Eliminating your morning Starbucks coffee and cutting coupons are perfectly legitimate ways to cut costs and rein in your finances. But you’ll never get rich playing so-called small ball.
To reach financial success, you need big wins. You need to address the areas of your financial life that will save you not $5 here or $10 there, but tens of thousands of dollars. Successfully navigating some of the following financial expenses will put you on the true path to wealth creation.
Automobiles: We love our automobiles, but our cars are driving us straight to the poor house. According to a recent Experian report, the average automobile loan has reached an all-time high of $30,032 with the average monthly new car payment also setting records at $503 a month.
Our car payments are literally suffocating our finances. Worst yet, we’re spending more and more on an asset that does nothing but depreciate. In his book, The Total Money Makeover, financial expert Dave Ramsey is quick to point out that, “Staying away from car payments by driving reliable used cars is what the average millionaire does; that is how he or she became a millionaire.”
So what should you do to keep your transportation costs under control? Follow the 20/4/10 formula. When purchasing a vehicle, your down payment should be at least 20 percent of the purchase price. Never finance a car for more than four years. Finally, make sure no more than 10 percent of your gross income is spent on transportation expenses, including car payments and insurance.
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