How to get out of your money mess

By Jay Pillay

Seven steps to follow on the path to financial security. Apply these steps and you will get out of the money mess you are in

1. All you have is what comes in

Acknowledge that all you have is your income. That’s it. Period. If what you spend is greater than your income, then you’ve just worked out the formula for disaster.

2. Strike a balance with a budget

You have to track spending like a bulldog on the trail of biltong. That means a budget - a table with income in one column and spending in the other. And you need to constantly check how spending is doing against income. If you need some help with the mathematics of this, then ask for it. Partner with your spouse, or your colleague at work. Get the assistance of your teenage son or daughter in school; at the same time they will get valuable lessons in money management. Do whatever it takes - but strike a balance with a budget.

3. Debt is not spelt strangely

The ’b’ in debt is a loud cry - beware! There’s only one cause of debt: spending is greater than income.

Borrowing is like knocking your head against a wall to cure a headache. Borrowing money costs - more money. For more money, read interest. If you can afford more money, then borrow. But if you can’t afford more money, delay your purchase, pay yourself the interest, and buy when you have cash. This is so logical that it makes many people suspicious.

Financial success won’t come from making wealthy strangers (that is, lenders of money) richer. Maybe these are not wealthy strangers. You know them. They advertise on television, on radio, in newspapers and in magazines. You can bank on a dozen of their messages coming at you every day. They are so visible that you think they are your friends. Their interest in you does not go beyond interest.

Have you recently been overwhelmed by aching shoulders? The credit industry is powered by debt. Some of that debt rests on your shoulders. The people who liberally ladle out credit take the interest, while you take the pain. Crazy, isn’t it?

4. Get your spending under control

There are many ways to control this runaway train…

* Stop buying on credit. Stop giving money to strangers.

* A cellphone (or even landline) without a leash is a cash gobbler.

* A car has a huge appetite for rands. You can reduce its use by good planning. The key is in your hand.

* The cheapest place for a meal is at home. Eating out, or buying takeaways, is always more expensive. But hey - it’s okay to subsidise the catering industry; just don’t break your budget.

* Interrogate every purchase - do you really need this? If the answer is yes, then buy the best you can within your budget.

5. Ignore those outside your equation

Often - and sometimes unconsciously - our spending goes thought the roof because we want to impress others. Hold it! Others don’t know what your income is; they can only see your spending. Train yourself to ignore them. Tune them out of your "spending equals income" equation.

You know your income like no one else. The peace that comes from living within your income is priceless. And the solution is to ignore those who can only see your spending.

6. You are as wealthy as the amount you save

If you work and never save a rand, you will forever work for your money. (Oops - you can’t work forever; there’s always retirement.) When you start saving, you put money to work for you. And that means that once you have accumulated a fair amount, you could ease up on working.

You are not as wealthy as your salary; your salary is the means to achieve wealth. You are not as wealthy as the amount you spend, but ah, it sure makes a great impression. You are as wealthy as the amount you save. So - just how wealthy are you?

7. Help someone - it’s not all about having money

We all know someone who can use help. It may be in managing money - meaning sharing these seven steps - or by giving money away. Be as generous as your budget allows. It will keep things in perspective. It will make you smile when you look in the mirror. Money can buy happiness. Moreover, seeds of generosity sowed today will reap a harvest of kindness later.

Take another look at these seven steps. They are not steps at all. They are processes. You may take five minutes to read them, but they will take much longer to possess you.

Copy this article and stick it up on your fridge. Once you become possessed, you’ve built the foundation. You’ve got the madness out of money. Only after that, can you start building in the magic.

And then you’ll realise that a miracle has occurred: as you take the madness out of money, quite unknowingly you put the magic in.