Never for a second did I think this would become a saga. Obviously when I started this I really didn’t comprehend how much I had to share on this subject.
Decisions made can affect our lives ten fold. Some are the kind to make a decision on the spur of the moment and usually get it right. There are those who carefully think everything through, weighing up the pros and cons and get it right every time. And then there are those of us, no matter whether it is a spur of the moment or carefully thought out, we mess up almost every time.
For instance, taking out a mortgage or a loan. These are major purchases, for a house, car, a holiday, renovations on a home, a boat, caravan, motor home. A house full of furniture, white goods, a TV and sound system.
We have become a society where we must have it now and often we upgrade just for the hell of it, rather than because something has broken down or no longer serves our needs. Like a bar fridge in a house with 2 adults and 4 children, just doesn’t work.
Say you are buying a car. There are so many things to consider. Size of the vehicle, function and uses, availability and cost of repairs and parts, insurance, can you afford to pay the loan comfortably if you lose your job or take a pay cut when you change jobs? Do you have other loans and credit cards to take into consideration as well.
Do you choose the nice shiny car that you have always wished to own and is $50,000, or do you choose the car that suits you needs, your budget and costs say $20,000. But that nice shiny car you’ve always wanted and the car sales man is making you an offer you can’t refuse, is swinging your decision. Do you go with your heart or do you go with common sense?
How many of you have chosen the first option and six months down the track you can’t afford new tires or something needs fixing and it is too expensive to fix or you have lost your job and you can’t afford to make the payments. You either end up selling it and losing money, or you take on another crap job to make the payments, and take out a small loan to cover the expenses of repairs, etc. It becomes a vicious circle and you get further into debt.
So here is an example of how I would go about it.
I want to buy a place of my own, I am living in a place where monthly mortgage payments are much cheaper than rent. I have a good deposit and a great job. My partner hasn’t worked in six months but he has equity in a caravan and a good size boat, and we are okay financially. I also own a property in the city which has no mortgage and I am renting it out. I see lots of lovely places, apartments, and houses, they are all good investments. There is only me and my partner so we only need a small place and we are both over 50 so the mortgage we would qualify for would have to be paid out in 15 years, not the usual 25-30 yrs.
There is this lovely 3 bd/2bth house near the beach but it is $400,000 and we have to sell everything like the caravan, boat and our extra car to get the deposit together as well as what we have in savings. The place also has two yards which need upkeep and mowing and neither of us are gardeners.
Or do we find a 2 bd apartment or duplex that is half the price, has a lot of facilities like a gorgeous swimming pool and is also near the beach, we can keep both cars and the boat, and we can comfortably afford the repayments, being half of what we would be paying on the $400,000 property.
Me personally I would take the small apartment, because we would still have assets to sell in an emergency, and we could live comfortably on one wage and would be able to keep some savings aside, just in case.
So many would take the bigger house and to hell with the consequences. And often end up losing everything in the process. So many people struggle with debts they can’t afford and even worse don’t change their regular spending habits to make debt repayment easier.
So many people still go out to dinner with friends or buy lunch everyday, have the latest phone, buy coffees, have to have that new dress to go to that party. And when they get into trouble financially they don’t know how to cope. You could get another job, take out short-term loans to get by. But does that really work. As far as I am aware, taking out more loans to cover the ones you already have, doesn’t work.
We have forgotten to live within our means. But also part of it has a lot to do with not realising the consequences of our actions, not having enough foresight to realise that we are extending ourselves a bit too thinly.
Our thoughts and beliefs can also play a part in this. If we believe we are better and more acceptable if we have the big house and the flashy car, the 2.4 kids, and live a certain lifestyle, then commonsense doesn’t come into it. I would rather drive that little car I can afford to pay even if I lose my job and live in that small place and know I can sleep at night without stressing about finances. I would rather have a second-hand small screen TV than have to continue working in a job that I hate and which will eventually wear me out. I would have a few little black dresses that can be dressed up or down and tend to be nondescript and wear them over and over again without anyone realising I am wearing the same old dress every time I go out. I like to know I get my money’s worth out of something.
I think we all need to consider things more, take our time making decisions. And live a better life.