Biggest Money Mistakes Series - Home Equity vs. Credit Card Debt

"I always turn to the sports pages first, which records people's accomplishments. The front page has nothing but man's failures." - Earl Warren, Former Chief Justice of the United States.

The money mistakes series deals about attitudes, beliefs and values versus specific tips

Mistake # 7: Getting a home equity loan to pay off credit card debt is a good idea. No, it’s a terrible idea. The excuse is that you have converted a non-deductible high interest debt to a lower interest tax deductible debt. I mentioned in an earlier post in this series that paying off debt by borrowing more money is not a solution to staying out of debt. Learning how to pay off debt is the way to stay out of debt. Learning how to stay on a spending plan can keep you out of debt. Converting unsecured debt to one that puts your home at risk if you default is a bad idea.

Solution: Follow the 12 steps in Wealth On Any Income and set aside 10-15% of your income to handle emergency spending. Set aside 10% of your income to create financial freedom. Establish a spending plan based on goals that reflect your values and principals and you will have a spending plan (or budget) that will work for you.

Rennie Gabriel – Rennie@RennieGabriel.com
Author of Wealth on Any Income: 12 Steps to Freedom

Biggest Money Mistakes Series - 2

"Without self-discipline, success is impossible, period." - Lou Holtz, Former Head Football Coach, Notre Dame

Many people have gone from broke to multi-millionaire by following some simple concepts that allow anyone to move from debt to wealth, on any income. In this series, you will see that the following money mistakes deal more about attitudes, beliefs and values, versus failing to reconcile your checkbook.

Mistake # 2: Emergencies always show up and ruin my savings goals.
In studying the spending habits of thousands of people for over 20 years I discovered that many people live on 105% to 115% of what they earn. They didn’t plan financially for their vacation, back to school clothes for their children or for the car to break down. But it happens, and when it does they turned to their credit cards to solve the problem and the balances grew and grew.

Solution: In addition to saving for retirement, set aside 10% of your income to spend later on the emergencies you didn’t plan for that will happen anyway. This will also cover back to school clothes, vacations, and possibly property taxes. The goal is to live on 75% to 80% of what you earn after taxes.

Are You Ready to Win?

Rennie Gabriel – Rennie@RennieGabriel.com
Author of Wealth on Any Income: 12 Steps to Freedom

Biggest Money Mistakes Series

"Champions keep playing until they get it right." - Billie Jean King, American Tennis Champion

Many people have gone from broke to multi-millionaire by following some simple concepts that allow anyone to move from debt to wealth, on any income. One thing you will note about money mistakes; they deal more about attitudes, beliefs and values, versus failing to review a restaurant receipt for errors.

1. There is no reason to track my cash spending because it doesn’t add up to enough money.
People have the attitude that only large amounts of money are important and that small amounts of money are not. They will not be concerned about how invest a few hundred dollars, but only thousands of dollars. They will think nothing of spending $5 a pack of cigarettes or a cup of coffee and muffin at Starbucks when they can make the same things at home for 50 cents. The fallacy is you can’t get to the large amounts of money to invest if you spend all the small amounts. You must have respect for the small amounts too. Over a 30-year time frame, $5 per day can create a $1,000,000 portfolio when invested appropriately.

Solution: Use a small notebook or spending register to track all cash spending. You cannot create a change in your behavior you are unaware of it. Create awareness by tracking your cash spending. Track everything from 25 cents in the parking meter to a fancy dinner and tip.


Rennie Gabriel – Rennie@RennieGabriel.com
Author of Wealth on Any Income: 12 Steps to Freedom