O Budget, Where Art Thou?

I have to admit, I am stumped. I just don’t get how people pay for all the things they have. I look at people around my age, or much younger, driving expensive cars, living in huge houses, spending summer weekends in cottages and going on trips down to the Caribbean two or three times a year, while having to spend on regular living expenses throughout the year.

Then I look at my own lifestyle and wonder, how can they do that? It’s not an envy thing. I find that we live quite comfortably, and I wouldn’t change much from what we are doing right now. It’s more of a curiosity thing.

For instance, Jen and I have a budget. We have a fairly good idea of how much we are spending on various budget items at any given time. Now, while we usually set a certain amount to spend per month, we usually go over this limit. This is a problem we have had since we bought our house. Before that, we were damn good at saving money and living frugally. Mind you, it’s not a big problem. We have not increased our debt load at all in the past 14 years, despite doing a bunch of necessary renovations, buying a minivan to replace our little car (thank you kids!) and going on a few trips. But I was hoping that the debt (basically the mortgage on the house) would be gone by now!

In any case, it is going down, and that’s what matters. What’s more is we’ve committed to putting the breaks on restaurants and other luxuries to bring it down even faster. We will get by.

But how do others do it? An answer was provided by talking to a friend of mine, who is a banker. Credit. This is nothing new. The papers have been crying wolf recently, and over the past few years, pointing out that Canadians are getting further and further in debt to finance extravagant lifestyles. People often have several credit cards and only make minimum payments on them. Low interest rates mean credit lines are appealing for renovations that no one could possibly afford otherwise. The list goes on.

Ultimately, a budget is simple. If you make $50,000 a year after taxes, then don’t spend more than $50,000. Otherwise, you will increase your debt. It’s so simple. It’s like weight gain or loss. If you eat more calories than you need, you will gain weight. But if it is that easy, why do we have so much trouble understanding this concept? The older generations get it. I’ve already talked about this in my post about my grandmother. Debt was a fearful thing to them. Maybe it’s time we learn from that generation.

Check out Jen’s blog post on budgets!

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8 Responses to “O Budget, Where Art Thou?”

  1. Haha, you sound like my boyfriend when it comes to budgeting — so logical and common-sensical. You may appreciate this story (coming from a female who was living in the OC and was more than accustomed to spending beyond my means) about how I first learned to budget… 🙂 http://iheartthebrazil.com/2013/01/10/austerity-measures/

  2. I agree with you wholeheartedly. My husband and I just recently started our careers after finally finishing school. While we make the incomes that will allow us to purchase large homes and expensive cars, the idea of taking on a debt for something like a BMW makes me physically ill. There are a million things that could go wrong — an illness, a huge unforeseen expense, or another recession. I prefer to save up until I have enough to live comfortably for a year or so with no income.

    Plus, when you take on that debt, you feel compelled to continue working the high-pressure jobs that pay for it. Right now, either of us could feasibly walk away from our work and we will not lose our roof. Add a $300K home (in our area, that’s a lot), two nice new cars, and you don’t have the same equation.

  3. I feel the same way – so many of our friends have cottages, multiple vacations, huge collections of fine china – I’ve often wondered what we are doing wrong. It’s not like I wish for those things, but there’s no way we could afford them, so…what’s up? I think it’s maybe debt related, maybe they do no saving for a rainy day, or perhaps it’s that we are a one-income family (I stay at home with the kids).

    I’d love to get a peek at someone else’s budget, though!

  4. Valerie Says:

    Yep, DEBT is the answer to your question. People would rather look good to others, enjoy the here & now, and pretend like they have it all, but in actuality they are just digging a hole they will one day have to figure out how to get out of.
    My husband and I have been learning a lot from Dave Ramsey and he is right on with the advice that you do NOT have to have credit. At all. Credit scores are just evidence of debt!

    • It’s true that ultimately, you do not have to get credit. But to own a home, or a vehicle, it is difficult to purchase one without borrowing money. Smaller items, mind you, are different. You can pay most things cash.

      I guess it’s ok to have a credit card, as long as you know you can pay it off every month. But many people can’t control themselves, and end up in a vicious circle.

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