More Great Saving Advice From The WSJ

Image by emdot via Flickr

The Wall Street Journal has a great piece: Saving Matters More Than Ever

Much of it reinforces what I have told you before - prioritize, know where your money is going, build an emergency fund, pay yourself first etc. It's a short and worthwhile read. Here are some select quotes:

"Becoming a better saver is more than just cutting out the morning latte. It's changing your entire relationship to money.

Some 12.5 million Americans were unemployed at the end of February, including 2.9 million who've been jobless for six months or more. From the market's October 2007 peak through January, U.S. shareholders lost almost 85% of the capital gains they'd amassed in stock mutual funds since 1990. And while stocks rallied in March, we're not out of the woods yet.

It's time to get a grip on your money."

And

"Think big-ticket. Here's how to save hundreds of dollars a month: Set a higher deductible for home, automobile and health insurance. Refinance your mortgage. If you get a pay raise, use the windfall to trim debt and boost your bank account. Once you've set priorities, that $4 latte might be worth it after all."

And

"Eliminating a 14% credit-card interest payment is like getting a 14% risk-free investment return, and lifts a heavy emotional weight as well."

And

"When times get challenging, people get more creative," says Nathan Dungan, founder of Share Save Spend, an educational program that encourages healthy financial habits. "Be more attentive not only to how much you're saving, but where."

The Internet is a great resource. Take advantage of online retailers' discounts posted on shopping Web sites such as CouponCabin.com, DailyDeals.com, RetailMeNot.com and CoolSavings.com. Visit price-comparison sites including Bizrate.com, Shopzilla.com, PriceGrabber.com, BillShrink.com and Google.com's "Product Search" function to find bargains."

WATCH: More Money For YOU By Cutting Spending

Image by jtyerse via Flickr

Kiplinger.com has a great video with some quick tips to cut spending. Some categories?

• Food - Restaurants and Shopping
• Mortgage and Insurance
• Energy
• Transportation - Purchase, Insurance, Gas
• Clothing - Shopping, Reducing Impulse Buys, Credit card management etc
• Entertainment
• Vacation - Airfare etc.
• Utility and Technology Bills - Cable, Cell Phone etc., Conservation tips
• Pay Down Debt - Tax Exemptions,
  
• Life Insurance
• Cash Back Credit Cards
• Buying and Selling online, Shopping online, internet comparison shopping
  

It's just under 9 minutes. Totally worth it.

Morningstar's List To Cut Expenses

Image by .p a n e. via Flickr

Investors out there, I know you are familiar with this company - Morningstar - and the work they do as a leading provider of quality investment research.

Well, I came across this great article today from Morningstar.com: 101 Ways to Cut Expenses: Follow These Personal Spending Tips And Watch The Savings Pile Up

And check out the second line of the article: " But before investors can tackle where to put the money, they need to tackle where to find the money. "

Well said. Since I know many of you are tacking this "where to find the money" issue, I thought I would share this piece. This is a great reference. Have a look. I know, not all of them are feasible. I know not all of them are possible. And, yes, I know, not all of them we are even willing to do.

But it's 101 tips!

Out of that you must be able to find even one! And remember, doing even one is a step in the right direction.

And a tip from me? Look at the image in this post. See the Post It Notes on the computer screen? When you pick the expense cutting tips you can do of the 101 listed, there's a nice way to remember to do them - use Post It notes to remind you! :)

Increase Your Earning Potential. And Have Fun Doing It!

Image by mikebaird via Flickr

Tonight, I'm doing something different. I'm talking about increasing your earning potential And I'm telling you two personal stories to get the message across.

Take it from me. Do yourself a huge favor and sign up for a class. I heard that collective "Aargh!" :) No, you don't have to go back to school and read tons of books (although that's one of my favorite activities). What I am recommending is taking one of your personal favorite activities - could be a hobby or an interest - and getting some structured skill development in that area.

