Well, it’s that time of year again; when we make promises to ourselves and sometimes other people that we mean to keep, and often do not. So I figure if I make my promises public, maybe I’ll be more inclined to keep them.
So the question begs, what do I want to do differently this year than next?
Well first of all, I’m going to further my path into financial recovery by really making the effort to pay all my bills on time. Why? Because late fees add tremendously to the cost of living. Late fees and interest eat a lot of Americans alive.
I understand the business logic of charging those having trouble making their payments late fees and higher interest. It’s easy to understand as there is a true cost to the business that is carrying your debt until you repay it, and yet as a consumer, I both see and feel the other side of it. When you look at it from the consumer point of view, it seems illogical to add more charges to a bill someone is already struggling to pay. Wouldn’t it make more sense to collect what you can?
Many a predatory, or semi-predatory financial firm loans money to people that probably shouldn’t be borrowing it. As a Libertarian, I believe we are all responsible for our own choices, and yet in a society where economic responsibility and the facts on how credit really works is not often taught, I do see some need for the government/schools to step it up and make sure people are prepared to afford their lives.
At a time when social security is at risk, and guaranteed pensions nearly non-existent, the need for personal savings has never been greater, and yet the savings rate for Americans is now at a negative level. My parents saved and budgeted. Somehow it never occured to them that maybe they should teach me and my brother those skills. I was the typical kid, who rarely went without anything I needed and usually got what I wanted too. I was completely unaware of how hard they worked to provide for my brother and me, and to be honest, I don’t think I truly respected their efforts.
By the time I was 18, I had credit cards and by the time I was 21, I filed bankruptcy for the first time. Yep, I said “first time,” because I’ve done it twice. Divorce often wrecks financial lives and mine was no exception, but the first time could have been prevented with a little financial education in my teens.
That’s a mistake I’m trying not to pass on as I teach my children the value of working for what you want, and the patience to wait. I’m actually trying to teach my children these skills and am sad to say that so far I’ve only partially succeeded at it. My younger two kids get it (19 and 12); my oldest, who has lived on her own says she gets it but she isn’t living like she does. Despite actually listening to me and avoiding credit cards for now, she’s got a fair load of debt already. It’s mostly unpaid medical bills and traffic tickets. I’m not going to bail her out. She needs to handle her own mess.
My oldest is a 20 year old college student who has taken this year off of school to play nanny in Australia. It’s a good adventure, but from a parent’s viewpoint, ill-timed. In addition to interupting her education (which isn’t necessarily life altering), she’s going to come back to all that debt, traffic tickets and a risk of arrest because they’ve gone unpaid. She says that when she returns she’ll live at home a bit to catch up and I hope she can do just that. It’s not easy for the two of us to live under one roof. We’re both pretty bull-headed. Still I’d like her to stay long enough to catch up and maybe long enough to learn the concept of “frugal student” living.
She’s never had to live a frugal lifestyle. Yes, she can shop for a bargain, but frugal usually means no shopping. It’s living without new clothes, gadgets, CDs and other stuff, and keeping the entertainment budget as low as possible. It’s learning to repurpose and reuse what you already have and figuring out where you can barter to trade your services or things for other things and services you want.
Sometimes it means two jobs, or living in a cramped place with a bunch of annoying roommates. Frugal is figuring out how to eat healthy on $50 a week or less. Frugal is being the first in line at the used bookstore so you can get your textbooks as cheap as possible. Austin isn’t a cheap town, but it is indeed very easy to live an interesting and full life here on little money.
Yeah, you can live cheaply if you aren’t in debt. Find yourself in debt and suddenly life gets a lot more expensive. Once you begin to damage your credit rating all these things happen that make it harder and harder to break even, let alone get ahead.
It gets harder to rent or purchase a home. At a minimum, a landlord will want a bigger deposit, but many just won’t rent to you if your credit is flawed, so you have to find one that will and they usually charge more.
You just might not get the job you want. Employers are increasingly checking credit even for jobs that do not involve handling money and where your personal credit should have little bearing. I’d like to see laws passed preventing this for most jobs.
Your insurance will be higher. I’ll write more on this ripoff in another post, but any or all your insurance rates may go up or you can be outright denied coverage for your car, life or health protection.
The utility companies are going to want fat deposits.
If you’re still determined to have credit, you’ll pay high annual fees, higher interest rates and being late just once could jack all those fees even higher.
All those higher expenses just make it tougher to pay what you must each month.
So yes, I’d like to teach my children how to save, not spend and live well even while making the sacrifices necessary to live a secure life. Like most parents, I want better for them than I had for myself.
And that takes me back to my second resolution for this year, really working with my two oldest children to teach better economic management. That will include the three of us learning where to find financial aid for college so they can hopefully graduate debt free. Perhaps if we do it together we’ll all learn more.
As to my other resolutions, they are more general. A few months back I shifted my “all or nothing” mentality towards losing weight and regaining a healthy energy level and body to a more forgiving, take it in steps, mentality. It’s been interestingly successful too. I’m actually losing weight, regaining energy and getting more accomplished since I started allowing myself room for imperfection and accepted that sometimes I’m only doing things “partially.” I can eat a cookie and the earth doesn’t give way below me. I can pick and choose which days I hit the gym as long as I get there at least twice.
Lastly I need to make more time to get out with friends. I’m still making excuses to sit home alone and that’s just dumb. I think it’s the last remnants of depression but being around people helps lift the cloud.
Happy New Year Y’all! To a better 2008.