Sunday, July 29, 2012

Can't see the forest for the trees

Learning to control our spending through budgeting requires an attention to detail that many of us are not in the habit of exerting. Watching every dime, keeping receipts, records, and analysing each of them is not always fun. In our effort to curb we watch unit pricing, sales, and bemoan our morning stop for coffee. All that is a good start to examine and change any wasteful or less than useful habits. The downside is that we can become so absorbed with the details that we lose sight of the big picture and begin to be hyper vigilant in the little things, making ourselves miserable while missing the bigger picture.

The old expression for this is "can't see the forest for the trees"

More than once I have caught myself figuring what sacrifice I can make to save another $10 and have been told I am able to squeeze Lincoln until he squeals. That's good but there are other times when I have missed big things while I concentrated on the details.

This is where goals become such an important first step needed before making a budget. Since I wrote the post titled Who wants to be a Millionaire? it really got me thinking...

Most of us want and hope for the same things at least as the basics:
  • An education
  • A home
  • A family

Our approach for the most part has been as follows:
  1. Graduate from high school
  2. Go into debt getting an education if scholarships have not been received
  3. Rent a place to live
  4. Get married
  5. Have children (for 30% of women number 4 and 5 are reversed)
  6. Buy a house
  7. Put kids through college or let them go into debt
  8. Struggle, remain in debt, or work on getting out of debt for 30 years
  9. Have a midlife crisis
  10. Save money (or not) and long for retirement
  11. Retire

All these steps are taken to achieve those 3 goals mentioned above.

What if we were to change the order of the steps to the following? Of course, it would have to be modified to the individual for we all know that when love enters the door all else takes 2nd priority whether we intend for it to  or not:

  • Begin saving money while living at home as discussed in Who wants to be a Millionaire?
  • Prepare for college by achieving academic excellence
  • Attend higher education using scholarships and/or saved money and parental assistance acquiring no debt
  • Get married
  • Work as a two income family to prepare for the purchase on a home in cash.  Use the income of one person to save and the second to live on thus learning to live on a single income.
  • Have children.  One parent could stay home avoiding all daycare costs.  A home business could also be developed
  • Home school child or any 2nd parent income for private education.  Why not put academic excellence for our children all through their years instead of waiting until they are 18?
  • (Remember the house was paid off before having children so all that is needed is for food, clothing, and transportation which should be manageable on one income)
  • Any 2nd income could be dedicated toward children's early and secondary education or savings for the future. 
Yes, this is an idea and not a common plan  or experience so statistical verification is unavailable.  However, I have heard so many times:
  • We have to have two incomes to live
  • We can't afford private school

Housing is the single biggest expense for most of us. How we choose to handle it can easily become the dictating factor in our budget. 

I love Jacob's book and blog Early Retirement Extreme.  The one subject he does not deal with in detail is those who do want to own a home and have or plan to have children.  Using the strategies as a basis the plan can easily be adopted for those who do want to have a prosperous family life.  I cannot fathom what it would be like to own a home outright at age 25 but I can certainly imagine it.

We need to try and see the forest through the trees so we are able to make the best decisions for ourselves and our families.  Did I know this at age 16, 25, or even 40?  No, time, experience, prayer, and watching the daily news has shown me there is a better way than the road of the average.


Anonymous said...

wow that's really amazing.
At Home Business

Carol Schultz said...

Almost like turning things upside down to see them clearly