Budgeting is such an important part of money management. That’s part of the reason I talk about it so much. Today’s lesson is about predicting the future. To correctly and safely budget, you’ll need to be a bit clairvoyant. Before making any changes to your budget, you need to look into the future and see how the changes will affect you down the road. I’m going to share one my own experiences to clarify.
In 2005, I had a new job, I was making good money, and about half my credit card debt was paid off. Financially I was feeling great, if perhaps a little too full of myself. GM had commercials all over the place about their employee pricing – you could buy any new GM product for the same price a GM employee would pay. So, I went to test drive a Yukon Denali. MSRP on this beast was just a shade under $50,000, and I simply hated the way it looked inside and drove, so I never even found out the employee price. However, the experience got me in “new car mode”, so I went to plan B. My dream SUV, the Lincoln Navigator, was only about $5,000 more than the Denali I drove.