Next we have to prepare- you must prepare for the un-prepareable. You can break this stage into two steps:
- Start a rainy day fund- they call it rainy day for a reason, it can come out of nowhere and ruin everything. Creating this fund will allow you to have money stored up for those occasions when you just can’t foresee or plan for in a regular budget.
- DO NOT TOUCH IT- the rainy day fund doesn’t work if you keep dipping into it. You need to be firm in your action to leave the money in the fund for real emergencies only. If your car breaks down and it is your only way to work, rainy day fund to the rescue. If your computer finally dies, go to the library until you can save up enough money in your luxury fund to purchase another (just remember you can always dip into a luxury fund for a rainy day)
The third principle to help us live plastic free is earn. You have to earn luxuries. I am not saying you can’t have them; you just can’t have them right now. Here are some rules to live by:
- Save up month to month for big ticket items. Some people claim it is actually a positive experience to wait and save for the item they want. Then when the finally attain it, the item reminds them of their success.
- If you can’t afford it now, why would you be able to afford it later…after the interest?
Most people do not use rent-to-own facilities for one reason-you pay 3 times more renting to own than you do if you just outright bought the product. For example a laptop valued at $1,050 is rented; you would over time pay $2958. If you saved $150 dollars a month that laptop could be yours in less than 7 months, or less if you chose a cheaper laptop. Credit cards are basically the same thing as renting to own. You are given credit for money you do not have to purchase items. Then, for a fee, you can pay back the company who fronted you the money for the items. The catch here is in the fee. Some credit cards carry a 24 percent interest rate on a purchase. If the purchase is 100 then you actually owe 124 dollars, if you pay the minimum payment of $25 dollars, then your principle lowers to 99 dollars, then you have to pay interest on that; you can see where this is heading.