The housing crisis has a lot of people taking a closer look at their finances and worrying about whether they too may be at risk for losing their home. There are a lot of great lessons that can be learned from this crisis, and they can be applied to all areas of your finances. Let’s take a look at some of these important lessons.
1. Don’t overspend.
It is vital to know and understand your own limits. We all know that overspending is not the smartest thing to do, but it’s so easy to get lured in. Many of the homeowners that are now homeless knew very well that they were overbuying their house, but they fell in love with it. Main point to learn: Emotion has no place in your finances. It doesn’t matter if it is the perfect house – or the perfect whatever. If you cannot afford it, you cannot afford it. It’s not a matter of life and death. In your retirement years, you’ll thank yourself.
2. Financial disasters can happen to anyone.
Everyone from the worst subprime customer to big sports stars have been affected by this housing crisis. When financial disasters occur, it doesn’t matter who you are. If you are not prepared, you will not be able to weather the storm. Never fall into the trap of thinking “it won’t happen to me.” The fact is, financial disaster is looming for each one of us, without proper planning and without the right management of our finances.
3. Having more than one stream of income is vital.
You may be set right now with your job, but what if you lost it tomorrow? What if you got sick? Relying on one stream of income is not smart, especially if you are dealing with a mortgage payment. You’ve got to be able to bounce back from a financial disaster. The best way to do that is to cut your reliance on your paycheck by creating more than one stream of income.
4. There is no safe investment.
Some of the most expensive houses in the best neighborhoods are now sitting empty. While there are good investments, there is never a sure bet in life. Always make contingency plans and never put all of your eggs into one basket. The only sure things in life are death and taxes, and it’s best to be prepared for the worst.
5. You can’t rely on anyone else to bail you out.
While big plans are in the works for bailouts, there is a lot of opposition and even if they pass, they will not be able to help everyone. You can only rely on yourself – not the government, not your family. By taking responsibility for your finances, you’ll be able to get through any financial problem with grace. Always have a backup plan and never rely too heavily on your income or on an investment. You never know when the bottom may drop out.
Photo Credits: 1
Related Posts -
Where to Begin with Investing If you are just starting out on your own as an adult, or if you are approaching the age of retirement, you are probably thinking about where you stand financially and what your financial future will be like. It is time to stop thinking and start actually planning and taking...... -
What You May Not Know About Personal Finance Unless you’ve taken some courses on handling finances, there is a chance that you may not be aware of a few of the key points about budgeting, managing your money and planning for the future. While a lot rests on common sense, there are a few techniques that everyone can...... -
Are You Ready to Be a Financial Success? There comes a time in everyone’s life where they begin to take a hard look at their finances. If you weren’t born into wealth, you’ve worked hard to get where you are and it can be frustrating if you feel as though you’re only treading water. Every single one of...... -
Getting Motivated to Organize Your Finances For many people, the first steps towards getting your finances under control are the hardest. Whether you didn’t spend enough time learning about basic personal finance principles when you were younger, or life happened and you’re now at the bottom of a very large problem, it can be difficult to...... -
How to Protect Your Pension in the Credit Crunch As news of bank failures continues, and government officials are debating a $700 billion bailout plan, many consumers are starting to worry about the state of their pension plan. If you have it invested in the wrong stocks, you could end up losing it all, or at the very least,......
Related Websites -
Pay Yourself First This is the fourth of a thirteen-part series that explores the core tenets of Get Rich Slowly. One of the oldest rules of personal finance is the simple admonition to pay yourself first. All the money books tell you to do it. All the personal finance blogs say it, too....... -
How To Teach Teens about Personal Finance Teaching teens about personal finances is one of the most important duties parents have. According to a recent Charles Schwab survey titled Teens and Money only 30% of teens believe their parents/guardians are concerned with making sure they are learning the basics of personal finance. 64% of teens reported they...... -
Keeping the Right Perspective During Your Diet Dieting is not for the faint hearted, and it is not easy. If you fail to keep the right perspective during your diet, it is all too easy to give into cravings, to fall off the wagon and simply give up. Before you even think about going on a diet,...... -
Automatic Finances has posted the Carnival Thanks to Automatic Finances for hosting this week's Carnival of Debt Reduction. His Editor's Picks for this week: Savings Toolbox shows how to squeeze more savings out of your budget. The Digerati Life reviews myFICO Score Watch. The Smarter Wallet reminds us that personal financial planning begins at home. Five...... - Blogging Goals: What You'll See Here in 2009 Thanks to Green Panda Treehouse for pointing me to Visionary Blogging's 7 Strategic Blog Improvement Questions. That article serves as an outline for my blogging goals for 2009. What will I accomplish with my blog in 2009? How will I make my blog more valuable in 2009? There are a......
- Plans, Blueprints Guides Building Hardware Home Improvement
- Lady Death Superhero Modern Age 1980-Now Comics Collectibles
- Life Savers Candy Nuts Advertising Collectibles
- Identity Crisis Superhero Modern Age 1980-Now Comics Collectibles
- A Perfect Circle A Rock, Pop Music Memorabilia Entertainment Memorabilia
Categories:
Budget, Diversification, Financial Security, Income Streams, Investing, Money, News, Personal Finance
Tags:
3 comments ↓
I would further clarify your list by stating that your residence is not an investment. It is an asset that provides shelter services to you. This means don’t create unnecessary risk to those services by treating it as a highly leveraged investment.
@ TML
Indeed. Protect the roof over your head.
I’ve been mulling over #3 for a while now: “Having more than one stream of income is vital.”
Finding that income stream is the tough part though…
Leave a Comment