Every day a few more visitors drop by my blog, apparently looking to enroll in the Spatula School of Personal Finance.
It’s not a real institution. It’s just an article — fairly lame one, I have often thought. It was a rough-hewn product of my imagination spilled out on a keyboard an hour or so before I took my kid to school one day.
Still, it seems to have captivated some people. Maybe the contrast of the simple and plain spatula with something more shrouded in mystery like finance is what does it. Can it really be that simple? Perhaps that’s what some are asking before they click the link.
Or maybe spatulas are some hot thing among the kids of today, possibly. . .
In the original article I pointed out that while I agree money is a useful and valuable commodity, I have no patience for people who obsessively chase it, just as I have no time for spatula enthusiasts, either. Money’s got the same mystique as a spatula to me.
And really, unless you’re in the financial industry in some capacity, there’s no reason money can’t be a simple utility to you, as well.
Don’t Suffer for your Spatula
We suffer for the things we love. It’s rather inevitable: We suffer for the skills we want to develop (because we love them) and the things we want to create (ditto). The people we love make us suffer. Whatever or whomever you love, it’s going to be the source of misery in some way — if only due to the threat you will lose it or won’t achieve it.
My point is that if you love money, it’s a given that you’re going to suffer for it. But the upside of loving money doesn’t provide nearly enough compensation to for the suffering you’re going to experience just for loving it.
Don’t suffer for a spatula. Don’t suffer for a love of money. If all you want is money and are suffering for it constantly, there’s something wrong.
I was Idiotic
I had gotten pretty good at managing money in my 30s. As with most things I decide to take on, my early enthusiasm paid off well. By my early-30s I had cash in the bank, no debt, a very manageable tax burden, great home equity, and a self-managed stock portfolio that had beaten a strong market about seven years in a row. My wife-at-the-time and I lived in a house that bordered on luxurious. When people would visit us — people who hadn’t done as well — they’d ask how we did it.
(Note: Those “salad days” were destroyed not by poor financial management, but by something far more essential that I’ll cover in a later article.)
Anyway, when I felt like being a smartass, I would tell them my wife was an insecticide heiress. She really was, in some ways, though we’d never seen any of that money.
When I was being a little less of a smartass, I’d put it this way: Cash good! Interest bad!
At one point just after I had graduated from college and bought a fancy pickup truck in which to court the ladies, I sat down one day after wondering why I had to put my Kraft mac-and-cheese and Diet Coke on my Discover card. It was because I was losing most of one paycheck to interest alone. It was interest on student loans, credit cards, and my car loan. It was wasted. I couldn’t even use tax deductibility as an excuse, the way the house-poor do.
It was idiotic, and I felt like an idiot.
Interest is The Rental Fee on a Time Machine
When you pay interest you’re paying to travel forward in time and pull back money you’ll have in the future. Interest is the fee you pay to use that time machine.
That’s really cool, but it’s also really expensive.
Interest dramatically increases the cost of whatever you buy. If you own a house, pull out your mortgage paperwork sometime and take a look at the total cost of payments on your house. Even with low interest rates you will find you will have paid for that house twice over a 30 year mortgage. Credit cards are even worse:
So at the age of 25 I looked at my broken finances and I decided I would fix them. I would drive out the money lenders, by gum! And I did.
As I gradually reclaimed my income from the interest column of my budget, the savings went into my first house, then my second. It definitely helped that I changed jobs twice and rode the tide for tech workers at the time. But all of that new determination came from that one moment of decision when I realized the stupidity of paying interest on crap I didn’t really need and decided to simplify.
No longer would I pay to make trips through the time machine to grab money from some point in the future, which tends to get further and further out the more you are living in debt.
It’s hard to be casual about money when you are being crushed under interest.
The Goal: Financial Nirvana
If you don’t want to need to think about money — if you want it to be no more demanding of your time and care than what’s required to wash your spatula and toss it in the kitchen drawer — you need to make sure it is no more complicated than it needs to be. Avoiding debt — and therefore interest — is a good first step. If you’re already in debt, then paying off your balances starting with whichever is at the highest interest rate is next best thing.
The goal of the Spatula School of Personal Finance is to get you to a point where you barely need to acknowledge money exists at all, giving it no more thought than you do a spatula. No more racing to the bank to make payments on time after pawning your lawnmower. No long hours spent reading WSJ or watching CNBC. No need to run stock screens nor have conversations with stockbrokers (who are the last people you should talk to about managing money or investing). Just do what you really want to do while having enough money to keep doing it, with a little cushion to spare.
It’s money-as-a-utility. It’s financial minimalism, driven by the notion that in all things, there is some amount that is “enough”.
Spatula-visitors: Please let me know in the comments if you liked this and want to see more. I guess it could be that there are kinky spatula-fanciers out there who keep clicking the link to see sexy pictures of spatulas or something. I’m anxious to find out.