personal finance | April 30, 2013

Admit You Can't Afford It: David Chilton's Advice On Smarter Spending

Want to get your spending and savings back on track? Personal finance speaker David Chilton believes that it's easier than you might think—as long as you are willing to be honest about your income. Chilton is the author of the popular personal finance books The Wealthy Barber and The Wealthy Barber Returns, and has made a career on imparting his wisdom about money. Today, he coaches young entrepreneurs on CBC's hit show Dragons' Den and provides entertaining keynotes for people in all industries. Much of his advice is straight-forward and comes from the tried-and-true methods he's learned over years of balancing pocketbooks for himself and his clients. Here are some basic principles he lays out in a Yahoo! Finance article that can help you balance your budget.

1) Be your own credit control board: It's easier than ever to get access to credit today—and it's important to know when to say no so that your bad debts (liabilities) don't outweigh your good debts (assets). Here are three characteristics to gauge if your debt is, indeed, "good debt": 1) you’re borrowing money for an asset that will appreciate 2) the cost of servicing that debt isn’t affecting your ability to save 3) the debt will be retired before you are.

2) Evaluate your spending: Tracking your spending habits is certainly tedious, but Chilton says it is also illuminating. There are often many expenses that can add up without us realizing it. Knowing where your money is going can help you get a handle on your income and stop you from spending needlessly.

3) Admit you can’t afford it: "It frees you from the pressures to live beyond your means, and its unassailable truth makes it easier to deal with temptation," Chilton says. "The fact is, we all have finite resources. We can’t possibility do and buy everything we want. There’s no shame in that. Accept it. Don’t fight it. And don’t let your credit cards convince you otherwise."

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