A couple of days I spoke with a young woman about my philosophy towards avoiding debt, and yesterday posted something on a discussion board to another young woman already in debt a few months after her marriage. I’ve always felt my position was so common sense that it didn’t need to be stated, but I’ve come to realize that I might be more of the exception than the rule when it comes to money management.
Here’s what I do, and what I’ve taught my kids: you can only spend money you have. And of the money you have, it’s a very, very, very smart idea not to spend it all just because you have it. Having it now is no guarantee you’ll have it tomorrow, so setting some money aside for tomorrow is a good thing to do. A financial cushion (this can be a savings account, a mortgage paid in advance, a full pantry) is very helpful in weathering the storms of life, and when large unexpected expenses come around, this is what keeps someone from needing to put these expenses on a credit card.
It doesn’t really matter how much or how little money you make. You can find people who make oodles of money who you would think have money for everything who are in debt. You can find people living on tiny incomes who have all that they need and are entirely debt free. It’s not about how much money you have. It’s about your attitude towards spending, about what you think you deserve, and about when you think you need to have it.
The problem is if you have no mental limitations on the money you spend and you have a credit card, then there’s no physical limitation either. Thanks to credit cards, a person doesn’t need to have money in his pocket or even his bank account in order to buy what he wants, when he wants it. By developing a clear awareness that there are limitations, then it’s obvious that you’ll put something back on the shelf when shopping, do without, cut down, wait until month, etc, if your coffers are running low. Having this mindset means you’ll avoid unmanageable debt and the accompanying anxieties that seem to be swallowing a huge percentage of the population.