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Friday, December 17, 2004 - 12:34amSanction this postReply
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This article says, at length, something that I understood in a different context more briefly: A man with savings is a man who can say NO. My abusive ex-wife used to overspend consistently - no matter how much I earned, she always found ways to spend more, so that my savings were being reduced, and I could not afford to leave - could not afford to say NO to abuse. In many practical contexts, financial security is existential freedom. An overspending spouse is the touchstone symptom of an abusive relationship.
(Edited by Adam Reed on 12/17, 12:35am)


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Friday, December 17, 2004 - 6:01amSanction this postReply
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Thanks for this, Luther. 
 
It so happens that I am a strong saver. 


Post 2

Friday, December 17, 2004 - 6:01amSanction this postReply
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Adam wrote:
A man with savings is a man who can say NO.  ... In many practical contexts, financial security is existential freedom.
Exactly.  The number of people I encounter who fail to grasp this fundamental precept continues to astound me.  Of those, many see "protection from abuse" as the job of government rather than their own well-reasoned actions.  Ironically, this reliance further exacerbates dependence on government as their savings dwindle due to taxation and regulation.


Luke Setzer


Post 3

Friday, December 17, 2004 - 7:23amSanction this postReply
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I have understood this deeply only in the past few years. Adam, I can relate fully.
Excellent post Luther.

John

Post 4

Friday, December 17, 2004 - 7:48amSanction this postReply
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Saving comes natural for me - a Chinese trait perhaps. Actually, my defect is in spending... smilie  Gosh, I need a vacation!
(Edited by Hong Zhang on 12/17, 7:51am)


Post 5

Friday, December 17, 2004 - 9:38amSanction this postReply
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I'm with Hong Zhang. I save naturally. My joke about my life is that I can tell you my plans for 2118, but I have no idea what I will do this afternoon. Since I lost about 85% of what I had in the stock market, I have a much better sense of balance about spending and saving.

Post 6

Friday, December 17, 2004 - 7:32amSanction this postReply
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Following up on Luther's comment, it is the existence of social welfare programs which make it harder for the average American to save.  When a sizeable portion of one's earned income is placed outside his control, his ability to save (and make himself secure) is reduced along with his desire and ability to contribute to charitable organizations.  Government programs which seek to enhance the security of the masses and improve the quality of life for its constituents rarely achieve their goals (if ever) as they must make one person less secure in order to improve the security of another. 

Post 7

Friday, December 17, 2004 - 12:28pmSanction this postReply
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Excellent submission, Luther.

Saving is a ~behavior~ NOT an inborn trait like eye color or height. I would venture to say that no one becomes a saver without being taught its importance or having a personal epiphany and becoming convinced. It is a choice, not some morally-spontanteous phenomenon. Some learn early in life that it is prudent. So many do not.

But the truth of the submission is indisputable. We would do school-age children a huge favor by teaching them that saving 10 to 20% of income is a must. I also agree with the fellow who said that it would be a heck of alot easier to do without the govt picking our pockets!

Further to that, here in Chicago, Illinois, our State Governor is trying to dig the State out billions in debt--but recently has exposed as having handed out cushy, lucrative jobs to his campaign workers. And in Chicago, our Mayor Daley is running for cover, because about once a month, another City Department is exposed for having ghost payrolls, or massive waste of money. THESE are the entities who claim every year to need more of our money. Lord, how can we stand with without screaming at the hypocrisy, the plaintly-evident corruption??!!??!

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Friday, December 17, 2004 - 12:29pmSanction this postReply
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I am just starting to understand the message behind this article.  I used to have a spending problem, but I'm learning to control it (it's just so hard in Chicago with all these great restaurants!).  Anyhow, this article has provided further inspiration for my quest for financial independence.  Thanks! 