Let me tell you what I have done. I've decided to get serious about my hobbies. I've decided to do my own research, practice what I learn, and seek technical training in formal settings. A class is a great way to make new friends with like minded people with similar interests, and also learn a lot of information in an effective way. I'm investing in myself and having a ball doing so by turning a hobby into an potential source of income. Try it. It doesn't have to take up all your time, or replace your main source of income, but in these days of uncertainty, diversifying your skill set is a wise move. Invest in yourself, it's worth it.

Which hobbies did I get serious about?

Well, first, I decided to get serious about photography. What does this have to do with earning potential? Everything.

As it turns out, there are tons of opportunities, especially now with the World Wide Web, to earn a bit of extra income from photography. With a bit of research you can match your interest with a willing market of buyers. Don't believe me? Well, there's stock photos, there's submissions to local newspapers, there's also work as art etc. I went to a great exhibition last Sunday - Just Photographs - and WOW what amazing work by professionals. And some nice prices for the work too. I'm taking a class now and loving every second of it. I have learned so much from my classmates and my instructor. And I have met people who I share a common interest with. It's been awesome!

Second, I decided to get serious about blogging. What does this have to do with earning potential? Everything.

I've been blogging since late last year. I've moved from one blog to two blogs. I blog everyday now. I do tons of research on how to blog, best practices, and how to increase earning potential from blogging. It started as an vehicle of expression - I'm pretty opinionated if you couldn't tell :) But then I started these personal finance experiments to help others in this economic downturn. I knew my readers are looking for ways to earn more money. So when I learned that people make money from blogging, I've tried some of the monetization techniques to see if they work so I can tell my readers how to do it. It's just some ads, really. But there's a whole skill to doing just that effectively. If I get it right, I'll be sure to share.

Blogging - with or without monetization - is actually a real skill and a very hot trend. I can use blogging in my full time job, or call upon that skill one day if I wish to to earn some additional income. So, taking my own advice, I took a one day seminar today and learned a ton! Not only am I investing in myself, I'm doing something fun, I am making new friends who have similar interests. If you like writing and knowledge sharing, and you are comfortable with the Internet, social media and cyberspace, you might want to try this.

But hey, those are just my examples of how I am taking my hobbies and turning them into the potential to be much more.

What do you like to do? Teach? Write? Name it.

Who knows, not only will you be happier if you do more of those things that you like to do, they may just help to pay the bills! :)

Need Some Help With Saving?

Image by Getty Images via Daylife

So often people tell me that they really understand the importance of saving, feel the need to save, want to save, but just cannot see where the money will come from. They look at their budgets and see fixed and/or rising expenses. And they see fixed and/or decreasing income.

Well, sometimes, it takes a second pair of eyes to see where the savings can come from.

If you are one of those people I described above, and if you feel comfortable in seeking help, talk to a friend or a professional who is not as personally committed to your expense categories as you may be. He or she may be able show you your expenses in another light. Or, you can read this great piece from from Kiplinger.com: Save $50 a day (and feel no pain).

• First of all, the article has tons of suggestions to save more than $50.
  

• Second, the article has sub-sections to "pay less " for banking and loans, health and insurance costs, utilities, food, transportation, investing costs, leisure, high tech and high fashion.

• Third, the article provides a link to actual stories of "super savers".

Now, you don't have to do all of these suggestions. Many of them may not work for you. But there are so many suggestions, it's likely that even one will work for you and adopting even one would be a start. And remember, everything you do not spend but save instead represents an opportunity to earn interest on that saving. :)

Words Of Wisdom

Image by Bohman via Flickr

I came across this gem today: 7 Keys to Financial Security from The Wisdom Journal.

It's a short piece that explains these 7 keys (their titles)

1. Live on less than you earn

2. Invest in your own stock

3. Insure yourself and your loved ones

4. Pay yourself first

5. Avoid borrowing money

6. Invest in boring things

7. Diversify, diversify, diversify

A worthwhile read!

Food For Thought

Image via Wikipedia

A few weeks ago, the Jamaica Gleaner ran an excellent piece in Money Management: You are financially unprepared if....

I have found that some people have great intentions with regard to money management, but have not fully grasped the context of how the various pieces fit together. For example:

• So maybe they go looking for great deals, but charge purchases on credit cards and pay only the minimum until it is paid off. That defeats the purpose of money management.
  

