Everywhere you look these days you will see homes being foreclosed, people filing bankruptcy and an increasing number of folks on government assistance. It never used to be this way - before the 1970's when liberal thought began taking hold on America, people were more involved in their efforts to use their resources wisely. They would use something that is disappearing today - a household BUDGET. And they would go without rather than place their families in financial jeopardy.
Today, however, we live in a society that is all about DIG debt. I call it DIG debt for two reasons - it is an acronym for "Debt for Instant Gratification". It seems everyone wants everything now, and "I'll pay for it later." Maybe. The other reason it is called DIG debt is because it effectively digs a hole for the consumer to fall into that he may not be able to extract himself from.
To protect your family and have the best shot at remaining financially solvent, I suggest everyone follow the 10-20-30-40 rule. It's simple, and it works. Of every dollar you earn, the very first 10% goes into savings - pay yourself first. That will become your "anchor" and safety margin. Then 20% of every dollar should pay all consumer debt - car loans, credit cards etc. If you are paying more than 20% of your income to consumer debt, you need to reduce it now. You can learn how to do this easily by visiting this page that provides a simple and very effective consumer debt plan presented by IntelliBiz. (There is a LOT of free stuff at intellibiz.com, like the stuff on this page). And don't forget their free eBook on success - Success - By Design, downloaded over 4,000,000 times.
The next 30% should cover all other expenses, including food, clothing, medical, entertainment etc. If spending more than that, it is time to start tracking, day-to-day, where the money is going, and make cuts accordingly.For example, if lunches at work are costing you $7 per day, consider brown-bagging it. Or cut out the Starbucks.
The remaining 40% is for shelter. This includes more than rent or mortgage payments - it includes any and all maintenance, insurance and property taxes.
By adhering to the 10-20-30-40 rule, not only will you be more likely to be financially solvent, but you will find your wealth is growing. That 10% you save? Once it grows to a sufficient amount, invest it for a return. Let it grow. And the peace of mind that comes with stability is priceless!
If you have found value in this, please pass this post around to everyone you know and care about. They will thank you for it.
Bill Vaughn
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