HOW CAN I afford that?

In the popular book, Rich Dad, Poor Dad, by Robert Kiyosaki, the “poor dad” would regularly say to his son, “We can’t afford X,” subsequently closing the door on any possibility of getting what was desired. The “rich dad” would tell the son that you shouldn’t say you can’t afford something, you should ask yourself, “How can I afford that?”

It is time to ask yourself, “HOW CAN I afford that?”

Finding a way to buy the things you want is more about mindset and motivation than money.  If you want it bad enough, you will make it happen.

It is also about smart money management. Most of our blogs are about making more money, but this one contains a few thoughts to help you manage the money you have better. 

How to Live Within Your Means

There will come a time in our lives when we have to make do with what we have. It won’t be easy, and it will take a lot of dedication and discipline to pull off not spending much so that you won’t be paralyzed by debt.

To balance a well-maintained but enjoyable life, you’ll have to learn to make each purchase count. You can’t use that paycheck to buy things that you want instead of what you need.

Many business owners fall into the trap of extravagance. But luxury isn’t always a bad thing. It only becomes a problem when you’re not reinvesting what you earn.

Be modest

If you see your neighbor driving a new car or using the latest gadgets, don’t be jealous. There may be a chance they aren’t handling their money as well as it seems. Every cost builds up eventually, so don’t let yourself give in to envy.

Pay down your debt

First, you must stop charging.  Charging should only be for an emergency, as it will never help you get out of debt.

If you are currently making your monthly payments timely, the best plan is to pay extra to pay down the smallest balance first.  

When that one is paid off, take the money you were paying on that monthly payment and roll it into the payment you are making on the new smallest balance.

Keep repeating the above, and you will be out of debt before you know it!

Getting help with your loan payments

If you do happen to be straddled with a lot of debt and not making your regular payments timely, consider consolidating all of it into one lower payment. By refinancing to a lower and fixed interest, you will get yourself out of a bad situation.

If you can’t obtain a consolidation loan, consider asking help from your family for the loan. (This is not always ideal as it can cause tension in the family, but it is better than having huge interest charges added to your balance each and every month.)  

If you take that loan, you should first put those charge cards away.  Many people who consolidate their debt end up charging all over again and finding themselves in deeper debt.

Before you accept any loan, look at the total cost (repayment plus all finance and interest charges).  It may not be worth it.  

Keep credit card purchases to a minimum

Don’t let the allure of paying for luxuries using credit ensnare you. After all, maintaining a good credit score can be beneficial to you in the long run, so be sure to track your expenses and avoid making unnecessary purchases. When you are shopping for necessary items, look for something you can afford but also guaranteed to last. 

Be ready for lean months

There will come a time when sales are slow, and your business isn’t growing at a rate you expected. That said, make sure to set aside as much reserve cash as possible to finance your operations during low activity months. It is recommended you have a minimum of three months of your overhead expenses in reserve.  Keep these funds liquid so you can get the monies without selling something or cashing a CD or bond when you need cash urgently.  At the same time, you may want to put the funds in a place that is not too easy to get to so you have to think twice before spending it.  

To boost your business further, you should consider getting professional mentorship. You will be surprised at the return you get on your investment!  Less stress, pay less tax, make and keep more money!  Why wait? Contact Business Untangled today!