Cash is king. That's the number one rule. Well, that, and cash-equivalents are king. Managing personal finances is very similar to managing business finances. Consider yourself your own business. Pay attention to your cash flow; do you bring in more money than you spend monthly? Or do you spend more monthly?Manageable credit debt is better than no credit debt, (surprisingly to many). Lenders consider you less of a risk if you can manage you credit debt (ie have a solid credit history where payments were made timely), than if you have no credit history at all. Think of it, if you were to loan money to someone you didn't know, would rather loan money to someone you knew had borrowed money (from someone else) previously and paid them back? Or would you rather loan money to someone who had never borrowed before? In the second scenario, the lendee has a repayment history you can see, and provided they paid it back timely, you'd know they were trustworthy enough to loan to again. Buying on credit is fine, as long as you know you'll be able to pay it back within a reasonable amount of time. But you should never buy outside your means. Again, look at the amount you spend monthly vs. the amount you earn monthly. If you're able to save money each month into a savings plan (savings account, stocks, CD, IRA, etc.) then you're doing fine. If not, see where your money is going and explore ways to curb the expenses (i.e., cooking and eating-in vs. dining out all the time) you have.
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