Saturday, October 29, 2005

Frugal Survival strategies for low and moderate income people.

It's not news to anybody with low or moderate income that economic hard times are here. In constant dollars, over the last 30 years the average American worker has LOST 22% of his or her purchasing power, and the less money you have, the bigger the impact this has been on you. For people with low to moderate incomes trying to live a regular American lifestyle, things are going from bad to worse, and then they will get even worse. Your dollars will not buy as much in the future as they do now. We are headed for an economic crisis so terrible it will make the Great Depression of the 1930s look like good times. If you want to protect yourself and your family from these economic hard times, make changes in the way you live.

If people are not worried about this, then they simply aren't paying attention to what is happening. Our entire economy is a stack of cards that can be knocked over at any time. Instead of looking out for the common good, powerful politicians make decisions that hurt ordinary people but benefit special interests that make big contributions to election campaigns.

The good news is you don't have to play their game. Even in the midst of these hard times, you can find financial security and develop a high quality of life for you and your family. Here are some basic survival strategies for coping with what is coming at us, and triumphing over it.

People who don't consider themselves low to moderate income can also benefit by following these strategies, because their ultimate effect is to increase the quality of life, security, and happiness of families. It just isn't possible to spend your way to prosperity. The advertisements and political talk that encourage this are the economic equivalent of methamphetamine addiction. Sure, you feel better for a while, but then you have to spend more money to get "high", and then even more money, and pretty soon you are spending your money but not getting any high at all, so you spend more money, and more money, and then comes the crash as the bills come due and you can no longer escape the consequences of your foolish and extravagant lifestyle.

Start by closing your ears to the lies of politicians and corporations. Turn off your televisions and ignore all advertising. Your life will not be better if you buy advertised products. Your kids will not be smarter if they wear expensive designer clothes. In fact, if you buy advertised products, your quality of life will deteriorate. You will have less money, more stress, and your family will be at risk of the many evils that derive from financial stress.

The borrower is the slave of the lender. Avoid debt like the plague it is. Never finance frivolous consumption on credit cards. Never take out a pay day loan. Stay out of pawn shops unless you want to buy something cheaply..The only real valid reasons for debt are to buy a house or for education that enables you to earn a better living. Pay off such debts as quickly as you can. As long as you have a mortgage, you are not the owner of your house, the bank is the real owner, and a sudden drop in your income could put you out on the street, homeless. By making extra principle payments with every monthly payment, you pay less interest over the life of the loan. Never take out a home equity loan for vacations, remodeling, or any kind of consumer spending. Don't consolidate credit card debt as a home equity loan - this puts your house at risk for your frivolous consumption spending decisions! Low income people must in particular beware of predatory loan schemes. Never take out a loan that has a prepayment penalty. If your property is paid for, do not, under any circumstances, get another mortgage. Debt-free housing is one of the most important survival strategies for the upcoming hard times.

Don't give in to despair and don't feel sorry for yourself. Sow blessings and kindness and you will reap blessings and kindness. By living more frugally and sustainably, you aren't going second class, you will have a first class, worry-free lifestyle. The people to feel sorry for are those, of whatever income category, who are locked into the super-consumer lifestyle. Their self-image is bound up in how much stuff they have. They are never satisfied, they always must have more stuff, new stuff, better stuff. If they aren't spending money, they feel depressed. They may have flashy clothes and lots of new possessions, but they are in reality slaves to banks, corporations, and credit card companies. Such people will have real problems adjusting to the realities of life in coming years.

3 Comments:

Blogger Ellen said...

Just found your blog and have enjoyed reading the past bits. Good stuff!

4:21 PM  
Anonymous Anonymous said...

Very Well said. People will have realized this now in a hard way.

Vijay

6:30 AM  
Blogger sanjeet said...

its lovely post thanks for sharing
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11:44 AM  

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