Dennis Miller’s newsletter this week had a very powerful article called “Escaping the Toy Trap.”
The theme of the article was that no matter how much money you have, it’s possible to spend yourself into debt.
When people grow older and retire with a strong financial foundation, they can either enjoy the luxuries in life to the extent they can afford them, or they can “keep up with the Jones” and consistently buy expensive things that bring short term satisfaction, but in the long term result in a depleted retirement account and a broke end to their life.
Miller featured five good points in his article.
1. Someone always has a bigger, faster boat
This is easy to understand. You can try to “keep up with the Jones” as much as you want, but the reality is there’s always going to be someone out there that has something nicer than you do. If you worry about what they have and constantly continue to keep up, you can run yourself broke. Instead of doing that, be happy with what you’ve been blessed with.
2. Don’t misunderstand status
Miller defines two types of status. The first time is “pseudo-status,” which is fake status in which you’re trying to impress people. The other type of status is “earned status.” Try to avoid “psuedo-status” as it could cause you to spend money you don’t have on things you don’t need.
3. You don’t have to be a scrooge
There is nothing wrong with buying nice things that make you happy – having an expensive glass of wine at dinner or wearing nice clothes – as long as you can afford doing so. However, again, buying things you don’t need with money YOU DON’T HAVE is a long-term train to broke city.
Miller referenced a man who monogrammed everything he wore, including his socks. Why? Who’s really going to see that?
4. Short-term gratification is just that: short term
Don’t invest in material items that will make you feel happy NOW if it’s going to affect your happiness LATER in life.
A good example I see on a regular basis in my office is when clients had bad spending habits that put them into debt, and instead of consulting with a bankruptcy attorney, they used their retirement account money to help get them out of debt. Now, they’re still in debt and have no retirement money left for the future when they could’ve come and talked to me about filing for bankruptcy, got out of debt and kept their retirement money.
5. Remember the lessons your grandparents taught you
“True friendship has nothing to do with money. It comes from who you are and how you behave,” said Miller.
Don’t take your money for granted. If you’ve been handed money your whole life without working very hard for it, don’t automatically think the money supply will never run out. Save and spend wisely. Take value in your money and don’t spend it so you can maintain “pseudo-status” and have a lot of “pseudo-friends.” Your real friends won’t care how much money you have as long as you treat them right.
I’ve practiced bankruptcy law in Memphis for decades and I’ve seen countless retired folks come into my office due to financial struggles from one thing or another. Take steps to prepare yourself for retirement and when the day comes when you retire, have steps in place for proper spending. This is your time to coast and relax, not have financial pressure to constantly stress about.
If you’re currently struggling financially, you don’t have to live in debt – there’s a way out. I ask you to consider filing for bankruptcy.
By filing for bankruptcy, your debts can either be discharged through a Chapter 7 or can be lumped into an affordable 3-5 year repayment plan through a Chapter 13.
Once your bankruptcy is complete, you have a fresh financial foundation to build a new strong financial structure. And my hope is that you come and see me before you decide to liquidate your retirement account.
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