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Financial Blinders

October 4th, 2012 at 10:15 pm

There are two types of financial blinders. I have used both of them.

The Bad Blinders
These are MUCH more comfortable to wear than the Good Blinders (coming up). These blinders allow you to look at your finances - or not look - and not see the debt piling up. These blinders let you borrow 100% of your house loan, get zero-down car loans, get and run up several credit cards and tens of thousands in their debt.

The benefit of bad blinders is that you get a very good credit score, until you wear them too long or something else interferes. You also get to have lots of cool things like new cars, big houses, the newest cell phone and computer.

The detriment of bad blinders is that eventually your habits catch up with you. The first time you have to decide which bill not to pay because your loans, credit cards, mortgage, utility bills, and Starbuck's addiction add up to more than your income, your eyes open up and you see the result of living beyond your means. Yes, no matter how much you earn, you can spend more than that with very little effort.

At the point where you see "rich people's income" and "poor people's balance" you find out the bad blinders only stopped you from seeing the truth that paying thousands in interest every month only benefits the institutions receiving the payments.

The Good Blinders
A couple of two or three years back (that's Texan for "a while ago"), we threw away the bad blinders and put on some good blinders. We made drastic changes and sold one car for what we owed, gave away another car that I loved (still do, actually) but someone else needed more than we did, sold the vacation home we really didn't need - or could afford - again only breaking even. In short, we first got rid of things we really didn't need.

Now, the good blinders came in to play. These blinders let you ignore income you don't really have. If you make $1200, and have fixed bills of $1000, you only have income of $200 to play with. The old blinders would let you look at the gross income and ignore those medical payments, FICA, and other deductions. Why not? If you can ignore the fact that the amount of the actual check is already accounted for, and more, then why not also ignore the above-the-line deductions that also can't be spent?

So, now, the good blinders allow us to have the wife's check go directly into a stand-alone account that doesn't exist; at least, it doesn't exist on our balance sheet. We also don't have any retirement accounts. What do I mean? I haven't retired yet, so that money doesn't count toward our finances.

These new blinders aren't terribly uncomfortable. Sure, every once in a while I check the balances in the accounts, but overall, we keep the blinders in place 99% of the time, and are just waiting until one of the peeks lets us give our jobs their two week notice. I haven't even written one of my Excel spreadsheets to see when we will have enough to retire. We have very lofty retirement goals, so I know we're not there yet. We're throwing every penny at the funds so it really doesn't matter if I know when we will get there before we arrive. There's no way we could send more and still eat.

Yep... these blinders may not be as fun to wear, but the end of month bill payments take up a lot less of our time.

2 Responses to “Financial Blinders”

  1. creditcardfree Says:

    I like your analogies!! I'm wearing the Good Blinders. Smile

  2. Jerry Says:

    Great points! I am glad that you have the good blinders on, and that it leads to progress toward your retirement goals... that is the only insurance we have of reaching them, is to keep those good blinders in place!

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