By: Tom Chatham
There are many character flaws that humans suffer from. Some are just inconveniences while others can mean the difference between mere survival and prosperity. Many people go through life in a never ending series of failures and can never understand why. Rather than look at their actions and make an objective determination of what went wrong, they would rather go on thinking it was not their fault for the failure.
As a smart man once said, doing the same thing over and over again expecting a different result is the definition of insanity. But this is exactly what most people do on a daily basis. It can be obvious to someone looking at them from the outside but is not obvious to the person themselves.
One of the character flaws people suffer from can be described by many different names. You might call it normalcy bias or procrastination but it amounts to the same thing. You fail to do something you should do based on the current information available to you. This may simply mean you fail to take advantage of a job opportunity, make a good investment or it could be something that spirals out of control and affects your whole future.
Information is your reality check on life. Just like intelligence in a war zone, it can be acted on or dismissed. What you do with it will determine your outcome in the future. A piece of information that you find contrary to your prevailing feelings does not make it true any more than it makes it irrelevant. What it does mean is you should investigate it further and determine what effect it will have on your future plans.
Here is one example. You have a few thousand dollars saved up for emergencies. You have a family to care for and a mortgage and car loans to take care of. The payment of all your monthly bills require the combined income of you and your spouse. One or both of you lose your job and have difficulty finding another. You now have hard facts in front of you to process.
You cannot pay all of your monthly bills with the current income. Even if you reduce your expenses you still will not have enough money coming in to cover the basics. You have no choice but to dip into your emergency cash to make up the difference. The amount of cash reserves will keep your bills paid up for several months before you run out of cash. Here is the disconnect that most people have.
What will you do after the cash runs out? That is the question most people refuse to ask themselves and the reality they refuse to look at. Most people will run things out until they have no resources left to control their future. Only then will they face the reality they were faced with several months before. They just assume and hope something will happen that corrects their problems before they run out of money.
Rather than investigating the job market and accepting the reality that they may not find another job quickly and making plans to deal with that reality, they just continue life as normal until time and money runs out for them. Unfortunately this hypothetical situation has become reality for millions of Americans.
What could they have done? There are many things they should have considered before their financial resources ran out. They could have looked at selling their house and cars and downsizing to make their remaining income sufficient to live on. They could have looked at job opportunities in other cities. They may have determined that moving in with relatives for a short while would be the best solution.
In an extreme case of job loss they may have determined that buying a travel trailer or RV to live in and some basic supplies to live on for several months would be the best way to avoid possible homelessness. An objective evaluation of their circumstances would have provided a realistic look at what they were facing but many will forgo this approach to feel normal as long as possible and will then suffer terribly for that lack of foresight.
This is one character flaw in humans that allows them to dismiss possible danger and walk off a cliff with both eyes open. The lesson here is simple. We must constantly question and evaluate our situation and accept those things we want to dismiss just because they make us feel uncomfortable. Regardless of how you want the future to play out, you must always treat reality with the attention it deserves. You can ignore reality, but you cannot ignore the consequences of ignoring reality.
By: Tom Chatham
It’s easy to get ahead in life if you have a good paying job and everything always goes your way but for most people that is not the reality they have to live with. Most people take prosperity as a given and put little effort into controlling where they are headed. Most just assume that if they get a job then they can have everything they want and life will somehow just work out fine. For some people that seems to work but these people are not in the majority, at least not anymore.
The times are changing and most will have to reduce their dreams to something more realistic in the coming years. Having a smaller paycheck does not mean you have to suffer from lack of necessities, it just means you have to be more thoughtful where every dollar goes in order to get the most from it. With fewer dollars to draw on it may be necessary for you to redefine what you consider a good quality of life and work towards those ends. The following are some of the things you need to consider that will help you make the best use of limited funds and insure a good life.
Have a long range plan-
Deciding where you want to end up in life will make your journey far easier. Even a simple plan will help keep you on track and moving in the right direction. Having a written plan will reinforce your desires and help motivate you to stick with it. Modify your plan as time goes on but always keep it realistic.
