013, Mortgaging a House

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So, we covered ratios in the last post. The focus of that post was to show you the basics of a ratio for buying a house. Now you know and understand the ratios that are recommended in relation to your income. You understand that the 20% recommended down payment is the minimum you should put down on a house. Let’s run through a few examples to show you the impacts of a few scenarios. Sometimes a picture is worth a lot of words. In this case, the picture will be a spreadsheet. Before we get started, here are some of the areas we’ll cover.

I ran all of the calculations through Mortgagecalculator.org. It has the most complete variables necessary to truly capture all of the costs. Be wary of the bank calculators that only show principle and interest. While that’s a big portion of your monthly rate, it’s not the whole picture. So, I’m going to lay out a few things in this post to help you truly capture the total costs you can expect.

First, there’s the purchase price. You may hear people say things like “I paid $200,000 for the house”. They are referring to the purchase price. By the end of this post, you will know the cost of the house will be much more than the purchase price… unless you pay in cash.

Then there’s the down payment. You’ll want to put 20% or more down on a house so you avoid paying PMI (Private Mortgage Insurance). Remember that’s where you get to pay for the bank’s insurance in case you don’t make good on your money. That 20% should be your minimum. You can put down as much more as you want.

Next comes taxes. You can’t get away from taxes. Taxes can be a considerable expense…especially in Texas, where I’m writing this post. What Texas loses in income tax, they make up for in property taxes.

You’ll also want to have insurance. This isn’t the PMI insurance. This is the homeowner’s insurance that you pay for things like a hail storm that trashes your roof, fence, etc. The bank will require you to have insurance if you finance. If you pay in cash, it’s a good idea to pay just to protect your home from an unexpected diseaster.

What we’ve covered above is referred to as PMTI. PITI is simply Principle, Interest, Taxes and Insurance. Everyone will pay those when financing a home. But don’t forget or confuse PITI with PMI. Remember PMI is that insurance for the bank that you get to pay. So, the total monthly cost will be PMTI plus PMI. The less you put down the more PMI’s cost goes up.

In order to show the differences in PMTI plus PMI, I’ll set a few variables so you can see the impact of the changes. I’ll also randomly choose Grand Prairie, Tx as our city of choice to nail down the exact taxes for a property. Limiting the variables should help you see the long term impacts to your finances for the choices you make.

The house will be a $200,000 house in Grand Prairie, Tx. The interest rate is going to be set to 4.33% which is fairly close to the current rate. Your rate will likely vary somewhat based on down payment and your credit score. So, 4.33% is good for illustration purposes. The property taxes for Grand Prairie are 2.921736% of your home value or $5,843.47 every year. That amount will be divided by twelve and added to your monthly payment. Homeowner’s insurance is set at $1,000 per year. Again this will be broken down and spread across your monthly payments. The three scenarios will be putting 5%, 10%, 20% down for your down payment.  The Term will also be either a 30 year or 15 year fixed rate mortgage.

Price Down Pmt % Down Term (yrs) # PMI Pmts Montly Pmt Total PMI Pd Total Int Paid Cost for House
$200,000.00 $10,000.00 5% 30 79 $1,592.98 $7,679.17 $149,698.07 $357,377.24
$200,000.00 $20,000.00 10% 30 71 $1,539.23 $5,325.00 $141,819.22 $347,144.22
$200,000.00 $30,000.00 15% 30 40 $1,485.40 $2,833.33 $133,940.37 $336,773.70
$200,000.00 $40,000.00 20% 30 0 $1,364.90 $0.00 $126,061.53 $326,061.53
$200,000.00 $10,000.00 5% 15 37 $2,086.49 $2,929.17 $68,666.11 $271,595.28
$200,000.00 $20,000.00 10% 15 26 $2,006.69 $1,950.00 $65,052.11 $267,002.11
$200,000.00 $30,000.00 15% 15 14 $1,926.89 $916.70 $61,438.10 $262,354.80
$200,000.00 $40,000.00 20% 15 0 $1,780.42 $0.00 $57,824.10 $257,824.10

Take a good look at the chart.  Study it for a bit and see if you can find the Big Rocks.

The first thing I see is that the final cost for the house could be anywhere from $257,824.10 to $357,377.24.  So, depending on how you set up financing for your house, you could pay a lot more.  Maybe this would help with some perspective on just how much that is.  Let’s say you make $57,000 per year.  If you are inefficient you would work for more than 3 years just to pay for the interest and PMI if you put minimal down and finance for 30 years.  You’d only have to work for one year to pay for the interest if you put 20% down and got a 15 year mortgage.

