Saturday, November 27, 2010

Dum spiro, spero

While I breathe, I hope.

I think these days a lot of people are finding it harder to hope for a better future. Between the economic problems we all face in one way or another and the fact that our government is rife with corruption and refuses to listen to the will of the people, it's easy to just give up and see the entire situation as hopeless. But I feel like the more we learn about the problems in the world the more able we are to face them. Rather than see each terrible story on the news as another thing to weigh you down at the end of the day, you should look at it as being informed of a potential threat to your own happiness and well being and that now, because you are informed, you can take steps to work against it.

A study released back in September found that the average person becomes free of the daily stress of life when they make about $75,000 a year. According to the study, this was because that much money easily allows a person to cover all the basics of life (food, bills, car costs, etc.) without having to worry about living week to week or even month to month. Now I would love to make that much money and I know you would too. But unless I run drugs, guns or illegally pirated software, that kind of salary isn't going to happen anytime soon.

However, I think that the study has a point in that financial peace of mind is important to a person's quality of life. When we don't have to worry about being able to make the bills, when we don't have to worry about being able to put food on the table or make sure we can get to and from where we need to be, our lives become better simply by not having to worry. Unfortunately, we're in the tough times and money doesn't grow on trees (unless you're the Federal Reserve, then it grows on anything you damn well please, but I digress.)

So what can we do when everything seems hopeless? A lot more than you might think. Individually there are a lot of things that we can do to secure our own freedom and our futures. I think the first and most important one is to change the way we handle our money.

When I think back to the nineties, a time when I was in middle and high school, it was a golden era. Of course, most people didn't realize that in another decade it would all come crashing down around us and that was the problem. It was an age of free spending and free credit. Technology was advancing at staggering speeds and there was always something new and awesome for us to spend money on. Not to mention that this was the time when the idea of purchasing a house as an investment rather than as a place to live started to become popular.

This is the time that really shaped who I would become and that was a very bad thing. Raised in ignorance with no real idea of what the value of a dollar meant or how much a trap credit really is, I made a lot of mistakes that I've since paid for and continue to pay for. But I've learned a lot of good lessons, especially over the last year and I think that there are still a lot of people from that time, in that generation, who aren't learning those same lessons even as things have gotten harder for them.

So here are a few tips that I've gathered over the last year that have helped me better manage my own finances and made it possible for me to pay off my debts and still keep enough money that I don't have to live paycheck to paycheck.

1. Keep track of your spending

Make a list of what you spend money on for one month. It doesn't have to be a fancy spreadsheet, just a pad and a pen will do. Then write down what you buy no matter how big or small. Buying a car? Write it down. Buying a candy bar? Write it down. All your expenses need to be recorded. Then at the end of the month, look at what you've been spending money on and you'll probably find you waste more money then you realize.

2. Save money

This can be a really hard one for a lot of people but it's important that you put aside something. Even if it's only five dollars a week, ten dollars a month or just the change in your pocket. You need to build a savings. Most people think that their savings are for retirement but more important is saving for an emergency fund. This is the recommendation of Dave Ramsey, author of the fantastic book Total Money Makeover. He advises saving a thousand dollars as quickly as possible and then not touching it unless you have a real emergency. Having this kind of cushion, even if you can't get to a thousand dollars just yet, will relieve you from stress you didn't even know you had.

3. Cut costs

We all know the stereotype of poor, single people and moms who work on a budget clipping coupons, searching endlessly for deals and doing whatever they have to in order to stretch a dollar. This shouldn't be a stereotype, it should be a way of life for everyone. That list you made to determine what you spend money on can really help with this, because if you keep buying the same things over and over each month then you should consider finding a way to find them at a cheaper price. Quality is worth paying for but considering that most of the shit in our stores these days is made in Asia, you aren't exactly going to get top quality. And shopping cheap doesn't always mean you're getting second rate goods either. I could write an entire post on ways to cut costs, and I'll probably do so in the future, but for now use your own imagination and don't be afraid to do a little research.

People need to stop watching the news and feeling that there's nothing they can do about their situation. In these times, which people call "tough times", I like to remember the words of the great Malcolm Reynolds.

"We have done the impossible and that makes us mighty."

Time for us to be might again. Peace be with you.

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