to buy a Honda because I had done all the research and determined that Honda and Toyota were basically the two best brands to buy in terms of reliability.
So the combination of all these things kind of made for the, all right I’m going to break my own rule here and buy a new car. But what I knew was we’re going to drive this car for 10 years.
I bought it with the intention of driving it for 10 years. I’m like, if we do that, then we spread out the depreciation long enough that it might make it worth it. And we did. We drove it for basically about 10 years.
Linda: We really gave that car a lot of love.
Bob: And it was fantastic car.
Linda: It was a fantastic.
Bob: Ugly car. I mean…
Linda: Super ugly…
Bob: I mean, I’m sorry, if you have a Fit and you think they look good, but…
Linda: It looked like a mini minivan is what it looked like. We have a minivan now, which is funny. Because we just upgraded as we added more people to our family. But it looked like a tiny minivan and it was such an ugly car. But man, it had way more space than you’d think.
Bob: Yeah, we had that car for 10 years and nothing went wrong with it, other than battery or a light bulbs. It burned through light bulbs pretty quick. But other than that, no repairs, it was amazing. I mean to have a car for 10 years and basically have no repairs.
Linda: And we sold it.
Bob: And then we sold it for a good amount because it’s a Honda and they sell well. That that’s a real long story of not buying new cars, but that’s the first point here. Don’t buy a new car if you can avoid it. And if you do, hang on different while.
2. And they’re not leasing new cars either
Bob: Next point. People who are good with money, according to this author, they’re not leasing new cars either. Yes. I hate to break it to a lot of people, but you are not getting a deal if you were leasing a car. Now I’m not saying there aren’t reasons in times where maybe you…
Linda: It makes sense.
Bob: It might make some sense, but you just have to understand the financial benefit you’re getting from it is not the reason that it makes sense. So I’ll just leave it at that and you can run the numbers and do all the math. Don’t go to a dealer and talk to him about the numbers. Don’t don’t go to somebody. Who’s trying to sell you the lease and ask them for the numbers, but go look at just Google it. Read the independent articles that people actually run the numbers and then evaluate for yourself if that’s the best financial move now (how cars affect your financial freedom). We always say “All decisions are not financial decisions.” So there might be other factors involved in why you’re leasing it. So we’ll just leave it at that.
Linda: Nope. But then you bring up a good point because it is important who you ask, what questions to.
Bob: That is a really good point.
Linda: Right? Like you can go to one person and hear what you want to hear. Or you can go to another person, hear wisdom and hear what the Bible says or what you need to hear. You know what I mean? So just be careful who you’re asking, what questions to.
3. They don’t buy houses that they can’t afford
Bob: Number three in this list. They don’t buy houses that they can’t afford. What do you think about that?
Linda: I mean, I think that’s very wise. That’s a great idea.
Bob: Yeah. The biggest reason is that you won’t get it taken away from you by the bank.
Anything can happen
Linda: Right? Especially, again, post 2020, like this is the thing that I feel like we keep talking about. Anything can happen. Like, I feel like we were just watching a show and they’re in the show they’re going to be talking about 2020. And Bob was like, go back to January/February of 2020.
Imagine like how you would’ve thought about the next year.
Bob: How optimistic…
Linda: Yeah think about how optimistic we all were like, this is the twenties, the roaring twenties. All the excitement. And then just a couple months in, there was a freaking quarantine, like who saw that coming? Nobody. That, that was unbelievable and everything that’s gone on since then, anyway,
Bob: I want to be like the anti pandemic on this podcast.
Linda: I know we don’t want to talk about the pandemic the whole time or any of the conspiracy theories or any of that stuff.
Bob: Let’s talk about all of it. Let’s talk about politics. We’re already talking about religion. Let’s just do it.
Linda: It was just very surprising and it put us in the position of, okay anything can happen. The things that we didn’t think were going to happen, happened.
Linda: Yeah. We were surprised by a lot of it.
Bob: Yeah. Okay. So the takeaway, I think is life is unknown. We don’t know what’s going to happen. It’s wise to prepare for things that could happen.
Listening to God and preparing
Bob: Let’s just go back to Joseph in the Bible in Genesis. God had given him a heads up. But like he prepared, he took steps in the times of abundance, he saw you know, by God’s heads up that there’s a famine coming and he got prepared for it. And as a result, not only did he survive it, but he was able to bless a whole bunch of other people and a whole bunch of other people were able to survive it because of his foresight.
And I think there’s a lesson here for us, financially or in other areas of our lives. Like we should be paying attention to the signs. We should be paying attention to what’s going on. And this doesn’t mean we need to get all doomsday prepper and build a bunker and whatever else, but, but let’s just start thinking about what could be and what could be.
