Serendipity is a funny thing. I always have music on at home and, as I sat down to write this post, Van Halen’s “Right Now” began playing on my Pandora station. The following lyrics caught my attention:

“The more you get, the more you want. Just trade in one for the other.”

How good are we at truly separating our wants from our needs? And what is the impact on our finances?

This is the first post that I’ve done that is related to financial independence, and I have some rather sobering statistics about credit card debt that I’d like you to consider.

Just this week, I read this article citing a study that found that 35% of the respondents with a credit card said they’re in too deep to recover, while another 33% with credit card debt are unsure if they can clear the debt. For further perspective, that’s a staggering 31 million people that believe they will still owe on their credit cards when they die!

So what’s the easiest way to get out of the hole you’ve dug? How about not digging it to begin with, or digging a much more manageable hole.

This is probably a good place to insert the caveat that personal finance is just that – personal. How you choose to spend your money is your business; it may very well be different than me, and that’s fine. To avoid getting into too much trouble, though, the most important thing is to ensure your spending aligns with your values and priorities.

Credit cards can be a wonderful financial tool – when used properly. In other words, enjoy the perks of a card (e.g., airline miles, hotel points, cash back, etc.) but just make sure to keep them paid off.

My mom told me once that her dad used to tell her that if you can’t pay cash for something then you probably can’t afford it.

While times have changed since my grandfather’s generation (and I realize the topics of mortgages and school loans are a whole other can of worms), I do think this applies when it comes to our day-to-day spending – and that’s where credit cards come in.

Here’s a brain teaser for you from another great article I read recently (assumptions are spelled out in the article): how long would it take to pay off a $2,000 credit card balance if you make only the minimum payment each month?

Might want to put your drink down before you read this answer. Over 30 years!! The kicker is that you’d end up paying more than twice the original balance in interest alone over that time! And a $2,000 balance isn’t that bad when you consider that the average American household carries $15,654 in credit card debt.

As I mention in the summary on the Resources page of my site, the book Your Money or Your Life changed everything for me. One of the key principles of the book is that money is what you trade your life energy for. I’d never really thought about it that way, but it’s true. What experiences or opportunities are you sacrificing to earn the money that you spend? And, with that opportunity cost in mind, are you spending wisely?

To take this concept to the next level, have you ever taken the time to calculate how much you earn per hour, or per day? Doing so will allow you to quantify exactly how long you had to work to earn the money you’re about to spend. Put a potential purchase into that context before you pull the trigger the next time, and I guarantee you you’ll at least think about it for a second time, regardless of whether you move forward with it or not.

Maybe, just maybe, we can link it all together this way: the less you spend (on both wants AND needs), the less money that you’ll need to earn. Needing less money to support that lifestyle means maybe you can work less (part-time, perhaps?), or for fewer years, or take a job that pays less but is more fulfilling. Then you can spend that life energy on more important things like relationships, or giving back, or whatever aligns with your values and goals.

OK, so maybe the argument isn’t perfect, but I’ll take it. To me, this is the essence of simplicity.

The Ate Truths tagline mentions “a lifestyle focused on personal freedom…”. If there’s one thing that limits personal freedom, it’s debt. Ralph Waldo Emerson is quoted as saying “a man in debt is so far a slave”.

How depressing is that? If that isn’t the opposite of personal freedom then I don’t know what is.

The last thing I want to link our “wants” to is our impact on the environment.

Think back the many of the “wants” you’ve purchased. Where did they end up? Were they enjoyed for a short time, and then tossed once something new and better caught your eye? How much packaging was required for that item – either for the product itself, or the box used to ship it to your front door?

And that is where our minimalism begins to come into play. More on that down the road!

As music still plays in the background, I’m reminded of another set of lyrics that help bring the point home:

“What I want is what I’ve not got, and what I need is all around me.”

“Jimi Thing” – Dave Matthews Band

More than likely, you’ve already got everything you need, and much, much more. Stop comparing yourself to other people, and many of those wants will fade away.

The following quote has been attributed to a number of different people, but its message is powerful regardless:

“We spend money we don’t have to buy things we can’t afford to impress people we don’t like.”

To conclude, I want to go back to the very beginning – let’s focus on appreciating our lives and the things we already have. Try to get every penny out of each thing you buy and, the next time you pull out that credit card, consider what of your life energy you had to trade to earn the money you’re about to spend.

Is it really a need, or just a want in disguise?