The Money Secret is a nice book by Rob Parsons. It teaches essential lessons in personal finance through a story where Lydia teaches Amy. Here is what I learnt:
If you want to be free of debt, you have to be as knowledgeable about your spending as you are about your weight. Measure your income and spending every month.
Some ways of cutting spending:
- Don’t pay money to exercise( like joining a gym) unless you are really going to use it regularly( at least three-seven times a week)
- Don’t pay insurance on the TV, DVD, stereo, fridge, pets
- Don’t keep money in savings or investments if you have debt( because the interest and gain you will get on this is minuscule when you are paying debt interest)
- Write down everything that you spend.
- Don’t take interest free credit unless you are sure you will pay it if full within the interest free period.
- Don’t take extended guarantees, just take the usual guarantee that comes without any cost. Put the money you would have put into the extended guarantee into a separate savings account.
- Don’t worry about loyalty points. Just buy the product you need at the cheapest supplier.
- Don’t get overawed by deals and the best brands.
The Three Powers
Recognise the power of a shopping list.
Recognise the power of a budget for any cost.
Recognise the power of impulse buying.
Peer pressure and addiction are two main reasons why we overspend. Don’t do retail therapy. It makes you ill in the long-term. It is the equivalent of a throat lozenge when what we need is ointment for the soul. We are worth more than what we accumulate. Unless we understand that we will never be able to deal with the problem of debt.
Pay THEM FIRST
Maintenance and child support
Don’t use credit cards unless you pay the bill in full always. And always ask the question: Do you need it? Can you afford it if you paid in cash first?If you have multiple credit cards and are in debt, pay the credit card with the highest rate of debt first in full, then go to the next credit card and so on.
Pay in cash always if you are addicted to credit cards Always think about what the total cost is, not the monthly cost. In everything. Use credit unions if possible. Unless you deal with expenditure you can never be free of debt irrespective of your income.
The money secret:
Monthly income=20 pounds; Monthly spending=19 pounds= Happiness
Monthly income =20 pounds; Monthly spending=21 pounds= Misery