Week 2: How To Live In Debt To No One

Calvin Coolidge once said, “There is no dignity quite so impressive, and no independence quite so important, as living within your means.”  I like to think what he meant by this is that when you live within your means, you can hold your head high because you are beholden to no one.

So just what does it mean to live within our means?

1. First and foremost, it is knowing the difference between ‘wants’ and ‘needs’. We need a roof over our heads, clothes on our backs, and food in our bellies. If you look at this in its most basic sense, everything after that is gravy!

2. After you have figured out what your most basic needs are and how to budget for them comfortably, then and only then, for obvious reasons – you can express the freedom of choosing purchases from the ‘want’ category.

3. Next, and equally important, is whether those wants should be paid for with savings or financed with credit.

We live in a society of buy now and pay later. It is tempting to keep up with the Joneses and buy the toys and fancy cars using credit and to worry about paying for them later. The problem with this is that you are ‘beholden’ to creditors.

Credit is unforgiving. If you ever think that the world has forgotten about you, just miss a few loan payments and your phone will start ringing. Sadly, a much forgotten alternative to credit is saving cash for a future purchase. Saving now for a purchase later gives you the flexibility that you may need and will lead to a more stress-free life. Delayed gratification of a purchase can even help you appreciate your purchase choice all the more.  Or perhaps, after working so hard to save that money, you may not see that ‘want’ as necessary anymore and you may choose to put it toward something altogether different.

The recipe to ensure you aren’t beholden to anyone is: don’t spend money you don’t have to buy things you don’t need. Following this advice will help you achieve financial well-being!

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