Okay, I kind of left you guys hanging with that credit card post last week. I felt like I should get something onto the blog but I was still sick, so I thought I’d see where that little post would go. I love all of these new shows out about getting people’s finances back in order, getting people out of debt and living within their means (and I can’t wait to see this!). They make me happy. It seems to me that the people that host these shows do the same basic things — they show people how much more they spend than they bring in every month; they show the people where their money is being spent; and they tell people how much trouble they will be in in the coming years if their spending pattern remains the same. For the most part, the people that come onto the these show do really well at keeping in their guided budget for the month(s) they are on the shows. In other words, it is possible for these people to live off of what they make and not overspend, and most certainly to pay down more debt at the same time. So, why have these people gotten into financial trouble?
Certainly there are many reasons, but I think one thing is that money seems to be all relative. What is a huge income to one person is poverty to another. The "basic" expenses of one person will be completely frivilous to someone else. Needs and wants are different to different people. And the notion of credit is acceptable to some and unacceptable to others. There are people who live month to month, worrying about how much there will be left before the next paycheck, and that is just the norm. However, others would be panicked if they had to worry about their account balance on the 29th, while still others would be joyful if they were not in the red by the 21st. There are a million different financial situations and ways of looking at money, and there are many different reasons, events, and mentalities that have brought us to where we each are at in terms of money.
So, what of these shows? Are there really over-arching principles that are just "how people should handle their money"? What about all the different levels of income and different situations that lead us to make financial decisions? I think the answer probably is "yes, there are just some ways to handle money that are better than others". I mean you gotta know that it’s better to cash your paycheck at your bank than at one of those money mart places. But sometimes people need their money and can’t wait. Sometimes people are forced to put something that they don’t have the money for on their credit card. (I’m thinking broken down car in the middle of nowhere, kind of thing.) And while doing that is not always wise, there must be times when that is just what has to be done.
I guess where the relativity of money comes in is in what people justify as "put-on-the-credit-card-without -having-the-money-for–worthy". Marc and I have never been in a position where we’ve had to put anything on a credit card without paying it off at the end of every month. We pay off everything right away and don’t have any monthly payments besides our mortgage. So, even things like car and house insurance we pay in one lump sum so we get the best rate. And we use our credit card for as many transactions as possible because we get reward points. There is nothing financially unwise about using credit cards if they are paid in full every month. But, like I said, it would never even occur to us to buy anything that we did not have the money for. We have always had enough saved that if unexpected expenses came up, we could handle them. And I’m not saying this to toot my horn of frugality. I’ve been blessed in my life. I had a 4 year scholarship to university, so that I ended up with savings instead of debt when I graduated, and I was able to pay off Marc’s reasonably small student loan when we were married and graduated. So we were lucky to start off on a better foot than a lot of young couples…
And yet, I understand that things can get tight very easily in this world of so many things. But, still I think we all justify spending money on certain things that are really unjustifiable. And I think it’s all relative. Some people will go out and buy something big if they have extra in their account. Some people will go make a big purchase if they have "room on their credit card". Some people will get another credit card so that they can make the big purchase. Some people who have loads of cash will not buy anything. We all have different definitions of what we can "afford": does it mean afford the full purchase price right now or afford the monthly payments? And that’s what I meant in my little sign "Buy today and pay 20% more!!!" How many people who purchase something on unpaid credit think of it in terms of the interest they will pay on the item? And, isn’t that the wise thing to do? Aren’t you deceiving yourself if you look at it just in terms of the ticket price? And would you really buy it if you knew how much it was going to cost you down the road? With everyone having their different ideas of what is acceptable with money, how do you know when you’re being smart or foolish? And what do you do when you see people you know making big money mistakes? In the end, I think it’s black and white and relative — some things are just unwise and some things just don’t matter… But I think it’s something that needs to be talked about more — something that doesn’t need to be hidden (I mean, do any of us know how much our friends make in a year and do they know how much we make, let alone how much we spend?!). I think if we talked more openly about money matters, without the fear of judgment, we could all make a bit more sense of where we’re at and whether we’re doing things well.