Post 9

Friday, December 17, 2004 - 1:25pmSanction this postReply
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Excellent post.
The converse case in point is the person who lives on credit. Such a person fakes financial confidence, fakes self-esteem while running up debt just in an attempt to appear poised and in control. I've seen such people ring up thousands and thousands of debt, only to have reality crash their phony house of (credit) cards. Equally sorry is the person who lives without health insurance. Doing so is also living on credit -- what I guess I'd term the credit of risk. The gamble may pay off in the short-term -- daily, monthly or yearly -- but sooner or later reality will come knocking. In college I managed, like many students, to run up a lot of debt. It was only in the last six years or so that I cornered it and took my financial life back. I now have tens of thousands in savings, no credit card debt and absolutely no worries about getting sick or laid off. It's a liberating feeling, a comfortable, confident feeling, and one that stems from a little thing called MONEY. (Tell THAT to a liberal.)

Post 10

Friday, December 17, 2004 - 2:38pmSanction this postReply
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When you are saving, you are behaving like a capitalist ... you are accruing capital. Because capital is deferred expenditure once you have that capital available to you are able to take advantage of opportunities and invest in risky ventures, with the possibility of making extraordinary profit for your benefit and, incidentally, for society as a whole. The first capitalist ... a caveman who starved himself for a day or two to fashion a spear or bow and arrow while his cavemates went foraging for rodents and insects, may or may not have been initially successful. His bow may have broken or the lashing of the flint to the shaft of his spear may have failed but when he finally succeeded it was spectacular. He was able to create capital goods (his spear or bow and arrow) by deferring his consumption and eat relatively lavishly from then on.

I have tried to explain to people who have credit card debts and are paying outrageous interest rates that if they could just reduce their spending drastically for a few months to pay off their debt, and never renew it, that they would be saving that 20% or so on that amount for the rest of their life.

I'm retired and grew up in an age where consumer credit was largely unknown. When I needed more money for university I took a year off, worked in a steel mill and saved enough for the next three years of study. I've always paid cash for a car, to the puzzlement of the salesman. I was forced into getting a credit card when I checked into a hotel and found they wouldn't take cash as, according to them, I might chalk up some long distance charges. Fortunately I was able to contact my niece who gave them her credit card information. Otherwise I would have had to sleep in the street.


Post 11

Friday, December 17, 2004 - 3:03pmSanction this postReply
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I love the first capitalist tale, Sam.

Post 12

Friday, December 17, 2004 - 4:41pmSanction this postReply
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Debt is the slavery of the free.

I don't know who said it but the country would be better off if everyone could quote it and understand it.

Sam


Post 13

Saturday, December 18, 2004 - 5:54amSanction this postReply
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Isn't cash legal tender - isn't there a federal law reqiiring acceptance of cash in payment of debts - and isn't a transaction an endebtedness?

Post 14

Saturday, December 18, 2004 - 7:18amSanction this postReply
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Robert: If you're referring to my incident with the hotel ... there was no indebtedness when I approached the hotel desk, hence I don't quarrel with their decision. But, yes, cash is legal tender.

Sam


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Saturday, December 18, 2004 - 7:27amSanction this postReply
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If so, then how - not just in the case with the hotel, but anywhere - is it lawful for anyone in business to refuse to accept cash? Can not such persons be then charged with a federal unlawfulness? And if so, why has the matter not been taken before the court?

Post 16

Saturday, December 18, 2004 - 10:09pmSanction this postReply
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Robert Malcom wrote: "... is it lawful for anyone in business to refuse to accept cash? "


Link to:
http://www.treas.gov/education/faq/currency/legal-tender.shtml
"The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 102. This is now found in section 392 of Title 31 of the United States Code. The law says that: "All coins and currencies of the United States, regardless of when coined or issued, shall be legal-tender for all debts, public and private, public charges, taxes, duties and dues."
This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy."
 
The other way to understand this is to consider the fact that governments in general and their treasuries and banks in particular create all kinds of objects that may be "money" or may not be but in any case are not "legal tender."  Treasury Bonds are a good example.  Ration coupons are another. What about your tax bill.  You get a piece of paper from the government saying that you owe them money: is it fungible?  How is it different from any other piece of paper issued by the same department?  Some of their paper says "legal tender" to identify it as such.
 


