Just Say 'No'
by Gary Foreman
Many of us are old enough to remember Nancy Reagan's campaign against
drugs. To this day I can still remember the slogan: just say 'no' to drugs.
It clearly explained the goal with a simple to understand message. Saying
'no' could help you avoid pain and make your life better.
The same thing is true in the world of personal finance. Sometimes saying
no can prevent problems and improve your lifestyle. Let's take a look at
some examples how just saying no can prevent a financial overdose.
Just say no to buying more home than you can realistically afford. In the
last thirty years houses have grown by roughly 50% (from 1700 sf to 2500
sf). Yet the size of our families is about the same.
Buying too much house will almost certainly sink your budget. You shouldn't
spend more than 30% of your after-tax, spendable income on housing
(including utilities). The biggest problem with spending too much on your
home is that it is very hard to correct. Other areas of your budget aren't
big enough to overcome the problem. Often the only real solution is to move
to a more affordable home.
Just say no to 'no payments until...' offers. If a deal looks good to you
because you won't have to make a payment for months (or even years) then
you probably can't afford whatever it is. The seller is making the offer
because he is betting that you won't have the money later and will be
forced to make payments on a loan with high interest rates. Don't take the
bet. Most consumers lose.
Just say no to rushing into a buying decision. Years ago my Dad emphasized
that it was a good idea to put off many purchases until tomorrow. You might
wake up to find that buying isn't as important as it seemed yesterday. You
might have thought of another way to get the same result without spending
the money or just decided that you could live without it.
You'll also avoid a lot of scams. Most con jobs need you to act before
you've had time to seriously think through the offer. The vast majority of
big financial decisions can wait for one day.
Just say no to believing that owning things will bring real happiness.
Sure, we need food, clothing and a roof over our head. If we don't have
those things getting them will bring happiness. But once you get past a
certain point (middle income?) more things don't mean a more enjoyable life.
Face it, any happiness you can buy at a store is going to be short-lived.
Soon whatever it is will begin to lose it's luster. There will be newer,
fancier versions available and you will own the 'old' version.
On a related subject, just say no to allowing things to become more
important than people. If you want real happiness look to your family and
friends. Their love is more valuable than any thing you can buy. Visit the
elderly and ask them. Their best memories are of people. Not of possessions.
Just say no to letting others dictate your standard of living (and
expenses). Just because someone else is foolish enough to buy a car they
can't afford doesn't mean that you should. The bumper sticker is wrong.
Dying with the most toys does not make you a winner.
Just say no to the 'you can have it all' mentality. Set aside the fact that
you don't really need it all. But why set yourself up for disappointment
when you can't get it all? Every day there are people creating new things
for you to want. It's pretty safe to assume that they can come up with new
things faster than you can acquire them!
Just say no to daydreams of getting rich quickly. It's a trap. Countless
people have lost money on both legal and illegal schemes to make huge piles
of money overnight. Don't join them. The odds of winning big are very slim.
You're more likely to be hit by lightning than to win the lottery (seriously).
That doesn't mean that you have to give up your hopes of attaining some
wealth. If you work 40 years (and most of us will) earning $25,000 per
year, you will earn $1,000,000. So a lot of money will pass through your
hands during your life. It's up to you what you do with it.
Is just saying no enough? Well, no, it isn't. Saying no while you sign a
new five year car loan isn't going to help. You have to say it and follow
up with the appropriate action. But choosing to 'just say no' can help you
and your family to financial freedom.
Gary Foreman is a former financial planner who currently edits The Dollar
Stretcher website <www.stretcher.com> and newsletters. On the website
you'll find thousands of articles to help you stretch your dollar and your day!