I’m approaching my fourth (!) anniversary as a personal finance blogger. In that time, I’ve learned a lot about money. Not only about my own finances, but about financial topics in general. As a result of my involvement with the PF community, I could tell you the difference between a 401(k) and a 403(b), why universal life insurance sucks, what PMI is (and why it sucks)….even though I don’t have a 401(k) or a 403(b), any type of life insurance, nor am I a homeowner. What I’m trying to say is, I know stuff about money, most of which I learned from reading blogs (thanks guys!).
Even though I consider myself to be fairly well-versed on most financial topics, there’s still a great deal that I don’t understand about money. In no particular order, this is the stuff that still confuses me about the almighty dollar:
How people only spend $150 per month on groceries
You guys, I have really, really tried to bring down my grocery spending. I buy blocks of cheese and grate them myself to avoid paying for the convenience of pre-shredded. I use coupons. I travel from one store to another to get the best prices on the products I frequently buy. And yet, I still really struggle to only spend $250 per month on groceries. I refuse to buy crappy food just to save a few bucks, and I am sort of picky about quality, but still. Other people are, too – how do they keep their grocery spending so low?!
Why 20% down on a house is the “magic” percentage
Ok, here’s the truth: I kind of don’t understand why banks require any type of downpayment at all. If I’m spending $1,057 per month on rent (I am) and I take on a mortgage payment which equals $1,057 per month, what does it matter if I put any money down or not? If I can afford the monthly payment and choose not to pre-pay any of the principal on the house, who cares? I understand that the traditional 20% down trope is to relieve some of the risk taken on by the bank – if I put 20% down, they take on only 80% of the risk as opposed to 100%. But seriously? Why 20%? If the bank thinks I’m a risky borrower, they shouldn’t be lending me any money, whether I can put down 20% or not. Or am I misunderstanding something?
I suppose I could Google it, but I have no fucking clue what an annuity is.
What do you still not understand about money?