What Not to Do

Let’s take a few minutes to talk about what not to do with money. This topic comes to you from a real family I know. Their finances, the parts I know about, blow my mind. For a family of four:

Known Expenses:
Net income: $7,000
Mortgage: -$1,200
Electric: -$400
Vehicle payments: -$800
Groceries: -$1,200
Insurance: -$500
Credit Card: -$550
Mower payment: -$300

Estimated Expenses:
Natural Gas: -$200
Gas: -$250
Cable/Internet: -$100
Clothes/Accessories: -$300
Cell ph0nes: -$300
Restaurants: -$300
Misc.: -$500

Total left for savings: $100

This does not include any savings for retirement or… much of anything, really.  And most months, there isn’t any savings. In fact, these people have around $22,000 in credit card debt.  Wow.

I have spent a few days trying to wrap my head around this since it was disclosed to me because the only credit card debt I have ever had is the less than $3,000 on my 0% introductory interest rate credit card.  I pay 0% interest which allows me to float my money for a little longer rather than taking it out of savings.  I recognize that financially, I am a little on the frugal side and I find joy in things like saving for retirement.

But let’s talk about what these people are doing right and wrong.  The right thing is their income.  $7,000 take home pay a month is pretty awesome, especially since we are in a low cost of living area.  So that’s good news for them.  But my goodness, expenses! The mortgage payment isn’t bad but everything else is still crazy.  How can a family of four spend $1,200 a month on groceries?  And the electric bill?  Turning off lights is helpful.

The Old Man and I are fearful for the financial wellbeing of these people.  They are less than one disaster away from financial ruin.  And they having nothing saved for retirement except for the provided pension, which isn’t much. And to make matters worse, after a windfall of nearly $2,000, they are customizing a vehicle rather than paying a credit card down.

That, ladies and gentleman, is what not to do.

 

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About His Polish Princess

I'm an engineer by day and an entrepreneur by night. I live with my Old Man, and our cat, Junior. Okay, so the cat is mine, not ours. I have some old fashioned opinions and I believe the unlikely can be achieved with hard work and a little bit of luck. I like cars and motorcycles and remodeling houses and taking risks. I love my family and my community in Small Town, USA. I believe life is one grand adventure that should be lived and thoroughly enjoyed. In 2013 I was diagnosed with an autoimmune disease and focused on natural healing. Fortunately, my disease has been in remission since 2014. In 2015 I was diagnosed with Hodgkin's Lymphoma. These things are just a road bump in life. They won't stop me from remodeling or buying houses or starting new ventures. Life is all about how you see it.
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