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Cheri Merz

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Four Golden Rules-Rule #2
3/6/2006 8:03:43 PM
Hi, Everyone This is the second thread in a series of four to share the article I recently found about the Four Golden Rules of Personal Finance, by Francis Kier. See Mr. Kier's bio in the first thread. Find the first rule here. Update: Rule #3 is now available here: http://community.adlandpro.com/forumShowPost.aspx?PostID=313436 Here's the second: ============================================ Rule #2: Always keep your finances under control. The first step in losing financial control and spiraling into debt and money problems is simply not dealing with personal finances. -Prepare for catastrophic financial accidents with health, life, disability, and auto insurance. -Plan and save before you buy something. Create a balance sheet for yourself at least once a year to see how you are progressing. -Pay every bill on time, or contact the creditor to tell them what is going on and make a partial payment. If you are temporarily unable to handle any of this, ask for some help immediately and find someone trustworthy who will do this for you. The most common source of financial trouble is a trauma in your life. This can be a health problem (large expenses or unable to work), an emotional problem (divorce or loss of loved one), or a financial problem (losing a job, cut in pay, relocation, unexpected expenses). Whichever the source may be, it leads to three emotional problems: the first is denial, the second is being overwhelmed, and the third is hopelessness. Denial causes people to not open their mail and continue spending as usual, and being overwhelmed paralyzes people from getting assistance and dealing with the situation.* For example, if you just lost a loved one, balancing your checkbook and paying bills is not high in your priorities. Unfortunately, tiny amounts of debt grow with interest and penalties into seemingly insurmountable mountains of debt; leaving you with loathsome options such as bankruptcy, poor credit, declining lifestyle spending, and added stress that you bring to relationships and work. (To be continued...) ----------------------- * I see this in my real estate business all the time with regard to foreclosure. In my state, after three months of not receiving the mortgage payment, a creditor can issue a "Notice of Default". At that point, the homeowner still has three months to cure the default before the home is scheduled for auction. Then there's another three weeks while the auction notice is posted. During all that time, if the homeowner would only shake themselves out of denial, chances are they could sell the home and avoid foreclosure. Nevertheless, about 10 a week go to auction. What a pity! A foreclosure on the credit record is sometimes even worse than a bankruptcy. =========================================== To prepare for the financial traumas: refer to Rule #1, have a checkup with your insurance providers and I'd recommend one with a financial planner and attorney as well. It's beyond the scope of this forum to list everything you should have in place, but those three professionals can fix you right up. If you feel you can't afford to consult professionals, I would recommend Suze Orman's books. The one I own is called "The Road to Wealth - Everything You Need to Know in Good Times and Bad." I highly recommend it. It's in encyclopedia and Q&A format, so you can find what you specifically need to know quickly without reading it through. You should be able to find it in your public library. (Here's a savings tip: Don't spend money on a book that you don't know you want to keep. Get a library card and use it! You can always purchase the book later if it proves to be something you want in your personal library.) The next rule may surprise you, so be on the lookout for it! Cheri
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Tim
Tim Southernwood

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Re: Four Golden Rules-Rule #2
3/8/2006 2:18:47 PM
Hey Cheri, As always, very thoughtful and informative content. I have to admit to having rather poor spending practices in the past, and the only thing that changed how I spent and saved was necessity and education. (you all can guess which was the more painful ;-)) I still say that all schools should carry courses to educate our youth at an early age about the dangers of credit, and failing to save for the future. If we look back, we can see that this principle has been used for millenia. True in the past it was survival basics (fuel, food, seed) put aside for the winter, but the need to prepare for the future remains just as strong. Might I suggest that if people refuse to wake up and find it hard to save money now, that they start buying and stashing away a large supply of canned dog food. They're gonna need it!
Tim Southernwood/Get eH² Packs!/BlogNet Awards We are what we repeatedly do. Excellence then is not an act but a habit - Aristotle
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Winston Scoville

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Re: Four Golden Rules-Rule #2
3/8/2006 3:01:28 PM
Hi Cheri, Very informative. I'll definitely be giving this a re-read. ========================================== (Here's a savings tip: Don't spend money on a book that you don't know you want to keep. Get a library card and use it! You can always purchase the book later if it proves to be something you want in your personal library.) ========================================== Very good tip. I'll pass it on to my wife! I wonder if they have the current Danniel Steele at the Library! :-) Actually, I use the library a lot. Not really for the reason you suggest but now that you mention it it's a great way to find what you want before paying for it.
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Cheri Merz

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Re: Four Golden Rules-Rule #2
3/8/2006 4:13:47 PM
Hi, Tim Eeewww, canned dog food? Have you seen Linda Caroll's new site? Just in case you ever did decide to try it, read this first: http://www.consumersrrevolting.com/pet_health.html I borrowed a great Jim Rohn article to post on my website about what you're saying. You may have seen it or heard it before, but Mr. Rohn is always worth a re-read. Find it here: http://www.never2late4success.com/ant-philosophy.html Don't get me started on how our youth should be educated about personal finance...I'll have to drag out my soapbox! Thanks for a post that gave me a chuckle. Canned dog food...yuck! Cheri
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Cheri Merz

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Re: Four Golden Rules-Rule #2
3/8/2006 4:23:56 PM
Winston, You're in Canada, right? Sorry...I don't know how public libraries work there. Here, most have a standing order for a certain number of each new book that comes out by a selected list of authors, especially the popular ones. When I worked a the University of Texas at Austin library, they called it a 'blanket order'. So, yes, they probably have the latest Danielle Steele, lol. If there's a way to reserve it before the library actually gets it, your wife should probably take advantage of that. Around here, it takes months to get a copy if you're not on the waiting list when the book hits the shelves. The only time that tip doesn't work is for e-books and books that are far enough out of the mainstream bookselling industry that you can't count on libraries having them. I gave the same tip to a colleague, who told me I was saving her about $175 a month! My response was, where were you putting them all? My house wouldn't be big enough to house all the books I've read if I had bought them all. I estimate around 5000 in my lifetime. Mostly novels, but only one Danielle Steele, lol. Once was enough. ;-) Cheri
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