When we hear of Greece, images of beautiful beaches and islands come to mind, if not all the great philosophers it gave the world. Unfortunately, as of late, hearing the word ‘Greece’ instantly brings images of people protesting in the streets, youth rioting in front of the parliament in Athens and other images of chaos. The Greek debt problems have been so devastating that they are threatening the entire economy of the European Union and sending its shock-waves across the Atlantic, all the way to North America.
Personalizing Greece for you as an Individual
For an economy as small as Greece to be able to have such an impact on other global economies tells you the chaos the world is in. But putting that macro-analysis of this whole issue on a side for now, let us focus on the micro version of it and how Greece’s economy and all its problems is a major warning to all of us as individuals.
How many times have we preached on this website about the important of budgeting, paying down your debt, saving and generally living within your means? A lot! In fact, it is not just this website. You hear it everywhere these days. In his new republished book “The Wealthy Barber”, for example, author David Chilton stresses the need for these basic principles of finance for someone to be able to afford life or to make it to the next level and be wealthy.
In Greece’s example, the government has been operating on debt for years and they have finally run out of all money to the point where they could declare a default on their obligations at any moment. Europe has been called to bail their Greek cousins. What went so wrong? lots of things, mainly the government and the people’s habits of operating beyond their means. I have lived in Greece and it is a lovely country with some lovely people. Greek people love to party and generally have fun. But so do most of humanity. I don’t know of anyone that will tell you “I hate fun.” We all like to have fun, but at what expense? to have fun for 5 straight days and only work two days just doesn’t cut it. Sooner or later you have to face the reality of your finances. You can’t expect to live a luxury life at the expense of the government forever. That can only be possible in such places like Fantacyland or Dreamville.
North America-yes this includes Canada-should take Greece as a major wake-up call and get its act together. Sooner than we may think, Greece’s debt issues may take its shadow across the Atlantic and blanket us here too. But we do have time and can do something about it. At least here in Canada.
How to protect from the Ghost of Greece?
Live within your means
First of all, and it is getting tiring saying this, it starts by living within your means and not beyond them. If you do live beyond your means, you may not notice the consequences immediately. The fact that we don’t immediately feel the dangers of living beyond our means is one of the worst illusions of personal finance. We think everything is OK until it is not and that is when it goes to hell in a basket. You have to recognize this: you don’t go from good to bad standing order immediately. In between, there usually is some calm before the storm. This calm is something to watch out for.
If you don’t save your money it means you are either spending it all or paying some of it to erase your debt. Which also means that you are one paycheck away from disaster. Do yourself and your family a huge favor and put some money away from every pay for a rainy day. If you are turned off by the term ‘Rainy Day’, ok let us call it ‘major future investment’, be it a new car, a course, or even a mortgage on a new home.
Pay down your debt
To avoid being in the same situation that Greece is in, make sure your debt doesn’t keep piling. It is OK to have some debt but to let it pile on and on, then we’ll have a problem. You have to literally say to yourself “I have to stop my debt here and now” and act on that command! Paying down your debt will mean that you get to save all the interest that would otherwise go to a bank.
What have you learnt from Greece and what it got itself in? I hope a lot, if not, you could be the next Greece and that is not a good thing at the moment.
Yours in financial success,
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