7 Dangerous Credit Card Mistakes You're Making

Consumer credit makes buying the stuff we want and need easy and convenient. Credit can also bail us out of a jam, especially if our emergency funds aren't quite up to the task. Unfortunately, that convenience comes at a price. Aside from uncontrolled, in-the-moment spending, credit card use opens us to a variety of dangerous financial mistakes, some with long-term effects.

You probably already understand the dangers of running up those credit card balances, but here are few more dangerous mistakes you may be making, plus some tips on how to avoid them.

1. You only pay the minimum due. Banks use several formulas to calculate the minimum amount due each month. Most start with a percent or two of the outstanding balance and then add in any fees for late payments, exceeding the credit limit, and monthly interest charges. However it's calculated, simply paying the minimum will result in lots and lots of interest payments over time.

You can find out how your credit card issuer calculates the minimum payment by visiting your issuer's website. Your bank's site may also include a calculator that shows you how long you'll owe -- and how much interest you'll pay -- if you merely pay the minimum. If not, try this credit card debt calculator.

2. You pay late. According to FICO, which generates credit scores, payment history is the largest component of a credit score -- 35 percent of the score, in fact. This makes sense because lenders want to know how promptly borrowers have paid in the past, and nobody likes getting paid late. Late payments mean a lower credit score.

There's a second danger here as well. Late payments will result in late payment fees from your bank, which not only cost you a bit more (or a lot more, depending on your agreement) but may also boost your monthly minimum (again, depending on your agreement).

3. Your utilization ratio is too high. After payment history, FICO looks at the "amount owed," which makes up 30 percent of a credit score. The key calculation here is the borrower's credit utilization ratio, which is how much available credit you use. For example, if you have a card with a $5,000 credit limit and a $2,500 balance, your utilization ratio is 50 percent. In generating the score, FICO analyzes each account and the total of all your accounts.

A high utilization ratio can harm your credit score, which impacts your ability to secure loans on favorable terms. It also means you have less credit available for emergencies. High utilization ratios may also indicate some deeper financial difficulties. If yours is creeping up, it may be time to do some serious budgeting.

There is no hard-and-fast rule, but many personal finance experts advise consumers to keep their utilization ratio below 30 percent.

4. You don't read your statement. With more banks pushing us toward paperless billing and automatic bill pay services, it's getting easier to skip looking over the monthly statement. The first danger here is that you may overlook erroneous charges and pay for products and services you haven't actually bought. You may even miss that you have been a victim of identity theft or other forms of credit fraud.

A more subtle danger associated with ignoring the monthly credit card statement is personal finance complacency. When we don't review and monitor our spending, we stop being in command of our finances, making it that much more difficult to reach our personal finance goals, whatever they may be.

Set aside a few moments every month to review your statements, whether paper or digital and make it part of a monthly budget review routine.

5. You haven't read the fine print. Do you know how your credit card issuer calculates and applies interest? Do you know what the fees are for late fees or credit limit overages? What about fees for cash advances?

Your bank is required by law to make all of that information available to you (and more), in an easy to read and understand format called the "Schumer Box," after Senator Charles Schumer of New York, who championed the law.

Before you apply and sign up for any credit account, make sure you understand the key terms spelled out in the Schumer box.

6. You apply for too many accounts at once. Every time you apply for a credit card you trigger a credit score inquiry. A couple inquiries won't impact your credit score, but several inquiries in a short period of time will affect your score, although the effect is minor. Experian, one of the big three credit bureaus, notes that while minor score adjustments don't harm those with good or excellent credit, consumers with weaker scores are at greater risk. Even a modest reduction in score, combined with other risk factors, can make it harder to secure additional credit.

There is an exception: Multiple inquiries made while rate shopping home and auto loans within a 30-day period are treated as a single inquiry.

