Building Your Wealth

One of my favorite hobbies is reading up on everything that has to do with personal finance. Although I have learned a great deal about where to save money, Nic and I still have a lot of room for improvement.

There are currently 4 great books adorning my shelves. Living Fiscally Fit, By Woman's Day; Personal Finance For Dummies, by Eric Tyson; The Everything Budgeting Book, by Tere Drenth; and Grow Your Money, by Jonathon D. Pond.

All of these books share the same advice for beginning to grow your wealth and get out of debt. Each one of them will tell you to list your debts in order, either with the lowest balance on top, or the higher interest rate. It's your choice. Pay the minimum due every month on all of the balances except the top one, which you will pay as much as you can until you have it paid off. If you chose the higher interest rate card first, then you will be saving money by knocking out interest the sooner you pay it off. The benefit of starting with the card that has the lowest balance is just psychological. Many people will stay motivated to continue paying down debt once they see a card with a $0 balance.

But do you use all of your extra money to pay down those debts? All of these books agree when they say NO! You MUST start saving. No matter how many excuses you can come up with about why you can NOT start saving right now, there are ways to do it, and it's important if you ever want to get out and stay out of debt. Even $5 a week. Think of it this way. You are in the process of paying down debt, and then an emergency arises, but because you do not have a savings account to tap into in this case, you have to put it on credit. It happens. We all know that if it's not one thing, it's another. The endless cycle of debt, and why my mother mistakenly tells me "it's a cycle, you can never really get out of debt." That's a LIE! One that is born out of ignorance. If you have the money in a savings account, then you will not need to tap into more credit, and can continue paying down those cards.