Sunday, October 16, 2011

How are your juggling skills?

If someone were to ask you what are the basic necessities of life what would you answer?  Most of us would answer food, clothing, shelter, and medical care (for those who have physical ailments).  But is this how we plan our lives or our budgets?  Recently I heard of a survey where regular manicures were included on the list of basic necessities.  How about cell phones?  A car?  A college education?  Pampers?  Somewhere along the line the expectations and definition of basic necessity has changed.  And, in attempting to maintain this new level of what is assumed to be expected people are scrambling to hold it all together amidst a changing environment. 

I'm not a juggler but I would imagine that it would be easier to keep one ball in the air than 10.  I have also seen those who are skilled are even able to juggle flaming objects.  Not my idea of a good time.  I prefer to keep it simple. Many approach planning a budget and paying their bills in the same manner and wonder why they can't keep all the objects in the air.

It is this principle that motivated The Minimum Basic Budget.  When the income gets cut some quick decisions need to be made.  The changes needed may not necessarily be permanent but indeed they do need to be done quickly.  By recognizing the need to focus on the basics early enough we have the opportunity to set down the rest so that we can keep these in the air.  Otherwise we run the risk of dropping them all and having to start over from the beginning. 

It is easy to point to the U.S. economic crisis and think that was when all our troubles began.  Indeed it was a turning point for many but often the signs of a diminishing personal economy were already rearing their faces but because we continued to receive a paycheck we were holding the hounds at bay.  The job loss was then just the last straw.

What were some of the signs?
  • Lack of savings.  This could be in the form of cash in the bank or other commodities.
  • Growing credit card debt.  Any credit card not paid in full each month is a sign of risk.
  • Living pay check to paycheck and counting the days until the next one.
  • Dependence on any government or public subsidy including welfare, food stamps, student loans, and tax credits.
  • Car payments.
  • More bills in the mail than letters from friends.
These are just some of the signs and may raise the hackles of some who still don't want to acknowledge that these warning signs existed and evasive action was needed.  Yes, I too, recognized some of these signs in my own finances so am not immune.  In fact, it is because I have had to start over more than once that I am beginning to learn the steps to the dance.

The bottom line is that there will ALWAYS be more opportunities to spend money than there are for most of us to earn it.  So the goal cannot always be to EARN MORE but to MANAGE BETTER.  Even if you have lost everything that gives you the opportunity to start over and become a more proficient juggler.  Dropping all the balls is sometimes the first step to figuring out which ones are really necessary.

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