The Personal Side of Debt

Do you know the amount you spend each month on essentials?

Do you know the basic household living expense ratios?

Do you have the ability to handle a $500 financial emergency?

More than 60% of Americans have less than $1000 in the bank and more than 57% could not handle a $400 emergency without having to sell something or borrow the money from friends or relatives. The generational disparity of how we view debt has created a huge crisis financially and that is driving the sentiment of income inequality, not the fact that some people are able to make and keep more of the money they make.

Taking 100% Responsibility

Few people truly know how or are able to develop a financial discipline that would allow them to have such things as an emergency fund, a savings plan let alone future financial security or retirement. A great deal of the problem is that, as a nation, we do a pretty lousy job when it comes to financial literacy and fiscal responsibility. After all look at the examples we have with our national, state, local and community elected officials who all spend money as if there is no end to the ability of the taxpayer to pay for it all. What a horrible example we have set for our nation that we spend money we do not have on things we do not need and create no sense of taking responsibility for the choices we make.

Everything is a Result of a Choice

Recently, one client was very frustrated at the financial mess in his business and he barely have enough money left at the end of the month after working so hard for the entire month.

I, in response to his statement, asked to see his bank statement where I immediately proceeded to point out that he took in $34,000 and spent $41,000 using everything that was carried from the previous month and then some on his line of credit.

I noted that his business did not have an income problem. It has a spending problem and the reason there was no money is because he chose to spend it all.

Everything in our life is a result of every choice we make. Period!

Studies have reflected that most people will spend 120% or more of every dollar they make every month and charge it now and pay for it later. Managing credit, living with a budget, setting financial goals that are realistic and attainable, and having an emergency fund are staple ideas that have worked for generations and will work even for the millennial generation.

It is not the fault of anyone or anything if at the end of the week or month we have no money. It is a result of every choice we make to spend $94 per month on Starbucks, and hundreds more on impulse buying with no regard of saving or setting aside money and then spend what is left. Studies have reflected that most people will spend 120% or more of every dollar they make every month and charge it now and pay for it later. In fact, there are so many ways to keep more money but it always begin with five letters — CHOICE.

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