Things To Consider Today

Being Thrifty Is Smart Living  

There has been a lot of talk about money and economic problems in recent months. People are concerned about their bills, their jobs, their investments, and their future. Everyone seems to be asking why are we in this dilemma, and how can we get out of it.

Let us realize that these types of problems are not new. They have occurred in the past and will probably occur again in the future. There are similar causes and similar solutions in each case.

Most of the basic reasons behind the current financial problems in the United States and other countries can be traced back to some common sources. I would like to emphasize two of these.

First, in recent years there has been an expansion in housing, especially here in the United States. More and more ways were offered for people to get into a home. People with lower credit scores were accepted. In some cases, there was no money down, as opposed to the more traditional 10% and 20% down payment for a home. Many individuals went on stated income rather than on actual income. Their expectation was that their new home would automatically appreciate in value and thus they were making a good investment. The banks and mortgage companies who arranged these mortgages were glad to accommodate the consumer and make money in the process. The mortgages were bundled together and passed on to third parties who hoped to invest in them and get a good return from the mortgage payments of the homeowners. This is all well and good as long as the economy is good and people make their payments, and there are no other related problems in the banking industry.

To some people the mortgage crisis is the sole or main cause of all our current problems. But I disagree. There is a second and perhaps more fundamental cause of our financial problems. It is simply overspending. People are living beyond their means or spending more money than they should. They do this through their governments. They do this through businesses. They do this through organizations. Their do this as families and individual consumers. It is this last category that I would like to emphasize because if we all did better as consumer and families, there would be less tolerance of overspending in government, businesses, and organizations.

Consumers buy bigger homes and more expensive cars than they really need. They get equity credit lines on their homes and then spend this money also. Too many credit cards have been given to most people and they have charged up these cards so they can barely make the payments. Between mortgage and car payments, equity loans and credit cards, these bills are eating up far too much of the take-home pay that people receive. To make matters worse, the banks are raising interest rates and fees, as well as reducing the amount of their credit lines on charge cards. The job market is tighter and more people are being laid off. What can we do?

In my family we are staying put in our home because it has lost some value and now is not the time to sell a home. We are continuing to make payments the best we can to maintain our credit scores. We have reduced spending to live on less income. There are no big purchases planned ,nor any normal vacation this year. We continue to monitor our investments, and increase earnings via the stock market even though it is down. Beyond these obvious steps we've taken, what can we and others do?

I offer an old-fashioned ,yet relevant recommendation for these troubled times. Change your attitude about money. Become more thrifty in how you shop and handle your financial matters. Thrifty implies practicing thrift or having good economical management. Thrifty, as I'm using it, does not imply being cheap. Being thrifty is always in style. It will lead to prosperity and happiness.

Related to being thrifty is being frugal. This implies being economical in use or expenditure. It is prudently saving or sparing and not being wasteful. It is entailing little expense or requiring few resources. I am not implying too much self-denial here nor always refraining from buying good-quality items.

Another word related to being thrifty is economical. This refers to avoiding waste or extravagance. It involves the efficient use of wealth or resources.

As you think about being thrifty, frugal and economical, evaluate your life and determined if this is the way that you've been living. Here are some things to consider.

Do you do any type of financial planning for both short-term and long-term periods ? Without some type of strategy and plan to follow, how do you expect to be successful over time with the handling of your finances? Planning provides a context for daily, weekly and monthly spending. Without proper planning your expenditures will easily get out of control and eventually they'll be controlling you.

Related to planning is simply living within a budget. What can you afford and what can you not afford? Don't desire nor covert things that are not possible currently, or they will merely lead to frustration and unhappiness. In some cases you will overspend to satisfy yourself and end up without the money to pay for the things you desire because they are simply not within your budget.

Make a clear distinction between needs and wants. A need is something you must have, and a want is something you can postpone or do without. Don't try to satisfy wants until needs are taken care of first.

Have some type of savings plan, or investment plan to help you in times of need and emergency. This could be charge cards with a zero balance, or an equity credit line that is not charged up, or stocks that could be sold to meet bills, or a savings account in a bank. All of these things represent ways to get money fast if you need it for a good reason.

Monitor your obligations including bills, loans, charge cards, and mortgages. It's easy to overextend yourself thinking that your job will always be there and your wage will go up with time. You won't have economic problems ,but perhaps your neighbor will. Obviously this is not always true.

Take care of the things that you have or own. They will last longer and over the years you will spend less money repairing them and replacing them. Doing this will lead to less purchases of things like clothing, appliances, cars, toys and other items. What is involved here is the simple principle that a dollar saved is a dollar earned.

Strive to earn interest on your money rather than pay interest on someone else's money. For example if you have a savings account, the bank will pay you interest on the money you have there because they are using it to loan your money out to others. If you get a loan from the bank, however, you're using their money and must pay them interest for it. There are many ways that we can earn interest on money, as well as end up paying interest. Some paying of interest is justified, but avoid doing too much of it beyond your ability to pay back what you owe.

Finally, be willing to buy used goods. Many people shop at garage sales and secondhand stores. Through the newspaper and Internet, many used items are sold every day. Decide what you definitely want in new condition, and what is acceptable in used condition. Then make your purchases accordingly.

As I said at the beginning of this article, there are many problems in the global economy and in our own country . The government is involved, as well as banks, businesses, and consumers like ourselves. It will not be easy to solve the economic problems we're having, nor will everyone come out of it as well off as others. But to increase the odds in your favor, do what you can for yourself. Being thrifty is important. It will help you take care of your financial responsibilities.

I challenge you to review your financial stewardship and come up with ideas and solutions that will strengthen your finances. Implement these and this will help meet your financial needs and protect your financial status in the future.

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Copyright  2008     Leland Pulley