Don’t Buy Stuff You Cannot Afford

This video is humorous, but the advice is irreplaceable. When considering purchasing an item, no matter how trivial it may seem, it’s good practice to think about the following:

1. Do I have enough cash to pay for it fully?

2. Can I buy it without borrowing money?

3. If I waited a month, would I still want to buy it?

4. Does the purchase have no effect on my fixed expenses?

If the answer is yes to all these questions, then it may be affordable (not necessarily needed though). However, the important message here is to develop a habit of not spending money on things that you can’t afford. The limit on your credit card is not your own money. It is important to understand the difference. Cash and credit are two distinct things. Cash is what you own and credit is borrowed money; this is a simple way to view them.

 

Don’t buy things you can do without

We can take this a step further. Do not buy things you can do without. This removes the desire to have a lot of things because you have become detached from the importance of these items in your life. If items are not perceived as important, it is very easy to not want them. Of course, you can buy things that are enjoyable, but the choice now becomes easier and you realize that you ultimately buy less things than you would have under the previous mindset.

No debt

The main objective is to reduce the amount of debt that we have. The majority of Americans are drowning in debt, and the only way to take control of this is to adjust ones way of thinking. The first step is to change ones behavior through thoughts. If I think I do not need something and I adopt a habit of not spending money on things I do not need, then everything else will be taken care of. What will the result of this behavior and thinking be: zero debt and a feeling of more control over ones personal finance.

This is a very simplified illustration, but I believe the point is clear. This is personal finance in its simplest form.

Balance happiness today with the security of tomorrow

The inspiration for this piece comes from a story I read on Get Rich Slowly. The blog post talks about a couple who spent their entire lives saving money only to die without having had the chance to use it.

After reading many of the comments that the readers left, I got a sense as to what the community thought. I must say it varied; it is very intriguing to read. I recommend taking a look at it. The link will be posted below at the end of my reflection on it.

Brief Summary of Story
The husband of an elderly couple passed away and his wife found out through the accountant that she had approximately $4 million in savings; money that she was not aware of. She went on to say that she wanted to do so many things in her life; buy nice clothing etc., but was never able to because of financial reasons. So she then went out and started buying things she always wanted, only to die a week later than her husband.

Reflection
The overarching message in this story is to have BALANCE. Yes, from the perspective of personal finance, it is important to be frugal, and pay specific attention to expenditures, but it should not be at the sacrifice of your happiness. As the title of my blog posting says, we should balance happiness today with the security of tomorrow.

What do I mean
Well I believe it to be a wise choice to prepare for the future, but it should not be at the expense of the present moment. You only get to experience life now, so your present should be given highest priority. Consequently, there is a difference between doing that  and impulsive spending on things you think you want or need that will make you happy. One says that you should really take the time and invest in yourself; things that you really enjoy, you should do it, but it should be done wisely and everything should be taken into consideration; other activities, expenses, education, children, spouse etc. On the other hand, one could merely make impulsive purchases, buy unnecessary things without future considerations, be reckless with money and rack up a lot of debt, and do not save or invest. This normally does not create a condition for future wealth.

I do think that doing things that you love allows you to really connect to Divinity, that creates a condition of fulfillment.

Deeper meaning

“There is no correlation between money and happiness.”

It would otherwise be very difficult to find someone with very little money who is happy. Or, most people with a lot of money will have the highest level of happiness. You can see how idiotic those statements are. Another way to look at this is to really think about where your happiness comes from. Happiness is a state of perception. Dr. Wayne Dyer said it and he was right.

“Everything that I experience in my life is a result of my perception of what’s out there in the world.”

At a certain level you realize that happiness is a state within and is not achieved by striving for things on the outside. There is nothing out there that can bring happiness into your life. Change your perception and change your life; amazing things will happen.

Check out the article and the comments at Get Rich Slowly here >>>

College Graduates | Be Positive, Challenge Yourselves

I thought this to be an appropriate time to post this article as many people I know will be graduating within the next few weeks. This is a very exciting time, but can also be a time that’s filled with anxiety and perceived as stressful by many entering the workforce for the first time. My advice is simple; Be positive, challenge yourself and let go of all worry. I refer to a quote by Dr. Wayne Dyer that says:

“Why worry about something that you don’t have control over, because if you don’t have control over it, there is nothing you can do so it makes no sense to worry about it.”

“And, why worry about things that you have control over, because if you have control over them, then there is no point in worrying.

This covers everything that you can ever worry about. Therefore worrying makes no sense.”

Let me put this in the right context. We all are aware that the economic conditions may not be ideal and that this environment happens to be one of the most difficult that this generation has had to cope with. This falls in to the first category of things you don’t have control over. We have little influence on the economic climate and macroeconomic conditions; we are not able to control unemployment rates, or interest rates, or housing prices. So why worry about them?

Rather, focus on what can we control.

1. We can control our perception of this environment. We can see it as a challenge or we can choose to yield to it. Many of the great leaders say that in the face of a crisis lies opportunities. Adjust your perception and seek out those opportunities.

2. We can control the opportunities we accept. We can challenge ourselves to find a job that we enjoy doing or that may teach us something that we did not know about ourselves. Many times we are too focused on something that we want, we bypass many other opportunities that may serve as stepping stones. Be open-minded.

3. We can change our spending habits. An environment such as this requires certain sacrifices. Adjust your spending habits to suit the environment. Eat out less, reuse items, spend less on alcohol and partying – choose home entertainment instead. There are many ways to cut back on our wants. Focus on the needs.

4. We can reach out to our networks and ask for assistance. Don’t think you can do everything alone. Reach out to people you have been in contact with at school, organizations, church, family members etc. You never know, they may have openings and many times, who you know does matter.

5. We can be of assistance to our friends, whether we are in an ideal position or not. When you want something really badly, choose to give it away and the Universe will bless you with it in abundance. A great lesson that we all learn at some point in our lives.

6. We can work on our resumes and seek out different types of job opportunities. This is something we have total control over.

7. We can try something new.

I could go on and on, but I think I made my point. Take some time to think about this and you will realize that unemployment is a state of mind. These are the things we can control. Instead of putting focus on what you cannot control, spend time concentrating on what you can control, because in the end, you have a firm grasp on one and not the other.

If done right and with a positive mindset, you will realize how much you have grown from this experience and that there are numerous opportunities for everyone.

I would like to hear your thoughts.