The second thing I see is that by far, the biggest difference in what you pay in interest is determined by the length of financing.  The longer you finance, the more you pay in interest.  Many folks say that they will finance for 30 years and pay early.  Statistically, they don’t though.  So, if you are in that small percentage, you’re likely not. I tried that and didn’t do well.  It wasn’t until I locked myself into the 15 year mortgage that I actually stuck to it.

The last thing I see is more of a reflection.  Being in the military, I’ve never truly owned any houses. I mortgaged them.  So, I’ve pretty much have been paying interest for most of my adult life.  While I did make money on every house I’ve mortgaged, it was done through improvements, etc.  I’ve never run the numbers, but I’d be lucky to break even considering all the interest I paid.  I wonder if I would have come out cheaper if I only rented and paid cash for a house.

So, as you can see from the chart above, there’s a lot of ways you can buy a house. This post points out a few different ways and for many different lengths of time.  Use this information and the thoughts to do it as efficiently as you possible can.  In just this one example, it could mean you save about $100,000.  What can you do with $100,000????

You now have the tools to make an efficient decision. Don’t be Average!

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012, Financial Ratios, It’s all About the Numbers

What’s in a number? A number standing alone is meaningless. Especially in personal finance. Something like $10,000 without comparing it to other factors is surrounding the number is just an amount of money. If that $10,000 is buying someone’s car outright with cash for someone who makes $30,000 a year, it’s a significant amount to that person. That same $10,000 paid as a down payment on someone’s $250,000 Bugatti sports car who is making $5,000,000 per year is less significant in that person’s personal finance. That $10,000 is hardly anything compared to the $5,000,000 annual income. But someone who’s buying a $100,000 car outright with cash for someone making $300,000 per year, the financial impact is exactly the same as the first person buying the $10,000 car in the first example. The ratio is what matters in these examples.

We started to touched on Ratios a little bit in the last Post with Warren Buffet’s house. In that example we were comparing his home’s value to his net worth as a percentage. His house is really a very, very small part of his net worth. This post will look at important financial ratios that banks, landlords, and many other people who try to manage personal finance.

Financial Ratios Everyone Should Know, Wallet Hacks and Millionaire Mob are just a few sites that give some ratios. The first is the most basic. Then each one after that give some more ratios to understand. I give you those three so that you can dig in at your own time and at your own pace.

Since several of the readers have asked about buying a house in the near future, we’ll cover a few ratios for buying a house. I first heard of a ratio for buying a house when I purchased my first house. During the application process, the loan officer informed me that I could get a loan for up to 28% of my income for the house. But there was a caveat. The total of all my debt could not be more than 32% of my income. Since I was an Average person, I had more than 4% (32% – 28%) in consumer debt. This limited my first home to less than the standard 28%. I don’t remember exactly what the numbers were at the time. The point is that I had a lot of credit card debt and it effected my loan to buy my house. That was one of the earliest wake up calls that I may be in trouble. So, I started tracking these ratios periodically.

I’ve never really thought about that ratio for several years now. While writing for this Blog, I’ve noticed these ratios have changed! They haven’t changed for the better either. The newer ratios are 28% for your house and 36% for the total debt ratio. While that may seem better, it’s not. This is not in your best interest at all. Here’s why I don’t agree with the ratio.

The 28/36 ratio allows for 4% more than the old ratio. That’s a 100% (4% to 8%) increase in consumer deb! So what they are doing is allowing you to charge more depreciating assets! They haven’t increased from 28% for the generally appreciating asset called your house. Not that I’m a fan of financing to the maximum, but the above shows where the banks interests are focused. What they did was basically allowed for the Average consumer to borrow more money for the highest interest rate category. That means they make more money and you lose more money to interest.

So, you loose the flexibility to use that second 4% that you could put towards an emergency fund, for food, or for investing. You are also loosing the opportunity cost of that 4% compounded over the years if you invest it in your retirement. That’s worth you seriously considering before you decide to max out how much you can borrow on a house and credit cards. Let me say it again:  That’s worth you seriously considering before you decide to max out how much you can borrow on a house and credit cards.  The old 28/32 ratio was hard enough to recover. The 28/36 ratio would be much harder. So, don’t be Average and max out your credit. Live below your means and invest the remainder in your future.

