How do you manage your hard earn money?
The reason why people get into debt problem is because they don’t properly manage their money. Instead of managing money, debt and money control them.
People are spending out of proportion related to their income.
How do you know that if you whether can afford the things you wanted or not? Every now and then, you might think that you wanted or needed something you saw in the store or online. Depends on the items, you really need to think twice before you spend your hard earned money. There are some simple ways to determine whether you can afford the item or not.
Key Concept:
Using the same trading principle of the position sizing and money management. One of the rules is the 1% budgeting rule. If an item you want is more than 1% of your primary income/earnings after your monthly fixed expenses and savings, then you may need to think hard that you really want to spend that amount of money. If you still think you really want or need it, you may want to find an alternate way to get it cheaper or financing it to fit your money management planning.
Action Item:
You can use this 1% budgeting rule to review your current spending habits. You will be surprised to see some of the things you are spending on are way out of proportion with your current monthly income. Hopefully, you will identify the patterns and the spending issues and make an proper adjustment to better manage your debt situation, if that applies to you.
You might want to check out this Debt Solution System to help you managing your financial situation and to be debt free sooner.
