Financial literacy - Grow your bottom line
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Go for financial freedom

q_v2.gif With prices for almost everything going up, where can consumers cut back on expenses to deal with them and save at the same time?

a_v2.gif It's going to be different for everyone, but the main thing I suggest that people do is get out of the mindset that they have to do something, that they have to live a certain way that they have to spend a certain amount.

I've been writing about how much you should be spending on your shelter. I wrote, if you spend more than 30 percent of your gross income on shelter, you're going to be having a very difficult time making ends meet. You're going to have trouble having enough money left over to save for retirement and put money into an emergency fund and be able to do other things you want to do. And people just came unglued.

Because I live in Los Angeles, and the Los Angeles Times is my biggest client in newspapers, I got all these letters saying, "You just don't understand how expensive it is to live in Los Angeles!"

And I wrote back saying, "No, it's just the math. I'm not saying you can't spend 50 percent of your income (on housing). I'm saying if you do, you want be able to do these other things like retire."

It's kind of ingrained in people that they are required to spend a certain amount. So what I suggest people do is let go of that.

Nothing should be off limits. You should be looking at everything about your life to save money. Some people are set up so that all they need to do is eat out a bit less, maybe carpool once a week, bring their lunch to work and they can save enough from doing that. They will be able to make themselves comfortable.

Other people have over-committed so that they are spending too much on their car payment, maybe they have a child care situation that is too much for their budget, but it's big stuff.

Nobody likes to take a step down in their lifestyle, but in order to make ends meet, that might be exactly what they have to do. If you're really serious about financial freedom, you have to look at everything.

q_v2.gif This is the prototypical personal finance question and the answer always varies depending on who you ask, so what do you say? Should be people save money and pay down debt at the same time or tackle debt first?

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a_v2.gif I'm one of the both-at-the-same-time people, and the reason is because of the value of time.

When you're saving for retirement, some things are obvious -- you don't want to give up free money. If you're getting a match at work, you should be putting in enough to get the match at least.

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