This is from an email that DH forwarded to me. The title of his email was "Are we secure?" He has spent some time this past weekend talking about whether or not the loss of the second income (which came from him working with my father) will in the long-run negatively impact us.

I told him I thought we were going to be fine. We ended up with an expected $375 from an unexpected sale of a dress, $407 coming shortly from the state refund tax, and some other odd small things.

These were the steps that were suggested to be "financially secure"


* Create a family budget: Do this together. Sit around the table, get everyone’s input. Shared ownership of the budget is essential. Craft a budget that starts with saving 10% of household income – even If it hurts. Why? Because it hurts more to be bankrupt.

** Build cooperation via dividends: A budget requires willing participation. So why not offer cash back bonuses? Craft an equation that shares “profit.” Maybe you’re $150 in the black this month – split the $50 equally and save the rest – use your imagination. Making ends meet is never easy, so why not make it a game it pays to play?

*** Never spend money you don’t have: Sounds obvious? You’d be surprised. Americans have been convinced that credit card “limits” represent money available to spend. Bzzzz, wrong! Credit card dollars are dollars that belong to someone else. It’s not money you have – it’s money you wish you had. Big difference.

**** Use credit, don’t let credit use you: Run expenses through credit only if you have the money to back it up, then pay it off immediately. This demonstrates your ability to pay back quickly. But don’t use the credit card when you have no other option. Think of credit cards as a convenience, not a loan. If you couldn’t write a check for the purchase – then don’t buy it.

1. Aside from charitable spending, spend money in this order:

- Savings

- Mortgage and utilities

- Food

- Transportation

- Bills

- Stuff you could live without

**** Use “The envelope method” for non-essentials: This means take money budgeted for things like clothes, recreation, eating out etc., turn it into cash, and place it in envelopes labeled accordingly. When the money is gone, you’re done. Simple as that.

** Plan for disaster: Anticipate hard times. Always save 10%, but when times are good save 20%.

** Keep your car twice as long as the payment: Have a four-year loan? Don’t replace the vehicle, but instead make the car-payment to yourself for another four years. Then you’ll have at least 75% down on the next car, plus you’ll avoid having to conjure a new payment out of thin air. In fact, your new car will now cost less per month than the old one and you can continue paying the balance into savings.

** Keep a balanced portfolio: “What?” you say. “Now you’re talking like I’m a rich guy!” No, no, no. It doesn’t matter if you’re worth $500,000, $5 million, or just starting out, the principle is the same. Place long-term savings in a balance of low-yield high-security and high-yield speculative investments. Here’s the rule of thumb: Only speculate with $$ you can afford to lose. Otherwise, wherever you chose to save, invest conservatively and make sure the account is Federally insured.

** If you’re a two-income family, pretend you’re not: Most of us are two-income, and we believe it’s an absolute necessity. It is… but not always in the way we think. Two-incomes are absolutely necessary according to the values imposed on us by a culture designed to consume. Quick story: A young couple married two years ago and set up their household budget based on one income. It’s a stretch, but that’s the trajectory they moved forward with. Currently, they’re both working, but her income goes to savings. So, when she goes back to school, it won’t cripple them; when they start a family, she can stay home if she wants to. It’s about budget, not income.



Just thought I'd share!