Don't Get Burned

America's Economic Meltdown Avoid the Burn

Now is the time more than ever for us to SAVE OUR MONEY. However, we are receiving mixed messages from the media and pop culture.

On the one hand, you got pop songs glamorizing designer clothes and being famous. You got videos with rappers talking constantly about their rims and jewelry (most of which are either leased or borrowed.)

But then today, you hear on the news that we are in a state of economic crisis. Which one is it? Is America broke or what?!

Well, as far as me and my household, we are saving our money. Here are my tips on how to overcome this economic meltdown without getting burned in the process. I am not in anyway a professional financial adviser, so do your own homework. However, I've used these tips and they are working for me. As an actress, we know that money doesn't always come in. So it's very important to manage the money you have and help it grow.

The first step I'm taking is opening up more secure funds (i.e. Roth IRAs and CDs). If you can roll over your 401K I say do it. Also, closing accounts with weak banks like Wachovia. I saw them getting ready to tank months ago. Not a surprise to me. Their fees are murder, and most of the tellers in my neighborhood are rude. If you have a Wachovia account, take out your money, and use a better, more stable bank. For example, ING Direct or HSBC.

My household is adopting a wealthy approach to financial security. Notice I said wealthy, not rich. There's a fundamental difference. Everybody needs to put a chunk of money into a safe deposit box. That way, if the ATM/credit cards freeze up, you can still access liquid cash. Or, buy a fire proof safe and put it in your house. No, under the mattress won't do!

And if you are a credit card junky, you are about to go through serious withdrawal. You should NEVER BE FULLY DEPENDENT ON USING CREDIT CARDS. That is not your money! You are borrowing money to use and then paying it back, with interest. Be warned, your interest rate is about to go up, up, up. As such, it's not smart to be dependent on credit cards. Use them only for major needs like gas, groceries, air fare, hotels, etc. Not to go clubbin' or eat at fast food joints.

If you don't have at least $20 in your wallet; on the regular for stuff like that, you shouldn't be in the damn club any way! And fast food is not good for you.

Here's a simple rule for using credit cards. I learned some of these tips by trial and error, and others by reading financial guidance books. If you can't afford to pay off the bill, IN FULL, every month when the bill comes...YOU DON'T NEED TO BE USING THEM! Simple rule.

Why? Because your broke butt can't afford it. You should either pay it off when the bill is due or before the closing date on your statement. What's a closing date you say?

That's the date the credit card company reports your debt to the credit agencies (i.e. Experian, Trans Union etc.). So, if your bill is due on say the 9th, pay as much as you can on time. Your statement closing date would be approximately on the 21st, so BEFORE that date comes, (at least 4 days before) make an online payment, directly on the credit card company's website, or online with your bank. Pay the bill off, or least make absolutely sure, that you NEVER OWE MORE THAN 30% OF YOUR CREDIT LINE.

So, if your credit line is $300, you shouldn't owe more than $90 when the statement closes. If your credit line is $3,000, you shouldn't owe more than $900 when the statement closes. Why?

Because that is your credit to debt ratio. If you owe more than 30% every month you are saying you can't afford to pay the bill off every month. And for those of you who want to buy a house, refinance, buy a car, etc., THAT IS NOT A GOOD SIGN TO A LENDER. Moreover, it keeps you enslaved to the credit card system that is designed to entrap you into debt. They are not trying to help you. So be smart. And whatever you do, DO NOT OPEN A DEPARTMENT STORE CREDIT CARD. The teaser to save you 10% on your first purchase is a set-up!

Speaking of which, we should all curb our spending at the mall and stores. Get only what you need and leave the rest behind. How many handbags, jeans, shoes, and necklaces do you need? Stop being greedy, vain...and naive.

Discipline yourself to treat yourself once a month, but not more than that. Set a dollar amount, and pay with cash, not a credit card. Don't give your money away. SAVE IT!

Bottom line, the only way for the average American to get through this mess, that "the man" created (yeah, I said it!), is to save our money. And not all in one place. Diversify. Remember what I said about safe deposit boxes, Roth IRAs, and CDs?

A golden rule for saving income is to save at least 30% of our monthly take home pay. Start with your next pay check. What can you eliminate in order to achieve that goal? Learn how to do your own nails and hair for a change; or at least cut back on salon visits. Skip out on unnecessary spending. And please people, write yourself a budget. If you need help on that, let me know. My household's spending plan is easy to follow and affective.

Okay, so some of you are saying, "Mahogany, girl I got bills, I can't save money right now."

My answer to that is YOU CAN'T AFFORD NOT TO SAVE MONEY RIGHT NOW!

If you can't save 30% of your paycheck, you can do 20%, no less than 10%. NO EXCUSES.

Do that for EVERY PAY CHECK until January 1. The money you save is not to be spent. You are building an emergency fund in case you get ill or laid-off. Again, I repeat, save your money. You can't be dependent on your job or credit cards. That's a very unwise way of living.

A lot of folks only think about paying bills, but you have to pay yourself FIRST. Don't get me wrong, keep your bills current. BUT, do not be broke. It's not smart. Most utility companies will set up a payment plan or structured charges. Call them and ask. And for those of you who are addicted to cell phones, be smart, do not go over your minutes. More importantly, you don't have to spend hundreds of dollars on a cell phone. Who are you trying to impress?

When you make a mistake and drop your fancy phone, or leave it in the bathroom while washing your hands, you just flushed money down the drain. I've used Virgin Mobile pre-pay phones for years. They're cute and stylish (like me) and I control my bill. How fabulous…and smart.

For actors and models this means keeping track of your expenses for auditions. Plus it means striving to get paid gigs to off-set your expenses, and ultimately earn a living doing what you love. If the gig doesn't pay a performance salary, at least negotiate being reimbursed for your travel expenses, meals, and any special wardrobe you buy for the production. Don't think for a second that this mess our country is in doesn't affect you. It does!

I am glad the "bail out bill" failed. They made their bed, let them sleep in it. All we have to do is make sure we don't get bed bugs in the process.

Now that's real talk.

Need help making a spending plan/budget? Let me know.

Have your own building wealth tips? Share.

My final piece of guidance, do not be a slave to money.
Money can't buy you love or happiness.

...and those my friend are priceless.

Be blessed and stay encouraged,

Mahogany

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