Credit Card Debt

US Debt credit card

US Debt Is Rapidly Growing

Money Maroon

As the US debt level continues to rise, it is an interesting sight to see it happen first hand. If you are a manager, you will see this everyday. Specifically from new hires. This is the easiest way to find out what is going on with US Debt. The attitude of new junior hires tell it all. You can watch the attitudes of those with children and family, and those without. For the most part, there is no difference. It is very obvious that the masses have been programmed to spend. Rarely do junior hires save and invest first.

The Drive To Spend

From new junior hires, it is simply amazing to hear their thoughts on money. When many obtain  a job that pays more than they have made before, the first thought is how to spend their money. Not how to save. It is shocking. Even when there is a constant drumbeat of a recession in the near feature, the vast majority of new junior hires have a spending mindset. As such, as soon as the money comes in, it is let go on frivolous things. 

It is actually amazing. For some of these new hirers, I am somewhat jealous of the naivety. For example, how free they are with money. No thought of what could happen if they lose their jobs. They are taking vacations, buying new cars, buying new homes and attending far away music festivals. You only live once they say.

US Debt Is Growing And It Is Scary

The scary part of this is because of the high wages that these new junior hires are making, the thought is that they can pay off debt whenever. As such, they accumulate debt with the thought that in the next few months it can be paid off. This is a problem. Without adequate funds in an emergency fund, the lost of a job or any hick ups or simply life can cause issues. With high salaries, in a high costs of living area, and financial illiteracy, debt can accumulate very fast.

This all goes to show how US debt continues to grow. There is such a mass of financially illiterate folks that no matter the salary, no matter how high the income, many in the US are simply trained or programed to spend and to continue to do so until they have nothing left.

Those With Families

The interesting thing is that even as we move toward a possible recession, it really does not matter if folks have families or not.  The spending continues on. Whether it is a weekend trip to Europe or traveling to another State for a music festival. It is simply amazing. Those individuals with families are spending more than those without. For most, you would actually expect the opposite. But coming out of the pandemic, this is where we are. There is a pent up demand to travel and it does not matter if a recession is around the corner. Caution is being thrown to the wind and folks are spending and the debt load is rising. 

US debt is not the only debt rising. Debt is raising in other countries as well. As the labor market tightens, as layoffs increase, there will be fiscal pain. Are you planing ahead or are you apart of this group that is driving US debt to new heights?

Conclusion

As the US debt level continues to rise, it is an interesting sight to see it happen first hand. If you are a manager, you will see this everyday. Specifically from new hires. This is the easiest way to find out what is going on with US Debt. The attitude of new junior hires tell it all. You can watch the attitudes of those with children and family, and those without. For the most part there is no difference. It is very obvious that the masses have been programmed to spend. Rarely do junior hires save and invest first. Or for that matter, save at all. For financial independence, start saving and investing early.

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Amazon prime day

On Amazon Prime Day, Ask These Three Questions

Money Maroon

It is back. Yes, it is that time of the year again, it is amazon prime day. The annual two day deal event that is exclusively for prime members. But before you hit the checkout button and reach into your wallet or bag for your credit card, ask yourself the following three questions. Do I really need this item? Can I afford it? How many days will I have to work to pay for this item. Do not buy just to buy, be intentional and logical with your purchases. It is your hard earned money after all. 

Amazon prime day
On amazon prime day, think before you spend

Do I Really Need This Item

So often we buy items because we think we need it. But do we really understand what is a need versus a want? Generally, a need is something that is a necessity or essentially required for life. For example, food, water, and shelter are needs. In some instances, the list can be much broader depending on your specific situation. But if you are hoping to take advantage of an amazon prime day deal, it is likely that the item you are planing to buy is in the category of a want. 

A want is something unnecessary but desired. For example, while you may need a car, do you need a luxury car? We all need shelter, but do you need the home that is at the top of your budget? Do you really need the new fancy gadget for your grill or your car? The answer is no. It is not a need, just a want. What is actually interesting is that a lot of times, we may desire an item, but once we have that item, we will rarely use that item.

Many factors contribute to your wants. Did you fall victim to a commercial or was it something you saw in your neighbor’s yard? Your want for an item may also be a matter of the fear of missing out. The fear of missing out will at times push us to buy when we need not do so. Before pulling the trigger on a purchase, remember not to buy just because something is on sale. Assess whether or not the item is a need. Does it make sense? For all you know, next week, the special sale that appears on amazon prime day will be back. Do not allow a manufacture sense of scarcity and pressure force you to make a purchase.

