Little White Elephants in the Room – Inconvenient Budgets Which Lead To Financial Debt

See List Below:  All of these “life’s occurrences” listed below can potentially have a huge impact on our finances because these situations in our daily lives tend to get ignored and pushed aside. These are the little white elephants that are ignored mainly because they are uncomfortable and inconvenient conversations, that for most of us, we simply do not want to talk about these topics.

We put off these conversations and these little white elephants quietly lay in the corner of the room, waiting for their future attacks.  These are the little “Financial Sleeper Agents” silently waiting for that right moment to spring their attack…waiting to grow into big elephants of financial pain…and…bam! We are suddenly surprised and cannot believe this has happened to us. And since we did not want to discuss it… we never considered to budget for it…and so we never set any money aside for this occurrence…and with that… we whip out our lovely credit cards and swipe those bad boys to cover the costs. This is “Where the Rubber Hits the Road!”  This is the moment where this little white elephant can grow into huge debt. This is that defining moment where our lack of planning for everything including these uncomfortable topics, can really get us into debt and start the avalanche of our finances.  

I mean…who wants to talk about buying new tires for their car? My wife certainly doesn’t. Or who wants to talk about saving up some extra money for a plane ticket for when one of our relatives dies? And now we will need to fly across the country to attend the funeral, plus we need to cover hotel and food costs, etc. No one wants to discuss this! And I don’t blame them. But these life occurrences will happen. There is no way getting around it. And who wants to discuss setting extra money aside for when the car needs to be replaced or it breaks down, or when you need to upgrade your cell phone, or what about when the plumbing “hits the fan?”  Or when you need to replace the fridge… Oh, the fun in that conversation. And so they are usually ignored and zero money is set aside for them. Not so fun but they are important.  

I strongly urge all of us (including myself) to take a look at the list below and seriously think about setting money aside for these life occurrences. They will happen! Make no mistake they will happen! And if we don’t set money aside, plan for it, and budget for it…then most likely we will have to use a credit card to cover the expenses. And this can be the cause for many of us, the start of our financial decline with debt. The credit card companies charge you huge interest, you pay the minimum payment because you did not plan for this to happen, and then like clockwork… another small white elephant comes tromping into the room with another “life surprise”. And then the finances really start to turn south.

So just a suggestion (to myself included)… set aside an emergency debit credit card or a savings account that you automatically fund a certain small amount of money each week or month… and then start accumulating the emergency cash reserves.

Start funding for "life's little mishaps" on a weekly or monthly basis and then we will be ready for it! And let’s say goodbye to credit card debt!

Again…these things will happen in life…it is just a question of when?

Small White Elephants to Watch Out For!

Transportation ~ Auto repairs, maintenance, new tires, DMV renewals, car insurance, accidents, toll road assistance, car rentals, etc.

Holidays!  If you celebrate say Christmas, Hanukkah, birthdays, weddings, anniversaries, etc.,
I would plan for setting money aside for these celebrations in life. 

Family Death ~ Sadly there is nothing to stop this but we can at least make this less painful by having the finances at hand when this unfortunate event does happen. Travel expenses, hotel expenses, funeral costs, can all add up in costs.

Medical ~ Dentist, doctor visits, unplanned accidents, maybe you will need to take work off due to an injury? etc.

Cars and transportation ~ New Car or pre-owned car – your car will break down someday. Better to start making payments to yourself than to the dealership, right? And don't forget car rental for when the cars break down or other reasons.

Tech Gadgets ~ New computer – the one you have will become outdated and be useless! New Cell phone – Whatever you use…Plan for those cool items to become outdated and will need to be replaced with the latest and greatest.

Home Appliances ~ Washing Machine and Dryer, Refrigerator– the machines will break down at some point in time and need to be replaced. AC and Heater.

Plumbing ~ water pipes break, toilet busts, mold behind the wall, shower head, bath tub, etc.

Other stuff ~ Bed mattress, new TV, living room couch, kitchen accessories, etc. And let’s not forget about replacing the carpet someday in the future or whatever flooring you have.

Do you have children???  New clothes, shoes, sporting equipment, team sports costs, school band, clubs, hobbies; this list can go on and on.

I am sure you can add to this list of NO FUN BUDGET ITEMS…

Please feel free to comment and add if you have some suggestions for anyone to help prepare, to plan, and fund these life’s surprises.

Keep safe, Stay healthy, and Keep Moving Forward!

Is The Middle Class Spending Themselves Into Poverty?

Do we really want to keep up with the Jones’ anymore? Do we really want to race and see who has a short sale first? Who can be first to have a foreclosure? Or let’s race to see whose family can split up after a huge financial wreck?  It seems our addiction to buying “stuff” is really starting to take its toll with all of the debt that follows with it.

