The Importance of Being Prepared

[2China2009]

So many unsettled things going on in our world. It really makes me think of how grateful I am. With the uncertain government shut down the whole thing has really made me think twice. I for one will be honest to say that I live paycheck to paycheck. This is my reality, but does not define who I am or how hard I work to provide on my single income raising 2 wonderful kids. My mom taught me over my lifetime to be prepared for any situation. So these are things I have done in case of illness or any emergency.
1. I currently have 3months of living expenses, but I am working on a goal of 6months.
2. I cook at home and we rarely eat out
3. I have 1 CC with less than $2,000 on it that will be paid off by April otherwise I am debt free
4. I have about 5yrs left on my mortgage and will be paid off when I am 52.
5. I live frugally in order to save for a vacation and some fun things to do with the kids.
6. My car is paid off
If I were to loose my job I would have 3months of living expenses. I also have family that would be able to help me out if needed.
It is so important to put every little amount away. Even for those who are more fortunate to have much more one does never know when something can happen.

 

[kandb]

That's great. I really believe people these days are so financially irresponsible. Buying and charging anything they want, even when they don't have the money to cover the costs. I have relatives with $20K credit card bills that p#ss money away like it's nothing. Don't spend within their means. Such a different world then when I was young.

 

[halfpintpeggy]

So many unsettled things going on in our world. It really makes me think of how grateful I am. With the uncertain government shut down the whole thing has really made me think twice. I for one will be honest to say that I live paycheck to paycheck. This is my reality, but does not define who I am or how hard I work to provide on my single income raising 2 wonderful kids. My mom taught me over my lifetime to be prepared for any situation. So these are things I have done in case of illness or any emergency.
1. I currently have 3months of living expenses, but I am working on a goal of 6months.
2. I cook at home and we rarely eat out
3. I have 1 CC with less than $2,000 on it that will be paid off by April otherwise I am debt free
4. I have about 5yrs left on my mortgage and will be paid off when I am 52.
5. I live frugally in order to save for a vacation and some fun things to do with the kids.
6. My car is paid off
If I were to loose my job I would have 3months of living expenses. I also have family that would be able to help me out if needed.
It is so important to put every little amount away. Even for those who are more fortunate to have much more one does never know when something can happen.

Very well said & it sounds like you're doing a fabulous job with being prepared!!!

 

[gottalovepluto]

So many unsettled things going on in our world. It really makes me think of how grateful I am. With the uncertain government shut down the whole thing has really made me think twice. I for one will be honest to say that I live paycheck to paycheck. This is my reality, but does not define who I am or how hard I work to provide on my single income raising 2 wonderful kids. My mom taught me over my lifetime to be prepared for any situation. So these are things I have done in case of illness or any emergency.
1. I currently have 3months of living expenses, but I am working on a goal of 6months.
2. I cook at home and we rarely eat out
3. I have 1 CC with less than $2,000 on it that will be paid off by April otherwise I am debt free
4. I have about 5yrs left on my mortgage and will be paid off when I am 52.
5. I live frugally in order to save for a vacation and some fun things to do with the kids.
6. My car is paid off
If I were to loose my job I would have 3months of living expenses. I also have family that would be able to help me out if needed.
It is so important to put every little amount away. Even for those who are more fortunate to have much more one does never know when something can happen.

Good for you!! And a solid reminder that preparation and self-discipline can help make the tough times a little less tough. Good luck on finishing off that cc debt!

 

[gottalovepluto]

That's great. I really believe people these days are so financially irresponsible. Buying and charging anything they want, even when they don't have the money to cover the costs. I have relatives with $20K credit card bills that p#ss money away like it's nothing. Don't spend within their means. Such a different world then when I was young.

I erased this like 5 times but I cannot say nothing so here goes..

I'm not about to judge "people". Every single person has their own situation. Many are responsible, many are not. Many are trying to become responsible, many were responsible and their lives went to hell. You cannot accurately judge "people" as one great mass.

