I don’t know about you, but I think it’s important to live a debt-free life. By living a life without debt, you don’t have the burden of paying your debt back. There’s no burden in your mind about what might happen if you suddenly lost your job. In short, living without debt can give you a lot of peace in life.
The best way to live a debt-free life is to never get into debt in the first place. This is the best thing you can do because by doing that you eliminate all possible problems before they even happen. Doing this isn’t easy though. You might need to keep your desires in check. After all, one big reason people fall into debt is because they want more and better stuff in life such as better car, better refrigerator, and better washing machine. All these desires make it difficult for you to live a debt-free life. Why? Because they push you to live above your means. They push you to spend more than what you earn.
So it’s important that you keep your desires in check. Don’t give in to the temptation of always having more in life. Learn the art of having enough. Doing this can help you a lot in living a life without debt.
But what if you are already in debt? Well, the situation is more complicated, of course. In essence, you need to find the best strategy that works for you. Handling debt is a complex topic in itself, so I think I’d better dedicate another article(s) for that purpose. For now I just want to ignite the desire to live a debt-free life in you.
When it comes to your personal finance, there is one simple habit that can help you a lot. It’s the habit of taking notes of your income and expenses. This might seem simple, but this simple habit can make a big difference when it comes to getting your personal finance under control.
Many people fall into financial trouble because of one simple reason: they aren’t aware of their financial condition. They might think that their financial condition is good while in reality it isn’t. Why does such a thing happen? Because these people don’t know how much their income and expenses is in a certain period of time. Furthermore, they don’t know where their money goes. As a result, not only could they be surprised with their true financial condition, but also they might not know what to do to fix the situation. That, definitely, is a bad situation to be in.
You can overcome this with the simple habit of tracking your income and expenses. While it means additional work for you, the extra value you get from it is worth it. This habits increases your awareness of your true financial condition and helps you take whatever actions you think are necessary to improve it.
To apply this habit, you can start with a simple notebook and pen. Just carry a small notebook in your pocket wherever you go and take notes of the expenses that occur during the day. You don’t have to write it down right after the transaction because it might seem awkward, but you should do it in the first chance you get.
If you want to use a computer, you can use a spreadsheet or an application like Quicken. The nice thing about using computer is it’s easy to do whatever calculation you need. Plus, you can easily backup the data.
The important thing is you should find what works best for you to keep record of your income and expenses.
One thing you should do to improve your personal finance is saving money. By saving money, you can build an emergency fund so that you will have something to rely on when unexpected things happen. By saving money, you can also start to invest and thereby build your wealth in the long term.
But how can we save money? The answer to this question can take multiple articles, so here I will just take one possible answer and that is cutting unnecessary subscriptions.
Just think about it. There are many things you subscribe to that you can actually live without. One of them is cable TV. Many people might complain and say that they can’t cut their cable TV subscription. They might also say that it’s a good source of entertainment for them. But the truth is there are a lot of sources for good entertainment outside of cable TV. This is especially true in this Internet age.
If you want to watch a TV show, there’s a good chance that you can find it on Hulu. You can watch it online through the Internet without using your cable TV. This way you actually keep your standard of living while cutting your expenses at the same time. How good is that?
Or take magazine subscriptions. There are so much free information available through blogs and web sites on the Internet, so are you sure that you need that subscription?
I’m not saying that you must unsubscribe everything. No. What I’m saying is that you should unsubscribe the unnecessary subscription. The key is to determine whether or not something is necessary. When you think that something is necessary, think again. Often what we think as necessary actually isn’t especially when you take into account the free alternatives available on the Internet.
When you’ve made your assessment, take the next step by unsubscribing those unnecessary subscriptions. It might need some time before you can get accustomed to the new situation, but before long you will realize that you can actually enjoy your life without those subscriptions.
The current job market isn’t good. There are many people who are looking for job these days but can’t get one. This means that it becomes more competitive than ever to land a good job, a job that you want. This also means that you can’t stay where you are and hope that you can keep your job forever. No, it means that you must increase your value.
Only by increasing your value can you stay competitive in the current and future job market. After all, if the standard keeps rising but you stay at the same level, doesn’t it mean that you actually become less and less valuable over time? Nobody wants that to happen, of course, and because of that you have the responsibility to keep increasing your value.
One thing you should do to increase your value is learning new skills. Don’t be satisfied with your current skill set. While it might serve you well in the present, there’s a good chance that it wouldn’t in the future. So you need to keep learning new skills.