The total number of U.S. bankruptcies filed during the first six months of 2010 increased 14 percent over the same six-month period in 2009, according to data released by the Administrative Office of the U.S. Courts on Aug. 17, 2010.

The typical family filing for bankruptcy in 1997 owed more than one and a half times its annual income in short-term, high-interest debt. A family earning $24,000 had an average of $36,000 in credit card and similar debt.  Source: Federal Reserve (1997)

According to one of my sources over 40% of US families spend more than they earn. That is extremely alarming. Perhaps it is time we started to restructure our spending habits and our core values, relearn how to budget, become better savers, and educate ourselves on money.  

At what point do we take “ownership” of our spending habits? We really need to start taking responsibility for our actions and change the way we view our values. Our addiction to spending money on “stuff” simply needs to stop!

Buying things on impulse will not bring you happiness tomorrow, only debt. And then even more debt. That “stuff” will never fill your heart up with love or joy. The only thing stuff will fill is your garage filled with crap!  

Remember when cars use to be parked in garages? Now we use them to store our crap we don’t want but for some reason we won’t let it go. And if we do finally decide to part with our stuff…we hold a garage/yard sale only to sell our things for pennies on the dollar.

I am not suggesting never buy anything ever again. But let’s save up for something and pay for it in cash! Let’s save up for something that is made well, high quality, it will last long, and is something we truly need and not some crappy item we use for 15 seconds and then toss away…or ….we pile it into our garage. Let’s stop purchasing items with our credit cards for something that falls apart in a few months. Oh, and what is even sadder is when the broken item is still not paid for since we only were paying the minimum balance on the cards. That is true insanity!

I really admire my grandparents’ era on the values of things that they had. Yes, they bought items but they seemed to “think” before they purchased any of their items. And those items were made really well!  For example, the best furniture was from their generation. Even though it is really old it is still ten times better than anything made from today. The older furniture was handcrafted, made flawlessly, made of fine materials and it was built solid and built completely. No assembly required! Now the furniture of today is not only crappy but the stores expect us to put the darn thing together. They say “assemble” but it really means we need to finish “building” it.  Now we need not only pay for it but we also are expected to “build” the crap after we take it home. If I pay for it…I want them to build it. That is why I am paying them, right?

We need to teach our youngsters better habits…let’s not teach them our poor habits we were taught as kids. When I was kid I had this huge Coca-Cola collection.  I would work hard doing chores around the house to earn extra money to keep buying more stuff to add to my collection. Now I have a pile of “stuff” that is basically worthless!  Now imagine if my parents had me purchase stocks and shares of Coco-Cola? Then my collection would be paying dividends instead of collecting dust!  What if we taught our youth (and ourselves for that matter) to buy stocks, assets, and invest our money wisely, instead of buying things we really don’t need?  Just imagine if your children bought company shares from when they were say 9 year old and up.  They might even be able to help out with their own college fees!  Maybe if we could focus “just a little less” on buying baseball cards, dolls, tons of toys, and instant gratification things?  I know…you think I am the Grinch that stole fun. Then perhaps a compromise? Maybe if we had some sort of balance on spending???  

I am writing this because I am deeply concerned for our country as a whole if we keep heading down this path. Poor habits will bring poor results. It is my hope that we can start teaching our younger generation to be smarter investors, take ownership of their actions, and become truly empowered.  We don’t need more impulse shoppers of “stuff.” We need to break this poor cycle of spending habits. We need to change our values back to my grandparents’ era.

Not only did my grandparents on both sides of my family own their homes out right but on my mother’s side….my grandfather built his own home!  And on my father’s side…my grandmother made all of her clothes. And they were beautiful dresses and well made!  Both sides had big gardens too… with fruit trees and lots of vegetables. The times might have been a little simpler back then, but they were not up to their eyeballs in debt and a garage filled with “stuff” that no one wants.

Seriously…Is buying all of this stuff really worth going into huge credit card debt, putting a second mortgage on your home, and then ultimately losing everything?

My mind keeps going back to my grandparents’ era. Pay for things in cash. No credit card debt. If you don’t have the cash to pay for it…put it down and save up for it. Don’t buy stuff just because you had a bad day. Instead work through our problems and not buy things to avoid them. Demand higher quality of ourselves and the things we purchase. Save up for things we want to buy and be grateful for the things we do have. We need to be owners and not debtors.

And we need to stop trying to keep up with our neighbors!

Besides….if your neighbors are short selling their home…do you really want to keep competing with them? Spending yourself into poverty is NOT a retirement plan. It is a death sentence.

My point of this discussion is simply to get us thinking more on what we spend our hard earned money on.  I would love to hear your thoughts. Please feel free to comment.

Spend wisely, Keep learning, Keep growing, and Keep Moving Forward.