Command those who are rich in this present world not to be arrogant nor to put their hope in wealth, which is so uncertain, but to put their hope in God, who richly provides us with everything for our enjoyment. Command them to do good, to be rich in good deeds, and to be generous and willing to share. (1 Tim. 6:17-18)

Friday, September 18, 2009

Rule #1 - Don't lose money!

Rule #1 explained

High-powered investors such as Benjamin Graham, Warren Buffet, and Phil Town have all invested using one primary rule - don't lose money! You can read more about Rule #1 investing in Phil Town's book.

What if we took the Rule #1 of investing and applied it to our everyday handling of money?

All of us experience regular creep in our monthly budgets. I define creep as money drains that come on gradually and almost unnoticed. It's a good idea to review your budgetary expenses a few times a year to identify areas of financial creep.

Check for financial drains such as:
  1. Bank accounts. Many of the big, national banks charge ridiculous monthly fees. Call them and get them to waive these fees or change to a local bank that doesn't have fees. Use online savings accounts such as an HSBC Direct or ING Direct Orange Savings that pay higher interest rates than traditional brick and mortar banks.
  2. Auto-drafts. Are you still paying automatically for services that you no longer use? Time to dump them and save yourself some cash flow.
  3. Cable and internet. Cable companies are notorious for using creep to their advantage by gradually raising their rates every 6-12 months. Call your cable company and demand a better rate.
  4. Telephone. Do you really use your landline anymore, or are you primarily just using your cell phone? If you're not using the landline very much, kill it.
  5. Cell phones. Are you paying too much on your current plan and need to alter it? Really study your phone usage and available minute plans. You can probably switch to a better money-saving plan.
  6. Utilities. Do you monitor your natural gas, electricity, and water consumption on a regular basis? Study your monthly bills and experiment with lowering your usage. "Go green" to save some cash!
Being an excellent manager of God's resources means that you have to stop occasionally and pay attention to what is happening with the money He has blessed you with.

In what ways are you experiencing financial creep and losing money in your budget?

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