Feb 11, 2010

Why Live Frugally Now? Reason #1 (Janssen)

I worry about money. I imagine there are some people who absolutely do not worry about money at all, ever, no matter how little they're making or how deeply in debt they are, but I cannot imagine such a life. I need my financial life to be in order or I spend a lot of time worrying about it and feeling uneasy.

For me, the #1 reason to live frugally now is the peace of mind it brings. 

If you are not saving any money, if you're living on virtually every cent of your income, you are only one unexpected expense away from disaster. If your car suddenly dies or a child gets sick or you/your spouse gets laid off or your employer gives out pay cuts, or you suddenly owe taxes when you expected a tax return or your roof starts leaking, and you don't have money tucked away, you're in trouble.

If any of those things (or the millions of other things that can go wrong) happen and you have no way at all to pay for them, you're left to suffer the consequences.

When our house's air conditioner had to be completely replaced last summer (to the tune of several thousand dollars), it was unpleasant, of course; I could think of a hundred things I would have rather spent that money on (every last one of them more fun than an air conditioner). But, thankfully, it didn't break the bank for us. We had savings to pay for it in cash and not think about it again. We didn't have to sell our car. We didn't have to put it on our credit card at 100000% interest. We didn't have to live on ramen noodles for six months. We didn't have to ask either of our parents to loan us money. It was inconvenient, but it was not a tragedy, and it didn't put us in a tight situation.

Living within your means, enough that you can have an emergency fund, is the only thing that acts as a buffer between you and unexpected, unwanted financial tragedy. If you do not have savings or an emergency fund to pull you through those events, you'll have to take on debt to cover the expense.

And avoiding debt is the second biggest reason I am willing to live frugally now. Stay tuned!


Carly Jane said...

Amen. We have had countless "emergencies" of the unexpected nature in the past year and half... but always enough in savings to make it disappointing (to have to use the well saved money on it), but not bank breaking (or even overly troublesome). Always a huge relieving feeling washes over me when the unexpected knocks on our door.

Packrat said...

Add someone passing away to the list of things that can go wrong. The bills still have to be paid until probate goes through. Try double (your own plus the deceased) house payments, double power bills, utility bills, etc. etc. Then, if there isn't money to cover debts, bills still have to be paid until a house and/or car and/or whatever are sold. (One cannot legally sell any of these things until they legally belong to you - after probate which can take nine months or longer.)

derrickfam said...

You Gates ladies are awesome. Thanks for all these tips...we're really getting our money in order now. I spent all afternoon yesterday working on our Mint.com account (Thanks to David's unbelievable seminar) and apparently we eat alot more food than I ever imagined. ha ha ha!
Janssen, how is Boston treating you? I don't think I've seen you since you moved. Congratulations to both you and Merrick on your baby news! You both will be wonderful moms. Merrick, I check in on your art blog every once in a while and your stuff is getting better and better each time I look. Are you loving the Bridge? It looks like an awesome program. CArole, thanks for all the advice I'm always hounding you with. You are so great. Your kids are lucky to have you.
Courtney Derrick

Tara said...

This is great advice. I'm excited for more.

Stephanie T said...

I think it is so ironic that I read this post just minutes after complaining to my husband about having to pay for our new roof in 6weeks.

We saved, and have recieved most of our insurance check, but it makes me mad to take it out of savings. So I told him my goal for the next 3 paychecks is to come up with the $$$ for our roof.

It is essential to save for unexpected things, but when it comes time to pay for something like this I almost always make it happen from paychecks. It is always a good reminder of how much really is discretionary in our budget.

Sherry said...

After watching my family get financially knocked down over and over and over and over and over again throughout my growing up years, almost always due to these emergency-type expenses, I vowed that we wouldn't have to do this. We just found out we owe more than I'd care to admit on our taxes. It stinks, but it's not going to sink us because we are prepared. And for that, I am exceptionally grateful.

Sofia Britts said...

Being frugal in everything you do will very beneficial for your future, that is why as much as possible, I save money for rainy days and look for a firm that offers fast cash advance whenever I hit near rock bottom, for me to easily get back on my feet and return to my frugal living.