You know, I don't really talk about world events much on this blog but today I'm going to. I'm not gonna preach but I want to say a little something about the economic woes that so many, from the wealthiest CEO to the poorest single mom seem to be facing these days. I have two things I want to say about this. The first is this...have a plan....
You see, we have had a very expensive and eventful year here at the Searcy house. I pay the same high gas prices everyone else does. Alicia's medical expenses have been significant. My truck was totaled. Food prices are over the top. The price of copper magnet wire and many other parts have been way up this year. We have had some unexpected trips to the vet with the dogs and I just learned I need $1000 for some dental work. But we are ok.... we have made it through all or these expensive things and we're still truckin'. Every bill got paid on time or early. Alicia and I were able to make it through this tough year because we have a plan. We haven't worried one single day about the bills getting paid or if there was enough money for gas. This has caused some of our friends to ask how we are able to do it.
Over the last month I have had talks with two different friends that are on the verge of losing their homes. As I talked to each of these families one thing became clear to me. These friends of mine were all living life without a plan. They just sort of bumbling along, hoping things will work out in the end. While none of them would qualify as rich they make good money. However this chaotic attitude towards finance insures that they live pay check to pay check year in and year out. They use debt and credit to impulse buy huge items like TVs, boats, cars, AVT and yes.... guitars that should require planing and bargain shopping. It's not hard once someone has developed this style of borrowing and spending to actually spend more money every week than they make. Once someone is on this road all it takes is one good pothole like sky high gas prices, slumping sales or a medical bill to send folks running to credit cards, payday loans, title loans, home equity loans anything to scrap together the cash to just barely make the minimum payments on this mountain of debt all the while being eaten alive by late fees and penalties. Maybe, as in the case of one of my friends, it starts sounding smart to float the mortgage just one month to get a little cash freed up.
Does this sound like you? Alicia and I used to live a similar way. For years I thought "well... we live paycheck to paycheck because we don't make enough money." But over time, as our income increased it became clear that this was not true. We were broke no matter how much money we made. The problem was how much we spent. Finally we got fed up with all the stress and chaos and bad interest rates and bounced checks and minimum monthly payments. We sat down and started working out a plan. The plan consists of three major parts. The first part is a budget. To start gaining control of your finances you MUST sit down and do a total, prioritized, written budget for your family. Spend all of your money on paper before the month so you can finally see where it's going. You might be surprised to see what your Starbucks habit is costing you. This doesn't mean you need to cut out Starbucks but if it's going to be a priority for you then the $30 or so it's costing you has to be included in your budget. For more information on making a budget check out Dave Ramsey.
The second part is a simple philosophy. Never spend more than you make. It's a small thing that has changed our life but it's one of the hardest for others to understand. Basically what this means is that we never borrow money. Alicia and I don't have a single credit card anymore. There is no car payment. No lines of credit hold up Searcy String Works. And they never will. If we don't have the money for something we want then we simply have to wait until we do have the money. Usually I hunt for a better deal while we am saving up the cash and many times I am very successful. We don't owe a dime to anyone accept for my hose payment and we are knocking that down as fast as we can.
The final part of the plan is to save money. Keep enough money in the bank to pay 6 months worth of expenses should you lose your job. This is a good number because it will cover most other things that come along too. Think about it for a second. Almost all those little and sometimes big emergencies that take such a heavy toll on our wallet have been a long time coming and are easy to see. Your tires are going to need to be replaced. You roof is going to leak. You are going to get sick. Your car will die and need to be replaced. Your kids will need to pay tuition. These things are not sneaking up on you in the night like a Ninja. They are 60 yards out and barreling at you like a line backer. Be prepared. Don't expect a bailout.
Any way... I hope I don't sound preachy here. That's not my intent. I am Thankful for all that we have this year and I want to share a little of that with you. Take care of your money and you will be able to take care of yourself so that you can take care of those you love. If every one from the wealthiest CEO to the poorest single mom used this simple plan the nightly news would look a lot different.