An Argument for Frugality

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I don’t like seeing people waste money, their own or other people’s.  For most of us, money represents the transfer of our work into a tangible abstract which we use to get the things and services we need in life. Money equals our time, our work, our life. If you think that I am placing too much value on money it’s undoubtedly because I place money right up there with oxygen as something that is essential. (yes, stolen quote)

I am not optimistic about the state of our economic health, with the government doing what no one of us can do – survive decade after decade with “deficit spending,” which means money we don’t have, which means, literally, bankruptcy!

The individual should do everything possible to live within their economic means both as a lifestyle, a mentality, and as a way to avoid personal disaster. 

Though this is part of a much longer series about personal economics, let’s start with credit cards. 

The convenience of a credit card is obvious.  I can go to Trader Joes and not have to worry about carrying sufficient cash, and I can buy what I need, slide my card, and go home with groceries.  The problem with this is that too many users – especially in the beginning – get addicted to the card in the same way that one gets addicted to heroin.  It is so easy, and it feels so good, but it is not free.

Let me begin with my conclusion, something that too many have learned too late. If  you cannot pay off your credit card at the end of each month, you cannot afford what you have purchased, and you should not buy whatever it is you think you need or want. There are a few exceptions, however, as my friend Robert Blair always told me: A house, obviously.  An education, because the education presumably will enable you, long-term, to earn much more than you would have earned without it. And, unfortunately, a vehicle. More on these three later.

Remember, if you cannot pay off the balance of your card every month, you cannot afford the items in question, and should not buy them in the first place.

But everyone forgets that last sentence, at one time or another, to their peril.

The balance – and interest – build.  You learn to pay the minimum required by the credit card company, as the principle gets bigger.  Eventually, you learn to juggle your credit card debt from card to card to try and find the lowest interest rate to handle your balance.

Eventually, all your money goes to paying off the minimum amount due, and it seems that you will never get out of debt.  Was it worth it?  You’re now a slave of the banks. 

I once overhead a conversation where the individual was describing how much money they had left. “What does that mean?” I inquired.  They were describing how much more credit they had left on their credit card, as if that was their own money in a wallet somewhere. In fact, the person had NO money “left”—the amount being discussed was simply the amount of more money that the credit card company would allow the person to go even deeper into debt without worrying too much. 

Though lots of people use credit cards without any serious problems, for many others, the use of easy credit is part of the fast road to financial failure.   If you’re one of those people, one of your best courses of action is to first take a complete assessment of all your actual needs.  Stop buying anything you absolutely cannot live without. In fact, if you are having difficulty paying off your credit cards each month, you might be well advised to cut up those cards and operate on a cash basis until you know you are back on solid footing. 

There are also legitimate agencies that help you manage your debt so you can get out of debt. This means the agency will re-negotiate your debt so that you can pay one fee each month, often at a lower interest rate.  Obviously, however, you must change your behavior or you will never get out of debt, and you will be “poor” forever.

When I read statistics about how up to 90% of the American public are dissatisfied and unfulfilled in their life, I have to look at the possible reasons. One of the biggest reasons is a dissatisfaction with one’s chosen employment, because – let’s face it – everyone needs an income and sometimes we take whatever we can get.  If we do not continually seek employment that is more personally fulfilling, we begin to wonder what our life is all about. I have seen it all too often.  Then, too many of us try to find fulfillment or happiness with the junk that we buy, and then we lose ourselves into our technological world of emails and smart phones and facebook and twitters and television.  And that choice to seek meaning with more stuff, and more technology, proves to be a futile path, where we don’t find happiness and we get even poorer.

Yes, I know this is just the tip of an iceberg.  In summary, you really must work hard to stay out of debt by always delineating need from want.  If your life doesn’t depend on it, don’t buy it. And your fulfillment in life will come from your face-to-face interactions and workings with other people.  Go on a diet from your technological toys for a while. You might find a new life that was there all along, and you might find that your wallet is a bit healthier too.