By the time life descends into chaos, it is too late to mend mistakes. Develop your frugality before you rely on it to endure. Practise discipline when times are good, for good times surely give way to worse.
Resilience is the key to success here. As we saw during the 2008 financial crisis there were too many homeowners overextended on their houses, and they swiftly crumpled in heartbreaking bankruptcies/foreclosures. Their tragedies serve as a lesson in resilience and discipline.
Discipline is formed of hundreds of tiny habits. If you practise each habit in fair weather, then it is that much easier to hold fast when you are tired, grumpy, confused, resentful, and stressed. This applies equally to disciplining a submissive or managing your finances. My duty as Domme is to provide the strictness that keeps us on track.
For instance, my dearheart and I discuss any purchase over a threshold of $25. This might not sound like a lot, but even $10 is a large sum of money when multiplied as a habit. "Small" transactions add up, which is why we talk about them – to stay mindful of them.
Yet there is the ever-present temptation to skip the discussion. Why bother, if the answer is going to be "go ahead" anyway? Why bother when the answer is "no" and I'm going to flout it anyway? Why bother when I'm impatient and my partner isn't available to talk right this minute?
The answer is, of course, to foster discipline. If you practise regularly, you make the habit permanent. Conversely if you skip it regularly, you erode the habit. There is no middle ground for merely maintaining a habit, you can either strengthen it or weaken it with your choices.
Not all habits end up working. For a time we tried a habit of entering a purchase into our bookkeeping within a week of its payment date. This worked great for me since I had nearly no spending to input each week. My dearheart on the other hand was swamped in many tiny transactions that made the input process tedious.
Tedium begets sloppiness, and more often than not my dearheart skipped inputting expenses. This broke the habit entirely. This was my failing, for I did not provide the discipline for him to stick to it. Nor did I recognise the problem to streamline the process for him.
After a long break of not enforcing bookkeeping, I returned with several improvements: it was faster to input an expense, it allowed multiple inputs at a time, and copy-pasting worked better.
Most importantly, instead of an arbitrary deadline for inputting expenses, I gave my dearheart a reason to input accounting: to have everything ready for our monthly finance review. This in turn led to the natural habit of working on bookkeeping every other week, and then at the end of the month making sure everything was caught up.
Since we can't do our review without bookkeeping being done, the habit enforces itself. Some of the best habits I've found are goal-oriented in this way, rather than based in arbitrary deadlines.
Small habits are also useful when they serve as practise for something bigger. They can develop useful skills and foster the discipline necessary for a larger pursuit – such as purchasing a home.
In ordinary lives a home is likely to be the most anxiety-inducing purchase of a lifetime. There are many complicated procedures, lots of money at stake, many future years tied up in it, and the long-lasting fear of foreclosure.
In short, you need discipline to purchase a home smartly.
The most important aspect of discipline is choosing a house that is affordable and sticking to it. Not just that it is within your price range, but that it is well within your price range so that there is little risk of times turning bad and costing you the entire place. For this I recommend perusing the house buying rules from Sam of Financial Samurai:
Sam recommends the 30/30/3 rule: 30% for down payment and cash cushion; 30% of monthly income on the mortgage payment; a max home price around 3 times your annual gross income.
This rule is a useful tool for discipline, as its safety factor forces you to confront any deviations from the rules as the risky decisions they are. For instance, can you afford 40% monthly income on housing? Likely so. Can you continue to afford it in the future, especially if things turn down? Possibly, but less certainly.
This touches upon why discipline is so important. Resilience and safety are a byproduct of control and discipline. Following a rule with a built-in safety factor will keep you from buying more than you can afford. The rule can be bent at times, but it should be a risk-aware decision.
One incorrect assumption that factors into buying too much house is thinking that your income will grow with time. After all, you will get raises, start new side gigs, and trade up jobs in the future, right?
Yet life is not so boring and predictable. In the short term, a temporary income loss can offset months or years worth of raises. Sudden medical bills offer an unwelcome stumbling block. You always run the risk of becoming disabled and unable to work. Or countless other life problems can come up.
Yes, you can get lucky in life and avoid setbacks. However, the collective wisdom of the ages argues against relying on this – even the Art of War states that you should focus on preparing yourself instead of trusting to luck:
The art of war teaches us to rely not on the likelihood of the enemy's not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable.
― Sun Tzu, The Art of War
Ultimately this is what my duty as Domme is: not to make financial decisions for my dearheart, but instead to provide discipline that fosters his growth. To teach him how to be self-reliant, autonomous, and capable.