Fixing Sucky Spenders, Part 2

By | August 26, 2014 5 comments

How Not to Waste Windfall Payments


As mentioned in Fixing Sucky Spenders, Part 1, today I'll point out one more of the most incontrovertible (and self-evident) principles of wealth building you'll ever hear... it's so ridiculous, in fact, I'm not sure why I'm even talking about it.

Today’s hot topic of Obviety is “Windfalls”… and what you need to do with one when it comes your way.

It’s bound to happen at least once in your life. If you’re an investor, you’ll likely buy some stock that will go up tenfold overnight. If you’re the gambling type (and if you’re still reading this, you sure as heck better not be anymore), then maybe you’ll win a few bucks on some lucky numbers or a slot machine. Or maybe a rich relative will leave you some money…. yada yada yada. Or maybe it's something as simple as an extra holiday bonus check.

Any number of things might happen that will result in a chunk of extra cash appearing in your bank account unexpectedly.

It’s only human to consider windfalls to be “free money.” Especially if you didn’t have to work for the cash... the average savage mentality screams, “Spend it!” After all, you won’t be any worse off if you spend something you just got for free, right?

I like free money just as much as the next guy. I got it all the time in college for my good grades (scholarships) and for being young, poor, and married (Pell grants). I, of course, spent all my money on genuine living necessities, tuition, and such.

I have a few friends from college who liked free money, too. One had three kids and worked a part time job, so he got welfare, food stamps, housing assistance, WIC, and a load of other free stuff in addition to grants. It was a windfall every other Monday.

But see... he always spent his extra food money on prime rib.

If only he had majored in economics or something instead of physical education... maybe then he could have learned about opportunity costs. Here in the Village, we know all about them, don't we?

We've talked about the opportunity costs of accumulating stuff we don't need... compound interest, foregone dividends, profits... all of which equal FREEDOM!

I’ve said it before, and today is no different: You need to choose between the crap you waste money on, and your freedom. This is the choice you are making when you decide how to spend any amount of money.

Free money of any amount, if you invest it, is equal to an amount of time shaved off your working career. Always think of it things in terms of foregone opportunities.

Now if you think about it, most of us get windfall payments every single year…

One is called a tax return. We end up with charitable donations, un-reimbursed work or job-related expenses, mortgage interest, and other things we can claim as deductions on our taxes. These result in lower taxable income than what we've been taxed on all year... as a result, Uncle Sam refunds us a chunk of change every April from what we paid.

Judging from your own experience... what’s historically been your very first thought once you know the amount of your tax refund?

        “Oh sweet, we can get those hardwood floors now.”

        “We’ve wanted to take the kids to Disneyland for a few years now!”

        “Some new ski equipment would be awesome next winter!”

Don’t be delusional. None of this line of thinking is healthy for any self-respecting Villager with any real dreams of becoming free. You can’t afford to piss away money like this!   >>>>>>>>>>>

If anything, the money you get from a tax return should be used to pay down outstanding debt... student loans, mortgage, and the like. Only if you have these things completely paid off should you even be able to consider using a Tax Refund Windfall for superfluous spending like this.

The same goes for any other kind of windfall... inheritance, lottery, work bonus, whatever...

Windfall cash isn’t free money. It’s free freedom. And it you waste it, there goes your life. This money goesstraight into the "money bin" suckas!

Don't stop now, you're doing great... let's talk more about this debt stupidity thing I touched on...

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5 comments:

  1. I so love the word obviety I've used it many times myself! In point of fact,t spell checkers allow it without question! These poss show only time, leaving the reader to believe they must have been made today? Loved the article, which I obviously (see what I did there?) stumbled upon while looking to see if "our" word had an acceptable definition! ;)

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    1. Hey Joe,

      Yes, turns out it is an actual word, just no one uses it! I wrote the posts about a year ago, many of them, but reorganized the blog in July, after posting basically nothing for five months, and had to recreate all the posts! Glad you enjoy what I have. What do you like the most about it?

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  2. Wish it were possible to edit comments to repair unnoticed typos! Also forgot to click the "Notify me" box! Write on, my friend!

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  3. I find the common sense aspect refreshing. Sadly common sense should be renamed uncommon sense these days since so few appear to possess it.

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  4. Your blog reminds me of this quote:

    "If you leave ignorance and stupidity alone, ignorance and stupidity will think it's ok."

    -Gallagher

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