Well, I won't argue Dru on principal, because the logic is sound. The numbers aren't entirely accurate, because in this case they don't have $20k up front. So if you calculate using the payments over 60 months instead, it'll equal a somewhat lesser amount. Also, rates of return are assumed as constant, allowing compounding to happen. This is unrealistic if you are investing in the stock market. Math != Economics

My point was that if you deprive yourself too much, you will deny yourself the opportunity to actually enjoy your wealth. On the flipside, if you spend beyond your means, you rob yourself of a financial future. You can have both, but it takes a special strategy to make it work.

Our goal should be to live within our wealth. It's all about balance.

Just like dieting, if you operate under a strict budget to keep your savings high and spending low, you need to reward yourself every so often or you won't be able to make it work. Retirement, college education funding, and other long-term goals are too far off for people to focus on them. In other words, the rewards are too far off to hold meaning for many, many years.

*shrug*

Chris

Mark, you make me laugh that you would sell your (wife's) car. I know it is easier when the sacrifices are not ours alone to bear.

Chris makes some excellent points. People will do what they will do, until they are faced with reality and must deal with it head on. I never hear anyone complain about their brand new credit card, the complaining comes when it is maxed out and the payments are due.

My point was that if we plan a strategy, and follow it, we can have it now, and later. Sometimes it takes a bit of belt tightening to get the ball rolling, but once we are on the right side of the interest equation there is nothing more powerful in the way it can affect our financial future.

So when is the right time to get started? Today. You will never have more time for compounding interest than you do today. Each day postponed, is time and money lost forever. If you are 18, or 20, and don't have a family to support, if you are living at home still with mom and dad and they cover most of your expenses, why not realize the opportunity and capitalize on it.

For most of us, we find there are many things (wants) that soon become those needs Chris mentioned. And in a Utopian world, all would be well and the markets would grow and life would be perfect. But to get a dose of reality, look at the number of Boomer's who say they have less than needed to retire. Many plan to work an additional 10 years, and some say they will always have to supplement their income in some way. (Thank Heaven for WalMart.)

With a growing concern about the Social Security system, decreasing numbers of workers to support a growing number of retirees, it is wise to have a great focus on becoming self reliant when it comes to our futures.

Look at the industry that is emerging around the older generation. "Do you have an annuity or structured payment settlement from insurance? We can get you your money now." "Are you 65 or older and struggling to pay your bills? Consider a reverse mortgage and get the cash you need today." These are just two examples of people finding their needs (or wants) exceeding their current ability to finance those needs. But it comes at a high cost. You better believe these guys take a healthy cut of your dollars. And that is for the lucky ones with some assets to tap into.

What about those who failed to acquire long term or permanent assets? What happens to those who envision their new car or boat as an "investment"? Living only for today is a denial of the inevitable. As Chris points out, having a balance is more than a good idea, it is essential. Statistically we are told that less than 10% will retire wealthy. The vast majority will have a home as their single greatest asset.

Although many people look at a home as a great savings bank, the reality is, property values are a good measure of true inflation rates. But the good news is, at least it keeps up with inflation, unlike most "insured" savings accounts. The bad news is, your money can be locked up when you need access to it the most. Having investments growing over long periods of time has historically been the best way to out pace inflation and prepare for the days when you cannot, or do not want to work.

The scenario I gave is certainly open to debate over the numbers, but then so is any investment scenario. The idea is, a small sacrifice now, will pay great dividends later. And a continuous habit of investing will give you the greatest chance of remaining in control of your financial future.