Champagne Taste On A Beer Budget!

Americans are the biggest borrowers in the world. We’re also the most in debt!

“Why is this,” you ask? Well, after World War II, our grandparents (or parents for you old-heads) had a large increase in money available to them for both consumer goods and to help establish credit. As they acquired more and more household wealth, they also became more credit-worthy, both to the lenders and in their own eyes. The result has been the complete, social acceptance of debt.

Skip to today, and payments on mortgage and consumer debts absorb almost three-fourths of the average citizen’s annual income (and that’s after taxes). For most people, there’s not much left after this. A lot of Americans are being forced to use one credit card to pay on another, or to delay one bill so another overdue bill can be paid. To top this off, personal bankruptcies had doubled in the past decade, and most of the people who filed for them had jobs. Unexpected bills and reductions in worker’s pay were the root causes for these bankruptcies. Americans can simply not afford any more debt. Scary to think about, right?

Even now, most families are living from paycheck to paycheck, with little or no reserves for any emergency situations. A temporary employment loss would be almost too unbearable to many people. Because of economic uncertainties, the wisest path one could take is to get out of debt and to start saving a cash reserve.

Here are five definite warning signals that can help determine whether or not you are headed for financial ruins. If any of them apply to your situation, you might want to take a closer look at your budgeting style. If three or more apply: you already know you’re in trouble (so do something about it):

1. You’re using credit for stuff you used to be able to buy with cash.
2. You’re taking out new loans, or extensions, to pay your old debts.
3. You’re only paying the minimum amount due on charge accounts.
4. You’re constantly receiving overdue notices from creditors.
5. You’re juggling your rent and car payment money to pay other debts.

The bottom line here is that you must overcome the temptation to buy things that you can’t afford. Forget about impressing others, and even more importantly: realize that no one really cares what you have and what you paid for it (it’s all in your head). At the end of the day, the very people you hoped would have drooled over your new sports car are going to go home to have some fun with their families, and not give that expensive (and ridiculous) purchase a second thought. That’s a fact Jack!

Here’s another: don’t listen to the marketers (they only care about suckering you out of your hard-earned cash).

My last tip: buy beer, not champagne (it’s so much cheaper on the wallet)!