Spend Less Than You Make

My Dad’s Lesson In Interest

With my Dad’s, passing, I continue to reflect on significant memories with him that helped shape my life. One of those memories involves this old, wooden, Bancroft “youth model” tennis racket shown above (with my current racket) and a good lesson in finance.

I was about 10 years old. We lived in Hillsdale MI – a small town in the southern part of the state. The high school tennis coach was offering group lessons for kids in the summer. I didn’t have a racket, but my Dad said we could get money from my savings account and buy one at the local sporting goods store.

I met my Dad at the small town JCPenney store he managed on one of the corners of the town’s courthouse square. We walked over to the Hillsdale State Savings Bank on another corner of the square. We went to withdraw $15 for the racket. That was big money to a grade-school kid in 1976!

Back then, they credited your savings account book with interest when you brought the book in for a transaction. Mine probably hadn’t been updated in a while, but the interest credited was … $15.

My Dad explained that the $15 in interest came from the bank paying me to use my money while it was in the savings account. I thought it was amazing!

I had collected that much for doing nothing!

It was a nice welcome into the world of passive income!

When we got to Gelzer’s Sporting Goods Store, I picked out this exact racket and paid for it with my investment earnings. In fact, I think the tennis racket came to a little less than $15 and I ended up with a couple extra dollars and some change in my pocket. That sure felt nice.

About a year later, I bought a JCPenney AM/FM transistor radio (with earphone!) with additional interest that had collected in the account. I don’t have that radio anymore, but I always kept the lesson of the value of interest!

What early lessons did you learn about personal finance at an early age that stick with you to this day?

Image: (c) MrFireStation.com

15 thoughts on “My Dad’s Lesson In Interest”

  1. My grandfather taught me to buy stable dividend stocks with rising dividends in companies that supply goods and services that are necessities. Reinvest when you are working and wait for checks in the mail when you retire. He retired at age 50.

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      1. The main ones I could remember an electric utility that he worked for, Duquesne Light and the local Mellon Bank. Remember he was investing when transaction costs were high and information was slim, so most people stuck close to home. His happy hunting ground was Pittsburgh.

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      3. Giving a newborn a couple shares of Dividend paying stocks would be much better than the traditional treasury bonds. Would help get them interested and see what happens during the long game.

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      4. We used to get old-fashioned US Savings Bonds from our Grandparents each year on our birthday. Too bad they didn’t send us shares of Coca-Cola or McDonald’s!

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      5. Just checked Xcel Ticker symbol XEL and it has a dividend safety rating of 50 based upon a fire that their lines start in Texas will cause a large settlement with a dividend cut. Here are the ticker symbols of some safer Electric Utilities that pay a higher dividend. I will show the ticker symbol, yield and forecasted growth rate. ES – 5.02% – 5.9%, EVRG – 4.84% – 7.1%, and right across the border in WI and IL WEC – 4.28% – 7.1%.

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      7. Here is what happened. The Camp Fire caused 85 civilian fatalities, and injured 12 civilians and five firefighters. It destroyed more than 18,000 structures. The towns of Paradise and Concow were almost completely destroyed, and Magalia and Butte Creek Canyon were also largely destroyed. By January 2019, the total damage was estimated at $16.5 billion; one-quarter of the damage, $4 billion, was not insured. Including fire suppression costs, the total cost of the fire was approximately $16.65 billion.

        This was the most expensive ‘natural’ disaster in the world during 2018, and the liability fell solely on Pacific Gas & Electric.

        I would also like to place blame on bad California governance. Bad forestry management increases the fuel load, and meeting Green Energy Mandates distract utilities from their core mission which should include not causing your customers’ homes to burn down. In Southern California, a fire burned a lot of newer homes in Malibu. The newer homes were barred from clearing their brush to meet Cal-Fire requirements by the California Coastal Commission.

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      8. Absolutely horrific mistakes. I have a buddy who’s son works for the National Forest service out there and he highlighted the poor policies around forest management to me several years before this happened. When these big wildfires hit, he wasn’t surprised at all. Arson played a role, too – didn’t it?

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  2. Sorry to hear of your father’s passing, that is a tough time. Where is the frame for the wooden tennis racket to keep it from warping? My early lesson on cash flow was 1970 or 71. I wanted a GI Joe Action Jeep which was available by mail order through Montgomery Ward. I had saved up and my mother told me that she would use their Master Charge, yes that was the name of what is now MasterCard and i wouldn’t have to pay for it until the bill arrived the next month. I also remember my father in the late 70’s tell me that he earned more on the earnings in his profit sharing plan than his salary. The firm he worked for was extremely profitable in the 50’s and 60’s building the Interstate Freeway system so there were big deposits into profit sharing. That account today funds a number of scholarships at Northeastern University.

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    1. It’s funny, I’ve never had a frame on this racket – or an old Wilson Staff Jerry Kramer that I have. They just hang on the pegboard in my garage. Never had a problem!

      I do remember when MasterCard was Master Charge. And, VISA was Bank-AmeriCard at that time.

      I think when I reached Director level (about 38 yrs old) is when my annual bonus first exceeded my base pay. I would guess I was in my 40s when passive / investment pay exceeded total pay.

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  3. As a result PCG cut its annual dividend from $2.04 to zero back 2017. It just resumed paying an annual 4 cents per share. In my opinion, California Electric Utilities are badly managed in terms of not providing their product at a fair price based upon comparison with prices in bordering states, not avoiding outages and not starting wildfires.

    Note that well managed electric utilities more than cover the 4% withdrawal rate used by many to plan their retirement income, and they have nice dividend increases to keep ahead of inflation. Buy a basket of these and you will have nice checks coming into your account every month. Really a lot easier than it was during my Grandfather’s time.

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      1. Reasonable people would agree that California Utilities are mismanaged. Yet, there are enough people who do not think the same way as us and were taught not to think for themselves, and they keep on voting for the same party.

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