Declaration of Financial Independence

In honor of election season I thought I would write a semi-political post. I am a fiscal conservative that believes in helping the needy. I know the two are often considered mutually exclusive. One political party likes to claim one of these ideals over another. I have never fully understood this as I don't see the two as opposites, but rather they are both worthy pursuits.

The two can co-exist - I believe I am proof of this fact. However, my approach is (voluntary) individual sacrifice for the good of the whole at a household level, rather than a national level (which ends up being compulsary through taxation). I think that system assumes the worst about people - that if given the chance we would choose not to be generous. I choose to assume that everyone wants to make a difference in the world, some are just waiting for the right opportunity to act.

My financial institution recently sent out a challenge called the Declaration of Financial Independence. What is that? I copied it below. I signed it. It is something I believe and try to live.

1.We will spend less than we earn. Saving a little out of every dollar we bring home is the foundation of independence. Without it, we can't build equity in our home, we can't invest for the future, and we can't be ready for challenging times.

2.We will use our home as a savings account. Besides shelter and comfort for our family, the role of a house in our financial life is to build equity. We will have a healthy down payment when we buy. We'll choose the mortgage that lets us pay down the principal fastest. And then we'll leave that equity safe where it is instead of spending it on things that don't last.

3.We will take care of our money. It's not enough to have money in a bank. We will put it where it will grow. We'll keep track of it. And we'll check every account we have every year to protect ourselves against fraud or escheatment.

4.We will defend our credit worthiness. Good credit is going to be precious in the years to come. We will pay our bills on time. We'll borrow only when we need to and in amounts we can comfortably pay back. And then we'll do just that.

5.We will ignore unsolicited credit card marketing. We decide when we need a credit card, not some marketer. And mostly, we probably don't need another one at all. We won't even open those solicitations. We'll shred them.

6.We will know the cost of borrowing. The interest lenders charge us is real money, too. When we buy a mortgage or finance a purchase, we'll figure out what that interest is really going to cost in dollars, add it to the purchase price, and ask ourselves if it's still worth it.

7. We will invest for the long term. Futures are built out of patience and prudence, not luck. We will not put off being a saver because we think there's a lottery win in our future, in Vegas or on Wall Street.

8.We will take care of the things we have. We work hard for our money, and it's disrespectful to waste it - or the planet - by treating our possessions as disposable.

9.We will remember what matters. We are not the things we own. If we have to spend and spend on bigger, more impressive things to keep up with our friends, then they are not our friends at all.

I would have been excited to see a political leader stand up and challenge America to do these things in the last political election - rather than the talk of bail outs (which turned in to exactly what I expected - increased deficits and little to show for it). If every American could commit to this - we could have avoided the recession we experienced or could be climbing out by now. This is a challenge to think long-term. To live values. To be responsible. These are good and prudent practices that ultimately benefit everyone. The more money I have in my pocket, the more money I have to give to those in need - rather than pay interest on my debt.

There is a final declaration...

10.We will be heard. Our representatives in government and the corporations we deal with need to know that we are paying attention. If we're silent, we're accepting the status quo, and the business practices that got our country into this situation will continue. We are not going to accept that.

If deficit spending doesn't work in my personal budget, why would it be a good idea on a national level? It's not. Just like the large homes that were bought and then lost to forclosure - some day the bill is going to come due. We will pay. And I am quite sure as a nation we have not done an adequate job assessing the cost of our borrowing.

Will you agree to this declaration? Why or why not?

Sheri

P.S. I have posted about this before - you can read those posts here, here, and here.