Money Myths That Keep You Broke
MYTH #1: If I had to pick one single monthly cost that is wreaking havoc on Americans' finances and making you broke, it is the car payment. It is KILLING us. The average car payment on a new car is almost $500 a month. I'm convinced that car payments are the biggest thief of middle-class wealth in America. Make your current vehicle the LAST vehicle that you finance. Then save up cash and buy a used car. It will take time, but your future will thank you.
MYTH #2: You don't need a bigger house and the accompanying bigger mortgage payment. You might just need less stuff. Don’t go house poor. A mortgage payment should never be more than 28% of your gross income and rent should never be more than 30% of your monthly income.
MYTH #3: There's no point in budgeting when you don't make much money
I believed this lie for way too long. If you don't get a plan for your money, then you will never get out of that situation. Not budgeting – even when you in dire financial straits – is a recipe for perpetual poverty. Here's one reason why – when your income does eventually increase, you will be so used to having no income leftover that your spending will simply increase accordingly, and you won't even realize it. And you will remain broke.
MYTH #4: Investing simply means taking some of what you have now, and instead of consuming it, putting it to use to make your future better. That's it. It doesn't mean that you have to hire a broker and watch the stock ticker on CNBC all day long. This could be investing in an IRA, investing in your kids through a 529 account, or investing in yourself through an online course. Even if you're in the process of paying down debt, that is a form of investing since decreasing debt is increasing your net worth.
Budget & Saving Tips
Plan Your Grocery Trips
Make a list and stick to it! Use the calculator app on your phone while you browse the aisles to make sure you’re sticking to your budget. Do impulse items always end up in your cart? Try ordering your groceries online and then picking them up curbside at the store. Oh, and don’t ever shop on an empty stomach! - David Ramsey
Working From Home?
Call or email you auto insurance company and let them know that you are no longer commuting to work. Ask them if it will save you money due to not commuting then ask if there are other ways to save. I dropped down to the very basic insurance since I’m not driving and it saved me $$$$!
Adopt a Frugal Lifestyle
If you can learn to make do with less, you’ll increase your savings and you won’t find yourself struggling to adapt to a new lifestyle when a recession hits. A frugal lifestyle isn’t about pinching pennies and depriving yourself of things that bring you joy. Rather, it’s about making conscious spending choices that reduces expenses, with minimal impact on your lifestyle.
There are lots of ways you can start living frugally. If your family has two vehicles, consider reducing it to one and making use of public transit. This choice alone could save you $9,000 per year. Or, if having two cars is necessary, consider selling one of the cars for a more fuel efficient sub-compact vehicle to save on the cost of gas. You can also look into spending less on groceries, scaling back on your cell phone plan, or eliminating cable to name a few.
“IF SOMETHING COSTS $1,000 AND ITS ON SALE FOR $750, THEN YOU DECIDE TO BUY IT, YOU DID NOT SAVE $250, YOU SPENT $750.”
#CHALLENGE
Approximately 39% of Americans would be able to cover a $1,000 setback using their savings account. That means that 61% of Americans have less than $1,000 in their savings account. When the unexpected medical bill or dead car battery pops up, using credit cards or borrowing money shouldn’t be your first option.
Having a savings account of at least $1,000 can provide you some comfort in case of an unprecedented event.
Before you start building your emergency fund, set a goal – Setting a goal allows you to identify a specific amount of money that you want to save. You will also be motivated to change your habits in order to achieve your goal. I recommend saving $1,000. Some can do it in 30 days while others will need more time.
No Spend Challenge!!! One of the big things I learned when I set up my budget was just how much I was spending on little things throughout the week. It’s so easy to overlook all those small purchases! Between a quick stop at the grocery store, dinner at the fast food place down the street and a coffee or two, it adds up unbelievably quickly.
A weekly spending freeze is such a clever money saving challenge because it is super easy – just don’t spend any money Monday through Friday. While it does take some planning to do it right, it’s actually a pretty painless way to save thousands of dollars a year!
Ways To Make Money & Small Business Support
You are not forgotten small businesses! There’s assistance for us/you and I’m happy to walk you through it.
Forgivable Small Business Loans Available
The state of Michigan on launched a website to provide businesses resources to apply for forgivable loans through the U.S. Small Business Administration to go toward payroll, rent, mortgage interest or utilities.
The Michigan Paycheck Protection Program website was launched as a collaboration between the Small Business Association of Michigan, Michigan Association of Certified Public Accountants, the Michigan Small Business Development Center and the Michigan Economic Development Corporation.
Click here for more.