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Responsible Spending - Is there really such a thing?






INTRODUCTION:


Greetings. I hope this post finds you all well. Tonight's topic is not only related to our present economic times, but it is also a requested topic from a subscriber. If we all want to be honest, everyone wastes money and sometimes spends it foolishly. Why not? We've been doing it since we started working. Therefore, we are creatures of habit.


However, gone are the days of private pensions. Everything is now 401K or other savings for retirement from your workplace. As a retired career firefighter, I was fortunate. I had one of the last private pension plans before many municipalities switched to 401k's. Why do I say fortunate? Because physiologically, we don't think to dip into our private pensions. In many cases, you cannot. However, you can borrow from your 401k. People do that more than you think.


However, what happens when you reach retirement age and realize you never paid back that loan against your 401k? Unlike private pensions, where you cannot change your contribution amount, you can with your 401k. As times became financially difficult, many municipalities and private companies found switching to a 401k plan cheaper and easier. And let's be honest here. When it comes to saving money, large companies and municipalities jumped all over it.


The result was that the burden on you to plan for retirement increased tremendously. It wasn't that long ago when the market took a nose dive, and people lost their entire retirement funds. This resulted in people having to be diligent when planning for their retirement. Some have, and many have not. Let's talk about why.


RESPONSIBLE SPENDING:


Who do you know that spends responsibly? I am willing to bet that there are very few. Money is a necessary evil. We need it for everything: food, our homes, children, and everyday necessities. The key word in that sentence is necessities. Here is a good article on why people spend more than they earn. Take a look.


People struggle with what I call the balance between wants and needs. You want it, but you don't need it, or you need it, but you don't want it. The second part is the dangerous one. Usually, when we spend money because we want something but don't need it, after a short time, we never use it. Some people are like this with clothes, shoes, handbags, tools, etc. That is a different form of spending versus when your central air breaks down and needs replacement in the middle of the summer.


Let me ask you this. How often have you bought something you rarely or ever used, and now you need the money for a necessity? You sell it at probably 50% less than what you paid for it. You lost money. Part of responsible spending is controlling your spending. When you are rolling in the dough, you don't worry about it. Also, believe it or not, you cannot deprive yourself of everything. That is not mentally healthy. It's a balancing act.


This credit card debt in this country is astounding, and the interest rates continue to climb. Why? Because people spend more than they earn. Heck, I did it for years. We all do. Then we learn. Or, hopefully, we do. I did. Many years ago, the smartest decision I ever made a long time ago was to take charge of my finances. My father used to say:


"Overtime isn't guaranteed. Live off your 40 hours paycheck and save your overtime money. One day you'll need it."


Did you ever wonder why your parents were usually right? It's simple. They were usually right because they made the same mistakes and learned the hard way. I remember a time when I was much younger when I accumulated a considerable amount of debt. Each week I got my paycheck, and it was gone. I thought to myself, this is ridiculous. I'm working just to pay bills. Sound familiar?


Responsible spending starts with self-control. People are impulse buyers. They see it, and they like it. They buy it even if they don't need it. Companies that produce infomercials know this and rely on this to sell their products. Every store places its impulse items by cash registers. While standing in line waiting your turn, you see it and put it in your carriage. It's a marketing strategy and a successful one.


WHY DO PEOPLE SPEND MONEY?


People spend money for various reasons. One might be because something has broken and needs repairs. Everyday necessitates, and the like. However, there are people who spend money out of boredom, depression, ended relationships, insecurity, low self-esteem, keeping up with others, and a variety of other reasons. These people will find themselves in debt with very little savings. My problem was I had a couple of friends who always had nice things and made more money than me. I bought things to keep up with them. That never works. My children were young, and there was a great deal I had to plan for. I had to fix it. I was one of the lucky ones, but not without first making sacrifices and changing my spending habits. It wasn't easy at first, but in a short time, it became a new way of living, and eventually, besides my everyday expenses, was debt-free. I had money for vacations and other things we wanted that made more sense.


It's nothing to be embarrassed about. Millions of people make these mistakes. People who have accumulated a lot of money got to that point because they always had self-control and controlled their spending responsibly. That is how they achieved this, how they will keep it, and how they will make even more money.


When we do something for ourselves, it rewards us with immediate satisfaction. We feel better about ourselves. However, that is a short-lived feeling when the bills start rolling in. So is money the root of all evil, or are we our worst enemy?

