Updated: Nov 18, 2020
2020 has been a rough year for the U.S., and the world. We are dealing with the recession, financial burdens due to a rise in unemployment, and the viral pandemic that has drastically changed our workplaces and lifestyles. Did you know that over half of Americans are in significant financial debt above $75,000?
Below you will find the percentage of different generations who are living with financial debt:
Baby Boomers - 80.9%
Gen Xers - 79.9%
Millennials - 81.5%
All of the above percentages should give you an idea of the severity we are facing in today’s personal financial crisis. Although the most common types of debt remain mortgages and student loans, many Americans are also dealing with credit cards, medical, auto loans, and more. Merely speaking, the words“personal debt” may cause you emotional stress, as it affects more areas of your life than people would like to admit. Take a second and ponder the following phrase, “Your Life is a Reflection of Your Finances.”
What does that mean to you?
5 Hard Truths About Debt:
Debt can be a vicious cycle
When you acquire a large sum of debt, feelings of hopelessness may inhabit your mind. Typically, these emotions lead you to give up, and give into frivolous spending, repeating the cycle. The only way to squeeze yourself free of the downward spiral is to focus on organizing your finances from the bottom up.
No Emergency Savings
There are too many people who live paycheck to paycheck and don’t invest any money into an emergency fund. The problem here is that life always throws us unexpected curve balls; it is only a matter of when, which you can never predict. Whether it is an essential car repair, a pricey medical bill, or a home appliance breakdown, are you prepared financially to cover from it? An emergency fund should be able to sustain you for a few months, without increasing your debt with another credit card. Invest in your rainy-day stash today, don’t be caught off guard.
May Negatively Affect Your Well-Being
A study by the American Psychological Association (APA) shows that the number one stressor for adults is money. More than 72% of Americans experience substantial anxiety about finances. For example, you may have guilt about spending, be afraid of bills, or fight over finances with your spouse. The weight of financial debt on your mental health is significant and may be a source of depression. Do not fret, make a change. Consider contacting a financial professional that will give you the blueprints for financial freedom.
Delay Life and Financial Goals
Everyone’s motivation, wants, and life goals differ. However, there is one commonality,
“financial debt = a delay.”
Are you looking to buy your first house, travel the world, or start a family? No matter your desires in life, money is at the center of it. Look at the BIGGER picture and imagine the consequences of a large credit card purchase before you make it. You don’t want to end up 5 years later still paying off something you could not afford to begin with. A better choice is to analyze your current financial situation, limit expenses, and pay off debt to set you up for a better future.
It’s never too late to take control of your life by getting your finances under control.
Here are 5 Quick Steps to Financial Freedom:
Make a List of What Needs to be Organized – this could be a room in your house or organizing your paperwork to make sense of your finances. Did you know that your room is a reflection of your financial position?
Do it in Baby Steps. Becoming overwhelmed will discourage you from completing your list. It’s important to make a list and set simple goals in the beginning. Your goals will become more attainable.
If you’re not good at organizing, find someone who can help. Many people do not have the ability to organize and this is nothing to be ashamed of. It’s actually a gift to organize. Find someone who is good at it and can help you get focused.
Create files for your receipts, whether paper or digital.
Watch where your money is going. How is it being spent? Do you have budgets to follow? What are your strengths and weaknesses? What are your financial goals?Take the time to analyze your spending habits.
Choose to take control of your finances and procure the freedom you desire in life. Small Business Accounting has the knowledge and expertise to help you get organized, budget, and prepare your finances for the future. Call our office today at 201-743-4477.