And what are the hints? What are the things that could be coming down the pike? And how should we adjust our lifestyle now? How should we adapt what we’re doing now? Thinking about the future, right?
Linda: Yeah. And especially if you feel like you are having dreams or things that God is highlighting to you, be paying attention. Right?
How do you determine if you can afford a house?
Linda: Okay. But I have another question about this. How do you determine if you can afford a house or not? Cause that’s what this is saying. You don’t buy a house that you can’t afford. Because what I would love for everyone to do is to pay off their house and never have a mortgage again. I think that is a great goal.
I want you all to know that it’s possible. We’ve done it. We didn’t grow up in houses where our parents did that. So it’s not like we came from all this money. But, what is a reasonable idea here of what can we afford?
Bob: I know this might be a cop out. I just don’t like talking about this, but 28% of your income. You know, this is a rough guidelines of what a lot of financial experts say should go towards mortgage expenses.
So roughly a third of your income, or ideally less, should be focused on that. I don’t really like that because we’ve never operated on that. We’ve operated on pretty much as low as we can get by on. And this is the thing, this is where personal finance is personal. Because that didn’t mean getting the cheapest house we could possibly find because we could find things cheaper in parts of the area or city we didn’t want to be in that were…
Linda: Or, it didn’t make sense for our family.
Bob: …didn’t make sense for us or were more dangerous or whatever.
But on the other hand, it wasn’t just, where do we want to be? It doesn’t matter how much it costs. We’re just going to go there. Like our goal has always been, how can we get a house that suits our needs for as little as possible so we can get it paid off as fast as possible. The goal has always been, how do we become mortgage-free as fast as possible.
And. That ratio is not going to help you get there. Now, the worst thing you can do is just go to the banker and ask him how much you can afford, because even after the housing crisis of 2008. You would think that they would be, and there were a lot more cautious for a little bit, but still they’re always overestimating for you and I in many cases. If you’re an entrepreneur and new in business, they’re hopefully underestimating. But that’s not who you want to go ask how much you can afford. And that’s what a lot of people do, unfortunately.
And especially pre 2008. That’s part of why we had the crisis that we had with the housing mess is because the banks were just lending way more money to people than they should have been.
Linda: So again. Who are you asking your questions to, right?
Bob: Yeah. But anyway, that’s a rough, dirty answer to maybe give you a little bit more direction and point you in some direction with that.
Linda: Okay. Great.
4. They’re not buying things on credit that they can’t pay for
Bob: All right. Number four, on our list, they are not buying things on credit that they can’t pay for.
Linda: Okay. So in other words, if you’re putting it on a credit card, it should be paid off every month.
Bob: Yeah, I liked that.
Linda: Okay. Which we have. You’ve got to tell them about the Chase Card.
Our favorite credit card
Bob: Okay. Let’s talk about the Chase Card.
Linda: Let’s talk about it really fast since we are talking about credit.
Bob: So, the Chase Card. Yeah. So I, again, only talking to people who are paying every credit card off every month.
If you’re not just tune out for the next minute or two, it doesn’t really matter. But yeah. So Chase Sapphire ultimately is our favorite credit card we’ve used. I’ve tried out at this point, I think 34 different credit cards. This is how I roll what I do.
Linda: That stresses me out, but he’s fine with it.
Bob: So, yeah, so I tried out 34 different credit cards, and this is just the best for most situations and ours being one of them.
How we’ve traveled for free
And so we’ve traveled for free. Yeah. Over a hundred hotel nights and flights we’ve gotten completely free. Mostly because of this card and the points that we’ve earned from it without going over all of the details, a lot of these cards have points programs, but this particular points program just…
Linda: It’s just better.
Bob: The money just goes further. The points just go further. So it’s like a currency that’s worth more than other currencies, if that makes sense. So all of this to say…
Linda: The reason why we’re telling you about this, because right now they have like a hundred thousand…
Bob: Yeah. At the time of this recording…
Linda: …hundred thousand point bonus.
Bob: Yeah. There’s a hundred thousand point sign up bonus. So it’s pretty crazy.
Linda: Which most of our flights. Let’s just put that in perspective. Most of our flights are probably under 20,000 points.
Bob: Yeah. So we were just, we just booked my mom a flight up here, and I think it was like 7,000, 9,000 points for her to fly from Florida to here.
And so, yeah, so hotels, like some of the hotels we stay at are 5,000 points at night.
Linda: Depends on where they are.
