This is a guest post by Matt from Pizza For A Dream

Insanity – doing the same thing over and over again and expecting different results

Today’s focus, most specifically, is on financial insanity and 8 ways to avoid it in your life. Are you financially insane? As the economy continues to crater, do you find yourself doing the same things that you’ve always been doing and expecting things to work out differently than they always have?

1. Read, Read, Read

I’m grateful to several mentors that have stressed the importance of continuing education! The education I’m referring to may not be the formal kind that might come to your mind, though. I’m talking about self-directed education through your local library or through the purchase of books on topics that will improve your lot in life. Most believe that formal schooling is the end of education, while it’s actually only the beginning!

Do you lack knowledge in a new skill or trade? Pick up some books and educate yourself! With focused study anyone can become an expert on any topic!

For example, some books I’m currently reading to eliminate financial insanity in my household include:

• The Backyard Vegetable Factory – A book about backyard gardening

• Basic Economics – Explains our economy and the basic principles that make it work

• The 5000 Year Leap – The history and founding principles of the United States

• Lone Star Rising: The Revolutionary Birth of the Texas Republic – History of Texas

• The 4-Hour Workweek – How to manage your time and design a desirable lifestyle Like me, you should have a specific purpose in mind for the books you read and know how each will help eliminate insanity in your household.

2. Eliminate Waste In Your Budget

Over time we all tend to get looser in our budgets and have numerous expenses that we continue to pay even though they’re no longer important to us. Cut these expenses and put yourself in a much better financial situation. Here is a list of several changes we’ve made to our household budget over the past few months:

• Cut cable TV to save money and have more time for the family.

• Signed up for an unlimited long-distance plan with our phone company. We found this would actually decrease our bills after we analyzed our calling history.

• Canceled monthly TiVo subscription.

• Eliminated collision insurance coverage as our vehicles aren’t worth enough to warrant this coverage any more.

• Stopped eating out as much during the day while on the road.

• Canceled the subscription to the radio talk show “Extreme Club”.

• Started shopping smarter. My wife spends time scouring the grocery circulars to ensure we get as many things as possible on sale during our large grocery trips. She also uses coupons where they make sense.

While all of these personal examples may not apply in your household, we all have places we can cut back.

3. Increase Your Income – Get a Second Job

Swallow your pride and add another income through a second job. This will provide both added security and an additional income in the event you lose your full-time job (see my post Why Pizza For A Dream for the reason why I began delivering pizza as a “white collar” professional). My 12 hours a week (3 nights) pizza delivery job offers nearly $1000 extra a month which makes a huge difference for us!

4. Best Time To Start Saving Was Yesterday

Less than 5% of Americans have savings accounts – start by making sure you’re part of this 5%! Setup an automatic withdrawal from your paycheck, so that you never miss the money. Begin with a simple $1000 emergency fund and grow from there – you’ll never have to use credit for emergencies again once this is built up. Over time you won’t ever have to use credit for anything! You don’t need to worry about your credit rating if you have cash!

5. Start (or Increase) Giving

Though it may seem counter intuitive, the more you give the more you will receive. Take your eyes off yourself and make a difference in the lives of those less fortunate around you. The Bible and many other books cover this principle in much more detail than I ever could, so use them as your guide.

6. No Car Payments! Pay Cash for Used Cars

Your new car loses thousands of dollars in value the minute you drive it off the lot. Eliminate being stuck with this depreciation cost by purchasing cars that are at least 4 years old and let someone else pay that new car depreciation. Also, begin to pay cash for your vehicles and drive them into the ground! Your car will last a lot longer than you think! Our 2 cars (’98 Honda Accord and ’97 Taurus) have 260,000 and 210,000 miles on them respectively. We typically spend around $1000 a year for repairs (emergency fund) which amounts to a lot less annually than monthly car payments! We won’t replace either of our cars with the van that our family needs until we’ve got the cash to do it. It’s called the “one payment plan” and it is much better than the plans the dealers offer!

7. Start a Business

There’s no better way to take control of your future than by building something that you own! My job security becomes less and less of a concern as my business grows! How would you like to be the one who signs the checks on the front instead of signing them on the back? Aside from the income, there are tons of tax advantages that you’re missing out on if not running a business. The government created the tax law for business owners, not the employees.

8. No More Debt

The borrower is a slave to the lender. Strive to get out of debt in the next couple of years and completely change your financial future! A great program for help in this process is Dave Ramsey’s Financial Peace University. His program provides a simple and systematic approach to financial peace and independence. Liked what you read? Don’t hesitate to sign up for our free email updates or subscribe to our RSS feed.