Friday, October 06, 2006

Fri. Spotlight: DINKS Check in with 3 Financial Rules

How many couples blog together and remain on speaking terms? Dual Income No Kids is a joint-effort blogging team with thoughtful and pedigreed posts. From married finances to get-out-of debt strategies, the DINKs--James and Miel--offer a good read with insightful tips.

This week, half of the blogging team --James -- checks into the Frugal Spa with this guest column! Thanks Jim.

The DINKs Top Three Personal Finance Rules:

Spend Less Than You Earn:

This is an absolute must. Everyone who thinks seriously about this, Suze Orman, Bob Kiyosaki or Warren Buffet, will say that to be financially healthy, you need to spend less than you make. The logic behind this is simple, if you make $100 dollars, but you spend $105, then you’re 5 dollars in the hole. Spending more than you make will buy you a one way ticket to the poor house.

That said, it’s harder than it might seem. We DINKs are currently spending more than we earn, but we’re working on dealing with this challenge. The story is that my wife and I are both attending graduate school, so we have a budget shortfall of approximately $1,800 that we’re dealing with. Feel free to visit our blog to find out how we got in this mess, and what we are doing to get back in the positive.

Do Goal Setting and Planning:

Success requires vision. What this means for people interested in personal finance is that you should have a picture in your mind of where you want to be in the future. Once you have this, you can set goals to achieve your vision. Goals should be written, measurable, and achievable. Once you have goals, you can develop a plan to achieve them. Planning in a personal finance context usually involves a combination of saving, investing, and finding ways to generate extra cash.

While this may seem like a matter of course, goal setting and planning is effective. I’m a financial expert by no means, but my wife and I were able to scrape up $30,000 for the down payment on our apartment and $17,000 for our wedding. We set these goals, planned and raised the cash in the space of a year and half. Engaging in goal setting and planning as a couple is not only healthy for your bottom line, but also for your relationship.

Get A Financial Education:

Finally, you should learn the basics of finance. Literacy has huge benefits. If you know the basics of accounting, tax law and macroeconomics, then your ability to plan, to properly choose investments and maintain an empowered state of mind are far, far easier.

When I was finishing up my M.A I ended up with about $18,000 in credit card debt. As part of the process of paying off the cards, I read up on investing, IRS deductions and worked through a couple of books on basic accounting. Just getting to know the basics has paid off and I’m happy with how my financial life has turned out.

While not for everyone, I am a firm believer that these rules can help most people become financially independent.

Good luck to you!


James of Dual Income No Kids

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