Can I Afford Amazon Prime Day

When thinking about taking advantage of amazon prime day, always ask the question of can I afford it. No matter what the sale prize is or the discount percentage, ensure that you can afford it. Being able to afford something is very different from being able to purchase the item. You can use credit to purchase just about anything. But can you actually afford what you are buying.

Do not be tempted to put something on a credit card that you cannot afford. You do not want to have an amazon prime day purchase made this year that is not paid in full next amazon prime day. Credit cards are expensive. Take a look at your interest rate. Ensure that if you make a purchase on credit, you are able to pay it off in full without having to pay interest.

Can you afford your next purchase? Be honest with yourself. If the answer is no, know that it is ok. Because there is a sale does not mean that you have to buy. Keep your financial future in mind.

How Many Days Will I Have To Work To Pay For Amazon Prime Day

It is a question that is rarely asked but should be asked before every major purchase, especially on amazon prime day. The question is, how many days will I need to work to pay for this item? For example, if the item costs $500, and you are paid $30 an hour, it will take you 16 hours of work to pay off the item, two days of work. If you are making significantly less than $30 an hour, you may have to work for over a week to pay for the item. Now consider if the item or items total over $500, it may take you a lot longer than a week.

Now, is this item that you are thinking of purchasing worth a week of work? Is it worth it? If the item is a need, then it likely is. However, if you are about to purchase a want, take into account the costs. With regard to costs, consider not only the money, but also your time.

Before you consider making a purchase on amazon prime day, ensure that you are not succumbing to a manufacture sense of scarcity and pressure.

Amazon prime day
On amazon prime day, don’t forget that it’s your money

Conclusion

Amazon prime day is here again. The annual two day deal event that is exclusively for prime members. Before you hit the checkout button and reach into your wallet or bag for your credit card, ask yourself the following three questions. Do I really need this item? Can I afford it? How many days will I have to work to pay for this item. Do not buy just to buy, be intentional and logical with your purchases. After all, it is your hard earned money. 

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Financial Mistake

This Financial Mistake Is Making You Poor

Money Maroon

When asked what their biggest money mistake was, many people will respond that their biggest financial mistake is something they bought. Whether it is a house, a car or their education, the answer typically given is an active financial act that has been taken. But the question is not what is the biggest purchase that you have made that you now regret. The question is, what is your biggest money mistake. The biggest financial mistake that you likely have made and may continue to make is not what you have purchased, it is what you have not yet done.

Lost Opportunity

Your biggest financial mistake is likely not a purchase that you have made. Surprisingly, your greatest financial mistake is typically a decision that you did not make. It is, lost opportunity. 

If the opportunity was taken and worked out in your favor, it is not a mistake and as such the decision would not fall into the category of a financial mistake. On the other hand, if a lost opportunity is a mistake, the size of the mistake only grows. The reason for this is the opportunity cost and the compounding of that mistake. For example, think about not taking a job or not continuing your education. 

If these decisions worked in your favor, it would have been a boon. However, if these decisions were in fact a mistake, when looking back, you will see the opportunity lost in your career earnings, relationships, status and financial security. These losses will only compound over time. The mistake will only grow. 

But do understand that this works in the other direction as well. By doing your research, due diligence and making a good decision, the benefits here only compound. Make a great financial decision today and enjoy the compounding benefits over your life time.

The Financial Mistake Of Not Saving Earlier

Financially, your biggest mistake is likely that you did not begin saving earlier. With regard to saving, consider the opportunities that you have missed out on because of lack of funds. Think of the turmoil that you may have experienced during one of the many financial downturns over the last number of decades. How different would that have been if you had been saving earlier?

Saving is the basis of any financial plan. Without effectively saving, you will not build an emergency fund to ride out the financial bumps in life. Sadly, the importance of saving usually dawns on us during a financially rocky situation. For example, it is only when you lose a high paying job that you think of how much you have wasted on nonsense. Think of professional athletes, lawyers and doctors. The financial regrets only comes after going through a financial rut.

Did you lose a house or other financial possessions? Think of what you could have done with an emergency fund. If you have not yet began saving, do not allow this financial mistake to compound. Begin saving today.

The Financial Mistake Of Not Investing Earlier

Consider if you had only knew then what you know today. What would you have done differently? If there were no time machine, as there current is not, how can you implement your learnings today and benefit going forward.

On average, over the last 30 years, the stock market has given a return of between 7-10%. Imagine if you had place a portion of your money 20 years ago into the stock market and continually did so. You would have most likely been a millionaire at this time.

