Ten Financial Commandments

Well, here are ten good rules that someone might considering follow to achieve financial freedom and also not waste an important asset, money.

1.Thou shalt not buy things before having the money. Many us think that we can pay for it later, so we buy it with our credit cards. Then, when the bill comes we are worried how we are going pay for it. We have several sleepless nights and finally decide to make the minimum payment and then we start ourselves down the path of credit card debt.

2.Thou shalt not put money first.Even though we may have several money problems, I have seen far too many divorces over the fact that people are not spending time together. Money should not be the first priority. Spending time together with people we love can change our atitude towards money. I have always enjoyed what Suzie Orman says after each show. People first, then money, then things.

3.Thou shalt make constant contribution to an Roth IRA. Roth IRAs are an important part of our retirement plans. Most of us in the military are under the income limits for Roth IRAs. Single filers: Up to $99,000 (to qualify for a full contribution); $99,000-$114,000 (to be eligible for a partial contribution. Joint filers: Up to $156,000 (to qualify for a full contribution); $156,000-$166,000 (to be eligible for a partial contribution. Also, this is important to contribute to just in case we decide that 20 years in the military is not for us. A least we will have sometype of retirement plan in place if we contribute to this faithfully. See Roth IRA contributions

4.Thou shalt not waste money. Sometimes we do stupid things with our money. Sometimes we forget to put money in our checking accounts or do not have enough money in them so we go ahead and write a check hoping that next pay check will cover the expenses. Before you know it you have a bounced check. Most of the time, these fees are around $15-$50 per occurrence. There are numerous fees out there (like ATMS) that penalize us for our forgetfulness or our instant need for money.

5. Thou shalt talk with parents about financial matters. It is kind of taboo to talk with our parents about money matters. Sometimes, they provide us with good advice and other times not so good. However, the most important thing we need to do is have a chat with them about their financial situation. Sometimes, you'll find they are not doing so well In short talk with your family about these matters.

6. Thou shalt kill all debt. Yes, that's right all debt. However, there is such a thing as better debt, namely, student loans and house mortgages. Why do I say that, most of these types of debt can be deducted from our taxes and they also become investments that will pay for themselves in the long run. However, bad debt needs to pay off as soon as possible. These include car loans and credit cards. So in short, my advice is that if we have extra money laying around, one needs to pay down those credit cards, first with highest interest rates.

7. Thou shalt create a budget. I think that creating a budget is one of the best tools we have. Write down your budget (put in somewhere where you can see it) when you first get started. Allocate money for living expenses like housing and food. Then allocate some more money for one's retirement, debt, etc. Then after several months reevaluate the budget and change it a bit so that the budget is livable and achievable.

8. Thou shalt not steal from your retirement account (a.k.a 401K or the TSP). This is one of the stupidest ideas out there. You will LOSE a lot of money if you borrow from these type of accounts. I have dedicated an entire post on this matter.

9. Thou shalt be honest with thine self. I think that this is one of the most important commandments out there. Each of us need to be honest about our financial situation. I know several people out there that buy buy buy without regards to future financial consequences. Then finally they hit the breaking point of disaster and file bankruptcy or they become unhappy paying back all of the debt they accrued. Save yourself some headache and only buy when you have the money.

10. Thou shalt not keep up with the Joneses. I am sure that many of us have seen our neighbors get the latest new HDTV set. Then after a few months, we end up buying a brand new HDTV set as well. But after many sleepless months we realize we cannot afford this purchase and we go farther into debt and start paying our creditors a lot of interest. I know by experience, that this is a huge temptation for some of us. My advice is either we go without this item or we should save up and purchase it outright. Did you know if you put that money in a Roth IRA ($4,000) instead of purchasing a HDTV, in thirty-five years the money could be worth $42,706!!!

So in general, if you live by these ten rules you may end up in financial paradise. Any comments? Come and see my blog at www.usactivedutymilitary.blogspot.com