Fantastic Finances – A How To
The first step in getting finances in order is to lower the amount of debt. It is fine to have some debt at low interest rates (low interest rates are relative at times), if the amount can be repaid within three months. The key is to owe as little money as possible. Cash should always be around for emergencies. Liquidity is a necessity.
This brings up the subject of auto loans, many of which are offered for terms up to 5 years at 0% interest. Yes, this is free money, but if you have nothing to back up an instant repayment of the loan, should unemployment suddenly result, it is not a good deal. The principal has to be repaid at monthly intervals and if you do not have cash to back up a tragedy that occurs, you could find yourself in a financial bind.
Do not make purchases that are obviously unnecessary. The newest phone is not a requirement unless your employer pays for it. A phone should be in style and hold enough technological advances for at least two years.
People are under the impression that they have earned easy money on the resale of their homes. This will not be the case for the foreseeable future, and probably was not the case unless a home was purchased back in the 1960’s or 1970’s. After all you paid about 2 1/2 times the price of your home when the mortgage was paid off. The high sale price that you receive has already been paid in interest. The profit is illusory. Besides, you will have to buy something else for a roof over your head. This means that you should not take equity out of your home for unnecessary purchases. Many of those that had are now facing foreclosure.
