I’m not talking about getting wealthy here although that could happen. I’m talking about just getting your head above water.
The problem is that we overcommit ourselves financially. We buy and buy and buy most of it on credit cards and soon the ocean of debt we create gets too deep.
We have to stand on our financial tippy-toes just to keep ourselves from drowning.
Eventually, we start wondering if maybe we’ve gone too far because the situation seems dangerous as if we might not be able to keep it all afloat for much longer. This can be scary. If you’ve felt this and want to change, then let me throw you a life preserver.
The Financial Riptide Pulling You Out to Sea
When the economy was good, it was much easier to live a indulgent lifestyle. Money and loans flowed freely. However, due to the financial slump we’ve seen that seems to keep hanging on forever, many people are finding it very difficult to survive.
Here is what is working against you (January 2011 figures):
- Unemployment rate in the U.S. is 9.8%
- The average duration of unemployment is 35 weeks or about 8 months
- 35.9 million (or more than 10%) of Americans live below the poverty line
- Average credit card debt in the U.S. is $14,750
All of this swirls together to form a financial riptide that can suck you far away from safety.
I don’t mean to be so negative, but it is important to properly recognize the situation so you can take action to save yourself. If you deny the truth or just ignore it, you may drift beyond rescue.
Getting and Keeping Your Head Above Water
I want to assure you hope is not lost. I am 100% sure that you can get your head above water and keep it there. Even if you are in deep, you can break free from the riptide that is pulling you out to sea and pull off a complete financial recovery.
You can do this without the help of any debt reduction or consolidation services. Most of these are scams that you want to avoid. All of what they do (assuming they do anything except take more of your money), you can do yourself and it won’t cost you a dime.
Here are the basic steps:
1. Get on a Budget
What I’m talking about here is not a restriction of spending. The kind of budget I’m talking about is a plan. One where you consciously decide how to use your money every month to get the most out of it. Your budget should direct your money to your most important priorities. A good budget can really improve your life and it is an essential tool to help you get your head above water.
2. Pay Down Your Debt
To save yourself financially, it is crucial that you start paying down your debt. If you look at what is sucking you dry every month, it is likely all the payments you are making to pay credit cards, car loans and home equity lines of credit. You have to reclaim this money to create financial margin. You need to create margin between what you make and what you owe. This is your financial strength that you want to reclaim.
3. Create an Emergency Fund
One of the ways that we start sinking financially is by constantly funding “emergencies”. When you have no spending plan or budget, then every new expense is an emergency. One that you don’t have the money to pay. Therefore, you pay with credit which is the financial equivalent of digging your own grave. The solution to this dilemma is establishing a personal finance emergency fund. This will keep you from sinking further into debt.
The above three steps are what I consider the three most crucial things you can do to save yourself. If you do these, then you will be well on your way to a personal economic recovery.
Don’t Drown Without Putting Up a Fight
Far too many people go down to the financial bottom without ever even putting up a fight. They get caught in the riptide of unemployment, poverty and debt never realizing they can break free. I hope you will not be one of these victims. The tips above can save you. They are fundamental strategies that when used are powerful means to get your head above water.
Are you struggling to keep your head above water? What are you doing to save yourself? Leave a comment below and let me know your thoughts.
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