Do you really need that?

I thought I would start out with a very simple idea. What are needs? By my simple definition they are the things necessary to maintain life.
For starters we have air. At least at this point in time this is still free (thank goodness).
Next water. Sometimes free, but still pretty inexpensive.
Food. Cost money, but maybe not as much as we think.
Clothes. Not in all climates, but here in the northeast...a definite must.
Shelter. Again, a must in some areas of the world.

Now, that is all. Notice that electricity, cable TV, car, and those other things are not on the list. they are not necessary to sustain life. They are a luxury. Perhaps a luxury experienced by most of the Western world today, but none the less a luxury. I would divide luxuries into 2 lists. First, those that in society today have become a given, and the second as pure luxury items.

In the first list I would put
Electricity
Indoor Plumbing
Heat
and Basic Toiletry items

In the second would be everything else
Car (a definite luxury in the city, but needed a little more in rural areas)
Cable TV
Internet
Seasonal Wardrobes
More than 1or 2 pair of shoes
Organic food
furniture
and almost anything else you can think of.

Now lets put this in perspective. I don't expect people to live without indoor plumbing or electricity these days. However, TV is a large unnecessary expense, add cable or satellite and it is very expensive. Buy a radio or book to pass the time. Where else could that 60 dollars a month go? Perhaps to pay off the credit card, save towards college education. It might not be much, but what if it was combined with the other savings. Where I grew up in the Midwest everyone needed a car. Now as I live in a city, I have no need nor want for a car. This is a HUGE expense. Consider, the car payment (or at least the value of the car stretched over its lifetime), gas, insurance, maintenance, and in some places parking. I figured it out for myself and it was close to 900 dollars a month to own a car, not including parking. My monthly bus/subway pass puts me back about 60 a month. A $840 dollar savings. Start thinking about all the things you spend money on every month. What do you absolutely have to spend money on and what things do you really just lust after. Organic food sounds great, but the reality is that it is almost 3 times the amount of other perfectly healthy foods. I spend between $400-$500 a month on food for 2 people (although it is enough for 3) and I take my meals to work. I save about 6 dollars a meal that way, $120 in monthly savings. If you compare these groceries to the Organic kind I would spend at least 800 a month (that is being conservative). Internet is great, but you know the local libraries have free wifi that is another 30-50 dollars in savings per month. I will get down and dirty about budgeting later on, but looking at what we just talked about, that is a savings of around $1200 a month (give or take). This is over $14,000 a year in savings. Now, how does that college education look? I realize some peoples expenses won't be as high, as prices varies greatly in all parts of the country, but this is based on a Boston, Ma location (which happens to be one of the most expensive cities in the US).

If you have any debt, mortgages excluded (for now), think about where you money goes. Why are you paying interest on something you could pay off quickly by just cutting back for a few months. I have seen so many people spend absurd amounts of money on things they don't even need and go into debt.
If you don't have debt, this is a good strategy to avoid it. Save money in areas you are willing to cut back on for a while to save for things you want. If you don't owe anyone money, why can't you have those luxuries?

Next post will be about budgeting for only the needs. Finding out how much you need to actually live on will give you a good idea of how long it will take to pay off those bills and/or save for that great new couch you have been eyeing.