For the last couple of years, we’ve heard about the tight credit market. It’s been more difficult to qualify for credit. Even credit card issuers reduced the amount of money they were providing. However, mailboxes are starting to see an influx of credit card offers, and things are getting a little bit easier (although we are still far from the heady days of easy money seen in the years leading up to the financial crisis). It might be a little easier to get approved for a loan or credit card now than it was last year, but that mean it’s a good thing?
Making just one goal with regards to your savings can make a real difference. Here are savings goals which can help you have a financially secure and less financially stressful 2010, so know your situation and choose one which best suits you.
[Read more…] about Savings Goals In The New Year And Beyond
Medical expenses are one of the leading causes of bankruptcy proceedings in the US. In 2007, 57 million people were in families who had problems paying their medical bills according to this article by Peter J. Cunningham. However, there are ways to cope with the rising costs of medical care. I was born with Spina bifida in 1979, and I’ve had a lot of experience in the medical care “system”. I have a few tips to share with you, and by following them some of your burden will be lifted.
[Continue to read about medical expenses]
What’s the best financial advice you ever received?
Probably one of the best pieces of advice I received was from my dad. When I go my forst credit card he told me to be careful and not go into debt with the cards. “Pay off your balances every month,” he said. Unfortunately I was young and headstrong and had to learn mistakes the hard way. I’d go onto opening numerous credit cards – Macy’s, Bloomindale’s, two CitiBank cards, and others.
At first I was real good with my cards and paid them off. But as I got older with more responsibilities the balances started to grow (that and I couldn’t keep my hands off buying “stuff”). In the end I had debt in the thousands. I was able to slowly pay everything off with a little help from my family as I moved back in with them for a while.
I was foolish for not taking my dad’s advice to heart. I’m sure many people out there have a similar story. They know what the right thing to do is but somehow their credit card debt got out of hand anyway.
If you’re one of these people – You can get out of debt! It may take a while but small steps will lead to big changes over time in paying back your cards. Start now!
If you’re not in credit card debt then make sure you stay that way! Be responsible with your charges and make sure you can pay back everything once the bill arrives.
I’m not one of those who thinks that credit cards are evil. The mistakes I’ve made with them I take full responsibility for. They can be very useful in fact. But you have to be responsible with them.
I’m tagging the other members of the Money Life Network to answer the question: What is the best financial advice you ever received? (MiB Smarter Money, Bible Money Matters, Sense To Save, Remodeling This Life, Prime Time Money, and Milk Your Money).
If you’re reading this then consider yourself tagged too! Write about it or drop a comment here.
What’s the best financial advice you ever received?
We’ve heard it all before haven’t we?
The simple way to build wealth is to spend less than you earn. Let me demonstrate this as a simple equation:
Spending < Earnings = Savings
That’s it in a nutshell.
Take what you earn. Now look at what you spend. If what you spend is less than what you earn then what is left over is savings. Let that grow and invest it properly and you will build wealth. You only need two numbers to figure out that math!
Let’s use dollar figures. You earn $3000 a month. If you spend $2999 you have a dollar left over for savings. What’s a dollar you ask? In today’s economic climate one dollar of savings will put you in better shape than corporate giants like Lehman Brothers, which is declaring bankruptcy, Enron, Worldcom, or Merrill Lynch, which was bought by Bank of America. And that dollar will have friends joining it every month as long as your spending is less than your earnings.
Now imagine if you could increase that savings amount either by spending less or earning more? The savings will build up faster!
Let’s change the equation slightly now:
Spending > Earnings = Debt
Spend more than you earn and you are in debt. You have to be. Where else could the money come from unless it’s borrowed?
Back to the numbers… You still earn $3000 a month but now you spend $3001. You’re in debt. Where do you get that extra dollar to get out of debt? Maybe you borrow it from a friend? Maybe you put it on a credit card (another name for debt)? Either way it won’t materialize from out of nowhere.
And what happens the next month?
Either you lower your spending by a dollar (assuming no interest) or you increase your earnings so you can pay back the debt. If you don’t then your debt increases! Just like our savings example that debt will keep growing until you find a way to pay it off. If you let it grow too long then you get to be in the same boat as some financial institutions as you either have to declare bankruptcy or find someone to bail you out (and really if someone bails you out you will probably still be in some sort of debt).
As complex as personal finance can be sometimes it still boils down to a simple equation. Plug in your spending and earnings.
Too often we over-complicate the ideas that make up personal finance. In reality the concepts are pretty simple, aren’t they. Sure, you can go nuts poring over the different ways you can invest your money but the simple concept is clear — spend less than you earn and you can save. That savings can help you build wealth.
Are you saving or in debt?