Here’s today’s neologism, and it’s a great one: “pre-solvent.” It comes from a comment on one a Money Talks News article called “The real reason Americans struggle to save.”
The article cited a couple of surveys that put the fault not in our stars, but in our cards: “Lifestyle spending” and “lack of financial discipline” kept anywhere from 44 to 71 percent of respondents living paycheck to paycheck and/or prevented them from achieving financial goals.
I’d like to point out that underemployment, lack of education and impossible-to-pay medical bills can also hinder the ability to save. But I agree that the “buy now, figure out how to pay for it later” attitude is definitely nudging some folks toward insolvency.
Which brings us to pre-solvency. A commenter named “Y2K Jillian” writes that she and her husband lived paycheck to paycheck for years and loathed the lifestyle. But change happened.
How? “Gradually, gradually.” Which is how I’d bet it happens for a lot of people.
Some of those gradual steps:
- Halting credit card use and paying off existing consumer debt via the “debt snowball” method
- Joining the company 401k (starting with the exact minimum for matching funds, and slowly upping the contribution)
- Putting more into savings
- Keeping a vehicle for 20 years, then paying cash for a newer-model used car
- Paying extra on the mortgage, finishing just as they retired (early)
You may be thinking, “It must be nice to be able to save for retirement, pay off a mortgage and buy a car for cash.” And you’d be right. Sort of.
Although some people are mired in the issues I noted above, others are yoked to that lifestyle spending/lack of discipline — which means they’re not just mired, but slowly sinking. You can’t get ahead if you spend every dime.
But it’s amazing how much money you find in the budget once you’re not eating out four or five times a week, or buying new stuff when the old stuff still works, or doing just about anything without a clear idea of how you’ll pay for it and still be able to save for a rainy day.
‘Our time was worth far more’
About that last: Sure, it’s frustrating when old poops like your grandparents (and me!) harp on the need to be ready for life’s inevitable precipitation.
But if you let lack of discipline to keep you from thinking ahead, then you need to accept responsibility for the day when you’re suddenly soaked and have no financial umbrella.
Part of that preparation, by the way, involves steeling yourself for name-calling.
“Funny how many people we know were disparaging about our ‘cheapness’ and ‘poverty.’ We never felt poor, we felt like we were pre-solvent,” Y2K Jillian says.
“We had agreed years ago that our time was worth far more than gadgets and toys.”
(Hey, me too! See “Surviving (and thriving) on $12k a year: The reboot” for more on that.)
Now that they’re retired, she and her husband are still living below their means, and happily: “Just the other day, we picked up some things at the Dollar Tree, and I said, ‘You know, I wouldn’t buy these things at a regular store if I had $10,000,000 in the bank right now.’ And I meant it.”
I’ve often preachified against trying to keep up with the Joneses, especially since they might be up to their hairlines in debt trying to keep up with the Smiths. Or maybe they’re just trying to prove something to themselves: Look at the great life we have! Everybody envies us! (Even though we have chronic anxiety about making minimum payments.)
Time to grow up
I understand that eating out is the new normal, and that people want to have fun while they’re young, and that 24/7 shopping online is a huge temptation.
I’m not saying that you shouldn’t enjoy life. That’s part of why we work: to get the things that make us happy. What’s essential is that those things be part of a workable budget, i.e., one that lets you have fun while saving for the near and not-so-near future. That way you can pay for car repairs from an emergency fund vs. putting it on plastic.
That financial self-discipline lets you can also enjoy life later on, vs. struggling to get by with Social Security plus whatever amount you set aside (if you did).
Taking charge of your finances doesn’t have to be onerous. Think of it as just one more thing that grownups do. We at least attempt to eat right, exercise, pay our bills on time, raise our kids/care for pets properly, donate to the needy and, yeah, have a little fun. But we do it with money that’s in hand vs. plasticizing our pleasures.
They say you should create the change you wish to see in the world. Allow me to tack on another adage: “Charity begins at home.” Get mindful about your money and you’ll create the change you wish to see in your own life.
Readers: Do you ever get teased/derided for being careful with money? And do you ever get the feeling that the people doing the criticizing are going to be in trouble later on?