appreciate or increase in value. They include stocks, bonds, and money in a mutual fund.
Real property: land and things attached to it (house, garage). This is by far the greatest source of wealth for American families.
Common definition of depreciating asset: assets that lose their value over time.
Common sense definition: assets that may make you look good but don’t do a darn thing to make you rich.
According to debt-counseling experts, if your debt-to-income ratio (excluding mortgage and rent) is:
15% or less: You are doing a good job keeping your debt at a manageable level.
15% to 20%: You are still a good candidate for credit by most lenders.
21% to 39%: “This range definitely raises a red flag,” Cavazos says. At this level, start looking at your spending habits and eliminate credit card balances that carry high interest rates.
40% and above: “This is a serious situation,” Cavazos says.
The average client seen by Money Management has an outstanding debt (not including mortgage or rent) of $19,000 and annual income of $27,100. If your debt-to-income ratio is this high, Cavazos says, you probably should seek credit c
ounseling. To find a consumer credit counseling agency near you, contact the National Foundation for Credit Counseling at 800-388-2227, or go to www.debtadvice.org. Common definition for gross pay: income before taxes, deductions, and allowances have been subtracted.
Common sense definition: income you wish you brought home before everybody and their mama, including Uncle Sam, get their cut.
HOW DO YOU BEGIN TO ACCUMULATE APPRECIATING ASSETS?
Reduce the amount of personal property you have.
And that begins by curtailing your love of consuming. Think about what it means to consume.
HERE’S HOW MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY DEFINES THE WORD:
1] to do away with completely
2] to spend wastefully
3] to waste or burn away
Common definition of discretionary income: the amount of income left over after essential commitments, such as housing and food, have been paid.
Common sense definition: the money you spend without having any idea where it goes.
From 7 Money Mantras for a Richer Life: How to Live Well with the Money You Have, by Michelle Singletary. Copyright (c) 2004 by Michelle Singletary. Published by arrangement with Random House, an imprint of The Random House Publishing Group, a division of Random House Inc.