Living within your means

It is inevitable that just as you begin to get your finances in order, along comes an emergency and you are right back where you started, in debt! If that is the story of your life, you need to be even more realistic about your needs and wants. Most crisis are highly predictable.

For example, if you have deferred maintenance on your car or truck, you will one day pay the price in expensive repairs. Having your car break down should not be an emergency that puts you into a panic and spending money you do not have. Every item we own has an overhead of maintenance, storage and cost of use. In the case of something like a pencil, the cost may be insignificant or even free and there may be no maintenance at all other than sharpening the pencil periodically. But even pencils become a product in need of replacement.

Cars and computers are at the other end of the spectrum. Whenever I teach about a computer program, which I do frequently, I am always asked about the cost of upgrades. Upgrades and periodic hardware replacements are a cost of computing, just like gas and oil for your car. You can try to defer the costs out into the future, but you will pay then with a great degree of anguish through the loss of data, or save now with planning and foresight.

If you intend to keep your appliances and mechanical devices, from air conditioners to blenders, operating and useful, you must always budget for the time the item must be repaired or replaced. It may seem too obvious, but car tires wear out and you can expect the tires to need replacing. To do this without going into debt, you must budget an amount sufficient each month to pay the pro rata cost of replacement when it is needed. The same could be said for medical expenses, and other "unexpected" but certain expenses.

Use your head, think ahead and plan for the maintenance of all of the things that might break or wear out, everything from clothes to paint for the house. Without a budget, everything that happens will turn into an emergency.

If you think about repairing an item, such as a washing machine or dryer, you may look at the cost of a new item before spending hundreds of dollars on repairs. Sometimes the cumulative cost of repairing an old item outweighs the advantage. If you determine, through tracking your expenses that there are things you don't need, like cable TV, then cut then out of your budget and save the cost.