• Others, have a difficult time prioritizing and saving a nest egg, because they see the "now" and not the "what if". That also defeats the purpose of money management

In this piece above stated, the author gives a great job of spelling out where people typically make the big mistakes, and her opinion of what you should do. I would not necessarily advocate every single one of her solutions concurrently, because it really depends on your personal circumstances. However, the basic arguments she makes are very sound.

A worthwhile read!

Save More: 20 Quick Tips

Image via Wikipedia

This is a dated article, but a gem.

Kiplinger: 20 Small Ways to Save Big

Very practical ideas and you don't have to even do all of them. Even one would be a start.

Plus the articles has tons of links you may find interesting.

An Emergency Fund - The Basics

Image by lantzilla via Flickr

I came across this great article from Investopedia.com today: Build Yourself An Emergency Fund.

---

It starts:

"Unlike the luxuries that so many of us purchase with our credit cards, having an emergency fund is a necessity"(my emphasis).

---

It notes:

"If you are among the many investors who don't have a "rainy day" fund stashed away in case of emergencies, there's no time like the present to start saving " (my emphasis, but note the word SAVING)

---

It reemphasizes:

"The amount of money required to fund a proper emergency fund is certainly significant, but we live in uncertain times with uncertain economies. Corporate loyalty is a thing of the past and unemployment can happen unexpectedly, usually at the worst possible moment."

----

It's a short piece that covers:

• Why
• How much
• Techniques to get it started and build it

It is well worth your time to read it.

4 Things You Must Know About Investing

Image via Wikipedia

As promised, I am venturing into some investing basics.

But, wait, before you get excited, I have no hot stock tips.

In fact, that is exactly what this post is about - what you need to know before you listen to other people.

So, although these are just a few basics, here are 4 "must knows", in my humble opinion:

• Saving and Investing are two completely different concepts. Yes, I know I probably sound like a broken record, but after what has happened in the world - both close to home and abroad - I feel like this point must be made again and again: You must save, you do not have to invest. When you invest, you are taking a risk that you could lose your entire principal. That is the reality. And you take that risk in expectation of a higher return than you can get on money you save. On the other hand, when you save, a portion of your saving in a regulated licensed deposit-taking institution is insured to a limit. Some people use the terms "saving" and "investing" interchangeably but in reality they are not. Quick Tip: Given the proliferation of financial products and Ponzi schemes, make sure you get details of what happens to your principal. Just ask. These days, return of principal is just as, if not more important than return on principal.
  

• Your savings, obligations and age matter - a lot! In other words, don't invest until you have a comfortable cushion of savings. Experts say 3-36 months of salary. In this environment of uncertainty in the cost of living and job losses, 3 months worth of savings is far too low in my humble opinion. If you have high expenses and obligations, then you cannot afford to risk money that you could lose (remember, that is what an investment is). Finally, the older you get, the less risk you can afford to take. That makes sense because your potential working years are declining, and you are coming closer to retirement.

• Do not invest in things you do not understand. How many times have people tried to convince you of "a sure thing", and told you "here's a hot tip"? It may very well be, but if the person telling you cannot explain the investment and why it's such a "hot tip" or a "sure thing", then that's grounds to doubt it. And it would be prudent to understand what influences the investment - what external factors are likely to make the investment do well or do badly. No one is expecting you to be an expert, but it's your money - you should be able to evaluate if what the "expert" says makes sense.

• Know Yourself. Believe it or not, this is one of the most critical things about investing - knowing your own risk-tolerance. You may get a great tip, understand what the investment entails, understand that it's an investment (as opposed to savings), but it may just be too risky for you. On the other hand, remember that not all investments carry the same risk, and some - under the right circumstances once you have sufficient savings tucked away - may just be right for you.
  

Quick Money Management Tips - Free Video Link Here

Cover via Amazon

When I started this blog, I recommended David Bach's Smart Women Finish Rich to get you started with making personal finance doable. It's very logical and straightforward.

He has other versions for couples etc., but substantially, the basics are the same. Another very popular one is Start Late Finish Rich. There is an Amazon search link to the right of this post. Just type in "David Bach" and see all the options.

