Oct 7, 2009

The Debt You Deserve

A hammer is a tool. It can hang a picture. It can also knock a hole in your wall. Credit is a tool. Used wisely, it’s very useful. If my refrigerator goes out, I will be out the door to Lowe’s to get another, Mastercard in hand. Before the bill comes, I will move money from my savings account to my checking account so that I can pay the bill in full when it arrives.

Credit used foolishly, is slavery.

Next time you see a TV commercial where the guy, usually selling big-ticket items like furniture or cars, says, “We’ll give you the credit you deserve!” I want you to substitute the word “debt” for “credit.” Now give a listen: “We’ll give you the DEBT you deserve!” Doesn’t sound so appealing now, does it? That’s what they’re counting on.

Those "easy payments" become uneasy real fast when you've lost your job. The credit you deserve is nothing but debt. You're spending tomorrow's prosperity today, without knowing what tomorrow may bring.

A wiser alternative: learn to say “no” to yourself, save the money, and pay cash for what you want. For a car? Are you kidding me? No, I’m not. It’s doable. Maybe you can’t afford a brand new Mercedes, but can you pass by the Coke machine, bank the $2 every day, and a couple of years from now have enough saved for a Plymouth? Just for giving up soda? If you lose the “Yeah but I gotta look cool” mentality, you’ll find that being free from slavery is more refreshing than “cool” ever was.

Fast food and convenience food are terribly expensive. How to cut back:

Pack a sandwich for lunch and skip the fast food. No time in the morning? Make time on the weekend. Buy several pounds of deli lunch meat, several loaves of bread, and set up an assembly line of sandwiches. They go into the freezer so that all you have to do is grab one to go in the morning, and it’s thawed by lunch time.

Make a big pot of spaghetti, chili, or soup on the weekend, and save portions in freezer bags. Quick suppers will be waiting in your freezer. Cook a casserole and double the recipe. Freeze half. Two weeks from now you won’t think of it as leftovers; it will just be dinner.

A stay-at-home mom with 5 kids was able to save up to remodel her kitchen and pay cash. Yes, cash. How? By not being caught up in the need to impress. The Oldsmobile was good enough. She bought meat that was marked down for quick sale (and cooked it that night for supper). Cheaper cuts of meat tenderize just fine in a crock pot. She fed her family nutritiously but economically for years.

Now that the economy has turned, she has money in the bank, investments that are solid, 50% equity in her home, and many of her friends are mighty impressed. This mom who wasn’t trying to impress anyone, is in an enviable position. This could be you.

How much will you save by saying "NO" to yourself today?

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