Practical Advice

Someone wiser than I once said, “If you’re in a hole... stop digging.” Good words to live by. It means to stop using any more money that will cause your expenses to out weigh your income. A common mistake most people that are struggling make is that they are oblivious to their financial disposition. They don’t know where their break-even point is. They don’t know what their base average monthly expenses are in respect to their monthly cash flow

Sometimes we forget how easy it is to find your self in a financial jam. If you live on your own, and you're barely staying ahead of your bills, you could easily fall prey to being homeless. Even if you are a two-income family without a large savings parachute, it doesn't take much to off-set the fragile balance.

Like so many families in America, you live paycheck to paycheck with little chance of putting together any kind of a savings plan. Families usually have a months worth of income to live off of in case of an emergency – but that’s it. Their financial status is such that if one thing goes wrong – like the car needs a new transmission – all reserve savings will be lost. A job loss at this time from one of the wage earners will only increase the tension. The monthly bills keep coming, and soon, you have to scramble for the rent or the mortgage.

This is the ‘homeless formula’. It's a myriad of problems and expenses that hit one after another, until all your bills are way behind, and you find yourself facing your first homeless night.

You should know exactly where you are financially - this means you should know how much expenses you have verses incoming moneys every month. If your expenses are more than your income, you need to take your scissors out and start cutting the fat from your monthly frill bills.

When you know what your base monthly expense is, versus what income you’ll make at the end of the month, you’ll be more apt to resist foolish spending. Just knowing what your numbers are will make you react more frugally to the sirens of the fast food restaurants.

You need to keep adding to your savings with every check you deposit. As soon as you have a handle on your bills, incorporate a pay-yourself-first habit. Try to accumulate at least six months of income as fast as you can. Having the peace of mind in knowing that you have the financial backing for 6 months should an emergency occur, will give you the time you need to ensure you land on your feet. Once you reach your 6 month savings target, you can consider investments, retirement funds or other needs that you or your family have put off.

When you know what your base monthly expense is, versus what income you’ll make at the end of the month, you’ll be more apt to resist foolish spending. Just knowing what your numbers are will make you react more frugally to the sirens of the fast food restaurants.The more you are in tune with your finances, the more of a fun game it becomes. It gives you a charge when you save more than you expected to – this also fuels your thought process into thinking where else you can cut, stretch, re-use and recycle.

Your entrepreneurial spirit may surface and give you an incredible idea to market. You’ll soon find that once you start purposefully safeguarding against mindless spending, you’ll wonder why you didn't start this a long time ago.

Anyway... just some practical advice.