My dad bought an Oldsmobile 88 before they closed the brand in 2004.  Why?  When he was a kid in the hay-day of the American muscle cars, he remembered being smoked attempting to drag race a vintage Olds 88.  While the body style had changed quite a bit and was more sedan than muscle car, his fond memories led him to buy it.  I remember as a family, we only bought American cars.

Until last year.  My mom got into an accident and totaled my first car, an Oldsmobile Cutlass Supreme(my mom was completely uninjured).  They replaced it with a Subaru.  The first non American brand my dad ever bought.

I want to replace my 8 year old Jeep.  I bought Consumer Reports annual car reviews, and researched features, reliability and price.  When I compiled a list of cars that appealed to me, not a single American car was on my list.  I’m not going to buy something for $15-$20,000 purely for ideology or patriotism.  That would not be sending the right message to the manufacturers.  Make something I want, and I’ll buy it.  It takes me too long to earn that much money to buy for reasons other than reliability.

Not a single American car was in Consumer Reports’ top ten best cars list either.  If I had a comparable American car to what I wanted, perhaps I would favor American.  But I don’t.  I can get much better made cars for less.

What happened to the highest quality in the world made in the USA?  What happened to innovation and technology developed in the USA?

As a family that was raised, fed and educated with jobs created by the American car companies, I’m deeply wounded and disappointed.  My parents bought a Subaru because that was the best car for what they wanted.  I will most likely not be buying a GM, Chrysler, or Ford either.  I’m not happy about my taxpayer dollars funding them; if they made something that I wanted, I would buy it.

I don’t fault them for failing to see the future.  I fault them for failing to be leaders creating it.

Zales claims to buy diamonds from conflict free zones, but seems to have a different ethical problem. Zales Fires Top Earning Saleswoman Because She Needs Surgery

I do not want a diamond for an engagement ring.  There is too much bad energy associated with them.  Too few retailers participate in programs verifying their diamonds came from ethical sources.

Brilliant Earth sells diamonds mined in Canada and Namibia.  However, DeBeers still owns many of these mines in Canada, as well as Africa.  They want to develop through a major protected area watershed in Canada.  As an outdoors enthusiast, I enjoy Canada’s untouched wilderness. While they will be following Canadian regulatory standards, I still choose not to buy new diamonds.

source: http://www.minesandcommunities.org/article.php?a=9094

The first thing to realize is if Smart Sally is out there right now doing this, barring any stupidity like getting entangled with a financially irresponsible boyfriend/spouse, she will always be younger, smarter and and probably richer than you. She has the advantage of time. You, Dan, can’t change the past, but you can change the now and the future. And you can lecture the whippersnappers like Sue to learn from your experience.

So congratulations, you’ve realized the error of your ways. You are going to be Smarter Dan. Download this Smarter Dan Spreadsheet. “Smartest Sally” never stops contributing every month, and increases her contributions by 5% every year until retirement. She has approximately $624,158,39 with 8% interest compounded over 40 years. (The 8% interest is a toy problem – we will discuss real world returns from index funds later.) What a nerd. <insert dripping envy here>

Dumb Dan – you blew it. You’re in the 30 something club with no real savings to speak of. The good news is you can still benefit from compound interest. You just have to put more money up front in a shorter period of time. If you start off by contributing $600 every month, then decrease your contributions every year, you can still end up near Sally’s balance at retirement. (“Decrease?! What?!” See note below.) You will have to delay buying your first home, drive a beater car, and take modest vacations. If you have a hardship year, you’ll have to sacrifice more. Yeah, $600 per month for the first year. $7200. That’s a lot of freaking money.

Sally will still be ahead of you. She will have earned more money that she didn’t have to put into her retirement funds and could invest the excess elsewhere, bought her first home with 20% down at 28, paid for her new $18,000 car in cash, and vacations in the Bahamas. If she had a hardship year, she had more money to fall back on.

I agree with Ramit’s point. If you’re a 20 something, be Smart Sally. If you’re Dumb Dan, be Smarter Dan. You’re just going to have to put in about 6 times as much upfront. It may not be possible depending on your income potential and obligations, and you’ll just have to adjust to realistic levels for you. If you missed out on your youthful compound interest years, it doesn’t mean that you can’t have a wonderful and meaningful retirement. Don’t compare your success with Sally’s. Be proud of your own accomplishments, the wisdom to recognize your past failings, and the smart decisions you’ve made moving forward.

Note: The point of this toy spreadsheet exercise is to show that even if you are starting late, it is possible for you to ‘catch up’. You just have to put a lot more upfront into it. The point remains the same – Sally benefits from compound interest with less upfront and lets time do its magic.

Read the full Review of Ramit Sethi’s Book: I Will Teach You to be Rich.

Update 3/23/2009: Corrected spreadsheet formula in C row.
Update 3/30/2009: Added link for book review.