That’s Money, Honey

18 Apr

The Clutter F**k Club is held every Wednesday until the end of April. Today’s topic is bad debt. Get rid of the clutter in your life so you can make room for positive, life-affirming energy!

I’ve lived with the same man for almost thirty-three years. When you live with a person for that long, you can almost read their mind after a while. It’s spooky. 

This man I live with is a banker. He lends money to companies. He’s allowed to poke his nose into other people’s finances, tell them what they’re doing wrong and how to fix it. He has seen first hand what poorly managed finances can do to a company, a family and a person. It’s not pretty. There are some very smart people out there who are really stupid when it comes to their money. Money troubles are responsible for broken relationships and broken lives.

Most people appreciate his advice, but some people don’t, and they tell him to go fly a kite. Actually, they tell him worse than that, but you get the picture.

I hate math and anything to do with numbers. I prefer words. This is a good thing, since I’m a writer. Whenever my husband starts talking about numbers, financing, or budgets, my brain turns off. But he’s taught me 4 important money tricks over the years, and here they are:

1. Manage your cash flow – You must live within your means. Your monthly expenses should never exceed your net disposable income (income after taxes).

2. Manage your debt – There are 3 types of debt:

Green debt – When you purchase an asset, such as a car, a house, appliances or furniture.

Yellow debt – When you purchase short term necessities, such as a yearly vacation. These should be paid off within 12 months.

Red debt – When you buy impulsively, such as buying too many shoes or purses (why he chose those as examples I have no idea) or using a credit card for your morning latte at Starbucks. Red debt is dangerous, and should be paid off within 30 days.

3. Prepare for Disaster – You should put away a bit each month in an emergency savings account. How much? Enough to cover 3 months of expenses in the event disaster strikes, such as getting fired or getting sick.

4. Have some Fun – Spending money can and should be fun. Going on a shopping trip? Plan for it by putting money aside.

According to my man, if you follow these 4 money-managing tricks, you’ll avoid most financial pitfalls. Does anyone have other suggestions as to what works well? I’d love to hear from you!

7 Responses to “That’s Money, Honey”

  1. 4amWriter April 18, 2012 at 4:49 am #

    I love it when money talk is broken down in simple terms like that. Thanks! Perhaps another tip, or this might be considered part B of one of your tips, is to pay off your credit cards every month to avoid interest charges. I HATE paying more money than what I originally spent/charged, so I have always paid my credit cards off in full each month. This also helps keep your impulsive buying at a minimum.

    • nancyelizabethlauzon April 18, 2012 at 7:48 am #

      So true … nothing worse than accumulated interest on a card so that the monthly balance keeps going up!

  2. Selena Robins Musings April 19, 2012 at 12:20 pm #

    Great tips, Nancy. I am not a numbers person and don’t understand markets going up, down or sideways, but this is simple, good common sense stuff. I think this is what is missing in the school systems, they should have a basic personal finance course, starting in elementary school. They have all kinds of brain twisting math (which I always hated), why not simple life financial strategies. Get the kidlets to economize and put their cute little piggy banks to good use.

  3. 2GirlsonaBench (@2GirlsOnaBench) April 20, 2012 at 1:40 pm #

    These are great tips. Trying taking out a weekly amount of cash like the old days when we didn’t use debit cards for everything, you feel differently about spending money when you only allow yourself to spend what’s in your wallet! 🙂

    • nancyelizabethlauzon April 23, 2012 at 2:10 pm #

      Yeah, the cash system is a great way to stay within your budget – it seems to mean more when you hand over a bill instead of a plastic card!

Trackbacks/Pingbacks

  1. Adventures in De-Cluttering « The Chick Dick Mysteries - April 25, 2012

    […] 8. Respect the family budget – see That’s Money, Honey […]

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