During the Great Recession at the end of 2008, there was a group of people who didn't even know that it was happening. The Amish pride themselves on many things, but their conservative financial approach is something that we could all learn from.
NPR did a story on them about 4 years ago and how they were thriving even in the then tumultuous times. To give you an idea of how well they're doing. Back then there was a local bank that almost exclusively did business with the Amish (95% to be exact). They had deposits of $100 million for the 60 families that they serviced. In case you're really bad at math that means that on average every family in that community has well over $1 million in cash. This is not counting the real estate and live stock that they own. This bank has never lost money on an Amish loan.
So how did the Amish get so rich? First of all, they are legendary when it comes to thrift. There is a common saying among them, "Use it up, wear it out, make do or do without." Being extremely cheap is necessary in their culture for 2 reasons. They are traditionally farmers, so one bad year of weather can destroy any means of income, not to mention multiple bad years. Secondly, they only borrow money to buy real estate, so they have no other means of money.
They also start working at very young ages and slowly accumulate a nice nest egg by the time they reach their early 20's. It's common for them to have rental properties by the time they're 20. They don't invest in securities, so they're basically limited to live stock, real estate, and cash. It appears to be working.
So how does all of this relate to eating marshmallows from the previous post? The temptations of modern society are not prevalent in their culture. There are no car loans, credit cards, student loans, boat loans or business loans. If you don't have the money, you don't buy it (unless it's real estate). How do you not eat the marshmallow? Remove it all together...
One further note. The Amish are conservative in EVERYTHING, especially their finances! Some of you may have heard of Dave Ramsey. His philosophy on debt makes the Amish look radical. He believes that you should only borrow money once in your life and that's for your first home. 25% down with a 15 year fixed interest rate. I think this is also a bit extreme, but it has served him and others well.
NPR did a story on them about 4 years ago and how they were thriving even in the then tumultuous times. To give you an idea of how well they're doing. Back then there was a local bank that almost exclusively did business with the Amish (95% to be exact). They had deposits of $100 million for the 60 families that they serviced. In case you're really bad at math that means that on average every family in that community has well over $1 million in cash. This is not counting the real estate and live stock that they own. This bank has never lost money on an Amish loan.
So how did the Amish get so rich? First of all, they are legendary when it comes to thrift. There is a common saying among them, "Use it up, wear it out, make do or do without." Being extremely cheap is necessary in their culture for 2 reasons. They are traditionally farmers, so one bad year of weather can destroy any means of income, not to mention multiple bad years. Secondly, they only borrow money to buy real estate, so they have no other means of money.
They also start working at very young ages and slowly accumulate a nice nest egg by the time they reach their early 20's. It's common for them to have rental properties by the time they're 20. They don't invest in securities, so they're basically limited to live stock, real estate, and cash. It appears to be working.
So how does all of this relate to eating marshmallows from the previous post? The temptations of modern society are not prevalent in their culture. There are no car loans, credit cards, student loans, boat loans or business loans. If you don't have the money, you don't buy it (unless it's real estate). How do you not eat the marshmallow? Remove it all together...
One further note. The Amish are conservative in EVERYTHING, especially their finances! Some of you may have heard of Dave Ramsey. His philosophy on debt makes the Amish look radical. He believes that you should only borrow money once in your life and that's for your first home. 25% down with a 15 year fixed interest rate. I think this is also a bit extreme, but it has served him and others well.
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