Best financial lessons from Dad

As we get ready to celebrate Father’s Day 2016 in my household, I reflect back to some of the best financial lessons I learned from my Dad.

Dad built a small trucking company which provided a very comfortable lifestyle for his family.  We vacationed at the shore every summer and even went to Disney and Williamsburg, Virginia.  Both my sister and I went to private high schools and graduated college with a lot less debt than most of our friends.

Dad is a conservative investor and pretty risk averse.  He passed on some great opportunities that put him out of his comfort zone but in hindsight would have made him pretty wealthy if he acted on them.

He invested in land and built a small farm in rural New Jersey when I was 12 years old.  He eventually sold it for about 5x original price affording him an opportunity to purchase a beach house on the Jersey Shore.

He was not one to follow the shiny objects and regularly keeps vehicles for 10 years or more.  He wears the same clothes most days and his wardrobe could probably fit in a large suitcase.

He is generous to his loved ones sparing no expense on his wife and family.  He would struggle with the decision to spend $100 on a pair of quality boots for himself but insists on paying for meals whenever we meet.

Of all of the actions and words that have stuck with me regarding finance is the concept of “OPM” or other people’s money.  Once Dad was confident that he raised kids with enough financial common sense to understand how to properly manage debt, he taught us a lot about using debt in a responsible and effective way.   I read a lot of financial blogs that seem to overstate the debt free lifestyle, but I wholeheartedly disagree.  Debt is a multiplier if used correctly and can provide flexibility and insurance when used responsibly.

I currently have a 10 year interest free loan for an heating, ventilation, air conditioning system (HVAC) replacement via an energy conservation program sponsored by the state of New Jersey.  The plan included a $5000 grant and $10000 financed at 0% for 10 years. I told my wife that there are very few sure things in life but a 0% loan for 10 years is one of them.  Rather than pay $15000 all at once I pay $83 per month.  Let’s use a very conservative 3% rate of return on $15000 and I earn $2400 on this deal by financing. PLUS – I have $15000 cash in hand AND a new HVAC system for the cost of $83 per month.

Debt is not a 4 letter word and all debt is not created equal.  When debt is used strategically and carefully it can help you meet financial goals.   What is the best lesson your father ever taught you?

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