Tuesday, May 14, 2013

Keep It Simple ... Keep It You

It's funny how many people can't figure out where their money goes each month.  They make "x" number of dollars, and can't figure out why they have "negative z" dollars at the end of the month.

That's how it used to be for me, when I was young.  I have never made a lot of money in any job.  But when I was young, my credit card was my catch-all for things I thought that I needed.  Turns out, I didn't really need what I was buying.

Now that I'm old, I try to hold to a few basic philosophies of spending.  Some are well-known and well-used, others are mine.

1)  Keep an honest budget.  For income, don't list what you hope to get, but write down honestly what is a virtual lock.  Then, make sure you budget for everything that you can:  rent or mortgage, gas and electricity, insurance, etc.  Add expenses for gasoline, food, and other items as realistically as possible.  Remember, it's easier to put money in savings when you don't spend up to the budgeted amount than it is to find the money because you understated the amounts.

2)  Pay yourself.  This is an old standard, but it holds true.  Make sure that you put a percentage in savings, and a percentage in retirement.  Don't even include that as available funds.  It should be a case of out of sight, out of mind.  If you have to, open a savings account at an online bank and have funds direct deposited there every payday.  It makes it less likely that you'll touch the funds unless it is an actual emergency.  And that is also the point of paying yourself: if an emergency arises, it doesn't become a major crisis.

3)  Be reasonable on entertainment.  If there's something you like to do frequently, budget for it.  If you want to get a gym membership, add it to the budget.  If you like to eat out from time to time, budget for that as well.  Then stick to it.  It's fine to spend money on activities, but don't spend more than you budget.  I've seen people schedule a vacation and not have the money to do it, then go anyway.  If you don't need cable, don't have cable.  Decide which "extras" are important to you and which ones aren't.

4)  Keep it simple.  Do you really need the 72 inch television, or can you make due with a 42" or smaller?  Do you really need the racing bicycle, or can you be happy with an "ordinary" bike?  We all have to make choices every day.  But before purchasing anything, ask yourself if it will end up taking up space in a garage or storage shed, or if it will be used frequently.  If it's going to end up stored most of the time, do you really need it?

5)  Don't carry a balance on your credit card.  Worst thing ever!  You may decide that you want to keep your money in savings instead of paying off your card, but use logic!  If you are earning .5 percent interest on a savings account (yes...one half of one percent), but are paying 20% interest on your credit card, why in the heck are you carrying any balance on your card?  Pay it off!  It's okay to have a credit card.  I have a couple that pay me back for using them.  But I budget for every dollar I put on the card so that I can pay it off each month.  Easy peasy.

There are more rules, but the basic idea is a Scriptural one:  keep your eye simple.  By doing this, you can have what you need, help others who may need it, and not go into a state of panic when your car needs repairs.  It took me a long time to learn these rules, but I'll never forget them.

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