7. You take cash advances. If you look at the line item for cash advances on your Schumer box, you may be stunned by the interest rate of your bank charges. A May CreditCards.com survey found that the average for cash advances is 23.53 percent -- or 8.54 percent higher than the average rate for purchases. Some banks even charge as much as 36 percent for cash advances! But the dangers of cash advances mount. Unlike charges for purchases, most banks begin applying interest the moment the advance is taken -- and this is on top of the 5 percent fee most charge to execute the advance.

Needless to say, consumers are wise to avoid cash advances, lest they find themselves caught in a never-ending debt treadmill.

3 Pearls of Financial Wisdom From Dave Ramsey

Between his best-selling books, radio show, and motivational speeches, Dave Ramsey has been giving solid personal finance advice for more than two decades. He takes a no-nonsense approach to manage money — just the way I like it — while offering advice that's practical, actionable, and guaranteed to put you on the path toward financial freedom. Ramsey's pearls of financial wisdom can help you get ahead and gain control of your finances. Here are three of my favorites.

1. Don't Worship Stuff

Many people grow up thinking they need the stuff to be happy. We often confuse our wants with our needs, and convince ourselves we "need" a big house, a fancy car, and everything else in between. The more we have, the more successful we feel. The problem, however, is that stuff costs money — money we might not have.

In his book, The Total Money Makeover: A Proven Plan for Financial Fitness, Ramsey nails it when he says, "We buy things we don't need with money we don't have to impress people we don't like." Ain't that the truth.

Some of us become so obsessed with keeping up that we sacrifice our future financial health and willingly go into debt just so others will think we're successful and can afford a certain lifestyle. However, the joke's on us because this type of thinking gets us nowhere financially — and fast.

The best thing you can do for your money is to stop worrying about the opinions of others and realize stuff doesn't make you happy or richer. Ramsey encourages "living substantially below your means." Just because you make $75,000 a year doesn't mean you have to spend $75,000 a year. Simplicity is the key to acquiring financial freedom.

2. Build a $1,000 Emergency Fund — Now

According to Ramsey, this is the first step to financial stability. This doesn't suggest you can't have more in your emergency fund. Like many other financial experts, Ramsey speaks about the importance of having a sizable cash cushion — at least three to six months of income. But since this takes time, Ramsey's Financial Peace University program recommends baby steps and starting with a $1,000 emergency fund.

This ensures enough cash to handle life's curveballs, so you don't have to rely on credit cards. This might come as a shock, but building a small emergency fund takes priority over paying off debt (although you'll still need to make minimum debt payments while growing a small emergency fund).

Do whatever you can to build this emergency fund. For example, sell stuff you don't need at a yard sale, work overtime, or get a side hustle. The idea is to fund this account as soon as possible. You'll enjoy peace of mind knowing you can handle an emergency, and it's only after building an emergency fund that you can start improving other areas of your personal finance.

3. Don't Be a Slave to a Lender

We live in a world where anything can be financed — from electronics to houses. And some people fall in the trap of thinking they can afford something as long as they're able to make the minimum payments.

Ramsey's financial philosophy revolves around living debt-free. He's a big believer in not carrying any type of debt, including an auto loan and a mortgage. In fact, he says he would rather ride a bike than take out a car loan.

In his book, Financial Peace Revisited, Ramsey says, "We want it all, and we can borrow to get it all before we can afford it all." For some, getting a loan or credit card has never been easier. But the more debt you have, the more you have to work, and the less money and time you'll have to enjoy your life.

Once you have a small emergency fund, Ramsey says it's time to tackle your non-mortgage debt. Not just your credit card debt — all of your debt. He feels that debt-free living isn't just about paying off revolving debt but also paying off student loans and car loans.

He recommends the debt snowball method, in which you pay off your smallest balance first. You'll make large payments toward this debt every month while making the minimum payments on all your other debts. After you get rid of the smallest balance, take the money you were using to pay off this balance and apply it to the next smallest balance, and so on. You'll eventually pay off your debts, at which point you can start increasing your $1,000 emergency fund, aiming for three to six month's worth of income.

