12 Reasons Most Americans Are Broke and How to Break the Cycle.
Let’s be honest, we were put on this earth to enjoy all the nice things that money can buy us.
There is nothing like the feeling of power and high status you get wearing that new pair of very uncomfortable but incredibly good-looking Jimmy Choo high heels.
Or the pride of driving that brand new heavy-duty-extended-cab-super-loaded-pickup-truck. Big gas-guzzler vehicles are a symbol of supremacy and success, not to mention every guy’s car fantasy!
Life is good until you realize that you, like most Americans, are broke and have no money to pay the credit card bill or the truck lease payment!
Also from the “Get Your Money Life Together” series:
12 Reasons Most Americans Are Broke
When looking at why most American’s are broke the list of reasons can be endless, but let’s look at twelve:
- Do not budget
- Live paycheck to paycheck
- Do not have an emergency fund
- Use credit cards to supplement income and pay for everyday expenses like groceries, gas or eating out
- Finance furniture purchases because they can’t afford to pay cash
- Believe they will always have a car payment
- Lease cars because the monthly payment is “cheaper” than the loan payment
- Recur to debt to cover a medical emergency or a layoff
- Buy things they cannot afford to keep up with friends’ lifestyles
- Live beyond their means
- Are addicted to instant gratification
- Can’t be content with what they have
Statistics show that most Americans are broke and can’t afford the lifestyle of their choice!
A 2017 study by the National Endowment for Financial Education conducted by Harris Poll® found that nearly half (48%) of U.S. adults admit to living paycheck to paycheck.
Credit card debt, employment struggles and mortgage/rent expenses are among the biggest reasons why people live paycheck to paycheck.
A May 2017 analysis of household debt and credit by the Federal Reserve Bank of New York, showed that household debt has reached record highs.
Americans owe $12.73 trillion dollars in mortgages, cars, student loans, high heels, pickup trucks, cat litter and a whole lot more stuff.
That is a $149 billion (1.2%) increase from the fourth quarter of 2016.
In other words, regardless of the appearances, half of the people around us live a lifestyle they can’t afford. The cars they drive, the homes they live in, the clothes they wear and the places they visit for vacation, all of that is being financed by credit cards and loans.
The Reality Check
Having nice things makes us feel good. That is true, until reality sinks in.
You get home, open your mailbox, and find -in horror-, the dreaded monthly stack of bills. There are enough to deal a game of poker with them!
There are credit cards bills, student loan statements, and car payment notices among a bunch of junk mail. As you open the countless envelops you wonder, how can you get rid of the debt?
As much instant gratification, joy and sense of power as debt can buy us, living on credit is not the path to financial stability. Living in debt can also create a lot of stress and anxiety, and a vicious cycle that can be hard to break.
We live in a consumerist society. We are culturally brainwashed to have what we want when we want it.
No credit? No problem! That common saying in advertising can’t be further from the truth. Borrowing money without having a good understanding of how credit works can get us in real trouble.
But sadly, pretty much anyone older than 18 can apply for, and most likely will be issued, a credit card.
We have been made believe that credit is our way to wealth and buy everything on credit because we have bought into the lie that having the stuff that we want now, is our way to happiness.
But it really isn’t. Debt creates the illusion of financial prosperity, until life -in the form of a layoff, unemployment or sickness-, bursts our bubble.
To secure your financial future, you must:
- Stop living beyond your means
- Quit getting in debt
- Start saving money
- Live on a budget
- Get rid of your car payment
- Stop comparing yourself to others
- Rehab from your instant gratification addiction
- Learn to appreciate what you have
- Be grateful and thoughtful
- Stop acting on impulse
- Learn about money management and personal finances
Ready to get your money life together?
Don’t miss my podcast episode on Getting your Money life Together.
Remaining Broke Is a Choice
What would happen if you got laid off at work? What if you had a medical emergency and couldn’t go back to work?
These are real questions that we don’t think about when purchasing cars, houses and furniture that we can’t really afford.
To avoid being broke learn to manage your money and make better choices.
Resist the urge to get in debt to have what you want now. Instead, take control of your money and your emotions, plan a budget and stick to it.
Getting financially fit takes time, patience and discipline. Remaining broke is a lifestyle choice.
Be the boss of your money!
Subscribe to the blog:
From the “Get Your Money Life Together” series:
- 12 reasons most Americans are broke-How to break the cycle
- 7 personal finance lessons learned from the 2008 Recession