Rule 2. Don't borrow trouble...

I just found out the first true credit card was introduced the year after I was born. Funny, I thought all along I was born with a minimum payment due. The Rich World runs on credit, interest is the dues you pay to play the game.

Previously:5 Rules, Rule #1, Rule #1b-recycle

Diners Club was actually first the first "Charge Card" to allow purchase at multiple businesses (resturants) in '50, but charges were due at the end of the month. Previously, retailers (department stores gas stations) would offer their own card. AmEx and Bankamericard (now Visa) were the first to take us down the road of revolving credit cards and the Minimum Payment Devil!

My goal in living on the edge has 3 facets; first, enjoy a small country life, second, use stuff the rich world sorta dribbles out the side of it's mouth so I need less money, and third, have a personal economy and infrastructure not totally dependent on BAU. Let me tell you about me and BAU...

discoverpa.blogspot.com

My first bit of credit was for a new refrigerator. We'd used hand me downs and even an old Coke ice box and block ice but I was ready to make the leap into BAU. My Dad co-signed for me, he said, "I'll sign for you, if you're sure you want me to – you'll never be out of debt again you know."

Of course he was right, I ran 'em up then paid 'em off with every house we sold. We'd swear them off and be good till the next time the car broke or school clothes time or whatever excuse seemed handy. We got in over our heads many times but I don't think we ever missed a payment.

Anyway, we're out of the interest business for good now. Long story short:

After the recession started our one card (that we used for cash flow - calf money isn't a regular thing) jacked my rate from 7% to 16% for no reason (except that the law was about to change preventing them for raising rates for no reason)

Then a few months later I got sick and wound up in the hospital, I wasn't sure how that would turn out so we skipped a payment - they jacked my rate to 29.9%

As soon as I saw that statement I decided I just wasn't going to pay - [expletive deleted] 'em!

6 Months later I offered them 20% to give up and they took it.

That makes me feel bad, not that they're crooks but that I knew they were crooks and still wound up in a place where I broke my word. It's too bad for them too. Now, just a few months later, I have 2 pretty good new clients, the calf market is up and the calves I was raising to pay off that card would have made a big dent in the balance, but they could not see past jacking me to ridiculous rates, late fees, and then over limit fees. Had they worked with me they would not only have made their their money back with interest but more in the future. Oh well, $20k is no great loss to them and in the end "they" finally broke us of our habit and now we're learning to get some cash savings built like we should have done years ago. 

But there are other ways to save for the future more in line with living on the edge. An unexpected offshoot of raising calves is they are as good as money in the bank, in fact, their return is much better than bank interest. Basically we put in some time and maybe $100 dollars and stick 'em out on the grass where they can gain weight. We don't need to sell them at any particular point (as long as we have grass), the bigger they are, the more they're worth (albeit with diminishing returns) and we can sell them 48 weeks of the year and have cash in a couple of days.

The same goes for storing hay, raising a pig, keeping chickens, growing and preserving food from the garden - even cutting firewood and unless you are really lucky those are all lots more fun than your office job. After all, there is nothing magical about money, it's just a store of value. Whether it's a gold coin, FRNs or 1s and 0s on some hard drive somewhere, it's only worth what someone else will give you in trade.


For someone trying to live in the margin, the reason to not borrow is pretty obvious; every dollar you borrow comes with a Business As Usual tax in the form of interest - if you're trying to escape BAU, why support it by paying the tax?

Silk Purses

Living on the edge of modern ag has kind of become the subtext here at the blog. I'm a Junker/Cobbler/repurposing aficionado at heart and enjoy the functionality of a well turned out Sow's Ear Faux Silk Purse.

But beyond the simple satisfaction of a successful kludge, my overall goal is to negotiate my life to a simpler and lower energy level, whether as a preemptive move in the face of lower fossil energy availability or just as an escape from the brass ring grabbing contest, the plan is the same. Hopefully a side benefit is leaving a place and a way for my kids and grandkids to adopt if they want or need.

About three years ago, after racking my brain repeatedly distilling my thoughts on "powering down" to bumper sticker sized morsels for posting on message boards,  I came up with my Five Rules. I use these to judge how/what/where to spend my time and meager resources and to what extent I'm successful.

Here are Pops' 5 Rules for Living on the Edge of the Rich World:

• Don't buy
• Don't borrow
• Don't specialize 
• Don't starve
• Don't be dependent 

I want to talk about these one at a time so I'll start with the firstest and hardest, Don't Buy - or the longer version, Quit buying worthless stuff and learn to live on less.

If I add together what the SS Administration says I've made in my life to what I've made selling the houses we've lived in and fixed up over the years, it comes to over a million bucks (inflation adjusted it's more like about $756.38 but whatever). Boone Pickens says the first billion is the hardest! Point being, I don't want to come off like some monk sleeping on the floor in a lotus position and eating air. I was up there in the 80th percentile a few times and by golly I tried to spend it before it stagnated and I caused the downfall of the entire economy.

But hey, buying stuff is the American Way. The self evident, god given right to pursue stuff was in the opening line in the first draft of the Declaration of Independence. And even though "property" was replaced by "happiness" in the final item, we all knew what they were talking about and so we all became the undisputed champions of stuff consumption. As a good American, I've made myself happy by buying every kind of stuff from candy bars to bass boats.

We left California for the Ozarks for a couple of reasons, first and foremost, it was clear the run in home prices was way overdue for a fall. I learned at the time the typical cycle since WWII was 7 years peak to peak - in '04, prices had not peaked for 20 years - that's 2-0 years! When I read the execs at the big home builder Incs were selling off their stock in their own companies to "diversify", well...

Real estate prices, or any price really, makes no difference if you aren't buying or selling. The thing is, as we sat and watched the "value" of our house double over about 3 years we had that pile of airball equity staring us in the face. But it was only accessible 2 ways, borrow against it (and inevitably find ourselves underwater) or sell and move to a lower valued area.

I was almost 50 and chained to the merry go round. I had a huge nut to crack each month and any little blip in the economy (oh, I don't know, RE bubble, credit bubble, commodity bubble) would cause my little free lance graphics business to go poof! The same old roundy round, chasing a buck just gets old. And most importantly Susan, my wife, and Miss, my daughter, were ready to abandon the coast - finally!

Anyway, when it came time to jump the shark, the first step was deciding we could get by without buying so much stuff. Turns out, buying stuff  is a hard habit to break and is what keeps most people working 50 hour weeks. We've been here almost 6 years now and we still get to jonesing for stuff from time to time. Stuff seems to multiply spontaneously (though of course this is illusion), and as it does there is an equal and opposite decrease in wallet mass.

But stuff is like food, you need to have some to survive, the key is deciding what and how much.

After chores post more...