Tuesday, July 18, 2006

Follow up to Theory of Accurate lifestyle

After reading that last post of mine I found it to be rather cliche, blase' , etc. ... it was kinda plain... "just plan a little more" is reiterated over and over again. Of course we know that!

Well, that wasn't really what I was trying to communicate... thank you to Lisa for helping me see this. She is right people DO live beyond their means and try to look like they have it all together.

It is pretty well accepted that people usually take many months and years to get into debt. So, really here we go--- it's not the car insurance or car repairs or unexpected funeral trip or wedding trip or a surprise medical bill that gets us into debt... it's the shoes and tickets and meals and gadgets that we buy in between that gets us. In other words we'd have the money for our car repairs if we bought fewer things before the car breakage occurs.

Here is where my "Theory of Accurate Lifestyle" comes in (I should stop calling it a Theory... this is not a Finance Journal.)

"Lifestyles fit within a given socioeconomic status."

The practical part of the theory should give anyone hope. You do not live WAY beyond your means. If you did you'd quickly go bankrupt. If you are in debt you are living just a little outside where you should be. So, that means that you should be able to make just one minor adjustment and get out of debt forever.

The one minor adjustment-- start putting $25-$100 per month in a savings account and don't let that account burn a hole in your pocket. It should be a game to not touch that money.

(By the way, I hesitate to put the $25-$100 amount in. You might need to put in $400 a month to cover contingencies...)

Now, I've re-read THIS post and it is still pretty simplified. I guess that just reminds me that if you have a good mouse trap why try to fix it. If setting money aside is a good idea then it's just a good idea.

Oh, more food for thought, "A stereotype wouldn't be a stereotype if it weren't a stereotype."


At 7/20/2006 3:54 PM, Anonymous Lisa said...

I think your third paragraph summed it up pretty well! It can be all the little things that add up to major debt. And sadly, when you're $30K in the hole and you look back on all the shoes and tickets and meals and gadgets, you would trade all of them back just to get out of debt.


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