I'm going through a bit of a health scare right now, so I'm going to make this relatively short tonight. I've been meaning to write about this subject for a while now, because it's at the heart of my financial goals. I think you might understand my intentions a bit more after reading this.
When you are a senior in high school looking to go to college, you fill out the FAFSA, the granddaddy of all financial aid forms. Or rather, your parents do. For those of us with reserved parents, it's a sudden unveiling of your family's financial life, which can be surprising.
All of my college-bound classmates and I started getting our financial aid statements from the universities at the same time, with the attendant surprises that food was going to cost a lot more than a daily Little Debbie and that there was a blanket fee for campus activities. It wasn't quite a meeting of the real world, but it was a rude awakening all the same. We also met the concepts of student loans for the first time as well. It looked like we could afford everything and more if we just got our parents to agree to these PLUS loans. Nifty.
My mother took a swift editing pencil to the paper. "This is suggested. You are not going to need that much. You will not have a car on campus, so that fee means nothing. I am not taking out additional loans so you can have pizza every week." By the time she was done, I would be taking out the subsidized student loan for under $2000, but that was it. There were no need-based grants offered, which felt like a badge of honor. Everything else would be covered by merit-based scholarships and eventually acquiring a job. Hooray!
At an event later that week, we were chatting with a couple classmates' parents about the award letters. One mother joked about how the expected contribution from the family seemed so high to her. "Apparently, we are wealthy. I had no idea. I guess we're the wealthy destitute, because it says we have all this money, but I don't know where it is!" Reality check: this family had a decent income, a home in one of the most expensive parts of town, and a hefty retirement account. They knew where the money was. For good or for ill, the FAFSA took hard numbers and turned them into benefit analysis. It didn't look at where your money was going, or if you had other goals than sending your kids to college. It looked at what should be possible, and assigned money accordingly. Her kid made it through college fine, with a stack of merit-based scholarships, and if there were student loans, they were not the kind that blunted his future plans.
That concept stuck with me, though. The wealthy destitute. We have a lot of wealthy destitute people in this society. I know a few of them, and I know also that there are a lot more of them who are not open about their situation. There is a really nice income, but every dollar is spoken for before it enters the bank account--high housing costs, luxury vehicles, season passes to multiple amusement parks, high-cost kids' activities, multiple "once in a lifetime" vacations a year, and so on. There's no room for error. They live extraordinary lives, but they also live paycheck to paycheck.
Quick test. How do you know if you are living paycheck to paycheck? Your employer's accountant makes a mistake, and your paychecks are going to be five days late. What are you going to do? If you now need to call multiple creditors and make deals, you're living paycheck to paycheck. If you need to put everything on a credit card that you'll pay off when the check comes, you're not in as bad of trouble, but you're still living paycheck to paycheck--you just have credit. If you can shuffle your emergency savings or even better, just hold tight for a few days, congratulations--you are out of the treadmill, at least a little.
I figured out a long time ago that I would never make enough money to be the wealthy destitute. We have always edited our expectations to at least somewhat fit our realities. There is very little about us that indicates "high flying executive" to anyone, and we're okay with that. We are attempting to carve out our own path, for the destitute wealthy. According to our taxes, we don't have as much as many of our neighbors, but we are doing our level best to make every dollar do its work--staying out of debt, keeping our lifestyle simple, saving for our future goals. At this point, if the hypothetical banking delay happened to us--as it did a year or so ago--we don't really have to do much of anything different, because every bill gets paid when it comes in, weeks before it's due. We worked very hard to get ourselves to that point, and we feel unbelievably lucky that we have had that opportunity.
The destitute wealthy don't look as cool from the outside, but we have a pretty good deal going on. It's worth a try.
No comments:
Post a Comment