Some time ago I posted an article about moving forward in a bad economy, and called it “The 13 Commandments of Success”. I’m posting it again upon requests from some of my readers. I hope it helps get you through bad times.
Chronic poverty is a choice–or the end result of a series of bad choices. These problems are exacerbated by a social safety net that tends to reward that continued bad behavior.
In any period of economic upheaval, I thought it might be a good idea to make a simplified list of how to handle money- basics to refer people back to in one single posting, since I get on lot of emails on advice. This will allow me to post more fun threads about race cars, left wing bashing and sock monkeys. In no particular order, here we go- to wit:
1. Get a good job, but upgrade your skills through training or education to make yourself more valuable to your employer- constantly. Upgrade your resume every 5-7 years to keep yourself competitive on the market, and ask for yearly raises or promotions. If you don’t get them after 2 annual requests- move on. If you are unemployed for more than 18 months, its time to broaden your job search, get retrained or consider moving to where there is more work
2. Save a portion of your paycheck weekly and put it toward a rainy day in a place you can get to it easily, like a checking or savings account, until you have about 6 months income on hand. Even if its a dollar or two– do it. A failure to pay debt and save is worse than bankruptcy, you cannot regain the time factor of money.
3. Invest a portion of you income in a wide variety of long and medium term investments. Do not invest solely in one place, like the market, real estate or gold, since you will then be subject to the vagaries of that single market.
4. Maximize your tax deductions by hiring a professional to do them. Moreover, use professionals in specific fields to make sure you get the most out of your money, particularly as your net worth grows and you get older. Being retired is NOT living on a fixed income IF DONE PROPERLY – Social Security is indexed and a good retirement plan allows for inflation, and should NOT preclude you from enjoying your golden years.
5. Don’t purchase a new car worth more than 30% of your annual income. Don’t get a mortgage payment more than 30% of your monthly income.
6. Insure your assets with quality policies, but don’t over-insure yourself and drain your monthly budget. Make sure to buy life insurance at 10 times your annual income, buy it young and KEEP it.
7. Don’t carry month to month balances on high interest store cards, and minimize your credit card use so that your outstanding balances are kept short term- less than six months. Do not purchase things on credit when the financial future is IN ANY WAY questionable.
8. Don’t overspend- make a budget and stick to it. Keeping up with the Jones’s is a recipe for disaster.
9. Be emotionally prepared for rainy days, including deaths in the family, divorce and loss of job. These will happen, it’s not your fault, and you will recover if you plan for them.
10. There is no one formula for success and the only common note to success is hard work and perseverance. Procrastination and denial are the chief enemies to success, however you define it. Accepting things as they are, and refusing to change with the vagaries of the economy, or move forward in new direction is a gateway to extended poverty. Bad thinking leads to more problems than a low income.
11. Over-consumption and greed will eventually overcome any solid financial plan- be wary of them.
12. Legitimate companies are not evil, they are not criminals and they do not look to rip off their consumers. Most problems arise from ignorance, neglect and a failure to assume that they must remain profitable to be there from year to year and to pay a dividend to their stockholders. A company is not evil when it seeks to protect it’s shareholders from catastrophic loss, such as a bankruptcy.
13. You are ultimately responsible for your own destiny, whether it be a success or failure, by the decisions you make every day- and no one is required to take care of you except yourself. Your church, your government and your friend can help, but it is YOU that must make things right to move forward with your life.
You have a choice in life no matter what misfortune befalls you– to be happy, or not to be happy.
I’m sure there are a lot of others, but truly, these 13 disciplines of good planning and preparation will answer most posts from this forum. Follow these 13 and I can assure you, than even when life goes awry you will have a way of dealing with them.
