[rescue] OT: financial woes

[Kevin Loch]

Bill Bradford wrote:
> On Wed, Jul 10, 2002 at 01:30:10PM -0500, Amy wrote:
> 
>>If I didn't have relatives, I'd be a financially stable woman, I tell you.
> 
> 
> If I wasnt married, I'd be rolling in money.. 
> 
> oh.
> 
> wait.
> 
> nevermind. 8-)
> 
> (heh, one thing we say about friends sometimes.. "Oh, $X has plenty of 
> money; he has no girlfriend")
> 
[I'm sure some people on this list already know this]

It doesn't have to work that way.  If both friends/spouses understand
good financial management AND they both are committed to practicing it
AND they both do, the combination of multiple incomes can be quite
beneficial.   If one or both are financially irresponsible then
both will suffer financial woes.  Part of that is simply not
turning cash into trash:

A good way to start is to watch as little tv as possible (except news), 
and don't go shopping.  It may sound silly but it's true.  Visit enough 
new car lots and you WILL be in a new car.  Visit EBX/Best Buy/Frys 
enough and you WILL buy some junk you probably don't need or want. God 
knows if I set foot in a grocery store I walk out with a basket full of 
junk food.  Some people spend $10/work day (==2,500/yr) on junk 
food/latte/newspaper etc.  Does this mean you have no fun?  Quite the 
opposite.  The more you limit the junk you buy, the better that junk is, 
and the more you enjoy it.  (as Warren Buffett would say, if people
could only make 5 investment decisions in their lifetime, they would
probably make really good ones).  The same thing goes for shopping.
If you only bought one CD or video game in a year, you'd probably
make sure it was something you really, really wanted.

The other part is investing any excess cash (that you diddn't turn into 
trash).  Start by "paying yourself first".  Before you pay one bill for 
the month, transfer some money to a savings account.  It doesn't have to 
be alot.  Even $50 is better than nothing.  Don't ever transfer money 
out of the savins account except to move into real investments.  Many 
people complain about not having any money left over after the pay their 
bills.  Paying yourself first solves that problem almost magically. 
Once you find a good investment opportunity, use the savings account 
money to buy it. Always keep a couple months of reasonably liquid 
capital (not necessarally in the savings account!) in case of dire 
emergencies
or layoffs.

Oh, and don't ever use consumer credit to buy junk.  If you do have a 
large credit card balance, consider paying that down as an investment 
with a guaranteed rate of return equal to the effective APR (for however 
long you would have left the balance on there).  That's probably an 
investment you can't refuse!

KL