AJ: Our nation’s debt is a constant source of anger for Americans regardless of political party. So why do so many individuals think it makes sense to take on enormous amounts of personal debt?
Everyone wants to think that they’re unique, but the reality is that most people struggle at some point or another. You absolutely cannot anticipate and plan for everything that comes up, but you can choose how you address the setback.
Don’t buy a car that costs more than you make in a year. Don’t spend more on eating out during the weekend than you make in a week. Don’t go to Vegas to take a break from your life before starting your child’s college fund. It’s all obvious, but in a moment of stress or excitement people seem to lose the ability to make rational choices, choosing instead to make small purchases on credit that ultimately cost significantly more in the long run.
It’s easy to get behind
It’s really easy to get behind, especially in relationships where communication isn’t consistent, but make a plan to dig yourself out quickly. If you’re fully extended each month and an over and above expense comes up, find another source of income, even if it’s temporary.
If you let $1,500 sit on a credit card with an interest rate of 15% and only make the minimum payment (not adding any purchases…), after about 2 years you will end up paying almost $3,000! That takes your cost from about $63/mo to about $125/mo.
I don’t know many people who would be too proud to ask a chef about how to use a certain ingredient in a recipe, so it makes no sense to me why anyone would be too proud to ask for help with their finances. Where did this idea of secrecy around money come from? If you are in trouble and need help, ask. Everyone pulls from different experiences, and you don’t have to be a financial advisor to have great tips on living a reasonable lifestyle.
Many financial advisors charge 1% of assets under management to provide you with financial guidance. Take the time to at least have a conversation with someone who is trained to help people invest wisely.
Change can be good
KJ: What your parents’ parents did to save might not be what you should do. In our rapidly changing landscape, consider seeking a financial consultant with the know-how of today’s world.
When was the last time you got an illness and just said ‘it’s okay, I can take care of that in a couple months.” No! You address the ailment as it arises. Putting it off to address at a later time only makes the problem worse.
Since so many products didn’t exist decades ago, why think what worked then will work now? The concepts of a mutual fund, ETF, hedge fund, 401(k), 403(b), IRA, SEP, SIMPLE, HSA, MSA, and FSA have become alphabet soup! It is important now more than ever to seek a competent professional who can walk you through your goals, investments, and financial picture, and can help update all areas periodically given the constantly evolving financial industry. Life isn’t going to sit on the sidelines and wait for you to figure things out: you have to go figure life out, so it doesn’t leave you in the dust.
No one said it would be easy
It can be a challenge to open up about your finances with someone else. As Americans, it’s so much engrained in our culture to not speak about money and to keep that behind closed doors. No one said working through problems is going to be easy, but it’s not something most people are prepared to do on their own – they need a great support system. Just like losing weight or trying to achieve a goal, you need to know where you stand and where you are headed (Budgeting: a very good place to start). With the credit binge that the U.S. has had for the last 30 years (consumers, corporations, and the entire country), it hasn’t been easy cleaning it up these past four years (we have a long ways to go), but we can get there if we put our minds to it! It starts with you!
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