Thursday, April 14, 2011, AM | 3 Comments
Updated from 2 years ago.
In order to get out of debt, you have to change your mindset. Spend less than you make. It has become some people’s second nature that they always look for bargains. They cut coupons from magazines, papers, search them on the Internet. They do that so they can save a buck or two. That’s fine. That’s what we all should be doing. The best thing to keep in mind is better described by the following statements:
- You always save when you save before you spend.
- You seldom save when you spend before you save.
However, people use credit cards to buy things. They don’t pay cash. Just charge them. They let the due date slip by, so when they pay their bills the following month, they pay finance charges as well as interest – more than 20% a year – on the total money they owe. Or in order to save money on finance charges, they pay the minimum amount.
A week or two weeks later – for some people a lot sooner – they repeat the same thing. And the bills keep piling up. I know we have to eat, wear clothes in hot and cold weather. But we spend so much money on some of the things we really don’t need.
You know! Mary Ellen Edmunds once said: “We buy things we don’t need, with money we don’t have, to impress people we don’t like.” I strongly agree with her.
I was listening to C-SPAN on radio. The host was telling a story about a lady, a 28 years old young woman. She would complain a lot about money. One day she called the station and said she is living from paycheck to paycheck.
Some folks just cannot live without Starbucks
The host asked her what was her typical day like. She said on the way to work, she stops by Starbucks, sits at the table and drinks one cup of coffee. And then she buys another coffee for the commute to work. Everyday she goes out with friends and eats out lunch. On the way back to her office, she buys another Starbucks coffee.
The host asked her how much she paid for a cup. She said in round figure, she pays $5.25. So three times, that’s a total of almost $16 a day times 5. That’s $80 a week in just coffee. Plus the lunch everyday and then once or twice a week, out for dinner. Over the weekend, she said her boyfriend pays for everything when they go out.
The host asked her how much she was taking home in her paycheck. She said $450 a week. Now she has to pay rent and buy clothes. She charges everything to her credit card.
By the way, Starbucks announced at the time they were closing down some stores for good. I wonder what their problem was.
The lady does not need a financial adviser. She needs a therapist. She needs to go under hypnosis. She must get rid of her spending habits.
But if you really and seriously want to save money, pay off outstanding loans and credit card debt as quickly as possible.
I found an excellent article How to Live Within Your Means and Get Out of Debt by eHow.com Personal Finance Editor who says that the guidelines in the article may sound harsh, but the price people will pay for ignoring them is even harsher.
I have a feeling that the suggestions in the article do not apply to the young lady. She really needs a therapist.
In a Nutshell
In our own family, we just don’t buy things we don’t need. And when we do buy what we need, we make sure we can pay the whole amount by the due date. We use, I might add, credit card a lot, for almost everything we buy, even for a gallon of milk – $2.99 – in our neighborhood corner store.