Recently during an SNL episode there was an infomercial for the program Don't Buy Stuff You Cannot Afford. This book is offered for free, and its contents are reproduced in their entirety here so all can benefit.
This book is based on the difficult concept that if you don't have money you shouldn't buy things. If you want something, but don't have the money, don't buy it. While this flies in the face of conventional wisdom but this radical concept could change the way you live. The basic concept of the book is this: It's okay to live on less than you make. Really.
People like money. People also like things. When people see stuff they want they give money to get it. The desire to get stuff is strong with people. Perhaps you have had this desire. People things something looks really cool or think that they deserve it, even if they don't have money. If they don't have the money but still want it, they buy it anyway. This gets them in debt.
Debt is Bad
When you buy things you can't afford, you have to get the money from somewhere else like a bank, a credit card, or a big guy named Guido. The nasty trick that you may not know is that these lenders not only want the money back, but they will charge you more money for the privilege of borrowing money. This charge is called "interest" and it can get you. Interest grows as time goes on, and you owe more and more to those you borrowed from. Owing someone else is called debt, and it is bad. To avoid debt, you could buy things only with saved money.
"Saved Money" is Good
Some may ask where this "saved money" comes from. Unfortunately it does not grow on trees. Saved money comes from savings. To get these savings, you have to put money away so you can buy something. This saved money can be in a mutual fund, a money market account, or even under your mattress, as long as it's not spent. It is much easier to save money if you are not using it all to pay down debt. In other words, the faster you can get your debt paid off, the more money you can save. The you can afford stuff. Cool.
As you can see, you should not buy things you cannot afford. You should only buy things you can afford. To afford things, you need to not have debt and save money. These are difficult concepts, but hopefully this book is helpful.
"Advertising is the art of convincing people to spend money they don't have for something they don't need." -Will Rogers
If all this sounds simple, it's because it is. The key issue it getting the willpower to do it. Perhaps our debt calculators can help you out if you are concerned about debt and things you can't afford.