As for a different world than when you were young- yes. Yes it is. The world has changed financially in the last few decades in 2 key ways making it impossible to compare then to today:
1) College. Older generations were not saddled with the financial debt many millennials now are with the obscene costs of college that rise exponentially each year- and if you want an office type job you better college or you can forget it. And if the millennial didn't cover the cost their parent did and might have drained their savings in order to do so.
2) The opportunity to rack up debt wasn't there. This would be a much more impressive argument if when you were young you could gotten a 10k loan with a few taps of your fingers. Bought that TV with a couple taps of your hand that indicated a promise to pay later- but you couldn't, so it isn't. The temptation was never there.

Had older generations had the same obstacles and temptations at these earlier points in life it might have been very different.

 

[barkley]

2) The opportunity to rack up debt wasn't there. This would be a much more impressive argument if when you were young you could gotten a 10k loan with a few taps of your fingers. Bought that TV with a couple taps of your hand that indicated a promise to pay later- but you couldn't, so it isn't. The temptation was never there.

Had older generations had the same obstacles and temptations at these earlier points in life it might have been very different.

o.k., now i have to comment on this.

i'm in my mid 50's, went to college in the 80's-it was SO EASY to get lines of credit/credit cards and run up a mountain of debt back then. the minute you turned 18 actual activated credit cards (unsolicited/you never filled out an application, maybe never had even heard of the company who issued it) came in the mail along with the beginning of daily mailed pre-approved card offers from every retail store and lender known to man, college campuses were riddled with tables of credit card issuers who were giving away stuff to get more applications filled out (no income? no problem they still issued the cards), every time you bought anything at the campus bookstore there were credit card offers/applications stuffed into the bag along with the receipts, walked into the mall and there were tables at the entrances to every major and most minor chain stores offering freebies (not discounts on purchases if you qualified-free items just for filling the application out).

we might not have been able to go on-line and buy a tv with a couple of taps of our hand but we could easily go to circuit city or dozens of other electronics stores and walked out 10 minutes later with a $1000 spent to get a vhs player and a few tapes all on newly established credit with that store. i worked in a furniture store in the mid 80's and part of my job was to call in credit applications to the loan company we contracted with-the amount of debt as compared to income people of all ages had was staggering (and so much of it independent stores and companies and lenders that charged what even today would be considered obscenely high fees/interest).

i agree that college prices have gone up but temptation to buy is nothing new (remember-all the common electronics of today were the undreamed of/up and coming/much more costly to produce/buy then, for my mom's generation it was a fridge vs. an actual ice-box unit and all the other undreamed of/up and coming....household appliances), consumer overspending is nothing new and it was even more appealing/acceptable to an extent back when people could write off the interest charges on their taxes. that deduction got taken away and then the home equity line of credit became a popular way to overspend w/ a tax write off (sounded better to say to yourself you 'only' had your mortgage and a helo instead of 'i've got a s-load of credit card bills'). now that is going away but i suspect there will always be as there always has been-those willing to extend credit and those willing to rack up crazy amounts of debt with it.

 

[Southernmiss]

That's great. I really believe people these days are so financially irresponsible. Buying and charging anything they want, even when they don't have the money to cover the costs. I have relatives with $20K credit card bills that p#ss money away like it's nothing. Don't spend within their means. Such a different world then when I was young.

And that's really different than what I see today.

I see mostly financial responsibility and some bad breaks in life for those who are seemingly are not doing ok.

 

[LovesTimone]

Kids are not taught the value of money... It really boils down to that... If they are not learning it at home... and they have cut all the funding for school for classes that offer some type of daily life skills. What are they suppose to do... When I was in school they taught you things that you would need in the outside world... I'm not blaming teachers, far from it... I blame the system... someone needs to put their phone down and realize what is going on...