After paying off debt and building a "real" emergency fund, Ramsey puts the focus on your mortgage and encourages paying off this debt as fast as you can. Becoming mortgage-free might feel like a stretch, but since you don't have other debts hanging over your head, you're able to increase your mortgage payments without breaking a sweat and pay off this debt year sooner.

That's the American dream if I've ever heard of it.

Source:http://www.wisebread.com/3-pearls-of-financial-wisdom-from-dave-ramsey

5 Credit Card Perks

Ever lost your luggage? Had a new purchase gone on the fritz just outside of the 30-day return window? Come down with the stomach flu the day before a long-awaited cruise?

If so, you know how costly, not to mention frustrating, these scenarios can be. It’s hard watching both time and money run down the drain. But you may have a makeshift insurance policy against these experiences right in your wallet: your credit card.

Yes, credit card benefits can extend to coverage of the aforementioned issues, among many others, as long as the original purchase was put on the card. It’s all in the fine print, which many consumers toss without reading, missing these perks altogether. "You have to read the terms and conditions on your card," says Bill Hardekopf, founder of LowCards.com. "And if you want to take advantage of one of these benefits, I highly recommend calling your issuer and talking about the benefit details over the phone."

That’s because the policies can vary, as can the requirements for meeting them. But here are five benefits to look for:

Travel protections. These benefits can include both delayed luggage insurance, which will cover the cost of any "essential" items you need to purchase until your luggage is returned (up to a limit), and lost or damaged luggage insurance, which will cover replacing luggage that is not found -- again, up to a limit. Many cards also offer trip cancellation service, which can reimburse you if your travels get canceled and the services you've booked are nonrefundable.

Extended warranties. If you’ve ever purchased an electronic item, you’ve probably been offered an extended warranty -- for a price. You may not need it if you’re making the purchase with a credit card. "The manufacturer may give you a year’s warranty. If you buy it with a credit card, the issuer in its terms and conditions may give you an extra year of warranty on that item," says Hardekopf. "That may be adequate protection and you can skip the extended warranty from the retailer." On top of that, many cards offer you additional coverage (up to a limit) if an item you purchase is damaged or stolen inside of a set period of time -- often 30 to 90 days, says Beverly Harzog, a credit card expert and author of "The Debt Escape Plan."

Return protection. If you make a purchase with an eligible card, and the retailer won’t allow you to make a return, your credit card may offer a refund, says Harzog. There will be a limit on the time frame -- often within 90 days of purchase -- and the reimbursement amount.

Roadside assistance. If you’re stranded, you may be able to call the number on the back of your card for access to emergency services such as a locksmith, tow truck or tire change. You’ll pay for the cost of service, or in the case of Discover, a flat fee of $69.95 for any covered services rendered. Again, read the fine print on this one.

Zero liability. In this age of data breaches, this may be the most important benefit of all. "When you use a credit card, you’re really protected if it or your information gets stolen. With cash, you’re out of luck, and with check or debit, the thief has stolen your money and you’re trying to get the bank to replace it. With a credit card, you’re not out your own money," says Hardekopf.

This is one good reason to always use a credit card when shopping online, and traveling, as long as you pay off the balance in full, before triggering any interest charges.

7 Reasons Why Malaysians Don’t Save

Do you have a problem with saving money? You are not alone.

We all have our excuses or reasons for why we can’t save. The only way to overcome this difficulty is to realise and identify the problem first. Then, we should work towards eliminating our excuses and working to find better solutions.

In 2012, Visa conducted a Financial Literacy Barometer survey on over 900 participants in Malaysia. The survey showed that one in five respondents had no savings at all and over 70% cannot endure a personal emergency of over three months.

That’s pretty scary, and to overcome this biggest financial hurdle, one must understand the cause.

Here are seven excuses that are perhaps unique to Malaysians for not saving money—and how you can bust them to build your financial stability.