The fact is, with compounding, it really does not take that much. It only a little money but a lot of time. Use the many financial calculators that they currently have. You will notice that with an average of investing  let us say for simplicity about $100 per month for 20 years, the amount that you gain overtime is remarkable to put it lightly. 

Your biggest financial mistake is not investing earlier.

Financial Mistake
Invest in your financial education

The Financial Mistake Of Not Investing In Your Financial Education Earlier

Knowing that you should save, invest, and reduce debt is the basis of long term financial success. This is in fact the basis of financial education. You must save to have money to invest.  Without saving and investing, your money does not grow. Further, no matter how much you may save or invest, you will not get financially far if your funds are going to interest payments on debt.

Somewhere along the way we all have a financial wake up call. It could be by learning through others or learning a tough financial lesson ourselves. But, at some  point or another, we will realize that we should save more, invest more, and have less debt. I did not say that we will all act upon this realization. Some of us do while others do not.

This is like anything else in life. While we know what is best for us, we may never act. For example, at a certain time in our lives we will realize that we are getting older and need to start thinking about retirement. In this case, many of us continue living it up while others make a change. As another example, at a certain time in our lives, we realize that we should get healthy. Some of us make changes while others continue to have an unhealthy lifestyle. 

Financially, it is the same. We know that the more we invest in our financial education, the more likely we are to succeed financially. Yet, most of us rate having a chat about money as near the bottom of the events that we want to do. Most of us refuse to learn about debt and compounding. Most of us engage in keeping up with the Jones instead of focusing on our financial reality. Yes, a lot of us are stuck in the “fake it till you make it” phase of life. This does not work in the long run.

Take hold of your financial situation and invest in your financial education today. The more you learn today, the greater your potential for tomorrow. Your future self will thank you.

Conclusion

When asked what their biggest money mistake is, many people will respond that their biggest financial mistake is something they bought. Whether it is a house, a car or their education, the answer typically given is an active financial act that has been taken. But the question is not what is the biggest purchase that you have made that you now regret. The question is, what is your biggest money mistake. The biggest financial mistake that you likely have made and may continue to make is not what you have purchased, it is what you have not yet done. Stop making financial mistakes and journey to financial independence.

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Teaching Kids About Money

Teaching Kids About Money

Money Maroon

One of the most important things that you can do in life is teaching your kids about money. Teaching kids about money is a proactive way to ensure that the next generation is financially literate. It may seem like another thing on the list to do as a parent, however, teaching kids about money can be as easy as playing a game or just including them in day to day activities. To teach your kids about money, take your kids on your daily money adventures.

Teaching Kids About Money Must Start Early

Having a financial foundation is all about starting early. While you may quickly accumulate wealth in some instances, the magic of compounding requires time. As such, start saving early. 

The easiest avenue to teaching kids about money is to start saving early. Yes, the good ole piggy bank. This is one of the earliest and easiest ways to get your kids to think about money.  Even kids love to see their money grow.

The piggy bank provides for a lot of teaching opportunities. For example, the piggy bank can be used to teach the concept of saving toward a goal. If your kid wants to buy something, have them understand how long it will take for them to save that amount based on their standard allowance. It need not be a big purchase, for example, if they want to buy candy, you can mention that they will need to save/take an amount from their piggy bank. This will no doubt trigger an internal conflict of money vs candy. They will have to decide whether or not the candy is really worth their money.

But most importantly, the piggy bank forces kids to adapt a habit of saving. Saving is a habit that can be beneficial if learned early.

Teaching kids about money
Our kids are the future

Making Purchases

Your kids like new gadgets, so does everyone. How do you pay for it? Typically with a credit card? Teaching kids about money involves teaching them about your purchases. Show them the bill and how much things costs. Show them how you purchased it, cash or credit. If you are using a credit card, this is the perfect time to discuss interest rates.  You can further venture into the concept of paying off credit card bills early such that you do not have to pay interest payments.  The magic of compounding and how this can work to your benefit in saving but to your detriment on money you owe will no doubt hold their attention. Importantly, the concept of not purchasing things that you cannot afford will be a natural progression.

Going To The Bank

Like many other things as a parent, get your kids involved in your financial decisions. They may not understand, however, the act of going through the process will be built in. When old enough, they will begin to understand. Teaching kids about money is about sparking financial curiosity and planting a financial seed that will flourish and pay dividends in the future.

For example, on each journey to the bank, consider taking your child. Kids are curious creatures and they will ask numerous questions about the bank. Why are you going to the bank? Why are you depositing money? Where did you get the money from? Do you get it back? These are all questions that will spark a conversation with regard to earning money, using money, and saving money.

