STARTING A BUSINESS NOW

Nearly 45% of families spend more than they earn. Average credit card debt is around $8,000 per household. The average combined debt of households is a staggering $85,000. Numbers like these are hard to swallow when they are on paper.

How do you think families are surviving when such numbers are their reality? The truth is that they are living on a slippery slope that can only end up in foreclosure and financial ruin.

If you are the average person, your financial debt numbers probably look like the ones mentioned above. Of course, your numbers could be a little more or a little less. Regardless, you might feel like your level of debt is bearable.

Unfortunately, such thinking could lead to your demise financially speaking. Before you get all rosy and comfortable with your level of debt, let’s take a moment to see where you should be as far as debt is concerned:

* Savings – Let’s start with savings. You should be saving at least 25% of your net income, 40% is better. And when I say save, I mean save for the long term. You should have an easily accessible fund worth at least three months of income. In this economy, 12 months income is more secure. You should also be putting back money each week toward long term savings plans such as retirement, education, investments, etc. If you cannot spare this much for savings, you have too much debt.

* Housing – Your housing costs should not exceed 30% of your take home pay. Housing costs include mortgage/rent, insurance and taxes. You should also calculate repairs and maintenance into this figure. If you’re paying too much for housing, you need less house. Refinancing your home may make your house more affordable. If this is not an option, you may want to think about downgrading.

* Budget – Your entire budget including all of your bills, groceries and expenses should not exceed 60% of your take home pay. Think about this: After you pay for housing costs, utilities and groceries, there will probably not be much left over for bill expenses such as credit card payments, auto payments, gym memberships, etc. In order to get expenses under control, you will have to think long and hard about what to keep and what to eliminate.

The 60/40 financial debt model is not impossible to attain. All it takes is dedication, close monitoring and a few lifestyle changes. Once you get used to living within your means, you will find that such a financial model allows you to have more freedom.

You will not be worried about debt, and it will seem like you have more money than you do now. The hardest part is getting started. You have to let go of your old ways of thinking. Stop using debt to finance your life. Adopt a saving strategy instead.

Get my famous introductory 20 FREE lessons eCourse about Making Money that over 179,000 people have studied and applied at: www.the-richest-man-in-babylon.com.