Now, David Bach has a website where he shows all the clips where he appears on program such as Larry King Live, The Today Show, Regis and Kelly etc.

Here is the link.

Now these videos don't replace the book, in my opinion. But its a great way to get loads of quick and easy tips. Not only can you learn from him, you can learn from the other guests as well as the people who call in. Sometimes the programs he appears on cover job hunting etc, so this video link is a great resource.

Hope you learn something new! I did!

A Quick Way To Have More Money Immediately

Image by spacebahr via Flickr

I came across this blog post, and I thought it was so powerful I decided to share the link rather than share the tip within in.

Kudos to the author. It's so simple but so true.

Read this short post: One Thing You Can Do Today That Will Put You In Better Financial Shape Tomorrow

Now maybe you can't go a whole day without spending, but trying giving up one item that you would normally buy regularly, if you can. It's a great way to start.

Everything you save and don't spend, you can earn interest on it. That's more money for you.

Everything you don't buy on credit, does not cost you interest on savings foregone and does not increase your costs by debt interest incurred. That's more money for you.

A Cautionary Note

Image by Picture Perfect Pose via Flickr

If you notice, there are Google ads on this site. My blogs never used to have any ads, but as part of my personal finance experiments, I have added them.

Why?

I blog because I love writing and sharing knowledge, and blogs without ads achieves that purpose. However, because I know that my readers are all looking for ways to earn some extra money and blogging can do that - especially when you learn the best practices - I added the Google ads so that the blogs were not only a hobby, but also a personal finance experiment.

The objective is to see if you could earn money doing this and how. This takes a lot of research, but there's not a lot you need to know to get started. My objective is to share that knowledge with readers in my "quick tips" style.

If it's successful, I'll say what did it. If it is not successful, I'll say why.

So far, both blogs - this one and Reasoning The Reasons - have earned money. Not much, but it actually works. And I'm learning more everyday. In addition to adding content, I tweak the blogs - features etc. - everyday to optimize it. And yes, how Google ads work is that when you click on an ad, there is a potential for any website with Google ads to earn money. Please note: I am neither encouraging or discouraging you do so.

Now, unlike all other content on the site, I cannot vouch for any of the sites listed as Google ads. The Amazon ads were placed there deliberately by me - and I can vouch those are legitimate links to the Amazon website. Some of the Google ads I recognize immediately, such as whenever there is a link to the New York Times. Evidently, that would be useful. Clearly that is a legitimate site.

However, not all the Google ads I recognize, and the Google ads change with every page refresh. Not all unrecognizable Google ad are scams, I've found some cool ones. Many legitimate and famous companies find Google ads to be effective marketing tools. BUT, some Google ads may be. That is not Google's intention, but it happens. If I find something I perceive to be a scam, I will block it as soon as I can find it.

Like everything in life, buyer beware. In fact, if you see information presented in a Google ad that you are unclear about, do some additional research. There is a Google search box at the top of this post. Don't believe everything you read; but equally don't avoid reading when you could learn something. Information is good, but what you do with that information is even more important.

Quick Tip: If someone asks for money to give you a job, make sure you do proper checking. According to an article in the Jamaica Gleaner on January 25, 2009 entitled SWINDLED! New breed of white collar thieves strike banks, it was reported that in 2007, Jamaicans lost J$80M paying people to place them in jobs. Now, the article did NOT say this was online or any form of online advertising - Google ads or otherwise. But, it is not impossible for such a solicitation to be made online.

The Easy Way to Make a Budget

Image via Wikipedia

Remember, money management begins with a realistic assessment of your financial status. See my earlier post here: More Money - The Basics.

It's time to make sure your budget is realistic, and if you don't have a budget then you need to make one.

Budgeting and sticking to the budget is critical to money management. The most successful budget will be the one you make for yourself - only you know what you are realistically willing to do and not do. By all means, get advice. And another opinion of someone you trust is always helpful to give you ideas. But be honest with yourself about your priorities. After all, it is your money that you're spending.

If you are not familiar with budgeting software (are there are tons), start with Microsoft Excel. You are just entering what money comes in and what money goes out - categories and amounts. Excel makes it easy to increase and decrease numbers in each category to see how you can get a better result.