1. Low income

The most common reason for not saving money might not seem like much of an excuse at all for many. Instead, it might feel more like a fact. Currently, Malaysia’s minimum wages is RM900 for Peninsular and RM800 for Sabah and Sarawak. This is hardly enough for a family to fulfil their basic needs, what more saving.

It is easy for one to save money when they make four or five figures a month. However, if you earn minimum wages and live in a city with a high cost of living, it can be difficult to save money no matter how frugal you are. It’s scary because the importance of savings is especially important for those in the lower-income bracket.

It’s essential that you try your absolute hardest .to save. Even if it’s a little bit at the start. If trying to cut corners on your spending fails, you might want to look into increasing your income.

Quick tips

Negotiate for a raise, consider finding a different position, work more hours, or establish some part-time work on the side by monetising your hobbies.

2. Lack of financial literacy

People with higher financial literacy will assume greater responsibility for their financial well-being. For example, individuals need to determine not only how much to save for retirement, but also how to allocate retirement wealth wisely. They can learn about budgeting and saving to manage expenses and debt. Indeed, financial literacy is an essential living skill for all of us to build financial security and achieve financial well-being.

However, individuals with low financial literacy are less likely to take calculated risks and invest their money in stocks. Many have also fallen prey to financial scams and lost their life savings.

Quick tips

You must stop telling yourself this excuse. There are so many fantastic resources at your disposal that will help you boost your financial education.

On the bright side, if you’re reading this article then you’re on the right track!
Take the initiative and start reading up on personal finance and how money works in the real world. Seek help from trusted professionals and don’t be afraid to ask questions.

3. Servicing multiple debts

Another reason that prevents people from saving money is the continual need to play catch up on their debts. You most likely fall into this category if you owe massive amounts of debts – credit card, student loan, personal loan, housing loan and/or car loan.

The worst part about this position is that it is hard to get ahead. Once you are behind, it makes it that much harder to reverse things unless you make drastic changes.

According to the Malaysia Department of Insolvency, 41 Malaysians are declared bankrupt every day, with the majority of them being under the age of 44. The main reasons cited are the inability to pay off car loans, poor control of credit card usage and a failure to pay off personal loans.

It is highly possible for an average Malaysia earning RM4,000 to service debts worth RM3,700 every month:

	Monthly repayment
Total	RM3,700
Credit card	RM500
Student loan	RM200
Personal loan	RM300
Housing loan	RM2,000
Car loan	RM700

Sure, you need to repay your debt. But it’s not the only financial priority that deserves your attention. Your twenties and thirties are your prime saving years. A Ringgit saved today can be more than a Ringgit earned tomorrow – thanks to the power of compound interest over time.

Quick tips

You can put the bulk of the money available each month toward debt repayment. But still set aside 10% to 20% for savings. It’s okay to work towards more than one financial goal at a time.

It’s important to know how to clear your debts effectively so you can start saving quicker. Here are some effective methods!

4. A low financial incentive for saving

Savings and fixed deposit (FD) accounts do not yield returns as much as investments do. The maximum interest rate offered is only 4% per annum, which may come with various terms and conditions. If that’s not bad enough, the current inflation rate stands at about 1.8% – and this means the effective interest rate we earn from our savings is only 2.2%.

Some may still stick to savings and FDs as they have a low tolerance for risk and is deadly afraid that they will lose all their hard-earned money in investments. However, understanding how an investment works can help you take calculated risks when it comes to growing your money through investments. Consider investments like unit trust, REITs and share trading if you are looking for a higher yield for your savings.

Quick tips

Savings or FDs accounts can be good to put some of your savings intended for an emergency as they are more liquid than investments. They are a place to stash away your cash so that you do not use it until you really need it.

5. Procrastination

This is another huge financial mistake. Procrastination can be very costly; for example, if you save RM100 per month for 25 years at an interest rate of 3% you will accumulate RM44,712. If you chose to start saving later, and you saved for 15 years instead, you would only have accumulated RM22,754. This is the advantage of compounding interest. And this is a really conservative example!

