3 Money Rules

Jan 30, 2013 Comments Off by

Some money behavior fascinate me such as the person who has $8000 in their savings account but carry a $2000 credit card balance.

Give up cable if you have credit card debt

Credit card debt is an emergency at 19%+ interest. You should cut back all the luxuries in your life until your credit cards are paid off in full. Luxuries include but are not limited to cable, smoking, drinking excessively, buying a daily coffee as opposed to making your own and restaurant outings.

You have disposable money if you smoke or drink

Add to this list any other expensive vices you have in your life. If you can avoid these vices but can’t make ends meet, you are broke (not poor) and could use a better strategy. Smoking and drinking is a luxury. If you can’t make a payment on your credit card debt but you can afford your 1 pack of smokes a day, you have money. Quit or reduce smoking, reduce your drinking or consider making your own wine and beer in order to have more money left over every month.

Don’t invest if you have credit card debt

Really, how do you justify funding your investment account with a 4% ROI when you pay 19% or more on your credit card debt!?! Who wants to deliberately throw away 15% of their investment money this way? Don’t be a sucker and pay off high interest debt first unless you can find a higher paying investment. Use your savings to repay your credit cards and then stop using them. Only then should you start investing.

Not everyone is perfect but personal finance is a journey. I use to be a sucker when I graduated from school. With my high student loans and maxed out credit cards, I would still go out and eat fast food out of convenience. My weekly purchases included several wants along with my needs. I was wasting money when I could have been repaying my credit cards and student loans.

Frugality, Lifestyle, Savings

About the author

Clara Cannes, the chief author from Goldeneer is a Canadian that works as a full time employee in the engineering field. Her passion is real estate, entrepreneurship and sustainability. Clara has finally reached financial independence in her late 20's and is on the path to a comfortable retirement by 35.
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