Buy used and save-
Part of life is the accumulation of stuff. Some things will be necessary while others are just trinkets to be looked at. Get ahead and fulfill your long range plan sooner by buying used items that you need. This will make your limited funds go much further and allow you to shop around for good deals.
Live on a budget-
Make a spreadsheet and list all of the expenses you experience during the year. Across the top of the page have 12 columns, one for each month of the year, and one column for a total. List the recurring expenses for the entire year and estimate the rest. Things like rent or insurance will be fairly regular while things like power or gas for your car will be variable. List everything you might possibly spend money on during the year so you can see where your money goes. This will help you to identify areas where you can reduce expenses. It will also show you what you can expect to have left every month after paying for your needs so you can plan for future purchases or implement a savings plan. This is helpful especially when you have large bills some months and must set aside funds during prior months to help make all of your payments.
Be as self sufficient as possible-
Those with the least needs and wants have the most money. If you can reduce the amount of food you buy or the amount of fuel you use, that money will be available for future needs. Having the ability to produce some things for yourself can make a big difference in your financial bottom line. Instead of giving that money to others you will essentially be paying yourself for those things you can provide.
Don’t try to keep up with the neighbors-
The fastest way to get in financial trouble is to try to have everything that your neighbors have. It may be fine for them but you have no way to know if they can really afford it or are setting themselves up for bankruptcy in the future. You do not want to follow them to the poor house just for the sake of envy. They may have financial assets that you don’t and can afford it while you cannot. Don’t fall into this trap. Live within your means.
Cultivate cheap tastes-
Having a good quality of life does not have to be expensive. A walk in the woods or a picnic beside a lake can be relaxing and rewarding if done with someone special. Playing board games or going bike riding can occupy kids for hours at little expense. Developing a hobby such as gardening or wood working can provide relaxation and a feeling of accomplishment when your task is done so don’t overlook productive endeavors. The further you remove yourself from our technologically advanced world the more real enjoyment and savings you can realize. The expensive stuff is nice but don’t let it rule your life.
Pay with cash instead of plastic-
It is so easy today to see something you want and just buy it without thinking. When you have to pull cash out of your pocket to pay for something the act of spending your money is much more personal. When you see the money you are handing over it makes you realize you now have that much less where using plastic is very impersonal and your finances are reduced to nothing more than a figure on a balance sheet that means little. Using cash makes you think before you buy.
Reduce, reuse and repair-
Reduce your wants to a realistic goal so you are not wasting money you will need in the future. Reuse things you may normally throw away to save and make you more aware of the money you are wasting every day. Try to use items you can repair when they break instead of buying a new one. Learning a skill such as sewing, appliance or auto repair can help you a great deal in the long run.
Save on a regular basis-
This does not have to be a lot of money. If your finances are tight, start with 5 or 10 dollars a week. Once you are in the habit of saving it will be easier to increase the amount over time. One way to help you save is to make it inconvenient to use the saved money for impulse purchases. Storing your savings in rolls of coins or gold and silver coins will make it more difficult to carry and use and provide you with the time to reflect on the purchase and determine if you really want to buy it.
Develop a hobby or skill you can trade on-
Learning a skill that can yield some type of production asset is a good way to help you get ahead in life. Having tools and knowledge to do auto repairs, a sawmill to mill lumber or gaining the expertise to lay bricks and stone are just some of the things a person can do to occupy their time, earn extra money or trade for needed services. When you have a skill that will fill your need and can also provide for others needs, it is a winning combination.
The best way to eliminate health costs is to exercise and eat healthy. Little things can compound to cause lifelong problems so prevention is the best medicine. The simple acts of eating more fresh vegetables and doing a few push ups or going for a walk every day can have a major impact on your health.
