Should You Worry?

Many people are wondering when their financial situation will get better. For most, it is not getting better but getting worse. Blaming others for their debt or waiting to win the lottery is not the solution. Study shows that the rich are getting richer and the poor are getting much poorer and the financial gap is getting wider. So, what can the average person do to control their debt?

Can debt, the economy, not having enough money, living pay check to pay check, interest rate too high, cost of living going up, housing going up, gas prices going up, hours cut at work, no jobs available, low paying jobs, mass laid offs, companies down-sizing, jobs being outsourced to countries where their dollar is lower in value, etc., be the reasons why people are having financial problems? If that’s all true, then how do we explain the number of Millionaires in the United States increased by 8 percent in 2011? In fact, there are approximately 4,715,000 Millionaires in the United States. Many people became Millionaires for the first time in their lives when the economy was at its worse.

In today’s marketplace, people are able to generate massive amount of income faster than ever before. Take a look at the entertainment industry for example. Celebrities are able to mass market their brands by using social media networks via the internet, to sell products that generate incredible revenue for them. Fans can purchase their merchandise, songs or movies online and pay for it and have the product within minutes.

You may say these people have special talents that they can make money from. That is true but not all Millionaires are entertainers or famous people. If you research most of the Millionaires, you will notice they are very happy and love what they do for a living. They are so passionate about their craft that they can’t wait to get up early in the morning so that they can do what they love. Some say, do what you love and be great at it (you shouldn’t do it just for the money). Give it your 100% all the time. Do it like you mean it. Money is the ‘by-product’ of doing what you love.

It is common that people with money problems tend to blame others instead of taking full responsibility for it. They blame the banks for charging high interest as the primary reason for their overall debt.

So, what caused them to go into debt? Did they inherit the debt from someone else? Were they forced to spend other people’s money and can’t pay back? No, they simply keep charging up their credit cards month after month and only making the required minimum payments.

The reality is, the banks don’t lend out money for free to anyone and not make money on it. Therefore, they charge interest on the amount borrowed – average around 19% for credit cards. If the balance is not paid in full, then the interest is compounded each month. Keep in mind, credit cards are meant for temporary use and not for people to borrow and live on. So, that dinner may cost $45, but will cost you hundreds of dollars in a few months or that great vacation to Mexico you paid $2500 for will cost thousands of dollars in total, depending on when you will have the entire balance in full paid off.

The best approach to credit cards is to pay the balance off in full by the due date, every month when the statement arrives so that you don’t have to pay any interest. If you can’t pay off the balance every month, then you have over extended yourself. Perhaps it’s time to adjust your lifestyle so that it is more aligned with your income. Don’t spend more than what you make.

If you are consistently short of money, or can’t save up for that special item you’ve wanted for a long time, you may consider creating a budget for yourself. This will allow you to see where your money is going or has to go and what you have left to spend or save. Keep it simple and realistic so that you understand your current financial situation. For some, this may be a reality check. Adjusting your lifestyle may help. For example, renting movies instead of going to the theatre; make your own coffee instead of spending $4 every morning at the coffee shop. It all adds up…very quickly.

Paying your bills on time every month will create an excellent credit history and remember to put money aside for your retirement. Even if it’s $20 per pay check – over time, this amount will add up. The best way is to have the amount deducted automatically from your pay check so that it goes directly into a retirement savings account or work the amount into your budget. Experts say to save at least 10% of your pay check every month for your retirement. Asking a financial advisor for assistance would be helpful as he or she may offer advice to help you achieve your retirement goals.

Should you worry about your debt?

Should you worry about not having enough money?

Should you worry about money problems?

You decide!