Things have gotten pretty bad when managing credit card debt in our “borrowing nation.” You know we’re in trouble when a credit card company or a mortgage company is encouraging you to go into debt even more by paying off debt just to get into another.
Credit card debt has grown to massive amounts. According to Value Penguin, Americans have over $800 trillion in debt or about $6,300 per family. Perhaps this is from credit card companies soliciting students at a vulnerable time, when they know they’re just going out on their own for the first time, with little to no income; it’s like dangling candy in a child’s face. These kids are at a period in their lives when money management is the last thing on their minds. This will become an even bigger problem for both the consumers and credit card companies, when the income to debt ratio is greatly unbalanced, and nobody can pay or pay.
It’s not only the aspect of the college students and their debts but also the people who knowingly get themselves into a world of trouble, spending way over their limits on credit cards and obtaining mortgage loans that they cannot afford. This isn’t the best way to go about things is an understatement. And this does not touch on the $1.61 trillion that holders of student debt held by some 43.4 million borrowers, according to Nerd Wallet.
Perhaps the best way for us as consumers to begin to get ourselves out of our current mess and keep ourselves out of trouble for the future is to learn to live below our means and spend less than we make. This isn’t always glamorous, and you’ll never hear this advice from the credit card companies or the mortgage companies who would be glad to obtain your assets when you default payment, but doing could save your future. Also, the key to any financial success is to have a functioning, working, and liveable budget to guide you. Please visit the Financial Tools of our website for more on budgets.
Making this much easier is to create an effective budget and learn to stick to it like glue. Budgeting is a dirty word to most, but they swear by it for those who have used a budget and stuck to it. Your budget acts as your blueprint for getting out of debt. Using a budget lets you recognize where your spending gets out of hand, and like a self-guided missile, you can make tiny corrections necessary to straighten back on course.
Spending less and budgeting may sound like an agonizing way to live; however, the alternative – forever being in debt can put you in an early grave due to stress. Contact me directly if you need help developing a workable budget and live in the Metro-Nashville area. If you are out of the middle Tennessee area, feel free to reach out to a fee-only Registered Financial Consultant, RFC, near you.
