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The Worst Cash-Flow Strategy Ever!
By Stephen Tiebout
Want to achieve a chronic state of personal economic turmoil?
Here's how to do it!
Live above your means.
Perhaps you're already doing it but don't know just how serious
your negative cash-flow is.
If this is your situation, don't despair. You are not alone! It's
estimated that 40 percent
of American families annually spend more than they earn. About
60 percent of active credit
card accounts are not paid off monthly. Average credit card debt
among people who have at
least one card is $9,205--triple what is was in 1990. Yet 9 out of 10
Americans claim credit
card debt has never been a source of worry! What's going on
here?
Running our households at "full credit capacity" is the American
way of living. A Maxim of
conventional wisdom for consumers is: living on credit is
fashionable; indulging oneself is
fashionable- saving money isn't.
Personal debt is one of those things we all like to forget about. As
long as we can keep
making the monthly credit card payments, we seem to think we'll
be OK. And yet our future
earnings are being eaten away at an accelerated rate, and there's
no end in sight. It isn't
just household debt or personal debt that's at stake here, either.
The same addiction to debt
exists at the national level, of course, where the ballooning national
debt still receives
almost no attention (even though interest on the national debt now
accounts for somewhere
around 17% of all government spending).
Consumer credit has hit an all-time high as a percentage of
household income. Put another
way, we've never been so indebted. We owe on credit cards,
personal loans, and home
mortgages. And personal bankruptcies are skyrocketing to the
point where nearly 1.5 million
Americans filed for bankruptcy in 2004.
By all sane reasoning, these are alarming numbers. And
eventually there are consequences.
You're going to have to pay of the debt load sooner or later. And for
many people, that
debt just keeps snowballing. You're paying debt on top of debt,
right? And those student
loans are due, too, and you barely have enough cash to pay the
rent and the car loan.
Sound familiar? I know; I've been there, too.
To make matters worse, we're all told that we have to keep
spending to help the struggling
economy. It's misguided, of course, since increasing personal debt
across the board does
nothing to help the economy in the long term. It's a simple fallacy
that spending--any
spending at all--is "good" for the economy. In fact only useful
spending is good for the
economy. Spending on meaningful education, say, or investing in
new technology or equipment
that can be used to create new prosperity--now, that's "good"
spending.
Finally, we have predatory lenders playing their part in all this.
Banks are cashing in on
the now-popular theme that you can erase your credit card debt by
refinancing your home.
That's great until you realize you're back in hock with the credit card
companies a year
later, and now you have increased long-term mortgage debt. The
real problem is that people
just spend way too much. They buy a lot of things they don't need,
and they keep buying day
after day, year after year, regardless of their ability to pay it.
Eventually, this collective national bill is going to come due.
We can't keep spending forever, not as individuals, not as a
country. And the price for the
bail-out is going to be steep. U.S. currency valuation will continue
to fall on the global
market. Personal financial misery will continue to rise. It's as
inevitable as gravity.
About the Author
Stephen Tiebout makes it easy to get control of your personal finances. Learn the secrets for living below your income and achieving financial success by visiting: http://www.101-painless-ways.com
Article Source: http://www.simplysearch4it.com/article/12209.html
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