FINANCIAL RESPONSIBILITY

Financial responsibility is so important if you want to be able to afford your life.   Unfortunately,  many people don't understand just how important this is.  Money is an important factor in life and having enough seems to be a problem for most people.  In order to understand how much money plays a role in our society, you should start with knowing about money and the many roles it takes on.  There is Cash, Credit, Assets, Gold, Stocks, Bonds, Real Estate, etc.  To learn the specifics and differences about these,  you should buy a good book explaining them.   You should do this before you ever invest a penny or open a credit card account or buy a piece of real estate.   in other words before you start spending,  you should know exactly how all of this works and how it will affect you long term, specifically your credit, credit worthiness and ability to accumulate wealth. 

I am not a financial expert by any stretch of the imagination, but I have learned a little something over the years and made enough mistakes to warrant warning others!!! I also spent years with a successful man who taught me some things about money and accumulating wealth and although the relationship eventually fizzled, I haven't forgotten the things he taught me when we were together. 

 I have sold real estate for over 15 years in New York City and I have seen people barely qualified to purchase a home buy knowing that at some point unless their financial situation changes, they will default under the pressure.  It is very difficult being a homeowner and keeping up with all the things you have to do to maintain your property.  keeping its value, as well as paying your taxes, insurance and many other bills related to owning a home.  It is not for the barely qualified and financially irresponsible.  You will find yourself and your family in a bad situation if you don't keep your payments up and pay on time.  I've seen too many people over the years become landlords without fully understanding what that entails.  I know that the American dream is to own a home and that many people in the real estate business encourage people to buy multiple family homes for the rental income. They hold seminars and tell you that owning property is the best way to wealth and sell you their foolproof method of doing this.  Although owning a home is a part of building wealth, it is only feasible if you can afford it.   If you cannot afford your home without your tenants rental payment, then this is a bad idea.  You should have your own money  or have money set aside to pay your mortgage and cover repairs, whether your tenants pay you or not.  Many people become landlords and discover just how difficult it can be.  Tenants don't always pay you on time and if they're having financial difficulties, they may not pay you at all.  If you're dependent on their money, you now have a problem.  It will cost you money to take them to court and evict them.  It is money you will likely never recover.  In addition, there are laws that protect tenants that you will have to follow whether you tenant is paying rent on time or not at all, like providing heat and hot water and anything else you agreed upon that is provided in the lease.  You don't get to stop providing it just because they aren't paying.  So if you're financially strapped because you could barely afford your property, this is going to cause you a great deal of stress and anxiety.

I also know many homeowners that aren't landlords but own a single family home and are constantly looking for ways to cut costs, such as energy, heat, hot water etc and then want to invite you to their house to freeze in the winter and sweat in the summer.  I know many won't like this, but you probably really can't afford your home either.  If you cannot live in your home and enjoy it with comfortable temperature settings,  a hot water tank that produces hot water 24 hours a day and properly water your lawn, then you might want to reconsider your decision to own a home because it seems like it's a financial stretch for you.

With that said, becoming a homeowner is a great way to build wealth and there's nothing wrong with being a homeowner.  In most cases (with the exception of the housing meltdown) homes usually increase in value over time, so if you can hold on to your home, it will make you wealthier.   In the meantime, make sure you can afford it.  I know we have no way of knowing what the future will bring, but if you start off a homeowner who can barely afford your home, unless your finances change drastically, you will likely be a homeowner always struggling to keep it together and only you can decide if that's worth it for you. 

Flipping houses is another way, people get into real estate to make money.  You buy a house significantly below market value, make any necessary repairs and sell it at market value.  Again if you can afford it, it is another way to make money and build wealth.  You can get stuck with the property a while before it sells, especially in a bad market,  so be sure before you put all your money into a property expecting a full return because there are no guarantees.  If the property doesn't sell quickly or at all, you can lose your investment.

Luxury cars are another favorite of the population at large and I guess it's nice to own one ( I have never owned a car).  Some people in this country spend more on their car payments than rent, grocery or child support.   If you can truly afford it, then enjoy it.   However, if you pull up and park your luxury automobile in the parking lot of the projects, then you aren't being financially responsible or insuring your  financial future.  Cars start to lose value as soon as you drive it out of the dealership.  If you took those car payments and invested them over the years and let them grow, you might actually be able to become a homeowner who could afford their home.   My ex would only drive luxury cars, but he rarely bought them new or paid full price.  He would  go to auctions and buy cars.  If they were banged up then he would repair them like new.   He drove around in them payment free.  You enjoy something a whole lot more when you're not worried about how you're going to pay for it.

Fashion and designer clothes  are another big cost for many people.  We are a label obsessed society and I am a fashionista, love clothes, shoes , and purses so this is an area, I have to most practice some discipline.  I have had some financial issues over the years as well and have learned to be more financially responsible.  My taste hasn't changed and I still prefer designer clothes, I just don't pay full price for them anymore.  If I could have back every penny I every spent for clothes with the price tag on them I never wore and invested it,  I would probably be rich now.   The first thing I do now before I buy anything is decide do I really love it, if so, do I really need it?   Most of the time that ends my desire right there, but if I do decide to proceed with a purchase, THEN one or more of these happens: 

 it must be ON SALE!!!  I check to see if there are any coupons for a discount,  I wait until the end of season sales where items are discounted even further,  I compare prices to see which place has the item  lowest markdown,  I'm signed up at all my favorite  stores and designers to receive notice of discounts, sales, coupons and online specials.   I ask the manager or store clerk is there is any further discount they can give me.   Sometimes they have codes they can use to reduce an item even further.   If I find something I love at a really good deal and I can afford it, I buy it.  I am not a trendy person.  My taste is more classic so I don't tend to worry too much about something being out of style.  I don't care if the inventory is from last season.  I would rather buy good sturdy pieces that will last for years than a cheap special that will fall apart after you wash it.

One day if it is possible, we would all like to retire and enjoy a certain standard of living.  That starts right now with being more financially astute.  We spend a lifetime accumulating things that will only be left here for someone else to enjoy when we die and that's okay too, just enjoy your own life as much when you're here.  Let's be honest, we will need some money to do that!!!  How much depends on you and your life's plans.   Stop wasting and spend wisely because wasting is giving it away.  You might as well throw it out the window for your neighbors to enjoy.  It's been a BRUTAL lesson for me to learn but my philosophy is BETTER LATE THAN NEVER!!!