Use the Responsible Spending Ratio to Go Broke Without Ruining Your Finances
It’s okay to splurge from time to time as long as it doesn’t interfere with your financial goals. The problem is that many of us waste money mindlessly. To combat this, try the Financial Samurai Responsible Spending Ratio.
This is similar to the previously mentioned preservation cost rule , but a little more specific. The Financial Samurai explains that if you want to spend $ 1 on something unnecessary, you must first spend $ 2 on something financially responsible, like getting out of debt or saving for an emergency. Here are some more examples he offers:
- Sell $ 2,000 worth of clothing, shoes, electronics, and other household items before paying $ 1,000 for the latest ultra-high definition TV.
- Pay off $ 10,000 of your student loan debt before spending $ 5,000 on your international vacation.
- Before paying $ 500 for concert tickets, deposit $ 1,000 in your mortgage principal.
Of course, these are just examples and your own scenarios will be different, but the idea is the same: spending money is okay, especially if you are confident that your finances are still in order. To learn more about this idea, go to the full post at the link below.
If You Want to Be Bad, Keep Your Cost Ratio Good | Financial samurai