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Living Paycheck to Paycheck Will Leave You Powerless

By Erik Folgate

I was driving in the card on my lunch break today, and I was listening to Bill O’Reilly.  He started out the second hour of his radio show recognizing the fact that Americans have a debt problem.  What struck me was when he made the statement that living paycheck to paycheck renders one “powerless”.  Now, the point made was not that we should all try to be rich so that we can flaunt our power.  The point was that we are slaves to the lenders that we owe money to when we are making payments and not being able to save any money.  It caught my attention because O’Reilly said that we are powerless, because we will make more rash decisions and go to more drastic measures when we don’t have any money in the bank.  He used the example that a boss can make you do things that you normally would not do if you had a reserve of money.  An employee that lives paycheck to paycheck must keep his or her job, so employers can take advantage of that.  O’Reilly is not a financial expert by any means, but he brought it up because he covers social problems — and this is a big social problem. 

So why would anyone want to put themselves in this situation?  Why do we continue to buy new cars with 5 or 7 year car loans.  Why do we continue to buy gas on a credit card or open up a line of credit to buy furniture.  In my opinion, the reason that our culture has a debt problem is because we think that we need to have everything right away.  We cannot wait for nice furniture, a nice car, or cool new electronics.  We have been taught from day one to instantly gratify our desire for wanting something.  Yet, I continue to hear personal financial planners, magazines, bloggers, and famous personalities continue to push the idea that debt is a tool.  Suze Orman tells young people in the “Young, Fabulous, and Broke” book to supplement any overage in your budget by putting it on a credit card.  She tells young people to finance the transitioning period of pursuing a dream job by using credit cards.  Her advice could merely have stated to tighten up your budget, but instead she choose 18% interest as the answer.  She could have given advice for people to do small things to set themselves up to pursue a dream job and be patient, but instead she choose debt as the answer to every young person’s job woes.  There are many Suze Orman lovers out there, and I am not bashing her personally, but she will not make you rich.  I understand that she advises young people to get out of debt quickly, but most of her solutions to other problems involve using debt!  Does anyone see the circular logic in that?  (feel free to start bashing me, because I’m ready to defend why I don’t like her). 

Lately, my finances have been really tight, and I hate it.  I cringe when I pay my credit card bills, and I bite my tongue when I pay my student loan bill.  So I made my wife promise to make me get a second job after the holidays.  I am going to do it, because I am sick of having credit card debt.  I am sick of living on a shoestring.  Are you ready to make sacrifices for financial security?  I wasn’t ready for a long time, but now i am ready.  I would rather sacrifice now when I’m young, so that I can relax and have some fun in the future. 

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://www.bluntmoney.com/ bluntmoney

    How true that is, even just in little ways. For example, maybe you wouldn’t tell your boss that no, you can’t work late tonight, because you’re afraid it’s expected in order to keep your job…

  • http://dimestodollars.blogspot.com dimes

    Suze seems to think the transition period won’t be a long one for most professionals. I hate to sound pessimistic, but I have seen firsthand how little things can add up into a big fat ball of debt. I wouldn’t be opposed to the idea of living on credit cards for the month between the time you get a job and when it starts, but long term income supplementation with credit is a dangerous idea.

  • http://www.erikfolgate.com erik.folgate

    I agree with your comment, Dimes. Again, I understand that Orman does not want young people to use credit cards for the rest of their life. But, I just don’t think anyone with as much influence as her should condone their use the way that she condones it. I believe personal finance has so much to do with the financial habits that we form. There are bad financial habits that we need to break, and good ones that we need to start. I think getting into the habit that credit cards will ALWAYS be there to bail me out is a bad habit to form. Saving SOMETHING every month is a good habit to start.

    In regards to the power issue, bluntmoney, I think it is scary when you think about all of the things that you will do to keep a job or earn enough money to pay bills or catch up on bills. The idea of obtaining financial freedom is like taking the weight of the world off your shoulders.

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