Drastic Action

Taking drastic action is usually done when all else fails. Financially speaking this usually means that you're on the brink of financial ruin. The latest evidence of this can be found at Money.com where you'll find a profile of a family in Michigan who, in spite of a high income, spends $9,000 more than they make each year. They're severely in debt and now must take drastic action and give up much of what they've taken for granted.

There are two reasons for this family's situation. The first is based on the choices they've made. The second is failing to deal with those choices. Mr. and Mrs. Schenkel chose to have six children (one was from a previous marriage) but didn't plan their finances as people with six children should. Their lifestyle was more like that of single people. The consequence of their decisions are going to be difficult to deal with.

I'll leave the first choice alone because it's such a personal decision. But as for the second choice, well, there's no excuse. I've written before about the importance of personal responsibility (Wake Up and Deserve as examples) and when you think about it, that's what every financial decision comes down to: personal responsibility.

This got me thinking about what I would have done if I were in these people's shoes. And I realized that in some way I was once in a similar situation. You see once a decision is made, once circumstances are such that you need to adapt, you have to alter your behavior. Once the Schenkel's decided to have a big family why didn't they ratchet down their spending? Why didn't they begin planning even before the need was fully realized (or born in this case)?

Those questions aren't just for the Schenkel's. What recent event in your life should have prompted you to change course?

Adapting to a situation once you're in the middle of it is hard enough for most people but what about altering your behavior when only the possibility of change exists? I wrote about this very subject (The Three Month Test) early on in this blog's history and, in my humble opinion, I think it's worth checking out.

My main point with this article and the Three Month Test itself was that you should consider taking a small dose of "drastic action" now to see what it would feel like when you don't have a choice. This does two things. First it will show you that you can do it, you can live on less than you think. Second it will give you the discipline and incentive to make sure you never put yourself in a bad position again.

My personal example from the article I wrote was temporarily losing my job due to a lockout of my union but let's take the example of the Schenkels for illustration purposes. Once they decided to have a family, they should have begun planning. Until she was actually pregnant, however, they wouldn't have to necessarily do anything but a plan should have been in place.

I would have budgeted certain items for the expected arrival of the child and begun saving money for such things as furniture, diapers, increased food budget (baby food adds to the grocery bill), even things like child care if it were necessary or educational spending.

I'd prefer to err on the side of caution and budget a bit high rather than wait till the bills start coming in and figure it out then. If I save too much (as if that's possible) I can always make adjustments but if I don't save enough I'll either have to give something else up or find anouther source of income. Neither of those things are pleasnt.

Every situation, every change in circumstance should be considered in terms of how it affects your finances. If it's not then you too could end up like the Schenkels and have to take drastic action.

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