Quick tips

If you start saving earlier, you can get away with making smaller monthly contributions to your nest egg than if you waited and tried to play catch up down the road.

Let compound interest do the heavy lifting for you!

6. Having the wrong misconception of saving

Whenever there is a hike in petrol prices, we can see Malaysians queuing up at the petrol station to fill petrol the night before the price rise. They somehow believe that they are saving money on petrol – which is a misconception altogether.

If a Toyota Vios driver decided to fill up a full tank before the recent petrol hike of RM0.10 for RON95. Before the price hike, his full tank would have cost him RM87.75 (RM1.95 x 45 litres). After the price hike, it would cost him RM92.25 (RM2.05 x 45 litres). So, he would have made a one-time saving of RM4.50 only.

That may just be enough for a plate of mixed rice with two dishes. Look for real ways to save instead of focusing on petty things.

Quick tips

If you are really looking forward to saving money on petrol, consider driving at a moderate speed, avoiding congested zones, or dump the car whenever you can and start walking or taking public transport.

These real money-saving tips will definitely help you save hundreds a month.

7. Malaysia is a shopping heaven

Not shopping is probably a tough thing to do for most Malaysians. With shopping malls at almost every neighbourhood, Pasar Malam, warehouse sales every weekend, cutting off spending can be truly torturous.

And this is probably the number one cause for Malaysians’ inability to save money. As Malaysians, we are always spoilt for choices, from food, entertainment or branded items. A friends gathering never goes away without an eat-out or sales never swing by without us taking advantage of that.

You can always enjoy a better television or a newer car, but splurging on the latest models can be a very expensive (and unnecessary) habit. You should only upgrade when your current item, be it smartphone or TV, is broken, not every time a newer model comes out. This is a result of the mentality that believes your money is yours to spend (now).

Quick tips

Prioritise your spending and buy according to your needs and not wants. When there is a sale, it does not automatically mean that you must buy something. Buy only if you really need something.

Anytime you must spend, think thrice if you can do without it. And the money you put into savings is the highest priority “spending” you can do. Pay yourself first, and then use what’s leftover to purchase something you want. Here are tips to help curb the temptation to spend money!

Don’t let these excuses stop you from saving for the rest of your life. If you don’t, you won’t achieve what you want. Or worse, if something bad happens, you’ll be completely exposed financially.

Identify the common excuses that stop you from saving and start taking proactive steps in overcoming your stumbling blocks. Once you have done that, you may find saving money much easier to accomplish. It may not be easy, but it is possible and it is well worth it because saving gives you peace of mind and financial independence.

Source:https://www.imoney.my/articles/7-reasons-why-malaysians-dont-save?utm_source=newsletter&utm_medium=email&utm_campaign=2015-07-09-7-reasons-why-malaysians-dont-save

How Many Credit Cards Are Enough For Singaporeans?

Singaporeans love their credit cards.

According to the statistics provided by the Monetary Authority of Singapore (MAS), there were 9,721,768 credit cards and charge cards in circulation in Singapore in May 2015.

And there are 1.58 million credit card consumers - so that means a credit cardholder holds an average of 6 cards each.

That's nothing compared to Walter Cavanaugh of California, US, who holds the Guinness World Record for having the most credit cards - he had 1,497 credit cards in 2005, a record he held since 1971!

All his cards add up to a total credit line of $1.7 million dollars!

Ever wonder if there is a right number of credit cards you should have? How many are too many, and how many are too few?

There isn't really a magic number of credit cards one should have; it's about how you manage them that counts.

We at GET.com have come up with a list of things you need to consider:

Does The Number Of Credit Cards I Have Affect My Credit Rating?

Before you are approved for a loan or mortgage by the bank, there are several factors that the bank will take into consideration before they lend you money. One of them is your credit score.