I've told this story to so many people over the years. I had a good friend who owned a small house. Unlike most, as his family grew, he never sold his house and bought a large home. He never increased his debt. He always said, "Why bother, we they grow up, they will move out, and I'll just be buying a smaller house again."


He bought his home for $64,000. Yes, he made some upgrades over the years. However, his house was paid in full when his children grew up and left for college. He had no mortgage and wouldn't have to pay probably $200,000 or more for the same house he paid so much less for—not counting all the money he saved over those years. We are still friends, and he and his wife live very comfortably with NO financial worries in that house. They both took early retirement. They travel, own a boat, go out whenever they want, and live a fulfilling life.


Not everyone can do this. Some people have to have more. That is their choice. However, it's a recipe for disaster if they cannot afford it. Most financial folks will tell you to have at least 3 to 6 months of expenses in your savings account. For some, that can add up to quite a bit. We must realize, and most know, it takes no time to spend money and more time to save it. It takes even less time to rack up some considerable debt and could take many years to pay it off.


Think about this. At today's interest rates, a $10,000 credit card making minimum monthly payments would take more than 26 years to pay off. Most people in debt rarely make more than the minimum payments because they have so much other debt. Is that responsible spending? The key is NOT TO GET THERE IN THE FIRST PLACE. Look at these stats courtesy of Credit Karma. Remember, these figures are only for one credit card. People usually have more than one. Here is the link. Take a look.


Generation Ages Credit Karma members' average credit card debt


Gen ZMembers 18–26 $2,781

Millennial 27–42 $5,898

Gen X 43–58 $8,266

Baby Boomer 59–77 $7,464


We are a society that is in great debt. Do the banks make it too easy for people to get credit? Possibly so. I remember when I was young; it was difficult to get a credit card. Today, you can file for bankruptcy and have a new credit card in 6 to 8 months. Therefore, does the fault rest solely on society? You decide.


There is nothing wrong with having some debt. Most people will because the car breaks, the refrigerator needs replacing, etc. When I bought new furniture, I bought it at 0% financing for five years. I knew I would pay it off, and why take my money out of the bank when I could use theirs for free? Wouldn't you call that responsible spending?


HOW DO WE FIX OURSELVES?


One of my favorite sayings goes like this:


"The first step in solving any problem is realizing you have one."


Should you determine that you have a financial problem, the first thing you must do is form a plan. Part of that plan should be putting some money into your savings account weekly. It takes time to add up, but it does. You look at your total income after taxes and what you must pay. Hopefully, what you have to pay out isn't more than what you take in. If it is, you need to make other arrangements, and talking to a financial planner may need to occur.


Now you must put yourself on and stick to a budget—no more foolish and wasteful spending. Yes, you will have some sacrifices to make, but they will all be your gains in the long run. If you have a compulsive spending disorder, you must seek counseling to help you overcome it. This is all part of realizing that you have a problem and what it is.


Nothing comes easy in life without some form of sacrifice. None of this applies to you if you are wealthy, and God bless you. This is for those who aren't rich and struggle daily. It is a struggle. A struggle that puts you in a downward spiral. However, it can be turned around with patience, desire, diligence, and sacrifice. The result is your reward.


IN CLOSING:


Forest Gump is correct. "Life is like a box of chocolates. You never know what you are going to get." Whatever your situation is, you can control it. You can turn it around and live a much more comfortable life with less worry. People can support and guide you, but only you can exercise self-control and responsible spending. As long as you are willing to work, sacrifice, and keep your eye on the prize, you will succeed. Also, please don't fool yourself by saying I wish I were rich.


Wealthy people have problems as well. Many rich people have filed for bankruptcy due to divorces and other things. Lack of self-control and irresponsible spending is not limited to blue-collar workers or middle-income American families. Money goes to people's heads. Some can handle it, and others cannot.


This is why it is said that money is the root of all evil because you can't live with it, and you can't live without it. All you can do is properly manage it. Thank you, and good luck. I hope this post helped those having these issues.


Please feel free to leave comments, or if you have a topic you would like me to discuss, you can email me at crondina@caesarrondinaauthor.com. Thank you.


Be safe, stay well, and focus on being happy. And remember to always:


Live with an open mind,

Live with an open heart,

Live your best life.


Best Regards,



Caesar Rondina


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