I just can not get myself to sit and write about those posts I linked in the last post. Sooner or later, I swear I will get to it. But this just may not be my week.
Maybe it is just me (and the stress of knowing we would lose money if we sold our house now), but very recently, The Economy has started creeping into my consciousness.
I don’t get much news except for the NY Times and some NPR, but even then I don’t read economic stories because I think it is boring. Even with my aversion, the dire predictions are starting to feel really scary. Except for the mortgage crisis and gas prices, I couldn’t even tell you what is going on with The Economy, except that it seems like there is a growing consensus that things look bad.
Due to our childhood experiences, both Mr. A and I are very conservative with our finances. I loathe debt. Even “good debt” like our school loans and mortgage can keep me awake at night. Mr. A lives to save for retirement and the girls’ college funds. In his spare time, he doodles charts of compound interest and notes about the tax benefits of socking away money now.
While we do have a few indulgent purchases like my fancy stroller or Mr. A’s crazy touring bike or the twice a month housekeeper, we don’t care much for designer goods, fancy clothes or the newest gadgets. We drive used, crappy cars* until they die and then we buy another used car. I wear the same two pairs of jeans, one pair of tennis shoes and cheap t-shirts from H&M every day. Most of the girls’ clothes are purchased by my mom or handed down from generous friends. Mr. A buys his suits and work clothes at the annual half price sale. A lot of our furniture is either used, trashpicked, from Ikea or from an outlet. It was a huge anomaly when I recently bought a new dining room table & chairs because it was the first time in 6 years I paid retail for furniture (and that was only the chairs which were on sale, the table was from the outlet). Our biggest indulgence is probably eating out more often than we should, but I try to stick to my $50 a week budget for that.
Despite Mr. A’s comfortable salary, it isn’t like we are living large. Most of the time, we are just living within our means. We don’t carry consumer debt, but after retirement and college funds, we aren’t socking away a ton of savings either.
I look around at a lot of other people and I wonder how on earth they can possibly afford to live how they live. You know who I mean: The 4,000 square foot houses filled with brand new furniture, a designer wardrobe and new cars in the driveway. Most of the time, when I see that stuff, all I can think of is that it is all probably creating debt and it makes me feel anxious. Even here, in our part of the Midwest where housing costs are so obscenely low, I don’t understand how people can afford those things.
Our family is fortunate because Mr. A is pretty employable and his job is very stable. We are also fortunate that he earns a good amount of money. If things with The Economy go into the crapper, Mr. A is probably going to keep earning what he earns now. But as the talk of The Economy gets worse, it feels scary.
I know we are doing a lot of things responsibly, but I am finding myself thinking more and more about cutting back and buying less. We do not need a bigger, fancier house. We do not need to live in a replica of a Crate and Barrel or Pottery Barn catalog. We do not need a professional-quality kitchen or a spa-like bathroom.
We are fortunate that we have everything we need. I do not have to be a slave to the seduction of advertising and marketing. What we have is enough for us.
*My last car cost $4,000 and has lasted 4.5 years with only minor repairs and very little maintainence. Mr. A’s cost around $5,000 and he has had it for almost 4 years.
Well, it’s interesting because for us, this post on economy slams right into the other unwritten post. We are leaving the diversity of the city because we can’t afford to live here anymore. For now, we’re moving to a far less diverse area where we can afford to rent an entire house (!). It’s an imperfect balancing act, and all interrelated for this family.
i wonder the same thing about how people live the way they do. and not only how, but WHY. who needs a giant house with all that stuff? we also live with lots of trash picks, hand-me-downs, etc. and i rarely buy anything that isn’t on sale. do we indulge here and there? sure. but scott makes good money, we have almost no debt (aside from the house and a piddly car payment), yet we’re not rolling in it. and even if we were, i doubt our lifestyle would change all that much.
