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- disabled4diggin, on 10/10/2007, -5/+1341. Never ever pay for anything you can download for free. (not free-license free, piracy free)
2. Sell your console and games to play PC games (they are free)
3. Get drunk BEFORE going to the bar/club.
4. Dont buy your lunch at work, bring it from home.
5. Buy your drugs in bulk. - AnteChronos, on 10/10/2007, -2/+39Here's my improved, single-step method to stop living paycheck-to-paycheck.
1. Spend less money than you make.
Problem is, that really only works when you're starting out. If you're already up to your neck in debt, then you're going to have to dig yourself out first, and that's not always an easy task.
I really wish that schools would teach responsible spending. I remember that there used to be (still are?) home economics classes, and they were stereotypically for female students. A guy taking home ec. risked ridicule, at the very least. Replace that with a mandatory "basics of money management" class or something, and a lot of people will benefit.
Our society also places too much emphasis on having the best stuff. Don't have a flat-panel TV? Then you're obviously not cool enough. But hey! The rent-to-own place has them for just over 250% of their actual cost! Now you, too, can live outside of your means!
Of course, I ultimately blame the individuals who fail to manage their money correctly. Common sense tells us that spending more money than we have is stupid. Common sense tells us that putting stuff you can't afford on a credit card doesn't make you suddenly able to afford it; It just makes it more expensive and spreads the cost over several months. But commons sense seems in short supply sometimes. - inactive, on 10/10/2007, -0/+21It aint rape if you're wiling.
- badassninja, on 10/10/2007, -1/+19That's one bad ass list my friend.
- dragon76, on 10/10/2007, -1/+17This list is terrible, it assumes the sole reason for money trouble is debt, not cost of living, poor wages, etc. It basically is a "We feel bad for the upper middle-class who mismanages their life" article.
- cygnus2112, on 10/10/2007, -0/+16Has little to do with the amount of your paycheck. It has everything to do with budgeting and living within your means. I know people who pull in $20k a year who have absolutely no debt and a great credit history and people who earn over $100k a year that have gone bankrupt or have horrible credit and use secured credit cards to buy stuff from online. It took me about a decade to finally organize my own finances and to create a calendar and monthly budget. It's an ongoing process too. I'm sure many people have to go through the same arduous process before finally "getting there". Too bad most public schools would rather focus on teaching you inane subjects like economic philosophies rather than practical economic things like checking, savings, retirement, investments, credit, etc.
- numerosiete, on 10/10/2007, -3/+18Step 1. Make more money.
- scottique, on 10/10/2007, -0/+13Regarding 1. Never ever pay for anything you can download for free: We canceled our cable television a few months ago, because we realized we were essentially paying $50 monthly to watch MythBusters and Heroes. Six hundred dollars a year, for two shows! It's always worth evaluating what services you pay for monthly (NetFlix, WoW, cable TV, paid website subscriptions) and figure out if, *this month,* you're getting your money's worth.
- DiscoLando, on 10/10/2007, -1/+14Nope, you've got it wrong. The emergency fund comes first.
What happens if, while trying to pay off your bills, you get hit with some new unexpected expense? You'll just borrow more to pay for it... digging yourself farther into debt.
Getting a small emergency fund in place first is the *right* thing to do. Don't just ask Dave, talk to any sensible financial advisor. - stewdog1, on 10/10/2007, -2/+14I'm not debt free yet, but Dave Ramsey has one of the best formulas for getting out of debt. The first two listed here:
1. $1000 emergency fund.
2. Debt snowball. After budgeting, whatever money is left, use that every month to pay off a credit card. Say $500. Then once that is paid, take that $200 and add it to the minimum payment of your next card. And so on until you have all your credit card debt paid. This is probably the fastest way to get out of credit debt.
Also, start with the lowest balance in order to get a sense of accomplishment rather than the tackle the highest. You want to stay motivated. - petoria, on 10/10/2007, -0/+12#3 fails if you are a generous drunk
- phr0ze, on 10/10/2007, -0/+12I've been doing that for years. This is never a solution.
- mrfunktastic, on 10/10/2007, -0/+11ING Direct online account will get your emergency fund rolling. Have it automatically withdraw $25 or $50 per paycheck and forget about it for a few months. Then suddenly you've got $200 or $500, and you are well on your way. Don't touch it and watch it grow. Oh and its getting 4.5% interest while it's sitting there. After 6 months you've got your fund. ING Direct y'all. http://banking.about.com/od/bankonline/a/ingdirectsaving.htm
- Schmitty, on 10/10/2007, -1/+11Dave Ramsey is awesome, just listen to his radio show. And before people start screaming "He's just selling his book and program" he CONSTANTLY gives his book, program and live show tickets away for FREE on air to listeners who need them badly. He preaches a common-sense approach to getting out of debt and pulls no punches. Granted the anti-religion folks out there may not like the light Christian spin he sometimes puts on his message, but the advice is still very solid.
