Tuesday, February 24, 2015

A Rant About Income, Credit & How to Live Your LIfe

Everyone needs to learn to live within their means.  This is a basic tenant of living a good life.

When it comes to your money, there are two ways to boost your financial bottom line.....you can work on the front end or you can work on the back end.  (You can also work on both ends, it doesn't have to be one OR the other.)

The Front End means you can improve the income stream coming into your home.
Examine how much you bring home.
Not enough?
Find ways to bring in more.  You know.....side jobs, part time work, sell stuff you don't need anymore, etc.  Turn something you love to do(a hobby)into something that brings in additional money to your home.

The Back End involves keeping more of that income coming into your home in YOUR hands and not letting it slip away.
Be the financial sentinel of your home.
Find ways to get what you need for less money.
Don't pay unnecessary amounts to others to do things you can do for yourself.
And stop buying crap.....that one is important. ;-)

I have been a stay at home mom since 1989.  Once the kids started coming we sat down and crunched the numbers.  Having one of us home full time with the babies was important to us.  The income I could earn in that time and in that place compared to the costs associated with having a full time job and full time daycare plus the expenses of transportation, clothing costs and probably the cost of more convenience foods meant that it made more financial sense as well to have me be a SAHM.  So that was my job.

Hubs and I worked as a team to keep our bottom line in the black.  He worked on the front end, the bringing the money into the home.
And I worked on the back end, the keeping the money in the account once he brought it in, and I pinched every penny until it shrieked.

This worked well for us, but every couple needs to find their own balance.

So Hubs was in charge of growing the income, as well as investing the retirement savings(though I was kept in the "loop" and had imput).
I was in charge of disbursement of the income, as well as saving as much of it as I could from what we actually took home.

Though Hubs was in charge of bringing the income into the home, when opportunities arose for me to add to the income stream as the children got a little older and less time intensive, I took advantage of them as well.
I wasn't too proud to do what I had to....from babysitting, the pet sitting, to sewing, to selling handmade crafts, to teaching crafts, to buying old toys on clearance and then reselling them online to collectors, to taking online surveys and participating in focus groups, to selling at a garage sale or flea market some of my stockpile of toiletries, I paid very little for.

While I was home with the kids,  I did all my own cleaning, took care of family business(making appointments, phone calls, banking, bill paying, etc.), make about half of my kids clothing, bargain shopped for everything from food to HBA items to clothing to furniture.

You do what you have to do to achieve your goals.
But first you have to identify your Goals.

Our goals have always been 4 fold--to make a comfortable life for us and our family, get to a state of debt freedom, have money set aside for the kids' college plans, and be able to afford to retire and have a comfortable retirement.

Of course most people strive for these goals, right?
Everyone wants a comfortable life and a comfortable retirement in their old age.
And everyone wants to be debt-free.

You need to figure out what constitutes "comfortable" for yourself.
We have modest needs compared to many in this country.  Heck our modest needs are still luxurious compared to what most people in the rest of the world have in their lives!

We never went in for fancy or luxury cars.  To use a car is just transportation to get you from Point A to Point B.  The less we had to spend on cars was the better.  The most important thing was if the vehicle was safe and if it was big enough to hold everyone......and that it had brakes......brakes are important. '-)

Now that I am a women of the certain age and have been through many phases of life, I see THREE main points/spending habits that keep people in debt long term.

*  Car lust is one of the biggest things that keeps people in debt.  That and always buying cars on time(loans).  If you can't afford a new car for cash, buy a used car that you can afford to pay with cash, in full.  Then take that money you would have put toward a car loan each month and save it for when your new used car breaks down and can't be resuscitated and you need to buy another car.  If you are lucky, by the time that point comes around that you need to sink more money into a new car, you will have enough to pay cash, and perhaps you can buy a better/newer car.

(Let me add that in the last decade or so, Electronic Lust, having/buying the latest electronic gadgets is quickly getting out of hand in our society and may surpass vehicles as one of the biggest things that keep people in debt....especially among the younger generation.  Upgrading smartphones, computers, tablets, televisions, buying movies then having to rebuy them because the platform is out of date and obsolete, expensive cable packages for those televisions, etc. is just another hamster wheel the media/advertising tells you to jump on, and you JUMP!, while the money just flows from your pockets.)

* The other point that will keep you in debt is buying a house you can't afford.  Realtors tell you as a rule of thumb that you can afford to spend 1/3 of your income on a house payment.  DON'T BELIEVE THAT!  Of course they have a vested interest in how expensive a house you buy since their commission is dependent on your purchase price.  They want you to spend more money than you can afford!  It makes no difference if you buy a too expensive house and have to eat beans & rice for years because you can't afford that house.

People buy houses bigger than they need that cost more than they should every day.  Don't be one of those people. 
And don't buy a house as an investment.  It isn't an investment if you are living in it, only if you are renting it out.  A house is a MONEY DRAIN on your income.  Yes, it may appreciate over the years(especially if you didn't buy it at the height of the market)but don't count on it to fund your retirement.  Especially since in retirement you will need a place to live and unless you sell your home and live in a cardboard box or do one of those reverse mortgage deals, your home won't even be an investment in your golden years.

