Financial peace is an appealing idea. Basically it goes like this, having a financial situation is where you can do what you want. I am not talking wealthy or do whatever you want tomorrow, crazy rich. I am talking being able to quit your job tomorrow should you decide to. Being able to retire early or move across the country (to a free state;) or what not.
How could you become financially peaceful? Also how could I become financially peaceful?
My first thought is that savings are essential. It would not be very smart to quit your job (no matter how bad things got) if next weeks paycheck is needed to pay bills and buy groceries. No matter your income savings are essential. Savings let you have a buffer to ride out a sudden job change or move or whatnot.
The second is living below your means. It doesn't matter if you are a surgeon making 200k a year or a laborer making 20k. You need a buffer between what you make and what your normal expenses are. It is hard to pull your kids out of public school and put them in a private one if you can't pay for it. It is hard to scale back a bit at work in order to spend more time with the family if you can't afford the pay cut.
The third is avoiding debt. Lets say you find out about work's new Friday furlough program that starts next week. This means 3 day weekends which are nice and a 20% pay cut which isn't so nice. You go home and tell the spouse about this. First a 3 day camping trip is planned and then you look at the finances. Eating out a bit less and going from the super every channel even in languages you don't speak plan to basic cable or just an antennae are obvious choices. Maybe watching the cost of food a bit more and putting off some plans for new furniture will help also.
People with minimal debt can do a lot to cut their overall expenses. If need be these folks can live absolutely dirt cheap to get by through a rough patch that is longer than their savings will just absorb. However folks who have a car payment and a credit card payment and a store card and a HELIC to pay off find they can not cut these expenses without serious back blast. These folks would have the same problem our federal government is having now. They have so many expenses they can not readily do anything to cut or eliminate.
The great part of these three is that they are pretty realistic for most people. Maybe not easy or fun but doable. Everybody can make choices that help in these and avoid those that detract from them.
Of course having no debt and a paid off residence would help a lot. These are not so easy to attain. The vast majority of the benefits of this idea come from the first three. Also living and practicing them makes it a lot more realistic to pay off your residence and have absolutely no debt. Paying off the mortgage faster or buy a couple acres with a travel trailer or whatnot is not unthinkable given the significant amount of income that has now been freed up.
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