10 Simple Ideas To Get You Thru Any Recession (Part 1)
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What I have written in this article are 10 very simple ideas I have accrued over the years from real life experience and from studying rich people. The tips will not make you rich overnight, but if applied diligently and consistently over time, they have the ability to make you financially successful.
1. Read your bank statement thoroughly
I cannot tell you the number of times I have scanned my bank statements and found accidental dual charges on it. 99% of the time you can dispute the charge and get your money back. But there is a 100% guarantee that if you keep quiet nothing will be done. Read your bank statements.
2. Similar to number 1, read your mortgage statement and understand it
Yes buying a house might be the greatest thing that ever happened to you. But in all your excitement you might over look the fine print at closing. You have to study and understand your mortgage payment.
Just last year my monthly bill increased prompting me to read my mortgage statement for the first time, turns out that my taxes had increased and my escrow balance was low thus causing the monthly increase. For the taxes, disputation was easy I went online and had the property value reduced by $15,000. But the escrow balance was a bit trickier. Turns out that I had been paying two insurance companies for a 4 month period. An accident that occurred when I switched insurance company 2 days after my closing date.
At the end of the day I was rewarded with a cool $300 for the error. Only because I bothered to read my mortgage statement.
3. Your aren’t what you drive
If you find yourself in a position where your car is the most valuable item you have, re-access your financial situation. A car depreciates faster than Usain Bolt on fire. I am not saying you should buy a bicycle, but am saying you should look into buying assets. It could be a house, stocks, a business or mutual funds. After you have acquired substantial assets, then you can buy the car of your dreams, but whatever you do ensure your car is not your most expensive investment.
A survey from must read book “the millionaire next door” says that 50% of millionaires spend $24,800 on their cars, in addition to that, their top 3 cars included Ford, Cadillac and Lincoln. No BMW or Lexus? Confused? I was confused too. Guess they don’t buy what we expect them to buy and pay what we expect them to pay. again ensure your car is not your most expensive investment.
NOTE: A new car loses 25% of its value the moment you drive it off a parking lot.
4.Know your Net-worth
So the first time I met with my financial adviser he asks me what my net-worth was. Which simply defined is my Assets less my liabilities. Turns out that my net-worth was a huge negative number. I had more liabilities than I had assets. And even some of the things I thought were assets (like my depreciating car) were pointed out to be liabilities =(
The experience of net-worthlessness was quite humbling, but it was an experience that was needed to wake me up from the fantasy I was living in. So if you can, figure out your net-worth and build on your assets…
Some examples of assets (courtesy “rich dad poor dad”):
– A business that does not require your presence
– Mutual Funds
– Income Generating Real Estate
– Notes (IOU’s)
5. Know how much you spend a month. BUDGET
Have you ever had a feeling that your money was simply disappearing every month? I know that feeling, it was the same feeling I had when I had no budget.
John Maxwell says it best when defining a budget:
“A budget is people telling their money where to go instead of wondering where it went.”
Again am not going to come off like an expert because frankly I don’t write a budget every month. But I do have a simple spreadsheet that gives me an idea of how much money I can spend every month. Thus I have an idea of my limitations and am better prepared for surprises. BUDGET!
READ PART 2
OFILI is an award winning motivational speaker and life coach, who blogs about life, success and excellence. He is the author of the inspiring memoir HOW STUPIDITY SAVED MY LIFE and has been featured in magazines and radio stations across the globe including CBS radio. Ofili is currently working on his second book LEAD, FOLLOW OR GET THE HECK OUT OF THE WAY a kick-ass approach to getting the most out of your organization. To get a copy of Ofili’s latest book on success visit http://ofilisketches.com/the-book