Economic Recovery Starts with OnePosted: March 28, 2011
Are you tired of hearing about the poor state of the economy yet?
I know you’re feeling the squeeze too. Maybe you’re out of work, or maybe you’re paying too much interest on credit cards or your mortgage. Maybe you’re behind on the bills, and finding gas money to get to work is getting harder and harder.
It’s time to stop waiting for the economy to fix itself. Stop waiting for the money to fall into your hands, or for that amazing job to come along. It’s time to do what you can now to start fixing YOUR economy.
I know it feels like there’s no way out. Like there’s no way to stop the collection calls, to stop the bills from filling your mailbox every single day. It seems as though this mountain is just too steep to climb.
But is it really a mountain, or is it just an anthill?
It’s time to get angry. Get angry at the banks for making bad loans in order to make money. Get angry at the government for bailing out these banks but not ordinary citizens for getting in over their heads. Most of all, get angry at yourself.
Every single person who has debt, who has gotten behind on bills, who can’t come up with money for an emergency, should be angry at themselves. You should be angry because you didn’t save up money when you should have. Don’t make excuses for yourself. So what if you lost your job– it’s happened to millions of people, and they’ve all survived one way or another. Maybe you have medical bills– yes, that sucks, and many times those circumstances are out of your control. Still, if you had started planning before, when things were good, maybe those bills wouldn’t be breaking you now. Be angry at yourself for getting into this situation, for charging things that you couldn’t pay for instead of saving up money and paying for it in cash.
The economy didn’t crash solely because of the banks’ bad decisions. They were making the decisions that were supposed to make them money. The economy crashed because people applied for credit, and it was given to them. They couldn’t afford what they charged, and then the banks started losing money. Now, we’re stuck in a vicious cycle. Everyone is broke, and the banks can no longer lend because they aren’t making money either.
Having less access to credit is a good thing. Really. I say that as someone who has no credit, no savings, and lives 1000 miles from family. If something goes wrong back home and I need to get there in a hurry, I can’t right now. I don’t have a few hundred dollars to pay for a plane ticket if I get a phone call. I hate knowing that, but at the same time I’m glad I can’t go out and get a credit card and say “this is just for emergencies.” If I did that, eventually an emergency would become running out of cigarettes or seeing a great sale and deciding that I absolutely have to have new clothes.
This is the kind of thinking that got many of us in trouble.
So where do we begin? How do we fix this?
It starts with one. You. Me. Our families.
For me? That means getting a job. I was hoping to start going to school this fall– I’d rather take a year or two to work and get my finances back on track. This is the perfect time to do it. I don’t have kids yet, and I’m able to work full-time.
For you? That might mean getting a second job. It means cutting corners wherever you can. Don’t go out to eat as often, don’t spend money on things that you don’t absolutely need. It means saying no to yourself, your spouse, and your children.
It also means opening a savings account. Start with whatever you have– $50, $100, whatever it happens to be. Build that savings account up to $1000 as quickly as you can. This is your emergency fund. This is what you use when your child breaks their glasses, or when you get that phone call and need to get on a plane in a hurry.
Once you have that $1000 in place, it’s time to start eliminating your debt. Start with the smallest one– an old credit card, or an old utility bill that was charged off. Pay it off. Cross it off your list, and congratulate yourself for taking care of one of your debts.
Then start saving up for the next one. Pay that one off as soon as you can.
See that mountain getting smaller?
Once all your debts are paid, it’s time to start saving. You should have at least 3 months of cash for living expenses in your savings account. If you’re the only breadwinner in your family, you should have at least 6 months worth of savings. That way, when the rainy day comes, you’ll be prepared. If you lose your job, that money will make it possible for you to support yourself and your family until you find another one.
It’s so easy to say that you’ll make the changes you need to in order to become financially independent. It’s much harder to actually make those changes.
You have to focus on the result. Think of how much happier you’ll be when you don’t look at every paycheck and think about what bill each and every cent will go to. Instead, you’ll be able to save some of your money, and buy the things you want.
We’ve become slaves to credit. It’s time to break the chains.
Start today. Sit down and write out your budget. Make a plan for every penny you earn. Think of ways you can earn more money– whether it’s another job, selling things you don’t need, whatever– just keep in mind that whatever extra money you earn will make your debt go away even faster. Write down your goals as well. What are you going to do when you’re out of debt? What are you saving up for?
We are the middle class. This economic crisis has made many of us poor, and it’s time to turn things around.
Start now. Start today.
We’ll do this together.
**I got a lot of information from Dave Ramsey. I also got much of it from the documentary “Maxed Out.” I recommend both. Also, I’m willing to pass on my Dave Ramsey book to anyone who needs it. The only catch is that you pass it on to someone else after you read it. Just comment below if you’re interested.**