Spending more than you can personally afford on “good” things like education, food and housing is no better for your bank account than overspending on entertainment, fashion or cars.
Lately it seems I have been talking to many people that are enduring financial hardship but are not necessarily overspending on luxuries. They are not getting their morning caffeine fix at Starbucks nor do they have 30 pair of shoes in their closet. Many of them have not taken a real vacation in years or even forever. Still they struggle to meet their monthly obligations.
Most of the time, I find people in this position are suffering from an unrealistic view of where they are.
Comparing our lifestyle to others does not provide an accurate measure of the reasonableness of our spending. Your rent may be cheap when compared to other housing options; but how about when it’s compared to your income?
If almost everyone in your community owns a car, it does not mean you can afford to own a car right now. Your income and your other obligations determine what you can truly afford.
If you are not paying your bills on time, do not have an emergency fund equal to six months expenses, cannot form a plan that gets you out of debt except for the house in 24 months; you are broke.
You need to take moment to be where you are.
Broke is not a lifetime thing. It is recoverable, but it may well take spending less, even much less on necessities for a while.