The next installment of best money tips ever comes from “Papa” John Schnatter, Founder and CEO of Papa John’s Pizza. He’s got some great, simple advice (although I don’t completely agree with his grandfather). Here’s the detail:
Best advice I can give: Live below your means and be frugal. The economy is going to get worse before it gets better. And folks who have savings have the best chance of getting through this.
Best advice I ever got: When I was a boy, my grandfather and I would go to the hardware store, and he would charge things. I’d say, “Papa, don’t you have any money?” And he would say, “I have money, but my credit is good.” I didn’t understand it then, but he wasn’t teaching me that it was good to borrow. Rather, if you borrow money, pay it back promptly so you can maintain good credit. That advice is more applicable now than ever.
In Washington they’re spending money like drunken sailors, but that means they have to print money like drunken sailors. They’re doing the opposite of what my Papa would have done.
My take:
I love that this guy gave such simple advice. Save and be frugal. You’ve heard it here before. It’s pretty much that simple. And it’s not just for the regular folk either. I’m not one of those “easy for him to say” guys. This man worked his way up to worth hundreds of millions of dollars (or more) depending on where you get your info. And that’s the “best” advice he can give?!?! Yep. He didn’t say anything about leverage. He didn’t say anything about complicated investment strategies. Just save and be frugal and you’ll be fine. Great stuff.
I don’t necessarily agree with the advice he got though, but I don’t feel very strongly either way. I get the value of a credit score in the “real world” but that advice, if misunderstood, could be dangerous. Pay careful attention though and he is not saying to borrow. He is saying if you borrow to pay it back right away. I have a loose rule that “I don’t pay interest on things I buy or do.”
There are two exceptions to that: student loans and real estate. Aside from those I have never paid interest in my life. Believe it. Never. Crazy, huh?
Wait, that might not actually be true now that I think of it. I think there are two exceptions.
First, the way they structure my gym membership I think they put some sort of fake interest rate in it because you have the option of paying for three years up front. That may have been “interest” technically because I chose the monthly payment.
Second, when I was 21, I bought a motorcycle. It was $5,850.00. I had the cash to pay for it. But I wanted to “build up my credit” so I financed $350.00 of it. I’m not sure what the interest rate was, but I paid it off within a month. I’m sure they charged me some interest, but it was probably next to nothing.
But that’s it. I never really thought about it like that before. Not bad. Don’t worry, I’ve made plenty of mistakes in my life, financial and otherwise. But I’m 18 days from my 31st birthday and I can count the times I’ve paid interest on one hand. Go me!
Incidentally, my wife has only paid interest on real estate. So she’s got me beat. Wow. I felt great for about six seconds and then turned my head to the right. With one question I was back to Earth.
“Honey, have you ever paid interest on anything?”
“Just my mortgage.”
Good stuff.
One more side note, while “Papa” John has some great advice, don’t take his car buying advice. That’s a lot of money for a used Camaro. (I get it – he’s worth a ton and it was more of a promo for his business or a charity thing than actually spending the money on a Camaro. But still – don’t pay $250,000 for a 1971 Chevrolet Camaro Z28. Please, please don’t.)
Until next time, put your credit card down and slowly step away from the mall!:
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