- lichme5000, on 10/10/2007, -0/+9That list sucks because it doesn't suggest the most important thing: SPEND LESS THAN YOU MAKE! At the top of the list should be the suggestion that you figure out what you spend your money on, and then what you have to live without (e.g. $5/day for lattes, expensive dinners, expensive vacations, BMW lease on $45,000 annual salary). Until lists actually suggest that people cut back on their spending, nothing ever gets fixed.
- inactive, on 10/10/2007, -1/+91. purchase pistol
2. purchase ammo
3. enter bank....
nevermind. - AnteChronos, on 10/10/2007, -1/+9Well then, cut back your expenses. Eat rice and beans for a month. Sell your TV and get rid of your cable service if you have it. Carpool to work. Buy your clothes at Goodwill. Keep your house a little warmer in the summer and a little cooler in the winter, thus saving on electricity. If you're living paycheck to paycheck, they you *will* have to make sacrifices. It'll get worse before it gets better, but it's worth it.
- KSUdesigner, on 10/10/2007, -0/+8Who needs a 5 step plan?
Step 1: Make a budget
Step 2: Stick to your budget - inactive, on 10/10/2007, -11/+196. ????
7. Profit - Synoptic, on 10/10/2007, -2/+9Stupid bills...
- DiscoLando, on 10/10/2007, -0/+7The best decision I ever made? To pay for everything in cash, except my house. I haven't used credit in three years, was able to save a substantial down payment for my house, and am to the point where I will be able to pay off my mortgage 6 years ahead of schedule on a 15 year term by making extra payments. I'm beginning to invest in mutual funds, and when my house is paid off, I'll have nearly $500,000 to my name. I'm excited to think how things will be financially when I have no house payment. :D
Oh, and all of this is being done with a modest combined income of my wife and I of $65,000. We don't make a ton, but we've learned to be smart with what we make.
The sad part is, if I had been smart and never touched credit in my early 20s I'd be even farther ahead. I'm about to hit 30, though so better late than never, though! - inactive, on 10/10/2007, -4/+11#5 should be "Buy everything in bulk". Otherwise, good list.
- Punisher2K, on 10/10/2007, -9/+16So be a thief. I guess when your in jail, you aren't living paycheck to paycheck anymore. Just man-rape session to man-rape session.
- Corinthos, on 10/10/2007, -0/+6Back when I'd go to the clubs a lot I used to always follow #3. Me and 3 others would get a fifth and do shots until the bottle was empty before we went in. Only thing that sucked was sometimes I'd blackout 20 minutes after being there and not remember jack ***** from the night.
- hydrodev, on 10/10/2007, -0/+6*Revised List*
1.) Don't Spend more than HE makes
2.) Don't Spend more than HE makes
3.) Don't Spend more than HE makes
4.) Don't Spend more than HE makes
5.) Don't Spend more than HE makes
Nice one Cygnus! - TheNico, on 10/10/2007, -2/+8#6 get to know the strippers, then they are less likely to take ALL of your money...
- revolvingcur, on 10/10/2007, -1/+7Consider the intended audience instead of pooh-poohing the message. Do you really think ghetto-fied welfare baby mommas are going to be reading The Motley Fool online?
- bobcrotch, on 10/10/2007, -0/+6This theory can be applied to losing weight too. Eat less calories than you burn.
- eunosx, on 10/10/2007, -1/+7I disagree with this. You just have to be smart about credit cards and only buy what you can afford. Then you can pay it all off every month, avoiding interest, and collect up on the cashback/rewards from the card. I got 2 round trip tickets to Hawaii this year by doing this and haven't paid $.01 in interest. Cash is good, but knowing your limits with credit cards and using them properly can be much better
- pintomp3, on 10/10/2007, -0/+5there are a lot of reasons people fall into debt: divorce, illness, downsizing, etc. housing costs, tuition, and healthcare far outpace inflation, which outpaces average salaries. while a basic grasp of economics is important, it's getting harder and harder just to get by. any attempt to teach people the truth about how to manage their money will be fought hard by the banking and credit industries. they make far too much money from fees and interest.
- sacherjj, on 10/10/2007, -0/+5Go get a night job. Replace watching 4 hours of TV a night with a job. Remove the $50/month cable bill. If you bought a new car (one of the STUPIDEST "investments" anyone can make), sell it and use the payments to buy a workable $2000 car. There are many ways to make it work. You just have to want it.
- thcobbs, on 10/10/2007, -2/+71.) Don't Spend more than you make
2.) Don't Spend more than you make
3.) Don't Spend more than you make
4.) Don't Spend more than you make
5.) Don't Spend more than you make - MaynardJK, on 10/10/2007, -1/+6Common sense is far from common.
