Image via WikipediaThe last few years we all have been going through tough financial times. Expenses have been going up and incomes have been going down. We have been forced to do a reset on our financial lives. We don't spend money the way we used to, we can't, we don't have it to spend. The smart ones that haven't been effected, our cutting back for fear of things getting worse. They are saving more and spending less; they are reusing, reselling and recycling. The best lessons are learned in the tough times and hopefully they are integrated into our lives and endure.
I have listed a few of the lessons learned, I hoped you learned them to.
Savings Accounts. If you are already saving your income every month your way ahead of most people. If your not, it's time to start. Make this your top goal for the coming year. Start small and as you begin to see that balance rise you'll be encouraged to increase the amount. Be sure to put it somewhere it's not easily accessed, so you won't be able to get to it easily when your tempted. And you will be tempted.
Your home is not your piggy bank or a retirement account. What I have learned and most of America to is that home equity is not guaranteed. I have owned 2 homes in my life and always thought their price would always rise, it never occurred to me their value could be cut in half. My retirement plan was partially dependent on selling my house in ten years and retiring, using the proceeds to setup income producing investments. The idea of producing equity out of home appreciation, may be a thing of the past. The lesson to learn is, your home is not an investment.
Home Equity Lines of Credit (HELOC) are another thing to be avoided. They are a foolish way to borrow money. You putting your home in jeopardy, when you can't pay it back. That new kitchen or bath you borrowed the money for, will sink you when you lose your job or can't work due to illness. Do it the old fashion way, save for it, pay cash or don't do it.
Living within your means. Americans are blasted everyday from the media that we need to buy things to make us happy. It's not true. Only buy what you need with cash that you save. Rule #1: If you don' have the money, you don't buy it. Rule #2: If you need to buy it, save ahead of time for it. Rule #3: Setup and maintain an emergency fund for those unexpected emergencies.
Credit Cards are not our friends. The main purpose of a credit card is to get you to use credit for your purchases and ask for only a small payment every month in result you pay interest to them. This interest is their way to make money on you. If you pay back your balance every month they make no money and actually lose money on your use of the card. Their goal and only reason to be in existence is to keep you in debt. Some debt always grows into massive debt. Your best move is to avoid credit cards altogether. They are built to keep you in debt.
Car Loans will keep you poor. Keeping up with the Joneses is a trap you will never satisfy. If you think you have to be defined by what you drive your deluded. If you have a car loan, pay it off. If you need a car, buy a used car let someone else take the depreciation hit. Here's a plan, save for that car purchase and live within your means.
Job security is an illusion. Don't fool yourself. We are all self-employed. Your only as good as what you can do for the boss today. I don't care how many years you work for a company, your an asset on their books until your not needed anymore and then you will be put out.
Frugality
is a must. What we have must be used longer. Our money must be spent in the most economical way. We can't just go in a store and put down our money. We have to shop sales, deals and always get a bargain. Coupons and coupon codes are a must. Ask for discounts everywhere. Nowadays, it's become perfectly permissible to ask for discounts from your dentist, doctor, plumber and kids' tutor. Don't forget to ask for drug samples whenever your doctor writes you a prescription.
is a must. What we have must be used longer. Our money must be spent in the most economical way. We can't just go in a store and put down our money. We have to shop sales, deals and always get a bargain. Coupons and coupon codes are a must. Ask for discounts everywhere. Nowadays, it's become perfectly permissible to ask for discounts from your dentist, doctor, plumber and kids' tutor. Don't forget to ask for drug samples whenever your doctor writes you a prescription.The recession has taught us many things we already should of known. Making your hard earned dollars do that much more is not a option anymore, its a necessity.
Amen to all these points.
ReplyDeleteAwesome and timely tips fpf! As economic scenario changes, people need to adjust their spending/saving habits.
ReplyDeleteNot bing frugal might've worked during the 60s, might not going forward.
It has to be a way of life if this country is going to prosper. Only thing it's going to be impossible to make the government be frugal.
ReplyDelete