I recently read an article in “Mens Health” about handling your personal finances and I stole their headlines and added my own comments. Good stuff and a great way to make sure that you are ALWAYS thinking about your finances. It isn’t rocket science but it seems hard to stay on track – doesn’t it?
Spend Less than You Make.
Kind of seems like a “no brainer”, huh? Creating a basic budget is a simple math problem. You have income and you have expenses. Take your income and subtract out your expenses. If you have a positive number at the bottom of the equation, that is a good thing. If you have a negative number, you have two choices – increase your income or reduce your expenses. If you are coming off of a bankruptcy, this math problem is what got you trouble. Make sure it never happens again.
Cash is king.
Studies indicate that you will spend up to 23% more if you use plastic instead of cash. There is no pain associated with plastic but we all build an emotional relationship with those green pieces of paper in our wallets. So stock your wallet with cash, bag your lunch, and call it a day.
Good debt is cheaper.
Dave Ramsey would shoot me for saying this BUT, good debt puts a roof over your head and a diploma on your wall. But the gray area between good debt and bad is wide enough to slide your new refrigerator through—because after all, you'll need a new fridge if the old one goes kaput. Try to use emergency savings to finance these purchases, and then replenish those coffers over time.
Next time we will look at your credit score, the cost of debt and how impulse shopping can shipwreck your finances.
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