debt snowball, debtsnowball
This doesn’t just apply to actual houses. It applies to apartments, cars, and even possessions.
With so many people in debt to the credit card companies and the banks that hold mortgages the question about how much house do you really need is an important one.
I’ve changed my point of view regarding possessions over the years. As a child and even a young man in my early twenties, I wanted more toys. I wanted a gigantic house, several expensive cars, multiple motorcycles, and the most expensive clothes that looked good on me. Some of those wants were just for status reasons. One can be seen driving an expensive car and wearing expensive clothes when far away from home. Only the people in your neighborhood will ever see your house unless you have plenty of parties.
Status is important in society. It really is. That is an unfortunate fact. Financial Status gets attention. Attention in society brings opportunities. Having an expensive car that others recognize as expensive signals that you have money. Money equals importance in society. (Guess who I think is important in society. Bakers that make petits fours and other pastries.)
The quest for status has caused millions of people to purchase dream homes that are much bigger than they actually needed. Surely they really wanted those large houses or apartments in the best part of town. There was nothing wrong with wanting something beautiful. Even wanting things that conveyed status wasn’t really wrong. It was just impractical for too many people.
The quest for status has built the US economy and destroyed it too.
The housing bubble wasn’t created by people buying great properties. It was caused by Wall Street investment firms and Securities evaluators who fraudulently rated high risk mortgages as safe investments. Then they sold them in bundles to investors. Banks and mortgage brokers also fraudulently adjusted mortgage applications to ensure high risk buyers got their loans on which the bankers and brokers made a profit. When some of the high risk mortgages failed, the investment firms couldn’t sell the bundles they created.
The bankers and Wall Street investors wanted more money to get more status. They helped ordinary people get things that were out of their financial reach. Those home buyers who chose to take on more debt than they could handle in a crisis (eg. a medical emergency that kept them away from work for a month or two) also wanted more status.
So how does this relate to the question how much house do you need? Had all of the people purchasing houses put down plenty more money as down payments and also proved that they could make the payments, then the mortgage meltdown wouldn’t have happened.
One other element could have been a key to preventing the mortgage meltdown. If people had bought homes that were enough for their needs and not any bigger, then millions of people would have been able to maintain their regular payments and not defaulted on their loans.
Do you have a house that is big enough for your family?
If you answered no then think about this. Do you have hundreds of possessions (maybe many hundreds) that you haven’t seen or used in months or years? Most people would say yes to that question. If you sold, gave away, donated, and threw out all of those things would your home be big enough for you? Do your family members also have hundreds of things that they haven’t seen or used in six months or even years? If they got rid of those things would you and your family have a house or apartment that is big enough?
Something wonderful happens when you get rid of clutter. Your mind relaxes and feels at ease. Actually the more you dispose of the better you feel. Some of the most serene people you will ever meet live a very uncluttered lifestyle. They have realized that all of their possessions were like anchors pulling them down and holding them back from greater freedom.
There is a movement in the United States that has been going on for a long time. Now in the information age it is becoming more popular as more people hear about it. It is the simple living movement. In a way it coincides with the environmental movement. Many environmentalists want to live simpler lives to be less of a burden on the planet. Simple living is its own reward. One doesn’t need to be an environmentalist to embrace simple living.
What is simple living? It is about not accumulating things that you really don’t need.
That is the basis of it in my opinion. I’ve read hundreds of peoples opinions about simple living. To some it means living a minimalist life with almost no possessions. To others it just means not wasting resources. It doesn’t mean being poor and giving up all pleasure by becoming a nomad.
Living simply also means living within your financial boundaries. Actually when one lives a simple life one tends to accumulate money very easily. It happens because one doesn’t purchase things on a whim or accumulate closets full of clothes that get worn just one time, or accumulate a garage full of toys that get used just a few times per year.
Part of living simply is to not buy or rent a home that is bigger than you need. Doing this saves money in many ways. The initial expense is smaller, the utilities are lower due to needing less energy for heating and cooling, and since there is less space you won’t buy things you really don’t need.
I invite everybody to do an experiment. Spend a half an hour going through just one room in your house and get rid of the things that you don’t use anymore. See just how much stuff you can clear out. If you are afraid to do it then try this; do the same exercise but don’t throw away anything. Perhaps that will give you a clue about how much your life is really cluttered with possessions. It will also demonstrate to you exactly how you are letting possessions control your life. Maybe after you do the exercise you will be able to part with those things after all.
If that goes well try it again in a few weeks in a different room after you have found good homes for your unused things. Do it throughout your home. See how it turns out. Then start again. You’ll find that you will be even more enthusiastic about taking it to the next level.
In my book “How to Be Debt Free Fast!” I didn’t write about the simple living movement. I hadn’t heard about it when I started writing it. The concept is simple and rewarding for many people. Putting the information in the blog is enough. It is better that more people hear about it now instead of waiting until they purchase a book.
Simple living is one way to save plenty of money. You don’t save the money through deprivation. You save it because you decide that you don’t need or really want to keep around so much stuff. Simple living requires you to think beyond the moment of wanting a new thing. It gets you to look into your future and think about how much you will really use something. Will it be used just one time or very rarely? Where will it be kept? Just thinking of these questions can help you get out of the habit of just buying things on a whim.
To be continued.
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