The Dollar Stretcher

by Gary Foreman

Each year experts share their predictions for future events. So in an effort to help you do well financially, I'd like to announce the following Dollar Stretcher predictions.

I predict that sometime over the next twelve months you will be tempted to buy something big that you cannot afford. It could be a house, car, wide-screen TV or anything big and expensive. Originally you'll be tempted by a television ad, a purchase your co-worker or neighbor makes or the desire to feel good about yourself.

I predict that you'll find a variety of reasons that you should make the big purchase. You'll think of different ways that you could handle the payments. You'll begin to picture yourself owning the coveted thing and tell yourself that you 'deserve' the item.

I can't tell whether you'll give in or not. If you do you could be facing years of payments. It probably won't make you feel any better, but many of the people in mortgage trouble today fell victim to the temptation a few years ago.

I predict that during the next year you'll be offered unnecessary credit. It could come in a variety of forms. A store credit card that offers 10% off of your first purchase using the card. Or an increase in the limit on your existing credit card. Or a bank offering to set you up with a "homeowners line of credit" on your house.

They'll tell you that the offer is made because you're special - a preferred customer or someone who manages their money well. Don't believe them. The reason that they'll offer you more credit is because they want you to use it. It's easier to spend money you don't have when there's credit available. And that's when the real fun starts.

I predict that sometime during the next year you'll face an 'unexpected bill'. The most likely sources for the bill are a home repair, car repair or a medical bill. Most people don't have any money saved for this type of financial emergency. After all, who can tell when an unexpected bill will come in. Since you don't have money saved you'll charge the bill and begin making monthly payments on it.

You'll find the payments frustrating since you really don't have anything new to show for them.

I predict that something you couldn't live without a few years ago will become a burden this year. There are a number of reasons this will happen. It could be that the item didn't deliver as promised.

Maybe it's just gotten old. In fact, maybe it doesn't work at all any more. Even though the fun is gone you might still be making payments on it. Regardless of the cause, if you look around your house or garage you'll find something that was irresistible before you bought it that you would gladly get rid of now.

I predict that you won't save enough. You'll find it 'impossible to save' on your present income. But you won't feel too bad about it.

Your friends won't be saving either. According to the Bureau of Economic Analysis <http://www.bea.gov/briefrm/saving.htm> the saving rate has been 2% or less of disposable income since 2002. You'll avoid thinking about things that could make you feel bad about not saving. Like college for your kids, financial emergencies and your own retirement.

I predict that you'll accumulate more 'stuff'. In the last 35 years the average home size has gone up by 50%. And, self-storage places are cropping up all over. So you'll have more stuff twelve months from now. It could be something you're collecting, or just routine shopping. I further predict that all this stuff will cause you to wonder whether your present house or apartment is too small. You'll be tempted to move to a bigger, more expensive home.

I predict that one of your neighbors will fall into serious financial trouble and you won't know it. What you'll see is a lifestyle with new cars, designer clothes, a nice house with all the trimmings. But, underneath your neighbor will be stressed trying to keep up with all their payments. Studies are estimating that 30% of employees are worried about their finances. So your co-worker is struggling, too.

The first sign that the prediction is true is when they abruptly stop spending money or when you hear that they're splitting up (financial problems are the number one cause of divorce).

You've probably noticed a trend among these predictions. I'm not much of a fortuneteller and the predictions are not very bold. In fact, most of them are so common that anyone could predict them. In fact, that's the point. You can be pretty sure that these things will happen to you. Wouldn't it be wise to be prepared for them?

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Gary Foreman is the editor of The Dollar Stretcher website <www.Stretcher.com> and newsletters <mailto:[email protected]>.

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