By now, most of you by now have read about how much credit can cost you. You know to avoid it on depreciating assets. Assets that don’t appreciate in value or provide income should never be financed.  So, when buying a house, don’t forget that wasting money on depreciating assets can really mess up your chances to minimize your interest costs. Remember all numbers in relation to your objectives of financial independence. Don’t get caught up in the Average American dream of owning a house at the expense of your financial future.

Maxing out your credit to purchase a house will significantly hinder your ability to save for your future. It will strap you for cash and for emergencies if you don’t have those in place before you finance a house. So, before you even consider buying a house make sure you have a fully funded emergency fund and an appropriate down payment.

Why is the down payment of 20% or more stressed by so many financial people? Because of two major reasons. Fist, it shows the mortgage company that you have skin in the game. You have 20% equity, so the bank has less risk. You are more likely to pay on time and not walk away leaving the bank with a house. They are not in the house buying business. They reward you for this by giving you a favorable interest rate. So, you’ll be financing less and at a lower interest rate. Over the life of your loan, the reduced financed amount and the lower interest rate will be a significantly less amount you pay to the banks.

Secondly, you won’t have to pay for Private Mortgage Insurance or PMI. PMI is insurance that the bank makes you pay for to insure that they actually get the money back that they lent you. That’s right, they make you pay insurance for them! You get absolutely no value for this either. So, you are losing money here too. In most instances, 20% down will eliminate this PMI. PMI increases with the cost of your house. More expensive house will require a more expensive PMI payment. So, just save at least until you get the 20% down to avoid throwing this money away by paying for the bank’s insurance for your home loan. Don’t do it. If you can’t afford this 20% down, wait until you can.

So, don’t be Average. Learn your financial ratios so you get a better picture of your major purchases such as a house.

006, Always “Bee” Learning

In the first five blog posts we’ve covered the basics. As was mentioned you can literally get advanced degrees on this stuff. The degrees don’t guarantee that you’ll be successful. Nothing really does. However, once you have a solid understanding of the basics, continue to learn. Strive to learn new things throughout your life. The more you know, the more likely you’ll make a well informed decision. The more you make well informed decisions, the higher your chances of success will be.

In today’s fast paced environment continuously learning is more accessible than ever before. Frequently, that learning doesn’t even have the high cost of a college education. There are websites for almost any topic you can think of to learn about. Granted, not all are great. But a website that doesn’t deliver will quickly be left in the dust by good ones. With the advancements in equipment and the ease of publishing something on the internet, a crowd of followers will point out any mistakes or poorly supported ideas presented as facts quickly. So, if you search for educational based websites that have a large following you’ll generally wind up with sound advice. When something is presented, you can cross check facts with another website quickly as well. Sitting in uncomfortable chairs listening to an instructor is not the only way to get educated today.

Podcasts are another development in recent years. Yes, I’ve been learning before podcasts were available. But you don’t have to even read websites if reading isn’t your thing. Some people learn from reading and some from listening. Many of the websites out there on financial independence and personal finance have both websites and podcasts. The podcasts range from just the host’s opinion, experiences, or advice to discussions among a group of people. Often times the guest hosts will either be someone who has achieved success or are well on their way. The guest could also be the authors of books, other podcasts, or other experts in the topic of the day.

Audio Books are another option to learn. While websites and podcasts can be very educational, the author needs a little more room to explore or explain the topics. Podcasts and websites tend to be more focused on a particular topic in a format that’s a quick read or listen. But a book isn’t limited to those formats. They can be as detailed as necessary to fully explain complex topics, stories, or ideas.

By now, you may be questioning the amount of time required to actually learn personal finance and financial independence. Everyone is working these days. Generally married couples both work too. So, how can you get to advance your education? When will you find the time?

My morning commute is about 45 minutes. During that time, I’m usually listening to a podcast of some kind to learn something new. Over the years there have been many topics I’ve leaned about on this commute. Dave Ramsey Podcasts about how to get out of debt when in debt. Choose FI and the Mad FIentist are podcasts about personal finance. Bigger Pockets is about real estate investing. I’ve also listened to many podcasts about deer hunting, turkey hunting, and even cooking. So, rather than just listen to the latest song by a random artist, I’m learning new stuff on the podcasts. If you can think of a topic, chances are there is a podcast about it.

