I’m curious as to how you feel about the government’s stimulus tax rebate plan. Our household income is over the maximum income amount to receive the rebate, so we’ll be getting nothing but the bill — again. It seems that those who will receive this money are encouraged to do nothing but spend it. Does this bother you, too?
I’m not crazy about this plan, either. I don’t like the idea that my money could be going to help someone else buy a big-screen television or whatever toy they’ve got in mind. I understand that the “rebate” is designed to stimulate the economy and pull us away from a possible recession, but it sounds a little like socialism to me — and that’s just the opposite of capitalism.
The whole idea — increased consumer spending giving the economy a boost — sounds good in theory. But, I think a much better idea would be to encourage freedom from debt. THAT would increase consumer spending, and in turn, cause the economy to flourish.
I’m sure, too, that a lot of people have already spent this money in their minds. That’s a really bad idea! It’s an open invitation for Murphy to move right into their spare bedrooms lock, stock and barrel. I’m still amazed that so many people waste this “free” money instead of making it work for them by paying off debt or investing.
Think about this. If you invest this chunk of money in a good mutual fund for a few years you’ll receive a lot more free money than just the original $600 or $1,200. Let’s say you get $600 back and park it in a mutual fund averaging 12 percent. In 10 years that investment will grow to about $2,000. Leave it in there for 20 years and it’ll be worth $6,500. For married couples that $1,200 can grow up to $13,000 over 20 years.
Don’t get me wrong. I’m not a total scrooge, and there’s nothing wrong with having a little fun with your money. But the quicker you get out of debt, the quicker you can have the fun stuff, change your family tree and bless others!
We couldn’t afford a 15-year mortgage, so we financed our house on a 30-year note. Now, even after doing this, we’re still having trouble paying our debts, saving and making the house payment every month. Do you think we should sell the house?
If you couldn’t afford the house on a 15-year mortgage, then you couldn’t afford the house. Period.
When you can’t save or get out of debt because you’re being strangled by your house payment, you are what’s called “house poor.” This usually happens when your payment is 30 to 35 percent – or more – of your monthly take-home pay. That’s why I recommend your mortgage payment be no more than about 25 percent of this figure.
There are lots of cases where I tell people to sell stuff to get out of debt. But having to give up your home is an emotionally and spiritually damaging experience. Try everything else that makes sense first before you give up your home!
I want you to try living on really tight budget for the next six months. Give every dollar a name and spend everything on paper before the month begins. It’ll be tough. You may have to cut out cable television, stay away from restaurants and put vacations on hold for a while.
Then, take a really close look at the situation and see if you’re getting out of debt and into savings. If not, then you may have to consider selling the house.
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