2010, The Year of Broken Stuff

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This is our very first article that we shared with our friends over at The Piedmont Shopper  on their finance page.

2010, The Year of Broken Stuff

Let me share a little story with you which, I hope, will emphasize the importance of regular savings.  First here's a little background information.  I have a wife, three children, two cars, and a seven year old house.  Surely you have heard the expression, "When it rains, it pours!"  Well that's what 2010 has been like for my family finances!  I know I'm not alone in this and that others in our area have had much worse years than me, but take a look at my list of expenses for 2010 that were not present in 2009:

  • New baby on the way (deductible + 20%) = $2,250+
  • Heat pump needs freon = $125
  • Water heater needs new element = $165
  • Heat pump leaking plus needs more freon = $125
  • Family car repairs = $985
  • Power surge killed refrigerator= $1,365
  • The other car needs tires = $315
  • Broken wrist = $35
  • Heat pump needs new fan, motor, & coils = $875
  • Heat pump needs new capacitor = $125

              Total = $6,365.

Has anyone reading this made an extra $6,000 this year? I haven't either.  However, built into my family budget is a strong, systematic savings plan.  I basically make a payment to myself every month.  Because of this we were able to pay these extra bills from savings without the stress of wondering where I would get the money or the stress of borrowing it.  Debt only makes it more difficult to save!  Think about how much you could save if you didn't have any debts to pay.  Your income (wages) is your greatest wealth building tool, not get-rich-quick schemes or perfect stock market timing.  Wealth is built over a long time with sound habits of savings and thrift.

You may think, "Dan, you have a good paying job with a very stable employer.  That's why you can save money."  It's true that my employer is very stable and my job is a good one.  But that's not why I save money.  When I got married I thought the same thing.  My father-in-law told me "It's not how much you make, it's how much you save."  I took the advice, but in my mind I said "Yeah, but you work at Goodyear for upwards of $60,000 per year."  Now that I'm an 11 year marriage veteran with three kids, a house, a stack of bills, and having been a loan officer acquainted with the finances of hundreds of credit union members, I see clearly that my father-in-law's advice was absolutely right!  One's income does not affect one's ability to save.  On the contrary, in our society, one's income primarily affects one's ability to borrow more rather than save more!  What a paradox! 

I hope these thoughts have in some way helped you see the importance of savings. Without purposeful savings it is highly unlikely you will reach the goals that you have for your life.  Something always comes up to derail your plan.  But if you're diligent, committed, and consistent in savings you can rest assured that you can face just about anything life throws your way.

-Dan

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