There are many advices out there on how to deal with and succeed in
your personal finance. Just like your goals in physical fitness and
other areas of your life, you have to have goals in order to succeed in
your personal finance. What does it mean to succeed in your personal
finance? Success in personal finance means different things for
different people.
If you make a lot of money but have a lot of
debt, then you will still struggle with your personal finance because
you are not making the most out of the money you have. You will be like a
bath tub full of water coming in but most of the water is going down
the drain. The end result is that you do not have enough water to take a
bath.
If you do not make a lot of money (compared to the meridian
family income which varies from city to city) which for the sake of
argument is less than $50,000 a year but you do not have a lot of debt
or other expenditures. You will notice that you do not struggle
financially because your income is suffice. Over a period of time, your
accumulation of income will enable you to succeed financially.
After
listening to many experts and even practicing many of their advices,
there is one advice that allowed and enabled people to succeed in their
personal finances. Here is that advice:
THE BORROWER IS SLAVE TO THE LENDER.
What
does that mean? It means that if you owe money then you are always
enslaved to the company or person you owe that money to. You will never
get ahead financially if you owe more than you make. Your net worth is
your asset minus your liabilities. In order to have more of a net worth,
then you will need to have more accumulated financial assets than
financial liabilities.
Most people will argue what can be called a
financial asset. With the down turn in real estate, many of the
properties have become a liability when they were once an asset. But,
most people including those experts would agree that credit cards and
loans (especially car loans) are a liability.
We have to eliminate those liabilities such as credit cards and car loans in order to not be financially enslaved.
Money
is definitely not the most important thing in life. But, it is
important enough that we have to pay attention to our liabilities by
eliminating those liabilities in order to succeed in our personal
finances.
