When it comes to successfully managing your personal finances, there’s a whole lot more involved than just “spending less and saving more“.
Fortunately, there is a variety of information on this site you can use to help you achieve your own personal finance goals. In an effort to prevent you from making the same mistakes I made, here are 8 important financial lessons I learned as my family and I turned our financial life around and paid off over $90,000 in debt in two short years.
Leasing A Brand New Vehicle Is Not Always the Best Idea:
When I was 22 years old (and fresh out of college), I made the mistake of going out and leasing a brand new Toyota 4Runner. I thought I was on top of the world but really I was just beginning to dig a financial pit I wouldn’t escape until many years later.
Day Trading is a Good Way to Lose a Lot of Money:
Back in 1997, 1998 and 1999 I thought I was a hot shot because I was “day trading” in-between my classes while in college at Maine Maritime Academy. Not only did I lose money during this extracurricular activity, I also learned to respect the addictiveness of day trading.
Buying a Brand New Motorcycle is Dumb:
In 2003 I received a modest raise at work of about $200 extra a month. Instead of using this money to pay off debt or to add a little cushion to my tendency to live paycheck to paycheck, I financed a brand new Honda CBR F4i motorcycle instead.
The Debt Snowball Method is the Best for Paying Off Debt:
There are a lot of different techniques people try to use when paying off debt. When my family finally decided to do something about our financial situation, we would pay a little extra on one credit card one month, and then pay a little extra on a different balance another month. We never got “traction” and felt overwhelmed by our lack of significant progress.
Pay Cash for Your Vehicle if Possible:
I’ve written several articles about the benefits of paying cash for your next vehicle (new or used). I almost didn’t follow my own advice a few months ago when my wife and I needed to find a vehicle that would accommodate three car seats (we have three children under the age of 5). Fortunately, we were able to pay off the remaining balance of the car before our first payment was technically due.
Always Keep Your Checkbook Up to Date:
It seems so fundamental, but many people don’t take the time to keep their checkbook registry up to date. Not only is there a possibility you might miss a mistake on behalf of your bank, the bigger problem is you’ll have a tendency to overspend if you don’t know exactly how much is in your checking account at any given time. When people reconcile their checkbooks the are often surprised that they didn’t have as much money in their checking or savings accounts as they thought.
Renting a Boat is Much Cheaper than Owning:
For most people, renting a boat a few times a year is a much cheaper alternative than buying a new or used boat. Just as important, you don’t have to experience the hassles of being a boat owner too (maintenance, storage, taxes, insurance, etc.).
Too Much Debt? Download our free Trees Full of Money Debt Snowball Calculator and see how quickly you can pay off your debt.