You can start with skills that are related to what you currently possess. If you are good at writing, for instance, you can learn about blogging. If you are good at accounting, you can learn about statistics. Just find something that can complement your current skill set. This way you make yourself more valuable and therefore more competitive in the job market. This is especially true because many people won’t take the trouble to constantly upgrade themselves. So those who do will have competitive advantage.
Of course, it takes time to learn new skills. You may feel uncomfortable to learn something new because it might push you to unlearn some of what you’ve learned in the pass. Yes, it could be difficult and inconvenient. But it will do you only good in the long term, so there’s no reason not to do it.
In my previous post I wrote about how credit cards make it much easier for people to spend more than what they earn. Does that mean that credit card is evil?
Well, I’d say that the answer is no. After all, there are many good things you can good out of your credit cards. First, you can shop without carrying a lot of cash. Carrying a lot of cash isn’t just dangerous but also inconvenient, especially if you plan to buy a high-price item. With credit cards, things will be much more convenient for you. Second, there are benefits that you can get from your credit cards. Frequent flyer program is one of them. You can also get discounts at many different merchants. If you happen to use those products or services, using credit cards can actually help you save money. Third, many credit cards offer consumer protection program that protects you from many potential problems regarding the items you buy. In short, credit card itself isn’t evil.
The problem, I’d say, lies in the culture of consumerism and our inability to cope with it. It’s the culture of consumerism that makes you want stuff that you don’t need. It’s the culture of consumerism that makes you want a bigger house, better refrigerator, and so on, while you actually can still use your existing items well.
The culture of consumerism is really ubiquitous these days. Just look all around you and you will see that there are many ads promoting stuff that you don’t need. These ads lure you to want more and consequently spend more.
Ultimately, it’s up to you and me. No amount of ads in the world can lure you into consumerism if you decide to live a frugal life. It’s up to you to discipline yourself when it comes to your wants and desires. Credit cards are good as long as people don’t use them the wrong way. So watch yourself and be careful. Don’t let consumerism traps you.
In this post, I’d like to talk about a basic rule in finance in general and, more specifically, personal finance. The rule is that you should spend less than what you earn.
This rule might sound simple, but it isn’t easy to do. In fact, so many people fail to do this simple rule and as a result make their personal finance a mess. It won’t happen right away, of course, but over time those who do not obey this rule will have to pay the price.
But why do people break this rule? One reason is because it’s much easier these days to spend more than what you earn. There’s one financial innovation that makes it easy: credit cards. Just think about it. If you have a credit card then you can spend money that you don’t own. You don’t even need to ask permission to borrow and use the money. The money is there for you to borrow as long as you don’t go over your credit card limit. Furthermore, it’s so easy to pay with credit card. It makes spending your money (and even the money you don’t own) so much easier.
There’s still another big reason why many people spend more money than what they earn and that is consumerism. Consumerism is the lifestyle that desires more and more stuff and convenience. You want to have car and once you have it, you want to have an even better car. You want to have good computer, have a nice dine, and more. In short, consumerism is the desire to live big.
The desire to live a convenient life isn’t wrong, of course. But it becomes a problem when it causes you to live above your means. The desire to keep up with the Joneses will only exacerbate the problem. As such, you need to be careful not to fall into the trap of consumerism (that is, the kind of consumerism that lures you to live above your means). Only by doing that can you spend less than what you earn and have good personal finance.
When it comes to building your own business, one important thing you need to have is a strong network. If you have strong network of friends and acquaintances, you will be able to grow your business much faster. Why? Because you will have many more opportunities come your way and also a lot more resources to get solutions for your problems.
Just think about it. If you don’t have a strong network, how can you get the resources you need to do your business? Of course, you can find other sources of information for that, but there’s one big advantage a strong network has that other things don’t and that is trust. Since you are related to your network, you have their trust that will make the resources you get of much higher quality. They will help you get the best resources possible simply because they trust you.
But trust isn’t easy to achieve. It takes time to build. That’s why it’s essential to build your network before you need it. If you start building your network only after you feel the need, you’ll be too late. By the time your network is ready, you will already miss a lot of opportunities.
So start building your network today. Don’t postpone it until later time because the more you postpone the more opportunities you lose.
