Friday, July 14, 2006

Follow up to "Debts are not Bills" -- my "Theory of Accurate Lifestyle"

My "Theory of Accurate Lifestlye" says that people are living a lifestyle consistent with their income. If not they'd be bankrupt in just a few months.

People find themselves in debt not because they are purposefully buying more than they should. They climb into debt because they are planning less than they should.

People know if they can afford $15 jeans or $150 jeans and buy the "right" ones. They also drive cars they can afford, eat at restaurants that won't weigh down their budget, etc. People's lifestlye generally reflects their income (except for those days when their inner Tyler Durden kicks in) and socio-economic class.

What people don't do is plan for things like tires, car insurance, wedding trips, job changes, and (even) toys, etc.

The remedy for debt then is not about reducing your lifestyle, the remedy to debt is to just to spend a LITTLE bit less than you have been so you build yourself a cushion, then a savings account, and eventually a retirement.

3 Comments:

At 7/17/2006 6:38 PM, Blogger Tired of being broke said...

thanks for visiting my blog. I like what I am reading so far. I completely, agree with you here. Debts are not bills. I would be able to travel alot more if it were not for my credit cards.

 
At 7/18/2006 5:25 PM, Anonymous Lisa said...

I think that this is an interesting theory and probably is fairly accurate. I agree that most people don't plan. They get hammered by those "non-monthly" expenses or surprises. But, I also think that there are people that simply live beyond their means by virtue of appearing that they "have it together". It's sad, but it happens. In addition, it's unfortunate that society has reached a point where it is simply EXPECTED that you will have a car payment and you will have a mortgage. I don't think that is failed planning, that's simply failure to challenge the norm.

 
At 7/19/2006 4:34 PM, Anonymous Anonymous said...

What a great site, how do you build such a cool site, its excellent.
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