Bear Mountain Bull

BMB says on his ‘About’ page that he believes “that the secret to accumulating wealth has much to do with spending less than you make, and staying out of debt.”

Mike Shedlock believes the same, and gives some tips on how to go about doing so:

The best way to avoid drowning in debt is to not get into debt in the first place. Those who are in debt should attempt to get out of it as quick as they can. The way to do this is simple: Live within your means or better yet live below your means.

Those who carry credit card balances from month to month are not living within their means. Far too many people treated their house as an ATM, taking out cash to pay off credit cards, only to run up credit card or auto loan debt time after time. The housing ATM is now shutoff but consumers keep buying more than they can afford. The result is that credit card debt is soaring once again.

The number one rule in all of this is: Don’t Buy Stuff You Cannot Afford.

These days, it doesn’t seem like most people bother to plan for a rainy day. Matter of fact, I’m not sure that many even plan for a slightly damp day. It’s been quite a while since much of our population has seen hard times. But that doesn’t mean that we won’t see hard times - and job losses - again, sometime down the road. Will you be ready - just in case?

As Mike says:

Just as the housing problem spread from subprime to Alt-A to prime, job losses are highly likely to spread from housing, to commercial real estate, to retail. To protect oneself from a loss of income, it is imperative to have actual cash savings in a money market, short term treasuries, or short term CDs. Those barely able to make home payments now and who have no cash savings, will be in serious jeopardy if they lose a job. Don’t be one of them.

Too many people live too close to the edge, and wouldn’t have enough money to last more than a few weeks if they lost their job. What are those people going to do if it happens to them?

Take Mike’s advice. Protect yourself.