A credit score is a number used by banks as an indicator of how likely you will default on a debt. There are many factors that can affect your credit rating including - current and past credit history, annual income, spending habits, and how many other types of loans you currently have.

In Singapore, the score ranges from 1000 to 2000, with 2000 being the best, and 1000 the worst. While there isn't really much effect from having too many credit cards until you can't afford to pay your bills or keep rolling over your bill each month, banks like to see that you have established a responsible credit history without going overboard.

This means that if you have credit cards and pay them on time, that actually helps your credit score, compared to someone who doesn't have a credit card and thus has little or no credit history.

Although having more credit cards may not affect your credit score, late payments on your credit cards will.

More Credit Cards = More Rewards

Compared to other countries, credit card issuers in Singapore understand that having attractive rewards is what entices customers to sign up with them.

That means banks here offer a wide range of credit cards to cater to the different needs of consumers. There are cash back credit cards, travel credit cards, rewards credit cards, petrol credit cards, low-interest credit cards, and the list goes on.

Cash-conscious Singaporeans may prefer cash back credit cards, whereas people who like to travel may go for travel credit cards that give them travel-related perks.

Singaporeans who like freebies will like rewards credit cards that give you points for every dollar you spend on the card and you can later redeem those rewards points for shopping vouchers or merchandise.

Since you are going to spend the money anyway, using the best credit card helps to maximize the rewards you can get.

Depending on your lifestyle, it may be more worthwhile to focus on just a few credit cards and concentrate on the highest percentage of your expenditure on these cards.

Spreading your expenditures over more than 5 cards may end up reducing the number of rebates you earn since you spend less per card.

Managing Your Credit Cards

Whether you have one or a few credit cards in your wallet, you need to have a system in place that enables you to pay your credit card bills on time each month.

The best and simplest way of doing that is to set up a GIRO deduction of your card bills.

Simply fill up an interbank GIRO form to link up your bank account to your credit card account, and voila, your credit card bills will automatically be deducted from your bank account each month.

Of course, you should also make sure you have enough to repay your card bill each month. If not, you will incur interest charges, and that's not a good thing.

In a nutshell, additional credit cards will likely not hurt and they could even help your credit. How many is right for you really depends on how comfortable you are at handling and managing them.

Source:https://sg.finance.yahoo.com/news/many-credit-cards-enough-singaporeans-010102863.html

The 10 Commandments of Wealth and Happiness

I’m now financially independent. I didn’t get this way overnight, nor did I do it by selling books or advice. I did it the same way you can: one paycheck at a time over many years.

One of my young staffers recently asked if I could condense everything I’ve learned into 10 simple ideas that would serve as a guide to those starting out, starting over, or maybe beginning to realize they’re not where they’d like to be. While certainly a challenge, it’s a worthy one. So here goes: the 10 commandments of achieving financial independence and being happier while you do it.

1. Live like you’re going to die tomorrow, but invest like you’re going to live forever

The ease of making money in stocks, real estate, or other risk-based assets is inversely proportional to your time horizon. In other words, making money over long periods of time is easy – making money overnight is the flip of a coin.

Money is like a tree: Plant it properly, care for it occasionally, but not obsessively, then wait.

Stare at a newly planted tree for 24 hours and you’ll be convinced it’s not growing. Fixate on your investments the same way, and you could miss out on a game-changer.

The biggest winner in my IRA is Apple. I don’t remember exactly when I bought it, but I’m guessing it was in 2002 or 2003. My split-adjusted price is around $1/share: As I write this, Apple’s trading at around $126/share. Had I been listening to CNBC or some other outlet promoting constant trading, I almost certainly wouldn’t still own it.

The lesson? Enjoy your life to the fullest every day – live like you’re going to die tomorrow. But since you’re probably not going to die tomorrow, plant part of your money in quality stocks, real estate, or other investments; then hold onto them. Don’t ignore your investments entirely – sometimes fundamental things change indicating it’s time to move on – but don’t act rashly. Patience pays.