These early conversations with your 3-5 year old will begin to inform their concept of money. Have you ever taken money from your kids piggy bank and try to deposit it in the bank? If you have not, this process is likely to create a mental break down for any child. They become very attached to their money. However, this process provides the perfect opportunity to have a discussion with regard to the function of a bank, interest rates, and possibly inflation. No kid wants to have their money taken away. By explaining why their money will earn more if it is put to work (in the bank/investment account) will put them at ease and be a great benefit in the future.

Monopoly Money

Teaching kids about money at times can be a simple matter of playing a game. In many ways, monopoly is the perfect game. Monopoly can accomplish multiple things. Monopoly is not only a fun game for family time. Playing monopoly can also help kids learn to add, subtract, and also teach your child to handle or at the very least begin to get an appreciation of money.

Think about it, where else would a kid learn about charging rent, bankruptcy, going to jail, getting paid a scheduled salary, trading property, and transacting with a bank? Monopoly teaches simple concepts in game form. (1) If you own property, you can charge rent. (2) If you invest in your property, by building a hotel, you can charge even more. (3) If you over extend yourself financially, you can go bankrupt. The concepts are all there, and your kids will learn them all without trying.

Conclusion

One of the most important things that you can do is teaching your kids about money. Teaching kids about money is a proactive way to ensure that the next generation is financially literate. It may seem like another thing on the list to do as a parent, however, teaching kids about money can be as easy as playing a game or just including them in day to day activities. To teach your kids about money, take your kids on your daily money adventures. Help your kids get on the journey to financial independence early.

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Financial Mental Health

Financial Mental Health Is Important

Money Maroon

When we think about health, we typically think about our physical health. We think of muscle vs fat vs cardio. But within health, we must also address our mental health. We can replace a hip and a heart, but we cannot replace our brain (at least not yet). So we must take care of what is happening in our mental space, both consciously and unconsciously. Within our mental health, it is important not to forget that our financial situation affects our mental health. When addressing health, we must address our financial mental health. Without good financial mental health, you cannot have great overall health. Work on your overall health by getting your finances in order.

Your Financial Mental Health

You can work out all you want, and eat correctly too, but if you are stressed and having anxiety about paying your mortgage/rent or affording your next meal, you cannot achieve your best health. Let us face it, when it comes to health, mental health is typically an after thought. With  millions in debt and financial literacy at a low, financial health is even further removed from our consciousness.

Your Financial Mental Health
Your financial mental health is important

Improve Your Finances, Improve Your Mental Health

To improve your financial health, improve your financial security. This basically means that you should become more comfortable with your finances. Become more comfortable with your assets and your liabilities. In a simpler form, know the amount you owe and the amount of money you have. 

Next, to improve your financial security, increase your wealth beyond what it is today. This can be done by increasing your funds and/or decreasing your debts. By increasing your wealth, we mean increase your wealth to the point of being able to handle unexpected costs. Yes, building an emergency fund. This act of having a safety net has an indirected effect on your mental wellbeing. It is a stress relief knowing that you are able to handle unexpected costs. You need not worry about being homeless, hungry or the effect of a car breaking down. Having an emergency fund frees up your mental space to do other things that can further improve your life. 

Comfort Before Millions

While the goal for many is to be rich and have millions in the bank, you do not need millions to improve your financial mental health. Just building an emergency fund will substantially impact  your mental state. In a recent study, it was found that the ideal income point for individuals is about $95,000 for life satisfaction and about $60,000 – $75,000 for emotional well-being. You do not need millions to be happy.

Start Small

To improve your financial health, start small. By making small incremental financial changes, you are most likely to stick with the process and achieve your goals. Slow and steady wins the race.

To increase your wealth, begin small by saving a portion of your income. Start slow. Aim to save at least about 1% of your take home income. Slowly increase the total over time to the point where you can begin to confidently build an emergency fund. Take a similar approach with your debts, begin small. Begin by aiming to owe less next week than you do today (for example, credit card debt and student loans). This can be achieved by buying only what you need and consistently reduce your spending over time. Think about your wants and needs before each purchase. Also, consider using a budget and track your spending. These are the initial steps on a journey to a better financial mental state and financial independence.