Podcasts can also be listened to during other times. Anytime you can wear headphones, you can learn. Instead of being that person bobbing his head up and down in ignorance, learn something. You can learn while exercising, while your partner is watching TV, or even sneak in a quick topic in a waiting room. You may even be able to listen to a podcast in a deer stand! Just make sure you download it first if there’s no cell coverage in the woods.

I’m also an early riser. Maybe you’re a night owl. Whatever your schedule is, carve some time out to better yourself either before the kids or wife get up or after he or she goes to bed. If you are going to get ahead in life, you need to spend some time educating yourself. Early or late in the day is generally a good time to sit alone and learn.

Almost all of this information is available for free, in many formats, and pretty much hassle free. Just as you want your finances to be efficient, so should your learning. It isn’t necessary to lock yourself in a classroom, office, or basement to learn. Don’t be stung by wasting your time being idle, learn something. Look for opportunities to be efficient with your time and always be learning.

004, Liabilities

Liabilities…Do you want to be Average in your Financial Progress? The little cutie above is Emilee. She’s above average in my book. She doesn’t have any liabilities. Liabilities are like the alligator she’s riding. If you don’t stay on top of them, then can drag you down.

Liabilities are simply what you owe. Everyone is trying to get into your pocket to get your hard earned money. In the traditional sense, liabilities are thought of as loans. But I argue that in personal finance, liabilities cover a broader range of obligations that require them to pay them every month. These are those seemingly small “I can afford it” things that really take a toll on you over the long haul. These are very important to get right. The idea behind these transactions is that the company wants you to think these obligations are a small insignificant thing. Don’t be fooled. This is financial death by a thousand cuts. They only want no or a small down payment and for a low monthly payment. Those really add up over the years.

I’ve personally experienced this in car buying more than anywhere. Unfortunately for me, I didn’t realize I was being taken to the cleaners in enough detail to act accordingly. I’m a slow learner and being in the military can be a bad influence when it comes to finances. Banks know your income is secure. They know if you are late on payments they can call your commander to put pressure on you. They also know “giving the car back” is not an option unless the military guy wants disciplinary action. It may have changed a little today with not being able to call someone’s commander, but there are still very real consequences to not paying on time. Anyway, early on I would buy a car and then trade it in before I paid it off. I did that several times before I finally made it to the big time! I could “afford” a brand new car they said. It was a 1990 Pontiac Grand Prix. The new V-6 model. You know, I’m going to get the small rocks right and save gas! But boy did I miss the big rocks on this one. I financed it with the 5 year plan to keep the payments affordable. I took it hook, line, and sinker. They smelled this sucker a mile away.

My numbers will likely be a little off, but in the ball park. I bought it for say $25,000. By the time I was done with the “easy” payments which really weren’t easy for me, I’d paid like $35,000. So at the end of the 5 years I was finally the proud OWNER of a 5 year old car that was driven daily by a young father with two kids. It was scratched and dented on the outside. The inside was not any better. Carpet was stained, headliner was stained from when someone opened a can of Coke and was starting to come loose and hang down. I would be lucky to get $10,000 for it on a good day. So, bam. In 5 years I turned $35,000 into $10,000 by buying that car. But I had a nice car for about 2 years and saved some gas! I got the little rock right, but missed the big rock. I never bought a new car again. I’ve reached the pinnacle of the financing sucker with cars. If I would have burned my Honda Accord to the ground in the parking lot of Greenville Dodge as soon as I wrote the check for it, I would have lost less money! If I would have invested that $25,000 I lost in the new car deal in an appreciating asset that got 10% interest, today that $25,000 would be worth approximately $223,857 today (23 years later). The car dealer doesn’t tell you that. That’s compounding interest. It works both ways. I lost $25,000 on 1995. The bank has $223,857 today. Who won? I guess that’s why banks have awesome buildings and I don’t. I got the numbers from here: http://www.moneychimp.com/calculator/compound_interest_calculator.htm. The picture below is from the EZ Calculator app you can download for free dollars. The numbers are not exactly the same, but close enough to prove my point. That difference is a small rock. I missed the boat with that purchase.

When you get the big rocks of assets, liabilities, and net worth right, you’ll win. Instead of death by a thousand cuts, you’ll be successful by a thousand small wins! The average consumer will spend hundreds of thousands of dollars during a lifetime bleeding money (and compounding interest) to finance charges, administrative fees, and interest. They will pay some on cars, some on consumer goods, maybe some college loans, and a bunch on a 30 year mortgage. These folks don’t pay all the interest and fees up front or at once. Doing so would highlight just how crazy expensive financing costs right in your face. Instead, they keep their hand in your pockets, and just take just a little, for a long time causing you to loose opportunities to invest.

