Living well with the money you have: author and syndicated columnist offers straightforward financial advice for people looking to take control of their money - Book Excerpt - Excerpt

Black Enterprise, March, 2004 by Michelle Singletary

Common definition of discretionary income: the amount income left over after essential commitments, such as housing and food, have been paid.

Common sense definition: the money you spend without having any idea where it goes.

APPRECIATING ASSETS INCLUDE THE FOLLOWING:

* Liquid assets: cash or other financial assets that can easily and quickly be converted into cash with little or no loss in value. Liquid assets include checking, savings, and money market accounts, and certificates of deposit.

* Investment assets: assets held for their potential to appreciate or increase in value. They include stocks, bonds, and money in a mutual fund.

* Real property: land and things attached to it (house, garage). This is by far the greatest source of wealth for American families.

According to debt-counseling experts, if your debt-to-income ratio (excluding mortgage and rent) is:

15% or less: You are doing a good job keeping your debt at a manageable level.

15% to 20%: You are still a good candidate for credit by most lenders.

21% to 39%: "This range definitely raises a red flag," Cavazos says. At this level, start looking at your spending habits and eliminate credit card balances that carry high interest rates.

40% and above: "This is a serious situation," Cavazos says.

The average client seen by Money Management has an outstanding debt (not including mortgage or rent) of $19,000 and annual income of $27,100. If your debt-to-income ratio is this high, Cavazos says, you probably should seek credit counseling. To find a consumer credit counseling agency near you, contact the National Foundation for Credit Counseling at 800-388-2227, or go to www.debtadvice.org.