Money Honey January 5, 2013
Money is misunderstood by many;
mastered by most who try, using a few basic tools. First tool / first rule: you don’t deserve
those perks and extras you can’t afford just because you are a good person who
works hard. The world doesn’t work that
way, and if you work that way, you are headed for all kinds of trouble. You must take in more than you spend, at the
very least over the span of a few years, and once you get your footing you must
do it every year. Develop a budget that
works and stick to it. Carelessness can cost you years of comfort, and there
are lots of places to get budget help.
Take care of the basics as priority one.
Second, you need an emergency
fund. At first, it should at least cover
your insurance deductibles (which normally range from $1000 up). This should be your top priority now. You don’t get the cable, the camper, the ATV,
or the golf clubs yet. And you can take
home-made lunches to whatever work blesses your life. Put at least $1000 into your credit union
savings account for emergencies only.
Third, if you owe money, get out of
debt as fast as you can—do what’s needed for financial independence. Stop working for money lenders. Many families pay $600 to $1000 or more in
interest each month. Get rid of
expensive vehicles and toys that you can do without. Replace them without borrowing. Ask, “How much?” instead of, “How much per
month?” At some point you may (or may
not) decide to purchase a home. Save at
least 20% for front money when you buy.
Get help (but not from the bank) deciding what you can afford. Don’t make yourself house-poor.
Fourth, if you have been under or
unemployed, or are conscious and capable of reason, you know what a friend a
BIG emergency fund can be. Make
one! Make a BIG one. Some suggest 3-6 months take home pay is
about right. But the economy is volatile
and will probably stay that way. I think
your life will be better with a 6-12 month supply of money. Do it in stages if you have to. You be the judge. These are tough times and you have lots of
priorities with a claim on your money.
Around here we think these four
things are the starting point for Do-It-Yourself financial independence. Do you really want to depend on banks, credit
card companies, or Wall Street, or Congress (Get real!) for financial
well-being?
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