Okay, if you still don’t like math (like most people), then instead think in terms of how much money you can save or gain with basic math skills. Therefore, math = “moneyology”.
First lesson: key words.
The most important words in personal finance are “no” and “free”. Saying “no” implies the ability to refuse buying useless things you don’t need, with borrowed money that you don’t have. We touched on this earlier. It’s not the price tag of the item that kills you financially; it’s the interest on the debt!
Related to “no” are two more words: “want” versus “need”. The only things you truly need are anything that provides food, warmth, shelter, and clothing for you and your family. That’s IT; that’s ALL. Everything else is a frivolous extra… not a “higher purchase” or “retail therapy”.
Ultimately, there is no such thing as free. Free beer, free money, free whatever… is always just a gimmick to get people’s attention. Even partially free is fake. So if you’re offered, say, a 20% discount on something that was previously marked up 50%… think again. Even if it’s “free,“ that just means that someone else had to pay for it. In other words, nothing is truly free. Maybe you paid for someone’s else’s “free” giveaway?
Second lesson: All about loans, or how not to get fleeced.
In basic terms, one way of making money is simply to avoid losing money. You can do this by minimising the interest on unavoidable debt.
“Loan” is a four-letter word. So easy to say, so easy to sign. Very common signs of trouble include hearing: “What’s a guarantor? or co-signer?” If someone asks you to co-sign, make sure you understand that you will be fully responsible for their debt if they don’t pay.
And the lenders CAN legally take “your” assets, and that includes not only the purchased object that you financed, but also the collateral which was pledged as security. Still don’t believe me? Try avoiding payments on your loan for a few months… and you’ll soon find out who really owns “your” car/house/boat/etc. before you pay off the loan!
Honestly, many people have a few too many “etc.” items in their lives. Trust me… I used to be one of them…
“The interest rate’s only 0.1% more.” More code words for trouble! And if a lender suggests it’s “only” about 20 bucks more per week, just remember that that’s multiplied over 52 weeks per year… for how many years?! Better yet, suggest that they pay the difference from their own pocket. (And watch them change their tune more quickly than a politician during an election.)
Besides, banks will try to persuade you that a 0.1% return (i.e. how much they pay you) is somehow great for your savings account, at the same time that 0.1% on your loan (i.e. how much you pay them) is not that much. Suspicious yet?
Third lesson: check the details carefully.
The same shell game (or con game) is often played with price per unit, per kilo, or per volume. Make sure you understand how much you are really getting for your money! Is it really a better deal?
So for those of you who want to learn the secret to financial success (or just primal self-preservation)… I’ve managed to boil it down to one simple, easy to learn sentence.
In fact! Better yet! I’ve managed to distill that sentence down to one simpler, easier to learn word! Aren’t you just dying to know what that one word is? 🙂
Back after these messages!
BEWARE of always following the herd!
Now you get your reward:
Spend less than you earn.
Until next time,
Dr Paul 🙂