How many times have you heard someone say that they have never been any good with money as though it was a valid excuse for getting into debt? Excuse or not the reality in the USA today is that huge numbers of people are in debt. For the purpose of this exercise forget mortgages because they are long term, low interest and may actually be helping you grow your assets.
If you do have money worries there is always something you can do to improve your situation even if other things are beyond your control. The economy is the USA is growing and consumer confidence has been restored. There are job opportunities if you feel you need a change or if it is obvious you can earn more money yet more money alone is not the real solution to financial problems. You must not waste it; too many well paid people are spending more than they earn without saving anything. It is bad habits that must be broken as part of the process of getting your financial affairs in good order.
The Issues for Attention
There are several obvious things that you may need to address:
- Your home. Everyone likes a nice home filled with lovely things. It is quite natural and as long as you can afford to maintain it and pay the rent that is fine. If you own your own home then the mortgage payments must be paid instead. There is no exact science as to how much your housing costs should be but 30% of your total income is a decent calculation. You can list the bills you pay regularly each month and see if you are close to that figure. If you are spending more than you are earning then your current calculations need to be examined closely.
- Debt. If you are repaying student loans each month then you will gradually be reducing the debt but if you are paying excessive interest on credit card balances you need to act. Perhaps you are subsidizing your lifestyle by using your cards to withdraw cash from an ATM or making purchases on the card without actually settling the bill at the month end? That is especially dangerous and you should investigate the possibility of a $5000 realistic loans from an online lender to pay off any balances and then pay the necessary monthly installments until the loan is fully repaid.
- Joint Decisions. You should talk through problems as a couple if you are married or in a serious relationship. If you intend spend your future with someone you need to discuss finance. If you are alone a second opinion may be useful anyway.
- The future. That falls into two sections, ultimate retirement but also the creation of an emergency fund to be used when something unexpected comes along. Remember the problem of using your credit card can lead to increasing problems. Compound interest will help even the smallest savings each month if it has time to do so.
Reaching a Satisfactory Budget
Taking these four things as a whole everyone needs to live with a proper budget in place that takes into account the answers to the potential problems mentioned above. The process can begin with a plain sheet of paper with two columns written down, income and expenditure. There can be no omissions and even small daily spending needs to be included. The level of credit card debt will not show in those columns, just the average monthly payments that you make. It is a bit like a profit and loss account that a company keeps. The liabilities, in this case the card balances, appear elsewhere, on the balance sheet. If that liability is settled with a personal loan the ‘’balance sheet’’ then has a diminishing liability and the monthly installment entered into the ‘’profit and loss’’. As long as installments are paid on time there is no need to worry about the liability.
The budget then needs to be calculated on the new figures with the aim of creating a regular surplus that can be used to invest in a good future. Retirement should be a reward for a successful working life and if it is to be comfortable then it is time for action. No more ‘’never been any good.’’