Ah, money. The stuff that gives Master P all the gold-plated fixtures a man could ever want in one household. I mean seriously, who could really bear anything less than a 24k gold bathtub? Not I, said the fly.
But the real answer is you, yo. That is, unless you too own a label like No Limit. But since chances are you don’t, work on perfecting life among the lower classes by learning how to manage the funds you do have. Here’s our short list of money mishaps that can trouble your finances from day to day.
While some debt is necessary to make do in today’s economy, carrying debt for non-essentials is the single biggest mistake people make with their money.
Many people are already signed up to pay Uncle Sam back for college degrees. And, many people have also taken on a monthly mortgage and a car payment. So, when payday comes, a good chunk of the cash is already committed to debt repayment.
Having to dole out a portion of our remaining case to a credit card company in order to pay for that new rug from Target, those couple of dinners downtown, or that CD, pair of shoes or new skate deck, leaves pennies to spare come the end of the month.
This pitfall often creates a panic, leading people into a vicious cycle: Pay debtors at the start of the month; fall short of cash come the 15th; charge your way to the 30th; pay debtors at the start of the month.
So, use cash for all non-essential purchases to keep out of this cycle.
“Whoa!” You say. “I ain’t no dummy!” But you might be when it comes to your finances. Pop quiz: Do you know how many more years it will take to pay off your mortgage or credit cards? Do you know the balance, right now, on your school loans? Do you know how much money you spend each month on gas, or food?
A common money mistake is ignoring where money goes, and for how long. The creditors, lenders or other expenses that receive a portion of our income need to be catalogued in order to give a clear picture of just what goes where, and how much is left over.
For example, if month-in-and-month-out for the next 10 years, you’ll be paying $100 monthly to Salle Mae for those school loans, your budget must reflect this. When the paycheck rolls in, you’re collecting $900 rather than $1000, as Salle Mae needs to get her cut.
Sometimes we have to cut so many people in that nothing is left over. Yet we continue to spend because we don’t know our budget is at $0. Then, when the bills roll in, there aren’t funds to cover the costs. We are forced to pay smaller and smaller portions of these debts in order to stay afloat.
While this term sounds terribly dramatic and brings images of the seven deadly sins to mind, the financial problem with coveting has to do with the size of our eyes compared to the size of our wallets. We buy what we cannot afford.
For those in America, a profound tension exists in the consumer market place. Having is not contrasted with not having, but rather with having better, having more, or having newer. Those who are driven to purchase what they cannot afford fall prey to the sense of inadequacy this tension creates.
Money mistake number three is letting this sense of have-and-have-better rule your wallet. One helpful step away from this dilemma is to ground your financial life on provision. Buy only those things your budget can provide. If you need help from a creditor to provide, review the reasons why. A college degree or medical procedure might be a reasonable need for partnering with a creditor. But a vacation, concert, or other lifestyle enhancement may not be.
Flat out, willpower is the single biggest money mishap. It’s said that people who fail to plan, plan to fail. But it would be more accurate to say that people who fail to plan—and actually follow through with this plan—plan to fail.
All the fancy planning tools—budgeting systems, graphs, charts or cash organizers in the world—simply don’t work without a dose of willpower on your end.
Baby steps that can help to train the will include: (1) paying yourself in cash each month for all day-to-day expenditures, relying on these funds only to cover gas, food, movies and the like; (2) leaving credit and debit cards at home—see the aforementioned cash; (3) cover bigger credit purchases by writing a check, immediately, to the creditor for as large a part of this balance as possible; do this every month until the bill is paid.
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