Rethinking money 101: Tough times add a twist to old financial tips

Written by Ken Serrano | Staff Writer 

 

This file photo taken in November 2010, shows a foreclosed home on Pine Island in Lee County, Fla. It’s not just that the housing market caved in, proving that houses can depreciate as well as gain in value. For many potential buyers, the costs associated with a home are higher than they realize. / ASSOCIATED PRESS

As hard times grind on, many Americans are taking a fresh look at the money lessons learned from their families. While some of the personal finance advice from prior generations and old adages hold up, some no longer apply — and sometimes they weren’t on target to begin with.

The struggling economy has dismantled some tried-and-true concepts.
With the stock market taking wild swings and low returns on savings, “I keep my money in my pocket,” said Steve Morris, 64, a title searcher from Freehold.
Financially speaking, he’s taking things a step at a time and not bounding into new investments.
That may appear to defy the biblical advice against burying your talents, although the parable means much more.
But more people seem to be just hanging on to their assets, happy they’re still there, and waiting for a little stability. But one person interviewed bemoaned the interest rate on savings.
“It used to be you got 6 percent,” said Margery Condie, 64, a retired teacher from Stirling, Scotland, visiting her son who lives in Freehold. “Now, they give you peanuts.”
Even an adage as seemingly sound as “Watch your pennies and your dollars will take care of themselves” can be called into question these days.
A modern twist on this advice has made buying a daily latte a questionable financial decision. That’s the view of Mark Boyer, CEO of Foundation Financial Group in Jacksonville, Fla.
“It’s all about the four bucks here, and the 10 bucks there,” he said, adding that not only does he make his own coffee at home, he also packs his lunch.
Boyer looks at it as simple math: If buying lunch each day costs $7, that adds up to about $1,800 of post-tax earnings a year. Someone earning $30,000 a year can give themselves an 8 percent raise by packing their lunch, he said.
Morris himself has shifted to this reasoning.
“I eat most of my meals at home,” he said. “I never thought I’d do that. I used to eat out three times a day.”
But author Ramit Sethi — who blogs about personal finances at www.iwillteachyoutoberich.com — thinks telling people they can’t have their daily half-caf-extra-foam fix can derail the good intentions that inspire the advice.
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