I recently read a story on CNN's website about a woman who had a job making a $70,000 a year, got laid off in February, and was having to go to the food bank in March. But where was her savings? She didn't have any because, like many other Americans, she was living way above her means and therefore was unable put anything away for a rainy day. Like many others, she just assumed she would always have a job and never planned for the possibility of not having one. While she was working, she made the mistake of thinking that things would always be as they were and the skies in her world would always be blue. No consideration was ever given to the prospect of a coming storm.
Why in the world did she go out and get a $2500 a month mortgage on a $70,000 a year salary? That was almost half of her gross monthly income and likely more than half of her monthly take-home pay. Do the math. Why did her bank or mortgage company even approve such a loan? No doubt she was probably having trouble making that payment even while she was working. I'm sorry, but she helped bring this situation on herself. She gets little sympathy from me.
People are so covetous for expensive houses, cars, and other things these days that they don't bother to think. (There's more than one reason why covetousness is one of the seven deadly sins). I make more than $70,000 a year, yet I have limited myself to a mortgage payment of less than $700 a month. Therefore, I have no trouble making that payment and have plenty of money left to put in the bank each month. That's called living below one's means and more people ought to have enough common sense to do it. In fact, I have been able to save so much that, if I were to be laid off, I could live comfortably off my savings for more than 5 years and would have no trouble making my mortgage payment during that time.
Now some may say that I'm cheating myself out of the more comfortable and luxurious lifestyle that I could afford if I wanted to. However, I believe peace of mind is worth more than that. To me, it's worth accepting a little less out of a home in order to build a hedge against hard times ahead. I don't want to have to struggle like everyone else when an economic downturn comes. Now, while everyone seems to be panicking, I can just sit back and take it easy. Some people, though, seem to always have to learn things the hard way.
Terry Mitchell is a software engineer, freelance writer, amateur political analyst, and blogger from Virginia, USA. He posts a least one article a day to his blog - http://commenterry.blogs.com - on subjects such as current events, politics, technology, society and culture, religion, health and well-being, self improvement, personal finance, trivia, and sports. His commentaries offer a unique point of view that is not often found in mainstream media. His articles here on SearchWarp represent only a small portion of his work. All of it can be found on his blog. If you like his articles, you'll love his blog.
» left by Anonymous (241 days 19 hours ago.)
He Terry, great article. I am going to pass it on. Thanks for sharing and for practicing what you preach. :-) Like I mentioned on another article. where were you when I was 18? We have lived and learned and have paid the consequences, thank God for grace and second chances. I hope many will heed this advice and not learn the hard way. Lord Bless you! Teresa Respond to this comment
» left by E. Raymond Rock(1,925) E. Raymond Rock (239 days 11 hours ago.)
Great article Terry. The woman will learn much more about herself now than she ever did in her expensive home.
» left by Sandra E. Graham(2,280) Sandra E. Graham from Paragould, Arkansas, USA (239 days ago.)
Hello, Terry. You've written another good article. I learned from my mother never to count on what isn't in your hand already---she didn't teach it to me, I learned by watching her make the same mistakes over and over. I loved my mother more than life itself, but she had no sense of money management. If she saw something she wanted, she bought it, knowing full well she could not pay for it.
Good informative article. Keep up the good work.
SEG Respond to this comment
» left by Jennifer Cuddy(1,499) Jennifer Cuddy (238 days 22 hours ago.)
oh, i do believe this to be true, but i think it is more the fault of the lenders than the borrowers. They convince you that this is within your salary range to obtain, and naive buyers who already have inferiority complexes are their prime targets. And yet, it still is not in the best interest of the bank to do so. Consumer spending is heavily influenced by available credit. i've been offered so many credit cards, since I was in College! They want you to miss a payment, because with all of the fees and increased interest rates they charge, is where they make the most of their money. it is evil, just plain evil! Respond to this comment
» left by Terry Mitchell(2,785) Terry Mitchell (238 days 10 hours ago.)
Jennifer, I agree that the way many banks, mortgage companies, and pay-day loan outfits operate is just plain evil. They have no conscience. They have no problem taking advantage of naive people. They will have to answer to God some day. However, it's up to educate themselves about such matters and be prepared to defend themselves. Yes, bankruptcy is more difficult to file now and I believe it should be even more difficult. I have a problem with people who don't pay their bills being let off from them scot free while those of us who dilligently pay ours on time get no break at all. Respond to this comment
» left by henry from nigeria (120 days 4 hours ago.)
This is really helpful i think to my own view, When you are still at the lower cadre,you tend to postpone some of your responsibilities waiting for when u get higher pay but i think there is a step to make evn at that. So can i live within my earnings?
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