Today’s economy has been a wakeup call. The consequences of unemployment, rising prices, rampant credit card debt and stress seem insurmountable.
What could we have done in the past that would have prepared and protected us?
Going back: We were told it was ‘the American Way’ to buy whatever we wanted, whether we had the money or not. We did. We got into debt and still bought more. Now we see that spending philosophy has not worked for us. We need to begin a ‘new American Way’, one that will get us out of debt and begin saving money.
Where we used to have fun spending every dollar before the next paycheck and then some, now we have fun seeing how much we can have leftover to save before the next paycheck.
The first thing we need to do is live, not within our means, but below our means. Living on the cheap not only can be fun, but stimulating. Make it a daily routine, like living in survival mode. Then think of new ways to save, have family contests. The prizes are seeing savings grow and having financial stability!
Some things we can do to boost savings:
· Eat healthy and exercise, therefore, staying healthier and cutting back on medical bills.
· In reality mode, think if the upcoming purchase is a want or a need.
· Think of ways to do it cheaper or free.
· Before buying anything, think of upcoming big expenses.
· Develop a new positive attitude that will make your will to save stronger than your will to spend.
· Opt to get an extra job to boost savings, increase 401K’s, or to save for college or a dream vacation.
Where we used to go into savings for a myriad of reasons, now we don’t need to. We have enough in the checking account to pay for emergencies, all our bills and have money to save.
We stay in survival mode until we save an eight-month salary nest egg. Afterwards, we still need to be diligent every day. It all depends on how secure we wish to be, as to how much we relax our spending habits. If we continue to save in survival mode, there will be funds to replace a vehicle or a freezer, buy a travel trailer or pay for a root canal and crown, with cash, thereby, not paying interest. It’s up to each person to decide what is more important. Those who save more will have a more secure future.
So, the ‘new American Way’ will consist of spending more prudently and buying less. Businesses will be presented with new challenges to offer more cost effective choices of ‘needs’ inventory versus the ‘wants’ inventory of the past. Everyone comes out a winner.
Living below our means is like buying an insurance policy against debt and financial disaster.
Judy Guralchuk, author of A Life Preserver in a Sea of Debt, available at Border’s, Bad Rock Book Store, Sliter’s Hardware, amazon, and Barnes & noble
Sunday, April 11, 2010
FORMULA FOR CHANGE
How are we to determine if we can afford something extra this month? Saving money for an eight-month nest egg and paying down credit card debt are our immediate goals.
First, decide how much to keep in a checking account as a back up for emergencies. Then, figure out what monthly expenses are. Next, figure out how fast you want to pay down debt. The faster it’s paid off the more is saved on interest. And then, see how much is left over to save. If there’s no room left to save, downgrade. Move into a less expensive home, get along with 1 car instead of 2 or more, reduce TV cable choices, sell what you don’t need, extend hair cuts a week, and don’t get so caught up in the moment that consequences to spending are forgotten.
There are some people who make $35,000 a year, are happy to save $1,000 a year. Then there are others in the same income group that saves $6,000 a year. And then there are those making $80,000 and are in debt up to their ears.
So, in able to sort things out, we need to, first, scale down lifestyles. My husband said to me, after he explained that his goals are to save at least 40% - 50% of our income. This was made possible because he had lived his whole life being financially astute. Of course, he said, he could very easily spend everything we make on new cars, a more expensive home, designer clothes, lavish vacations, flashy jewelry and name brand everything. But, none of these ‘things’ will give us financial security. I told him, I had left that way of living behind after he taught me another way. It only caused sleepless nights, debt, worry, stress and anxiety. Now, we are happy in our chosen lifestyle and don’t ‘need’ for anything.
So, the question being… how do we determine if we can afford an extra? It all depends on other extras that come up during the month and in the future. We are firm and have our feet staunchly set on the ground. Nothing interferes with money spending. Of course, we could feel deprived, because that’s the feeling many have if they cannot spend, as they have in the past. But now, we know better. The programming of our spending habits will longer be dictated by the credit card companies or the great American marketing machine, nor their advertisements or commercials, but will be decided by us. Nor will they be dictated by the Jones’s living across the street or our worshipping wealth over everything else. And we learn to not feel depressed but elated to know we have positive choices.