Elementary school

When they taught us about money, not only about the denominations, how to spend it, and when its gone its gone...like giving everyone 25 pennies, then we could buy thing like eraser, or pencils, or colored pencils - treats, like gum balls, or those dumdum lollipops... and how to get the most out of our 25 pennies...

Middle School

Home economics's - in class we learn things like how to stock a pantry, make a grocery list, how to make household budget, sew a button back a shirt, some basic kitchen skills, and a lot of other things...

Shop - how to change a tire, change the oil, basic car needs and fixes, fix a dripping sink, change out the guts in a toilet, fix basic things around the house,

Each semester we would have what they call a switch week, in where the home economic's class would go to the shop, and we learn things like how to change a tire, tackle a over flowing toilet, check the oil in the car, even how to use jumper cables, lets just say this one caused a few sparks... The shop class would go to home eco. class, and learn some basic's sewing on a button, how to make a grocery list and such...

Math class... we learned how to make a budget, how checking and saving accounts work, interest rates how to know where your money is going... in middle school each year for a grading period we did nothing but learn how to budget, each week we would get paid, have bills, and even emergency scenario's how to plan, bonuses or pay raises. While we just thought it was fun, and we were not having to do boring math... it taught us a lot about real life without us really knowing we were learning... sneaky... I am so thankful...

High school

Life Skills class - to graduate you had to have a least 1 credit for graduation - I took it 9th thru 12th... for me it was like an easy A... Not until I was on my own did I realize how much this class helped prepare me... Each year we would get further into money management, how to fill out a employment application, creating a resume, interviewing skills, appropriate behavior in the work place. Basically what we learn in middle school only more in depth... Family skills, sex education, and some other things...

Driver's Education - a must have for graduation, not only how to drive the car, as well as other things, like driving while impaired with the film that they would show you, gave me nightmares for weeks afterwards... getting insurance and things related to a car... road rage - that term was just in the beginning stages and education, and what to do if this was to happen... parking lot safety.

There was more to school than you have to go to college, college, college, college... and prepping for standardize testing... teacher actually got to teach students instead of worrying about the scoring on the standardize testing... tech school where included in career days.

It seem now that only thing school spend money on is sports, which is great if you are going to go pro one day... for most kids this isn't whats going to happen, so teaching everyone something that is useful in daily life seems much more sense-able way to spend the tax payers money... I'm in no way a saying take sports out, just a more even distribution of the funds...to use toward more classes for everyone.

I was a divorced- single parent with a 8 week old DD, and I did have 1 credit card and it was for emergencies only , I lived pay check to pay check the first few years... never depending on child support (one good scare about going to jail changed all that) - thankfully I had some knowledge in the back of my head that came rushing forward slowly I got on track... I was lucky and my parents helped me out during emergencies and crisis's times ... I started teaching my daughter about money early on, so she could understand when I would tell her no honey not this week to something she wanted in the grocery store, I was a serious couponer back then ( I still use coupons every week and will do so the rest of my life) and she helped me cut out and plan shopping...about how to save money... when she would get money for birthdays and such... we would go to the bank and put part of it in her saving account, and then she could spend the rest on what she wanted... After I got married again, my DH is wonderful with money, and he set her down and really started teaching her about finance and money...She is quite savvy with her money, she is married now and has my Sweet DGS, she has had to teach her DH about money, and keep them on track...

The thing I notice is most people don't have any idea on how much money the really make, or where does their money go... they think that card you swipe, or insert just has a unlimited amount of funds... not realizing that it is all going to need to be paid off one day...

 

[kymom99]

When my son was pretty little the neighbor across the street had a house fire. My son remarked that if we had a fire we would have to go to the Jeanie (atm) a lot. That was when I realized I needed to explain how that money gets there.

 

[DisneyHardin]

Kids are not taught the value of money... It really boils down to that... If they are not learning it at home... and they have cut all the funding for school for classes that offer some type of daily life skills. What are they suppose to do... When I was in school they taught you things that you would need in the outside world... I'm not blaming teachers, far from it... I blame the system... someone needs to put their phone down and realize what is going on...

