October 15/02

Indentured for Life
by Marcel Chartier

Ok this is a heavy title. But ... sometimes heavy is a bit sobering and that can be good. If you are a working person or a small business owner, you are working to live. If you have enough money to make enough money to live on you don't have to work, especially if you don't want to. Most of us will have to work until we have enough money to live off, be that investments, pensions, profits, rental income or whatever. The key words here are HAVE TO WORK.

And, it usually takes us a lifetime to achieve that.

I think that a thousand years from now students of history will be reading about us and reacting just as we may have reacted when we read of serfs and fiefdoms of the middle ages. Serfs pledged their allegiance to local noblemen and fought for them and payed taxes to them in return for some level of protection. As most people had a life span of 45 years or so they died in servitude, indentured for life.

We, in our "modern age" work more years then they lived. We work for companies, governments or ourselves (small business), and need to continue working until we don't have to anymore. In most cases this is late in our lives - at 65 or if we are able, at 55. According to many, some of our working lives could extend into our 70's if we are not prepared - seems a lot like serfdom to me.

Why do I even go there? Well for me, it helps me to think about why I work, why I save, why I invest. It also helps me think about overall financial planning. The goal for me is to be free of HAVING to work ( not that I would never work, but it would be nice to choose not only what but when to work and how much). I also want enough money to play with too. No sense in having time but no money to enjoy it.

I don't want to owe anything. The more I owe, the more I HAVE to work. That means turning blind eye to the entire industry that would have me work till I'm 75 or dead to pay off debt ... to "enjoy the good life" by the way. Of what money I do make, I need to make good decisions and ensure I invest a sizeable portion on a regular basis to eventually have enough that will make enough to live on. At that point I would have bought my freedom from HAVING to work.

Back to our future students ....

I think, future students would say, why didn't these people just save money as soon as they could to raise enough to free themselves as soon as possible? Why wouldn't the first priority be to build the pile of money to a large enough amount to sustain itself?

Well dear students, people have families, children, mortgages and a whole industry designed to give easy credit to indebt every working person for the rest of their life.

People enslave themselves by getting now and paying later.(Unless you are born with enough of a moneypile to begin with!)

Developing that higher personal net worth also means keeping most of what you make, that means watching spending, or alternately, making more money (or both).

All of the choices require you defer either items purchased or time not working. This is hard. That's why its easier to buy now and pay later. The alternate choice is pay now (save or invest now) and buy later ( when you have excess cash) - not popular. The nature of our society, and some would say the purpose of our western economy, is set up to make it very easy for you and I to be "indentured for life" (ie. credit cards) while enjoying our many consumer items now - to the detriment of our financial future.