Living within your means.
A co-worker of mine gave me the article below and after the couple of blogs that etheracide made I figured I should post it. (This is going to be a long blog, skip to the bottom if you want to just read the aritcle.) I'm actually shocked that I'm thought of as horrible because I think it's chicken shit that I should feel sorry because he went to school which he couldn't afford and took out loans that he couldn't afford. If I had known him at the time I would have advised him against it. It's really all about living within your means. When my husband and I got together WE decided that since we could only AFFORD for ONE of us to go to school it would be him. I'd hate to break it to him, but I'm not stupid and I know that property tax includes the education for the schools in the city you live in. I live in Clovis for crying out loud and have been told many times if I think about buying a home here I need to consider how much money they put into public education here. So now you're saying we should not only pay for K-12th grade, but also people's college education? Why? There are plenty of other ways people can get money from the gov. or the schools they apply to.
It's not society's job to hold anyone's hand and get them to be their best. It's the person's parents when they are younger and as they get older (junior high/high school) they need to be the ones pushing themselves to be whoever they want to be. It's not my mom's job, she's a teacher, to push her students to want to become more. It's her job to teach them and get them to know and learn as much as she can. If you always have someone pushing you and making you be something then you will never learn to push yourself. You will never push yourself and fuel your own will power to the point of wanting to be something more or better. In fact it may end up back firing.
I feel bad for people who fall on hard times, but I will never feel sorry for people who make their debt and then say society should have helped them avoid those costs. If you are mature enough to go to college then you should have been mature enough to think of what the outcome of those loans would have been. A large debt that would take a long time to pay off. I've worked my butt off ever since I got out of high school. I have credit card debt, car loans, a school loan, etc. I pay them without complaint (Ok, so I was pissed about how my car insurance raised when I moved 40 miles closer to work.) because I made those choices. I picked out the cars we have. We made purchases on our credit cards knowing full well that we'd have to pay them back with interest. Luckily because we are both making a decent amount it's gotten a lot better, but when I was the only one working times were very hard. I almost laughed when one home loan person said he needed to tell me that once my husband and I are earning 100K a year you can't claim the PMI on your income taxes...and he was sure that was going to be soon. Either he knew about a raise that I'll be getting in my review or he thought I was doing a much different job then I am. We aren't even half way to that amount by the way.
Right now the US does not pay for anything higher then High school. This does not mean that you can't get free college education. There are grants, scholorships, loans, etc. Our new receptionist went to Fresno State instead of the college of her choice because they offered a full scholorship. If you live in the US research every cent you can get from schools and our gov. and get anything you can. Don't apply for it months ahead make sure it will get to them by the first date they start considering people. I'm guessing you didn't work during high school. I grew up with and new many schoolmates who worked while going to school. They HAD to. It's great to get a college education, but think before doing it. If you're going to need to take out student loans for your first two years go to a city college. If you missed the deadlines for grants, scholorships, etc. wait until you can apply for everything. Waiting one year for your AA won't change anything. Instead work for that year and save as much as you can for what you want.
Also if you take out school loans pay them while in school. A novel thought I know, but well worth it. Even if it's just a little bit it will chip away at some of the loan so it won't be so big when you get out. The interest on most school loans is less then most personal loans and they pushed at least me to take out more then I did because the interest is cheaper. I didn't need more so I only took out exactly what I needed. I went to college and I made small monthly payments on my student loan. Because of that I was able to pay it off in 2 years making only the minimum payments amount. (We're still paying off my husband's student loan and we probably won't for many more years to come.) I also know many people who went to school and worked, I know I did. They only took the classes they could AFFORD to take or they saved up until they could afford classes!
It's no secret I want a house, but I'm not jumping in without thinking though. I've received a ton of different type of loan quotes figuring out what's best for us. What will work out the best for us. Luckily a co-worker of mine has taught me a lot, but it's part of researching what you want. There are always hidden costs in everything and only those who have bought a new track type home will know the things my co-worker has told me. I know how much we can afford. I know how much we want to spend. We want to be able to save. We want to put in so much money for credit cards since just because we'll have them paid off doesn't mean we won't use them again. If we can't get things paid off in time then we won't be getting a house. We won't buy the house and hope everything is always ok. We both have worked very hard to raise our credit to ruin it by buying a house we really couldn't afford.
Time for bed. Time has definitely gotten away from me.
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TheStreet .com
10 Commandments of Personal Finance
Thursday July 26, 10:42 am ET
By Jeffrey Strain, Special to TheStreet.com
For some people, getting personal finances in order is more grueling than wandering the desert for 40 years.
But it doesn't take a miracle. If you are looking for some basic guidelines, just follow these 10 commandments:
1. Thou Shalt Take Action
Reading about how to improve your personal finances is a start, but it has absolutely no meaning if you don't take the action of putting what you learn into motion. Before you can get anywhere with your personal finances, you need to begin -- right now. If you are reading this article, you know that you should be taking steps to get your personal finances in order.
Print out this list and place it where you will see it every day, so that you are reminded that personal finance is a priority in your life and that you will take some action each and every day to try to improve your lot. If you aren't sure where to begin, start with getting your banking accounts in order.
2. Thou Shalt Pay Off All Credit Card Debt
Credit card debt is, in most cases, the No. 1 enemy to your personal finances. It can have a huge negative effect if your credit card bills are not paid off in full every single month.