This is a great post I happened upon: How to Make a Budget in 10 Easy Steps

It's a worthwhile read on how to make a budget - easily!

FREE Online Personal Finance Courses

Image by Omega Man via Flickr

Check out this article in today's Wall Street Journal about the sharp increase in online personal finance courses: A Boost in Online Money Management.

What's the trend? People are arming themselves with knowledge to make informed decisions. Even if you use a financial adviser, it would be prudent to ensure that you have enough of your own knowledge to evaluate if his or her recommendations are appropriate for you, your particular financial situation, your goals, and your risk tolerance which determines not only investing, but also how much money you feel is a comfortable cushion of savings in the current environment.

There are many FREE and paid services you can enjoy from the comfort of your own home!

From the article: "Popular courses included those on reducing spending, and ways of saving and creating a priority spending plan. "

With a little due diligence to ensure the information is credible, do yourself a huge favor and check out some FREE or paid personal finance courses!

What's a small investment of your time if it saves or makes you money for your own financial security?

Guess What Americans Are Doing? Saving More!

Image by Daniel Y. Go via Flickr

Today's news was interesting. In the last few months, there has been a steady increase in savings rate in the US. At one point in recent years, it had been negative. See an article here in the New York Times: Consumers Increase Savings While Spending Less

So, I'm thinking this is great news!

After the recent financial crisis and given the ongoing uncertainty, people are making sure that they are more conservative with their money, doing the absolute basic minimum of personal finance which is making sure that they have adequate savings, and really making substantial steps to get themselves back on their feet.

However, some economists argue that when people save "too much", the economy takes long to recover because businesses need the revenue to employ people etc. OK, I see the point. But, consider this:

There is nothing wrong with saving. Saving is the absolute basic minimum of personal finance. You don't have to invest (which is to take on risk with the hope or expectation of a return). You don't have to borrow (which is to take on debt). But you do have to have money to spend for the basic necessities of life and that comes from earning and saving.

If you want to get higher returns than what you can get from savings, and are willing to take the risk of losing all your money, then you invest.

Saving is not investing. I repeat, saving is not investing.

Saving is what you do when you place a deposit with a regulated financial institution at a stated interest rate applicable to that deposit and that deposit is insured up to a limit by a Government agency (such as the FDIC in the US and the JDIC in Jamaica)

If you want to buy things that cost more than your income, then you borrow and pay a premium for that money not being yours. That is what debt is - other people's money and you are using it. If you can wait, it is better to save for an item than go into debt to buy it. Why? Because debt costs money. That money is called interest and that debt interest will in most cases - unless it is concessionary debt - exceed your after tax interest on savings dollar for dollar. So after all your time spent saving, you would be effectively losing some of that interest every time you use any form of credit.

Now, back to this debate between savings and economic recovery.

Now, as I understand it, in the US people lost the ability to access credit - many of them through no fault of their own. If you don't have your own money - which is savings - and you don't have credit - either because of the banking crisis, the new lending standards of the bank, the credit rating system, or because you owe too much money - then what are you going to use to consume? You need savings.

Massive borrowing fueled unsustainable levels of consumption. Would some economists prefer that the economy "recover" by people borrowing which they might not be able to do anyway? Would some economists prefer that other people - who are fearing job losses - use up their savings to consume? Because when those savings are depleted, people will have no money to consume, and will have no savings and possibly employment income to qualify for credit to then consume. At some point, the economy will run out of people who have money to consume.

Why, in this time of record job losses, and market uncertainty should people not save more? Now, I love consumption as much as the next person but I have zero interest in unsustainable consumption. Unsustainable consumption, unsustainable debt with limited, zero or negative saving is how we ended up in this global mess.

No matter how you look at it, consumption gets a hit.

In order for an economy to be sustainable, there has to be a balance between consumption and saving.