Elementary school

When they taught us about money, not only about the denominations, how to spend it, and when its gone its gone...like giving everyone 25 pennies, then we could buy thing like eraser, or pencils, or colored pencils - treats, like gum balls, or those dumdum lollipops... and how to get the most out of our 25 pennies...

Middle School

Home economics's - in class we learn things like how to stock a pantry, make a grocery list, how to make household budget, sew a button back a shirt, some basic kitchen skills, and a lot of other things...

Shop - how to change a tire, change the oil, basic car needs and fixes, fix a dripping sink, change out the guts in a toilet, fix basic things around the house,

Each semester we would have what they call a switch week, in where the home economic's class would go to the shop, and we learn things like how to change a tire, tackle a over flowing toilet, check the oil in the car, even how to use jumper cables, lets just say this one cause a few sparks... The shop class would go to home eco. class, and learn some basic's sewing on a button, how to make a grocery list and such...

Math class... we learned how to make a budget, how checking and saving accounts work, interest rates how to know where your money is going... in middle school each year for a grading period we did nothing but learn how to budget, each week we would get paid, have bills, and even emergency scenario's how to plan, bonuses or pay raises. While we just thought it was fun, and we were not having to do boring math... it taught us a lot about real life without us really knowing we were learning... sneaky... I am so thankful...

High school

Life Skills class - to graduate you had to have a least 1 credit for graduation - I took it 9th thru 12th... for me it was like an easy A... Not until I was on my own did I realize how much this class helped prepare me... Each year we would get further into money management, how to fill out a employment application, creating a resume, interviewing skills, appropriate behavior in the work place. Basically what we learn in middle school only more in depth... Family skills, sex education, and some other things...

Driver's Education - a must have for graduation, not only how to drive the car, as well as other things, like driving while impaired with the film that they would show you, gave me nightmares for weeks afterwards... getting insurance and things related to a car... road rage - that term was just in the beginning stages and education, and what to do if this was to happen... parking lot safety.

There was more to school than you have to go to college, college, college, college... and prepping for standardize testing... teacher actually got to teach students instead of worrying about the scoring on the standardize testing... tech school where included in career days.

.

I am 40 - I graduated High School in 1996 and I didn't learn a single thing you mentioned above in school.

 

[Keeblerelf928]

You're doing a good job? I'm confused by this, most people know logically they should be prepared for the unexpected, but for some they have a harder time such as extended job loss (last recession), mounting medical bills (because they didn't have health insurance or they had bad health insurance), or way too much in student loans. You can tell someone to be prepared all you want, but if you lose your job (and therefore your health insurance) and then have a health emergency, you will probably still be in a really bad spot, really fast.

 

[Searc]

You're doing a good job? I'm confused by this, most people know logically they should be prepared for the unexpected, but for some they have a harder time such as extended job loss (last recession), mounting medical bills (because they didn't have health insurance or they had bad health insurance), or way too much in student loans. You can tell someone to be prepared all you want, but if you lose your job (and therefore your health insurance) and then have a health emergency, you will probably still be in a really bad spot, really fast.

You can still be bankrupted in this country by medical bills, even with health insurance.

 

[LovesTimone]

I am 40 - I graduated High School in 1996 and I didn't learn a single thing you mentioned above in school.

Well I am in my late 50's(57) graduated in the 70's... I also went to school in the south, where things like this were taught at one time...

There were not any classes offered like this? or not taught in a regular school curriculum?

