life simplification

Lately, I’ve been giving considerable thought to the topic of life simplification – or should I say “de-complexification” (if thats even a word). This could be something simple like not filling up every waking moment of every day with tasks, meetings and get togethers with people. It can also be something that takes a little more effort to accomplish like selling your overpriced, gas-guzzling status-mobile (did I mention i’m selling my car?) to get into something you can own free and clear and doesnt break the bank every time you roll up to the gas station and cringe at the current price of premium grade petrol (BTW i cant wait for electric cars so I can finally once and for all flip the oil companies the bird).  Either way, over the past few years I have taken several steps along with my family to just stop doing things and buying things that don’t ultimately lead to fulfillment or any sort of sense of true meaningful accomplishment. I thought at first this would make me feel like I was missing something and at first it did a little but we quickly adjusted to what amounts to an alternate reality (maybe a little dramatic but you get my point) from what was once our “normal” existence. By doing this we have been able to live a lot more comfortably and *gasp* actually have money left over at the end of the month! What a concept!

I see stories about how now that many american consumers’ big piggybank (their house) is no longer providing an alternative source of income now they are trading down to the most evil of all debt, unsecured revolving credit in a sad futile attempt to keep up a certain lifestyle that is neither realistic nor maintainable (did you see Jose Canseco is even now a “victim” of the housing crisis?).  This has been blatantly clear lately with the sharp rise in foreclosures, bankruptcies, skyrocketing consumer debt, increasing public debt, etc, etc, yadda yadda.  Why are we going into unimaginably large and never realistically repayable debt to finance a “now” that is just really a product of what the media and marketing firms and big corps want you to believe is “normal”????  We need to get off the teet of debt otherwise this economy and the society behind it will most surely crumble. Maybe not today, or next week or next year even but eventually this crap all needs to be paid for. Remember the whole there are no free lunches lecture in econ 101? If we’re not careful our standard of living in this country will be reduced to that of many banana republics in the world as we are easily overtaken by much more determined and prudent people (the chinese – in case you have been paying attention for the past 20 years).

So, my solution to all this mess is that american consumers need to downsize their lives before it gets downsized FOR them.

-Drive a car you can comfortably afford no matter what rather than trying to overextend into something
-Stop eating out and paying ridiculous prices for meals (i used to be a BAAAAD abuser of this sin)
-Stop paying for things with your credit cards. If you can’t pay for things with the money in your bank account then you CANT AFFORD THEM.
-Order up a credit freeze on your credit reports so even if you’re tempted to open another account it will be painful enough to make you think twice about it
-Stop buying crap to make yourself feel happy. Instead, spend a portion of that money on some good healthy food and spend a couple evenings cooking as a family. That’s true fulfillment. Enriching each others lives in a way that buying jetskis or a big stupid abnoxious SUV just can’t do.

I have often wondered why many people seem hopelessly incapable of managing their financial affairs.  I had a bit of a epiphany on the way home today on the train. I think the main reason the average person sucks at managing their money is because there really is no education around the topic that is given in elementary, middle, high school or even college really. I dont ever remember a class on personal finance and budgeting being offered. At least not where I went to school. Isn’t that kind of strange? We teach our children about math, biology, english, geography, etc, etc… and then we launch them into the world and one of the most important topics they need to know about to be able to truly survive in the real world on their own – personal financial management – they’ve never learnt hardly anything about ! Except maybe by watching mom and dad buy them things at the store and perhaps gripe a little when the summer electric bill arrives at the house but nobody’s gonna argue that is “education”. I have resolved to right this injustice for my children at least in two ways: leading by example and ensuring they are educated about these things even if their formal schooling doesn’t do it. A great starting point I have found is the following list of tenets:

http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/9MoneyRulestoLiveBy.aspx

Here’s a couple articles I recently read on the subject of debt in general. Man its getting ugly out there! People, come on, STOP SPENDING!!!! Jeez.

http://articles.moneycentral.msn.com/SavingandDebt/ManageDebt/TheWorstKindOfDebtChargingTheGroceries.aspx

http://www.bloomberg.com/apps/news?pid=20601087&sid=aSN4AbFYIoCc&refer=patrick.net

And to brighten things up a little – here’s one of my favorite Capital One commercials. I like their commercials but I certainly don’t recommend you use their “products”.  🙂

 They are masters at making it seem like a fantastic idea to use their cards. What a joke! I’m happy they spent all their marketing dollars entertaining me though. 🙂

When you have time rent the movie “Maxed Out”. Here’s the trailer:

 

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~ by razor on May 10, 2008.

3 Responses to “life simplification”

  1. I see nothing wrong with using a credit card since I pay the balance in full every month. the cash back offered is better than paying with cash or debit. Other than that I agree and have been doing this for years.

  2. Very good ideas! We need to learn to stop spending money we don’t have. But our greed and pride of having the latest stuff is holding us back from making the right decision. I hope we can learn soon!

    http://www.beatingdebt.wordpress.com

  3. I agree that there is nothing wrong with using a credit card as long as you pay it off each month. In fact, with a good rewards card (no annual fee and can use rewards on many things) it even may make sense since those rewards are “free”. Also, when buying things online the protection that a credit card provides can be a real butt saver. I have personally been defrauded online and it was my credit card company that paid me back which was a HUGE relief. Having said all that, people that are unable to successfully keep the balance at zero each month are playing russian roulette with their finances. Once the balance begins to grow you end up paying more for things than you should and in a worst case scenario if you lose your job or income streams change then you’re immediately “behind”.

    So, yes, a credit card, when used correctly can be a useful tool. Just as long as it doesn’t become a way to leverage your monthly budgets beyond your true means.

    I agree with you BDO on the whole pride thing. We are bombarded with media and ads that tell us that our self worth is closely tied to what we have and can obtain. It isn’t done overtly but very subtly over and over and over day after day after day until it becomes “normal”. I like your blog by the way. I had a read through the last few posts. Keep it up!

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