* The final point that will keep you in debt is not knowing where your money goes and keeping a close eye on the outgo in your household.
Money has an insidious way of just flying out the door.  It's easy to turn around at the end of a month of income and have nothing left, or worse yet, be in the hole!
Not paying attention to your money results in doing stupid things.
Stupid things like overdrawing your bank accounts and paying fees;
Stupid things like charging on a credit card and not paying it off at month's end(when you meant to)and paying interest.
Stupid things like not keeping track of variable spending and having to put expenses on a credit card because the cash you thought you had left for the month is mysteriously gone.

Just keep this thought in mind whenever you go to buy something on a credit card(or a mortgage or car loan for that matter too)--Whatever you are "buying" isn't really yours until you pay that bill off.  You are just borrowing that jacket, gas for your car, dinner out, etc.  The credit card company still OWNS it until they get paid.....the credit card company as a result OWNS YOU until they get paid!
The Mortgage company OWNS you until you pay off your house.
The car company OWNS you until you pay off your car loan.

Next time you buy something on time, think of the purchase like that........you are OWNED by a corporation. 

Live your life on credit and you are not your own person until your creditors are paid off.
Now is that any way to live your life?



  1. Thanks for the boot to the arse I needed today! I'll reread it later on...sending smiles from the frozen zone, aka northern New Brunswick Canada..

  2. There is so much freedom in not owing anyone a cent and never paying interest. I wish more people "got" it. Instead everyone is trying to live up to their neighbor and borrowing to do so.

  3. You are so wise. Wish I had your sense years ago.

  4. Good post! Too bad it took me too long to figure that out :/

  5. Excellent post! You should write a book!

    Peace <3

  6. You're singing my song (but unfortunately I get the words wrong a lot)

  7. Great post...too bad the people who most need to read it probably won't. I actually think the back end is more important than the front end. Some people will never know how to save money, no matter how much or little they make. Seems the greater the income, the greater the debt.

    I do think frugality is an inherited trait (my grandmother saved money even on social security, I'm glad I've got those genes), but can be learned (but, not by all!). I would like to add to your list of downfalls: the small stuff. It likely falls under your final point and you likely didn't mention it because it is so obvious (to you). Buying lunch every day, picking up $4 coffees without even thinking...it all adds up. The adage "watch your nickles and dimes and the dollars will take care of themselves" is a wise one. And to that I will add recurring expenses such as the cable bill (I understand you can practically see everything on TV for almost nothing through various schemes these days), the cell phone bill, etc.

  8. Can we send you on a lecture circuit, to high school graduating classes?

  9. Very well said! Kudos to you, Sluggy. You and your husband truly are an inspiration. Hugs XOXOXO.

  10. If we didn't earn points on our credit card, we wouldn't have a reason to have a credit card. In the past 5 years, we have earned about $1065, which is about $213 a year by using the card. We have never paid interest or finance charges in at least 20 years. The bank probably hates us. For us, it doesn't take discipline. This is just the way we roll! For now, our circumstances are such that we must rent. When we can buy, we hope to pay half the amount in mortgage what we currently pay for rent. We will probably buy a house at half the amount the bank says we can spend. Our house will probably have about 1500 square feet - enough for me, my wife and 5 or so cats. We don't want to clean or heat any more than that! We are realistic. Cars: Ours are 15 and 16 years old and run well. They cost us little to maintain right now, and we will not replace them until we must. We will probably buy used and have enough cash to pay for one outright. Our electronics: When it breaks, it will be replaced. Not until. We both need computers. We have what we need. Nothing fancy. We still have an inherited boxy 20"+ TV. We had to replace the other small boxy TV because it popped, sizzled and smoked a week before Thanksgiving a year ago. It is a 22" flat screen. Nothing fancy. That's it. We hate shopping for electronics about as much as shopping for clothes. Making more money: I belong to sites where I can save up points for gift cards. Savingstar is one I know you belong to also. MyPoints in another where I read ads, takes surveys and do other things. I earn enough to buy over $200 worth of gift cards by the end of the year. I pass them on to my daughter who does her own remodeling on her house and has a very large family. It helps her out. There are other opportunities like this. Our needs are not great, and we shop intelligently. There are areas where we can save money, and we continue to work to do so. We watch our credit score through Credit Karma, and we both score as "excellent". It tells us that we are doing things correctly. We are living a fulfilling life without spending beyond our means. People are told that they DESERVE more than they can afford, and they don't need to believe it, because they can live with so much less for longer. Thank you for sharing your perspective.

  11. Excellent post, Sluggy! But I agree with a previous poster, the people that need to hear it the most never will. I was talking to a couple of women and work the other day that both "needed" to upgrade their iPhones. Why? Because they weren't the newest model. I didn't even mention my Tracfone that costs me about $100/year and I use it as much as I want.

    Electronics envy is really gaining on car envy.


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