 

[hsmamato2]

IDK.....I like this thread! I don't feel like this should be an arguing point at all,since it's all true. And since our 'budget board' spends more time chatting about ways to spend more money (sales!!!) than about truly budgeting or doing without one thing to achieve something else (Yup,I'm an oldster!) I feel like it has nothing to do with judging,and everything to do with common sense.
Yes, some have it harder financially than others,etc etc. We all know that. But that doesn't negate the idea of trying to prepare ourselves in case of a problem in life....
In the 'old days' of the Dis we talked about frugality a LOT more in real terms than I see now.... and people sometimes get a little defensive when something like this is posted....
I don't see a need to be defensive,I see it as a thought for the day,maybe I can learn (or remember) something that is good to know in life.
And old fashioned common sense preparedness (to a point) sounds like a great common denominator we all need to ponder....just sayin'....

 

[neatokimmo]

Well I am in my late 50's(57) graduated in the 70's... I also went to school in the south, where things like this were taught at one time...

There were not any classes offered like this? or not taught in a regular school curriculum?

Our high school was separated by blue collar and college bound. The life classes didn’t mix with the calculus classes. I’m 44, also in the south. Interesting how things changed in a short period of time.

 

[DLgal]

I am 40 - I graduated High School in 1996 and I didn't learn a single thing you mentioned above in school.

I am also 40, also graduated in 1996, and learned almost all of this stuff in ONE of the high schools I went to (I was in NJ for grades 9 and 10 and CA for 11 and 12). The NJ school taught us a LOT of that stuff. Middle and high school we had Home Economics, Auto Shop, Woodshop, Cooking class, Sex Ed, Drug education, Life Skills classes, etc. The CA school had NONE of those classes, and was a far inferior school all around. I went from a GPA of 3.8 at the NJ school (in all honors classes) to a GPA of 4.5 in the CA school because the material was a joke...way too easy, even in the "advanced, honors" classes. The variability in quality of schools in this country is just way too broad.

 

[DisneyHardin]

Well I am in my late 50's(57) graduated in the 70's... I also went to school in the south, where things like this were taught at one time...

There were not any classes offered like this? or not taught in a regular school curriculum?

I also went to school in the south. As far as I know they weren't offered. There were no home-ec type classes of any kind - there had been at one time because my high school had a "home-ec" room, but it was used as more of a multi-purpose room by the time I was in high school.

 

[ClapYourHands]

I think there's a disconnect here regarding the costs of things now vs then. In my mother's day, things were expensive, but they lasted. You could buy something and it would keep going for years. My grandmother died more than 20 years ago, and I still have her travel hair dryer and it still works better than some small appliances that have gone kaput that I bought new. Clothing especially was made from better quality materials and more sturdily constructed. Some brands of kids' clothing these days are so cheaply made that the knees bust out easily and the treads wear out of sneakers before the child outgrows the shoes. I'm a child of the 70s and 80s, and hand-me-downs easily passed through multiple kids in good shape.

As PP mentioned, higher education has had a huge effect on people's debt levels. I graduated 20 years ago, and the cost of tuition, room/board, and fees was about $25K per year at the private university I attended. The same university now costs $67K for the same tuition, room/board, and fees. Tuition alone is $50K. Sure, there's been some inflation in that time, but the cost of higher education has risen much faster. Public universities ares still more affordable, but at nearly $30K per year for my state's university, that's still likely to leave most middle-class students saddled with debt at graduation.

With the rise of cheap electronics and overseas manufacturing, many things that were previously "luxury" items are now relatively cheap. With the rise of big pharma and expensive procedures, basic medical treatment that was previously a "necessity" is priced more like a luxury. Insurance costs keep rising, and my premiums cover less and less. Even the "free" yearly "well visit" turns into something I have to pay for if we discuss any actual concerns or the doctor discovers anything like a minor ear infection. A colleague's husband just got a big bill for his well visit because the doctor put a stethoscope on his chest (no complaints of pain or respiratory illness; the doctor just went above the minimum requirement which apparently does not include actually putting hands on the patient) and it moved the visit into a different category. She's in the process of appealing that one.

