My mother recently went on vacation to Spain with one of our distant relatives from England. During the course of the trip, it turned out our relative is deep in credit card debt. She split up with her husband (of over 20 years) and has been struggling to get by on jobs that pay a pretty low wage. She told my mom that she “couldn’t live a decent lifestyle without going into debt”. No one in my immediate family could make heads or tails out of that comment.
To me living beyond your means is a party that is inevitably going to end badly. Eventually you’ll have to radically change your lifestyle once you lose access to the credit you’re abusing. Beyond that you’ll have the pain of filing for bankruptcy, probably at a stage in life when you’ll be less able to deal with it (since you’ll be older – working a second job will be even LESS appealing than it is now). Or, you’ll try to reverse your lifestyle before bankruptcy and have even less money to live on as you’re servicing your debts.
Perhaps, for extra fun, you’ll borrow money from friends and/or family and blow that before the party ends as well.
It’s a cliche, but some people truly don’t understand the difference between a need and a want. Vacations are wants. No one needs to travel for pleasure. I enjoy travel greatly, but if I can’t afford it, I don’t go. It’s incomprehensible to me that someone would think it’s a good idea to go on vacation or buy a fancy TV and add the cost onto a debt they’re already struggling with.
1 billion people live on $1 / day or less. At this level of spending you’re probably not meeting the long-term survival needs of your body (although I think a lot of people don’t realize that a dollar goes a lot further in a rural village in a developing country than it does at the Eaton’s center). These people can say that they don’t earn enough to live a decent lifestyle, but can ANYONE earning a western salary really make the same claim?
A while back I read through a blog of a guy who lived off $1 of food per day. Unappetizing? Sure. Unhealthy? Yeah, probably. That being said, how much more do we REALLY need to spend before it’s considered a decent lifestyle? $60 in snacks at The Carrot Commons seems like a want rather than a need to me. (for those not familiar with the Carrot Commons, it’s a hippie spawning ground masquerading as a grocery store here in Toronto along the Danforth – their hummus is great!).
Debt Kid and Violent Acres both have stories about times in their life when they were living pretty rough. This is probably the threshold of what I’d consider a “decent lifestyle” for Westerners, but in both of their situations they admit that they made poor choices and got themselves into a bad place, and they chose to temporarily live the way they did to get out of it. My brother spent 6 months travelling across Canada and the US in a pick-up truck with a mattress in the back (covered by a cap – those shells that cover the bed of the truck). He was homeless living out of his truck for half a year and he loved it! Hobo Stripper lives out of a van (and takes off her clothes as a job). I suspect she does have a problem or two, but I don’t think money is one of them – she chooses her lifestyle and seems pretty happy with it.
My brother probably would have been happier if he’d had a stripper with him in his truck, but I’d argue that would have been a want, not a need .
Part of what got Debt Kid and V through their experiences is they chose them. I’m not terribly sympathetic with someone who sticks their head in the sand and ignored their financial reality until this type of lifestyle is forced on them. If a train is coming down the track towards you, I’m not impressed if you turn and look the other way until you get hit. In situations like these, the medicine will probably be less bitter the sooner you take it.
People sometimes are amazed at how little I spend ($1200-1400 / month these days), but from a global or historical perspective I’m living a lavish lifestyle. I have time to spend with friends, a computer and Internet connection that lets me blog and read all day, I never go hungry (and I have the option of healthy food), I have clean water, a hot shower and a roof over my head, free government medical care, there’s a public library in easy walking distance I can read current newspapers and books at, there’s a subway stop 2 minutes from my door that gets me to any corner of our not-so-fair city for a couple of bucks and a wide assortment of tasty affordable foods when I have some extra cash and want to “splurge”.
Not too shabby from my perspective. I could stop eating out, get rid of my home computer, live with a few roommates or in a rooming house and still be living what I’d consider a very decent life.
In a western urban setting, what’s the minimum amount of money or amenities that you’d consider a decent lifestyle?
Want to learn more about RESPs? Buy The Book:
The RESP Book: The Simple Guide to Registered Education Savings Plans
Everything you need to know about RESPs.