Saturday, January 18, 2014

How to have more money.

Warning. Saving too much money will cost you your friends. Having too much money will get you some friends but they'll leave when the money runs out.

1. Make a detailed list so you know what you are spending your money on. Track your progress so you know how you are doing in adjusting expenses.

2. Make a budget by going through that list and separate what you need from what you like or want. Need = shelter, food, clothing, transport. Like/Want = large house, exotic foods, designer clothing, nice new car, great stereo. Allocate your salary to necessary items and eliminate the want items.

3. Create emergency fund so you can meet unexpected expenses like broken fridge or washing machine (but see nr. 10). (Money you keep in a account is not emergency fund if you owe the same amount, or more, somewhere else.)

4. Start paying up loans, starting with the loans that you pay the highest interest on.

5. Don't use credit cards or overdraft on your bank account. Don't travel if you have to use credit card to pay the trip. If you can't pay it when you order, you can't afford it.

6. Get rid of the car (or one or of the cars from the home) and use public transport or bicycle or your feet or get slower, cheaper car. Don't buy a gas guzzling car to make you feel safe in, drive safely.

7. Don't eat out, order in food or get take-away food more than once or twice a month. Don't go out regularly with your friends to pubs, coffee shops or similar expensive places. Meet at each others house in rotation. Plan your meals in advance, plan them around what is available in your freezer/fridge, aim to empty your freezer of everything more than a month old, fridge more than a week old. Use coupons at the supermarket.

8. Cut regular costs. Shop around for deals on regular cost items. Stop smoking if you smoke. Stop drinking alcohol if you drink it. Cut cable or get the cheapest option, get slower internet, lease cheaper mobile phone, reduce insurance coverage (self insure, especially if you have older worn out things and your insurance carrier has lots of small print that can reduce or prevent payout in case of you needing insurance). Cut the gym and go out jogging. Pack a lunch for work.

9. Buy things that last and take care of the things you have. Wax your car, paint your house, don't drink or eat in the sofa or over the carpet. Don't be sloppy and leave your things where they can be damaged. Don't let your kids leave their toys/things outside.

10. "Use it up, wear it out, make it do or do without." Don't replace things just because some new things are available or they develop minor failures. Always try to repair them first. Don't replace your oven because you burned some food in it. Don't replace your TV because there is a new one with a 3D option. Repair your children's bicycles instead of buying new ones. Fix clothing, sew up small rips, replace zippers, glue shoes that are starting to come apart. When clothes are finally worn out they are good for rags. There are videos on YouTube teaching you how to do all those things.

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