The Canadian Record (Canadian, Tex.), Vol. 98, No. 42, Ed. 1 Thursday, October 20, 1988 Page: 2 of 36
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7fit Canadian RECORD
CANADIAN HEMPHILL CO.. TEXAS
THURSDAY 20 OCTOBER 1988
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BY BEN EZZELL
A Dallas financial planning advisor, Mark Schupbach, has some
interesting theories about how to accumulate a million dollars for
your retirement age by making wise choices about how you spend
your money along the way. Schupbach’s theories were explored in a
feature by Scott Bums in the San Antonio Express.
“Peace of mind,’’ the Dallas planner says, “isn’t a function of how
much you make. It is a matter of how much you spend.”
Our most important decisions, he believes, aren’t our investment
decisions, they are our “lifestyle” decisions...what we do with the
money we earn.
Schupbach’s example: the difference between a luxury car, he
says, and a car that is just ‘nice’...say a Taurus or a Honda...is about
$1 million. The difference between a Mercedes, or a Cadillac, or a
luxury car of your choice and the economy alternative is about
$10,000. Invest the difference each time you make that economy
decision and it will accumulate a large sum by the time you're 65.
Financing a $25,000 car for four years will cost $b34 a month, it costs
$253 a month less to finance the $15,000 car. If you save the
difference for 35 years (from age 30 to 65) and it earns an average of
eight percent, it will accumulate to $580,352.
If you then invest the $580,000 to provide monthly payments so that
the total is exhausted by the time you reach age 90, you can collect
$4,479 a month...a total income over the 25 years of $1,343,775
through the magic of compound interest. If you live that long.
The rainy day fund, et al
TPHREE AMENDMENTS to the Texas Consti-
1 will be on the tag end of the big General
Election ballot which voters will mark on
November 8, and these, for a change, may have
some real merit. They deserve careful considera-
tion, at any rate.
Proposition One proposes a Constitutionial
Amendment which would dedicate, for the
purposes of construction, right-of-way acquisition,
and policing public roadways, all money received
by the state from the federal government as
reimbursement for state money spend on roads.
The amendment is intended to remove all doubt
about how the federal rebates of road funds are to
be spent. It seems straight-forward and clear
enough to slap the hand of the dumbest bureaucrat
who might try to divert these funds to other
purposes.
Proposition No. 2 is the “rainy day fund”
3he (Canadian
RECORD
USPS 087-960
Box 898, Canadian (Hemphill) Texas 79014
BEN EZZELL Editor
NANCY EZZELL.................... Editor
LAURIE BROWN Advertising Manager
Entered as second class matter December 20,
1945 at the Post Office at Canadian, Texas, under
the act of March 3,1879. Published each Thursday
afternoon at Canadian, Texas, by Ben R. and Nan-
cy M. Ezzell. POSTMASTER: Send address
changes to THE CANADIAN RECORD, Box 898,
Canadian, TX 79014.
SUBSCRIPTION RATES:
$20/Year in Hemphill and adjoining counties
$25/Year elsewhere
proposal which was dropped from the ballot last
year for fear that it might get lost in the shuffle
among the twenty-five other amendment proposals
on that ballot.
It would create what is formally labelled “an
economic stabilization fund” in the State Treasury
to be used, when needed, to offset unforeseen
shortfalls in revenue. If it is approved, the State
Treasurer will start stashing away a percentage of
extra revenues, when and if they occur, for use in
future budget crunches.
The annual saving would be half of any state
surplus funds and 75 percent of oil and gas taxes
collected over a set amount. The fund would be
allowed to build until it reaches ten percent of
general revenues collected, a process that could
take years. Then it could be used to make up
budget deficits, or for other purposes subject to
approval by 60 percent majorities in both chambers
of the Legislature.
The proposition, which seems sensible, is
supported by the governor, the lieutenant govern-
or, the Speaker of the House and the Comptroller.
Texas voters would be encouraged to go along with
that rare accord.
Proposition No. 3 would create a growth fund
allowing the permanent university fund, the
permanent school fund, and public employee
retirement funds (the Teacher Retirement System
and Employees Retirement System) to voluntarily
invest up to one percent of their assets in the fund,
providing that all investments would be required to
be directly related to the creation, retention, or
expansion of employment opportunity and growth
in Texas.
Other states allow their state retirement funds to
be invested in venture capital. Freeing part of the
Permanent School Funds for investment...up to
one percent of their assets...would put a lot of
money to work in the state...and with the
safeguards built in, should be a good use of the
money for the general good.
All three of the proposals should get careful
consideration from Texas voters before the 8th of
November. They have merit.
Your decision to buy the cheaper cars, instead of the luxury
models, can therefore earn you a million dollars, more or less.
Schupbach applies the formula to a lot of other “optional” purchases
which you can make during your earning years. “We reach our goals
by deciding how we live, not how we invest,” he says.
Without doubting the Schupbach math, some of us may
nevertheless detect a certain fallacy in the formula. It goes back to the
matter of original options. A lot of young folks at age 30 can’t ei\joy
the option of choosing between the Cadillac and the Honda. Some
may even have to opt for a $5,000 used car instead of a $15,000
economy model in order to save the $10,000...and having made that
sacrificial decision, find that they can’t invest the $10,000 they saved
because they didn’t have it to start with.
That louses up the reckoning in the beginning for poor folks.
Schupbach says there are people “going broke” at ail levels of
income, and he’s certainly right. The country is full of people who
can’t make ends meet on incomes of $50,000, $100,000, or $250,000,
and these folks might profit from investment counselling. But what
about folks, and there are a lot of them, who can’t make ends meet on
an income of $10,000 to $15,000. Their investment opportunities are
as limited as their savings...both nonexistent.
There’s another economic theory at work here: The ancient truism
that “It takes money to make money.” And there’s a corollary , too:
“It’s tough to invest on an empty stomach.”
Economic planners and financial advisors certainly have their uses,
and 1 don’t mean to put them down, but their theories don’t fit a lot of
pocketbooks. There is a rock-bottom economic level in this country at
which spending choices do not exist, and where the magic of
compound interest doesn't work.
The name of that game is “Poverty” and there’s a lot of it around
in America today. The Schupbach theory that “our spending
represents our choices, not our necessities” doesn’t really apply at
that economic level.
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Ezzell, Ben & Ezzell, Nancy. The Canadian Record (Canadian, Tex.), Vol. 98, No. 42, Ed. 1 Thursday, October 20, 1988, newspaper, October 20, 1988; Canadian, Texas. (https://texashistory.unt.edu/ark:/67531/metapth520675/m1/2/: accessed July 11, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu.; crediting Hemphill County Library.