- As a credit risk assessment planner, of course my line of business brings me before individuals who have more month than money. You know how it feels to feel closed in, borrowing from ‘Peter to Pay Paul’. You maybe sliding your money trying desperately to make ends meet before it starts all over again next month.
You have tools to guide you and keep you on track, such as the debt to income ratios, and the debt to credit ratios. These money management tools are helpful, but bottom line logic tells you that when you are using your credit cards to slide money because you don’t have the real cash, you are in trouble ! There is no need for a mathematical formula to figure it out, the simple fact is that you don’t have enough money to cover your expenses.
We all live in a ‘cashless’ society and there is no ‘feeling’ of loss. There is in place a very good marketing plan that motivates consumers of all ages to spend money without thinking. But do think about it, your income is automatically deposited to your checking account. From the checking account you make purchases with your debit card. Or you write checks or make payments online where the payments are auto debited from your account. And of course you have the ‘convenience’ of credit card purchases. WHEN do you ever really feel the cash flow ? You don’t. The mental stops are erased in a ‘cashless society’. Without seeing the stack of cash physically deplete you don’t make a decision to stop whatever you are doing wrong. It feels good because you don’t see your money go down, or your debt go up. You experience emotionally only the good feeling of getting what you want.
So no matter what age, spending 50-75% of your income on debt can be an easy habit to develop. ‘Habit’ is the key word here. Like any unhealthy habit, you can control it. You Can Stop! First you must realize the harm this bad habit does to you personally. Then you must educate yourselves in the many ways you can make changes, then develop a personal plan. And finally make a commitment to yourselves to follow the objectives in the plan to be successful. No one can survive and be fiscally fit while spending 50-75% of your income on debt. It might be a fun ride now, but the crash and burn part is not an experience many people enjoy. Be healthy, take control of your money, learn how to become fiscally fit today.
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