The question is: how should we build our network? Well, you can start building your network by helping other people. Just give sincere, genuine help to those who need it. This way you are building goodwill with those people and they may help you in turn when you need it. But be careful not to help with the motivation to get something back in return. Your interaction will be superficial if you do that. To the contrary, make sure that you do things in a genuine way. Make sure you’re sincere. People can easily see through selfish motivation and that will make your effort to build your network a failure.
Have you ever thought about having your own business? Perhaps you are the kind of people who don’t like working in a corporate environment. Or perhaps you are the kind of person who want to have a lot of control over your own life. Whatever it is, you might consider building a business of your own.
Unfortunately, it’s not easy to build t your own business. You need to ensure that you have what it takes to make your business a success. More important, you need to give yourself enough time to build it. There’s no such thing as instant success, and only with persistence over a long time can you build something that will give you and other people lasting value.
That’s the reason having a side business is a good way to start your own business. In fact, I will recommend it to practically everyone. If you ever dream of having your own company, start it by having a side business.
There is one important benefit of it that I’d like to highlight: it allows you to keep your day job. As I mention above, it takes time to make your business a success and that means you may not be able to earn enough income (or even any income at all) for pretty long time. This is a problem, especially if you have a family, that prevents many people from ever having a business. But if it’s just a side business you, of course, don’t need to quit your job. You can still enjoy the income from your day job while building your business. Later on, when the business is mature, you can safely quit your day job to fully concentrate on your business.
Now how should we apply this? Well, what you need to do is setting aside time for your business in the evening or weekends. Give yourself two or three hours in the evening to work and more hours in the weekend. Use the time to tackle big tasks related to growing the business. It takes persistence and hard work, but over time your business will grow to the point where you can safely leave your day job. Of course, don’t forget to always keep your life in balance.
It’s interesting to read about recent developments in the world of economy. Greece is in deep financial trouble now and, even worse, it could mark the beginning of another financial crisis that rivals the scale of the 2008 financial crisis.
As The Economist put it, in 2008 the problem was the banks and the goverments was forced to save the financial system from collapsing. Now the problems are the governments themselves. They are the ones who fail to maintain sound financial system which eventually leads them to a pile of debt so deep it’s difficult to imagine how to eventually pay it.
Just take Greece as an example. Its debt is 120% of its GDP which means that it’s way more than the whole economy of the country. Even if everyone in the country gives their income to pay the country’s debt, there’s still 20% of the debt left. In the real world, of course, there’s no way everyone will give up their income for that purpose so the problem here is huge.
What I’m afraid of is the rippling effect that may come from it. If one country (Greek is the most likely one at the moment) defaulted, there’s a chance that other countries will follow suit, especially those which are already weak economically. In 2008, when the banks failed the governments needed to step in to save the system. Now that the governments themselves are in trouble, who will save them? That’s the scary situation that might happen if this situation is unsolved.
Of course, I hope it won’t happen. I hope the danger the problematic countries have can be contained in such a way that won’t endanger the global financial system. While a there are a lot of benefits of global, interconnected financial system we now have, it also has a big problem: problem in one part of the system can easily affect other parts of the system. That’s why governments need to take quick actions to prevent that from happening.
Getting out of debt is a hard thing to do for so many people. It is especially for them having credit cards. It can almost be sure that they who have credit cards are the people carry a balance. The problem of credit card is so general that almost every one having them cannot easily stop themselves to use it excessively, thus adding more height in their mountainous credit card bills. For this problem then, so many people are seeking for help to have credit card debt elimination to end their suffering.
Having the help of debt elimination by the professional such as financial advisor can mean more burden for people since the amount of money that they have to pay for the best financial advisor cannot be considered small. There are actually more effective and useful ways to conduct credit card debt elimination. Following the steps, then you do not have to pay so expensive for the financial advisor.
The first step of the trick is by listing each of our credit cards. While you do this, collecting the information such as outstanding balance, interest rate, and minimum payment is important to be done. The next is by ordering the credit card so that the one with the highest interest rate is at the top. After this then you should total the minimum payment, since this is the minimum amount that you have to pay per month. Always remember that we need to pay more in order to repay the debt more quickly. For it then you should take a look to your budget for the extra money to be paid. The amount of money that we budget for other cards should also be applied to the card on the top of the list. These steps need to be continued until the first card is paid off. Continuous payment for other cards should be done, but the important thing is to take the amount of the first card in addition to the minimum payment of other cards. The process should be repeated until all the cards are paid off for the effective credit card debt elimination.
