People don’t talk candidly enough about money these days considering how much of our lives is centered around it. There are a lot of people offering their expertise on money but it seems that they want your money for that advice. There also seems to be a lot of people giving advice on what you should do with your money when they don’t seem to have their own stuff in order. I am not that old, but I have experienced enough ups and downs to have felt both ends of the spectrum when it comes to what to do with money when you have it and what to do when you owe, but don’t have any money. None of it includes avoiding financial responsibilities.
I don’t know why it’s so hard for people to pay for things on time. When I was in my early 20’s, I didn’t pay for things on time because I spent my money on other things I didn’t need so money was not there to cover my obligations and I owned up to that. Now that I am a bit older, I simply don’t spend my money (as) impulsively and do not take on financial responsibilities I am not confident I will be able to sustain over time. I also recognize that my money is also my wife’s. It’s not that hard. There are times you can not afford things and there are times you can. There is nothing wrong with that and in today’s society, it is understandable. Staying above water simply means having self control with your spending. However, less are responsible these days which means the business whom money is owed loses. Prepare for the possibility of a setback. The only insurance you can really count on is your savings account. I grew tired of “being caught off guard” by unplanned expenses so I started saving by cutting back on other things. Our savings account has floated us across many “setbacks” and once we are in the clear, we begin rebuilding the savings account. I understand that not all things are avoidable, but planning for a situation is the first step to surviving it.
I have came to realize that most people do not change. Most people get set in their ways at an early age and never change. This goes for good and bad habits. When it comes to paying your bills, some people pay them on the very last date possible and others pay them right as they come in. I have even found that some people figure out how late they can be with out penalty and will purposely wait as long as possible before paying their bills. This must be stressful to manage.
I have watched people walk away from homes that they signed the mortgage on with their own signature or let their car get repossessed because they decided they don’t want to pay for it anymore, only to turn around and buy a new home or car in the next year or two. Totally irresponsible.
Bills used to be a major stressor for me. I’m not going to lie and say that still are not a contributor to my stress but I have found a way to keep them from bringing me down each month. Though I loathe the pile of bills that seem to come through the mail each month at around the same time, they don’t bother me as much as they used to because I pay them right as they come in. I don’t let them sit on my desk staring at me. I used to have this organizer on my desk where I put the bills I had to pay. They would just sit there staring at me while I worked reminding me that I was working for them. I never had much money in my bank account so I could never pay them off. I also had a slight mentality that the companies sending me the bills were evil and did not deserve my money until the last minute possible. What a weird way to live, allowing the bills to sit there and control that much of my daily mental expenditure.
After years of impulse spending and a savings account with a zero balance, in early 2007, I cut back on everything. I moved out of the house I was renting all too myself to share a house with 4 other people. I cancelled just about every service I had except for my cell phone, car insurance, gym membership and internet. I sold off pretty much everything I owned that I did not have an immediate use for and I started tithing at church on a regular basis. I also had been dating the woman who is now my wife and knew that I did not want to bring all of these bad spending habits I had developed in my 20’s into a marriage. I had always envisioned having my stuff together before getting married and at this point, I did not.
Little did I know that before our first anniversary we would endure many financial setbacks from medical bills and other insurance related expenses. Our first large setback was a medial bill our insurance declined to be responsible for that ended up costing us $25,000 out of pocket. I had to empty my only retirement account to pay for that as well as use the remaining money left over after selling my truck and paying off the loan. My wife and I shared a car for a year.
Once we recovered from that expense I started dumping any spare money I had into savings. I wanted to have enough in savings to cover living expenses for at least 6 months if not more, so I saved. It’s easier to save these days if you think about it because you can set it to automatically transfer. It’s actually smarter to do it this way because it just happens and you don’t have to remember. If I had $250 in my checking account, $100 would automatically transfer each week. I never turned it off, even if all I had was the $100 left that week after paying bills. Eventually I was able to put more in savings and get to the point where we had enough money in savings to cover at least 6 months of living should something happen to me. Little did I know that shortly after achieving this level of savings I had never seen before my son would break his leg.
When Liam broke his leg, it was 2 weeks before Cohen was born. My wife was in no place to be lifting a 28lb toddler brandishing a 15lb bilateral long leg hip spica cast. I was a full time stay at home Dad for somewhere around 45 days while my wife and oldest child recovered. Savings came in handy. Bills still got paid on time even though their frequency shot through the roof for a couple of months. A year later, we had another hospital stay that lasted a week.
Today our savings account is not where it once was, we have had some expenses here and there that have made it harder to put money away, but still to this day, $100 automatically goes into savings each week and more if possible.
I believe that the main thing you have to get over is trying to keep up. There is no way to keep up with everybody else. We will always find something to be jealous over. Once you get that thing, whatever it is, that everybody else on your block seems to have, the next thing will come. Get over having to have those things and you will find extra money around in your checking account each month, money you can use to save and even take a vacation from time to time. If you can take a step back and watch what other people are doing with their money, you will see how ridiculous it looks for the most part. We are on Earth for a lot of years, even though it doesn’t seem like it at times. We make crazy spending decisions in a day that can effect the next 30 years of our life. It’s time to change that. I have wanted to buy a house for 13 years now and haven’t because I am not ready to commit to that just yet.
You can’t avoid everything. At the time of writing this, I could not handle another $25,000 expense all due at once but I have the right kind of insurance not only for medical but for everything else as well. Should situations arise, I know that I am covered to a reasonable extent. Though I get frustrated at just how much insurance I pay for each month, it is pocket change compared to how much the last several years since starting a family would have cost me out of pocket. I am not advocating the idea of storing up as much as you can in savings. I want you to live life and enjoy your time here as I am. I take my family places and vacation as often as possible. I want to live life and enjoy it while I can. I am not promised tomorrow, I just want to live responsibly enough so that should tomorrow come, I could afford it.
If I could leave you with one thing it would be to show some restraint. Don’t keep your credit cards near your computer where you could be tempted to spend money online and don’t take them with you when you are going out shopping. Get a savings account with a different bank so you can put your savings there. Doing this makes it harder to transfer money to an account it could be spent from. The savings account I use, came with an ATM card, but I cut it up. The only way to get money in or out is to transfer it to my checking account at another bank, which takes 2-3 days. 2-3 days is enough time for the “need” to have something to go away. It sounds silly, but all you need to do is put up a few obstacles between your ability to spend the money you have. Stop caring about what your friends have. They will be more jealous of the vacations you can afford to take then you could ever be of their shiny new toy that spends 99% of it’s time in the garage (not that jealousy should ever be a motivator to do or have anything).
I hope that this post helps someone save a bit more. I can’t recall even 50% of the bad spending mistakes I made in my 20’s. All I know is that I spent a lot of money on stuff I don’t have today and that if I had prevented all of that with the maturity I have now, I would most likely have at least $500,000 in savings.