If Your Out-go Exceeds Your Income, Your Upkeep Will Be Your Downfall! This is a mantra that I have written about before. In this post, I will go deeper into some fundamentals and practices that will help you maintain that critical balance.
As long as you continue to spend more than you earn, you will continually fall further and further behind. Eventually leading to a financial crash and burn. This practice will lead you deeper and deeper in debt. At some point you will eventually not be able to pay the interest on the debt you owe causing you to fall into bankruptcy.
Bankruptcy is a major personal setback and brings with it consequences that have a long lasting effect. Credit becomes harder to acquire. Its impact is felt by more than the individual who filed for bankruptcy. Those debtors that did not get paid in the settlement now have to deal with the loss to their business as well. The increase in bankruptcies and foreclosures took a toll on our nation’s economy over the past decade. The trend had snowball effect that hurt us all.
How much have you spent on interest charges this year? What does that add up to over your lifetime till now? How much do you hate budgeting and how much would you be willing to pay to avoid making and living on a budget?
We’ll group the fundamentals into two groups; things to avoid and things to move toward.
- Easy credit offers
- The trap of indebtedness
- Immediate Gratification
- Move toward:
- Improve financial literacy
- Desire to grow wealth rather than overspend
- Commit to a New Pattern of Saving before Spending
- Prioritize Spending – control your out-go
- Reduce Amount of Out-go to Finance Charges
- Improve Income Potential
Three Pitfalls to Avoid
Falling prey to offers from credit card companies, continued indebtedness and the desire for instant gratification are traps that threaten to sabotage our efforts toward achieving our desired outcome. By identifying them and setting guards against them, you will have a safer road to achieving financial independence.