Now, armed with how this stuff works, think about reversing it. Now you are aware. So, let’s say Average Joe spends $400,000 towards servicing liabilities. The $400,000 is a low number for average folks, but just trust me for now. Smokey Joe on the other hand at least gets the big rocks right. He will cut this figure drastically. He still messes up on some small stuff, but gets the big rocks right. Smokey will likely save say 80% of the $400,000 in interest and fees over his lifetime. Yes, I made up the 80%, but it surely isn’t unrealistic. That 80% will keep $320,000 in his family’s pocket. Or use a more conservative figure of 50%. He’s keep $200,000 in his family’s finances. He doesn’t get a large pile of cash up front or long down the road some day. By efficiently using his hard earned money, he still buys what his family needs. He doesn’t give 50% – 80% of his money away to liabilities, and instead invests it in a slowly growing appreciating asset. Over time, he’s sitting back receiving dividends from from the money he invested in appreciating assets, or letting it continue to grow for his family’s legacy. Or whatever he wants, he did well by spending wisely to accumulate a nice pile of money.

I’m sure most know that loans are an expensive way to buy things. The only worse way, in personal finance, to finance a car is to lease it. But, there’s even more to the story than just an expensive way to spend your valuable money. You can make financing something good a very bad deal. Remember the appreciating and depreciating asset discussion? Average Joe finances only depreciating assets. So, when he’s done paying the purchase price, fees, and interest, he looses big time. Whatever he purchases, is worth less than the original purchase price. So, he pays more and ends up with less. Now Smokey messed up a few times along the way. But he remembered the difference in assets. He would only finance things that are appreciating assets. While he still paid more than he could have by being inefficient, at least Smokey Joe was left with an asset that was worth more than the day he bought it.

Let’s math this up a little.

Average bought a $1,000 flat screen TV, sofa, bed, or something like that. He financed it. Say he financed the TV at 10%. Since he has great credit, he gets the premium 10% interest rate versus the more common 18-21% on the folks with jacked up credit. Say it takes him 2 years to pay off the credit card or loan. He would pay $1,107 for the TV or 10.7% more than if he had paid cash. You can check it here: https://www.bankrate.com/calculators/mortgages/loan-calculator.aspx. Let’s also assume that 5 years later, Average wants to buy a new TV. He lists it on Craig’s List and sells it for $200. The cost of this deal is what he paid for the asset, minus the cost of selling the TV. Running the numbers, he bought the TV for $1000 plus the $107 in interest. His cost is $1,107 minus the selling price of $200. His ultimate cost is $907 in real dollars. Of course, Average repeats this over and over again throughout his life and can’t seem to get “get ahead”.

Smokey financed $1,000 of investment grade gold, silver, or maybe he just got a great deal on a small business. He got the same 10% interest rate for the same 2 years. He financed the $1000 for the appreciating asset. At the end of the finance terms Smokey’s paid $1,107 just as Average did above. Now fast forward 5 years as Average did in his TV purchase. Smokey’s asset appreciated a measly 10% in 5 years. It didn’t do nearly as well as he had hoped since he knows when buying low cost index mutual funds historically return more than 7+ percent over time. So, basically his asset’s growth and the interest he paid cancel each other out. When Smokey decides to sell his asset at 5 years, he gets 10% more than he paid for it. But the interest wipes out his gains. While this doesn’t seem good, he’s still in way better financial shape as Average. The value to his financial position from this transaction is zero dollars. Not good, but remember Smokey makes mistakes too. If he would have paid cash at least he would have about $107 dollars more. Why not $100? Compounding interest is the reason. More on that later. Smokey could use that $1000 to buy a TV for cash or try investing again. He has $1000 in in pocket. But for Average to buy a $1000 TV for cash, he would have to use his $200 from the sale of his TV and also come up with another $800!

These aren’t huge numbers. Both were only doing a $1,000 deal. Let’s look at percentages.

Average spent $1,107 and sold it for $200. That amounts to a $907 loss or approximately an 82% loss of position or 18% efficiency. Smokey broke even at zero percent. So, Smokey achieved an 82% higher efficiency of his valuable money.

