A recent study determined that approximately 52% of Americans are spending more than they earn. However, that's no real surprise. Few of us have ever received any formal financial education.

Giving Yourself a Fresh Financial Start

Steffens Law Office can help you file for bankruptcy to get relief from old debts, but you'll want to make some major changes afterward to avoid future problems. Here’s a primer that hits the highlights:

  1. Build a Budget. Surprisingly, less than 50% of American households have prepared a budget. While this is a loathsome task, it’s key to getting on track. The concept is the same whether you use a kit or pencil and paper: track your expenses, separate fixed and discretionary spending, create realistic goals, set your budget, and stick with it.
  2. Avoid Debt Traps. Major financial decisions need to be carefully thought out. Rash judgment, usually triggered by desperation, can land you in a long term trap. Payday loans, debt settlement scams, or misusing a credit card, are just a few pitfalls to avoid.
  3. Make Savings a Priority. Pay yourself first from each paycheck. Aim to save 10-15%. Do it automatically each pay period. 
  4. Avoid Overspending on Housing. Many people are “house poor.” Their rent or mortgage payment is far beyond what they can afford, leaving them very little to live on otherwise. As a rule of thumb, you should try to keep housing costs under 20% of your income.
  5. Invest in Yourself Instead of Stuff. Don’t under-invest in areas with long-term benefits, such as education and career development. These are appreciating assets that will pay for themselves many times over.
  6. Avoid Buying Depreciating Assets. While most of us need a car to get around, expensive, luxury cars are not wealth-building assets. Quite the contrary. While your vehicle may look good in your driveway, it’s depreciating in value every day. Focus instead on appreciating assets like stocks and real estate that grow in value over time and offer you resources in the future.
  7. Learn to “Course Correct.” There is almost always a cheaper or better way of doing something. Make a habit of challenging your personal money handling to find, and implement, alternatives for major expenses.
It’s never too late to make some financial adjustments. While it may be difficult, the payoff can be huge. Not just in dollars, but in your peace of mind. You don’t want to be part of that 52% headed for hardship. 
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