Friday, October 24, 2008

Now, More Than Ever...

In these uncertain economic times, it is more important than ever to watch what you spend, and how you spend it. With the stock market in flux and unemployment on the rise, people are getting nervous about their next pay check.

I see things a little bit differently than most urban dwellers do. We have not instilled in our children the need to be busy with activities all the time. We do not spend beyond our means. And we almost never impulse buy. We don't have a house full of stuff to maintain, or need to get a bigger house to have a place for all of the stuff. We actually will be downsizing a child next fall, as she goes off to college.

We don't need a lot of "things" that most people feel is necessary. My cell phone was purchased in 2002, I think, and it still works fine with the original battery. I have no need to replace it. I have a camera so why do I need a phone that takes pictures? I have an internet connection for my laptop, so my phone doesn't need to be able to search the web either. I have a radio, so I don't need it to play music. I don't text people, I talk to them. It is a phone. I talk to people on it. That is what it does and that is all I need it to do. It works out well.

If and when the economy collapses, there will be a lot of people walking around with cell phones/MP3 Players/cameras/text messenger/computer/personal organizers with a blue tooth connection that can't afford to pay the bill. And they will be lost with out it. "OMG! I can't text?!?!"

As a society, we have gotten so used to spending money, that a lot of people will just be lost if they have no money to spend. College funds and IRAs are all well and good, except that they are tied to banks and/or the stock market. If those institutions fail, then so does your money. And everything you have worked for is just , poof, gone. I am not saying that you should panic and cash out all of your assets, I am saying you should not depend on them being there. If they don't diminish and you can still access it when you need it, Great! But you can't be sure it will always be there. That is why there is fine print on your prospectus.

Credit cards are another thing that our society has gotten used to. It has become a staple of every day life. People just don't carry cash anymore. And most people do not pay in full every month. I don't understand why you want to buy something with interest every time you get a whim. That just strikes me as dangerous. What if you lose your job? Or have a medical emergency that prevents you from working for 6 months? Or a year? What will you do then? Getting yourself into a debt cycle is just a bad idea. And lots of people are starting to realize that they have spent themselves into a hole they can never get out of.

What to do about all of this? Stop spending. Sounds easy doesn't it. It isn't. It takes commitment and a willingness to change your lifestyle. So you don't eat out so much, stop buying the newest gadgets just because they are new, and find new and creative ways to reuse the things you already have. Shop for "things" at flea markets and yard sales instead of paying retail. Utilize Freecycle. Swap things or services with your neighbors. Invest in a good cookbook and learn to cook your own gourmet meals.

And stop using credit cards. If you do nothing else, stop using credit. If you can't pay cash for something, don't buy it.

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