Daily Preparedness

As we pause this weekend to celebrate the freedom won for us, do not forget that one of the most critical forms of personal freedom you can achieve is financial freedom. The greatest obstacle to financial freedom is the Debt Monster. Debt is a crippling master that neither sleeps nor takes a day off. As we have all seen, overwhelming debt not only cripples the individual, but also endangers our nation.

One obstacle that prevents many from achieving financial freedom is the art of self-deception. Lying to oneself is often the easiest of all lies to tell. Our inner conversations can lead us into the chains of financial prison. Understanding and then breaking those chains can lead to a future of true inner-happiness, peace and freedom.

It is important to point out that there is nothing wrong with working for and obtaining items you want! Capitalism is a beautiful thing and learning to use our resources wisely can reap great rewards. However, consumerism has driven many to believe that they must live beyond their means.

Not only are we as a society too often failing to provide for tomorrow, we are mortgaging our ‘todays’ to the point of breaking. Take a bit of time and see if you are falling prey to the Debt Monster and his wily lies!

If you are currently debt-free and prepared for tomorrow, take a moment to review these common financial lies. Be wary if you find yourself falling into these carefully laid mine fields!

Some of the most common lies and myths we tell ourselves and others, include:

• This (insert item) will make me happy, more beautiful, more successful, ‘more anything’. Inanimate objects do little to produce true happiness. Though they may provide you with greater comfort, ease in accomplishing daily tasks, entertainment or fulfill a real need, an item you can ill-afford will accomplish nothing more than increasing your stress and decreasing your self-reliance. Carrying a designer purse, driving a fancier car or buying a home you can ill-afford will doing nothing for you other than increase your bondage to debt.
• I ‘need’ this. Really? Carefully analyze that statement and then think through what a purchase will actually do for you. Can you differentiate between need and want?
• Budgets are for nerds and those good with money. NOT! Though you may not need to record every expense on a spread sheet, knowing how much money you have and carefully planning how to spend it is essential to financial freedom. Budgets really amount to common sense–spend less than you make and plan for tomorrow. Whatever method you choose to use, anticipating expenses and realistically analyzing your income is essential.
• I deserve this. Ah, the entitlement mind is a lovely thing. If you must reward yourself regularly for performing routine tasks, you need a little dose of ‘grow up juice.’ Take comfort in knowing you are not alone, as the corporate world now holds seminars on how to deal with this method of thinking among their employees. Break this one and you will save yourself untold years of disappointment, debt and stress.
• Eating out is as cheap as eating home. Again, NOT! Super savvy bargain hunters can often meet the expense of eating at home in a restaurant, but that is a rare accomplishment. Overall, simply not buying your lunch while working saves the average worker between $2000 and $3000 annually. Learning to properly purchase, store and prepare food at home is not only a huge money saver now, but potentially a life-long savings in decreased medical bills, etc.
• I don’t make enough money to save. No matter how little you make, it is possible to save everyday. You may not quickly build up a trust fund, but you can live slightly below your means and try to make every dollar s–t–r–e–t–c–h as far as possible. The ability to save is not based on income, but on self-discipline and strategy.
• It’s such a deal! This one may seem a bit hypocritical from a ‘bargain shopping maven,’ but not everything on sale is a good deal. Nor do we need to grab every ‘deal’ we come across, especially if we have not done our own research, we cannot really afford it, we don’t really need it, nor do we even really want it! As I used to tell my children, “Half off of ridiculous is still absurd.”
• Student debt is always okay. Says who? Yes, a reasonable amount of student debt may be absolutely necessary, but only after all other options have been exhausted. Starting out one’s adult life saddled with debt is a heavy burden to bear. Sadly, student debt often goes to cars, stereos, clothing, trips and other unnecessary expenses. Plan early to apply for scholarships….middle school is when the planning should begin! Apply for every scholarship or grant you can find. Teach your children early that they need to save for their education. If you cannot afford a four-year college, begin your higher education at a community college. Be certain that credits earned there will transfer and that you complete every general education requirement that you can. Students should be fully aware of how marketable their desired degree is and what their earning potential is in that field. Internalize that the level of debt you take on will weigh on every decision you make after graduation–which job to take, when you will marry, who you will marry (remember the potential spouse may enter marriage with a debt load), when you will have a family and what lifestyle you will achieve.
• Save for the kids’ education before saving for your retirement. Though this was a common mantra for years, the realities of failed pension plans, Social Security bankruptcy and housing markets falling, are changing the tune. The truth is that there are multiple ways to pay for higher education and only one sure-fire way to pay for your retirement years! The worst thing you could do for your children is to burden them with elderly parents who have little or no means to support themselves. For many facing retirement, what they have saved is what they will have.
• We show love by what we buy. Whether that love is directed at ourselves or others, true love is shown with time, attention and self-sacrifice. Yes, gifts are wonderful things and I love giving them more than most, but the amount you spend is not necessarily commiserate with the feeling expressed.
• You always get what you pay for. Though quality items may cost more than inferior ones, price is not always an indicator of quality. Name brands, designer labels and fad items may be priced higher than a ‘generic’ counterpart, but they may not be of great value. Look past prestige and price to study the true value of what you are paying for. How long will the item last? Do you need it to last a long time? Would a less expensive substitute function just as well? How can you purchase the item on sale, used or possibly borrow something you will use infrequently?
• Real estate agents are whizs at budgets & finances. Successful real estate agents are good salesman, who make the most money when they sell the most expensive houses they can get someone in. Know what you can reasonably afford (and it might be smaller) in a home. The real estate pain and panic we have seen in the past few years would have been prevented if more people had read the fine print, done their own math and been completely realistic about what they could easily afford.
• I’m ‘just looking’ or ’shopping is my hobby’. “Just looking” often leads to increasing our desires beyond our means. Shopping as a pastime, hobby or therapy is just one more trap the debt-monster builds. Spend your time improving yourself instead of creating a more demanding self. Remember that retail outlets and salespeople are all waiting to lure you in.

Recognize, analyze and overcome the chains keeping you in financial slavery. Watch out for the traps set for you and be truly free!