Show me the money

I’m beginning to think there is something fundamentally flawed with this country or at least with the attitude many if not most of us have about money. The other day I was having coffee with a friend and she told me she and her husband were considering putting their house up for sale. They were tired of struggling to pay the mortgage each month. Problem was, places to rent didn’t seem to be much cheaper than the mortgage. As gently as I could, I probed a bit to see how much equity they had, how much saving they had, and what options they had considered. I was trying to figure out if they could do what I did – buy a cheap house, fix it up and live debt free. Turns out, there was practically no equity because they had only paid the standard payment each month for the past couple of years they’d owned the house. Plus, they never saved anything for a rainy day. Thus, if they walk away from the house, they’d have nothing to show for it. Yikes. However, this isn’t the first time or even the hundredth time I’ve heard this. All to often people get the maximum mortgage they can, put as little down as they can get away with and hope for the best. Few understand how mortgages work, what happens if they are late on a payment or how much interest they actually end up paying. I even had someone once tell me it was okay to be late on a payment or two because he thought he had made a few extra payments along the way. Uh, no. Even if he was ahead on payments the bank still expects a payment each and every month and on time no less. But it’s not just house payments we treat like this, it’s all debt from what I can tell. So what if I’m a little behind on the credit cards, car loan, whatever. So what if I have nothing in savings. I’ve got a big TV, nice car, nice house, all the toys. When did it become so okay to live paycheck to paycheck mainly to pay for stuff we don’t need? Surely I’m not the only one who sees the flaws in that kind of thinking. Or maybe I am and this is just further proof I’m a dinosaur. Yup, I’m so old-fashioned I still think you need to have 3-6 months of savings to cover all your expenses in case of an emergency. No job is a guarantee, no car is going to last forever, no one is immune to illness. Yet I sit here and think about how many people I know who have dug themselves into such a financial hole they’ll die in it. It makes me cringe knowing there’s little I can do to help them. But like so many things in life, there is no genie you can call up to make everything work out when you get in over your head. However, here’s a thought – try living below your means for a month just to see if you can do it. I know, I know it’s such an old-fashioned idea. But are you up to the challenge? You might be shocked how much you can save in just a month and how little you really need to live on.