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L. Keith Jordan
2009.0216 (last update 2009.0318)
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LEVEL ONE (your finances are distressed)
Save whatever you can
  • The key phrase is "whatever you can." Pay yourself first (manual or automated) by depositing money in savings, even if you have to withdraw it later to pay for bills and necessities. Hopefully you'll find that some of the money saved gets to stay that way.
  • Set a small amount and increase it each time you are able to consistently leave it in savings.
  • I know this sounds difficult and almost counterintuitive, but I know from personal experience that it works. Even if you can only muster $5 or $10 per paycheck at first, you'll hopefully begin to be able to leave it in your savings more often than not. As I've often said, budgets are a lot like water -- they expand to fit the space available. Reducing the amount available to spend can slowly begin to affect the amount actually spent. If you have to withdraw from savings, withdraw the least amount necessary to get the job done. Even a dollar or two not transferred is a dollar or two saved that might otherwise have been spent. And every dollar saved grows with the miracle of compound interest. An added benefit is that you are building a revolving fund for use in case of emergencies.
Stay liquid
Pay your credit cards
Try to get your credit card rates down
  • If possible, negotiate lower rates on credit cards.
  • Consider alternative debt sources such as Lending Club.
Use your head
  • DO NOT be greedy. Earnings rates that are too high and performance that is too consistent are probably too good to be true. The question is: do you really want to take the chance? Look for a reasonably high interest rate or dividend rate, and compare it to the average rates for similar products using sites such as Look for FEDERALLY-INSURED accounts whose rates are somewhat above the average.
  • READ THE TERMS (including costs, fees, penalties, and risks) BEFORE you open an account, purchase a CD, or try to consolidate credit cards. Don't be lured into something that can cost you more than your earnings if things don't work out as expected.
  • Don't get snookered. IF YOU DON'T UNDERSTAND IT, DON'T DO IT. Some very intelligent people have forgotten this very basic rule and it has often lead to disastrous results.
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