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PHOTO: A Monarch butterfly enjoys nectar from a butterfly bush. Photo by Dan C. Rinnert, ©2003. All rights reserved. QUICK LINKS Nancisceris Internet Directory Getting Married? Job Stress?
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2009 January 07, Wednesday
Why America is in Debt According to the American Bankruptcy Institute, bankruptcies in
the U.S. have jumped by 44% in the past ten years just as consumer
credit has exploded in the past twenty years. Although consumer
spending is a good thing, if misused, it can be disastrous. Unfortunately,
this is exactly what happens. Americans are notorious for abusing
money, often spending more than earned. In fact, statistics show
on average every dollar earned, $1.22 is spent. To give you a better idea of what Americans are spending money
on and consider the following: Mortgages The National Association of Realtors advises the average home
cost is $162,800. With interest rates at a 36-year low, buying
a home is a great investment. The problem lies in that even good
debt can create bad situations. Rather than buy a home at the
high-end of your scale, look at homes at the lower- to middle-scale,
thus stretching your good credit. School Education is always good and can increase your earning power by
as much as 80%. However, completing a bachelor’s degree or graduate
degree can be costly. More than 50% of students graduating with
a bachelor’s degree do so with unpaid debt. On average, the amount
of money borrowed for a four-year degree at a public school is
$15, 375 and for private, $17,250, meaning in the end, while graduates
will have better paying jobs, to get there they have to go into
debt. Credit Cards Credit card companies make borrowing money far too easy. When
you need something, you just charge it. On the other hand, credit
cards encourage debt. Just ten years ago, the average credit card
balance was close to $3,000 while today, that number has hit close
to $9,000. Although easy and convenient, what people do not realize
about credit card debt is that a $1,000 balance with only the
minimum payment made, will take more than 20 years to pay off
just because of interest. With the down economy, it is more important than ever to get debt
under control and you can. Debt consolidations agencies have been
established around the country teach people ways to manage finances. Finding Help to Control Debt With so many Americans struggling to bring debt in better alignment
with their income, these agencies are booming. One invaluable
service offered is counseling, which are free and designed to
assist with teaching financial strategies. Qualified counselors
will review your debt versus income ratio and then work with you,
one-on-one, to develop a personalized plan for both current and
future financial difficulties. In addition, debt consolidation agencies specialize in creating
individualized plans so you can pay off debt and dramatically
reduce stress in your life. If your financial situation is severe,
other plans are designed where your debt is paid off via monthly
deposits made to a special agency that manages the distribution
of funds going to your various creditors. For most people, repaying debt takes anywhere from 36 to 60 months,
depending on the situation. With 100% of payments going directly
to your creditors, you are able to accomplish repayment in a much
shorter amount of time than you would on your own. For many people,
this is the first step to financial freedom. To locate a reputable
agency, look on the Internet or in your local phone directory
for “consumer counseling services.” To ensure you work with a qualified agency, check references and
ask questions. You want to make sure the agency is non-profit.
This is important to ensure all your money goes to the creditors
and not to the agency. Question the specific types of services
offered to make sure they align well with your needs. Other questions
would be, are the counselors certified, are all services confidential,
and are they a member of the National Foundation for Credit Counseling.
With a little research, you will be headed to a debt-free life
and having the tools to stay that way. Managing Bills / Getting out of Debt As simple as it may sound, many people are still in debt because
they do not know how to manage their finances properly. This is
a common problem but one that can be solved. The first step to
getting out of debt is learning good spending habits. Many people
avoid proper money management because of budgeting. They view
budgeting as being synonymous with deprivation. However, once
you establish a budget and learn to live by it, your entire life
will be less stressed. You want to make spending simple by creating a list outlining
all your monthly expenses. This can be done manually or with a
computer program. This list needs to include everything such as
rent or mortgage, car payment, utilities, credit card payments,
doctor bills, entertainment, and so on. Your list will help guide
you in the way you spend. Keep this listed posted in a visible
spot where you can see it. Keep in mind that managing money and
getting out of debt is a learned process and not something that
will just happen on its own. After completing your list, prioritize
your bills. For example, you know that your rent or mortgage,
groceries, and utilities come before credit card bills and entertainment.
Revisit this list each month since things will change and adjustments
have to be made. Next, you have to plan. You never know when some unexpected major
expense is going to enter the picture. Planning is not as hard
as one might believe. For example, if you normally pay $800 a
month for your mortgage or rent, increase that by $25 to $35 a
month and put that extra aside in savings. The money will add
up quicker than you might think, allowing you to handle surprises. Take the next step by tracking the amount of money spent as well
as where it goes. Expenses can sneak up on you and unless you
stay on top of your spending, you could be going over your budget
and not even know it. While you may not think a $2.00 cup of coffee
or a $4.00 sandwich is a big deal, write it down. In fact, write
everything down. Those little incidentals are what will get you
in trouble. Look at your spending habits and make changes where appropriate.
One misconception is that in order to have a good life, you have
to spend a fortune. Nothing could be further from the truth. You
just have to change the way you do things. Instead of spending
a fortune on concert tickets, look at ticket outlets or find local
free concerts. Rather than pay full-price for a movie, watch for
sales at your local movie rental store for previously viewed movies,
generally half the cost. Switch those steaks for some juicy burgers
on the grill. In other words, you can save money by being creative
and knowing what you are doing with it. As soon as you are freed from the burden of debt, you will have
an entirely difference perspective of bills and a higher appreciation
for being debt free! About the Author: For the past 23 years, Renee Dietz feels she has been blessed
to have opportunities to use her gift of writing. Born and raised
in Arizona, Renee follows proudly in her mother’s footsteps who
has more than 80 novels published around the world. She is also
an interpreter for the Deaf and performs volunteer work for various
organizations. However, she says her real passion is writing.
“Not just a hobby–writing is my life!” |
America’s Debt
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