Things To Consider Today

What Is Affordable For You  

Before focusing on your personal finances and what is affordable for you, let’s look at some things affecting all of us. These things ultimately affect which products and services we can afford to buy or use.

Over the past few decades several economic problems in the United States have become more serious. Examples of this are greater debt by the federal government, and more dependency by citizens on the government for some type of benefit. The population is getting older and more problems lie ahead for Social Security and Medicare payments. Oil imports have gone up and our own development of energy alternatives has not been keeping up with the demand. Even things like greater use of illegal drugs, and the breakdown of the family unit through more divorce, are having a negative impact on our public treasury. In the international arena, there is a trade balance that is not in our favor, and it’s getting worse. We are losing the manufacturing base in this country and becoming too much a service economy. The value of the dollar is shrinking. We have printed too much currency to cover our deficits or borrowed from other countries to cover them. Meanwhile, Congress acts as if the day of reckoning will never come. Few politicians will stand up and talk openly and frankly about our economic issues and really work with others to solve them.

State and local governments have their own problems, but at least they cannot operate in the red like the national government. Less services are affordable at the local level. There are too many demands and not enough resources.

Schools are always asking for more money and doing a questionable job of educating our young people. This is not just the fault of the schools because many problems from homes come into the schools. Social problems also affect schools. Meanwhile, people are asking for more accountability by the schools. Many school bond measures are voted down by parents and other taxpayers when they cannot see good results from current taxes.

American companies and corporations are competing in a global market where there is cheaper labor abroad and less environmental standards. Foreigners are getting our technology and closing the gap between us and them. The net result is Americans are buying too many goods from abroad and cutting into their own ability to employ people here and pay them good wages.

The recent lending practices for mortgages has hurt many American families. Financial institutions here and abroad have been affected in a negative way. Many Americans have been buying too big of a house or taken on too much of a mortgage commitment. They thought housing would continually appreciate in value. This is a gamble and the time for some reconciliation has come to many homeowners. Besides this, many home buyers have also taken out lines of credit on their homes to continue their high spending patterns.

We as a country have fallen in love with credit cards in the last forty some years, and used them more than we should. The interest rate and other charges associated with them have gone up considerably. Now it’s hard for some families to merely make the minimum monthly payment.

Savings are far too low. People are under insured as well. Few of us are prepared for unemployment or things like natural disasters that could affect us directly.

Despite all the things above, budgets to many people are viewed as something you simply tolerate while you have to live this way. They aren’t something you seek after or do because you want to live within your means. This is a big mistake.

Financial planning, not just for retirement, but at any age is a good idea. It causes you to reflect on your priorities, both short-term and long-term. It helps you to set aside money so you’ll have it when you need it. It trains you to buy only the things you need or should purchase. It eliminates impulse buying and foolish spending which over the years can drain a lot of wealth out of a family’s resources.

Here are some things to consider as you review your finances and determine what is affordable for you and your family.

   • How many clothes do you buy versus how many you can actually wear and get the good out of them as you should? Are you willing to buy used clothing for yourself or your children?
• Do you have to have a new car or will a used one do? Why do some people need a $40,000 car to drive around, yet others can do the same thing with a $20,000 car?
• How many services does your family hire versus doing more of these things for yourself? Maybe you don’t really need all these things done anyway.
• If you take care of possessions and keep them in good condition, they’ll last longer and you end up buying less goods over the years.
• How many toys can your child really play with? They don’t have to be new ones necessarily. They don’t have to be automated ones either.
• How far do you have to travel to take a vacation? How expensive of a hotel or motel do you need? How may extras are necessary to really get away and enjoy yourself and do something different?
• You don’t have to do everything before having kids. Your first house doesn’t have to be a new one. It’s best to sacrifice some while you’re a younger adult in your twenties and thirties, in order to have more and enjoy more as you get older. You’ll appreciate it more then.

As the above list demonstrates, there are many ways we make choices that affect our money. We should seriously consider our real needs and separate them from our wants. We should look into the future the best we can and be practical on what it will hold for us financially. Then exercise good judgment in deciding what is affordable for us today.

If you’re still not convinced, consider this. I talk with many younger adults below age thirty-five. So many of them do not see Social Security for their generation. They do not see pensions from their employers either. Many don’t have health insurance and other benefits. Too many are stuck in lower paying jobs in the service sector. These younger generation Americans feel less secure in their jobs than the baby boomers did at the same age. Yet various problems have increased, not decreased, since then. For example, when I was growing up the whole interstate freeway system was put in. Now bills are coming due for roads and bridges that haven’t been properly maintained for forty years and they need serious work. Yet the money is not readily available to do this, let alone do new road work like was done previously. What a difference in just this one area.

I challenge you to live within your means. Pay down and pay off debt. Have some savings for now and for retirement. Finds ways to be happy that don’t cost much money. Some of the most important things in life are free !

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Copyright  2008     Leland Pulley