I recently read an article on the foolish things that you do with your money. There are nine, so let's get going!
- 1) Falling in love with your investments. Don't do it.
- 2) Chasing a fantasy- past performance is not an indication of future returns.
- 3) Equating "on sale" with good deal: do your homework. Know what you are investing in.
- 4) Retaliatory spending. Let's not discuss this one, as it may cause relationship problems.
- 5) Hanging on to debt, especially debt other than for the purchase of your home.
- 6) Parental Martyrdom. This is parents bailing out their children. If you do it once, it's hard to stop. Be careful. Make sure you protect your own future first.
- 7) Cyber insecurity. You probably have a higher chance of having your mailbox raided than your bank account.
- 8) State of denial. Don't abandon your investment strategy. Measure it, but keep it unless some major life event occurs to cause a change.
- 9) Hoarding Money. Children of the Depression are guilty of this. Keep a reasonable amount of cash available. Don't hoard!
There they are, be sure to avoid these mistakes to ensure that your hard earned money is never wasted.
We are in the holiday season; this is a very important part of the year for most retailers. Their sales and profits for the year are largely generated from Black Friday, which is the day after Thanksgiving. Black Friday got its name because it is traditionally the day that many retailers go into the black or profitability for the year. Funny how a business can operate at break even or a loss and then suddenly become profitable in one day! Well maybe if you went out on that day, you would know. People, people and more people. No parking spaces, traffic galore and never enough checkout clerks.
How did Black Friday stack up this year? Statistics tell us that overall sales rose last month by 0.5%. That's not much, but it is an increase! Projections were for an increase of 2.1%. However, last year we saw a huge drop in November sales of 7.8%. The biggest obstacle to sales this year continues to be the job numbers. With unemployment at its current level, we have less people with money to spend. This situation is unlikely to improve in the near future. The National Retail Federation expects a decline in holiday sales of about 1% over last year. Overall, that should stack up as a really good number, given that we have a significant number of unemployed.
What can you do? First of all, be thankful if you are employed. Do your job well and make sure that you have some savings. DO NOT spend money that you don't have! If you have a job and savings, spend what you can afford on those you love and on those who are less fortunate. Together, we are looking forward to a great Christmas!
"Now what do I do?" is the question many have asked as they try to move forward in our rebounding economy. In last week's segment we touched on creating a budget to help save money and stay out of debt. But what if you are already in too deep?
Some debt is good. Good debt includes anything you need but can't afford to pay for up front, like buying a home, or saving for college or retirement.
Bad debt includes debt you have taken on for things you don't need and can't afford. The worst form of debt is credit-card debt, since it carries such high interest rates.
According to a recent article, the average American household has at least one credit card with nearly $10,700 in credit-card debt, and the average interest rate runs in the mid-to high teens to even in the 20% range. What do you do if you have too much credit-card debt?
Step #1: Be honest with yourself. Add up your balances and see where you stand.
Step #2: Try to consolidate your credit cards to one with the lowest interest rate and best terms.
Step #3: Don't be late with your payments and don't go over your allowed limit.
Step #4: STOP charging! This is the cause of your problem. Correct it at its root.
Credit cards have turned into evil plastic. They are tools to be used and not abused. Use a debit card instead, that way you will only spend money if you have it. Let's become financially responsible.
We have been exploring the question, "Now what do I do?" What steps do I take to ensure I will never be as affected by a financial setback again like the one we have just suffered? One of those steps is to make a spending plan, or budget.
Why create a budget? A budget allows you to see where your money is being spent, how much you are spending and how much you have leftover to save. By creating a budget are you able to determine what you can really afford.
Along with keeping track of your finances, a budget allows you to plan for short- and long-term goals. You can learn how to save for your vacation in one year, a bigger house in five years or your retirement in twenty years; it's all there in black and white so there will be no surprises later on.
Creating a budget is simple: It involves comparing your total income to your total expenditures. There are three steps to creating a budget:
- 1. Identify how your money is currently being spent.
- 2. Evaluate that spending to see if it meets the financial priorities you have established, and
- 3. Track your spending to make sure it stays within those guidelines.
When projecting the amount of money you can live on, don't include dollars that you can't be sure you'll receive, such as year-end bonuses, tax refunds, or investment gains.
If your budget tells you that you are spending more than you earn, you need to make adjustments, fast. Continuing to do so is a surefire way to engross yourself in debt. Eliminate any unnecessary spending on personal items, entertainment, and luxuries you can live without.
Stick to your budget-it is the essential tool for ensuring that your money gets used the way you need it to.