We cannot continue to live in an interconnected global economy with such great information asymmetry - where so many people do not understand the basics of personal finance:

• that savings are absolutely mandatory;
  
• that savings are NOT investments;
  
• that you have to evaluate investments not just based on hot tips or recommendations but based on your individual risk profile, needs and age in life;
  
• that debt eats away at your hard earned interest and needs to be managed
• that you should only take on debt in accordance with your realistic ability to repay, and fully cognizant of the true cost of debt
  
• that expenses (and hence consumption) must be managed so that they can be paid from earnings without depleting savings, savings goals and ability to save. Remember the "Pay Yourself First" principle, you must save before you do anything else!
  

I could go on.

In order for anyone to prosper, as we have seen, everybody needs to be at a basic minimum level and it is up to education reform, advocacy, and helping each other that this financial literacy will be achieved. It has to start from a very young age.

If you spend money, you must know how to have money to spend - that is, to save.

It is said that those who weathered the Great Depression were the conservative spenders and the aggressive savers. Although we are not in a Depression, we would sure like to avoid one. The only thing we are certain of is that we are living with uncertainty. And if you don't know if and how much money you are likely to earn in the immediate near future, isn't it prudent to adopt some conservative spending and aggressive saving habits?

Great Slidehow of Money Saving Tips from Oprah.com

Image via Wikipedia

Click here: Money Saving Tips from Thrifty Families

This is a quick slideshow of great tips on Oprah.com featuring CNBC's Dylan Ratigan, and loads of ideas from people who are finding ways to save more money. Everything from budgeting, coupons, money management, discipline in spending, some do-it-yourself around the house, utilities, alternative vacations - such as going to the beach etc. There are also stories of people helping other people, and how Google can help you find deals and free"stuff" in your neighborhood.

When I read "going to the beach" as being thrifty, I thought how often so many of us don't consider a vacation to be a vacation unless we have gone on a plane shopping somewhere. If you do want a vacation, Jamaicans - why don't we try vacationing right here and supporting the local tourism industry - any realistic budget does have entertainment provisions. :)



If you do watch Oprah's show, Tuesday's show is entitled "The Thriftiest Family in America"

Plan to Take Action in 2009

Image via Wikipedia

I remember watching the opening bell on the first day of trading. Trading is a speculative activity, involving risk with the hope of reward.

And here was perhaps the most famous personal finance expert/author, Suze Orman - someone who counsels about money management, the virtues of saving, the importance of managing debt, and taking risks only when you have evaluated them, understand them and can do so depending on your age and stage in life - doing the honors.

It was a very interesting note to start the year. And to me it signaled that this should be the year of financial literacy, and greater risk/reward determination, and ultimately responsibility.

About Economy
Read the Article at HuffingtonPost

A Kiplinger Article - Where The Jobs May Be

Image by ForestForTrees via Flickr

Kiplinger.com (the online version of Kiplinger's Personal Finance Magazine) recently published a very interesting article - 13 Hot Jobs in Hard Times - on where the jobs may be in a Recession and/or Depression. Check the article out for details on the categories:

1. Accountants
2. Education
3. Entertainment Industry
4. Utility Companies
5. Repairers
6. Energy Industry
7. Health Care
8. Senior Services
9. Law enforcement
10. "Sin" Industries (see article for their definition)
    
11. Clergy
12. Repossession, foreclosure and debt collection
13. Government Work
    

More Money - The Basics

Image via WikipediaTo get you started, there are 3 basic things you need to remember about money management.

1. SAVE, SAVE, SAVE.

No matter what, you HAVE to save; you MUST save. Saving is not - I repeat not - investing. This is saving - take money and deposit it with a regulated financial institution where your deposits are insured (by the FDIC in the US or the JDIC in Jamaica) up to a limit, and where that regulated financial institution will provide interest at a pre-defined interest rate on that deposit over a period of time.

Why is saving the foundation, the key?

• When you save, your money earns interest for you. Now, other than working to earn more or receiving a gift, how else do you get "new money"?
  
• Save more, earn more interest.
  
• Save longer, earn more interest.
  
• Save your interest and your interest earns interest.

Saving is the absolute basic minimum you must do!

What is the best way to save?

