Saturday, August 11, 2007

Surprised by a calculation and a few words on what money is to me

Last night I was facing down my two girl's college tuition bills and trying to figure out where exactly to take the money from.

I began my investigation by making a list of the various places we have money invested. (I'm a bit of a worry-wart, so I like to be pretty well diversified.)

So I made a list of both retirement and straight savings.....of money I have and money the girls have too.

My first observation was that I was surprised at the money we had saved. Well, not shocked....but it had grown to level that was slightly higher than I thought. Very close to a goal Cheryl and I had a while back......before the great stock market melt-down early this decade. But here it was, after losing about 25% back then. (and many lost much more.....but being a conservative investor, I don't chase I also don't make as much as I could either, but it's not about who dies with the most money anyways....right)

So after the pleasant net worth surprise, I also remembered some bonds that my mother and father had been buying for Kimberly and Kristen all those years.....earmarked for their education.

You see, over the years my mother bought them EE savings bonds with the idea that they would be used for their education. They were not very large denominations....mostly $25, $50 and a few $100.....but she would do that maybe twice a year...birthday and Christmas.

The idea was that it showed the girls that she was supporting our country and helping them save for college. (My parents were not at all wealthy, but were big into saving.....I believe they only had one credit card, from Sears, and that was just in case a home appliance failed and they needed to get one. They taught me to be a saver.....a cash buyer if you will)

Anyways.....over the years, these savings bonds added up....and over half of them have surpassed their face value. (ex: a $50 EE bond costs $25 to buy, but gets to $50 according to the rule of 72 "Doubling time" depending on the interest they pay....and they keep getting that interest for I think it is 30 years)

NOTE: To be fair....I always talk about my mother when I speak of money....she held the purse strings, but bothy my mom and dad were very good savers...and while my mom knew the value of a buck, I think my dad had a better handle on "the math" any how compound interest was your friend....if that makes sense.

My mother started this bond buying as soon as the girls were born. Kim has 31 bonds and Kristen 18. (It looks as though Kristen was short-changed, but she seems to have larger denomination bonds for some reason)

Kim currently has $12,767.56 and Kristen $10,346.66. (I knew my mother would NEVER have favored one over the other...and the totals show that.)

So why think of this at this point......Kimberly is a senior. This is her last year to use this money for school, and therefore get the interest tax-free. Kristen has three more years to user hers....and since she is planning to go on to a PhD, she has even more time.

My parents were really the best......yes, I suppose I am biased, but I truly mean that. (yes, they were far from perfect....let me state that for the record...but who is anyways?)

My parents were product sof the great depression, and they started out very poor. Bother were not well educated, having dropped out of High School for different reasons (My mom to take care of her mother, and my father to go into the war) but they didn't have a hate or fear of money. (or education for that matter)

In fact, they really appreciated the value of both...and they also saw the negatives and pitfalls each offered too. To some, it doesn't seem as though money or education can have a negative side...but my parents felt that if you let money rule your life, you might never be happy.....and if you let education get you to think you were somehow better, superior or better than would suffer as well. (and not live up to your potential in terms of your value to society)

So they always taught me that money was a tool....a means, and in no way an end. We didn't work and save to amass money for power...or in any way for greed. If we saved, we did so for good, honest reasons.....and we saved money for a particular purpose.....not just for the sake of saving money.

Saving for a house was great.....we have to have a place to live, and owning a house brings a certain level of stability to life. Saving for education was great.....making ourselves better with knowledge would allow us to be more valuable to the world so we might be able to give back more. Saving money to help others in time of need was good as them it was ok for money to help with security......but not power and in no way was it the reason to save in and of itself. (saving for retirement was important to them because it allowed the parents to be self-sufficient and NOT become a burden on their kids.....who BTW, they felt had an obligation to help their if the parents saved, they would be further helping their kids by NOT becoming a burden)

Bottom line is what my dad used to day all the time:
"Money doesn't make the world go around, but it sure greases the wheel."
It is must be dealt with, perhaps even is a tool, but it can not be the end in and of itself.

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Blogger Freddie Sirmans said...

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8:58 PM EDT  

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