Bob: Yeah. But the point is, is that those points go really, really far. Yeah. Anyway, there’s the, a sidebar on that. So my encouragement is if you just pick some random credit card, cause it’s just what you’ve always had or they give you a free t-shirt to sign up or something, it might be time to try one that might yield you some more benefit.
And if you’re not using credit cards, that’s cool too. Like no need to use them. We had many years of our marriage where we didn’t use them because they didn’t make sense for us. And we couldn’t control our spending.
Bob: But if you are disciplined with your spending, you’re paying them off every month. There’s a lot of benefit and rewards that you could get.
Bob: So anyway, all that to say back to point number four you do not want to be paying for things. You don’t want to be buying a pair of shoes and be paying interest on it for 12 months. We want to avoid that if at all possible. I think we all know this, right? This is pretty common sense, but all right.
5. They’re not buying luxury goods from brand-name designers
Bob: Number five. They are not buying luxury goods from brand name designers. What do you think?
Linda: Well, I have been for years trying to figure out how to convince you that this was a good idea, because there are some things that you can really like, if you’re going to do the “I’m going to buy this and then resell it” Like you’ve done this before.
Bob: Give me an example, let’s talk.
Linda: Like a Louis Vuitton purse.
Bob: Do you can think you can sell a Louis Vuitton?
Linda: You can definitely sell a Louis Vuitton.
Bob: You think you can sell it for half of what you would pay for it?
Linda: Oh yeah.
Bob: You think so?
Linda: More than half. Yeah. And there are even some like super high-end luxury bags, at least that you can sell for more.
Bob: Okay. So here’s what I propose that we do…
Linda: As they like become vintage and whatever.
Bob: Alright. Here’s what I propose that we do. We buy one used.
Bob: A, cool vintage-y one used.
Bob: And then let’s get a good deal on it when we buy used. And then, yeah, let’s go for it.
Linda: Are we doing this? Are we buying it with business money? Because it’s an experiment for the business. This is the other thing I do.
Bob: If the IRS is watching, this would be real fun.
Linda: Okay. So anyway but in general, I agree with this. I think the point is…
Bob: Okay, I would say, I don’t know this world that well, but a lot of high end design stuff is just so grossly overpriced.
Linda: I agree.
Bob: And there isn’t a super strong secondary market where you can resell it. So anyway.
Linda: No. I agree. And I think the point of this is you’re just consuming. Like I think that’s what this point is, is the consuming aspect of it. So if you’re going to do this, I think making wise decisions and trying to resell when you are no longer interested.
6. They’re less likely to load up on material items at all, opting for quality over quantity
Bob: All right. Number six. They are less likely to load up on material items at all, opting for quality over quantity. So, yeah. So I think there’s a tendency to kind of look at these two and say that they’re contradictory.
Linda: Yeah they’re contradictory.
Bob: But they’re not. I think you have cheap stuff, then you have quality stuff and then you have…
Bob: It’s really high level thing.
Linda: It’s really just a label.
Bob: Yeah. And so even like, if we’re being honest about Louis Vuitton, for example, a Saddleback leather bag that I used to have made of this leather, that’s like this thick. Like, it really was super well-made amazing quality stuff. It was expensive. It’s like $500 for a bag, but…
Linda: That’s actually still less than a Louis Vuitton.
Bob: Yeah. And made a whole lot better. You know, Louis you’re paying so much for the name and it might be well-made compared to a Coach bag or something like that. But I think the reality is it’s probably not that much better than a Coach bag, and maybe it’s 50% better or something. I mean, I’m throwing these numbers out of thin air,. But point is, it’s not like whatever 10 times or a hundred times better, like the price would make you think.
Linda: No, but I mean, this is true. So I for a long time shopped at H&M. I still like H&M, this sweatshirt is actually H&M, it’s one of my favorites. But we bought some t-shirts from Freedom Co, their quality is a whole lot better than H&M. You know, when you wash them the seam isn’t like sideways and stuff like that. And they last a whole lot longer. So they are, there are more expensive. That brand is great. You should definitely check it out, but they’re more expensive. However, it’s something that you can have for. like 4 5, 6 years until it starts really wearing out.
Whereas I can buy like six H&M shirts, it’s going to cost me the same thing. Not as good of quality.
Linda: And won’t look that’s good.
Bob: Well, yeah. And oftentimes, like, in the case of Freedom Co, it’s ethically made. That’s their main thing is that it’s ethically made clothing. And so whereas a lot of things that are cheaper, in fact, most things that are cheap are not. Made in sweatshops or whatever.
Linda: But also like you think about that shirt and you said it’s your favorite shirt to wear and you’ve bought other t-shirts and worn them a few times and been like, I’m ready to get rid of this.
