Tag Archives: Warren Buffett

warren buffett’s grandfather on having savings for a rainy day

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“…the mental satisfaction of having $1000.00 (in 1939) laid away where you can put your hands on it, is worth more than what interest it might bring, especially if you have the investment in something that you could not realize on quickly.”

Warren Buffett’s grandfather Ernest Buffett writes a letter in 1939 on the importance of what Scott Pape calls Mojo Money, some money tucked away for just in case.

I can’t stress how important this is, or how much it changes your attitude to life. I have quit jobs I wouldn’t have without my mojo money. It allows you to think rationally in non-rational situations.

warren buffett on home ownership

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“Home ownership makes sense for most Americans, particularly at today’s lower prices and bargain interest rates. All things considered, the third best investment I ever made was the purchase of my home, though I would have made far more money had I instead rented and used the purchase money to buy stocks. (The two best investments were wedding rings.) For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories with more to come.

But a house can be a nightmare if the buyer’s eyes are bigger than his wallet and if a lender – often protected by a government guarantee – facilitates his fantasy. Our country’s social goal should not be to put families into the house of their dreams, but rather to put them into a house they can afford.”

~ Warren E Buffett – the world’s third richest person, even after giving billions to charity, applies some common sense thinking to the dream of home ownership in his entertaining yearly letter to his investors.

In Australia, we still have hugely overpriced houses, and banks willing to facilitate the common fantasy of owning a hugely expensive dream home with lifelong debt. It makes even less financial sense to own an overpriced home in Australia.

bitter and negative

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I got really pissed off this afternoon when the RBA cut the official Australian interest rate by a full 1 percent. It means that K and I won’t be able to save as fast anymore because our savings won’t compound as much, which is really annoying.

After work it was still bothering me when I decided that I should stop worrying about it at all, and I should stop being so negative. I’m really passionate about housing (un)affordability, but I think lately I’ve been coming across bitter and negative, especially towards some speculative property investors who I work with.

So I decided to do something nice, but lo-fi, tonight, to take my mind off it. We went to Kangaroo Point cliffs with a picnic and sat and watched the river and the city. We listened to Radiohead’s OK Computer which I, remarkably, had lost over the years.

At home we then watched YouTube film clips of heaps of the songs we remember from growing up. My favourite was ‘She don’t use Jelly‘ by The Flaming Lips.

In bed I started to read my Big Issue from yesterday. Straight away I saw a Hearsay quote I loved:

“You can’t keep money around for ever. It’s like saving sex for your old age.” ~ Warren Buffett

Then I read Editor Alan Attwood report that The Big Issue street sales are suffering because of the current economical climate:

“The general economic malaise has made it harder than ever to sell magazines on the street.” ~ Alan Attwood Editor, TBI 314

I couldn’t sleep. I decided to get up and re-read Instructions for Life. I then thought about writing this blog post.

But maybe dropping interest rates today wasn’t such a bad thing. It might finally free up some cash for people to actually buy a copy of The Big Issue off Greg, or one of the other street vendors. Or maybe they’ll just use the freed cash to buy some more shit for their MacMansions, or worse, to feed those hungry hungry pokies. But I’m just being bitter and negative again, aren’t I?