The Danger of Debt: A Budget you Can Live With, part II:

The Danger of Debt.

Being in debt is one of the most difficult life situations to escape from, which is one reason it’s worth it to make sure you don’t ever go there.  Debt can make you feel enslaved to a corporation that doesn’t care about whether you have children to feed, a roof over your head, or a job, and too much debt can make you feel like there’s no hope.

The Danger of Debt

It’s easy to fall into debt – even if you’re making great money.  In fact, people who make a lot of money are often in debt up to their eyeballs, simply because they feel the need to keep up with other affluent friends.  But being in debt means you don’t really “own” anything, and makes it more likely that you will eventually get yourself into real trouble financially.  Many people in debt are really just one paycheck away from homelessness, even if that home is a six-bedroom mansion.

Imagine yourself making a high-figure salary and buying all the things you dreamed about having – on credit cards.  Although you might be able to keep up with the payments as long as you have a job, what happens if you lose it and you have made no other plans?  You might be thinking that it won’t happen to you, but it can and does happen to anyone.

If  you have high levels of debt and you lose your job, it won’t take long before you are unable to make those credit card, car note, or even mortgage payments.  It might not have seemed unreasonable to get into the debt when your income was good, but when you lose your income it can be financially tragic.  Don’t let this happen to you!  Plan ahead!  That’s what a budget is all about.

When you don’t buy items you can’t afford, you’re protected from the danger of losing everything to debt.  There’s strength and confidence in being able to pay cash for your purchases.  Ultimately, that will be your goal in creating a household budget.

Common Pitfalls of Budgeting

You may have tried to budget before but have been unsuccessful.  That could be because you haven’t really gone about it in the most effective and comfortable way for you.  Some of the common budgeting mistakes people make are:

·    Not making a budget that’s realistic for your family
·    Making a budget, but not committing to it
·    Not communicating with your spouse and/or children about the budget
·    Disagreeing on what expenses are necessary
·    Misidentifying needs versus wants
·    Being inconsistent with financial habits

While budgeting can be challenging – especially getting started – it’s not impossible.  When you have a budget, you need to be realistic about your own family and have good communication.  In later posts, you’ll learn how to do that – it doesn’t always come naturally to people.

It’s also important to actually decide that you are not going to stop until you have this budgeting thing under control.  Setting some goals can help you to have motivation and to see your success.  We’ll continue to cover all of that here and in future posts.

Money Is a Highly Emotional Topic

While talking about money seems to be pretty objective and about dollars and cents, in actuality it’s an extremely emotional topic.  You may have many feelings surrounding your financial situation both on how you earn money and how you spend it.  Some of those feelings can easily derail you if you aren’t careful.

Learn to separate your value as a human being from your financial value.  Everyone makes mistakes and has difficult challenges.  If yours happen to be financial, you can sometimes feel desperate, humiliated, and embarrassed.

You’ll need to try to let go of those feelings so that you can look at things more objectively.  It will feel really good to get in control of your funds.  And if you’ve made financial mistakes or are experiencing hard times, you should feel very happy that you’re now ready to face things, and make them better.

Getting on the Same Page with Your Spouse

Finances can be tough for couples to discuss and manage, because of all the hidden meanings behind money.  If you’re in a relationship where you share the same household or if you’re planning to in the near future, you need to learn to communicate about money.

This can be a major challenge for any couple.  Set some guidelines about being open when discussing money.  You’ll also need to make sure not to make things personal.  You may have very different ideas on how to spend money – in fact,  it would be surprising if you didn’t!

Even when you disagree about money, it’s a good idea to start at the beginning with an agreement not to make personal attacks.  If you find that you’re getting in a heated discussion, it might be best to take a break and cool off before continuing.  Working through financial issues is tough, but necessary if you’re going to have good financial health.

You may want to look for some resources to help you communicate about money as a couple. This series is a great start, but if communication is a serious problem, you may want to look even further.  A financial counselor can be beneficial if you need an objective ear.  You may also want to look at books designed to help couples get on the same page about money.

Coming in Part III:  Figure Out Where you Are First…

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