Wednesday, September 28, 2011

Live within your means. Pay yourself first.

I remember once when I was considerably younger that I got myself and my young family really deeply in debt. I just didn't make enough money to pay the bills and still go out on the town and have a LITTLE taste of the good life. It only got worse and creditors were calling me and then the phone got disconnected, but they just knocked on the little apartment door at night and kept bugging us to pay them.

I want to tell you that today, and for a very long time now, that is no longer the case. It is a pretty radical idea, but I want to share with you what I did in order to get out of debt, stop paying interest to everyone and his dog, and actually have enough left to save up for a down payment on a house and a car that would start in the morning. Here goes.

What I did was, I stopped borrowing money and we tightened our belts. I contacted all my creditors and told them how much I made and how much I could truthfully pay them each month (some made me pay every week) and I kept my word. A lot of hamburger and beans and macaroni were consumed during that bad time in my life, but my little family stuck with me. Somehow I managed to keep the car running to drive to work.

But you know what? After what seemed to be a lifetime of doing without and not being able to get extra things for the kids (and that killed me, because I used to put stuff for them on the credit cards) the bills started to get paid off, one by one by one. There were a lot, too. Once the creditors were paid off, we continued to live on a percentage budget, and part of that budget was savings and a little each month for investment. Not much. One day, a few years later, actually, after rebuilding our credit and saving a little out of each paycheck, we found outselves with a new car and then a small two-bedroom house that we actually could say that we owned, along with the mortgage company.

Now, I am not trying to be smart, or trying to insult anyone. Honestly, I am not. But I am here to tell you, as living proof, that the way out of crushing debt and the way to take care of your family, and perhaps your whole country, is NOT to borrow more and more money.


  1. I am at that point in my life where I want a house to call my own, a home for my babes to make memories in, rather than this cozy apartment we have now. There isn't anything wrong with it, except that I am wasting my money throwing it to rent, rather than a home. We are taking small but definite steps to becoming homeowners at least in the next few years if our cards lay right. Unfortunately they do not, and we land in financial hardships quite often, but I still hold onto hope that it will happen.

    Inspiring post, thank you!

    P.S. I don't know if you ever check your email that's in your profile, but I just mailed ya.

  2. Excellent advice. I really hate credit cards on principle - I realize that they have their uses sometimes but I still dislike them. Am a cheapskate Luddite (though a kind of a fun one, I like to think).

  3. I don't disagree in principal. And for an individual, it's a relatively straightforward thing as long as necessities can be addressed.

    The process falls apart with too little/no income.

  4. Well said! I've been there, in a different way, being self employed and never quite bringing in enough to pay all the bills.

    I never did credit-cards. In my case it was a company I'd done a lot of work for going bankrupt, that drove me into bankruptcy. I gradually paid back all my suppliers, and for many years lived without a bank account on a strictly cash economy.
    When I returned to the normal world, the bank refused to give me a credit card because I had no borrowing history.
    What a joke. "So, I went twelve years without ever buying anything i did not already have the money for, borrowing nothing, and that makes me a bad risk?" Yes.
    Countries could learn from me. If you haven't saved enough money, you can't have it. Simple.
    Paying interest to borrow money is stupid. I know most of you have mortgages, but it's still stupid.

  5. Great Post!

    I learnt this lesson from my parents, and I have never been in debt because of it. Like you when they were younger they spent many years having pay off credit cards.

    I've been putting a chunk of change away, every year since I started working, and just this month bought my first house. Yes I probably could have done it sooner, but I would not have been able to live within my means. So apartment living it was until the money was saved us for the life that I can now enjoy.

    Such an inspiring post. :)

  6. Common sense seems to be discouraged in today's world.

  7. Alas for some such cards are the only way to survive! The crooked bankers who overcharge for them ought to be jailed!

  8. @Kell - I know you will have your house, your memories, and so much more. :)

    @Lidian - I have also always thought of you as a "kind" sort of cheapskate Luddite. Fun? You probably could be that too! :) Good to see you.

    @Stephanie Barr - Indeed the plan would fall apart with no income. It is a given that one would have to go out and work. If one were infirm, one would have to earn money with his brains, like Stephen Hawking. A lack of income is seldom terminal, unless being productive is a foreign concept. Taking money from one's neighbor is not really an option - even if you have a government who is willing to steal from your neighbor and then give you his money. This is not something that ever has entered my thinking, and so it wasn't mentioned in my story. The only real choices are "one job or two jobs or three jobs" and "must I really sleep for an entire 8 hours and take a whole day off every week?" Jobs are so plentiful in America today. It has ever been so. I blame an "entitlement mentality" for the disgraceful unwillingness to work, which is shown in our current "unemployment" rate. Admittedly, the jobs might be below the pride of some. Thank you for mostly agreeing that borrowing to live is wrong.

    I admire what you have personally accomplished, and I would love to have your compassion. I am working on it. I am.

    @Soubriquet - thank you for the inspiration. It CAN be done! No, did have a mortgage, but don't anymore. If early payoff is an item in your percentage budget and you are willing to pay the price of independence, you can make it so. "Deferred Gratification" is a term that is very foreign to many today. Pity. It is how my country was founded. And it is the so-called "secret" of how people get to be wealthy.

    @Caroline - You are a shining example. I know how hard you've worked. At least I know a little. You are amazing! For a quiet little Geordie girl to break out and pay the price to become an international superstar at the helm of one of the world's largest corporations....!!! It boggles. Ok, so you are still a couple steps away. :) :) But the truth is, though County Durham is worlds away from where you are now, you've kept it in your heart. The U.S.A. got the better deal when you showed up!

  9. @Julius Cicero - I agree. I have hopes though. :)

    @Adullamite - No! Well, maybe one or two. But get 'em from your bank as a debit card if you can and don't do credit at all!

    Yes! Yes! Yes! String up the crooked big bankers! Especially the Royal Bank of Scotland! (Who I owe a bit o money to until the end of the month. I admit.)

  10. ..and never was a truer word said... live within your means not without them and the world would be a richer place.



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