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Getting Started (part 1)
"Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." -Wilkins Micawber in Charles Dickens' novel David Copperfield
Too many people live paycheck to paycheck, and all the advice on where to save and how to save is of little value if at the end of the month, there is little left over. Let's look at the first couple ways to find those first dollars to save and invest.
The first place and the most painless is to call your current credit card companies. You likely have cards with interest rates of 20% or more. Pick up the phone and ask for a lower rate. If you owe $10,000* total, just 1% is $100/yr. You will probably get a larger reduction than that. You will have the best chance of success if you have offers from other credit cards which have a much lower rate, maybe 0% for 6 months. The problem with those deals is if you cannot pay them back in full, the rate will often jump to as bad a rate as you have today.

Next, and this will take time and patience, track your expenses, every last dime, for a minimum of three months, but a year is ideal. (I said this wouldn't be easy.) From this exercise you will certainly uncover a number of items that author David Bach refers to as Latte Factor® (yes, he copywrited the phrase, go figure) which simply stated, is that even $5/day (the cost of a Latte), when saved and invested at 10% per year, will grow to nearly a million dollars over 40 years.

This step of tracking your expenses will enable you to identify where the money is going. For some, the daily coffee will be obvious the first week, for others it may take a month to see how many different magazines you buy on the newsstand. Not too hard to do the math and see that most yearly subscriptions cost as much as only 3 or 4 issues on the stand. Others are compulsive book buyers, dropping $20 on every hardcover book they read. For avid readers, a visit to the library instead of the bookstore is a great first step.

Find that first $200/month that you can cut back, and use that to pay off your highest interest credit card. Some suggest to pay the lowest balance first, to which I reply, "nonsense." You'll find as you see those balances shrinking faster that you'll be motivated to find that next item to cut back.

*average credit card debt = $9900 per an article in a recent issue of Kiplinger magazine

Until next month, JOE