October 1, 2004
Getting on the Road to Financial Freedom
Debt, according to Lynnette Khalfani, is the single worst four-letter word in the english language. She describes it in her latest book, Zero Debt: The Ultimate Guide to Financial Freedom (Advantage World Press; $14.95) as “the longest-lasting economic curse, the most heinous financial plague, and the least recognized form of modern slavery afflicting Americans this millennium.”
“Debt keeps you up late at night,” she writes in the introduction. It drives people to drink, to fight with their spouse, and to have anxieties. The problem with debt is that the way we manage it has a huge impact on our daily lives. People who handle their debt better than others are the people who have better financial opportunities and benefits.
Khalfani is a former Wall Street Journal reporter for CNBC, whose work has also appeared in The New York Times and USA Today. Khalfani’s second book offers a 30-day plan to help consumers take control of their finances and manage their credit properly. And while she divides her book into week-by-week steps, this particular book excerpt is from the three chapters that help consumers understand the basic steps of debt management as well as ways to overcome debt. As always, BLACK ENTERPRISE routinely revisits little-known ways to help consumers take control of their finances. Sometimes it’s as complicated as knowing which stocks to buy at a given time; other times, it’s something as simple as being organized. We assume that our readers are fairly advanced in their understanding of consumer issues and management, but every now and then we revert to retelling the basics. Here, we look at three basic key components to gaining financial freedom.
BASIC STEP [NO. 1] SET UP A GOOD FILING SYSTEM
One of the best things you can do to get financially fit this year is to get yourself financially organized. So many of us want to whip our finances into shape, yet the task seems especially daunting because most households are overwhelmed by mounds of paperwork. But wouldn’t it be great to have an easy, workable system for organizing all your financial documents—like those numerous credit card receipts, old bills, tax records, and quarterly investment statements? Well, here are some tips from a few experts [who] will help you get a handle on all your paperwork, streamline your home or office, better balance your time, and enhance your record and document management skills. As of today, you’re going to create an easy-to-use filing and financial record-keeping system.
WHAT TO KEEP—AND WHAT TO THROW AWAY
Once you’ve gotten your files labeled, you may wonder how long you should keep certain financial documents. “As a rule, you should keep old tax records for at least seven years because that’s how far back the law allows the IRS to go when it wants to audit you,” says David Bach, a New York financial adviser and the author of Smart Women Finish Rich.
You should also hang on indefinitely to your stock, bond, and mutual fund statements—mainly because if you sell any of those