As the economic decline slides further into uncertainty, we have to take a hard look at our own familial finances and begin to ask some serious questions. It’s time to take off those rose-colored glasses.
First, we all need to understand what we, as individuals, can and cannot control.
We can control how much we earn
If you don’t make enough money, you can moonlight at another job, change jobs, move, go to school, or change careers. You can turn your hobby into a second job. You can sell stuff on EBay. You can house sit or pet sit. You can have a yard sale. You can mow the neighbor’s yard, clean gutters or clean houses. Just because the economy is tight, don’t think there isn’t money to be made. People still need things, just find the need and fill it.
We can control our expenses
While this may seem impossible to some, it can certainly be done. There are many ways to control expenses. You can draw up and maintain a budget. You can spend less on items that you don’t really need. You can cut coupons or turn the air conditioner off. You can carpool or walk more often. You can brown bag your lunch and buy a thermos for that cup of coffee you just have to have at midday. The Internet is loaded with ideas on how to control spending.
We can control our debt load
Debt is different than expenses. Expenses are something you have to have, like food, rent/mortgage, gas, clothes, insurance or utilities. Debt is something you want. For instance, let’s say you need a car. So you go out and buy a nice car that you have to pay on for the next five years. That’s debt. You need a car, so you go out and buy a beater car and drive it for three years while you save up to buy the nice car. That’s smart. You can insert the word couch or house or whatever you want in the above instance and it still works the same. You might have to save longer for higher ticket items, but the payoff is greater in the amount of interest payments you save. See how you can control your debt load?
Debt is one of the reasons the economy is having the problems it’s having today. Too many people wanted too much. They knew they couldn’t afford the debt. The lenders knew they couldn’t afford the debt. Both sides gambled and lost. Let’s learn a lesson from them.
We cannot control interest rates or what the stock market will do
We can wait for interest rates to change and not panic when our stocks go up and down. We cannot control the price of milk or gasoline. We can shop around for the best prices. We cannot control the weather. Well duh! We can carry an umbrella in our car. We cannot control the housing market or the banking system. We can control where we buy a house, when we sell a house or what bank we use.
We need to be responsible
Plain and simple. No one makes you spend money. No one makes you go into debt. These are personal choices. Credit card companies can make it very enticing to spend money you don’t have. It’s natural to want. It’s normal to want nice things. It’s acceptable in today’s society to go into debt. Is this the dream we want to leave to our children?
According to USA TODAY only 45% of Americans believe that their children will live better than they do. What does this say about the vision we once had of making a better world for our children?
If we begin to accept our personal financial responsibilities and stop the debt cycle, I believe we can make a better world. But it means that we will all have to stop living beyond our means. We will have to start saving for what we want. We may have to work harder and longer but the payoff is tremendous.
Image courtesy of Linus lights