You’ll have hundreds or even thousands of transactions like this over your lifetime. If you can be 80% more efficient on every purchase, how far do you think you can go? Let’s see the kind of difference makes over a lifetime. Average Joe and his wife make $45,000 per year, the average American income. Smokey’s family makes the same $45,000. To bring it back to some math and numbers let’s say Average worked 30 years and earned $1,350,000. Average’s efficiency is 18% from the numbers above. So, his $1,350,000 will yield approximately $243,000 of value. He finally OWNS his home, but he’s still financing his car. Sounds like the average American right?

Smokey worked right next to Average and earned the same $1,350,000. But since his efficiency is even, his $1,350,000 is worth $1,350,000. That’s $1,107,000 ($1,350,000 – $243,000) more! His money is much more efficient. That’s assuming Average JOE continues to finance things and Smokey never has investments that make money. He owns the house next door worth $243,000, both the family’s $30,000 cars, and has the remaining and has the rest is invested in $1,043,000 in gold, silver or a business that never appreciated. His lifelong investment broke even too. The more money you put into appreciating assets the better off you will be over the long haul. It’s pretty hard to invest in conservative appreciating assets and do as poorly as Smokey did. But he still has over $1,000,000 in assets. This is a simplistic view of two transactions extrapolated as if all transactions were the same. The big rock is that the percentages very different and are significant enough to make a large difference in your personal finance.

That’s the power of knowing the big rocks. Numerous small decisions like Average made above over an extended period of time can really drag your financial independence down. Most people are Average Joes.

Don’t be Average.

001, What do you Value?

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Everything has Value!
What exactly is value. Simply put, it’s how much are you willing to give or get for something. It’s the price you pay for something or the price you would take for someone to buy it from you. Value is transferred by these transactions. But what unit of measure are you using?
As the old saying goes, money can’t buy everything! It does have value. Money isn’t the most valuable thing for sure. It can’t buy life, time, happiness, friendship, love your parents, or repair a broken relationship. It can’t buy many material things like the ring that my mother gave my father that he passed down to me. Often I figure that money can’t buy the things that are most important to me. It seems like it can at times, but it really can’t. All of the things mentioned above are valuable. But there’s no dollar or monetary value anyone can assign to them. How much would you pay for another special day with someone who passed like: my mother, grandparents, cousins, or maybe a best friend?

Money is simply one measure of value built on Trust
Our US dollar is so strong in the world market because it has the full backing of our great nation. Back in the day, it was backed by bars of gold and silver, but not anymore. Now it’s just based on the fact that if you have one dollar, the US government will always ensure it’s legal tender for a transaction. But what if our government was not trustworthy? I’m only saying it’s trustworthy in backing the dollar, there are many things that they may not be trustworthy on, but backing the economy is one they stand out on.
In my years in the military I’ve seen worthless money from governments that have failed for one reason or another. When in Italy, I found a 100,000 Austrian Lira note under the drawer in an old end table I found from Austria, Slovenia, or somewhere over there. It was obviously very old. So, I got excited because in my young mind 100,000 of anything old had to be worth something pretty big now. Right? Nope. The dude on the front of the currency was one of the many dictators who rolled through. His “iron fist” ruling cost his country’s collapse. The value of the 100,000 Lira? It got me a scowl from a foreigner for even having something with the dudes face on it! I couldn’t get anything of value for it. Another example of useless currency I experienced when I was in Turkey. While eating lunch, I noticed a 1,000,000 (yep 1 million) Turkish Lira bill in the tip jar. Turkey had been plagued by roaring inflation for years (over 38% for several years). Inflation was so bad that the currency was ridiculous. I bought the 1,000,000 Turkish Lira for the grand total of $1 US Dollar! Then in 2003, the Turkish government reset their notes. They just literally slashed 6 zeros off of the currency and created the “New Turkish Lira”. So, I was a Turkish millionaire from 2000 until 2003. At that point, my 1,000,000 Lira was valued at 1 New Turkish Lira or approximately 75 Us Cents. I valued the million lira note more than 75 cents, so I never sold it. I valued having that little piece of history, and the cool factor, more. But the lack of trust in the Turkish ability to control inflation cost them the entry into the European Union. They just couldn’t be trusted to not draw down the larger Union based on their recent history. So, trust in money is very important. Without trust, you money is not as valuable to others who trade with you.