Sit down and work out a plan to pay off any credit card debt that you currently have, using the snowball method that best fits your personality. Make this a top priority.
3. Thou Shalt Understand the Difference Between Wants and Needs
To keep your personal finances in perspective, you need to understand the difference between wants and needs. There is nothing inherently wrong with small luxuries, and you should be able to enjoy many of the nonessential things you have. But it is important to realize that wants are not needs. If you master this skill, your finances will be in much better shape.
Take some time to critically look at your true needs vs. your wants. If you are having trouble distinguishing these, set up a plan to eliminate impulse spending.
4. Thou Shalt Live on Less Than You Earn
There are no two ways around this one. If you want to keep your personal finances in order, you need to live on less money than you make. That means either purchasing items and services that are less than you currently make, or figuring out a way to increase your salary so that you can spend more, but still less than you make. Either of these is perfectly fine.
Track your spending to see if it is more or less than you are earning each month, and create a budget so that you can continue to track it in the future. If you are spending more than you make, you need to decide whether to curb unnecessary costs or figure out how to increase your income. Most people can balance their budget without changing their current lifestyle.
5. Thou Shalt Pay Yourself First
Before you pay any of your other bills, you should pay yourself a minimum of 10% of your take home pay. This money is not part of your monthly spending budget.
Go to your bank and set it up so that your paycheck is automatically deposited, if possible. Then set it up so that an automatic payment is immediately taken from your paycheck into a specified account that is not used for your monthly expenses.
6. Thou Shalt Set Financial Goals
In order to reach your financial goals, you need to know what those goals are. Nobody can determine these goals except for you. You need to take the time to figure out exactly what your financial goals are so that you can take the needed steps to reach then?.
If you don't know specifically what you financial goals are for this year, next year and 10 years from now, take the steps needed to create them.
7. Thou Shalt Educate Yourself and Be Responsible for Your Decisions
While it may be more convenient to hand over all your money matters to somebody else, you will not do this. Part of being financially responsible is having the final say in all decisions about your money. That does not mean that you can't seek out advice and get opinions on your finances, but in the end your money is your responsibility, and you are the only one who is going to truly look after your own interests. If you have designated someone else to take care of your finances, begin to take back control. No matter what, spend an hour or two each week reading articles on personal finance subjects or visiting Web communities where you can ask questions.
8. Thou Shalt Save and Invest
Take the money that you pay yourself first and either save or invest it to make it grow and work for you in the future
If you are carrying credit card debt, invest in it first. But also make sure to take full advantage of the saving and investing opportunities that are available. If your company matches 401(k) contributions, contribute up to the match and try to maximize your Roth IRA contribution. Make sure you have an emergency fund.
9. Thou Shalt Protect Your Finances
You will take the necessary steps, usually through insurance, to make sure that your assets are protected in case of a disaster.
Take the time to make sure that all your assets are properly insured, and re-evaluate this every few years or whenever a major life change occurs, such as marriage or a new addition to the family. Also be sure to compare insurance rates on a regular basis, since this is a competitive business.
10. Thou Shalt Donate to Worthy Causes and Those Less Fortunate
No matter how desperate your finances may appear, if you are reading this article there are a lot of people that are far worse off than you are in the world. It's important to nurture a sense of giving and to be thankful for the small things that you do have. That means donating to worthy causes on a regular basis.
Find a few causes that you believe in, and give to them generously. Don't assume that money is the only way that you can give. Volunteering time and skills are also appreciated by most charitable organizations. You can research organizations at Web sites such as Charity Watch. If you don't know where to begin, three that you may want to consider are Kiva, Modest Needs and Doctors Without Borders.
what the article says is really common sense and a repetition of what many other people have said. but these simple things people tend to forget or rather neglect. and it's of course a great reminder to me.
i like no. 8 the most but many people don't do that. they don't even put in fixed deposit. a friend of mine doesn't even do any investment and he is relying on gov pensioner's piggy bank to survive his retirement. my god.
working in the investment line really stresses me when talking to people who prefer to get 3.7% from FD than 15% and above from my investment company.
» renaye on 2007-07-31 03:41:09
Wow... that's really long.. Though it's true that one have to really consider the outcome if one wants to take a loan or anything.
» Nuttz on 2007-07-31 05:01:04
Yeah, loans are dangerous business.
» alexsedotcx on 2007-07-31 06:38:05
Hi Kat. Thanks for the 10 Commandments of Personal Finance; great tips! :-)
» (69.106.184.79) on 2007-08-02 01:44:16
Hmm.. I'm not sure if we're on the same book but I think people from the US and other first world countries are (a lot) better off than us in third world.. I mean, yes the gov't taxes you 40% of your salary but you can (I think) see where it's going to.. I mean free education until HS, that's quite a lot.. Unlike here, where our taxes almost reach 30-35%, our 'benefits' if you can call it that isn't even a small percentage of what you're getting.. BUT I think we're improving now..
Anyway, my point was, there are a lot of kids here that can't go to school... they have to work at a very young age, not to study but to eat and to live.. those students who get to work while studying are a lot better..
i whole-heartedly agree with 'living within your means'. if you want something, work (hard) for it.. you can't expect it to be given to you.
what society ought to give us, what they can give us, and what they actually give us (whether in a 1st world or third country) are three separate things which people shouldn't confuse..
anyway, just wanted to add some of my thoughts.. :D
good luck with your house buying.. :)
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