Tuesday, July 31, 2007

What would being debt free mean to me?

What if I had no mortgage payment, no car payment, no debt at all? Here's a fun activity. Take all your essential bills, not including the debt and the 'luxuries', with the average you pay each month and multiply it to a year. My list includes:

water, electricity, gas, telephone, taxes, insurance, fuel, food

Altogether this is a yearly expense of $15,680. This is what we live on if we own our home (paying taxes/insurance on it of course) and cut back to the bare essentials.

Could you make $16,000 net a year? What is the cost of your "bare essentials"?


Jim said...

I think you left out some stuff like clothing, maintenance, and savings? With that said, I understand what you're trying to look at. If you made no payments other than what was needed, what would it be possible to live on?

There is a relatively large family out there that lives off a teacher’s salary of 32k a year. They are so frugal a nickname "America's Cheapest Family" has been given to them. I think it's great they have managed to live so well with all those kids while making so little. Not everyone out there has this kind of patience or tolerance to live like that.

Rarely do people realize that money is limited and there is only so much of it. If they made more money, life would be so much better. Making more money will not necessarily solve a money problem. Properly utilizing income based on needs and priorities is key to money management.

There are some people out there that don't make any money and the taxpayers are the ones who take care of them. Should the government be responsible for these people? That is probably a whole new can of worms.

Beyond the Consumer said...

Ah, you caught me, though I think maintenance (like on cars and house) would be far more than clothes. We're talking essentials. The essential clothes you need is a fraction of what most people buy. Especially when you get into the brand purchases. I buy mine at Ross and they last forever!