Investing? Squadering? Is there a difference?


Can anybody help me understand the difference between "investing" money and "squandering" it?

I don't need help with the notion of "spending" it. Spending, I understand I have money in my pocket, or maybe in the bank. I see something I want. I dicker with the seller, I put up my cash,and I buy what I want. That's spending. I'm pretty good at that. (Maybe too good for my own good. )

It's when I don't have the money in my pocket or in the bank that I start to misunderstand things.

People tell me that borrowing money for a decent car, so I can get back and forth to work, is really an "investment". It's an investment in keeping my job, not being late, appearing reliable, all that.

On the other hand if I bought a Hummer or a Lamborghini -- and borrowed several times the value of my annual pay for that car -- well, that would be, I'm told, squandering money.

But I'm funding the process of getting a car. Squander, invest , what's the difference?

Some people tell me that college loans are an investment. Pay the fee and get the degree. Cool. And if you have to borrow the money to pay the fee, first, well, that's a smart thing to do.

On the other hand, if I borrow money for four-years of coursework in 19th century French Poetry, the degree I get at the end of the period might not help me much when it comes to repaying the loan. Does that mean the money was "squandered"?

I'm funding an education. Investing, squandering, what's the difference?

Isn't the difference really about what results I get after the end of the process? If the money spent gets me long lasting good results -- a good job, more money in my pocket -- then I guess what I borrowed for was an "investment". But if I borrow money -- and pay interest on the loan -- for anything that does NOT have long-lasting good results, then I have a problem.

I know people like that. They put the monthly payments for the cell phone, the DSL line, the cable TV, dinner at Chili's a few nights per week, electric bills, all that -- all onto their credit cards. Sometimes they get into credit problems -- so they scramble to scrape up the payments, take out a home-equity or bill consolidation loan, and get their credit scores cleaned up. So they can then -- get more credit. Raise the limits on their cards so they can do dinner at Saltgrass instead of Chili's, you know.

I don't think that qualilfies as an "investment".

In 2003 the Lancaster school had months left at the end of the money and issued Bond Series 2003-B borrowing $2.5 million over FIVE YEARS to get them thru. In 2004 they issued another bond, for nearly another $3 miillion, because once again they'd had months of expense left at the end of the year's worth of money. And in August of 2005 and in June of 2006 and AGAIN last month, in August of 2006, the Lancaster school district STILL had month left after they'd run out of money and had to borrow AGAIN, to tide them over until the state bails them out.

God help us all if the state decides to delay payment and do the kind of audit on Lancaster they did on Wilmer Hutchins.

This year the district has moved some payroll expenses to the 2004 capital improvement bonds budget. Elvin Lotten is working full time on bond related issues -- so , as the expression around here goes, There is Nothing Illegal About This. But it's like using your home equity loan to pay the kid who mows your lawn ...

So, did you know, that according to our Red Whiddon, the solution to lend the district MORE money?

Well, as we say around here, There Is No Law Against Stupid.