Archive for January, 2009
Today, Obama spoke about the current economic crises. He pointed out that “this crisis did not happen solely by some accident of history or normal turn of the business cycle … we arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. … Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford. The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government.” He’s right.
The recent economic headlines have been enough to make anyone nauseous. Money-savvy people are scared and financial novices are terrified. One of the most important promises you can make to yourself this year is to learn about money and personal money management. I realize learning about the economy can seem intimidating, math feels boring, and managing your own finances daunting – but if you can shop, you can manage your money.
Shopping actually requires you know more math than money management. For example to spend, you need addition and subtraction. To budget, you need addition, subtraction, and multiplication. To over-spend, you need addition, subtraction, multiplication and division. To shop, you need addition, subtraction and multiplication. Percents and decimals also help – especially if there is a sale! Notice that algebra is not listed; geometry is nowhere is sight (although one way to save money is to angle around the outer perimeters of the shoe department); trigonometry – forget it; calculus – don’t need it.
So make a commitment to yourself and learn about money. You’ll feel even better than you do when your skinny jeans fit.
January 8th, 2009
Gwyneth Paltrow’s latest GOOP posting (www.goop.com) shares her post-holiday cleanse, complete with menu and bowel movement advice. This year, rather than simply focusing on being thin focus on becoming rich. You can start by truly assessing your financial condition. If you’ve never made a budget, do so. If you’ve never calculated your net worth, try it. If you have credit card debt or other debts develop a plan to pay them down or off – if your debt is caused by excessive shopping vow to hit the gym instead – you’ll get thin and rich at the same time.
Wallis Simpson, the American divorcee for whom King Edward VIII gave up the throne of Great Britain, is often credited with originating the saying “You can never be too rich or too thin.” However, she was wrong. You actually can be too thin- anorexia looks pretty on no one and size 27 jeans cost the same as size 31 jeans so smaller sizes do not help you save money – but you can never be too rich.
January 7th, 2009
It’s not what you wear – it’s how you wear it. Similarly, it’s not what you budget – it’s how you use it. Most budgets fail because they are seen as a restraint as in the plaintive, “It’s not in my budget.” Instead, start thinking of a budget as a way to help you achieve your life’s goals and dreams. A budget doesn’t tell you what you to do, it tells you what you can do. There, isn’t that more palatable already?
For a budget to succeed, it helps to have goals. Goals can be short or long-term, large or small. In fact, it’s good to have goals for both. So you’re coveting …? Whether … is a new car or an expensive cashmere sweater, make use of your budget to save for it. Set aside a certain amount each month so you can eventually afford it. However, if the amount puts you over your monthly spending allowance be sure to compensate elsewhere in your budget.
The only way to find out if your budget is actually working is to track your actual spending against what you had planned to spend. How do you do this? Continue to keep those receipts. At the end of every month, add up what money you actually made, what money you actually spent, and what you have left over. Then compare it to what you planned when you made up your budget. If you spent more than you expected, spend less next month. If you spent less, think about putting the surplus money into a savings account.
January 5th, 2009
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