Financial Solutions: Turn Your World Upside Down for Personal Empowerment
Remember when going to school was all about finding a job. Deciding on a CAREER. Obtaining the Highest wage or salary that you could negotiate. So where did you fit personal finance in your life? It is never too late but the sooner you begin… the greater the rewards! As author of several pathbreaking books, including CREDIT CARD NATION, LIVING WITH DEBT, and CROSSROADS OF DEBT, I will provide a blue-print with specific tips from my next book for beginning the TRANSFORMATION from a debtor to a saver to an investor. It is never too late to change your financial life… just like changing your diet and lifestyle for a longer HEALTY and LONGER LIFE.
Begin By Making Your Financial Life Simple
There are THREE KEYS to Financial Empowerment. FIRST, increase your income that comes into YOUR CONTROL This includes the money from your job and income that you make from other activities. SECOND, reduce the amount of money that leaves your control like interest on credit cards, car payments on rapidly depreciating new cars, and expensive habits from discretionary purchases such as online memberships, new Nikes, and Starbucks lattes. THIRD, begin investing as soon as possible. The MAGIC of Compound interest during your life is AMAZING. You have control over embracing this power. It is not how much you SAVE but how you invest it. Instead of paying $200 for a pair of new NIKE sneakers, do you realize that you could buy 3 shares of the corporation?!!
What’s Debt Got to Do With It?
Did you know that NOT ALL DEBT IS EQUAL? In the 1980s, consumer debt like credit card and auto loan interest was tax deductible. That made the cost of debt much cheaper when you filed an itemized tax return (More on this later!) Today, owning a home has many advantages such as deductibility of mortgage interest and Home Equity Loans (HELOCs). And, credit card debt is an ‘unsecured’ debt which means that banks can charge much higher interest rates. In another blog, we will explain what happened to Federal usury laws. Remember when Jesus kicked out the money lenders from the temple? Prioritizing debts to be paid off and when is a crucial to achieving FINANCIAL SOLUTIONS and EMPOWERMENT.
Why Is Debt Such a Big Deal?
Did you know that the payment on your debts—especially credit cards—determines how much banks charge you? Do you know that paying your debts just a couple of days late every month greatly increases the cost of credit and thus how long it takes to pay it off? And, even worse, the payment of your debts greatly influences your personal credit score. Did you know that your credit score may have a greater impact on getting a job than your work history? We will explain in a later blog.
When Is Consumer Credit A Responsible Choice For Solving Financial Challenges?
Consumer Credit is essential in society today. Big retail corporations have replaced local merchants. They don’t know you but want to sell as much as they can to you as soon as possible. READ MY LIPS: “Impulsive Buying!” So, purchasing products a few days before your next paycheck is financed with your credit cards. BUT, when the monthly credit card bill arrives, would you have made the purchase if you did not use your credit card? Is managing your finances with cash payments better for you? Are you prepared to pay extra the next month to pay for the finance charges? Were the items that you purchased worth the cost plus interest? Research studies confirm that people spend more money when they use credit than if they only use cash! Can you really afford the savings of buying items on sale with your credit cards!
How to achieve Financial Empowerment?
In this blog, I will share with you the special tips that I have learned during my 30-year career in teaching Personal Finance, Money & Banking, Financial Innovations, and developing FinTech systems for leveling the playing field between banks and consumers so that the subsidized corporate financial system benefits the citizens that pay for it. In my next post, we will discuss the ‘baby steps’ necessary to achieve economic empowerment. This will begin with an innovative budgeting system that requires consumer discipline if you can not manage your financial affairs without costly credit cards.
Let’s Take This Financial Empowerment Journey Together!
In ending this post, I challenge you to discipline your spending for a month without using any consumer credit—only cash or debit cards. HOW HARD was it? Like going on a low carb diet and not eating Red meat. How many purchases did you NOT make? How much money did you save? How much extra did you pay on your credit card debt? How much faster will you be able to pay off your credit cards if you manage your expenses primarily with cash or debit cards?
NEXT STEPS
After experimenting with a credit diet, How much did you save this month? And, did you use your new savings to invest in paying down other debts or did you invest in wealth building assets. Are you ready to open a low-cost investment account? Do you know what is a tax-deductible IRA? A MUTUAL FUND? An INDEX FUND? Are you NOT INVESTING because you don’t know how?
We will begin your journey to FINANCIAL EMPOWERMENT with introducing some Financial Solutions in the next blog post. We will begin with your Budget and the responsible role that credit cards can play in your financial Life.
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