I read an article this morning which discussed the 7 signs of good financial health based on conventional wisdom. According to the article, these 7 signs are:
1. By age 40, you’ve accumulated 1 to 3 times your annual income.
2. If you’re part of a dual-income couple, you can cover your fixed expenses with one income.
3. You live in your 30s like you did in your 20s, 40s like you did in your 30s, your 50s like you did in your 40s, and so on.
4. You have only one car payment at a time, or better yet, you save in a car replacement account each month instead of making a payment.
5. Your home’s value is 2 to 2.5 times your income and your mortgage is no more than 80% of the value.
6. You have a will.
7. You give at least 5% of income to charity.
What was interesting was not the article necessarily - for these checklists are de rigueur of a frugal lifestyle - but rather the comments made by some of the readers. To wit:
"I was knocked out in the first round....."
"Wow! I feel like such a loser!!! : ( "
"I think one problem with people of our country is many believe they have to have the latest gadgets that really add nothing to their quality of life and, in many cases, cost them dearly each month."
"How about you write about today's real problem your house is underwater you maxed out your saving cause you were out of work for 2 yrs NOW your trying to pay off cc's and put put 10% into savings for your nest egg IF POSSIBLE!!"
"This author must think everyone in this country is in a Norman Rockwell situation. Very few folks can be that ahead of the game in this day and age with a tomato costing $2.00 at a grocery store."
"Here's a little advice: Buy EVERYTHING used. All that I own was bought used, it's all paid for."
"Get rid of the cell phone unless you are in business and have to have instant contact with your office or a client. When it comes to houses, think modest. Why does a couple need a 3,500 sq.ft. or larger house? Buy an automobile for its utility, not as an ego booster. Invest the savings."
"Steps 1 -7, especially 7, are optional if you are a politician."
"Fiscally responsible and mature parents would help considerably to solve the majority of the financial hardships that I hear echoing across these articles. It all starts at home."
"Be smart. Work hard. Live below your means. Invest. Piece of cake."
"This isn't rocket science, it's common sense. We were a one-income family for many years while I raised the boys, my husband starting at 24K a year. Endured lay-offs, hard times, medical issues, kids' issues, etc. On one modest income, we bought a home, paid off our cars, invested in a 401K, built up equity, paid off debt, went on vacations once a year, etc. Our "secret"? We lived quietly, never tried to keep up with any Joneses, rarely bought new electronics or retail - preferring goodwill, thrift or yard sales, or did without - cooked at home, didn't spoil our kids, who had to buy with their own money or wait for it. I always paid off our credit card. When I started working again it was like we hit the lottery, yet we still put the money toward the house or saved for a sudden expense or layoff. Life is good. Keep it simple: enjoy life not things, save and live frugally, teach your kids the same and they'll be okay. Common sense."
Wow, that last one is spot on! (Okay, that was my comment).
Common Sense. Somehow, since recovering from the Great Depression, and with the advent of credit (whoo hoo - now I can buy things I can't afford!), we've lost all vestiges of it. We've been tempted by beautiful "things": houses, cars, electronics, clothes, stuff. We can't get enough stuff. Now we're caught up on a Spending Throwdown with everyone, even people we don't know, who glisten from magazines, who whisper to our need, "If you want to look like me, live like me, drive like me, be like me, you need to spend like me..."
Gone are the days, for many, of living within one's means. Of saving instead of spending, of doing without or delaying wants instead of gratifying instantly; preparing for the future instead of living in the moment. Cooking at home instead of bringing home dinner or eating at restaurants a few times a week. Comparing yourself with no one but yourself, using your income as a guide to living. Being disciplined. Living smart instead of popular. Doing these things, I mean, it's just not...in style. Being in debt, now, that's in style. Having the latest technology, the shiniest car, the biggest house - all in style.
When I read the article's 7 steps, I had confidence we would pass most if not all of these "health questions". The reason isn't that we make a lot of money, or have a rich Uncle in Dubai or are just lucky. We chose to go a different route than some - the destination being simple and solid, yet one that's offered to all. It's kind of like faith: it isn't easy at first, it's not fashionable or in style...but man, it's really great to know that you can pass the tests, each and every time; that regardless of the situation, you're going to make it.
Sharon L. Cece © 2013