This was #20 I believe, out of the the 21 tips, and this one made the most sense to me;
Liz Claman Fox Business Network anchor and author of "The Best Investment Advice I Ever Received"
Best advice I can give: We all have to learn from our mistakes of overleveraging ourselves and acting like 5-year-olds -- "I want four cookies." You don't need four cookies; you only need one. It's not about what you want, it's about what you need. We all must reassess our consumer behavior. It's not good enough to live within our means -- we have to live beneath them.
Best advice I ever got: My father, Mo Claman, would say, "Liz, buy good companies going through bad times." When I was growing up, he was a big believer in Kodak, and every day he would get the paper and run his finger down the stocks column to check on it. The stock went through some rough periods, but he kept his Kodak shares, knowing it was a good company. He swears he put us five kids through college thanks to that stock.
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I'm embarrased to admit it, but my husband and I have virtually no savings. And we have debt. Not a lot of debt, but enough. And I don't mean the mortgage or the car, those are pretty normal, standard debts that everyone has, but we also have some credit card debt that we've been carrying about a year now. Boo!
And on top of that, no savings. Yeah, not a good place to be in. We just got our tax return recently and we put most of it towards the credit card debt, which paid off maybe 1/5th of what we owe, and then we got a Tivo. Yeah... maybe not the best use of our money but the idea behind that is that we'll save over the cable box DVR that we're currently paying for so the intention is good - to save money.
The remaining money is going into Savings. For sure. And we recently got a small refund check from our home escrow account, I'm putting that into Savings too. I worry in this economy that we could find ourselves in big trouble, unable to pay the mortgage or car payments if one of us were to lose our job (knock on wood!) though I know we'd both work at McDonald's if we had to, just to pay the bills. We'd figure it out. Still, I don't want to be a spender, I want to be a saver.
We do have 401k accounts so it's not like we have absolutely no savings, but that's not the kind of saving that Liz Claman is referring to. Standard advice is everyone should have 6 months worth of expenses saved up, in case of a job loss or other such crisis, and these days the financial people are saying we should all have a full years worth saved. Scary to think that we don't even have 1 month saved right now. So time to change that!
Then I get stuck though, on whether it's better to pay off the credit card with any "extra" money we have, or to put money in savings? Shouldn't we pay off our debt first, and then save?
Ugh. Decisions, decisions. Now I'm not sure what I'm going to do with the remaining tax return. Pay off the debt or put into savings? I get paralyzed by the fear that I'll make the wrong decision, and then don't want to do anything.
-A
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