I thought I would start off with the most basic, yet one of
the most fundamental principles: don’t spend money you don’t have. This advice
was given to me when I was young and has served me well throughout the years. Even though this principle is so basic, not everyone abides by it.If you don’t have cash for something- don’t buy it. It’s that simple. In other words, even though you have a $500; $1,000; $4,000 or $10,000 dollar limit on your credit card, this does not mean that you actually have that money.
Abandon the mentality that leads you astray; the one where you convince yourself that you will pay yourself back later – this is not a good way to get yourself ahead. If you’re burning to have that new item, whether it is the latest technology, or the newest accessory - then you better start saving.
This rule is not intended to deprive you of your goodies; it is meant to empower your pocketbook! Skip the interest payments and pay cash; your purchase will be more affordable in the long run. Recite this to yourself 10 times: I will not spend money I don't have.
People tell me this, and I still don't listen! I don't even listen to myself. But I'm going to start! I like to also think of the waste I'm contributing to the world and how I'm doing something actually wrong. That sometimes stops new purchases! But seriously...have you ever been shoe shopping!? Sigh ... :)
ReplyDeleteThat's true. North American (over)consumerism doesn't only affect ourselves, it also affects the planet. But you have to think more long term with how to spend your money.... Do you really want to be a slave to debt until the end of time? I know I don't!
Deletehopefully i'm not jumping the gun on this one and skipping to the next rule, but something that I think sort of goes along with this is fully paying off your credit card each month...I always do it out of habit, but i know so many people that only ever pay the minimum and its such a dangerous slope. So i'd say abide by rule 1, and always pay off what you spend!
ReplyDeleteAlex, you definitely already embrace rule # 1. Sometimes using a credit card is OK; it can be safer, there are generally no fees for transactions (unlike debit cards) and often times different points can be collected (like PC points, Airmiles etc.). But the principle is still there - you only use your credit card when you actually HAVE THE MONEY to pay it off right away. You are not spending money you don't have - you are using your credit card as a method of payment, and you are NOT convincing yourself that you will "pay yourself back later." I'm glad you brought up this important point. Conversations like this one will definitely help empower others to be smarter spenders, even though you've already nailed it.
DeleteI need to use this rule more often. Perhaps I should write it on my wallet?!
ReplyDeleteCarly, Dave Chilton discusses a woman in his book "The Wealthy Barber Returns," who said she put her credit cards in a glass of water and then stuck the glass in the freezer. When she really wanted to purchase something, she took the glass out of the freezer and waited for the ice to thaw. By the time the ice had melted, she found that her desire to make her purchase had faded away. Make a strategy that works for you to prevent yourself from buying out of impulse. If that means writing "don't spend money you don't have" on your wallet, then do just that. If that doesn't work, then maybe try to leave your credit card(s) at home or in a glass of ice in the freezer.
DeleteI'm with Alex on this one. I find that paying off my credit card, in full, at the end of each month is the best way to avoid accumulating a massive debt that becomes overwhelming. It's also less stressful!
ReplyDeleteToo often I forget this simple rule. I have a feeling your blog is going to be a great resource for me!
ReplyDeleteI am the worst at doing this sometimes.
ReplyDeleteThank god I only have a debit card, or I would be homeless!
But that's the easiest money to spend. I don't know why but I can never think of my credit card as real money and it's maxed out all the time. I think I need to destroy it before it destroys me!
ReplyDeleteSadly, considering how we have moved away from using physical money more and more it is easier to ignore this rule. It is the main reason I not only take out money all the time, but I try to limit my credit card purchases.
ReplyDeleteI also ALWAYS pay off my credit card each month, never letting it pile up.
Good blog.