Thursday, March 13, 2008

Taking Care of Your Money Problem


So, I was just browsing the magazine stand, and in this one, I saw Real Simple magazine, with subtitle "How to solve your six biggest money problem." If you've read my earlier post, then you know I've been commenting on how people are in credit crunch problem paying their cards ahead of mortgage. Well, one of the steps suggested under "I spend too much" is "Try cash." I can tell you that cash is overrated.

It is true that it is impossible to spend more than you earn, but that doesn't mean you can't blow your budget. I still remember taking out a week's allowance on Saturday, and on Tuesday, I looked at my wallet and saw $12 left in it. How can I possibly survive the next 4 days with 12 dollars? I can't, so I just pull an extra $200 out again.

"I save too little" : open up IRA and/or 401k. Contribute the max amount. Any extra goes toward your wish list.

Target-date fund is a new term I should be checking. Money market fund is another you should be checking. Index fund definitely need checking.

"I need a budget": Maybe. I've been able to get away from budgeting for a while, though. Rather than counting your pennies, I subscribe the "Ever increasing balance" money management style, and it seems to work well. Of course, I don't spend money all that much. I'll have more to say to this.

"I need to develop a financial plan": yes, you do. However, it need not be overly complicated. Your million dollar wish list is sufficient. What's that? You don't have a wish list? Well, then, start one!

Looking through the cases, it is interesting to note that the best woman is the one who earns the least. Monthly expenses? $2058 per month, which is close enough to my $2250 per month. Actually, my target is $2000 per month, but as you know, indulgence does have a price. That was with $400 debt repayment plan. So it's even better now. Well, maybe not, since I travel so much.

The point is: more money doesn't mean more money if you spend it all! Personally, I only spent a maximum of 25% of more money, but usually much less.

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