I'm going to risk being a bit blunt here.
That said, I'll apologize ahead of time for those of you in truly tragic financial circumstances. I'm referring to events, completely out of control, which wreck your balance sheets. Like a medical emergency, not covered by insurance — and which no reasonable person could have expected. Or a business situation that completely goes off the rails.
We have seen plenty of all of those things, and we have seen enough tragic stories to fill a lifetime. (And we love helping to clean up those messes.)
But for the rest of you, call this your early intervention.
I know life is hard. I know being single is expensive. I know being married is expensive. Having children is expensive. And there's no doubt that getting divorced can be a drain too. Yes, working two (maybe even three) jobs is exhausting.
I haven't been all of these things. Maybe you have. But on the surface all these "reasons for losing money" are just the result of a much bigger problem.
So, if you'll allow me, today I want to be the one in your life who provides a (hopefully bracing) reminder that some financial habits need to be broken, or you’ll stay in debt. And so I thought I'd reach for something, put on my "coach" hat, and do what I can to inspire you into even greater financial prosperity.
I want my San Antonio, Boerne, Texas hill country clients to think properly about these things … because when times of crisis do come (however intense or unexpected), it's much easier to work from a place of continued strength than from weakness.
Michael Essick's Five Reasons You’re In Debt
"Knowing trees, I understand the meaning of patience. Knowing grass, I can appreciate persistence." – Hal Borland
We have seen every kind of client come through our doors for help getting out from under IRS debt. This is what we do.
And you need to know this right up front: There is no shame here. For we understand that for every "bad financial habit" or trend, there are deeper issues at play. And our job is to help you deal with "what is" — and not make you feel badly about "what should have been."
The purpose of this article is to wave some flags at you that might be helpful. That's the goal: above all things, we're here to help.
But perhaps there are a few of these habits that are pulling you down…
1. You spend good money on junk.
I'm sure the marketers love you since you're spending your hard-earned money on modern debris. It's the stuff that's cluttering your home and bursting out of your front door. It's the disposable, upgradeable, and superfluous stuff you buy in a heartbeat because "you're worth it!" But it costs. It consumes your space, it can initially make you feel good but can lead to feelings of guilt, and can make you (eventually) broke. Please, learn to identify junk and end the spending spree — because yes, you're worth it. <smile>
2. You don't have a budget.
Yes, sticking to a budget (or starting one) can be scary and learning about your true financial situation can be a downer. Get over it. Please. At least get some help with it, find your net worth, add up all your debt, track your spending, and build a budget that reflects your true reality — not the world you prefer to live in. Only when you face the facts — by spending the time to manage your money — will you stop losing ground.
3. You don't earn enough.
This is a toughie. If you've cut the junk, you've made a budget, and you're still inching down your savings, you need to fix the income side of the equation. I've known people with 3 jobs — THREE JOBS — to make ends meet. They work their tails off to earn enough cash to cover the rent, buy better quality food, and pay off student debt. If need be, they didn't own a car, didn't wear fancy clothing, and didn't wine and dine on the weekends.
The answer here isn't easy — you'll have to find a way to make more money. Even in a choppy economy, *if* you can swallow your pride, there's always a way.
Plus, there are now more ways to get off your behind and build something on the side than ever before. Leverage that social network of yours, and take the entrepreneurial leap.
4. You don't pay off your debt.
If you don't have a plan to conquer your debt, then you're going to do more than "lose ground" — you'll go broke.
It's time to look at ways to increase your debt payments. Paying just the minimum balance is a sure-fire way to keep the debt around your neck like a noose forever, so dig into that debt by paying it off sooner.
5. You don't save.
Perhaps you used to save well — and now you're resting on previous good habits. It may be time to INCREASE on that front, or at least return to what brought you upward in the first place. Saving even just a smidgen more of your income is a wise way to get started again. Take a good hard look at your spending patterns, your subscriptions and services, and find ways to cut back. For example, downgrading your television package — or canceling it completely — adds up to money that could be put into a high interest savings or investment account. The idea is to be consistent and set up automatic deposits into a specific account set aside for emergencies and long-term plans. (Again.)
If this stuff resonates with you, then good … if not, then I do hope that you keep on maintaining the excellent habits that got you here in the first place.
And lastly, I hope this little dosage of "tough medicine" goes down smooth, and that you'll forgive me my possible insensitivity. I'm in your corner. Many of my clients are doing quite well. But sometimes it's important to admit it when you're not.
Michael A. Essick, CPA, PLLC