Heard of the "Pay yourself first" principle? Before you do anything else, as you get a paycheck or a payment for services rendered, take a portion and save it - don't invest it, save it. It would be best if you could get into a habit and decide on an amount and do it by salary deduction. That way you don't agonize over "should I' or "shouldn't I". Trust me, after a while you won't even miss it and you'll be happy to watch those savings grow every month. Remember this if you remember nothing else.

2. SPEND LESS.

Easier said than done, right? If you are in Jamaica, this sounds impossible given the cost of basic necessities. Well, here are some suggestions:

• Exercise discipline in consumption. Buy what you need, not what you want. Yesterday's post gave you an idea of how that can work.

• Find out all benefits and discounts available to you and use them. Trust me in 5 minutes what you save by using these discounts and benefits can exceed one year of after-tax interest, dollar for dollar. Come back tomorrow for some specific tips on this one because I discovered big savings and small savings here. Regardless, they all add up.

• Take on reducing spending in your utilities as a special project - phone, electricity and water. I've done experiments with those and I'll share them later in the week.

What's the one thing to remember with spending less: When you spend less, you have more money to save which earns interest.

3. MANAGE YOUR DEBT.

This needs some clarity. Not all debt is bad. Debt that is unsustainable is bad. Debt that you cannot afford to service is bad. If the price you pay for being completely debt free is depleting your savings, I would say that is too high a price. So let's think of debt as something you manage.

• First, dollar for dollar interest charges will exceed the after tax interest earned on savings. This means that you are paying out in interest more than you earn in interest. So, if you have debt, the experts advise you to rank them starting with the highest rate and aggressively pay down that one, then the next highest rate etc. Now important: always service all your debts because not only is it the responsible thing to do, if you don't, then you pay penalties and fees, and it's bad for your credit rating. So, when I say "aggressively" pay down debt, it means pay more than the minimum to eliminate it faster.

• Second, really try to minimize using credit cards. Use cash and ABM cards (fee free preferably). If you can wait, save towards the goal to purchase the item. If you can't wait, remember that you are paying more for the item in finance charges. Would you want that item if it were $150 instead of $100? You may have paid $100, but if the charge sits on your card, then you may end up paying more like $150 (depending on interest rate, time to pay etc.).

What's to remember with managing debt: Less debt, lower rates, shorter time periods means less in interest charges which you could have saved to earn interest. Oh, and pay your debt on time to avoid late fees because those add up!

Those are the absolute basics.

For each category - savings, expenditure and debt - there is much more we can discuss. But we'll get into that later.

Now to get you started on your journey, you need to make an assessment of your current financial picture. What do you earn? What do you save? What do you invest? Did you remember saving and investing are different and do you treat them as such? What are your expenses? Can you track every cent you spend every month? If not, start a log and write it down. How much debt do you have? What interest rates are you paying?

Want to know what I did? I have had an Excel workbook for years, and I have different tabs for different categories and its color coded and everything. I know every single dollar that comes in goes out, and have different scenarios for debt, saving and investing.

• That means I track my accumulation of savings and make conscious decisions about when and where to put my money.
• That means that I have an extremely detailed budget and I know all my regular expenses, and make a provision for contingencies
  
• That means before I even use a credit card I know what it is likely to cost me even for one month in interest.
  
• That means before I decide if I should invest, I know the expected return, I evaluate the risk in terms of the market environment and my own personal finance goals. I know where the funds will come from, and I do not sacrifice my savings goals.
  

My model is very straightforward and I know where to find everything, and change parameters for scenario planning. I have projected at least 5 years into the future. And it's very conservative. It works for me. Some people prefer to use software. Find what works for you.

Now assess the picture, do you like what you see? Are you saving? Are you saving enough? Do you know what enough is? Have you figured that out? Are you meeting your expenses? Do you see anywhere you could cut expenses? Have you looked at your monthly interest charges on debt? Did you realize that if you paid even a little more in debt payments you could reduce your interest charges, and therefore the total cost of the debt?

Now, don't worry. If this is all new to you, we can walk though all of this to make it manageable. But the very first place to start is with that picture. If you don't know what is broken, you cannot fix it.

As I said, come back tomorrow for some big and small savings I've discovered through benefits and discounts.