Time is Valuable, But Much Harder to Evaluate
We tend to be here and now centered frequently when asked what is our time worth. Today I make $10 per hour. So my time is worth $10 per hour. That’s a typical first thought process that has some validity. But it surely doesn’t encompass the entire picture. For example, if you are going to college, a movie, or concert are you paying for your time. Say you paid $100 for some concert tickets for a 2 hour concert. Using the above logic, your time is worth -$50 per hour since you gave away $50 for every hour of your life you spent doing that task? Is the entertainment value worth the 10 hours of work it took you to make the $100 (for simplicity, I’m ignoring deductions for tax, social security, insurance, etc. ). What about your entertainment value? How does that come into play?
So, what does all that mean? It means your time, just like your money, does have value. Placing a value on time is complicated, yet simple too. You’ll only have so many seconds, minutes, hours, days, weeks, months, years, or decades alive to do stuff. Time is finite and waits for no one. Whichever of the units of measure for time you choose, once it’s past or wasted you can never go back. Sure, there are things you may be able to do with the remainder of your finite time to get more efficient, get more effective, get more stuff, more money, or more family time. But you can’t go back to a missed birthday party, a missed birth, a missed funeral, or even a missed conversation. Sure, you can use some of your remaining finite time to apologize, make excuses, or whatever. But you can’t go back.
You also don’t control how much time you have. Only God knows that answer. We all have heard of the stories. Uncle so-and-so smoked every day, drank every day, and never slept. He really didn’t take care of him self. But that dude lived for over 80 years. You’ve also heard of the ones who are in picture perfect shape. Great athlete. Made all the right “sacrifices” in the name of a long healthy life. Then dies in his early thirties. Or your buddy from high school who died in a car accident. Then there’s the sudden infant syndrome stories. You just never know the time or the place of your end.

Increasing the Things You Value
So, the take away is to use your valuable resources wisely. Spend the your time on the things that are most valuable to you. Each of us are different and have different things we value. I’m at a time in my life of reflection. I look back on past mistakes and am trying to make sure I don’t repeat them. I’m looking forward to how to avoid mistakes in the future. I’m also trying to explain some things that may help y’all avoid some of the mistakes, or missed opportunities,
The best way to maximize your resources to increase things that you value is long term consistent progress. There are no shortcuts. In order to get things you value, you’ll have to trade something else of value. You trade time for hourly wages or a salary. You trade your valuable time doing other things. Maybe playing video games, hunting, fishing, watching movies, reading, Facebook, formal education, informal education like library or internet research.
Is what you doing consistently moving you forward. Do things that move your closer to the goal adding value (no, not just money). Day after day, week after week, month after month, and year after year you move forward and avoid moving backwards. Do the right things for the right reasons, keep moving, keep learning new ways to maximize ways to get more of the things. Then after time, when you look back, you’ll be amazed by how far you’ve come.
Here’s a couple of examples. I value gardening. I have grapes, blackberries, raspberries, basil, onions, garlic, asparagus, peppers, a peach tree, a plum tree, and a fig tree. That’s only the edible stuff. I also have Mexican Petunias (from Taylor), Hen and Pecs (PePaw), DayLillies (Gene), 4 O’Clocks (PePaw), Iris (PePaw), Purple Beans (Margie), and many others. That’s quite a lot of plants for the little bit of yard we have. But it was all part of a plan. I wanted things that I valued. I value the edible stuff for obvious reasons. I also value the flowers and other plants because it reminds me of the people I love that were generous enough to give me a little piece of them (their plants). If done in one effort, it would be overwhelming. It would be a lot of effort. But I didn’t do it all in one effort. I built up my valuable (to me) garden often only one plant at a time. I brought home a hunk of Mexican Petunia’s from a trip to Lockhart at Taylor & Austin’s first house. I brought home a clump of dirt with 4 O’clocks from PePaw and MeMaw’s from a trip to visit them a couple of years ago. Each time I was gifted or bought something, I’d think of a place in the yard with the most chance of success, or where it could be enjoyed, or some other reason that made sense to me at the time. Another thing that makes my garden valuable is that none of the things have to be replanted. In many cases, they are even propagating where I have more than was originally given to me or more than I bought. I can now literally share the “fruits” of my labor with people I value. I can give a cutting or plant to someone I value for them to enjoy. So, I have a valuable garden that I built up over time. It was built in baby steps, over a long period of time, and consistently. A small effort, over a long time, of things that increase in value (or quantity) allow me to be more generous each year because now my garden provides more than I can possibly use.

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Paw Paw