The Difference Between THEM and US When It Comes To Money.

We all have them. Friends that spend like there is no tomorrow, they buy the latest cellphone, the biggest flat screen TV, the newest model BMW. They buy a McMansion to impress their friends and families, eat out every night of the week, and go on extravagant vacations that they cannot afford. So I got to thinking about them when we received a card in the mail the other day from a relative.

This relative sent us a very large cash gift for no reason other than she wanted to give it to us. She is an older member of our family, and I am guessing that she wants to start spreading the love around while she is still here. We don’t really like to think of this kind of stuff, but it is reality. Anyways, we got this check and we looked at each other immediately and thought: “Retirement and a small vacation”.

Not for one second did we contemplate buying a plasma TV. Not for one second did we consider trading in my wife’s older car for brand new great smelling luxury automobile. Not for one second did we start looking for an apartment actually in the middle of the ocean. We looked at each other and decided that our well being later in life was more important than any short term elation we could experience by blowing this money.

And that’s when I was thinking of our friends from the first paragraph. What would they do? I am guessing they would find a way to spend that money ASAP, without looking at it as a long term help. No thought of retirement or education or anything else. “It’s free money” they would say….but it isn’t really. Someone worked a long and hard life to save up that money, and the fact that they are sharing it with the rest of their family really means something. Do the spenders think that someone worked hard all those years to buy them a new TV?

That is what separates them from us…we are conscious of our financial choices.

We look further down the road than the end of our noses, and feel that saving and investing and living within our means is more important than having a new this, that, or the other thing right away.

So what did we do with the money? Well, the majority of it went into our retirement funds, some went into our house fund, and we took a small amount out for a vacation we were planning on taking this year anyway. We think our relative would approve. Don’t you? She worked very hard for a very long time to be able to do this..and we don’t want to let her down.

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Comments (4)

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  1. Well done. I’d give this approach 9/10 (People who use such windfalls to buy a Plasma TV only get 1/10).

    However, I think the perfect 10/10 score would be if you already had plans in place to fully fund your retirement, house payments and vacations yourself. In that case any extra “windfall” money such as inheritances could be invested in a separate account as part of the “estate” you’ll be able to pass on to your heirs. You would add to this if you end up with more than you need in retirement, but at the very least you’d pass on all the “extra” money that you win in lotteries, inherit and so on.

    Then again, your relative might prefer to see you spending the money on a vacation and retirement funding, rather than it just being put away as part of your estate (although if you documented where such inheritances that form part of your estate come from, this would become a permanent part of your family history to be passed on to future generations ie. where the “family fortune” came from).


  2. david says:

    Thanks for the comment Enough Wealth. We do have a plan on our own to save for retirement, but nothing wrong with adding to it instead of just buying a new TV or something else like that.

    I understand what you are saying, but since we dont even have kids yet or an “estate” I believe that our retirement fund is the best place to put this money as of right now. Thanks for the advice!

  3. Brandon says:

    Hmmm…I agree, too…to an extent. As a single guy reaching the ripe old age of 30, and who’s tripled his retirement savings in 3 years and saves 26% of his income, I was on the same track. But recently got a little derailed by…tada…plasma tv. Newest BMW. I believe in balance – have spent like I made half of what I do, and socked away most of the rest (Roth, 401K, emergency fund, trading acct, etc). And was ready to drive my VW for another years and 80k miles…until my buddy, who is very intelligent, pointed out that my desire for nicer things could be fulfilled, to a reasonable extent, while I was young, single and without children (that I know of!).

    One need not be austere, nor must one go overboard. I could have bought an overpriced florida home and gotten raped w/ insurance increases since I moved down here and been “homesteaded” into never being able to move to a smaller house…but I maintain a modest apartment that costs very little and have maxed out all retirement spending, save cash to invest and still have the funds for the plasma and the bimmer…sure, the cash could go to savings, but at the same time, if your vice is hot cars AND you can afford it WHILST providing for your future, let’s not forget that this is called FUN or VALUE.

    Just saying is all. 😉 All in all, a great set of articles and posts that make you think “is this really necessary?”

  4. david says:

    Thanks Brandon, it is true that sometimes you should spend money on yourself…I guess the important part is that you are taking care of your finances as well as splurging once in a while, which is great that you can do both. Most people don’t do both, they only buy the plasma TV and BMW while going further and further into debt. Thanks for the comment!