Rongnongno wrote:
Well, sorry that I cannot relate in some aspect of your life since I basically retired at 35...
The key is budgeting.
When I want something I start a budget, even before looking at anything meaning that when I purchase something I am already planning for the replacement.
The result is that I/we (my wife included) is that we always pay cash, even for the car she purchased 5 years ago.
You will not believe the power of cash. No financing, no extra cost, no interest, no monthly payment. Basically no pressure exists in life.
You seem to be well, off so what do you know? Well, we started hand to mouth but early on after seeing that we created a spreadsheet to see where our pay was going, to the penny. The result was telling: we were spending too much in stupid stuff*.
We put a hard stop to that, took two years.
After that we started looking at other expenses and started killing them, one at a time. We do not drive in new expensive cars, in fact two are antiques. We do not have a 'fancy' house. We live simply within our means.
Still we budget everything, vacations, purchase common or individual and move onto it only when we can pay.
So, you want a 'How'?
Observe your spending habit.
Kill what is unnecessary.
Retire your debt
- Stop using credit cards that have a running balance
- Kill all store credit cards, even if you pay them in time. Seeing your cash flow through your hand will slow your spending, trust me.
- Consolidate your payment into as few as possible (best is one, a personal loan at 8~12% is much less than 19 to 22%)
- Kill all but two credit cards and place these two under lock and key so as not to use them
- Pay off the higher interest bearing debt first
- Always pay more than the balance due
- Pay your monthly obligations (rent, stuff like that)
- Pay yourself (retirement, saving for whatever)**
- Budget your daily/weekly/monthly expense (food, hair cut, whatever)
- Never pay full price, there are always promotions, rebates and stuff like that. Thrift shops often offer some surprisingly good deals. Specialty stores that sell about to expired food item often sell for pennies over a $, huge daily savings there.
- At the end of the month place the positive balance toward paying your debt in addition to what you have already paid. Do not wait for the due date to that by the way, the balance is accrued every day so the earliest you do the less interest.
All this will not make you rich but will have several positive impacts in your life:
- You are back in control
- Your self appreciation will go up (the most important in my opinion)
- You will find yourself in a situation where you can actually afford things from time to time
- The closure of credit and store cards will raise your credit worthiness
- A single payment on a personal loan will also raise your credit rating (ratio income/debt+obligation)
- In the end, if you are able and consistent in following this 'advice' you have taken healthier habits that will last the rest of your life.
There is really no secret to 'how'. Just discipline and self control and stop paying the damned banks. The whole capitalist system is geared toward spending on credit, fight back.
For anyone reading this: YES I am a cheapskate.
Edit: Something that will demolish the cheapskate issue... If you really want something purchase the best possible for your budget. This maybe more expensive in the short run but in the long run, you save $$$.
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* Neither of us smokes or drinks so other stupid stuff like not paying attention...
** Why pay yourself instead of paying your debt? Because once you have enough you can do something for yourself and this what is is all about. You should not work for a bank but for yourself. Think of #1 (You).
Well, sorry that I cannot relate in some aspect of... (
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Wow ! - the most sane and lucid posting I have seen by you ! ( meant to be a compliment ) very impressive.