Talk About It
Getting into debt nowadays is a lot like falling from a steep,tall mountain. The first stumbling steps are the unpremeditated use of readily available credit, which can quickly snowball into a full blown avalanche. All of a sudden, you can find yourself in a scenario where you have to pay off a mountain of debt and also improve bad credit. A lot of times you won’t even realize that you are sliding down until it is too late to stop.
Sometimes, you can spot debt coming and can plan for it, like when you are buying a car or house. On the other hand, there are situations when a person’s personal finance budget takes a sudden hit, like when you lose your job, or need to spend for an unforeseen and very expensive medical treatment. Even though you can’t really predict these events, you can still prepare for them. The average debt of families in the United States is basically a few thousand dollars, therefore if you don’t desire to be a victim, you need to spend smart, and you need to start now.
Modern life is cutthroat and complex, and aging does not help you maintain an edge. A lot of individuals, unaware of the danger of certain behavior, can fall into debt quicker than it takes to make a bad decision. Stay away from these common spending sins and keep away from debt.
Having nothing saved. If an emergency expense comesup, like an unforeseen illness or your vehicle breaks down, then you will be forced to use your credit card. This only magnifies your expenditure. Cash is a smarter option, so remember to put something away for rainy days.
Considering credit as money is another. Mounting credit card bills only worsen debt. Don’t ever spend more than your monthly income, and you will find that dealing with debt is not as bad as it seems. It really is much better when you have control.
Staying with minimum monthly credit card payments will keep you in debt. This only extends the time you spend in debt, and does not help you pay down on the principal. Do not fall into this trap, or you will only have indefinite debt. New Laws are increasing minimums to discourage this type of activity and to ensure quicker loan payments.
Another mistake is charging with a loaded credit card. You have to get your credit card debt down to nothing before you use it. If you don’t, you are really digging your own grave. Come up with a sensible strategy for totally paying off your bills. Try to do it sooner rather than slower, as some companies reward people who pay early. That means you will be rid of debt sooner and have more money earlier.
Late payments will kill you. Not paying on time will only result in additional debt, as much as $40 per late payment. In addition, the default rate increases the finance charges to your original debt, so your minimum will increase. If you are having trouble budgeting your income, seek help from a financial analyst.
Not knowing your total debt is a problem. You need to add up all your payables and get your big picture quickly. After you know the extent of your problem, you will find that decisions about money become obvious and elementary.
Wasting your retirement fund is the last straw. As you age, your earning potential will only go down. If you have nothing put aside, what will you do when you are forcibly retired?
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Tags: debt
Posted in Budgeting · April 8th, 2010 · Comments (0)
First of all, in order to talk about how “problematic” frugality can be, we have to define the word frugal. Now frugal means, “Practing economy, living without waste or being thrifty.” It also means, “Meager or not costly.”
You see, frugality doesn’t necessarily mean penny-pinching, budgeting or finding whatever means possible to save a buck. In short, living frugal just means being smart with your money as opposed to being frivolous. And those two definitions are not the same. Now, being smart is never a bad thing. To tell you the truth, if you desire to achieve wealth, frugality is a must. Being stupid with your cash is just plain stupid because a fool and his money will always part!
So then, why are we talking about the issues of frugality? What could possibly be dangerous about being smart with your money? Well, consider the following info. Frugality to your personal finance budgeting is like drinking water is to your health. Drinking water can greatly improve your health. Drinking it is paramount for your wealth being. You can’t live without it. But if you drink too much of it, it will take you out!
You see, frugality is a beautiful and necessary thing. But it can be addictive (even to the point of being out of control), and if you overdo it, it can kill your finances. With that being said, I realize that this does not describe most people, but it has to be talked about because it can be a block for a person reaching wealth.
If you’ve ever bought a bottle of caffeine pills you will know that it says on the label, “This should never be used as a substitute for sleep!” Living frugal should also have a label on it. It should say, “This is not to be used as a substitute for building wealth!”
Let’s say that your heating bill is very high. Well, there are two ways to deal with this. You can figure out how to lower your heating costs… or you can just make more money and then you won’t have to worry about the cost of the electric bill! Now of course, no matter how much money you have, you should never be spending ridiculous amounts of money on anything that you don’t have to, but spending 100 percent of your time learning how to save money and zero percent trying to figure out how to make some is just as crazy.
You see, we have to be balanced in our approach to things. Now there are people out there who make a lot of money, live alone and can hardly keep their lights on. They make more than most people yet struggle more than most people. This type of person will never be wealthy because all of the money they make they waste it all. There is another breed of people who have gotten PhD’s in frugality and never once considered how to attract more wealth. They won’t be wealthy either! In the end, you have to make money to be rich.
To view the conclusion of this piece, you can go to, “The Danger of living frugal.” You can also subscribe to the monthly online newsletter and get valuable information on building wealth.
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Tags: frugality
Posted in Budgeting · March 25th, 2010 · Comments (0)