When I was younger and had more money problems, I used to say this all the time…This is a serious problem for many people; they find themselves in a financial situation and say…How did I get into this mess? I observed my parents go through such agonizing financial stress and ultimate devastation that I promised it would never happen to me…and I have done everything in my power to prevent it. It can be one of the most helpless and frustrating situations most of us can find ourselves in. To make matters worse, it seems the harder we try to get a handle on our finances the deeper in debt we become.
There isn’t an answer that covers everybody, naturally, but I believe that in most cases we simply weren’t paying close enough attention to the details of our finances. We figure that an extra payment here or there won’t make a difference, until it’s too late. Over the years I found that it wasn’t until I took a good look at how we GET ourselves INTO debt, that we can figure a way OUT. It’s not so that we place blame, but rather to determine what changes we need to make in order to prevent it from happening again. I have found that very few people, including myself, have ever been taught even the basics of proper money management, either at home or at school. This hit home when I had to self-teach myself how to balance checkbooks and do my mothers taxes after my father’s death when I was only 16 years old. If the parents aren’t teaching it, shouldn’t we at least hold the educational system responsible?
A money basics class isn’t too far fetched in a world of I-phones and Windows vista is it??? Come on! If you are just starting out in the work force or going to college, it is time for you to learn that you have to work at managing your money, everyday. It is essential that you learn as much as you can about setting up a budget and using every expense cutting method you can think of. Even if you are making good money you need to know exactly what you have coming in and what you have going out. There are a lot of people making $70,000 or more a year that are having money problems.
There usually isn’t just one thing that causes us to accumulate debt. It can be anything from buying more house than we can afford to running our credit card balances to the hilt. It almost always happens a step at a time. Let me give you an example: You buy a house with payments that are more than you wanted to pay, but it is exactly what you were looking for, so you decide you can cut back in other areas. Now you’ve used all of your cash for the down payment on the house, but you still need furniture. It’s time to break out the credit cards. You don’t realize just how much the furniture, curtains, pictures, rugs, etc. will cost. Now your credit cards are reaching their limit Then the electric bill comes in and it is double what you were expecting. This can all happen within just a couple of months. The above example may not fit your situation, however, chances are no one purchase caused the problem. This is why it is absolutely necessary to pay close attention to your finances and plan every purchase.
The only way to know if you can afford something is to have a budget in place. For most people, there are too many expenses for the average individual or family to keep track of in their head. You have to take what ever time you need to put this information down on paper after considering all of your possible expenses. You can do this on a piece of notebook paper or find a simple budget form. Which ever way you choose, make sure that you review it before you make any purchases. As I stated before, it is necessary to know what events led to your money problems so that you will know what actions to avoid in the future. This will be vitally important on the road to your financial recovery.