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In my last post, I mentioned that my grandfather, whom I always called Grandpa, was my first Finance Superhero. When making financial decisions, I often ask myself, “What would Grandpa do?” It seems fitting to highlight several of the lessons he taught me, both in childhood and adulthood.
Don’t Pay Asking Price
Growing up in a dual-income household, I spent much of my summer under the watchful eye of family, including Grandpa and Grandma. Grandpa and I spent many hours working on my baseball fundamentals. One sunny summer morning, we ventured out to a local flea market, and while Grandpa searched high and low for miscellaneous treasures, I had my sights set on baseball gear. Upon finding a wooden baseball bat for sale, Grandpa and I had the following conversation:
“Grandpa, I want that bat! It’s only $5.”
“We’ll get you that bat, but not for $5. We will get it for $2, or that can guy can keep it.”
“But. . .”
“Now, take these two dollar bills and tell the man you want to buy that bat. Show him the money, and tell him that it’s all you’ve got. I’ll be right over here.”
Moments later, I was the proud new owner of a beautiful antique baseball bat. More importantly, I had just learned lasting lessons in communication, negotiation, and the power of willingness to walk away.
“Don’t let anyone buffalo you”
Grandpa used this phrase often, and ironically, it bewildered me for quite some time. I came to understand that Grandpa was reminding me of the simple nature of money. To him, those who aimed for sophistication or complexity in the management of their finances were “full of prunes.” Grandpa knew that stupidity could not be outearned, even with the most superior work ethic. The importance of consistent savings over time, spending only a portion of earned income, and seeking the best value in purchases were part of Grandpa’s plan to become and remain financially independent.
“Watch your pennies”
Most people in Grandpa’s generation understood the power of cash. Grandpa thoughtfully planned for a purchase, big or small, by ensuring he saved the money to pay for it in advance. Buying on credit was nonsense to Grandpa. Furthermore, Grandpa always knew the balances of his cash, checking, savings, and investment accounts, down to the dollar (or penny!).
While other retirees spent mornings on the golf course and afternoons poolside and sipping an Arnold Palmer, Grandpa enjoyed hobbies that kept him busy, sharp, and boosted his income. In his youth, Grandpa built his first home from the ground up; in retirement, he used these skills to build and rehabilitate small and mid-size utility trailers and sell them for large profit. It was not uncommon for Grandpa to unexpectedly come home with a newly-purchased, dilapidated trailer, even when he had two or three other projects in progress. He could not bear the prospect of an opportunity gone to waste. Grandpa was focused on constant maximization.
Master of the Flip
Before HGTV taught America how to flip houses, Grandpa was the Master of the Flip. He enjoyed purchasing vehicles, driving them for a short time, building some sweat equity, and reselling the vehicle for a profit. While I previously explained his work with utility trailers, perhaps Grandpa’s wisest Superhero feat lay in his understanding of marketing and supply and demand. Grandpa often purchased trailers in the rural countryside and resold them in the city for significant profit. It was not uncommon for him to purchase a fine trailer for $250 (after flashing cash and talking down the seller, of course), drive it to a prime location in our town, post a bright orange FOR SALE sign, and sell the trailer that same day for $500.
Outside of our family, few people knew that Grandpa was wealthy. He kept his Superhero identity a secret. He and Grandma lived in a modest, meticulously maintained ranch home. (Grandpa often boasted about his choice to move into a neighborhood with a low property tax rate.) He drove unassuming vehicles purchased with cash after someone else had taken the depreciation hit for 2-3 years. Grandpa and Grandma maintained exemplary landscaping which would not have been out of place on the cover of Better Homes and Gardens, and they did the work themselves. Paying someone to do what they could do themselves was simply out of the question.
Your Finance Superhero
Who was your first Finance Superhero? Who taught you the value of a dollar? What are some of the biggest financial lessons you have learned? Tell us in the comments section!