Defensive Financial Moves help Win the Financial Fitness Game

Defensive Financial Moves help Win the Financial Fitness Game

Financial fitness is my number one focus on behalf of my clients. That means helping them understand money and the way it works.

To help my clients understand the concept of financial fitness, I’m sharing the ideas found in a book called Financial Fitness: 47 Principles by Chris Brady and Orrin Woodward. The book highlights every aspect of financial fitness that you can master to help improve your financial situation and begin to build a stronger financial future. There are a number of very valuable principles in the section of the book called Financial Defense.

Financial defense means caring for your resources and protecting against loss or decline. In this blog, I’ll talk about the second half of the authors’ principles for defensive financial fitness.

But first, I want to focus a little more deeply on principle #29 from the first set of defensive financial fitness principles I discussed in the last article: see a car as transportation, not as a status symbol.

Avoid Putting your Car in a Position to Jeopardize your Financial Health

One couple I know has an annual income of $100,000 and their monthly car payment is $1,200. One of their car payments alone is a $724 payment. The reason they have taken on these excessive car payments is that they think of their cars as status symbols, and it is jeopardizing their financial fitness.

It might be tempting to justify large car payments, with the idea that your car is important to your professional success. However, unless you are someone whose primary work is chauffeuring business executives and celebrities, your car’s primary role in your life really is simply to provide safe transportation from point A to point B.

If you can change the way you think about your car and the payments you make on a car loan, you will free up a big chunk of income to be used for your choice of many other more effective ways to strengthen your financial future.

I’ve shared this principle with my clients, and they are taking steps to change this habit for the future. I’m looking forward to helping them get financially healthy, so they can buy a new home.

More Defensive Financial Fitness Principles to Help Build a Financial Foundation

If you have read the previous articles in this series, you already know about the basics of financial fitness, as well as offensive moves you can make to strengthen your financial position. The last article covered the first half of Brady and Woodward’s defensive financial fitness principles. In this article, the last of the series, we share the last half of the authors’ defensive financial principles.

Financial Fitness Principle #33: Use the roll-down method to pay off all credit card debts
With this method, you use your extra income to first pay off credit card debts, because they are the ones that can cause the most destruction, or at the very least block, your future financial health. Once you have paid off all credit card debt, then you can use the same extra income to pay off other debts, such as secured loans.

Financial Fitness Principle #34: Learn to be skeptical of advertising, media and marketing
The world is full of wonderful opportunities and tools you can use to improve your life and help you reach your goals. However, the aggressiveness of advertising and marketing within an ever-growing list of multiple media outlets can put pressure on our sense of good judgment. Don’t believe everything you hear. Any given product is a great idea for someone, but not every product will be a great idea for you.

Financial Fitness Principle #35: Accumulate slowly
As you work to build a secure financial future, it’s critical to abandon any goal you might have to accumulate “stuff.” Instead, get in the mindset that your goals should be to accumulate something else that can provide even more satisfaction and happiness: resources and wisdom. Think of the peace of mind you could have if you gain first-rate financial fitness, including a nest egg and knowledge that will serve you well for the rest of your life.

Financial Fitness Principle #36: Get right with God and apply godly principles in all areas of life
There is so much to be said for approaching life and finances from a spiritually strong position. The basic principles of faith help you reach the right goals, such as good stewardship and serving others. Leave the impressing of others in God’s hands, and focus instead on living life in ways you can be proud of.

Financial Fitness Principle #37: Do not use consumer debt
Consumer debt is like a cancer that begins small and grows until it consumes and destroys your financial health. Cut out that destructive cancer! Wise financing is occasionally a good idea as a smart business investment, but buoying your financial position artificially with consumer debt is not a good idea.

Financial Fitness Principle #38: Make memories a part of your lifestyle, budget and life plan
Being a good financial steward does not mean abandoning the satisfying events of your life. You don’t have to wait until you are financial stable to make memories. In fact, if you try to stop living a fulfilling life until you are financially stable, you probably will not be able to sustain the effort. Memories are important payoffs for your hard work. However, keep them in alignment with your financial position. That means starting small and building up to bigger memories. Make sure big memories are a part of your plan, too.

Financial Fitness Principle #39: Be very, very careful with danger zone decisions
Certain aspects of your financial fitness hold more potential to go wrong than others. Here are the most common danger zones: taxes, home ownership, divorce, credit cards, lawsuits, insurance, seeking status, college, addictions, and investments. Here’s how to overcome the element of danger: Get good advice from your financial mentors and study each situation carefully before you take action.

Financial Fitness Principle #40: Follow the 2X rule for buying a home
This principle is very simple. It’s a rule of thumb that can help keep you living within your means. Don’t buy a home that costs more than twice as much as your annual income. For example, if you make $50,000 a year, don’t buy a house that costs more than $100,000. Want a bigger home? Then make it your goal to increase your income.

Financial Fitness Principle #41: Do not buy costly “toys” until you are financially fit
So many people believe when they earn more money they deserve the finer things life can buy. However, if your finances are not in order yet, the truth is that you do not deserve any costly toys. If you get the toys anyway, it means you are using your debt and savings on the wrong things. On the other hand, if you have done a good job of paying off debt, building a savings and following other smart financial principles, and if you have the cash available, you can buy a few “toys” and still remain financially fit.

This brings my blog series on financial fitness to a close. I hope you have enjoyed learning about the basics of financial fitness, as well as the offensive and defensive actions you can take to strengthen your financial health and help you win the financial fitness game in your own life. If you have questions about any of these articles, or would like help understanding the principles and building good habits in your own life, please don’t hesitate to contact me.

Here’s to your financial fitness…starting today!