- columbusgeek, on 10/10/2007, -0/+5Here is a preview of his next article. It is all about how to not be a alcoholic.
1) Stop drinking.
2) Drink water.
3) Relax.
It's just not as simple as outlined. - m11ka22, on 10/10/2007, -0/+5don't live in new york city.
- kingofthisnight, on 10/10/2007, -0/+5It is amazing how easy it is to save money. For the longest time I was buying an energy drink a day at two dollars a drink. I also would eat fast food at least once a day except on weekends. That over the course of a month is 60 dollars on energy drinks and 160 on fast food. I am a college student only working part time and I realized that one of my two monthly pay checks was wasted on junk. I finally sat down and started grocery shopping and cut out energy drinks. It is surprising how fast you can set money back when make a change like that.
- FuzzyBunny, on 10/10/2007, -0/+5It's almost funny how often people trot out this excuse, especially people who live in the US where the average yearly salary is about 40 times what the average yearly salary is worldwide. The thing is, there are almost always ways to cut your expenses and save more money. Do you really need cable TV? Do you really need that morning coffee? Do you really need to eat out for lunch every day? The reason you can't find the money to save up an emergency fund isn't because it's not possible, it's because you don't care enough. No body said it was easy to be financially diligent. But it's a lot easier than the consequences of living a lifetime in debt and the insecurity of living paycheck to paycheck.
- Homunculiheaded, on 10/10/2007, -0/+5It may be surprising but Making more money doesn't actually work if you don't already have a good system of saving. Haven't you ever known 2 people where one guy seems to always have new cool stuff, and the other guy tends to live pretty cheaply, when in fact the guy living cheaply is actually the one whose income is greater?
I've made career moves that have almost doubled my salary, at first it seems like your rich, but it doesn't take long for your lifestyle to adjust. The only way for it work is if you get in the habit of saving a spefic percent of your income, the closer to 25% that that amount is the better off you'll be in the long run.
Also, as has been said a million time before, pay yourself first! (Auto transfers are fabulous). Keep your checking as low as you can and keep everything else in savings (that way you have less money at your disposal to spend). - sacherjj, on 10/10/2007, -0/+4Tell that to the people who make a few MILLION more a month when they win the lottery. Then in 3 years are back in a trailer with no money left. Just because you can cover being stupid with money by making more, it doesn't mean you are not being stupid with money. A little self control will pay off severely in the future. Money works for you, debt works against you. It is much easier to make more money if you have more money. This is the whole reason the rich stay rich and the poor stay poor.
- RandomGuySteve, on 10/10/2007, -0/+4Do you have some sort of handy pamplet about this interesting concept?
- KMartSheriff, on 10/10/2007, -1/+5You yourself were beginning to sound like one of the smart ones up until that pompous-ass comment at the end.
- frontporsche, on 10/10/2007, -0/+4This comment by AnteChronos was more interesting than the article itself.
- cygnus2112, on 10/10/2007, -0/+4thcobbs, don't tell me. Tell my wife!
- AnteChronos, on 10/10/2007, -0/+4Some banks allow you to set up scheduled automatic transfers from, say, a checking to a savings account. So if your paycheck is directly deposited into your checking account, you can have the bank automatically move $100 to a savings account on the same day. You'll never see that money in your checking account, and you'll adjust to living on your paycheck - $100, all the time building up a nice buffer in your savings account with no effort.
- AnteChronos, on 10/10/2007, -0/+4So you have an unemployed GF that just leeches off of you? If so, you need to sit down together and come up with a budget. If not . . . you need to sit down together and come up with a budget. It's not that hard.
- sacherjj, on 10/10/2007, -0/+4It may be common sense to THINK it, but practicing what you preach is one of the hardest things for some people to do.
- t1m0j5, on 10/10/2007, -2/+6Step 6: Work corner to pay rent
- cygnus2112, on 10/10/2007, -0/+4I dugg you up because of the first part. People are blind-sided with a lot of things that keep sky-rocketing, but I also look back and see that most of our predecessors didn't live with a lot of luxuries. They "did without" for the most part. Today we're flooded with consumerism.. heck, Digg proves it hourly with the latest "Oooh, look at the new iPhone hack! You must get an iPhone because Apple is awesomest!"
Although it may seem harder, I think our grandparents were more practical and lived closer to the line of survival. I look at my friends, family, neighbors, coworkers and see how they live for pleasure and very few have set their long-term goals or established basic priorities. I think most of us struggle with rampant misdirection in our 20's.. and start figuring it all out in our 30's and then realize that we started too late by our 40's. God help us. - nutsackninja, on 10/10/2007, -4/+8simple formula
spend < make
Don't buy crap you don't need / never going to use.
Idiots need budgets smart people can do this all in their head -
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