Managing Money

SEE HERE I received a message the other day with the disturbing data that students coming out of college are often saddled with huge debts $20,000, $30,000, even $40,000 and more. That's quite a burden to bear when you are just staring out. Moreover, with the state of the government finances there are serious questions about the future. The best strategy is to plan for financial independence and that means first and foremost learning to manage your money well, pay your debts off and be very careful about creating debt. The link I put up was sent to me by a reader and has a lot of resources you might want to consult.

The bottom line observation that I would make is if you can avoid increasing your indebtedness then don't take on more debt. It is far better to go without for a few years while saving than to just borrow up to the maximum. This is as true for home mortgages as for anything else. The home mortgage thing has to balanced against the cost of renting however. Building equity in a home is certainly better than simply paying rent. Another element is to build a long term investment plan. Start putting aside at least 10% of your pay into investments with the commitment that you won't touch that money. If you do that wisely then you'll build equity in the future. If you don't then forty years from now when your working life is finishing up you'll find that almost all you have is the mountain of debt you've accumulated and no way to pay it off. Start being frugal and investing now, not ten years from now. The discipline you build doing that is alone worth the price of admission.