The Daily Item, Sunbury, PA

Business

October 21, 2013

The Color of Money: Getting ready for the next time

(Continued)

     By the way, don’t fret about having to dip into your savings. That’s what an emergency fund is for -- to address a financial shutdown in your life.

     I am fully aware that many people have overwhelming financial demands. I know some are barely making it because they have large families or medical bills or are taking care of others who have fallen on financial hardship. I’m not fussing at you. You are doing the best you can. But if you’re just getting by, that’s all the more reason to cut expenses and put the savings in the bank.

     I’m talking to workers who can do better and should do better with what they earn. They have run up a bunch of bills and can’t figure out how to save. Still, I understand.

     In many parts of the country, including the Washington metropolitan area, you have to contend with the high cost of housing, food, gas and transportation. If you have children, it’s the high cost of day care or private school tuition or the seemingly endless fees for the kids to participate in sports or other extracurricular activities. I’m a parent. I get that.

     But it all comes down to choices. You can’t do it all. Not even folks making millions can live paycheck to paycheck. How do you go broke on $200 million? By spending $201 million.

     During various shutdowns in sports -- National Football League or the National Basketball Association -- we heard about players complaining about not having money to keep up with their expenses. In those cases, we shook our heads and sneered about their overspending. But how similar are you to those players?

     Your expenses are different and not as large but you still overspent. You spent too much on your college education and now have student loan debt that is burdensome and preventing you from saving. You’ve bought a home that you really can’t afford because the monthly mortgage payment doesn’t give you the leeway to save. For a long time, long before sequester-demanded furlough days and the current shutdown, you’ve blurred the line between your needs and wants, not really distinguishing the two.

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