What can you afford? It’s a simple enough question with a very complex solution. Debt to income ratios, credit scores, interest rates, installment plans, and so many other variables that make it a highly personal question. The answer is going to be different for everyone, factoring in all of the choices you’ve made in the past that have brought you to where you are today.
The problem is that even as personal as the question is, many people don’t know the answer themselves. They let the credit card companies and banks tell them what their limits are. There is a serious problem with that approach. Lenders are always going to give you more than you can really afford. They don’t factor in non-necessities that you treat like necessities. There is no where on a credit application that asks how much you spend every month on cigarettes, coffee, shoes, lottery tickets, or fast food (even though many people spend the equivalent of a car or house payment on those things). It’s up to you to calculate what you can really afford. No one is going to care more about your financial situation than you are! It’s time to start showing that you do care.
It doesn’t matter how much money you are making, everyone has to say no sometimes. Our generation is so afraid to say no. We’ve been conditioned with things like “You deserve it”, “I’m worth it”, and “You only live once”. Why does buying things have anything to do with what you deserve? You deserve to open up a bill, be able to pay it in full and go about your day without giving it a second thought. You deserve peace of mind, having money in a savings account for life’s unexpected moments. What happened to telling your kids that you can’t afford something? There is no shame in it. You need to lead by example. Teach them the art of prioritizing. Groceries, priority. Heat, priority. New iPhone, not a priority. Being the responsible adult is not the most glamorous role and it’s never going to win any popularity contests, but it creates a stable, peaceful place to live.
If you aren’t contributing to your retirement account while also building an emergency fund of at least 6 months of living expenses, you are living beyond your means. Period. Things need to be cut. Like being lost in a corn field with a machete. It’s up to you to get yourself back on the right path. That path begins with writing down everything you spend money on every month. Make two columns, one for necessities and the other non-necessities. That way when you start swinging that machete, you’ll know where to aim it. Some cuts are going to be easier to make, while others will be excruciating. It’s not fun and it’s not a one time fix. It means making better choices every day and saying no a lot more than you ever have. Being in control is a rewarding and empowering place to be.