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.