Thursday, July 3, 2008

Independence Day

On the 4th of July 2008, we celebrate the 232nd occasion of The Declaration of Independence from the British which occurred on July 4, 1776. This certainly is a great cause for celebration, as we all are grateful for the fruitful lives we enjoy today due to the sacrifices made by those before us. This is also a time for us to think of our own independence; independence from debt, which leads to true liberation. Each of us should try to declare independence from debt by taking action to minimize and eliminate unhealthy debt. The day we achieve that, is a day of true independence that we can celebrate for ourselves. Here are 12 suggestions that you can try.

  1. Take inventory of your income vs. expenses. First step is to figure out what your income is and what your expenses are. If you don’t know what, how and where you are spending your money, you might as well walk blindfold in a mine field.
  2. Make a budget. Now that you know your income and expenses, you have to make sure you are spending less than you make.
  3. Recognize that there is healthy debt and unhealthy debt. What I call healthy debt is debt that can work for you, such as your home mortgage, since the interest paid on your mortgage is tax deductible. Unhealthy debt is debt from Credit Cards or Auto loans where the interest paid is money gone from your wallet for ever. Automobiles and consumer goods are depreciating assets as the value will continue to depreciate over time.
  4. Automate your bills. If you are making your purchases on credit cards, make sure you pay it off before the due date every month. If you sign up for online banking, you can automate the payments, so you will never be late. Also make sure you join rewards programs that will give you something back. If you are going to have to spend the money anyway, why refuse to get something back?
  5. Debt consolidation. If you have credit card debt, take steps to consolidate your debt and make a plan to pay it off ASAP. Credit card debt is usually the worst kind of debt as they allow you to make minimum payments while sucking you dry.
  6. Figure out all the other unnecessary expenses and take steps to minimize them. We all know that we have little choice when it comes to energy costs, but you can save by packing your lunch instead of eating out, etc.
  7. Organize yourself. If you want to track every little expense as it happens, try Xpenser to help you track them. If not, at least try to write down your major expenses.
  8. Make sure you put aside some savings every month. If it is not possible to save, at least try not to spend more than you make.
  9. Become a lender. If you have additional money, you could become a lender yourself thru Prosper. Remember that lending is a risky business, so do your research and make sure you are investing "only what you can afford to loose".
  10. Contribute to your 401K. If your employer has a matching 401K program, make sure you contribute at least the minimum required to get the maximum matching from the employer.
  11. Learn to become a frugal spender and try to make the dollar go as far as possible. You work hard to earn your money, why should you let it leave your pocket too easily?
  12. Seek the assistance of a financial planner if you must. Suze Orman always gives good advice.


Anonymous said...

This is a good article. People should take advantage of this free advise and act on it!
I would add a couple of things. In item 3, credit card debt is mentioned. Usually credit card debt has a very hight interest rate associated with it. Often you can start a new credit card and get zero interest for a few months, which would set free some cash to pay down this debt.
One way you can save with energy costs is to use a whole house fan. These fans are effective when the outside temperature drops significantly during the evening hours. You can displace the warmer air inside the house and the very warm air in the attic with the cool outside air with a relatively economical fan motor. Some utility companies, such as SDG&E provide a rebate on the purchase of these whole house fans. Swamp coolers work well also, but their effectiveness depends on the humidity.

Anonymous said...

JErk. Posting the same thing over and over again on yahoo finance articles to get yourself some customers. What is it about your personal job that make it unable to be outsourced? Nothing. If you want to add value to the market, then do it, if you need government action to keep value in what you do, get lost. Supply and Demand. If you pick a business model that doesn't work, that's your bad decision. That's not the governments fault, nor is it their responsibility to make YOU successful just because you happen to like doing something they can do cheaper on some other side of the globe. If you want to talk about compassion, see how much more of a dramatic impact you make on the lives of the Indian or Chinese people who are supposedly being 'exploited' with that measly $20/day you're paying them. Around here, that's a moderate lunch date, to them it's the difference between life and death. If it's really about compassion, then bring it. Lets talk about compassion. Until then quit harping about the market being 'unfair' to people who 'just want to make a living.' If you want to make a living, pick a busienss with problems that haven't been already solved cheaper and better than you can.

msoori said...

Where did I ask government action to keep value? I merely pointed out the root cause of the problems, when people like you are pointing fingers at every thing else, but the real cause. I can only guess that you are probably one of those involved in outsourcing and trickle down economics. The point I am making is simply that its the fat cats in the middle that are becoming rich at the expense of others. Its certainly not the US worker whose job is being replaced and certainly not the guy from a poor country thats replacing the US worker. You talk about exploitation, yet you pay a poor Chinese worker $1 to make a shirt and sell it at Sacks 5th Ave for $75, pocketing the difference while claiming you are making the US worker more competitive and giving the Chinese worker a better life. No health care, no benefits, 7 day work week, and a new term to give a better meaning to the wrong you do; indentured labour. $20 a day maybe enough to have a half descent life in a poor country, but is that enough to make a living in the US when you don't even have a descent health care system? Unlike the Republicans, Democrats were more humane, they increased the H1 quota, brought foreign workers, paid them comparable salaries, and made them a valuable part of the US economy. I don't have a problem with that approach, what I have a problem with is your approach of trickle down economics where there is no trickle.

Here are some references for you
BofA: Train your replacement, or no severance pay for you
Outsourcing Blues: Training My Overseas Replacement
Workers asked to train foreign replacements
U.S. tech workers training their replacements
Outsourcing America
Commenting on US Competitiveness
The Bushites Have Outsourced Our Government to Their Pals