Getting Started With A Budget
For most American families the dirtiest 4-letter word in the household is "BUDGET." Nothing brings more fear, panic and shear emotion than discussing a budget with a spouse particularly when one feels that they are under attack for potentially bad behavior.
However, a budget is a must in order for anyone to achieve success in building wealth over the long term. The interview covers some of the basic ideas of where to start. However, just getting started is typically the toughest part. While living on a budget may seem like an impossibility - the reality is that not only is it possible - but it is greatly rewarding down the road.
Here are of the major guidelines:
1) Separate WANTS from NEEDS.
2) Live on 60-70% of what you make.
3) Get rid of credit cards and live on cash.
4) If you can't pay for it with cash - you can't afford it.
5) With interest rates as low as they are - mortgage debt is okay as long as your monthly payment, taxes and interest are not more than 25% of your income.
6) Use a service to track expenses real time (www.mint.com)
7) Fully fund your 401k or retirement plan first.
8) Keep 6 months of salary in CASH for emergencies.
9) You are a SAVER not an INVESTOR. You can't afford to lose money in the markets.
10) Paying for kids college is great - as long as it doesn't detract from your own savings goals.
11) You only get one shot to save up for retirement - don't **** it up.