Instant gratification debt traps

Are you in debt?  Do you have student loans?  A credit card?  A mortgage? Car payment?

I don't.  In fact I don't have a credit history.  People around me keep telling me I need to build up a credit history.  But for what?  A car?  A house?  A 100 foot yacht?  I can buy the first one in cash, the second one I intend to build, and the third one I have no use for or interest in.

Ok so, my expenses are very low. I don't have a child or a girlfriend.  I'm generally healthy and I don't rush to the doctor when I get a cold.  I have a decent enough job, though it is unstable.

There was a time in America when you wanted a radio, you put a quarter in a jar every week until you saved up enough to buy it.  Of course I'm not old enough to remember this, but the sentiment has always appealed to me.  I only ever buy what I can afford at that moment.  Whenever possible, I live well below my means.  This allows me to save my money to make investments, and have my money work for me instead of against me.

When things happen and I lose my job (Hello temping), I have a safety net there to dip into if necessary.  When the economy goes bad and people are dumping their items well below their items for quick cash, if I'm interested I can buy it.   When the economy crashes, smart investors can make money.  Remember buy low, sell high?  Desperate people sell low.

A friend studying economics and philosophy once told me, "I think you can only be truly free if you're very poor or incredibly wealthy."  I suppose there is some truth in this.  If you're incredibly poor, you're probably out existing somewhere, though you are at least existing on your own terms.  Just remember to stay out of prison.  If you're incredibly wealthy, you can buy all the legal help, judges, officers and politicians you need to keep you clear of harsh prison sentences.

However!  There is no need to keep up with the Joneses. Living well below your means will help relieve some of your financial worries and give you more time for yourself.  Hey, working 12 hour days 6 days a week makes for a pretty pay check, but unless you really *LOVE* what you do, it will take it's toll quickly.  Having a job you absolutely can't leave because of financial reasons can make you feel trapped.

This is not to say I'm a complete penny pinching miser.  I tip generously when I go out to eat or drink, though I go out rarely.  I spend money on quality items that will last. I spend money on various interests of mine, like books and movies, beer making supplies, and camping gear.  However, before I make a big purchase I research it throughly, and try think of this:  "How much money do I make an hour?  After taxes?  Expenses?  Time spent traveling?  Things I absolutely have to buy to work?"  After you figure out what you're ACTUALLY making per hour, take a look at what you're about to buy and divide that by your actual hourly rate.  Is it really worth that many hours of your life to purchase?  For me, it generally isn't.

If you're interested about this, check out "Your money or your life" by Vicki Robbins.  There are some outdated parts, like the whole "Invest in 4% bonds until your returns cover your daily expenses!"  Good luck finding a bond with that return.  Also, you have to factor out how much you're losing in inflation every year.  However, investing your money wisely in responsible companies and having it work for you is a good thing.  So are the tips on how to reevaluate your spending habits.

Pay off all your debt.  Credit cards first, then prioritize whichever has the highest APR.  Pay well beyond the monthly payments.  Stop wasting money smoking cigarettes and going out to the bars every night.  Take a bike instead of a car.  Plant a garden.  Compost and recycle to save on trash pickup. Once you're out of debt, save enough to live on for 6 months.  Make the purchases you honestly need, and invest the rest wisely.  Do what you can yourself, and enjoy your life!  

simplify, simplify, simplify