Sunday, March 29, 2009

The Things We Believe In

by Gary Foreman
Are you denying facts that could hurt your finances?

The human mind is very interesting
. We're given an amazing ability to think. And, yet sometimes we also have an amazing ability to deny the facts and believe whatever we want. Today I'd like to take a look at some of the financial things that we might believe.

Bad things won't happen to me. We'd all like to believe it. We own the one car that won't break down. Others will get sick, but not me. Therefore I don't need an emergency savings account or insurance. I can postpone the savings or insurance until I have more money. But, the facts are sobering. Every car will break down at some point. And almost all of us will spend some time in the hospital during our lives. The truth is that everyone needs a plan for handling unexpected expenses.

I did it before and didn't get hurt.
Just because you got away with a bad decision before doesn't mean that you'll continue to get by with it. It's a little like walking away from an auto accident. You don't automatically assume that you'll be as fortunate the next time it happens. So the sane driver tries to avoid accidents.

That "everybody's doing it" is a good reason. If you hear yourself saying this, you need to check your math. Because it's very rare that everyone is doing something dangerous. Usually it's only a few people. And rarely do we know enough about their finances to know whether they're really getting away with it. Even if they look prosperous, that doesn't mean they don't get calls from bill collectors and worry themselves to sleep each night.

Besides, even if everyone were doing it, that doesn't mean that it's smart for you to do it. A few years ago lots of people were using variable mortgages to buy homes they couldn't afford. It seemed like everyone was doing it. But, now we know that it wasn't alright. Bottom line? Think through any move and how it might affect your personal finances.

That I'm smart enough to avoid problems.
We'd all like to believe that we're smarter than average. And, that our smarts make us less vulnerable to financial problems than the average guy. The sad truth is that our guard is down when we're so sure of ourselves and we're probably more likely to have problems. Don't be fooled by your own arrogance.

That decisions don't have consequences.
We all live with our decisions. But many of us fail to see the connections between the problems that we're having today and the decisions we made yesterday. We chose a new car instead of leaving the money in savings. Months later the refrigerator breaks down and we don't have the money to repair it. Bad luck has nothing to do with it. It's the decision we made to take the money out of savings that caused the suffering today. To understand what went wrong (so that we can learn from the experience), we often have to go beyond the first step. Sometimes the problem goes back a few steps.

Take a look at some of the things that you believe about your finances. You might just find that some of them simply aren't true.

Gary Foreman is the editor of The Dollar

Note from Lucy: "If ye are prepared, ye shall not fear." Remember to keep a financial reserve to help cover you if you should suddenly be out of a job. Keep a three months supply of food stored away to help you save money in case of a job loss or an extended illness...

My sister is hanging on at her job right now, after they just laid off 80 employees. Her husband's current job will be over in two months and it doesn't look like he will get a new one right away...He is in construction and he may have to take a job 200 miles away to keep working. Luckily for them, they just paid their house off last November...My other sister works for a department store and they have been laying off people too...Luckily for her, she is one of their top producers and they have moved her to a different department just to keep her.

People don't think it won't happen to you! Get you ducks in a row now. If you are spared of a job loss or an extended illness, you are some of the lucky ones... If not, being prepared can only help you....


At 7:39 PM, Blogger Diane@Diane's Place said...

Things are bad all over and it certainly pays to prepare for a rainy day. After all, the unexpected seems to happen....when you least expect it!

Happy new week, Lucy. :o)

Love and hugs,


At 7:07 PM, Blogger OldOldLady Of The Hills said...

Lots of good advice, all around....Some things are truly "common sense"...yet, often, this particular "sense" leaves us when we go into some form of denial.

At 8:17 PM, Blogger Renie Burghardt said...

Hi Lucy,

Oh, I love the Dollar Stretcher and have been a subscriber for several years. Great advice, full of common sense. Being prepared is the best defense in our world today.

Happy Tuesday!

Hugs and blessings,


At 6:04 PM, Blogger Jamie Dawn said...

Great advice from Gary Foreman and from you, Lucy!

We know from personal experience that bad things do happen, and they can happen at the worst times.
From illness to car repairs, these things really throw finances out of whack and can put heavy burdens on family finances.
I KNOW I don't know it all, and I KNOW I can't expect to get away with making dumb choices.
Pray and be as prepared as possible. The rest is in God's hands.


At 8:10 PM, Anonymous Jahn said...

Reminds me of something Vox Day once said: Man is not a rational animal. Man is a rationalizing animal.


(And I'm really bummed about missing out on that order from Walton's Feeds.)

At 6:41 AM, Blogger Cliff said...

Good advice Lucy. I don't even have any ducks yet let alone trying to line them up..

At 11:13 AM, Blogger Big Dave T said...

Shhhh. I don't want my old clunker car to hear that it could break down. It needs to last me until I finish making payments on the other one.

Texas is one place where you can work 200 miles away and still be considered living fairly close by, right? My son has a friend who lives and works in Texas. He works 11 hours drive from home, but both his work and his home are in Texas.

At 8:15 PM, Blogger Ralph said...

Sound advice. Thanks for posting this.

At 9:03 PM, Blogger Oh great One said...



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