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Living debt free is one of the greatest gifts that we can give ourselves. We have lost much of our personal freedom because we do not know how to live within our income. We work year after year with only a week or two of vacation because our credit culture has us trapped paying mortgages, car loans, college tuition and credit card debt. It is unimaginable that one would take a year to travel, write a book, stay home with the children or just rest and do nothing. Such actions would bankrupt most families. We are becoming people who have lost our options to our desire for things. Possessions have become more important to us than the riches of an experienced life or even the security of good health care and universal education. We have traded our freedom for predictability and the comfort of our stuff at the expense of personal time, adventure and enjoyment.
According to the World Tourism Organization, Americans only average 13 vacation days a year, while Italians have a whopping 42 days and France and Germany 37 days and 35 days respectively. Even the Japanese with their frenetic work ethic enjoy two times more vacation days than the average American. It is true that Americans are the most productive workers, but according to a UN study they are the most productive only because they work longer workdays than their counterparts in other developed nations. The average American worked 1,825 hours in 2002, but in major European countries the average ranged from 1,300 to 1,800 hours.
Does all this work actually make us happier? Not really. A recent world survey showed that Americans ranked 23rd on the world happiness index, behind countries like Denmark, Switzerland, Austria and even Canada. Interestingly the survey showed that the strongest indicator of happiness was related to good health care, followed by general prosperity and educational opportunities. A BBC survey showed that 81% of people in the United Kingdom, a country with ranked 41st out of 178 nations on the happiness survey, thought their government should focus more attention on making the population happy instead of wealthier.
Many years ago we had a large loan on our farm, after a major crop failure during a recession we lost everything. The scars of that experience made me determined to avoid debt. I was amazed to see how it changed the quality of my life. I no longer had to juggle every month to meet payment deadlines. I began to sleep better, and did not feel guilty if I took time off to take a trip. Interestingly, I find that we pay a lot less for items. The interest payments on car financing and house mortgages often result in paying two to four times the actual sale price. The credit melt down of 2008 showed us the disastrous results that can come about when easy credit is given to people who don't really qualify for the loans. People were lured into buying things they could not afford and ended losing everything in Bankruptcy.
In the past credit made it easy for me to cave into my desires. If I saw something I wanted, I pulled out the plastic and carried the item home. Now I ask myself can I afford this? Do I need it? Would I prefer to do something else with this money? I am not suggesting that we all throw away our credit cards; Obviously they are an important part of our financial security. And I realize that many people do depend on loans to buy homes and start or expand businesses. But, I also believe that we need to look at our credit habits and trim them back to manageable levels.
It is good to spend money, but we must be wise in our spending habits and investigate ways to get the most for our money. We are best able to manage our money and live within our means when we pay with cash, unless we have a credit card that gives special points for airline miles or other services and even then we need to make a habit of paying off our card every month to avoid late fees.
Avoid making shopping the prize for a job well done. Fine other ways to bolster your self-esteem, reward yourself by inviting a friend to tour art galleries, go for a hike or spend a day at the beach with your family. Swallow your desire for instant gratification and be smart about your shopping habits. Identify items you need and want before you leave the house and be resourceful in finding the best opportunity to buy them – wait for the great sale, find them on line or at discount outlets. Don't be afraid to look for clothes and other items on e-Bay. I was able to buy a brand new top of the line computer for $ 500 below cost from a seller who had won the computer in a contest. My accountant tells me that the best car deal is a two or three year old used or off lease vehicle, especially those that have certified pre-owned warranties. And above all, avoid the glamor trap of "ego satisfaction buying" designed merely to keep up with fashion or impress friends.
This morning Reuters ran an article about Jim Press, who briefly ran Toyota Motor Corp.'s US operations and spent 37 years with the Japanese automaker before joining Chrysler as one of its three top executives in 2007. He is now facing bankruptcy claims of more than $ 1.35 million for unpaid federal taxes and a personal loan.
Press wears a simple thin string around his wrist and when asked by a New York Times reporter why he wore the string he said, "This is actually from my wife's grandfather. It reminds you that in life, you just need enough to get along. What's important in life isn't what you have, but how you live. "
It is time for us to revolt against the overwhelming materialism of our culture and find the deeper values that give expression to our essential grace and humanity.
It is time for us to evaluate our affected and remind ourselves what is really important in life.
It is time to find the courage, strength and discipline to achieve economic freedom.
~ Develop a life compass. Make two lists: The first list should clearly articulate your dreams, being mindful not to limit the list to only material goals. The second list will be those things that you need, both material and non-material. Put your lists away and revisit them every six months, maybe you will cross off goals that you have achieved, or perhaps you will revise your direction and set new goals. The point is two-fold, first to define what is important in our life and second to remind ourselves where we are going so we do not easily stray from the path we really want to travel.
~ Review your bank and credit card statements to evaluate how and where you spend your money. Examine how, where and on what you spend your time. Are you supporting your goals.
~ Before making a major purchase calculate how much it will cost if you finance your purchase and how much it will cost if you pay cash?
~ Where do you want to be economically in five years? In ten years? Will your present plan get you there?
~ When making an unplanned purchase ask yourself if you are buying because of ego?
~ How often do you cast off a perfectly good car, computer, cell phone, or electronic appliance just because you want the latest model?
~ If you only had two years to live, what would you do with those two years?