Be happy with yourself-
You may not be where you want to in life but this is where you are so deal with it. Having a positive attitude and laughing at yourself once in a while will put you in a receptive frame of mind and allow you to see opportunities that may have been missed. Good mental health has a great bearing on physical health as well.
Getting ahead in life when your financial means are limited is a challenge but not impossible. It requires you to put more thought into your actions in order to get the things you need and want. With a well thought out plan and the proper attitude even someone with limited means can have a good quality of life and an enjoyable future.
By: Tom Chatham
Many people realize that the financial situation in the U.S. is deteriorating, yet these same people continue on with their daily lives assuming things will get better or will not affect them. Those that still have a stream of income are in much better shape than many but they have not thought about the reality of losing that income and what will follow. Those that have lost their income but still have sufficient savings to live on have not thought about the day when that money runs out and what will follow.
When things don’t go as planned, many people refuse to think about the inevitable circumstances that will ultimately follow when they run out of money. This is just so far outside of their comfort zone they refuse to think about it and hope it goes away. You can ignore reality, but you cannot ignore the consequences of ignoring reality. If your financial situation continues to deteriorate, what will you do?
The problem a lot of Americans have is misplaced hope. They hope things will improve before they hit the financial wall. It is good to have hope for the future but it is also important to be realistic and honest with yourself. Those that take an honest look at their financial situation need to determine what financial resources they still have and how long those resources will last. They need to determine what expenses they should eliminate and which ones they cannot do without. They need to look at their current standard of living and determine if it should be reduced to make their resources last longer.
At what point will you cease to have a roof over your head? At what point will you no longer have food to eat? At what point will you no longer be able to afford your car? These are things a person with a diminishing pool of money needs to think about while they still have those resources.
Most people will not want to think about these things because it makes them unhappy. They will continue to live life as normal until the day the money runs out and only then will they begin to think about a plan to deal with their position. By then it is too late to do anything meaningful to improve your situation.
It is important for people in this type of situation to break through these psychological barriers and plan for their future making the best use of their dwindling resources. It is never easy to leave the life you have built and depend on and feel secure with but at some point you will have to cut your losses and move on.
You may have to sell the car you have and pay off the loan and use the remaining funds to buy an older car that you fully own. You may have to dump the home you love and worked hard for and get a smaller place to live that costs much less. You may have to stop buying the frozen foods you like and start cooking more from scratch to save some money.
Before you have to do these things you need to think through the situation and determine what resources you have, what they are worth and at what point you will need to make the decision to downsize and start living leaner. You need to determine what the breaking point will be and prepare yourself mentally for the change. You must do this before all of your resources are gone leaving you little or no ability to continue taking care of yourself. You must have a plan standing by even if it is nothing more than buying a camper trailer and tow vehicle and a supply of food to support you for several months. This becomes even more important if you have a family that depends on you for their everyday needs.
Many Americans like to stretch things out as long as they can hoping things get better. If things never get better, you still need to take care of yourself and your family and to have no plan for this is to fail to take responsibility for your position. As the financial situation in the U.S. becomes worse, it will be ever more important to know exactly where you stand financially and how you will use your resources for the maximum benefit of your family.
You also need to keep in mind that the only resources you can definitely count on in the future are those that you actually have in your own possession. You must also decide what form these financial resources will take. Will it be cash, precious metals, diamonds, food storage or some combination of these things? If you lose your job and rely on savings to take care of everyday needs, what would happen if there was a sudden banking holiday and you had no access to your funds for weeks or months. It could even be a cyber attack that takes the system down. What happens if they lose your banking records or the institution goes bankrupt like MF Global taking your funds with it? FDIC insurance may pay you back but it could take months or years to get your money. What will you do in the mean time?
You need to have a plan to deal with your worst case scenario and know what the breaking point is when you will put your plan into effect. You need to decide when it’s time to go from normal mode to survival mode while you still have the financial resources to make a difference and preserve your quality of life. Too many people waited too long to react to the changing financial situation and many of those people are now homeless or living in tent cities. Don’t let this happen to you.