Thoreau, 1817 – 1862, stressed simplicity and said the mass of men lead lives of quiet desperation. This is still apparent today. I believe that our spending lifestyles are the current reasons we live in quiet desperation. So, the extreme change that experts tell us to make in order to prepare ourselves for a different economic future is really quite simple.
A small change in mindset attitudes will put us on the right track. Let us start to program the spending of our hard earned money to benefit us! Have fun, look for sales, don’t buy retail, compare prices, make due with what we have, buy for our needs instead of wants, and not to keep up with the Jones’s. Live below our means. Save the extra money. Ask yourself questions before spending any money. For instance, will I die if I don’t buy this?
Next week: You, the reader, decide. Send me ideas through comments.
First, decide how much to keep in a checking account as a back up for emergencies. Then, figure out what monthly expenses are. Next, figure out how fast you want to pay down debt. The faster it’s paid off the more is saved on interest. And then, see how much is left over to save. If there’s no room left to save, downgrade. Move into a less expensive home, get along with 1 car instead of 2 or more, reduce TV cable choices, sell what you don’t need, extend hair cuts a week, and don’t get so caught up in the moment that consequences to spending are forgotten.
There are some people who make $35,000 a year, are happy to save $1,000 a year. Then there are others in the same income group that saves $6,000 a year. And then there are those making $80,000 and are in debt up to their ears.
So, in able to sort things out, we need to, first, scale down lifestyles. My husband said to me, after he explained that his goals are to save at least 40% - 50% of our income. This was made possible because he had lived his whole life being financially astute. Of course, he said, he could very easily spend everything we make on new cars, a more expensive home, designer clothes, lavish vacations, flashy jewelry and name brand everything. But, none of these ‘things’ will give us financial security. I told him, I had left that way of living behind after he taught me another way. It only caused sleepless nights, debt, worry, stress and anxiety. Now, we are happy in our chosen lifestyle and don’t ‘need’ for anything.
So, the question being… how do we determine if we can afford an extra? It all depends on other extras that come up during the month and in the future. We are firm and have our feet staunchly set on the ground. Nothing interferes with money spending. Of course, we could feel deprived, because that’s the feeling many have if they cannot spend, as they have in the past. But now, we know better. The programming of our spending habits will longer be dictated by the credit card companies or the great American marketing machine, nor their advertisements or commercials, but will be decided by us. Nor will they be dictated by the Jones’s living across the street or our worshipping wealth over everything else. And we learn to not feel depressed but elated to know we have positive choices.
Thoreau, 1817 – 1862, stressed simplicity and said the mass of men lead lives of quiet desperation. This is still apparent today. I believe that our spending lifestyles are the current reasons we live in quiet desperation. So, the extreme change that experts tell us to make in order to prepare ourselves for a different economic future is really quite simple.
A small change in mindset attitudes will put us on the right track. Let us start to program the spending of our hard earned money to benefit us! Have fun, look for sales, don’t buy retail, compare prices, make due with what we have, buy for our needs instead of wants, and not to keep up with the Jones’s. Live below our means. Save the extra money. Ask yourself questions before spending any money. For instance, will I die if I don’t buy this?
Next week: You, the reader, decide. Send me ideas through comments.
How can I get out of debt?
Since the economic crisis has forced many people to finally acknowledge overspending, I am dedicating this blog to help people get out of debt.
What has happened to cause our debt? Through 50 years of subliminal programming the masses to buy anything regardless of their ability to pay, the stark consequences of this behavior is now staring us in the face.
Burgeoning credit card and other debts are causing millions to lose their homes and worse. We were so ingrained to spend more than we had, that savings were as low as during the Great Depression! We cared not… until the bottom fell out. And we don’t like what’s happened. So:
· #1. How do we get out of our self-imposed debt?
· #2. How can we survive while learning how to change?
· #3. How can we be as sure as we can that this will not happen to us again?
