Now that I have your attention…
If you’re looking for a hook-up, shortcut, or another get-rich-scheme, STOP READING NOW!
Are you still with me? If so, let’s proceed. I’m not a late night infomercial salesman. But, if you’re looking for wise advice on being smart with money, then let’s explore what being rich is all about.
Fire The Jones’
We all know “that” family… the happy, perfect family who seems to have it all. Everyone has a “Jones” family on their block and while some shrug their shoulders and don’t care that the “Jones” just brought home a new Mercedes, others feel as if they need to not only keep up but to outdo this neighbor or even friend.
Occasionally, we make questionable decisions to impress the others. The earlier we recognize our self-worth isn’t tied to our possessions, the sooner we’ll reach financial freedom. Keeping up with the Jones’ indicates an incredibly showy façade of big-ticket purchases accompanied by years of fiscal battle to repay the debt with interest accrued. There’s no shame in driving a second-hand car with a few miles. You don’t need the pressure of working extra hours just to cover credit card payments.
Know The Difference Between Good Debt & Bad Debt
Have you ever heard of the “Rule of Holes?” I once heard someone say:
The first rule of holes is when you’re in one, STOP DIGGING.
Having bad debt is like trying to drive a car that has holes in the gas tank. No matter how many times you fill up, gas leaks out of the holes. Steer clear of bad debt that has you paying interest on non-essential things. Pay the highest-interest balances off first and make minimum payments on the rest of the cards. This is “snowballing your debt,” according to Dave Ramsey. Next, when the highest interest card/debt is paid off, take the exact amount you were paying on the card you have paid off and roll it into the minimum payment of the next card. Continue doing this until you are out of bad debt.
Give Yourself Some Breathing Room
There’s a big difference between having a standard of living and a quality of life (advertisers won’t tell you this). Some erroneously believe if I raise my standard of living, I’ll have a better quality of life. You raise your standard of living with debt. You raise your quality of life with discipline. The problem is we like debt more than discipline. Breathing room is the space between our income and expenses. The wider the space – the more breathing room you have.
No matter what your paycheck says, if every bit of that money is allocated to paying someone else, you will never feel rich. Only you can decide what percent of your paycheck you want to live on. The closer you get to 100% the less breathing room you have. Keep your expenses down to a level where you aren’t strapped every month. Leave yourself breathing room. Live BELOW your means and save the rest of your income to build wealth.
While this isn’t a get-rich-fast post, if you apply these principles, you’ll find that you’re well on the way to economic success, no matter your definition. But, like all wonderful journeys, with each measure taken, you’re that much nearer to independence.
