Do you feel scared about the current economic crisis? Do you want to know how to get out of debt so that you can protect yourself and your family from the coming economic crash? Here is the information you need.
The first thing you need to know is what the word "economics" means when it comes to your family and how you can use that meaning to help your money.
Don't listen to what the media says about economics when they talk about the stock market, supply and demand, inflation, mortgage defaults in the banking industry, and the unemployment rate. Those are "economic characteristics" that describe a much bigger area than what you can change.
What you can control are the finances of your own home. I use the original definition of economics, which says that it is "the art or science of running a household or business." And that is something you can change as an individual.
There is a skill to running a home. You need to have certain skills and abilities, like being able to organise things so they work well. There is a science behind running a home, especially when it comes to money. Here are some things you can do to make sure your family's finances are strong and stable, even if the country's economy is on a slippery slope to disaster.
1: Don't spend more than you earn.
Think about how your parents or grandparents lived well on very little money. Keep your expenses at a level that is less than what you bring home from work after taxes. The fastest way to lose all your money is to spend more than you earn. You can still have a good life even if you cut back on some spending. This can be done by doing something as simple as renting a movie and making popcorn at home instead of going to the theatre or by buying a new used car instead of a brand new car.
2 - Pay CASH
Every time you buy something with a credit card that you can't pay off when the bill comes, you give the credit company a claim on your future earnings. Your regular bills will need to be paid with those future earnings, so you end up in a situation called the "credit trap," where you are forced to work for money. The only time this isn't true is when you buy something that goes up in value, like a home or a commercial building that brings in more money.
Tip: If you pay cash, try to get a cash discount. When the economy is getting worse and it's harder to get credit, the person with the most cash is king. Learn how to buy wholesale instead of retail to cut your costs even more.
3: Make money BEFORE you spend it.
If you need or want to make a big purchase in the future, start putting small amounts into a savings account and keep doing that until you have enough money to pay for it. If your child will go to college in 10 years, find out how much it will cost and how much you need to save each week to have the money by the time they graduate from high school. Plus, apply for every scholarship, grant, and package of financial aid you can find.
4: Keep some cash in a safe place for emergencies and living costs
Nothing will help you sleep better at night than knowing you have some money saved up in case of an emergency, like when your car breaks down, you need dental work, or you lose your job. When you have a cash cushion you can get right away, you don't have to worry about money anymore. Instead, you can focus on living and enjoying your life, and making money gets easier.
In a financial crisis, the only thing you have to worry about is not having some cash on hand in a savings plan that you can get right away. Did you know that more millionaires were made in the United States during the Great Depression than at any other time? What went wrong? During that time, the economy and stock market both crashed, prices went through the roof because of inflation, the unemployment rate went through the roof as businesses closed, and people who lost their jobs also lost their homes.
People who had saved money were able to buy homes, land, and even whole businesses for a few cents on the dollar. They became millionaires in the end because they had enough money to get through the Depression.
Set aside 10% of every dollar you earn right away and put it in an account you've set up for your cash cushion. Even if you have to get a second job and cut your spending, JUST DO IT! As the weeks go by, you'll find that you're sleeping better at night and going through life with a lot more confidence, knowing that you've reached financial independence and protected yourself from the coming economic crisis.
