MP Dunleavey, a columnist for MSN Money, recently came to the realization that her family’s finances were not in order. Wait a minute! Dunleavey has been writing about personal finance for years, and has covered the very issues she is facing. This cognitive disconnect is common in the world, so I can excuse her.
Her enlightenment was inspired by the fact she was expecting (and is now the proud mom of) a baby boy. Knowing another mouth to feed was on the way from that place that manufactures mouths to feed, she got fed up with the fact her family was still struggling with their $8,000 a month income.
Our monthly expenses came to more like 84% of our gross, with about 6% going toward my remaining credit card debt and 10% going toward various savings buckets.
Dunleavey wants to be closer to her expenses being 60% of their gross income. Here’s what she did. She sold her apartment. She was keeping a cheap aparment in New York City in addition to a cheap house upstate. Having both was superfluous.
What can we learn from her experience, by the levels?
Level One: If your expenses are eating too much of your income, sell your extra apartment. Level Zero: If your expenses are eating too much of your income, find ways to cut back, as earning more money isn’t always the best solution.
Level One: If you are ignoring your personal finance situation, have a baby. Level Zero: If you are ignoring your personal finance situation, it’s time to start thinking about the consequences and working on a plan.