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Traffic lights are everywhere – red, green, amber. Green and red are clear – go, and stop. However, what does amber mean? Our behavior suggests: “Speed up, beat the red light!” Simply put, the amber light indicates that we should prepare to stop.
Similarly, we have cues for our financial situation. We know when we have had too much. We sure will when we have a little. However, do we know when we are coming up empty? Like a traffic light, there are a number of signals that appear quickly, indicating us to slow down and prepare to stop spending. Sadly, when these amber lights come on, people grow faster, take on more debt, and subsequently hit their financial institutions and their families, while their health suffers.
Here are four amber lights indicating that your decisions are causing or will cause problems with your personal finances. Consider each and be prepared to respond appropriately when they pop up:
- Reduced or stopped giving to churches, charities, Christian ministries, or other places or individuals.
- Credit cards regularly keep unpaid balances.
- Capital fund or targeted reserve fund has not been established.
- Budget or spending plan not used.
reduce or stop
Sometimes some people feel overwhelmed by their financial situation, and feel they need to cut back on spending. They know that they are spending more than they should have, and so, they decide to cut back. The first area they cut is their giving to their church, charity, Christian ministry, or elsewhere. Regrettably, they react instinctively because it is the most visible, easy to bite, discretionary item. They categorically stop or reduce it, without a total review of all expenses. And they keep spending in other areas.
In these circumstances, when you consider reducing your giving, understand that the pressure you are feeling is your amber light telling you to pause and review all spending immediately – red. The light is here!
Look at your total budget, review your goals and plans, and remember why you were giving up. You know the lifestyle choices you’ve made, so it’s easy to pinpoint the source of the stress you’re feeling. Examine your spending decision processes and recent spending decisions.
This is the first and foremost sign that your financial position is under pressure. Pay attention Before you change your giving, contemplate, pray.
Credit card balance not paid regularly
A credit card gives you a minimum “grace period” from the itemized charge date to the day you pay the total amount due. Canadian regulations implemented in 2010, Mandate a minimum 21-day, interest-free grace period effective on all new credit card purchases when a customer pays the outstanding balance in full.
Consider this grace period as your total credit period. Pay the balance in full monthly; If you can’t, then this is your amber light. observe it; Stop using the card. Put it in a freezer bag and store it in the freezer. Do not “speed up” to cross a red light; stop!
Capital fund or targeted reserve fund not established
What causes the most stress in the household budget? emergency situation. The car breaks down. Washing machine dies. The microwave, stove, or other household appliance stops working. You can’t predict when one of these items will go away, but you can expect to spend regularly on one of them.
That’s why each of us needs a capital fund: a plan to avoid getting into debt by systematically saving for specific expenses with unpredictable timing. It is planned, targeted savings.
Typically, people borrow using their credit card or credit line to make a first-time purchase, to replace or repair major items such as cars, refrigerators, stoves, furniture, appliances, and more. This is a stressful, costly, irregular item maintenance and replacement approach that capital funds are designed to remedy.
Capital funds are an addition to your operating budget. Simply put, to replace an item that costs $1,000 with a ten-year life, set aside $100 a year for ten years. In the tenth year, if you change the item, repeat the process. If you don’t, keep setting aside funds. Anticipate major repairs over the life of the item and apply the same process. Imagine if you used capital funds to pay cash for everything except the house and you would not have to pay that interest fee!
Don’t have capital funds or equivalent? This is the amber light screaming at you to stop and pay attention. Would you consider it today?
Budget or spending plan not used
Wherever you go, someone, corporation, group or ministry is trying to spend from you. In the mall, in the super market, on TV, on the radio, there is an advertisement that entices you to buy that wonderful widget, that helpful book, or that wonderful service. It may cost only $5.00, or only $2.00, or only $10.00; So buy it. You forget that these “only” amounts add up to a huge amount.
Essentially, we allow advertising to lead our spending. That’s why we need a money map to use as our road map. A money map, spending plan, or budget is a guide we prepare before an event or period in order to plan how to spend the money available at that event or during a specific period.
When you leave home without a money map or budget, it is like leaving home on a journey to an unknown destination without a road map. you will be lost
Daily operations without a budget is another amber light. Slow down, and get ready to stop, or you’ll get further into debt. Make the decision today to start using Budget to help you allocate your limited resources. You will be glad you did.
conclusion
When any of these amber lights are flashing, take a look at your lifestyle. You may need to make changes in your behaviour. Bankers, insurance agents, and other salespeople calling themselves financial advisors will look at the symptoms and offer money-focused solutions: remortgaging, refinancing, combining loans, with money, rather than addressing your attitudes, behaviors and choices (ABCs). everything to deal with).
Changing your ABCs is the only long-term fix for your financial affairs. Other measures only delay definite, necessary attitude changes. Are you ready to make the difficult lifestyle adjustments needed to rebuild your finances in the long term? Always remember that money management means lifestyle management.
Copyright (c) 2011, Michelle A. Bell
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