Live within your means—
This is a derivative of what you are earning, and how much
you need to put aside in saving towards the goals you have set for yourself. What
you can live on is the difference between the two. As a general guideline, an
upper limit of 60% of your after-tax income is what you should allow to go
towards your living expenses consumption.
Monitor your debt-load ratio.
This measures the extent to which what you own has been
financed using debt. It is computed as your total debts as a percentage of your
total assets as at a given date. You should aim at keeping this at no more than
35%. Anything above this is a red flag you must attend to.
Prioritize your goals.
Often debt trouble s are fuelled by poor prioritizing, where
you will try and do more than your finances will allow you within a given time.
Debt has been marketed as that extra cash you are lacking to enable you buy or
do something now rather than later when finances will be available. This very
easily interferes with your objectivity in prioritizing achievements of your
goals, thus growing your indebtedness.
Contentment
The more discontented you can be made to feel where you are
or what you have, the more successful the consumerism that drives our economy
will become. There always seems to be something extra that you need to feel
better about yourself, more accomplished, happier or at peace. Related to the
point above about prioritizing, you need to consciously practice contentment. Discontentment
is very expensive.
Financial discipline
Making financial headway by keeping your debt in checks is
like swimming upstream. It requires a plan, determination, and plenty of
discipline. You need to learn how to say NO more often, fight off the temptation
to spend, spend, spend, and stick to a spending plan you have drawn up on how
to spend no more than 60% on consumption.
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