Financial Advice for folks who are broke….no …REALLY broke.
I feel sometimes that I dwell on a planet far far away – and simply come here to work, visit and enjoy the international cuisine. I received a newsletter from our financial advisor this week that featured a ‘heartbreaking’ story of a couple (‘just like us’) in their 30’s, who were struggling to keep up with their finances. They had two young children, 20k in student debt, 15k in credit card debt, a 130k mortgage, and get this….100k in savings. However the poor saps had lost 20% of their savings in the recent financial downturn and were now living pay cheque-to-pay cheque. The author then probes, ‘does this remind you of your situation?’.
The answer? HELL NO. HELL NO – It surely does not. I in no way mean to downplay the struggles that someone may encounter when sitting on 100k – I mean – I’ve never had a tenth of that saved – but I don’t know – somewhere along the road I would probably put more of that money toward paying off the debt – if its such a problem. The debt, I assume (and its only 15k) that can be attributed to living expenses, which means their expenses have increased and they haven’t adjusted their budget to account for that.
I think someone needs to come up with a poor-people plan. I need a financial support group for those of us who have no savings, who have an ever increasing mortgage, whose expenses are high because we live in the GTA of Ontario – where everything seems to cost over $20.00. Yes – we need our own support group. We need our own financial advisors and our own plan. We generally don’t have parents who shell out thousands of dollars in cash (FREELY) to help us buy homes and cars or even our education. We don’t have grandparents who buy us bonds for our birthdays or pay for our extra curricular activities. And what about that weekly trip to the mall to shop? It just isn’t a consistent reality for many of us. So everything – Nearly everything costs us something – and most of the time cash is unavailable. Did I mention our parents won’t let us live at home forever or until we ‘get some money together’ – because guess what? If you’re living at home – you’re paying rent, contributing to groceries and utilities and expected to do housework…so…you see where I’m going with this.
So lets talk. Just you and me – and our truly happy – but truly broke friends. Those of us with a asset net value in the negative or at least under $30k Those of us who are always in overdraft , who spend more money on car repairs than a taxi company; have mountains of students loans, mortgage interest we cannot ‘write off’ on our taxes, and to whom home ownership means finding money to pay for a $300k house that you may neither like or creates distance between you and your obligations. We need to work together – because there is a way for us middle-class underdogs. Those investment companies are not going to woo me with their methods. They are ‘ living in a world of make-believe! With flowers and bells and leprechauns and magic frogs with funny little hats.’
To begin – here is what I’d like to direct my funds:
savings accounts for a home (for investment) down payment
savings for a car
extra money to accelerate mortgage pay down
an emergency fund (3 – 6 months of expenses)
a holiday gift fund,
a savings plan for kids’ education
a savings plan for kids’ future wedding?
a savings plan for kids’ future children?
a vacation stash
a retirement account
