Posted by: nickgerlich | July 1, 2008

The Order Of Things

Without doubt the funniest cartoon to ever grace the comics page was The Far Side, penned by Gary Larsen. It was a great loss to American humor when he retired in 1995.

And one of my Far Side faves is the classic “First Pants…Then Your Shoes” scene. I have used that line countless times since it first appeared, for its message is so profound…yet often overlooked by adults who should know otherwise.

First PantsSo why is it we seemingly intelligent grown-ups repeat the same stupid things over and over? Have we not learned that there is a proper sequence in some things? That we should learn from our mistakes? That it looks ridiculously funny when we try to put on a pair of pants, thinking that it will save time if we just leave the shoes on?

Not that I’ve ever done that. OK, I have. And I bet you have, too.

But this is not just about shoes. You see, we human consumers fall into this trap repeatedly. Take credit, for example.

Now I will be the first to say that credit can be a good thing. How else would we buy our homes? And with the price of a new car these days, it could take many months’ salary (or even years) to pay for it. Lest we live out back at the dumpster and walk around pushing a shopping cart, we probably have more debt than we care to admit.

And in spite of knowing that debt can lead to bad things, we say “Bring it on!” and assume ever more of it.

I suppose it is just an innate American urge to consume more than one’s income. In fact, Gerlich’s First Law of Personal Finance says that “A person’s ways will always meet or exceed his means.”

So there. When you write the blogs, you get to make up the laws.

But there’s a lot of truth in my simple observation. If you make $100K, you feel compelled to live like it’s $150K. In other words, as you move up the income ranks, you climb the ladder to new levels of poverty. You may be living the Blu-Ray life, but at the end of the month, I bet you’re worrying as much as the guy across town with the tape stuck in his VCR.

It’s all relative.

So here’s my prescription (in addition to getting dressed in he right order):

  • Resist the urge to trade up in housing, unless you absolutely positively need it. It is better to stick with your present home, pay it off, and then start banking the money. Besides, with housing prices increasing in the long term, you will be paying old prices well into the future. We are still paying 1989 prices on our house.
  • Buy a quality used vehicle and then drive it until it falls apart in the driveway. Your insurance will be less, as will your payments. Even if you have to repair it, factor in $400-500 each month as “allowable,” because that’s what a new car payment would be. Each and every month. I doubt you would spend $5000-6000 each year on repairs; if you do, then it really is time to get rid of it. And buy another used vehicle.
  • Use your credit cards as short-term advances on your paycheck, and then pay them off promptly.
  • Whatever you buy, plan on totally consuming it. Don’t worry if signs of wear appear. That’s why you bought it.
  • Take care of what you own, and it will take care of you. I wish I could lay claim to that phrase, but I have found it really does work.

I know…I sound like your old man. But I am getting close to being one, so I hereby grant myself permission to act the part. It’s just that I have had to learn some things the hard way. And I am not through learning. I could probably start a club called “The Not Good Enoughs,” and be its president. But at least I no longer fall on my face getting dressed.

Dr “First Save, Then Spend” Gerlich

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