It's Time to Change Your Financial Thinking

Success in life means making the most of your income while saving and preparing for the future. Too many Americans are living beyond their means, racking up credit card debt while driving cars with loans the size of small condos. While its possible to juggle the situation, the loss of a job, an illness or injury, any bump in the road can cause it all to come crashing down on your family.

After going through periods of success and failure, one thing I've learned after a lifetime in business is the first step to financial success is to change your thinking. Get mad at paying high interest rates every month, get mad at not having a nice emergency fund in the bank, change your thinking and start focusing on it all the time. With hard work and a change in thinking, you can pay off your debt, live within your means and have money saved for emergencies, college educations and retirement.

We're a family of savers and we've passed those principals down to our children, who are also savers and careful with their money. Not-coincidentally, they are both independently financially successful, which I think is a result of the environment we provided.

Here are some key ways to really change your financial thinking and taking control of your money:

Stop Living On Credit
If you can't pay cash for something, you really can't afford it. Credit card balances should be paid off in full each month, or kept under 25% of your available credit limits. Large purchases should be saved up for, not put on credit cards. The thinking that this new TV will only be $40 a month is what puts people in debt. Several banks (and PayPal) offer debit cards with 1% or 2% cash back, try to use those for all purchases.

Pay Off Debt
If you find yourself in debt, immediately stop using credit cards and assess your situation. Begin a plan to pay off and pay down your balances. I suggest paying off the highest interest rate cards first to save money. Some people like to start with the smallest debt and pay it off completely, working upwards from there. The satisfaction of accomplishment can help spur your momentum

Live Within Your Means
Your house payment should be no more than 30% of your net monthly income. If it's more, consider selling your home and down-sizing. Although the loan requirements are now much more stringent, be sure you are ready for the commitment of buying a home. I think you should have a year's worth of payments saved up before doing it.

Drive Within Your Means
Just because your local car deal will put you in a $40,000 car doesn't mean you need it or can afford it. Find a reliable, used car. Most brands now offer certified, pre-owned cars, factory inspected and with a good warranty. A new car loses a huge amount of value the second you drive it off the lot, let someone else take that loss.

Too many Americans are carrying huge auto loans. Consider selling your car and downsizing to a smaller vehicle. Unless your tax professional specifically recommends it, avoid car leases. They are a way dealers can get you into a car you could not otherwise afford.

Involve Your Family
Get everyone involved in the process of changing your financial thinking. Have everyone help with a family budget and find ways to cut costs. Teach the kids that purchases are made with cash, not credit and people need to save money for the future.

Always Think Savings
Read articles and books on saving. Learn about IRAs, Roth IRAs, 401Ks and other things you can use to save money. Learn about employee savings programs. The more you learn about saving and the potential for your future, the harder you will work to achieve it.

Look for the Suze Orman shows on PBS, she offers solid advice. Another great discovery I made this year, which I am quick to share with others, is Dave Ramsey. He has a national radio show and advocates constant saving, never using credit and paying off all debt. The show is also available online for listening anytime. You can just listen to the show, take his advice and follow his thinking, you don't need to buy his books and tapes or attend his seminars.

More from this contributor:

"We Sold Our Cars and Now Use Public Transportation"

"How I Saved Money Buying A Car"

"How To Get Better Results From Ebay"