Bob: That is a frustrating
thing. When you buy something, that you love it in the store and then you get it home and it’s like, it washes and it’s terrible.
Linda: Quality over quantity.
7. They probably aren’t planning lavish, expensive weddings
Bob: All right. Number seven on this list is they probably aren’t planning lavish, expensive weddings.
Linda: Should we tell them about our wedding?
Bob: I don’t know man. I think we nailed it with this. And part of it was just because this is what you wanted
Linda: Yeah. This was what we wanted. Well, and it part, but I would tell you a big piece of it was I was seeing how much everything was going to cost. I went and tried on a dress and I did not have money to buy a dress. This was like all happening to me at one time where it was like, I was seeing how much things cost. I was seeing how in debt I was, we were getting married. We were trying to get our finances on track. So that was kind of the culmination of all these things that were happening at one time.
And I went to go try on a wedding dress. And I was like, this is the dress. This is the one. It was beautiful. I felt gorgeous in it. You know, the whole thing. And it was going to be a thousand dollars to get this dress. And I still hadn’t bought shoes or accessories. I hadn’t gotten my hair done or getting my makeup put on.
Bob: $1,000 Which is nothing compared to what a lot of people were spending on dresses now.
Linda: Right! In my head. I was like, I cannot spend a thousand dollars on this. And so we ended up just deciding if we don’t really want to spend that much money on this, like this is telling us something, right? So we went for a super simple wedding. We did immediate family only. I worked at my church at the time, so they let us get married in the building for free. We tried to pay our pastor. He gave us the money back, which was so kind and sweet. And…
Bob: We had a reception at a nice restaurant in town afterwards with our immediate
Linda: Well, or after, yeah, that was just with our family. And then my mom hosted a reception for us at her home a month later. It was really just so sweet and it was really intimate. Like we actually really loved it.
Bob: Yeah the best thing about it was the stress reduction of the entire wedding process. Because I had enough foresight to know, cause I’m just analytically wired to think, all right, this is one day. Like we’re going to be married this whole time. I’m more interested in our whole time married than I am this one single day.
And I don’t really want to spend whatever $20,000 in this one single day. But I would have happily done it. I would have happily done it for you. But since you were kind of cool with this, I’m like great! This is awesome. And so then we just had the super simple wedding, like almost all the stress was gone. And it’s just like…
Linda: It’s so true. It actually became like the celebration of us being able to start our lives together instead of it being like this event. Which I know that’s not for everybody, but…
Bob: Yeah, we’re not putting this on everybody, but I’m saying for us, like, it just fit.
Linda: Yeah it was really great for us.
Bob: And we really enjoyed it. And I, part of me honestly, was scared that you might regret it at some point.
Linda: I do not regret it at all.
Bob: And yeah, that’s, that’s awesome. It’s a win!
Linda: It’s a win! We all win.
Benefits of having a simple and small wedding
Bob: So, yeah. And so we were able to actually have some money to buy a bed, which we desperately needed a bed. And many of the things at the beginning of our marriage, because we were completely broke. But yeah, it was a good financial move.
One of the better decisions of our marriage. I think.
Linda: I agree.
Bob: So, Yeah. So I think just remembering that it’s one day is, is helpful, regardless of whether you’re going to a big wedding or a small wedding. Cause it’s so easy to caught up in the frenzy and in all of the typical expenses when…
Linda: Yeah, and I have to do this.
Bob: Yeah. Like you have to ask that question, like, do I really have to do this? And the answer is not it’s, it’s often different than you think. Just because everybody else does it that way. Doesn’t mean you have to do it that way. And that’s such a liberating thing to understand.
Linda: Also capping your spending limit on that, just saying, “okay, we’re only going to spend this much.” Usually brings out so much more creativity. It gives your friends and family a chance to participate in ways that brings you all together. Because it’s really such a special time of a new thing happening in your life.
And I think it gets overshadowed so often by the party and it has to be a certain way. It even can cause a lot of conflict because… “well, I want it this way.” And “well, I’m paying for it. So it should be this way.” Well, but it’s my day so it should be this way, you know? That, that doesn’t need to be there. So yeah, I think there’s so much to think about with all of that, and I think part of that can really be saving a lot of money.
Bob: Yeah. Amen.
Summing things up
Bob: All right. So those are the seven things that this author, we don’t even have author’s name. Bummer!
Linda: Business Insider.
Bob: Business Insider says “people who are good with money, never buy these things.” So there you go.
All right. That’s all for today. If you haven’t liked this video or whatever, subscribe to the podcast or whatever the thing is, hit the like button, do all that stuff. We love you when you part of the SeedTime family with us.
That’s all for now. See ya!