Posts Tagged 'money'

Bear Stearns: The Money-Drunk Empire Builder

When I was on Amtrak’s Empire Builder train heading east to Glacier last fall, I met a friendly mortgage broker in the lounge car as we clackety-clacked through the Gorge. We chatted (a longtime habit of mine).

“My industry made loans to people who were in no way ready to buy a house,” she said. “It’s not ethical. You should form a relationship with people who can’t yet afford it, and help them make a plan to buy later. It’s not all about getting a house right now, or getting rich overnight.”

I wish more people had had mortgage brokers like her in the past few years.

The collapse of Bear Stearns due to the sub-prime mortgage frenzy does not surprise me. It reminds me of Enron’s implosion earlier in the decade. In both cases, people got drunk on greed. What do people do when they’re drunk? Ill-advised things they regret later, things they wouldn’t do when sober. And it wasn’t just the mortgage and investment industries that were money drunk; it was also the home-buyers who weren’t willing to wait and save for down payments, or bought far more house than they could afford.

I have been money drunk too, though not in the context of buying homes. It feels so much better being sober, believe me. Ethics and common sense both dictate that we only buy what we can truly afford. The earth’s resources hold up better that way, too.

The friendly, ethical mortgage broker I met on the Empire Builder helped me understand all this. If we’re drunk with greed, we need to get sober before we buy or sell things. And if an empire is unsustainable, it is better left unbuilt.

Top Five Tips On Breaking Free of Credit Cards

In my last post I talked about overspending with credit cards and overspending the earth’s resources needing a similar solution: live happily within our means. It feels so much better this way, believe me.

Here are my Top Five recommendations for how to break free of credit cards, based on how I did it. (Note: If your debt comes from medical expenses or not earning living wages rather than consumption choices, these won’t necessarily apply to you.)

1.) Hang out with people who are good with money and live within their means. Learn all you can from them. Behavior is contagious. Tell them your goal is to stop using your credit cards, and ask for their support.

2.) Track everything you spend. An Excel spreadsheet works well. Use categories, i.e. clothing, utilities, groceries, eating out. Be curious and analytic; solve the mystery of where your money goes. Refuse to be a victim. Money is about constant choices.

3.) List exactly what triggers your using credit cards — then avoid the things on the list. Examples: going clothes shopping with Annie; eating out because there’s nothing good in the refrigerator; shopping on the Internet while at work. Vow to your friends you’ll not shop with Annie, will buy appealing groceries, and will simply work while at work. Tell them later about your follow-through (you’ll be motivated to keep your commitments).

4.) Make a long list of low-or-no-cost things that give you satisfaction or joy. Specific is good. Examples: walking in parks, reading mysteries from the library, trading child-care with Cindy, cooking fish, having Mike and Zoe over, fixing bicycles, giving away your unneeded clothes, playing board games and 20 Questions. Schedule these things into your life, making them replace your old credit card activities.

5.) See life without credit cards as making you happier and also a better user of the earth’s resources. Consider this website and program that offer excellent tools on money management.

Green Into Gold: Breaking Free of Credit Cards

Confession: I am a former credit-card addict. Many years ago I racked up huge debts, played all the games of transferring my balances, thought I was very smart, la la la.

Today I have zero debt, and am much happier. (Smarter, too.) I think many others could be happier in this area, as well. I suggest we all break free of credit cards and stop using them.

How do credit cards relate to treading lightly on the earth and lowering our carbon footprint? There’s a huge correlation between buying what we can’t afford and tearing through resources the earth can’t afford. We in the U.S. are 4% of the world’s population but use 25% of its resources. (This isn’t helping our global popularity, either.) And our level of consumer debt is the highest it’s ever been.

The positive thing is that there’s a large and beautiful intersection between fiscal responsibility and environmental responsibility. This is what I mean by turning green (a low-impact lifestyle) into gold (personal solvency and prosperity). Living within our means is a kindness both to ourselves and to all other species. To do that, we break free of credit cards (different from debit cards, where we are spending funds we actually have).

I realize that deep green (environmental) readers may think I’m going far afield with this topic of our personal finances. But I see our nation’s debting frenzy to be deeply enmeshed with environmental destruction and also global warming. We need to take everything down several notches, from spending to consumption to extraction of resources like oil and timber. It will make us happier overall. It helps us craft a diamond-cut life. It is also the only realistic path, in my, view, to sustainability.

Next post: My Top Five recommendations for how to break free of credit cards, based on how I did it.