Why?
Here is the most simplest thing – save money while we are in boom times. When things are good and everyone is pouring out money, make sure you save. You know why? A damn recession will come. I guarantee you that you’ll experience multiple boom and bust cycles throughout your lifetime. I guarantee you that by the time we go into retirement (I’m in my late 20’s), most of you will be complaining that when we were younger prices were more reasonable. Damn it. Take a look around. I came out of my teens when the dot com bubble burst in the late 90’s/early 2000’s. In 2008 we saw a major crisis on the financial and housing markets that still burns some economies today. In the business and economic cycle there is always a boom and always a bust. No matter where you look there will always be high employment and large salaries followed by recessions with layoffs, cuts and decreases in paychecks.
You think I’m being negative here? Call it what you want, but that’s a pure fact since the beginning of time. Part of the cycle is simply that the bust times take out a lot of the excesses of the good times. My question to you is, could you make it through a recession if you were laid off, without the security of your job? Do you have enough savings? Could you afford to pay debt on a monthly basis (Car, Mortage, some random electronic device, credit cards, etc)?
How?
You need to reduce dept and you need to reduce it now. Let me give you this thought. If you learned to save 20% of your income, and yes perhaps that’s not reasonable for you right now, but if you did and could save something out of every euro that comes in – meaning put it on auto pilot, have it transferred automatically to a savings account, etc, than you will start having an opportunity to live a debt free, money generating life.
Do whatever it takes. Sell off things, focus on paying down debt from the amount that goes to your savings account (your interest percentages are killing you) and once that’s done you will have the opportunity to put your money where it really belongs – to work for you!
Get this, if everything went wrong. Our hot water heater broke, our dishwasher, our fridge and our TV burned out, our dogs got sick, our utilities got jacked up, gasoline and the such went higher – our savings would allow us to book a flight and go on vacation over and over again while paying for all of these things to get back up and running in no time. It wouldn’t affect my day to day living (aside form the fact that its frustrating). That is a great, stress-free way to live, or?
Often times I see friends and even family stress on issues, and yes it boils down to money. Remove the stress around money and you will tone down a lot of other problems in your relationship. It is one of the best things you can do for your relationship/marriage, etc. My beautiful fiance and I have never argued about money and that’s because we both have instituted things that have brought us prosperity. Things that I want to convey to you.
The summary…
My key message is reduce your debt. Than you will be able to save and invest and buy those nice shiny things without any worries. Think about it – a 40K car on one lump sum rather than on monthly payments! Nice, huh?