As a result some (not all) older people see "poor" people with a "luxury" like a smart phone, and make all sorts of false assumptions about that person's spending habits. Many smart phones are inexpensive if you buy refurbished or come "free" with the contract. And, yes, contracts can be expensive, but many people aren't paying for landlines anymore, and those phones come with unlimited long distance plus the ability to basically be their home computers, allowing them to pay bills, compare prices, search for a new job, etc. Plus, the way people connect has changed drastically. How many people here remember the astronomical costs of long distance? I'm old enough to remember the Bob Wehadababyitsaboy commercial when it was relevant (

).

I would also like to add that "back in the day" there were plenty of people who lived beyond their means. Just because those people weren't you (general you) or your family, that doesn't mean they weren't out there. Of course, we didn't have social media, tabloid TV, etc., so their spending wasn't there in front of us all the time. Irresponsible spending, where it exists, is not new.

 

[1st*toright]

Responding to @LovesTimone's list of school classes - my daughter did take a financial literacy course and is currently taking drivers ed (we do have to pay extra for drivers ed), so I guess different places offer different classes. There is no question that the financial literacy course was really really helpful for my daughter, but she's a pretty practical kid and very independent, so she really took the financial literacy info on board, where another kid might not have been ready to internalize it as well. No question that her school pushes college, but our town is a suburb of a city without much manufacturing and lots of financial services, so most of their parents are office types who expect their kids will go to college. I do think the system is broken and college costs have gotten way out of line with the earning potential of most degrees, and that is a very real impediment to many peoples financial success.

I've been fortunate financially, and like the OP I have worked to build financial reserves and live frugally so that I maximize our flexibility. We weathered an unexpected job loss last year and that preparation paid off. Kudos to everyone who has the wherewithal and foresight to have a plan in place.

That said, similar to @gottalovepluto I'm really reluctant to be too congratulatory of my own situation or too judgmental about someone who doesn't have 2 pennies to rub together. Maybe there are some people in the latter situation because they spent all their money on movies and avocado toast (as some politicians have suggested), but it is just as likely that the extra $500 they were able to sock away each month was insufficient to cover a large medical bill or other large expense. Just because we all know someone who came from a family of little means or education who grew up to have a lucrative career doesn't mean that everyone can make the same leap. There are plenty of people who are living a solid middle class lifestyle who hit a couple of bumps in the road (job loss, illness, addiction, divorce, loss of a spouse) and all of a sudden they can't sustain their middle class lifestyle.

There are plenty of people who will credit their own success exclusively to their hard work and intelligence, without acknowledging that where you start has a huge impact on how far you've come. I had 2 college educated parents, got a solid education that prepared me for college and no debt when I got out of college (thanks to a combination of part-time jobs and my parents generosity). That set me up pretty well to get where I am. Not that it hasn't taken hard work etc., just that I could have worked just as hard and gotten a lot less far if I hadn't had my background. I'm much more impressed by a friend's husband who grew up in a trailer in a rural town who was the first person in his family to go to college and now has a solid career as an actuary. I'm much less impressed by the success of a kid I know who has a job making $150k as a lawyer right out of law school because he is working for a law firm his dad started - yeah, he went to college and law school and worked hard to get good grades, but that path was a lot easier for him than for my friend who is an actuary.

@ClapYourHands comments about "luxury" items are well taken as well.

I guess I'd rather just take responsibility for my own finances, be grateful that my situation allows me some financial cushion and not worry too much about other people's choices.

I am extremely sympathetic to the plight of anyone who is not getting paid because of the shutdown, regardless of whether they are frugal or living beyond their means, because it is unfair that our system allows the government to hold these people hostage to a political fight. It is a good reminder that we can all be thrown by events beyond our control and preparation and empathy are our best defense.

 

[wvjules]

Is it really living paycheck to paycheck if you have 3 months worth of living expenses in savings? I guess I'm unclear on what "paycheck to paycheck" means.

I am 46 and don't recall any of the above mentioned classes. For me, Home Ec was cooking and sewing. I don't remember any financial aspect to it?