2. Listen to your own voice above all others

My job as a consumer reporter has included listening to countless sad stories about nice people being separated from their money by people who weren’t so nice. While these stories run the gamut from real estate deals to working from home, they all start the same way: with a promise of something that seems too good to be true.

And they all end the same way: It was too good to be true.

If someone promises they can make you 3,000 percent in the stock market, they’re either a fool for sharing that information or a liar. Why would you send money to either one? When you hear someone promising a simple solution to a complex problem, stop listening to them and start listening to your own inner voice. You know there’s no pill that’s going to make you skinny. You know the government’s not handing out free money for your small business. You know you can’t buy a house for $300. Stop listening to infomercials and start listening to yourself.

3. Covet bad economic times

Wealth is realized when the economy is booming, but that’s not when it’s created. Wealth is created when times are bad, unemployment is high, problems are massive, everybody’s freaking out, and there’s nothing but economic misery on the horizon.

Would you rather buy a house for $400,000, or $200,000? Would you rather invest in stocks when the Dow is at 12,000 or 7,000?

Nobody wants their fellow citizens to be out of work. But the cyclical nature of our economy all but assures this will periodically happen. If you still have a job, this is the time you’ve been saving for. Stop listening to all the Chicken Littles in the media: The sky isn’t falling. Get busy – put your cash to work and create some wealth.

4. Work as little as possible

A friend of mine, Liz Pulliam Weston, once wrote a great story called Pretend You Won the Lottery. She asked her Facebook fans to describe what they would do if they won the lottery. From that article:

Most of the responses had a lot in common. People overwhelmingly wanted to:

• Pay off all their debts.
• Help their families.
• Donate more to charity.
• Pursue their passions, including travel.

Note these goals are largely achievable without winning the lottery. And that was her point: Listing what you’d like to do if money is no object puts you in touch with the way you’d really like to spend your life.

My philosophy takes this concept a step further: When it comes to working, you should try to do something that you regard as so fulfilling that you’d do it even if it didn’t pay anything. In other words, the word “work” implies doing something you have to do, not something you want to do. You should never “work.”

If you’re going to spend a huge part of your life working, don’t fill that time with what makes you the most money. Fill it with what makes you the most fulfilled.

5. Don’t create debt

I’m always getting questions about debt. “Should I borrow for this, that, or the other?” “What’s an acceptable debt level?” “Is there such a thing as good debt?”

There’s way too much analysis and mystery around something that isn’t at all mysterious. Paying interest is nothing more than giving someone else your money in exchange for temporarily using theirs. Rule of thumb: To have as much money as possible, avoid giving yours to other people.

Don’t ever borrow money because you want something you can’t afford. Borrow money in only two circumstances: when your back is against the wall, or when what you’re buying will increase in value by more than what you’re paying in interest.

Debt also affects you on a level that can’t be defined in dollars. When you owe money, in a very real way you’re a slave to that lender until you pay it back. When you don’t, you’re much more the master of your own destiny.

There are two ways to achieve financial freedom: Have so much money you can’t possibly spend it all (something exceedingly difficult to do) or don’t owe anybody anything. Granted, since you still have to eat and put a roof over your head, living debt-free doesn’t offer the same level of freedom as having massive money. But living debt-free isn’t a matter of luck or even hard work. It’s a simple choice, available to everyone.

6. Be frugal – but not miserly

The key to accumulating more savings isn’t to spend less – it’s to spend less without sacrificing your quality of life. If going out to dinner with your significant other is something you enjoy, not doing it may create a happier bank balance, but an unhappier you: a trade-off that is neither worthwhile nor sustainable. Eating an appetizer at home, then splitting an entree at the restaurant, however, maintains your quality of life and fattens your bank account.

Finding ways to save is important, but avoiding deprivation is just as important.

