If we’re all so smart and more educated than ever why is it we are up to our eyeballs in dept? The only answer is Financial Education!
The days when our parents or grandparents had secure jobs, savings and paid for everything in cash, from their car to their house, are over.
Today, individual debt is growing 23 times faster than the economy and the housing crisis and credit card debt is largely to blame. On average we spend $1,05 for every dollar we earn.
Consumer delinquency rates, bankruptcies and foreclosures are at an all time high.
Why is it that within one generation we have lost the security and ability to make and save money the way our elders did?
The answer is simply that the rules have unfortunately changed. One day, someone moved the goal posts. Unfortunately, unless we as individuals adapt to understand the new rules of the game we will be left behind in a mountain of debt, chasing financial stability which will always elude us.
THE CREDIT AND HOUSING CRISIS
Credit card debt and foreclosures seem to go hand-in-hand as home owners struggling with their mortgage find it increasingly difficult to pay their credit card bills as well.
In 2007, Americans accumulated an unprecedented $2.2 trillion in credit card debt. As mentioned above, we are spending more than we are earning, therefore we are supplementing our income by withdrawing high-interest cash advances from our credit cards.
Late repayment is the highest it’s been in three years the consequence of which is that credit card companies are increasing fees and cutting credit limits. Some are even increasing rates not to mention not giving out credit at all.
As for the state of the housing market, foreclosures went up by 50 percent in 2008. Easy credit back in the days of the housing boom meant that mortgages became available to people who otherwise wouldn’t be able to afford one. Many today owe more on their homes than they are worth.
It is estimated that every foreclosed property lowers the value of every other property on the block by 1.5 percent. This pushes lenders to reduce prices dramatically to rid themselves of all of those foreclosed properties. It is expected that property prices will continue to fall another 10 percent in the following months.
Our credit cards are working overtime and one reason is the soaring price of gasoline. Now costing $4 per gallon, prices show no sign of slowing down. This does not only affect people who commute to work and need to fill up the car’s gas tank. When gasoline prices go up so does everything else you purchase from clothes, to food, to heating (which is expected to increase by 30 percent).
If your family is already on a really tight budget these extra pennies can really tip the balance towards some seriously negative cash flow.
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SO WHAT CAN WE DO?
The answer is Financial Education. As individuals we are in so much over our heads that we just don’t know how to start repairing our financial situations.
The will is there though! We are more than ever seeking advice online and buying books about how to “Eliminate Debt” or “Building Wealth”. But can we make sense of what we are reading?
How do you start digging yourself out of debt? Should you start by planning your retirement or by sending your kids to college? How do you find the appropriate advice? How can you be sure the person advising you knows what they are talking about and not putting you at risk of more debt? Should you invest in bonds, stocks, mutual funds or property? Can you really shrink or eliminate your debt while expanding your investments?
Although we have never been more educated as a society, when it comes to financial education most of us are illiterate.
This doesn’t mean that we aren’t intelligent, just that we have never been showed the skills necessary for handling money. Although school taught us Math, English and Science, we have never been taught how to be prudent consumers and expert investors of our cash.
Some individuals are trying to change that though. Robert Kiyosaki, millionaire investor and best-selling author of the “Rich Dad Poor Dad” series, is a leading proponent of bringing financial education in to the classroom.
Companies such as Wealth Masters International are currently filling the need for a comprehensive financial education. Founded by Kip Herriage a former Investment banker and Karl Bessey a self-made multi–million dollar business owner, WMI is dedicated to getting people out of debt and steering them towards financial freedom.
It is important when commencing on your journey to debt elimination to recognise that you might need the advice of more than one advisor. It is important that every person you take advice from be an expert in their field.
Do not be embarrassed to ask for their credentials and proof of experience before you proceed with them. It is also very important that your advisors can explain complicated financial concepts to you in a manner that is clear to you.
It is estimated that Baby Boomers will need $1 million to retire. It is therefore essential that you find advisors that will be able to help you no matter what age you are now.
Working closely with your advisors, begin by developing a plan to get yourself out of debt as quickly as possible. Get help raising your credit score, saving money on taxes and putting money aside in case of emergency.
Once all of these things are in order, your advisors should help you choose wise investments and protect your family with life insurance. They can even help you increase your cash flow and your income!
There are many solutions available out there. You just need to educate yourself about them through research, one-on-one meetings with your advisors or by taking a financial education course. Then you will be better equipped to choose the strategy that best suits your needs.
Debt is probably one of the most chest-achingly stressful realities of our modern society. At times it can seem like an insurmountable and daunting task to eliminate debt from your life… which can sometimes leave you paralysed with fear.
However it is possible and not so out of reach as one might think. Your freedom is around the corner. All we need is a little education!
If you would like to increase your financial knowledge through a recommended course, visit my business website for more information:
www.jasminomeara.biz
SATURATE EVERY PART OF YOUR LIFE!
Jasmin
