Mcsween - Do You Really Need It?: One Question to Free You Financially

Youve never had a problem, and your life has been a long, tranquil river (is that possible?), but do you have $2,000 set aside, readily available? Do you have the money you need to deal with the unexpected? You know, that unexpected event thats just around the corner? (Im talking about actual money, available in a few hoursnot credit.)

In other words, do you have $2,000 ready to send to your daughter who went to Florida to live her dream, but who got in a fight with her boyfriend and wants to take the next flight home because shes scared?

Do you have $2,000 so your best friend can pay back his dealerthis instant? Can you help him in twenty-four hours? If you cant, either he isnt really your best friend or you dont have the money. You can always comfort yourself with the idea that, toothless or not, hes still a friend (and if the dealer is nice, hell have spared him a few Chiclets).

Im not actually suggesting you pay your friends drug debts. What I am asking for is an honest answer to the question: Do you have $2,000 readily available? And its all relative; the amount will depend on your lifestyle, income, and short- and medium-term financial commitments. Im just putting it out there.

The beginning of the debt spiral

Unforeseen events can trigger a debt spiral, whether were talking about a sudden separation, a leaky roof, a business setback or a fluke accident only partially covered by insurance.

And yet these seemingly unpredictable situations are anything but. Statistically speaking, we know full well that the puck doesnt always bounce our way.

Its the law of probability: one day or another, the unexpected will strike. Then, like a friend in trouble calling you at 4 a.m., it forces you bolt upright in bed. Even before you have a chance to catch your breath, shots start coming from every direction, and you find yourself backed into a corner.

You need a safety cushion to deal with the unexpected. When you dont have a safety cushion, something as simple as a $2,000 balance on a credit card can turn into a ball and chain you drag around for yearsat 19.99 percent interest.

People often point out that you can transfer that debt to your line of creditwhich is true if your line of credit isnt already maxed out and the credit is available. But even if you use your line of credit as a cushion, dont forget that there is often a second and third costly surprise on the heels of the first. In fact, life is a long series of such surprises. Sodo you have $2,000?

The stories behind the faces

People often tell me about their financial problems. The other day, a young woman told me that her credit card was maxed out, and she couldnt make the minimum payments anymore. She is thirty-five years old, with no savings and such overwhelming debt that I dont know when things will improve for her. Her distress was palpable. But her story isnt unusual, and thats sad.