We are a nation of debt. Millions of people today will apply for new credit cards and loans that they cannot afford to payback but need just to stem the tide of negative cash flow in their homes today. With this debt comes a personal finance battle over who gets what and when. The mortgage company comes first. They are followed by the car loan company. They are followed by the credit card used to pay for food and gas. And then families attempt to pay the full balances on their utility bills. This all, not to mention, the desire to give an offering or donation to their local church or synagogue.
This financial plan is no plan at all. Today families are suffocating under the monsoon of bills, debt, and unexpected expenses that happen every day to thousands of hard-working, yet financially deficient Americans. Studies have shown that an increasing number of homes are entering foreclosure in the last five years because families borrowed more than they were reasonably able to pay back. And yet, we as a nation continue to borrow, believing that one day it, being our personal financial ledger, will one day get better.
What we need more than anything else is a reality check of where we are and where we will ultimately end. When it comes to personal finance we must be honest with ourselves about how much money is coming in through our jobs and how much our expenses are down to the last penny. This assessment will mute the cavalier attitude so many people have because they are unwilling to confront the purple giant of debt living on their personal finance ledger.
When it comes to tackling this elephant the one thing that is given is that you cannot devour fifty thousand dollars worth of debt overnight. You did not spend fifty thousand dollars yesterday so it is wishful thinking to believe you could pay all that debt down in a short period of time. Imagine for a moment that you looked in the mirror one day and realized you had gained twenty-five pounds. It might be shocking at first. But the truth is you have been in denial for a while because your pants stopped fitting you three months ago.
So what do you do? If this were your body you would go to two people, a fitness expert and someone who could help you develop a meal plan that would give you the intake necessary to continue the energy levels you need to perform at peak levels. What this person will do before developing a strategy moving forward, is look at your habits that led you to this place. It is the same methodology when it comes to personal finance. You need someone to help you look at what has been eating your money so that you can get a handle on where your money is going that could otherwise be considered wasteful or indulgent.
Like Snicker bars and Skittles, there are a lot of ways in which junk causes us to spend a lot more than we believe. Because it is a quarter here and a quarter there we fail to see the overall impact on our personal finance ledger. However, when you calculate over a years time how much candy or other junk we indulge ourselves in, we will find that junk has a lot to do with the personal financial mess that we are in today. So, let us take a look.
Cigarettes. I know it is addictive and the nicotine calls you all throughout the day but the truth is, if you eliminated that one pack of cigarettes a day you would save yourself over fifteen hundred dollars. Imagine that, those puffs of smoke eat only three dollars a day. Yet, when you multiply that one pack by the calendar year your cigarette bill is a fifteen hundred dollar junk bill on your personal finance ledger.
Alcohol. It may be fun on the weekends and at events, but wine, spirits, and beer are an expensive habit to have. Even if you are a casual drinker who only spends twenty dollars a week on alcohol, that still adds up to a thousand dollar junk bill on your personal finance ledger.
Snacks. Like so many people who have vending machines at their jobs, buying a bag of chips and pack of candy daily can seem irrelevant in the big picture of personal finance. Yet, eliminating them can make a significant impact on your personal finance ledger. A typical person drinks one 20oz soda, one bag of chips, and either a bar candy or bag of fruity snacks daily. That has a daily hit of just over two dollars. If you multiply that by two hundred and fifty working days a year, those two dollars becomes five hundred dollars a year in junk food. That again, is a major expense on the personal finance ledger.
These examples may seem rudimentary and simple. However, it is typically these excusable expenses that tend to eat up so much of our money. If an individual wants to step to the plate and take control of their personal finances, developing better disciplines in these areas would be a significant first step. On a monthly basis, just stopping these three things would make two hundred and fifty dollars available to pay bills with. That is always useful in paying down debt.
Managing personal finance is all about discipline. The people who have stronger discipline have an easier time putting them in positive financial shape. Those that do not continue to struggle to push that plate away and say no to indulge them in one more snack. It may not seem like much. But that snicker bar you ate last night makes a difference. That late night visit to McDonalds to curb your ice cream hunger makes a difference. Do not try to eat the big purple elephant tomorrow. Just start with a slice. It is a lot easier to chew that way.