Hi, perhaps you?ve already heard that there are 4 variants of financial condition. Yes, these four conditions really exist and many wise guys have even managed to write books on this matter. It goes without saying that my review isn?t a book at all. I can?t fit that format any way and there?s no need to do this. But I just want to give you brief definitions of those conditions. So look here below.
The first financial condition is the status of financial problems. This status includes income and certainly debts, heavy debts I should say. This is a situation where the cost of the individual?s living or the entire family?s living is much higher than income. This is life in debt, I?m talking about living on the edge of financial collapse. And the absolute amount of income isn?t important in this case. But we should pay attention exactly to the ratio of income and expenditures of course. To my mind nobody wants to have this living. But to my great regret for the last time due to the distribution of loans, more and more people keep on getting into this category where the total amount of debts and expenses exceeds the current income.
The second condition is the status of financial equilibrium where income is equal to expenses. Certainly this situation is already better than that one mentioned above but any way the financial situation of the family remains very precarious. Of course the same refers to one individual. So any unforeseen event such as an accident, illness, troubles in business, even a grown daughter?s wedding will inevitably lead to a significant decrease in revenues and correspondently increase in costs. And it disrupts the balance and throws away the family or an individual and people often have to start everything ones again.
Thirdly I should mention the status of financial independence. In this case revenues exceed expenses. In such a way a so called financial reserve is formed which is sufficient to cover the entire expenditures for a certain period of time. For example this can help a person in case of being fired. Certainly other unforeseen things can arise.
And the last condition is also the status of financial independence. Though you can see some coincidence in the name of the status with the previous one but I should add one explaining word which is ?security?. In fact it?s the highest level of financial life. Your money works for you. Here we also have a financial reserve formed by the annual investment income and it?s sufficient not only to cover inflation, but also to pay all necessary expenses, taxes and fees without any difficulties. It becomes possible to maintain the usual standard of living at any time while preserving the capital for children and even for grandchildren. Perhaps you?ll be able to gain this greatest financial status.
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