Compelled By Reality

3 Steps to Living Beyond Your Means

Filed under: Blogging, Comical, Featured, Money

If you’ve been reading my blog for a while you probably know that I have a little bit of passion when it comes to managing money. I’m one who will tell anyone that in order to get on the flip side of debt, you have to have an aggressive motivation and start attacking it. Many in this country are upside down in their personal finances and aren’t quite sure how they got there, or how to flip the boat back over.

However, there are many who just laugh and brush off those like myself who are so intently against credit cards, against car loans, personal loans, any kind of loans (that are not your mortgage) and who think making a budget is for those who have a lack of self-control when it comes to money.

So I’ve decided to write an article for you Mr. I don’t need a budget, Credit cards are the best thing since sliced bread, Mr. why do I need a savings account when I’ve got a $20,000 limit on my Visa Platinum?

Here are 3 steps to making sure you are living beyond your means:

Step 1: Make SURE You are paying more than 28% of your income on your mortgage/rent payment.

If you add up your taxes, insurance and rent/mortgage payment and it is 28% or less, than you are in major trouble. If this is you, then you have probably experienced the pain and suffering of going to a friends place and foaming at the mouth at what they are able to “afford” making the same income as you. Do something about it. Move into a new house. Rent a nice condo downtown! Why should you have to work your way up, your parents probably have a nicer house than you… Why should they get it and you not?

Step 2: Keep at least 5 credit cards open at all times, only pay minimum balances, and then take out a new loan to pay off / consolidate your debts

If you are not cashing in on the features and rewards that credit cards are offering these days, you are missing out! With 1%, 2% and even 5% cash back bonuses, sky miles, reward programs… how can anyone resist? I mean with the economy like it is we really MUST have the security of a credit card to fall back on in perilous times. And they even pay you to keep the credit cards! These credit card companies really don’t know what their doing if they are giving you money to keep their cards. All you have to do is pay off the balance every month and you’ll be fine. Or better yet, pay the minimum balances and refinance your mortgage and take the equity out of your house to pay off all your cards.

Step 3: Buy a brand new car cashing in on the LOW INTEREST loans with little or NO MONEY DOWN!

Go out and find a NEW car… not a 1 or 2 or (I shiver at the thought) more than 3 year old car. Make sure you talk to the loan officer at the car dealership and let them know you are wanting a 5, 6 or 7 year loan, because this will make sure your car payment is very low. Wheel and deal until you get them to give you this car with NO MONEY DOWN, and a low interest rate.

Only about 40% (1 out of every 2-3 people) of american consumers are upside down in their car loans, but that could never happen to you! Those are just scare tactics from those gloom and doom old people who just want to be pack rats and pay cash for everything.

I mean seriously… The average car payment in America is $374 per month. If you were to drive a quality USED car (that you paid cash for) from age 25 - 65 and invested that $374 in a growth stock mutual fund (averaging 12%), you would have over $4 MILLION dollars. At that point you could give cars away.

BUT THATS A LONG TIME! Who has the self-control to be able to wait that long? Besides When you want to be able to enjoy stuff NOW right? How is anything worth doing now if you don’t get to enjoy it until you are old and wrinkly?

Tags: credit cards, debt, finances, living beyond your means, loans, Money, self control