Financial Freedom (lesson learned)

Ok, so assuming you did what was in the last post what did you learn? You learned (hopefully) that you could do without something. I needed you to figure that out before we moved on. My whole theory of financial freedom revolves around knowing that I don't "need" everything that I think I need. As a matter of fact I don't need 75% of the things I think I need. Do you know how much money is spent on advertising in the US each year. Go to www.wiki.answers.com and look it up, the number is so very much bigger than you think. Then ask yourself what is the goal of advertising? To sell stuff. How do they sell stuff, by convincing every person that the product or service they sell is a "need" and we should give up what little extra money we have to get it. Now I wouldn't say that everyone should only buy exactly what they need because I am all about creature comforts, toys, cool stuff, etc. The point is that most of us have fallen for the Need advertising and bought too much crap.

So, of course the first thing that came to your mind was car, boat, jet skis... Stop it! I know very few rational individuals who spontaneously buy big ticket items like this. Most people on a budget plan before buying something big, even if they overspend in the moment (which we will address later). What I am talking about is the nickle and dime stuff.

You can "20 dollar spend" your entire paycheck in no time, think of my eating out problem. Advertisers count on us to spend 20 bucks or less without thinking about it and that is where you loose your control. $20 is not that much money unless it is all the time, which for a lot of people it is. One example would be DVD's, most are less than $20. You cruse into Walmart and right next to the checkout stand is a new movie just released. That vision is embedded in your mind as you do your shopping, by the time you get back to check out you are convinced you need that movie and it is only $19.95, score. Ok, how many times are you actually going to watch that movie? Why didn't you rent it at Redbox for a buck? The answer in your head right now is "well because I now I own it." If you own something you will never use it either becomes a stupid decoration or another reason to get a storage unit. So not worth it. Now if you happen to be a movie buff, collector of DVDs, etc then that purchase was worth it, the specialty cheese grader next to it was not.

This is where you start paying attention to what you buy. Once you get a hazy view of where you are habitually making the $20 and under purchases you can start putting it in order. Do I need this and why? Ask yourself that every time. On the one hand you may need something that others don't but on the other hand don't fall into rationalizing every purchase as necessary. The point is don't lie to yourself, you're on a budget, we are in a recession you only "need" so much.