Debt

The National Debt Clock And Americans Poor Saving Habits

Just to underscore how big the problem of debt is in our country. Just take a look at the gross national debt and how fast it is growing.

The Gross National Debt:

It seems that the majority of U.S. citizens have followed suit. Here is some statistics. Even though this information is a few years old it will give you a good idea of what we as nation and as individuals are up against.

The state of the Union:

• According to the Wall Street Journal nearly 70% of consumers live paycheck to paycheck
• A Marist Institute poll published in the USA Today stated that 55% of Americans always or sometimes worry about their money
• In the new millennium, the personal savings rate in America fell to -2% the lowest in 60 years, according to the Department of Commerce
• According to Automatic Data Processing, Inc., 20% of workers would not be able to make a mortgage, utility, or credit card payment if they missed a paycheck
• Money magazine states that 75% of families will have a major negative financial event ($10,000) in any ten-year period

How we as a nation save:

• More than 40% save less than 5% of their annual household income
• 16% save between 5% – 10%
• Only 9% save greater than 20% of their annual income

• Among all workers, 45% have less than $25K in savings and investments (aside from equity in primary residences). 64% have less than $25k in savings (age group 25-34)
• According to CNN, the average credit card debt per household reached a record $9,312 in 2004. That’s an increase of 116% over past 10 years
• Approximately 35 million Americans pay only the required minimum (about 2%) of their balance each month

We here at Debt-Wrench.com think that even though the numbers look grim, we can overcome them one person at a time, one bit of financial education at a time, and one dollar at a time. So don’t be scared by the numbers. Don’t be intimidated by how bad your financial situation is. Let the numbers and statistics motivate you to take action now and learn more.  As you learn more you can act fast and act correctly to eliminate your debt.

Changing the Way We See Money

I recently read an article on MSN Money about how MP Dunleavey was able to pay off $30,000 of debt. What struck me was how simple the approach she took was. I think that it would be worth while to look at the tools she used to get rid of her debt.

However it takes more than just a certain approach, technique or tactic to change the way we behave financially. Unless we change our personal views on money we will never affect our long term bottom line. It takes a shift in our paradigm or the way we view the world around us. We have to look at money in a different light. Understanding what money can do for you and what is most important in you life can help you to learn what money really is.

Here is a small list of questions you can ask yourself about money. By truthfully answering these questions you can start to understand your personal views on money.

What does money mean to you?

What can money do for you?

What can’t money do for you?

Why do you want money?

Why don’t you have money?

Its also a good idea to ask why at least three time to your responses. Asking why will help you find your core values that drive you to action. Once you have discovered your core values that motivate you or the “why” the “what” will follow.

Once the “why” if fully defined and understood, you can move on to action or what you should do. The following items were taken from the MSN Money article I referred to above. They are “what” MP Dunleavey did to get out of $30,000 of debt after she had changed the way she saw money.

* Cut expenses.

* Budgeted, budgeted and re-budgeted.

* Identified and changed bad habits.

* Adjusted expectations for our lifestyle.

* Took in a roommate.

* Moved.

* Tripled and quadrupled our minimum credit card payments.

* Quit using the cards.

* Saved a cushion for emergencies.

* Relied on automatic payments.

* Switched to a superlow-interest card.

* Found ways to earn more money.

* Got honest with friends, family and ourselves about this priority.

Some of these might no work for your given situation (i.e. get a roommate or move) but most are very universal. To truly change our money woes we have to change our habits, how we spend, why we spend, and when we spend.  How we live must reflect the lifestyle we desire and our core values. After we have changed the way we think and act we must have discipline and perseverance to follow through with our goals.