One of the most important things I’ve learned when observing other people’s financial lifestyles is this: there are no miracles. Sometimes when I wonder how someone affords that car on their salary, or how someone can travel for leisure as much as they do, I’m reminded that living an expensive lifestyle requires some risk and debt.
In order to have the most lavish life now, most people can’t afford to live beneath their means. I’m not saying this is a bad thing. I don’t think there is anything inherently virtuous about being a penny-pincher. What I am saying is that the closer you are to bottoming out, financially speaking, the more likely you are to be sunk by a single emergency or unexpected event. Don’t let this be you. Here are three ways I’ve found to make sure you aren’t painting yourself into a financial corner, while still being able to enjoy your life.
Have Friends. This may seem like it has nothing to do with finance. But if you are a person who wants to enjoy life, you’ll find it’s a lot easier to do so if you are able to enjoy people. This involves being plugged into your community, enjoying simple times with people who you honestly get along with, and other things that humans like that don’t cost much. Friendship isn’t overrated, and it tends to satisfy quicker than activities that cost a lot of money. So if you have this worked out, it’ll make all the other financial steps a lot easier and more powerful.
Have Only as Much Debt as You Could Pay Off in 3 Months, if You Had To. This is my own rule of thumb. I sometimes carry debt, and I’ve even (gasp) used it to do things that I enjoy, like go on vacation or buy a new toy. Stuff like that. But if I use debt, it’s only as much as I could reasonably eliminate in 3 months of hard effort. It would be tough. I would have to work extra hours, cut my leisure budget to zero, and contact structured asset services, but I could do it. Could you? If you have more debt than that, you might be stuck if something bad happens, like you lose your job or have a family emergency. If that’s the case, you’re in the danger zone. Get out of the danger zone. Then turn that debt into an emergency fund.
Enjoy Time Alone. Some people really can’t stand being alone, and I get that. I’m not saying you have to become a hermit. But it can be expensive to always be looking for something to do. Cultivate hobbies and learning experiences that you can pursue on your own. Meditate if you like. Exercise so that you feel better in your body. Do stuff so that you’re not always buying contentment, but that you possess contentment. That’s a tall order, and people spend their whole lives pursuing this. But it’s possible, and you can do it. Once you’ve got something resembling personal satisfaction, you’ll find that you don’t need all the money in the world to make it happen.
Photo: Franco Folini
Great suggestions for avoiding the scourge of overwhelming debt.