Answer to #1: Immediately go into survival mode. Make it a fun challenge. Only buy what is needed to survive: food – cut back – buy cheaper – buy only on sale. No more spending anywhere…on restaurants, clothes (if emergency go to thrift stores), gifts, yes, including Christmas, Sunday drives (gas costs money). Downsize everything: cable, satellite, make do with one vehicle, move into smaller quarters, sell a collection, sell things that haven’t been used in over 2 years. Call your credit card and other loan companies and ask them to reduce the amount owed and to lower your interest rates. Pay off loans with the higher interest rates first. STOP using credit cards! Work an extra job until debt has been paid off. And…to start us on our way to financial freedom…continue that 2nd job until you have an 8-month salary nest egg. In fact, continue saving that 2nd paycheck just to invest! Remember positive attitude adjustment, where past spending habits are replaced with a new innovative awareness of buying choices. You now are practicing transitioning to permanent financial astuteness.
Answer to #2: Keep reminding yourself you are transitioning to a new way of life that benefits you and your family. As debt goes down, and more money becomes available, do not spend it. Start living below your means across the board. Splurge a little once a month, but only after all bills are paid. Make the splurge a freebee or as inexpensive as you can, but still fun worthy. You’ve worked hard to reduce your debt, so do not go overboard and start the debt process all over again.
Answer to #3: As we transition our spending habits, we see positive tangible results. We must continue to be cognizant of our new spending power. When a financial emergency arises we know we can handle it. When we need a replacement vehicle we know we can afford it, that we can pay cash and buy a cheaper one than we can afford. The difference saved can for into a college fund or to boost a 401K.
The hardest part of transitioning is learning how to let go of the overspending magnet that had such a stronghold over our past spending patterns. Try the new way…once. Remind yourself it will benefit you. The next time you want to spend where you did in the past, try the new way again. Everytime you spend the new way means one less time you spent the old way. After a while, the new way takes over totally. Savings spring up, there will be no more financial stress and sleep will improve.
The things mentioned here to help get rid of debt can be modified according to circumstances and how quickly we want to pay off debt and begin living within our means.
What has happened to cause our debt? Through 50 years of subliminal programming the masses to buy anything regardless of their ability to pay, the stark consequences of this behavior is now staring us in the face.
Burgeoning credit card and other debts are causing millions to lose their homes and worse. We were so ingrained to spend more than we had, that savings were as low as during the Great Depression! We cared not… until the bottom fell out. And we don’t like what’s happened. So:
· #1. How do we get out of our self-imposed debt?
· #2. How can we survive while learning how to change?
· #3. How can we be as sure as we can that this will not happen to us again?
Answer to #1: Immediately go into survival mode. Make it a fun challenge. Only buy what is needed to survive: food – cut back – buy cheaper – buy only on sale. No more spending anywhere…on restaurants, clothes (if emergency go to thrift stores), gifts, yes, including Christmas, Sunday drives (gas costs money). Downsize everything: cable, satellite, make do with one vehicle, move into smaller quarters, sell a collection, sell things that haven’t been used in over 2 years. Call your credit card and other loan companies and ask them to reduce the amount owed and to lower your interest rates. Pay off loans with the higher interest rates first. STOP using credit cards! Work an extra job until debt has been paid off. And…to start us on our way to financial freedom…continue that 2nd job until you have an 8-month salary nest egg. In fact, continue saving that 2nd paycheck just to invest! Remember positive attitude adjustment, where past spending habits are replaced with a new innovative awareness of buying choices. You now are practicing transitioning to permanent financial astuteness.
Answer to #2: Keep reminding yourself you are transitioning to a new way of life that benefits you and your family. As debt goes down, and more money becomes available, do not spend it. Start living below your means across the board. Splurge a little once a month, but only after all bills are paid. Make the splurge a freebee or as inexpensive as you can, but still fun worthy. You’ve worked hard to reduce your debt, so do not go overboard and start the debt process all over again.
Answer to #3: As we transition our spending habits, we see positive tangible results. We must continue to be cognizant of our new spending power. When a financial emergency arises we know we can handle it. When we need a replacement vehicle we know we can afford it, that we can pay cash and buy a cheaper one than we can afford. The difference saved can for into a college fund or to boost a 401K.
The hardest part of transitioning is learning how to let go of the overspending magnet that had such a stronghold over our past spending patterns. Try the new way…once. Remind yourself it will benefit you. The next time you want to spend where you did in the past, try the new way again. Everytime you spend the new way means one less time you spent the old way. After a while, the new way takes over totally. Savings spring up, there will be no more financial stress and sleep will improve.
The things mentioned here to help get rid of debt can be modified according to circumstances and how quickly we want to pay off debt and begin living within our means.
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