Diets suck. Whether they’re food-related or money-related, if they leave you feeling deprived and unhappy, they’re not going to work. But there’s a difference between food diets and dollar diets: It’s hard to lose weight without depriving yourself of the foods you love, but it’s easy to reduce spending without depriving yourself of the things you love.

Cottage cheese isn’t a suitable substitute for steak, but a used car is a perfectly acceptable substitute for a new one. And the list goes on: watching TV online rather than paying for cable, buying generics when they’re just as good as name brands, using house-swapping to get free lodging, downloading books from the library instead of Amazon. No matter what you love, from physical possessions to travel, there are ways to save without reducing your quality of life.

7. Regard possessions not in terms of money, but time

You go to the mall and spend $150 on clothes. But what you spent isn’t just $150. If you earn $150 a day, you just spent a day of your life.

Almost every resource you have, from physical possessions to money, is renewable. The amount of time you have on this planet, however, is finite. Once used, it can never be replaced. So when you spend money – especially if you earned that money by doing something you had to do instead of what you wanted to do – you’re spending your life.

This doesn’t mean you should never spend money. If those clothes are all that important to you, by all means, buy them. But if it’s really not going to make you that much happier, don’t. Think of it this way: If you can live on $150 a day, every time you forgo spending $150, you get one day closer to financial independence.

8. Always consider the opportunity cost

This is related to the commandment above. Opportunity cost is an accounting term that describes the cost of missing out on alternative uses for the money.

For example, when I said above that not spending $150 on clothes puts you $150 closer to independence, that was a gross understatement. Because when you save $150, investing those savings gives you the opportunity to have more savings. If you’re earning 10 percent, $150 invested for 20 years will ultimately make you $1,000 richer. If you can live on $150 a day, ignoring inflation, you can now retire nearly a week sooner, not just a day.

One of the exercises in my book, Life or Debt, is to go around your house and identify things you bought but probably didn’t want or need. A quick way to do this is to find things you haven’t touched in months. These were probably impulse buys. Add up the cost of these things, multiply them by 7, and you’ll arrive at the amount of money you could have had if you’d invested that money at 10 percent for 20 years rather than wasting it.

And when you do this, consider the stuff in your closet, the stuff in your garage, the rooms of your house that you heat and cool but don’t use, the new cars you’ve bought when used would have worked. The truth is that most of us have already blown the opportunity to achieve financial independence much sooner. Maybe now’s the time to stop.

9. Don’t put off till tomorrow what you can save today

Shortly after I began my television career in 1988, I went on set with a pack of smokes, a can of soda, and a candy bar. I explained that these things represented the kind of money most of us throw away every day without thinking about it; at the time, about $5. But compound $5 daily at 10 percent for 30 years, and you’ll end up with about $340,000. That’s why learning to save a few bucks here and there and investing it is so important.

Fortunes are rarely made by investing big bucks, nor are they often made late in life. Wealth most often comes from starting small and early.

There are limited ways to get rich. You can inherit, marry well, build a valuable business, successfully capitalize on exceptional talent, get exceedingly lucky – or spend less than you make, and consistently invest your savings over time. Even if you’re on the road to any of the former, why not do the latter?

10. Envy is your enemy

You can either look rich or be rich, but you probably won’t live long enough to accomplish both. I’ve lived both ways, and trust me: Being rich is way better than using debt to appear rich.

Most of us will admit that when on the verge of making a purchase, we’re often thinking of what our friends will say when they see it. Normal human behavior? Sure, but it’s not in your best interest, or theirs. Making your friends jealous isn’t nice and feeling envy for other people’s possessions is silly. Possessions have never made anyone happy, nor will they.

Decide what really makes you happy, then spend – or not – accordingly. When your friends make an impressive addition to their collection of material possessions, be happy for them.

One of the stupidest expressions ever coined was: “The one who dies with the most toys wins.” When you’re on your death bed, you won’t be thinking about the things you had – you’ll be thinking about the times you had.

Source: http://www.moneytalksnews.com/the-10-commandments-wealth-and-happiness/?all=1