Credit Card Blog & Article Area
Blog Post Date: Oct 19, 2005
The news has been crazy lately with regards to finance and economy. Interest rates are rising, gas prices are up, record bankruptcies filed with the new bankruptcy laws coming into place on October 17.
One of the good things about reading personal finance blogs is that I've learned about how to get finances in order.
Quite frankly, even with a depressed economy, if you've got your finances in order, you're going to become more depression proof.
I've heard news where people making $50,000 to $80,000 are having trouble making ends meet! The elevated gas prices are taking a bite of the life styles of people making $80,000 per year? That's ridiculous.
Many years ago, I visited a family who had a combined income of $80,000. I was trying to sell them a $20 per month subscription to an education savings program. As I drove up to their house, I noticed they had a boat, a RV, motorcycles skidoos and more toys. I thought to myself initially that these people must be loaded. They showed their wealth pretty well.
After talking to them for a while, they were genuinely discussing whether they could afford $20 per month for their child's savings program!! $20 was going to stretch their budget. I never forgot that example.
I don't have much sympathy for people who make lots and spend lots and save nothing. If a person has a 'live for today' policy, then enjoy today. I certainly hope that nothing happens to upset these people in the future.
Middle income people who are used to living free and easy with their money, may have to adopt a little more conservative approach to spending their money. I'm hoping that with the vivid examples of Hurricane Katrina and Rita victims, people will get the idea to save up some reserves to help through slow economic times.
Ideal scenario:
Let's say that you've been prudent to keep your credit card down to a minimum and have adopted a 'purchase needs only' mentality. You also have saved up enough reserve to pay your expenses for 3-5 years.
You'll be sleeping much better than a person who makes $80,000 per year, spends it all and loses his/her job. Especially if this person is used to the $80,000 per year lifestyle with all of its expectations. People who are used to spending $80,000 per year have a tough time coming down to earth if their income source is all of a sudden wiped out. (Being self employed I've seen the ups and downs of business and have experienced this a few times over the last 20 years.)
Recession is a state of mind. If you've got money in reserve and have cut back your desires to a level that you can afford, you won't be affected by a recession or depression.
That's the good news!
By Monty Loree - Financial Maturity blog - Topic - recession, depression, get reserves saved up. Get your financial expectations in order.
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