We will begin with the link that is the basis of any financial program: money. How are you doing this with this link? First of all, do you have any? Do you have a cash account that serves as an emergency or opportunity fund? I suggest that a person have at least $10,000 in a money market account for this purpose. I also suggest that you have an account that you deposit money into to pay your taxes when they are due.
Do you have all of your money in your checking account? Do you realize that you are letting your money rot? Maybe you need to take a look at a money market account. So what's your story? Is cash your weakest link?
Moving along the financial chain, we next come to a link that keeps most people chained to disaster: credit cards, those little pieces of plastic that can destroy any financial program if not managed properly. What do you have in your wallet? Are all of them at a fixed rate of 10 percent or lower, or are you still playing that game with a low rate now that jumps up later to a rate in the high teens? That can be dangerous, especially when you can't jump to another card at a low rate. If you continue to play that game, you will come out a loser. Have you called all of your credit card companies and asked them to lower their interest rates? They won't do it without a little prompting from you.
Here is one that makes the hair on the back of your neck stand up: debt, a little four-letter word that most people fear. How do you feel about it? Are you in or out of control? You need to understand debt and how to work with it. There is good debt and bad debt. Do you know the difference? You need to!
Got a mortgage? Want to pay it off early? Why? Mortgage money is the cheapest money. Why tie up your money in your home? The only way to get to that money is to borrow it at the market rate of interest. Is that smart? It is not a place to save money. When you have to pay to get to your own money, it is not a savings account!
Here's another four-letter word that can really break you: bank. Banks are not your friends. How friendly can they be if they attach chains to the pens that you use in the bank, and then charge you to park so you can come in to give them your money? Do you have a real working relationship with your bank, or are you just a slave to them? Like I said, they put chains on their pens, and those links are not weak!
Do you have any idea what your bank is charging you in fees to hold your money? I suggest that you add up all those charges and see what it is costing you to have them hold your money. While you are at it, see what rate of interest they are paying you on your money. You may find that this is the weakest link!
You have just read about the first four links in the chain. There are other links, but they are all based on the first four. If these are weak, then the others don't stand a chance. If these are strong, they set the pace for the rest of the links. How does your chain look? Remember one thing when taking a look at your chain. It is your chain, and you are truly the most important link in it. With that in mind, I have one last question for you: "Are you the weakest link?"
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Click here for previous articles by Stanley Greenfield, RHU.