Basic HTML Version
The moral to the story is thal in
o rder lo meet their basic need for a
place lo l ive, a family ought lo buy a
house or condominium. Besides the
rise in the value of one's properly,
lhere are tax advantages : One can
deduct the mortgage interest and
property taxes from one's taxable
income. Furthermore, by buying a
house, one can stabilize for a period
of 30 years the amount of money
which must go for hous.ing each
monlh. (Unfortunately, one can' t
slabi lize one's property tax.)
It
is the
only way to insulate one's fam ily
from be ing al lhe merey o f a land–
lord, whose own costs are a lways
rising.
E)
Mobilize the Whole Family
Throughout most of history. wives
llave worked , usually alongside their
husbands in lhe fields , in a n agrar–
ian economy. The industrial revo lu–
tion, however, produced sufficient
prosperity which, when combincd
with the Victorian tendency
LO
p u t
women on a pedestal, led to an in–
creasing tendency for nonworking
w1ves.
Generally, the fact that a wife
doesn't have to compete in the labor
market is a greal blessing to a fam–
ily. Many, if not most women, in–
trinsically prefer the work of a
housew ife to the work of, say, a ste–
nog raph e r or an accountant. A
housewife genera lly has much more
control of her daily schedu le, much
more time to attend to lhe bus iness
of the fami ly's needs, and mo re time
to pursue interests or hobbies than
does her husband, who is genera lly
regimented on an eight- to-five
treadmill, in lockstep with the rest
of his economic peers.
Inflation, however, is forci ng
more and more women to excha nge
the freer hours and greater control
over the ir dai ly sch edu le wh ich
characterize lhe work of a housewife
for the extra money of a second in–
come.
Having the wife go back to work
is one major way of coping with
inflation. However,
it
is a decision
wh ich shouldn't be made without
cognizance of the
costs
which will
inevitably accompany the decision:
- T here will be less lime for cook–
ing and househol.d chores.
16
- l f there are chi ldren, there will
be complica tions . ls a day-care ceo–
ter really worth it? Recent studies
con tradict eaeh other on the q ues–
tion of whether day-care centers
ha nn the development of ch ildren.
l s the extra money worth the
chance?
- There may be scheduling prob–
lems, work shifts which ar e d iffer–
e nt. or vaca ti on sc h edu l es to
coordinate.
- There may be extra costs in the
way of a second car or extra clotbes
wh ich will eat into the wife's earn–
ings.
l f a family st.ill decides that they
need a second income, it may be
wise to examine the wife's skills to
see if maybe it wouldn 't be smarter
for her to go to a local college first
(see stra tegy one) so that she can get
a better j ob when she does go out
looking .
O
Wise Borrowing
Somewhere a rou nd 1973, when in–
flation had been around awhi1e,
people carne to a s trange con–
clusion: Since one pays back 1oa ns
in depreciated dollars, inflation fa–
vors borrowers over lenders and ,
the refore, one oughl lo go into deb l
as deeply as possible.
T here's only one catcb : It doesn' t
work. Or more precisely, it on ly
works when the inflation rate years
dowo the line is even more ghastly
than originally contemplated. But if
that's the case, it may be a Pyrrhic
victory to be able to pay off one's
car loan with petty cash at a time
when the original price of the car
won't even fet ch ajar of peanut bul–
ter.
Moneylenders aren't dumb. They
are not in the business of loaning
out valuable dollars in the hopcs of
ge tting back less valuable dollars.
They a re in the business to make
money. T ha t means that they calcu–
late lh e hi ghest reasonab le inflation
likely to occu r before you pay back
your loa n a nd then
add that on
to
their regular interest rate.
Interest costs are a form of in–
fl a tion, nol a cheap way of beat ing
it. Therefore, it makes sense to lim it
one's borrowing as much as pos–
sible. A loan to finance vocational
education (strategy one, again) can
yie ld high pretil if it nels a good job.
lt only pays
to
borrow when one
is going to buy something anyway ,
and its price is a lmost certa in to go
up. Then it pays to buy "now."
Otherwise, borrowing is only specu –
Iating that infiation will be even
grea ler than the moneylender th inks
it will be.
9
Cost Cutting
Economists are fond of poin ting out
that, unless there's sorne horrible
monopo ly at work, there a re sub–
stitutions we make for most of lh e
th ings we buy - subst itutions which
can save money.
Food: Typical substitutions are
cheese, eggs, or beans for meat,
one's own labor instead of going out
to a restaurant, or cheaper for more
expensive brand names.
Transportal ion: Car pools or pub–
líe transportation can cut car costs.
Medica! ca re: A good diet, exer–
cise, and proper da ily care of one 's
teeth are cheap subs ti tutes for ex–
pensive med ica! or den tal bilis.
The substitution rule takes the
form of a general question one can
ask onese lf in most economic trans–
actions: "Can I get the same thiog
cheaper elsewhere? Can 1 get some–
th ing else fo r less money wh ich will
do the same job?"
0
Prioritize Options
Every family's budget consists of
vary ing proportions of the same
th i ngs: housing , foo d, trans–
portalion, recreation, clolhi ng, med–
ica!. a nd grooming expenses. Where
our own individuality comes in is
the "mix" or proport ion of ou r
money which we allocate to these
various areas. Specifically, we ough t
lo know wha t we' ll give up firs l
when the budgel gets tight.
One should ask oneself, "Wha t
am I willing to give up in order to
keep what 1 wan t? Buy a sma ller
house so
l
can keep my car? Eat
beans instead of meat so
1
can pay
the rent? Orive a sma ll subcompacl
so l can run the air condilioning?"
Tbese are questions which on1y
we as individuals can answer. How
much is living in an a ir condilioned
house worth? Enough to give up a
(Continued on page 41)
The
PLAIN TRUTH December 1976