Living Well With The Money You Have

Author and syndicated columnist offers straight forward financial advice for people looking to take control of their money

load with your income. The lower your ratio, the better off you are financially.

“Maintaining a good debt-to-income ratio will keep vital financial doors open,” says Rudy Cavazos, director of corporate and media relations for Money Management International, one of the nation’s largest nonprofit credit-counseling agencies. “Owning a home and a car is just the beginning. A home requires improvements, and cars must be replaced.”

To calculate your debt-to-income ratio, use your gross monthly income. Include any bonuses, tips, commissions, alimony, child support, dividends, interest earnings, and government benefits. Next, figure out your monthly debt obligations (excluding mortgage or rent payment). Include payments for your car, installment loans on furniture and appliances, bank loans, student loans, and credit cards (use the minimum amount due).

Now divide your monthly minimum-debt payments by your monthly gross income. For example, if you have a gross monthly income of $2,000 and minimum payments of $400 on a car loan and your credit cards, you have a debt-to-income ratio of 20% ($400 divided by $2,000 equals 0.2).

About one in 12 American families (8%) had a negative net worth in 1998. About one in eight families (12.1%) had a net worth of less than $5,000.

“Wealth creation rarely happens by chance,” says Theodore R. Daniels, president of the Society for Financial Education and Professional Development. “It is generally the result of informed choices about spending, savings, and investment.”

Many of us–actually you because I’m a reformed shopaholic–shop as a form of entertainment. Americans go shopping an average of 1.9 times a week, according to retail consulting firm WSL Strategic Retail.

“I shop, therefore I am” is the credo of the new American consumer, the firm announced when it released the How America Shops 2000 survey, which tracks how, where, and why Americans shop.

“The role of shopping in American life has changed dramatically since 1990,” says Wendy Liebmann, WSL president. “No longer is shopping solely about practicalities alone. Today, shopping is about who we are, how we live. Shopping is life.”

Have people lost their minds? How on Earth did shopping become our way of life?

Does the tenet, “I shop, therefore I am,” define who you are? If it does, you better get used to saying, “I shop, therefore I don’t own a pot to pee in or a window to throw it out of.”

“The most important fact about our shopping malls, as distinct from the ordinary shopping centers where we go for our groceries, is that we do not need most of what they sell, not even for our pleasure or entertainment, not really even for a sensation of luxury. Little in them is essential to our survival, our work, or our play, and the same is true of the boutiques that multiply on our streets,” says Henry Fairlie. Our obsession with shopping is standing in the way of financial security. We should be treating shopping as a chore, not a social outing.

Stop participating in an activity that requires spending money you don’t have. In many respects, men have it right when

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