[quote=AN]The author lost her credibility with me with this statement.
[quote=flu]Moreover, people don’t rack up thousands of dollars in credit card bills because they buy too much, she says. Unexpected and costly medical emergencies, divorce or long bouts of unemployment are the main reasons Americans find themselves drowning in debt.[/quote]
These unexpected cost will only hit you hard if you didn’t save up for it to start with or have proper insurance. Although I don’t agree with everything Orman or Bach said, they have the right premise. Spend less than you earn. Especially Bach with the Latte factor. I’ve read his book and make perfect sense. It’s not that hard to save when you live well under your mean. When you do that, along with proper insurance, their unexpected costs will not affect you as much if at all. I like the “Can you afford it” portion of Suze Orman’s show. Her message those those callers and viewers is that, don’t buy junk unless you can truly afford it and already have your savings and retirement set. Her stock tips is as good/bad as anyone else.[/quote]
AN, your “plan” is infinitely easier if your employer covers your entire family with a comprehensive health plan.
Many self-employed people and people too young to qualify for Medicare have individual HDHP’s. The deductibles plus co-insurance in these plans can easily run $8K or more in ONE year for ONE individual if they have a health scare, accident or are diagnosed with a chronic illness.
No one can plan for death or a spouse or divorce … at least not for the “long term.” The reality is that economies of scale allow two or more people to live much cheaper than one (like you are). If you were living separate from your spouse, you would not have the same lifestyle. It would be much lower, unless you used cc’s to “make up the difference.” A lot of recently-divorced people feel they are “entitled” to do so because of the life they became “accustomed to” as part of a two (or more) earner household and that’s what ends up being a “rude awakening” when the bill comes due, their credit is shot and they need to rent, buy another house, or buy a vehicle. I’ve seen this mindset over and over among my clients, kid’s friend’s parents and other acquaintances.
Not everyone can qualify for or afford the premiums on a term life policy over $50K. A LOT of people can’t qualify for ANY life insurance at all or just enough to pay for their funerals. Many also don’t have access to employer-paid term life policies with no questions asked.
Of course, all workers hope their good wage-earning years last a long time and nothing happens to them throughout life which will affect their finances adversely. But they really don’t have control over a lot of it unless they are VERY wealthy and have ironclad legal agreements signed with everyone they come into contact with, including spouse(s).
