Saving vs. Charging

Posted by T | 8:35 PM | 0 comments »

As I have mentioned before, my late grandmother was the most frugal person I have ever known. She lived on nothing more than Social Security income, yet always had new clothes, plenty to eat, cooked and baked for the whole extended family and even purchased a new car once in awhile.

How did she do it? Well, she did two different things: she lived below her means, and she saved for things that she wanted. Sounds simple, right?

It turns out that many of us don't live like my grandmother did. Back in her day, people didn't use credit cards. If they didn't have the money to pay for something, they saved their extra money until they had enough to buy what they wanted. My grandmother cut back on her monthly expenses and deposited the money she saved in the bank. After about 2 years, she had enough money to buy a car that was only a couple of years old...and she paid with cash.

How many times have you found yourself the day before payday, and your bank account is at least $10 in the hole? That's not living below your means. Having extra money in the bank at the end of a pay period is living below your means.

My family takes one vacation each year. This year, we are going to San Diego, and the trip is coming up next month. It will actually be cheaper for us to fly to San Diego than it will be to fill our minivan with gas multiple times during a road trip, so I'll need to purchase three airline tickets. I'll also need money for food and entertainment expenses while we are in California. I figure I'll need about $1,200 to make all of this happen. So, I have about 45 days to save $1,200. Can I do it? Well, I guess I'm going to find out.

My wife and I plan to hold a garage sale to raise money for our trip. We also plan to sell some items on eBay, and I'll make about $400 extra this month from freelance writing. I have the possibility of making another $400 next month, but I don't know if I'll get that check before we leave for our trip so I'm not counting on that.

That leaves another $800 we must raise. A garage sale and some eBay sales may not total anything near that, so we are also going to have to cut back on some of our monthly expenses and save the extra money, just like my grandmother would have. I recently got a raise at my job which will give me an extra $200 per paycheck. Instead of using that money for household expenses, I plan to act like I never got the raise and stick the extra money in my trip account. I have two more pay checks before our trip next month, so that's an extra $400. Between the raise and the freelance earnings, I am now up to $800 for my trip. That leaves another $400 I need to raise for our vacation. Between the garage sale and eBay, I think that is doable.

And I won't need to charge any of my vacation expenses. Sure, the vacation will be great, but do I really want to spend the next year paying for it...with interest?

By following the teachings of my grandmother, I won't need to.

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