My wife and I walk through our neighborhood most evenings where some new houses have been built. They’re all worth over a million dollars, and most are occupied with young families. But they don’t just have a new expensive house; they also have beautiful boats and new vehicles and motorbikes peeking out of the garage.
Some have access to family money, but many have got to be up to their eyeballs in debt.
A client recently met with his banker, and his banker’s comment was, “We don’t know what inning we’re in, but the game is coming to an end.”
Financial cycles usually come every 7-10 years or so. The economy goes up, the economy goes down. That’s just how it tends to work historically.
The last down cycle was in 2008. So… Nobody knows when. Maybe we’re good for another 10 years. Maybe it’s all ending next month.
Some questions for you to consider:
- Do you have an emergency fund? Could you go without any income for 3 months?
- If you went to renew your mortgage, and interest rates were 1% higher, would you be okay? For many, that would be a 30% increase in payments.
For your interest, here are some basic habits of people who have their act together in the area of finances:
- They avoid consumer debt: They don’t carry a balance on their credit cards. They don’t lease their cars. They don’t borrow money for luxuries like holidays or toys.
- They pay themselves first: Each month, they save or invest 10% of their income.
- They clamp down on dumb spending: Starbucks is evil. You can make a coffee at home for next to nothing. Amazon is evil. You don’t need that stuff; why tempt yourself? You can make a big difference by eliminating spending on things that you don’t really even care about.
- They don’t buy stuff to impress others: Your kids can wear clothes bought at garage sales. They won’t die. People on Instagram are lying; their lives are messed up too, just like yours.
So, make sure you’re safe when trouble comes. Watch a Dave Ramsey video if you need to know more (look him up)!
