Hudson Valley Happenings Blog : April 2009

I am not nor have I ever been a financial adviser, accountant, or any other financial professional.  I have not earned a degree in finance nor been licensed for any financial profession.  I start this post out that way because I am about to give you a financial philosophy.  It is a personal philosophy born of years of trial and error (sometimes more error than I like to admit).  I have borrowed ideas that seemed to work for others and tweaked them to fit my own philosophy.  I am not raking in the dough or piling up huge amounts of cash but I am living quite well, I am able to give my children things like voice lessons and help with college,  and I don't have to worry that I will be taken down by the first month without a closing or if my husband is laid off from his work and can't get another job for a while.

Since there are a lot of new graduates starting out on their "adult" life this time of year and there are many people who need to turn around their financial position after years of living on the edge with credit card debt and a pay check to paycheck existence I thought sharing my philosophy might be helpful to you.  Heck it might go a long way for the country too but that is another post for another day.

Heading for Trouble>>>>>>>>>

In our society we see what we want and we want it NOW!  The days of saving up for something have become old school.  We have CREDIT and boy oh boy do we use it!  I am not going to tell you that I don't use credit because I have a statement every month from my credit card company just like most Americans.  I am going to tell you that I Pay My Balance Off Every Month.  I use my credit card for convenience and to earn bonuses.  I recently earned free gift cards to some department and home improvement stores that I frequent just by using the points I tally up with purchases. That's free money people.  I have friends who build up free air miles too.  If you travel a lot this might be a good option for you.  The main key to using a credit card though is the monthly payoff!  Don't keep racking up unsecured debt.  It will and has to come back to bite you at some point.  Believe me I have been there done that.  

If you are already in trouble, Stop Using The Card.  Live within you means and start paying down that debt as best and as fast as you can.  Anything above the minimum payment is good and if you are not using it the debt will not be growing anymore.  It seems that once you let the credit cat out of the bag it grows at alarming rates.  Your cuddly kitten can become a snarling tiger almost overnight.

Of course most of us need to have a mortgage in order to purchase a home.  A mortgage is long term secured debt that can be part of a wealth building program.  I own several properties right now that have mortgages on them.  I can tell you that all of my mortgages put together don't equal what some people are paying out for one home because they had to have the dream house NOW!  I have a vacation home and two income properties in addition to my residence.  These investments were made within my means to repay and are secured by assets (the properties themselves) that were bought with analysis of the future value, tax benefits, and income potential in mind. This is the kind of debt that will increase wealth.  The only people who get increased wealth from excessive credit card use are the banks and collection agencies and of course those debt reduction companies that abound right now to prey on unfortunate victims of our national obsession with shiny new things and our buy now pay much later attitudes.

So there you have it people.  As I said I am not a millionaire but I am content with my life.  I have been lucky but I was not always in the position I am in now.  I know what it's like to be scraping together change to buy food for the day or to wonder how I could pay off more than the minimum balance on credit cards that were used indiscriminately.  If I can save one of my readers that pain or help one on the road to recovery I will have done what I set out to here today.