Business Magazine

Keeping Your Head Above The Water

By Rusty @russellpurkiss

“Bank failures are caused by depositors who don’t deposit enough money to cover the losses due to mismanagement.”–Dan Quayle

Keeping Your Head Above The Water
The above quote above takes a comical look at the more serious situation that we are faced with today.  Unfortunately, those who have mismanaged the money are not the ones that are being penalized for their lacks, but rather the overall economy.  Instead of lowering the pay for those who are responsible, the interest rates continue to be lowered to accommodate their lacks, and now the latest move is to make you pay a °service fee° for your account.  The reason for this post is not to rant about that, although it is one of the issues that begs to be addressed, but I wanted to share more about the importance of managing your personal finances in such a way as to be always prepared for a rainy day.

Why has it been so difficult on the home front, well basically we have become so addicted to credit that it is all too easy to leave the “real world” and start living in “la la land”.  There has been a major problem with mismanagement at the household level which needs some “regulations” need to be put in place as well. To stay solvent it take discipline and this has to be you disciplining yourself.  The rule of thumb being, if you do not have the money or the income to cover an expense, then do NOT make it!  To be wealthy does not always mean to have a 6 digit income a month.  There are people who have a 7 digit income, but they are not able to manage their income properly and live as if there will, be no tomorrow and end up broke within a few years.

If you can learn to live within your income, and not only that but being consistent to, regardless of your income, put aside a certain percentage of your income a month for savings, then you will become wealthy.  If you do not become wealthy, you will at least be ready for that time of need when it arrives instead of finding yourself on the street.  Sad to say, not everything is guaranteed not even you job or career.  It has become necessary to be ready to take on even a totally different career if need be, but to be at  least prepared for a possible change in order to stay up to date on your payments.

There are so many temptations everyday, to buy this, buy that at “only” $29,99 a month!  Well, if that means to dig into what you designate as savings, then you cannot afford it.  It would be far better to save up month my month and purchase it in cash then to pay the “just” $29,99 a month!  I have credit cards too, and I have a potential outstanding debt but I never buy anything that I am not certain that by the end of the month I cannot pay in full.  Partial payments on credit cards are a major drain of your money, and buy falling for the temptation of buy things just because you have enough credit, it is a sure way to becoming poor, and that quickly!

If you really think you need something that bad, consider an activity that will earn you additional cash, but don’t get fooled into the credit trap.  Those of you who have been there know what it is like to pay thousands of dollars in interest, when you would have lived just fine without that wonderful gadget you got on credit!  Spending can be addictive just like alcohol or drugs, and you might just need help or counsel.

So what to do?  Budget your income to cover all of your monthly payments.  Decide what percentage to put aside for any additional luxury item you might wish to eventually buy and start putting aside for that.  Make sure you have 10-20% of your income available to place into savings that you are NOT going to touch unless it is an absolute emergency. (absolute emergency does not include the release of the latest iPhone 4s) And if you want to really grow prosperous, then put aside a certain amount each month to donate to your favorite cause! You will eventually find yourself becoming wealthy regardless of your actually income!  Management of your finances is what will make or break you!

Have you battled with personal financial crisis? Do you have some additional words of wisdom?  Please share it with us!

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