Money doesn't grow on trees. Oh if it were as simple as this blog photo. The problem is if it were that simple we would not appreciate anything nor would we ever learn to be wise with money. With the holidays upon us and a new year coming, I wanted to provide some perspective on money.
Your money can work for you (saving, investing) or you can work for your money (bad debt). I have learned this the hard way in my life. I have been in major bad debt twice, once of my own doing in my twenties because of bad choices and once because of my late husband's destructive money habits. I was definitely enslaved to my debt - working, working, working to get it paid off in both instances. I write to you now debt free. My credit scores are excellent. There is not a bank out there that would not work with me and I will keep it that way.
What can you do to stay out of bad debt and keep yourself financially healthy? Here are a few things I have learned:
1) Stay away from credit card debt. If you can't afford it, don't buy it. Pay off any credit card balance you have at the end of the month. If you can't do that, don't charge it. Be what they call a "dead beat" when it comes to credit cards. That term means they don't make a dime off of you in interest.
2) Save at least 10%-20% of your income and be sure you have a retirement plan through your work or fund your own retirement plan. You will need money after you quit working to pay regular bills, pay for your health costs and pay for the fun things you want to do. Social security will not pay for everything so don't depend on it. A good savings account will provide you not only with fun money but also money to take care of your home and any emergencies so you don't have to use credit.
3) This one may step on some toes but it would have saved me a lot of heartache had I done this before and during my marriage.
If you are considering a serious relationship or if you are in one, know where he or she stands on money. Know what their credit score is. Sit down and talk about any debt and the bank accounts. Who will pay for what? Are we banking together or separately? Be sure they pay their taxes like they should. Can they account for where their money goes? Are they interested in what happens to their money? Do they have an addiction that could damage one or both of you financially? Ask questions, even hard questions. Be open and honest about your own money habits. Be willing to step back and re-evaluate if something doesn't set right or sound right - most of the time your gut feeling is correct. From my own experience, I saw warning signs and ignored them because I was in love and I wanted to believe the best. I didn't ask the hard questions and as a result I was nearly bankrupted.
4) Never be the sole person responsible for any major loans or credit cards in a serious relationship. If you are, there is a good chance you are being used to fiscally support the lifestyle of a very fiscally irresponsible person. Either share this responsibility or let each person be responsible for their own loans/credit cards.
5) Do not, I repeat do not, fix money problems for your partner if you did not get into them together. If your partner has unpaid debt of any kind, let them be responsible for taking care of that debt. If they choose not to, then let them deal with the consequences.
6) Again, I might step on some toes. Don't be in a relationship with anyone solely because of a financial security benefit. It's not a good position to be in for you and frankly, the relationship won't last because there is no substance to it. Both of you be a financial asset to one another, not a liability.
7) Work together towards your financial goals. Plan together and execute those plans together. I hope to have this opportunity in the future. Until then, I plan and execute my own financial goals.
I speak more about money matters in the last chapter of my book The Road Less Traveled: A Story of Love, Pain, Hope and Everything In Between. You can find the book on Amazon, Barnes and Noble, iTunes, Audible.com and Kobo.com or the Kobo app.
Be wise in your relationships and wise with your spending. Make your money work for you.
Until next time,