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Saturday, December 18, 2004 - 10:52pmSanction this postReply
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I derive satisfaction from savings akin to -- but different from -- what spenders say they get from consumption.  I often work on projects in different cities.  (Luther Setzer and I met when I was working on the Space Coast, for instance.) Of course,a local bank account is a necessity, and I seldom close one, even after I leave the project.  Over the years, I continue to put savings into them.  It is a game of sorts.  I try to keep them all about equal.  Some I ear-mark for various future purchases.  Others just sit there.  If I get a check for some small project such as a magazine article, I will often send it to one or another of these accounts.  I still have the Swiss bank account I opened in 1973 after reading a book by Harry Browne.  When I was sent on an assignment in Basel in 1999, I almost drew out some spending money just to do it, but I never got around to it in the few days I had there -- and  there it sits. 
 
As for credit cards, Sam Erica makes an undeniable point.  Even so, I do have a couple and at the moment, both are carrying close to their limits.  The balances go up and down.  Paying them off takes precedence over other savings.  The fact is that I see it that way: Would you deposit money in savings if you got 18% interest?  Of course!  So, paying off the credit cards is a high priority.  Even so, I see this as a business decision, a matter of accounting and preferences of time values.  Even with that in consideration, there is still the opportunity to put some nominal new earning (again for a magazine article) into some other form of savings.  One of the areas I write about is numismatics.  I am not a "collector" in the usual sense, but I do buy examples of the coins, banknotes, etc., that I write about.  So, some admittedly small fraction of my savings goes into these kinds of channels. 
 
Objectivists place great philosophical, perhaps aesthetic, value in gold.  Over the last 30 years, I have always been able to enjoy the opportunity to buy it in some form or other: British sovereigns, French Roosters, or whatever.  The stash goes up and down -- not surprisingly in some kind of pattern with those ghastly credit cards -- but I have bought gold when it was convenient, even while carrying a credit card balance.  Again, this is something of a consumer item for me, another kind of saving that also satisfies my desire to enjoy something nice, like a Mint state French Angel.  If I were coldly rational, I would pay off the credit cards first, deposit into demand account savings next, and then, last, buy gold, which pays no interest or dividends.  However, I appreciate the artistry exemplified by the many different forms that money can take.  For me, then, this allows "consumption" while also following the discipline of savings.
 
Also, for me, the money does not come in nice, neat, regular paychecks.  Sometimes it does for a longer project.  If I get a $25 honorarium, it does not make much sense to me to send that to a credit card company.  Instead, I will send it to the savings account with the lowest balance, or perhaps to the bank closest to the town I plan to be in next year for a convention. 
 
My lowest form of savings is a coffee cup on my desk that holds Sacagawea dollars.  My daughter does the same thing.  She called me tonight and we talked for about an hour about life and everthing else, and we poured out our "Sackies" and counted them up.  She won.


Post 18

Sunday, December 19, 2004 - 9:34amSanction this postReply
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Michael: I, also, was much impressed with Harry Browne's book and in the late '70s had a Swiss bank account (in Swiss francs), gold bullion (bought at $170 and sold at $830), and bought silver coins at about $5 and saw it climb to $50 after Bunker Hunt tried unsuccessfully to corner the silver market. Unfortunately, I didn't close out the silver coins until they had dropped way down again. I still have a significant amount of Krugerrands and Maple Leafs which I will hold forever. I also had an account in the Bank of Nova Scotia in Lebanon that I held all through the civil war and came out intact. At the time the Lebanese pound had the highest backing of gold of all the world's currencies, according to Browne.

Sam


Post 19

Sunday, December 19, 2004 - 10:08amSanction this postReply
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Debt is the slavery of the free.
-Publilius Syrus, 1st century Roman writer (and former slave!)

Sam, your tale of the first capitalist probably inspired this quote from Benjamin Franklin.

Rather go to bed supperless than rise in debt.



On another note, would it be preferable to save in an E-gold (or similar instrument) rather than a conventional bank account? Or the metal itself?

Didn't FDR pass a law during the Depression that outlawed keeping gold? What happened to this law? My history is quite patchy here.

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