| On average, families in the United States carry
credit card debt of about $8,834. The number is
much higher when viewing the “recycled”
debt or credit card debt consolidated and paid
off with the use of a mortgage product. Facing
a mound of credit card debt is daunting enough,
but a large majority of American families have
no written budget. Many Americans see debt as
the monster that is and that it is about to eat
their family’s financial future. Some of
the fortunate few who do not have a great deal
of debt are suffering from a problem that is just
as bad, no liquidity.
Being in situations like these makes one feel
trapped and helpless. This is why we will have
higher and higher bankruptcy rates in the future.
Even with the economy being better than ever the
individual family is in trouble.
There is a way out. You need to run your household
finances like a business. Sometimes businesses
are criticized for not taking the human cost into
account when making decisions, but for the most
part, business make good financial decisions because
they are made without emotion and using the guiding
force of sound financial principles.
In our homes we do not know these principles
and too many times our decisions are made based on gut
feeling, myths that make common sense, common
wisdom and pure emotion (usually fear). It is
no wonder that we are facing the individual financial
crises that we see in this nation today.
The good news is that the lack of financial knowledge
is not your fault. No one ever teaches finance
as it relates to the person. You certainly don’t
learn it in high school. You don’t learn
it in college; where do you learn personal finance?
Answer: from your parents. And who taught them?
Their parents! This may not seem bad, after all
your parents may be doing well. However, they
learned a whole different set of rules than the
ones that apply today. Finance changes over the
years, but we never change with it.
So this is another source of financial myth; usually financial myth, not a lack of discipline,
is the source of our financial downfall.
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