Your Happiness Is Worth More

Maneuvering through adulthood isn’t the easiest thing to do. You have bills to pay, kids to raise, a job to work, and other things that demand your time – or money.  Being fashion conscience is always one of our desires as it assists in putting us on platform that alludes to saying, “I made it” or “I’m responsible” or “I’m a man/woman.” But what does it really mean when you really can’t afford it?

I’m often alarmed at the impact social media has on our communities when it comes to displaying what we’ve acquired. Reality shows that fabricate the life of the rich and famous where the actors wear high end fashions, the men or women are draped in expensive jewelry and drive lavish cars while living in their huge houses.  The sad reality, from a financial perspective, is that many of the items that we buy loses its value as soon as we purchase them. For example, research says that a new car loses 10% of its value the minute it’s driven off the lot, and an alarming 60% of its total value over the first five years of its life.  So, why is it important? Why do we struggle – or front – to acquire things when we know we can’t afford them?  We max out our credit cards, take out high interest loans, or borrow money from friends and family with no intent to pay it back. It’s all based on living outside of our means.  Unfortunately, it has a domino effect and impacts every area of your life.

Today, I want to share some tips on recognizing when you are living outside of the scope of reality and placing restrictions on your future.  So, how do you know when you are?

1. You live from paycheck to paycheck. 

Working a job is a great resource for your household and needed in order to handle responsibility.  However, always being broke after you pay your bills isn’t the purpose of getting paid. I’ve heard, “I’m broke, but at least all of my bills are paid!”  That’s commendable, but life or punching those 40+ hours a week shouldn’t equate to you being satisfied that you paid all of  your bills but have nothing else to show for why you worked.  Acquiring money is an option to allow you to save, invest and build an opportunity for the future.  And, having more expenses than your income puts you in a dangerous situation.

When I began my professional career, an old director of mines welcomed me to my new position and said, “now that your a full-time employee remember to always save something for a rainy day.”  Now, being 23 years old, fresh out of college, and making 32,000 a year pushed my way of thinking in a different perspective.  I was thinking now that I make more money, I can do more things.  Terrible mistake!  Financial planners say that you should save at least six months of your job’s income for a rainy day.  Your rainy day can be getting laid off, or a tragic event that causes you to need to do something that requires resources.

Advice:  As your income increases, do not become distracted by believing it’s an opportunity for you to acquire more.  No, it should be opportunity for you to save more and diversify your portfolio to plan for the future.  Consider those big purchases (house, getting married, etc.) and what it would take for you to get them.

2. You can never pay for anything with cash.

Credit cards are great when needing to have access to money instantly to fund a project, or purchase a flight somewhere to check on a sick family member, or take a vacation and not wanting to touch your savings.  Credit cards should be viewed as an “emergency resource” and not an everyday option. However, credit cards, in all of its glory, is a loan.  You are borrowing someone else’s money to make a purchase.  It must be repaid and it must be done on their terms – meaning you will be paying something extra for using their money.

Advice: When considering making a purchase plan for it. Do not impulse shop (the buying of goods without planning to do so in advance) but consider the impact that it will have on your finances.  Cash has spending power and being able to pay and plan for things pays off.  For example, lets say you see something you want or know of something that you want to get in the future.  Begin to set money aside for your purchase.  Maybe put $25 aside every time  you get paid, or pick up a hobby that allows you to generate extra money.  In either way, it’ll allow you to appreciate the value of money and how if managed correctly, can make life easier.

3. You are robbing Peter, to pay Paul.

I’ve heard this saying so much in the church – if you could see my face.  Bill are inevitable on every level. You are born into the world with bills and you will die with one – your funeral.  However, it doesn’t warrant a free pass to not pay them.  You know you are living outside of your means when you have too many bills and you’re strategically manipulating dates (finding out when is the latest you can pay before it’s a negative impact on your paying history).  This is robbing Peter to pay Paul.  You’re shuffling finances from one bill and putting it on another in order to satisfy that obligation.  Unfortunately, sometimes they show up at the same time.  What do you do then?

Advice: Simply take some time to sacrifice the things that you do but don’t necessarily need to live.  For example, you might have cable – cut it off; you might eat out every day – cut it out and cook; or you might have a high cell phone bill – downgrade!  Use the extra money to then attack those bills that you have.  Often people are in this situation because of credit cards.  You have more than one and they are high interest.  Merely focus on paying them off with the extra money and cut them up.

4. You are okay with paying fees!

One thing that I’ve never been fond of is giving money away.  Now, I’ve loaned money and never got it back – that’s another article in itself – but the mere thought of giving money away pains my stomach.  If you find yourself one that says, “I’ll just pay the overdraft fee because I need this” or “I’m going to be over my limit but it’s worth it” then this is a problem.

It is never okay to give your hard, earned money away.  It’s like saying you going to work for free and  you have no use for the dollars that you could earn.  Fees from any banking entity are costly and range from $25-$35 for each item, if not more.  It’s never worth giving that money away.  Ever.

Advice: Don’t purchase it if you can’t afford it or don’t have the money in your account.  Also, take control of your finances and do not allow others to automatic withdraw/deduct from your account. We sign up for these features but have to stay on top of when the payments will come out.  If you forget – and the money isn’t there – you’ll find yourself subject to a fee.  Each month, take time to manage your bills and adequately prepare for what needs to be paid.  Bill pay is an excellent choice and it eliminates the option for consumers to automatically take money out of your account putting you at risk for overdraft charges.

5. You know from the start that you don’t need it.

Unlike impulse buying, knowing you don’t need something and buying it anyway is a terrible habit to have.  This is different from rewarding yourself from time-to-time, but merely going out shopping every weekend because you think “it’s the thing to do” and you find yourself with having all of this stuff that sits and collects dust (I’m guilty of this).  If you say to yourself, “Do I really need this?” it’s indication that you really don’t and the item can and should stay on the shelf.  No matter how nice it is.

Advice:  Listen to your first mind and realize that the money you spent could’ve been used for something else more important like saving for a college education, buying life insurance for your children, improving a property, or investing it in a stock.

Well, that’s all I have to share with you today.  Hopefully, these five tips help you to think better about what can be done differently as it relates to your money.  Live life stress free, by eliminating the debt that entraps us.  Don’t let life fool you; it’s perfectly fine to downgrade now, to upgrade later.  You’ll definitely thank me later.