Conclusion

When we think about health, we typically think about our physical health. We think of muscle vs fat vs cardio. But within health, we must also address our mental health. We can replace a hip, and a heart, but we cannot replace our brain (at least not yet). So we must take care of what is happening in our mental space, both consciously and unconsciously. Within our mental health, it is important not to forget that our financial situation affects our mental health. When addressing health, we must address our financial mental health. Without good financial mental health, you cannot have great overall health. Work on your overall health by getting your finances in order.

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Credit Card Debt

How To Pay Off Credit Card Debt

Money Maroon

Consumer debt is increasing and it is expected to continue on this trend. Let’s face it, we live in a consumerism culture. We are bombarded by ads to buy new and, at times, unnecessary products multiple times per second. It is no surprise that so many of us are in credit card debt. It is of no surprise that so much of us have such low financial literacy and are moving toward a financially painful retirement. If you are trying to make a change, you are probably asking, how to pay off credit card debt?

How to pay off credit card debt

Know Your Credit Card Bill

If you are wondering how to pay off credit card debt, it may be best to start with your credit card statement. First, ensure that you are looking at your own credit card statement. Does the statement have your name, address, and credit card number/account number? If the statement does, take a deep breath and look at your balance. Remember your balance. Know your credit card balance. Know your exact credit card balance. So often, we generalize and minimize what we owe by giving a ball park number. It is important to deal with the reality of what we owe by knowing and repeating the exact number.

Now, take a look at the minimum amount due and how long it would take you to pay off your balance if you paid the minimum amount due. It is important to know your balance, it is also as important to know how long it would take to pay off your credit card balance. The Credit Card Act further notes the disclosures required by law on your statement.

By looking at the above information, you will be able to get a real understanding of your financial situation. You will also become more comfortable with your credit card statement.

Your Transactions

Now, if you are asking how to pay off credit card debt, look at the transactions on your credit card statement. Are the transactions all necessary purchases or wants? Circle all the wants (purchases that are not necessary). Thereafter, highlight at least one transaction that you will not do next month. Each month, perform this task of highlighting at least one want that you will eliminate until you are down to only needs. 

Apart of paying off your credit card debt is not growing the debt. In the process, learn to create a sustainable financial lifestyle. In short, stop making unnecessary purchases and live within your means.

Contact The Credit Card Company

If you are asking how to pay off credit card debt, one of the best action you can take is to communicate with the credit card company. Keep the line of communication open. Call them. Have a conversation with the credit card company with regard to your financial situation. If you are unable to pay a bill, it may be possible for the credit card company to give you some time. Further, you can request a reduction in interest rate. What do you have to lose? Call them.

Communicate

In some instances, your credit card company may forgive a portion of your debt. But there is no chance of this happening if you do not communicate with the credit card company.

Balance Transfer

To pay off credit card debt, it may be advantageous to look into a balance transfer. By doing a quick search, or even going through your mail, you may quickly find that many credit card companies offer 0% interest balance transfers for a number of years. At times, the 0% interest will last at least one year while others times it may be about two years. 

With anything in life, it is important to do your due diligence. Review the terms for the balance transfer. Read the fine print. Ensure that you will not have anything additional  to pay for the transfer and that you will have nothing to pay until the time period noted. Understand whether or not there are strings attached to the balance transfer. If there are strings attached to the balance transfer, know them, and only proceed if you are comfortable with them.

How To Pay Off Credit Card Debt – Pay It Off

To pay off your credit card debt, pay it off. By paying off your credit card debt, you will instantly earn 12-24%. By paying off your credit card debt, you will not have the 12-24% interest payments. But how do you pay it off?

To pay off your credit card, you can pay the minimum due. It is important to pay at least the minimum due to ensure that your credit is kept in tack. However, if you pay the minimum, you at least know how long it will take for you to pay off your credit card balance. The credit card company already told you this on the credit card statement. To pay it off faster, consider paying a portion above the minimum due. This is strongly recommended if you are able to afford it.

If you are asking how to pay off credit card debt, to pay off your credit card debt, know your numbers, contact the credit card company, consider a balance transfer and pay it off. There are other methods such as bankruptcy that you may also consider, however, it would be best to appreciate the financial consequence of such a route.

Conclusion

Consumer debt is increasing and it is expected to continue on this trend. Let’s face it, we live in a consumerism culture. We are bombarded by ads to buy new and, at times, unnecessary products multiple times per second. It is no surprise that so many of us are in credit card debt. It is of no surprise that so much of us have such low financial literacy and are moving toward a financially painful retirement. If you are trying to make a change, you are probably asking, how to pay off credit card debt. Know your numbers, contact the credit card company, consider a balance transfer, pay off your credit card debt and journey to financial independence.

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