Consumer Credit Counseling Service News Articles
The lightbulb moment. The “ah-ha” moment. When algebra finally makes sense. Those are the KEYS that change your life. The following 6 are those moments financially:
1. People who overspend their income do so in one of three ways: 1) Too much house, 2) Too much car, 3) Too much entertainment.
Of course there are outstanding circumstances (medical emergencies, tragedy, job layoff, etc.) But generally speaking, if you have a hard time living within your income, check your spending on your home, your car, or your entertainment (dining, tickets, trips, shopping). Keep each category modest a.k.a. “live within your means”. You can’t have a steak dinner on a hot dog budget. But with the correct financial outlook and planning, you can have that future lobster dinner without debt or anxiety.
2. Begin your marriage/partnership living on just one income.
Imagine this: Work hard to live on just one of the incomes and save the other. One income each pay period goes immediately into savings and the other goes into the checking account.
This phenomenon occurs: After a year, that savings account becomes the down payment on your first home. Maybe a few years later, with the arrival of child(ren), if you are still living on essentially one income, that frees up your family to decide if one parent will stay home with your child(ren) if desired. There is FREEDOM in having options due to financial planning.
3. Buy your car with cash.
Whatever you have saved up, use that as your auto budget even if it isn’t much. THEN, rather than making a payment to the bank on your existing car, begin making a monthly payment to yourself for your NEXT car. Whatever you would have paid for a car payment, put into a savings account. When your car dies, you will have a bigger budget for the next one – then, repeat the cycle. You’ll be surprised how quickly you are able to upgrade your vehicle over the course of your life.
4. If keeping a budget has not worked for you, then use a spending plan instead.
People, even financial people, use these two concepts interchangeably. But they ARE two different concepts. Contrary to a budget that requires detailed tracking and can be frustrating to people, a spending plan provides flexibility, as it offers more of a snapshot, moment-in-time glance of your current spending. Then the knowledge and lessons learned from that snapshot view of income vs. expenses provides valuable insight for course correction. It’s a “living” tool in that to make it work for you, you must use it, adjust it, review it as you go.
The idea is worth the effort! First, determine your monthly take-home pay. Second, subtract your fixed monthly cost (everything you must pay each month i.e. housing payment, insurance, etc.). The money you have left over is your monthly discretionary income. With that number in hand, you are in a good place to determine where you’d like that money to go.
5. Don’t let money alone be the determining factor of taking a job.
Consider the money, of course, but don’t let that be the sole factor in deciding on the job or not. A job that pays too little or seeks to take advantage of you will ultimately add stress and worry to your life and keep you from doing your best work. Consider your talents and skills and strengths and the opportunity to make a difference then add the consideration if the money is enough for your needs, THEN make the decision.
6. One extra monthly payment per year on your mortgage shortens the length of your loan by years.
Make a goal of completing one extra mortgage payment each year. Even if you work hard to add a little extra each month to your mortgage principle, even if it’s just $50, then it may end up to be enough to have added up to a full extra monthly payment. Over a few years, your will shorten your loan by MANY years from a relatively painless process. Get in the habit!
Remember when you borrowed the keys to the family car for the first time…and that feeling screamed FREEDOM! These financial keys are just like that…they will unlock your financial freedom. Start by trying just one. Start today.
Excerpted from Joshua Becker