Principle of Financial Management #.5

photo by laurenatclemson's

photo by laurenatclemson's

.5? Ok this is a little different. If you take the time to look through my other Principles of Financial Management you will see they all have to do with taking control of your financial life: paying off debt, spending less, saving more and investing wisely.

While there are listed in a logical manner, more or less, I don’t intent to imply that a person follow the principles exactly in the order presented. Your personal situation may dictate that you focus more on one or another in a different way than your neighbor.

When I first started this blog, my vision was focused on presenting a different perspective on life, organization and wealth accumulation; a lean perspective. However an unexpected but pleasant side effect has been the opportunitity to reflect even deeper on these topics and others. In just a few short months I have been exposed to many more ideas than in the entire previous year and learned much along the way.

As a result I have realized that my knowledge and beliefs about life and personal finance continue to develop and grow. This is what has led to a Principle of Financial Management #.5. 

Without the boring details I will say my parents raised us with the value of personal responsibility. For us there was nothing to think about, it is just the way it is.

In the past few months however I have been exposed to many stories where others have not been personally responsible. Stories like:

  • Deleting The Debt – Mike, as told by The Dolans, was in debt to the tune of $50,000. A year later he only owed $8,000. This great progress however was not a result of eating “beans and rice” it was a result of negotiating with his creditors to accept less than he owed.
  • Offers In Compromise to the IRS – Thousands of people every year manage to reduce their tax debt to an average of $.13 on the dollar. If you look at those sites that offer  a service to help you do this there are often dozens of testimonials.
  • Deadbeat Dads – Some studies show up to 30% of spouses that owe child support fail to pay. While many are levied unreasonably high child support amounts in relation to their income. Thousands are simply not man enough (or woman enough) to do what is right for their children.

Disclaimer: We must recognize that bad things happen to good people. Catastrophic health issues happen. Layoffs happen. Accidents happen. The point I raise is not about people that have found themselves in an untenable position due to reasons beyond their control.

I am only thinking about the millions that have the ability but not the interest or motivation to face their obligations head-on. In their latest poll on the issue from CareerBuilder.com they cite that 61% of workers are living paycheck to paycheck.

Many of these are the same iPhone buying ($1200/year), clunkers buying (17% feel regret), latte sipping people that we work with everyday. They live in houses that are too big, drive cars that are too expensive and eat out too often. These are the same people that complain about not making enough, too many bills and the high cost of gas.

If you want to live debt free, you can. If you want to have money in the bank, you can. If you want to be able to afford the price of gas whether it’s $2.50/gallon or $4.00/gallon, you can. But none of it will happen until you choose to take personal responsibility for your life and your finances.

Getting a handle on your money is like getting a handle on your weight. You can’t go on a diet once a year or save money by not going out for a few months and think that you are going to be fit, thin and rich for life.

Weight control is not about dieting it is about lifestyle. Financial control is the same, it is a lifestyle; a lifestyle that requires the personal responsibility to make the right decisions routinely.

Until you can commit to this principle of financial management, nothing else is going to work.

That said, I need a diet coke!

 

 

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