A few days ago a stranger stopped me outside The Home Depot and asked how old my van was. Apparently, it reminded him of a work van his father drove. “1990,” I replied. “Wow, 19 years?” he said with a surprised look on his face. “Does it still run good?” I could see him checking out my homemade Rustoleum paint job on the top, and the faded paint on all sides. I said, “She runs good, minus a few flaws here and there. I don’t drive it for the sex appeal though; I drive it because the payment is right!”
Now he looked insulted. “Yeah, but everyone has a car payment, man.” We parted ways with him glancing back at my old van with an eye of jealousy, which I found amusing since he was driving a fully loaded, late model Toyota Tundra pickup. What could he possibly be jealous of? Maybe the fact that I was paying $500 less per month to get from point A to point B? I could understand that.
“But Everyone Has A…”
Think about how many times we hear that statement used in the world of personal finance. Everyone has a credit card. Everyone has debt. Everyone has a mortgage. Everyone has student loans. And from my personal example, everyone has a car payment.
I used to believe these statements, too, but one day I realized that it was possible to live a frugal lifestyle contrary to these long-held assumptions. No, everyone does not have a car payment. Some managed to pay off their car debts and continue driving debt free for many years. Others chose to pay cash for more inexpensive cars rather than borrowing money to finance the operation.
Believe it or not there are some people out there who have paid cash for a house, and almost more shocking these days, graduated college without debt. It can be done, and it is being done. The problem is that those whose livelihood depends on your buying into the idea borrowing money is the only way are out to perpetuate the myth. And in a way, that even extends to the upper-most reaches of government.
Throughout this economic downturn we (consumers) have been reminded at every turn that borrowing is what fuels this economy. It is sad, in a way, but true. We’ve seen what happens in industries like automobiles and houses when people stop borrowing money to buy things, but I can’t help but wonder if this would merely be a short-term pain, assuming we were really in it for the long-term gain. Unfortunately, I don’t really believe we are.
Soon enough credit will be flowing again, and I guess if that leads to the return of job growth, that’s a good thing. However, in our own personal economies let’s make a fundamental shift in the way we acquire things. Let’s get back to basics. If we don’t have the money for something, we save for it. If we must resort to financing, let’s buy cheaper so we can put that debt on shorter terms, and agree to a lower monthly obligation. Ultimately, we’ll all still be in the market for that new car, or that cruise, but not until we have the cash. After all, everyone has a dream of being financially independent. At least I do.