The Things We Believe In
Bad things won't happen to me. We'd all like to believe it. We own the one car that won't break down. Others will get sick, but not me. Therefore I don't need an emergency savings account or insurance. I can postpone the savings or insurance until I have more money. But, the facts are sobering. Every car will break down at some point. And almost all of us will spend some time in the hospital during our lives. The truth is that everyone needs a plan for handling unexpected expenses.
I did it before and didn't get hurt. Just because you got away with a bad decision before doesn't mean that you'll continue to get by with it. It's a little like walking away from an auto accident. You don't automatically assume that you'll be as fortunate the next time it happens. So the sane driver tries to avoid accidents.
That "everybody's doing it" is a good reason. If you hear yourself saying this, you need to check your math. Because it's very rare that everyone is doing something dangerous. Usually it's only a few people. And rarely do we know enough about their finances to know whether they're really getting away with it. Even if they look prosperous, that doesn't mean they don't get calls from bill collectors and worry themselves to sleep each night.
Besides, even if everyone were doing it, that doesn't mean that it's smart for you to do it. A few years ago lots of people were using variable mortgages to buy homes they couldn't afford. It seemed like everyone was doing it. But, now we know that it wasn't alright. Bottom line? Think through any move and how it might affect your personal finances.
That I'm smart enough to avoid problems. We'd all like to believe that we're smarter than average. And, that our smarts make us less vulnerable to financial problems than the average guy. The sad truth is that our guard is down when we're so sure of ourselves and we're probably more likely to have problems. Don't be fooled by your own arrogance.
That decisions don't have consequences. We all live with our decisions. But many of us fail to see the connections between the problems that we're having today and the decisions we made yesterday. We chose a new car instead of leaving the money in savings. Months later the refridgerator breaks down and we don't have the money to repair it. Bad luck has nothing to do with it. It's the decision we made to take the money out of savings that caused the suffering today. To understand what went wrong (so that we can learn from the experience) we often have to go beyond the first step. Sometimes the problem goes back a few steps.
Take a look at some of the things that you believe about your finances. You might just find that some of them simply aren't true.
Keep on Stretching those Dollars!
Gary Foreman is the editor of The Dollar Stretcher.com website < www.stretcher.com> and newsletters < http://www.stretcher.com/subscribe/subscribeDS.cfm>. Not only does the site host thousands of articles on various ways to save money, but you'll also find a vibrant forum where people share their dollar stretching ideas. You can comment on this entry here
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