Yeah-it overwhelms me too. I cry poverty, but honestly, I got a 40% raise last year and j got a job after several years of patching together contracts-so our income is more than it ever was, and not too bad statistically. But we don’t use credit cards, we buy clothes thrift if at all, we share one 12 yo car, everything S has is gifts and hand downs-but after retirement and college, there’s not a lot left. I was fortunate to buy my house at the height of the bubble for considerably below market (uh, it needs WORK, but nothing that affects our comfort) and my neighborhood has been holding housing values even now-so I don’t worry too much about the mortgage payments. And the student loans for the MBA? That’s how I got my big raise…
And the chariots are 20% off this weekend, and, after much agonizing, I decided to stay far far away from rei until the sale is over. I just can’t bring myself to spend the money, and I can’t figure out how others do it. ~lmc
I am in awe of your cars. We were good for the first two cars I ever bought–used, cheap, nice condition or so we thought. And they ended up costing a fortune. Like the second car that had something wrong every month that seemed to cost at least $300…it drove me to leasing. I don’t love leasing, but I love the fact that the cars cost a set amount each month, not 200% more. But then again, we bought American for the first two cars (I am the daughter of an autoworker). We leased Hondas and ended up buying out the first and it is still going with very little maintenance at 6 years old. Maybe if we had bought used Hondas from the beginning, having an old car wouldn’t scare me as badly. (getting stranded in a so-so neighborhood with my 2 month old daughter the first time I drive alone after her birth…yeah 6 years later it still freaks me out.)
Sorry to stray off-topic. The economy is worrisome. I used to feel that if things felt tight, I’d go back to work full-time. And now, that feels less like an option. It used to be, what job would I pick up that would be interesting and pay well. And now it is what job could I pick up that covered day care and made it worthwhile?
I do have some (perhaps unwarranted) optimism that a lot of the Wall Street types and financiers are sort of holding their breath until after the election. The unknowns concern them too.
I think lots of people do live within their means, but get trapped when something goes wrong (someone looses a job, gets ill, gets divorced). That puts them in a spiral that they can’t recover from without giving up things they’ve gotten used to. I think that’s the real test of whether you’re living within your means — if you can downsize successfully, it means that you can deal with the ups and downs of the world.
We’ve always lived within our means, but our means have always been growing, so we’ve never had to down-size, to decide that we can do without the 2nd car, or the trip, or . . . .
We have started buying new cars as those means gave gone up, but our newest car is four years old, and we have no timeline for buying a new one, until they fall apart. And cars are getting better now — the ten year old car runs just fine. It’s going to be an interesting experiment, to see how long it makes sense to keep the cars.
Like you, DH and I are very conservative with money. He makes great money, but we carry as little debt as possible. We recently bought a new house and had to get a small mortgage and just that drives us nuts, we’ll pay it off as soon as possible. We definitely have a much more luxurious lifestyle than we did 10 years ago, but we still are very much aware that it can all change overnight and that it’s always important to live well within one’s means, to have college funds for the kids, retirement funds for us and just a good healthy savings account (all this of course is assuming you have an income that allows it – it took us many years to reach that point). Even with all that, the economy makes me nervous. And I can tell you that while our next car will be new, it will most likely be a small hybrid car…but I’m not giving up my heated bathroom floors and steam shower!lol I think everyone needs to live responsibly within their means, but it’s hard to do when all day long you’re being bombarded with “you can have it all and have it now” ads…
Wait til middle school! There is such intense, incredible pressure to buy clothes from the right stores – Hollister, Abercrombie, etc. I teach 7th grade so I see it at work and at home with my 6th grader. I do understand how she feels and have bought her some clothes (from the sale table) from there. I don’t know how some parents afford the amount of crap they buy their kids.
Here’s the dirty little secret. Parents that have all the cool stuff, big house, clothes, cars don’t have any money. They’re in debt, have no savings or both.
http://www.AnUrbanStory.com
” I don’t understand how people can afford those things.”
They can’t afford them. I’ve been doing a ton of bankruptcy and foreclosure work lately (not because I especially like it, but, my kids need to eat), and I can tell you, many, many, many people are living WAY beyond their means. It absolutely TERRIFIES when I see what kind of debt people have. I lose sleep at night thinking about OTHER people’s debt, I have no idea how they sleep at night. Plus, with the real estate market being what it is, people who took out home equity lines of credit to buy all kinds of crap have negative equity in their houses. It’s scary, very very scary.
Gretchen
I think some people can afford those things because they had two substantial incomes before they had kids (or both are still working after kids at jobs that pay quite well). And some people bought their houses in the 90s before prices went up quite a bit. And there are definitely many people who aren’t saving. I once asked my moms group how much they were saving for college and no one answered. Then one mom said that the reason no one answered was because no one was saving anything!