Yesterday while I was working, I ran into some old friends. When I first met them, their older daughter was in high school. Now she’s a veterinarian with about 7 or 8 years of practice under her belt.
We discussed some small talk for several minutes. You know, “How are you?” “How Dave (her husband doing)?” “How’s the vet practice coming?”
Her daughter began telling me about her economic difficulties. By the time she graduated from veterinary school and established her practice, she was in debt for $358,000. After five years in practice, she had lowered her debt by less than $10,000.
“WOW” was about all I could express.
Ms. Vet decided to renovate the house she was purchasing and sell it to reduce the debt in her life. She realized most Vets (and MDs) are living under a lot of pressure to keep up appearances and the only way they can keep up the appearances is by living paycheck to paycheck – even though their income is several hundred thousand dollars.
Ms. Vet completed the renovations and sold her house. She dedicated all of the proceeds to paying off her debt and reduced it from $350,000 to $100,000. Still a massive chunk to pay off, but nothing like making monthly payments on $350,000 of credit.
I recall listening to a local doctor tell the same story several years ago. He was a specialist and was grossing almost $1,000,000 a year.
He had all the baubles of success – the house, the cars, the toys, and so on.
However, reality hit when one of his relatives died suddenly.
The immediate family was concerned on how they would afford to continue living life the way they were accustomed to as they no longer had Dad’s income to depend on.
“No worries”, said the doctor. “I make over $900k a year. I’ll just buy your house and you can live in it for as long as you like for free.”
WOW. What a nice guy.
Caveat warning – this is a story of 15-20 years old, so please keep this in mind when I recount the numbers involved.
His brother-in-law’s house was valued at $150k or had a $150k mortgage on it. “No problem,” thought the doctor, until he was denied a loan to purchase the house.
All of a sudden, rich doc meets reality.
I learned a long time ago about money. It wasn’t so much about how much you earned a year or what kind of house you lived in or the car you drove or the vacations you went on.
It was about paying cash for everything.
Harry is a long-lost friend who is very wealthy and is well-known in Cincinnati. For example, Harry bought James Bond’s DB5 several years ago for $4.5 million. A few years before that, I ran into Harry at his business. He had just parked his new Ferrari (the price was close to $1 million). I had just parked my Ferrari in the same lot as I was in the midst of doing business with Harry’s firm.
“I’ll trade Ferraris with you” I joked to Harry. Harry replied, “As long as we trade the car payments as well.”
My reply was my Ferrari was paid for (I paid $20k for mine. It was used, but still a nice driver). Once he pays his off, then we could trade.
True – Harry was driving a model of car of which less than 500 existed in the world. I was driving a similar car that was used, but had a similar panache. Harry paid 50 times what I paid for a similar experience, simply because Harry was keeping up appearances while I was happy taking my car anywhere I pleased without a worry.
In fact, I never locked the car the entire 7 years I owned it.
Back to Ms. Vet.
She’s realized the same I did decades ago. Keeping up appearances for others and doing so with loans and credit cards is stupid. Living within your means and enjoying what you have been blessed with is much more enjoyable than any million-dollar car or $50M house.
What’s my fun car today? A $4000 Toyota that I take anywhere I want, it starts every time I turn the key and I can treat it like a car.
And that’s the point of my musing today.
Maybe the entire country needs to relearn this. We’ve borrowed every cent three to four times over should you add all the debt, both public and private and compare it to all the assets, both public and private.
Who’s going to continue to lend money when the country, in essence, has gotten a 300-400% mortgage on every car, house, farm and apartment building within the country.
Instead of being paupers with ‘ppearances, it’s time to be financial independent which will make you foot-loose and fancy free.
Otherwise, the country can follow the course most free countries follow. Free countries evolve into dictatorships via debt, taxation and regulation. And, should you let the country follow this path which so many have followed, how will you provide for yourself, your family as well as your loved ones.
THAT I can answer – in my upcoming book
Prospering in a Socialist Society.
Sign up for emails at https://TedLeithart.com and you’ll be the first ones to receive the book.
P.S. You may wish to purchase several copies of the book so your loved ones can use the book for a reference source for themselves.
