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Monday, August 29, 2011

Debt as the Norm

When I was growing up we lived in an upper middle class neighborhood with a private community club and a private beach that only people living in "Lot A" of the community were allowed to go to. Like many communities in and around Seattle, our neighborhood also had a dirty little secret that on the land deeds of the houses was the rule "No, blacks, Jews or Asians." The underlying historical attitude of our neighborhood was that if you were rich and white you floated above the rest of the world in your superiority. Luckily for me, my father did not adhere to this belief system (and I've never quite understood why he chose that neighborhood to raise his family in, although before I discovered the dirty little secret it was a fun place to grow up).

So, while the neighbors in the Tudor mansions directly on the beach were buying speedboats and sailboats and my friend's dad was buying her another horse, I would lament that my first car was a hand-me-down old Plymouth. My father's response was always, "We don't need to go into debt." He always said it so matter-of-factly as though it was the only rational way to look at things and he lived a long suffering life in the midst of consumer madness. In my childhood mind I heard it as "To be good, one must never have any fun." Add to that it was 70's and songs like this were blaring from my brother's turntable, of course my childhood view was that practicality was boring.

Not all kids grow up with that rebellious attitude that I had, and those who do usually outgrow it like I did by their 20's when they realize there is a lot of fun to be had that doesn't involve being irresponsible and partying all the time. But what our culture does not encourage is outgrowing the idea that "we deserve whatever we want". Commercials and print advertising usually have the theme that "You want it - you deserve it no matter what the cost!" Even responsible, well educated adults have told me they can't give up "shopping therapy" because they deserve that treat.

There is nothing wrong with shopping for fun things you don't need as long as you have the extra money for it, and I do that occasionally myself. The problem comes when it doesn't seem strange to buy things even when we don't have money for them. Credit cards are a huge business in our country and in my opinion are one of the main reasons our economy is a mess. Our family has credit cards and we use them frequently, but we also always pay them off at the end of the month. The reason we use them is that we get points for all our purchases for hotel rooms so we use the points to help pay for vacations we otherwise couldn't afford.

In my opinion credit card companies are modern day loan sharks. Oh you need a few thousand dollars to buy that car you can't afford? Sure, we'll give it to you even if you have terrible credit. But instead of breaking your legs if you don't pay, they increase your interest rate and slap on more and more fees.

The first step to getting out of debt is not cutting back your spending or writing budgets or cutting up your credit cards - the very first step is to change the way you look at your spending. Is buying something you really want that you can't afford really the "therapy" you want if what it achieves is more debt and more stress over your financial situation? I've said before that living within one's means does not mean deprivation. But it also means that you can't buy a new car every two years or buy a bigger house than you need but can't afford. Rethinking what you really need and what you really want is an important step. If you just want something to improve your image - like designer clothes, new cars, fancier house, or anything just because it's expensive - you might want to rethink your sense of self and identity because who you are and the worth you have comes from within you, not what you own. Today would be a great day to start focusing on what about yourself you are proud of that has nothing to do with what you own.

Here are some ways our family lives within our means but don't feel deprived:
1. My husband and I love to read, but instead of buying new books every couple weeks we go to the library a lot.
2. We found a great deal on a kayak on our local craigslist, that's also where we got our life jackets.
3. I have two horses but we can't afford horse property and boarding horses can be very expensive. To make it affordable for me I do a "partial lease" with my horses, which means that someone else helps me pay the monthly board cost in exchange for getting to ride my horses a couple times a week.
4. I also couldn't afford to buy a horse to begin with, so I looked long and hard until I found someone who was willing to give me her retired, champion rodeo horse for free. Then after keeping my eyes open for a few more years I found someone willing to sell me a race horse worth thousands of dollars for only a few hundred because she couldn't keep her.
5. I love playing piano and wanted my daughter to play piano so I just kept my eyes open until I found a free piano.
6. We were tired of paying $100+ for cable tv and still not have much to watch, so we now have basic cable service and use Netflix and Hulu, which come to about $18 am month for both.
7. I don't buy clothes unless they are on clearance sale or second hand or from an outlet warehouse. And yes, I actually am well-dressed and my daughter (who is a little fashion diva) is very happy with her clothes.

Over the next few weeks I will be collecting ideas from people on how they live within their means without feeling deprived. Feel free to comment here or send me an email: sustainfinance at gmail dot com.

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