Save All You Can
A concept many people fail to understand is that it’s not how much you make that matters. It’s how much you save. I started by saying “earn all you can.” But, it would be a shame for you to kill yourself physically working three jobs just to spend all that extra money on cars, coffee and hair cuts.
We have seen it over and over, when sports and other celebrities who make millions of dollars end up in bankruptcy. They can’t afford the lifestyle they have chosen to live.
Did they make enough money? Of course they did. Did they save enough? Obviously they did not. They may have even been cursed with the “I make enough to live this way syndrome.” If a person makes tons of money they may feel a sense of obligation or privilege to spend. Again I say, “This is the kind of mindset that has brought America to a point where so many loans have come into default causing the economy to threaten collapse.”
Here’s the nitty-gritty. Save all you can. It will not be easy. It will be very hard. It will require you making choices about what you will not be able to enjoy. Those choices will cause you to grieve and feel a sense of lose that may even surprise you.
Saving is best done as a wide sweeping investigation as to what is essential in your spending and what is not. This is only one step. It might not even be the first step. But when you take this step don’t count any thing as sacred. Go at it with the mindset that anything can be cut. It’s the truth. It’s just a very hard truth.
When I talk with people about financial cutbacks they seem to want to pitter around with inconsequential spending choices. They want to cut out the one cup of coffee they drink each week. This is about $4 a week and $16 in a month. So, I guess it could add up but people seldom want to look at those things that add up quickly like houses, cars and drug or food addictions. It makes a financial advisor seem like a monster when they mention these revered effects.
I will give you another phrase to remember, “Survival is sacred.” These are the kinds of times when we should consider the value of survival. We haven’t in the past had to purchase survival. It came with living in America. Now survival has a cost. It requires that we earn all we can and that we save all we can.
Here are a few savings to seriously look at. Buy a smaller house or move to a cheaper community. Don’t write off the option just for the difficulty of getting a loan. It is something to seriously look at. It may also create an opportunity to enter a situation where equity will increase at a better rate when the economy improves. I would even suggest to you that it is not bad to move to a rental if you are in a loan that is turning your equity upside down.
I realize it is too late for many people to even consider their equity. It will certainly be scary to look at. To give you an idea; I have a home that lost more then one third of its value in the month of February 08. I decided not to look at my equity again for a long time. For those of us who have lost so much we may need to consider paying down that debt as a way of saving.
I have heard every excuse under the sun about why people drive cars they can’t really afford. “I have to have a reliable car…” “I need it to get to work…” “It might have been expensive but I bought it for the gas mileage.”
You are usually not saving enough money to make it worth having a new car as apposed to an older car that you can pay cash for. Older cars are being practically given away right now because of their supposed gas costs. You will have to calculate it out, but I think you will easily discover that owning a car is much cheaper then what your interest minus your gas savings comes to.
My whole point is, don’t let your self make excuses to be in debt or to spend money poorly. Save all you can.
There are certainly other things that should be considered. One great way to determine what you can save is to take a close look at where your money is going.
