HOW TO SPEND LESS THAN YOU EARN (or, how not to live on the financial edge)

About Deirdre

Deirdre Sentis is a wife and homeschooling mother of five who has struggled in the trenches with debt and despair and wants to help others along the journey into hope and financial freedom.

March 27, 2020

Is it even possible?

This is hard. I know! We were barely making ends meet, using credit cards for unexpected emergencies, and transferring between cards to keep the interest low.

For a while it was a game and then we got stuck. We missed a few payments and the interest rate jumped to 24.9%! Then we couldn’t make the payments (for the rest of our Financial Disaster Story, click here). Most of us live this way. We drive ourselves, keeping just ahead of our financial obligations. While living at the edge of our financial means has some superficial benefits, the stress can negatively impact our health and relationships and steal our peace and well-being. We need to ask ourselves if it is really worth it.

Fantasy vs. Reality

Someone once said, “Reality is what you run into when you’re wrong”. There is an element of fantasy in living on the financial edge. While it is human nature to hope for the best, we know that something will inevitably go wrong. It could be a dental bill, a car repair, or a pandemic that pushes us over the edge. The impact can be severe if we have no buffer built into our finances.

How did we get to the edge?

Our society promotes living on the financial edge since our economy grows through borrowing and spending. We are bombarded with advertising telling us to buy whatever we want and the availability of credit removes the natural barrier to buying things we can’t afford. We’ve also bought into the idea that the perfect house, the cool car, or the dream vacation will make us happier (deep down we don’t really believe it, but the messages are constant and appealing). Unless we intentionally choose to think differently, we will be swept along into debt.

How do we step back from the edge?

Most of us spend all we earn, every month. One way to stepping back from the edge is to revisit the choices that lead us there. Living on the financial edge doesn’t just happen to us. It is the result of financial choices that did not take into account the unforeseen future that has downs and ups.

– Maybe when you graduated from university, you bought or leased a new car because you needed to get to work. The need is legitimate but there is a cheaper way to meet that need.

– Maybe you purchased a home that your family could grow into when you could have chosen a more affordable house with a cheaper mortgage.

Once we’ve identified the past decisions that are pushing us to the edge we can start to take back control. We can reevaluate those decisions and make changes.

For some it may be selling a house and purchasing a less expensive one, buying a used car instead of making payments, or cutting back on daily spending habits. The goal is to start making financial decisions that liberate some money in order to pay down debt, create an emergency fund, and have some financial breathing room for the next time life happens.

It is possible!

I have a friend who consistently, year after year, lives on 70% of her income. She saves 20%, gives away 10%, and comfortably lives on 70%. She intentionally chose to buy a home that was a little less expensive, rather than the one she could almost afford. She has money to travel internationally every few years, often spending an entire month in another country. She plans ahead and has money set aside for another vehicle in advance. I’ve seen her living this way for the past 6 years. She has peace. She has no financial stress. She is not afraid of the future.

I want to be like her when I grow up! I’m not there yet. But this is where I want to be. Prepared. Unafraid. Looking forward with Hope.

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