Saturday, March 27, 2010

Planting Trees of Money

Imagine for a moment, that you make say, $50,000 a year. Now, let's pretend you decide to spend $60,000 a year. That's 20% more than you make a year. In order to enjoy a more extravagant lifestyle, you apply for and receive, a couple of credit cards. After about year, you learn that both credit cards are maxed out and you can no longer use them. So, you apply for and receive two more credit cards. After another year, those are now all used up.

You look over your credit card statements to see where all of your money has gone:
Car payment
Eating in
Eating out
Helping friends

It dawns on you (a little late) that you have, for the past two years, been spending $10,000 a year more than you make and now you are in trouble. The credit card companies want their money, along with the landlord and others. Meanwhile, the friends you have been helping and entertaining, are asking for more help. What do you do?

Spend more fact up your spending to 30% more than you make. Doesn't this make sense? If you pretend hard enough, you can continue spending more than you make for years and no one will notice. Right?

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